November 19, 2015 Print

Ukraine is a country in transition. The 2014 deposing of former President Viktor Yanukovych has provided an opportunity to reform Ukraine’s struggling economy, which currently ranks 162nd out of 178 ranked countries on the Heritage Foundation’s Index of Economic Freedom. Little has been done since then, however, to shore up Ukrainian property rights, strengthen the rule of law, lower government spending, or open markets to international investment. Atlas Network hosted a forum at its 2015 Liberty Forum & Freedom Dinner, “Ukraine at a Crossroads,” to explore how the climate of ideas that prevails in Ukraine can make all the difference to its future.

“Ukraine is starting to make positive changes, but the pace has been slow,” argued panelist Yulia Tychkivska, vice president for management education at the Kiev School of Economics and cofounder of the new Ukraine-based Bendukidze Free Market Centre, which was organized in July. Reforms have been particularly slow in areas of decentralization, competition policy, and governance, she said, but better in improving public finance, rehabilitating the banking system, and deregulating business and the energy sector. Most of the positive legislative changes have been seen in anti-corruption measures, she pointed out, but even so, corruption remains a major concern for Ukrainian businesses.

Tychkivska argued that although the people of Ukraine have long called for reforms, the country’s politicians have not taken ownership of the reform process — a situation attributable in part to internal conflicts between the president and the cabinet of ministers, she said. Ukraine’s political leaders don’t have a clear vision or strategy for where the country will go next.

Still, the future of Ukraine is enormously important, not only for its own people, she said, but also for the example it can set for other countries around the world. If Ukraine implements real free-market reforms, its economy will dramatically improve — and the positive practical consequences of freedom will be evident. Fedorin asked the audience to engage in a thought experiment about what might have happened if the new Ukrainian government had followed a different path.

“Imagine we are in February 2014,” said panelist Vladimir Fedorin, cofounder of Bendukidze Free Market Centre and former editor for Forbes Ukraine. “The new government that came to power has a plan of radical reforms. The new prime minister understands that Ukraine faces deep problems, eliminates all subsidies to enterprise, launches privatization and deregulation. What results would we have now, if we’d had that kind of economic policy?”

Instead of that attractive counterfactual scenario, Ukraine now faces its second year of a deep recession, with an economy burdened by high taxes, a web of regulation, an enormous welfare state, and other forms of profligate government spending. Both Tychkivska and Fedorin hope that the new Bendukidze Free Market Centre will serve as a focal point for educating both the citizens and the politicians of Ukraine in how to build a renewed and prosperous society.

“I want to live in a free, normalized, western country,” Fedorin said. “And this is why thousands of Ukrainians oppose Russian aggression — because they want to be responsible for their own lives.”