RUINation

By Dr Andrew Zhalko-Tytarenko

The concern about the current Ukrainian regime revolves around two subjects: the threat to Ukrainian national identity, which comes from the Russification policies of the government, and the arrogance, greed, and incompetence of particular bureaucrats, that represent the regime.

A well known saying goes: “If there is a nation, there will be a state.” Meanwhile, nothing other than the State (then - the Soviet state) had cleansed Ukrainians from Ukraine through the Holodomor, and then brought in millions of Russian settlers to occupy the vacated eastern and southern lands. Now Ukrainians face the ultimate dilemma: either accept Ukraine as it is, with a considerable part of its population Russian speaking, and some of these people leaning toward Russia, or go for federalization, and eventual separation of some historic parts of Ukraine. There is a third option – the Ukrainianization of the East and the South, but this will take decades, unless it is conducted using Soviet-style repressive methods. From the standpoint of Ukrainian Statehood, the necessity of the third option is questionable since there is already a movement of Russian-speaking Ukrainian nationalists, the majority in the East and in the South that support independence. The more pressure government applies, (by Soviet traditions), the more resistance it faces. A good example is this year’s University entrance exam: after three years of Dmytro Tabachnyk’s aggressive Russification efforts the number of the candidates who wanted to write the University entry essay in Russian has hit an all-time low, only 2-3% elected to do so.

In any case, whatever option we consider, the future development of Ukraine requires strong and consistent governance. In this case “strong” does not mean law enforcement “muscle.” More than 1% of Ukrainians are employed by the Ministry of Interior. The problem is that only 1% of Ukrainians trust the police, i.e. – even not all of the policemen trust it. “Strong” means a government that can control the situation in the country, which is supported by the nation, which is competent enough to effectively implement its policies, and which is driven by national interests. The current Ukrainian government meets none of these criteria. Furthermore, it’s gradually bringing Ukraine to a state of ruin-a fallen state. It is worthwhile mentioning that Ukrainian Statehood was not lost with the signing the Pereyaslav Treaty of 1654, it was lost as the result of the ruin, which followed after the death of Bohdan Khmelnytsky, more then ten years later, and lasted for more than forty years. Three centuries of suppression of everything Ukrainian is the result of this short period of Ruin. The governance of Yanukovych is gradually taking Ukraine back to the state of Ruin, and there is a risk that the history will repeat itself.

The incompetence of the government is stunning. We have the Vladyslav Kaskiv initiated $1bln contract signing with a Spanish ski instructor for constructing the Black Sea liquefied natural gas (LNG) terminal. The government continued to push the terminal idea only to find out this June that there is no way to bring Middle East LNG to Ukrainian ports because Black Sea straits are overloaded, and Turkey cannot afford to let giant LNG tankers through. The government has built and opened with great fanfare, international air terminals in Lviv, Kyiv and Donetsk for Euro-2012. The Kyiv International terminal is now 33% of capacity, while Lviv and Donetsk are under 10% - a monumental waste. The “bullet trains” which the government bought from HUNDAI turned out to be suburban electric trains, which are not usable for long-distance high speed travel in Ukrainian (or any other) conditions. Ukrainian manufacturer KRUKOV CAR BUILDING WORKS makes better, faster and cheaper trains, but when the Ukrainian – built train had beaten the HUNDAI on test tracks, the driver of the Ukrainian train and several his superiors were fired.

The financial sector is in disarray. The government had turned a blind eye to the enormous natural gas corruption, and had lost the support of the IMF. The scheme was simple: Russian gas was bought at, say, $400/1000 cu. m. (with VAT it comes to ~$600), and then it was sold to the public sector for $800-$1000/1000 cu. m. The retail price is kept artificially low, ~$160/ 1000 cu. m. and the difference is covered from the State budget. This means that Oblgaz distribution companies (mostly controlled by Yanukovych’s cronies) received a subsidy of ~$650-850/1000 cu.m, out of which their net profit is ~$400-600/1000 cu.m after reimbursement of VAT. These are the subsidies that the IMF rejects, and because of which relations with the IMF have deteriorated. International banks either already left Ukraine, or are leaving soon.

The list of such incidents is endless, and conflict resolution is not driven by law and national interest. The same applies to the prosecution of Yulia Tymoshenko, which is driven by vendetta and fear, and is extremely damaging for Ukraine.

The sum of these developments points to one very threatening tendency: Ukraine is slowly, but steadily sliding down into a state of Ruin, or as it is now called - a failed state. If this drift is not stopped, the Ukrainian nation risks a repeat of history, which followed after the XVII century of Ruin.