OPINION: Morning in Ukraine

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In my two prior blogs (“Hijacking of a Nation” and “Back to the Future”), we noted how Ukraine’s future was “hijacked” and what must be done to avoid the pitfalls of the past. Ukrainians demonstrated they knew how to fight and win a bloody existential war and change the course of history. But their mission is incomplete. Ukrainians must demonstrate the same commitment to win in the peaceful rebuilding of their economy as they did in winning the war. For without a robust and growing economy, all is lost.

The economy plays a pivotal role in a nation’s security, prosperity, growth, and just about everything else that matters. It is an aggregate of capital, labor, technologies, innovations, human capital (such as science, education, and healthcare), and ecology. If properly planned and managed, it will signal the dawn of a beautiful new “morning” in Ukraine. In the hands of an incompetent or uninterested political and economic faux “elite,” they will create chaos and waste.

Each part of the aggregate is a building block and requires professional designers, builders, and even visionaries… all of which Ukraine has in great abundance, but have been largely brushed aside. Consider, for example, one of the most egregious and devastating instances of hijacking by Ukraine’s own parliament. By scandalously kicking the proposed EDSM law down the road for 22 years and violating constitutional requirements, Ukraine’s parliament had colluded in spawning widespread corruption and eroding the very foundations of the state.

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EDSM is a law drafted by the Cabinet of Ministers in 2002 at the behest of Ukraine’s National Security and Defense Council and prepared for adoption by Ukraine’s parliament. If enacted, it would have enabled end-to-end monitoring of energy resources (oil, gas, electricity, heat, water, etc.) by creating a single, unified, national picture of Ukraine’s energy flows for energy security, anti-corruption oversight, crisis management, and revenue.

To this day, despite a half dozen attempts to revive it, the corrupt “energy lobby” in parliament has blocked and buried it. The cost to Ukraine has been catastrophic. Failure to pass a law accounting for the extraction, disposition, cost, and sale of the single largest consumer product (energy), which affects every Ukrainian’s personal budget and well-being, has created a fetid cesspool of corruption estimated at as high as $150 billion. The toxicity of this cesspool – not unlike the Epstein papers – may have ensnared many of Ukraine’s top political and economic “elite.”

It is of paramount importance that the current parliament – not some parliament of the future – review the most current version of EDSM and how much of it may have been subsumed and integrated into more recent and digitalized formats, and finish the work started 22 years ago. This would create not only the control system Ukraine badly needs but also provide a model to account for the disposition of many more hundreds of billions of dollars in postwar recovery costs.

There remains a great deal more to be done, and every Ukrainian citizen must realize that a new era in Ukraine will depend on their choice of candidates for parliament or the presidency at the ballot box, regardless of whether they are interested in politics. Given the complexity of building a new economy, it is their responsibility as citizens to assess each candidate and choose one based on past performance, education, integrity, and love of country. Failing to do so is the civilian version of going “AWOL.”

It is this new “team” of political leaders who will be obliged to develop an economic model that best serves the national interest. The power and interests of a handful of rich oligarchs will have to be replaced by programs and strategies that support small and medium-sized businesses and family farmers. An increase in salaries for highly skilled and/or educated professionals, such as teachers, doctors, military personnel, creative and scientific intelligentsia, and civil servants, may be necessary to discourage migration abroad and attract them back from the diaspora. In addition, the state must actively intervene in housing and communal service tariffs tied to the real incomes of the population. Ukrainians pay 30-50% of their income for these services, while EU citizens pay 15-20%. Ukraine has one of the highest rates of private home/apartment ownership in the world, which greatly facilitates the growth of the middle class if communal services and other costs are kept in check.

At the very outset (and to this day), Ukraine’s government has failed spectacularly in that it has abdicated its constitutional responsibility to regulate the use of Ukraine’s land and vast mineral-rich subsoil. These mineral and fossil resources belong to the citizens of Ukraine and should be used to relieve their financial burdens and facilitate commercial and diplomatic leveraging rather than to serve private interests in collusion with authorities. There is no reason why Ukrainians cannot enjoy the same standard of living as their EU peers, and keep their mothers and fathers at home rather than serve abroad as common laborers. In fact, salaries and benefits can and should exceed those in the EU if we are to encourage the return of the Ukrainian diaspora and recover some of our critically needed demographic vitality.

Ukraine’s government also failed to prevent the loss of Ukraine’s highly developed industrial potential and to reduce an unacceptable level of dependence on external donors and lenders. To date, there have been no targeted sectoral investment and development programs, nor technological renewal of strategic industries such as rocket, aircraft, shipbuilding, and space, nor the creation of national production of chips and state-of-the-art radio-electronic and bioengineering products. Only government regulation and protectionism can, through R&D subsidies, support long-term basic research and create incentives for innovation through a protected patent system.

In short, Ukraine has all the elements needed to build a developed form of European democracy with a powerful middle class, an active and involved civil society, a market economy, state regulation of strategically important industries, comprehensive protection of the national producer (including agriculture), and special care for science, education, health care, and demography of the Ukrainian people, as the basis for a powerful economy, army, and defense potential of Ukraine.

Ukrainians must select qualified professionals to retake control of their ship of state from the oligarchs, clear the debris of war, and establish closely monitored programs for rebuilding and recovery. Concurrently, Ukraine’s (presumably) new postwar political elite must develop, in consultation with all sectors of society, economic and societal programs that prioritize the well-being of all Ukrainian citizens and that would usher in a new morning for Ukraine.

The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post.