Jul 24, 2014 - 2:45pm

What’s Ukraine’s Best Response to Russia’s Political Adventurism?


Vice President, Global Initiatives

Bloomberg_Ukraine_Yatsenyuk_800px.jpg

Arseniy Yatsenyuk, Ukraine's prime minister.
Photographer: Krisztian Bocsi/Bloomberg.


In the wake of the tragedy of the Malaysian Airline plane shot down over the Eastern Ukraine, the realization is sinking in that the conflict is having broad and long-term global implications. The geopolitical rift between what during the cold war was known as The West and The East, now threatens to take the form of the G7 against the BRICS

The resurgence of geopolitics should not distract us from the root causes of the conflict which were largely economic. The turmoil in Ukraine was sparked by the legitimate desire of the Ukrainian people to break with overbearing cronyism and institutionalized kleptocracy and to hitch its economic destiny to the European Union. These aspirations are the source of the legitimacy of the new government and they deserve to be taken very seriously by the international business community. How to bring a sustainable revival to a market of over 40 million people in the center of the Eurasian continent when the EU is barely recovering from the prolonged financial crisis and can ill afford to throw public money at Ukraine?  The answer lies as always with the business community. 

What is the real Ukraine today? It is merely the involuntary subject to IMF’s budget constraints and macroeconomic blues? Is it still the world’s top five purveyor of obsolete cold war militarily hardware? Is it the home of uncompetitive dirty coal industry and the Chernobyl sarcophagus? Or is it the country that ranks 4th in the world in number of certified IT professionals, has a full cycle of aerospace hardware engineering, has 30% of the world’s richest soil and is the birthplace of many successful entrepreneurs?  The answer will determine the likelihood that the sacrifices and tragedies of today will not be in vain, and that Ukraine will be able to overcome its legacy.

On July 8, these challenges were discussed in Brussels.  Let’s look at who was in the room: the European Union (EU), Member States, Ukraine, government officials from United States, Canada, Japan, Norway, Switzerland , international organizations – Council of Europe, OSCE, UNDP, OECD – and International Financial Institutions –EBRD, EIB, IMF, World Bank Group, AFD, KfW. Who was not in the room? Business, either international or Ukrainian.

Today, Ukrainian Prime Minister Yatsenyuk who just a few days ago spoke hopefully of a Marshall Plan for Ukraine, submitted his resignation. A genuine reformer, he was frustrated that the hold-over parliament who refused to overcome partisan posturing and face the needs of the economy. Fortunately, the resignation opens the door to parliamentary elections and to a new class of more responsible, legitimate  and pragmatic legislators to assume responsibility. The international community will stand by Ukraine but it has to be done with business at the table, and not just an alphabet soup of agencies. And business has to be more than the oligarchs who are still exerting a great deal of influence in the Ukrainian economy. For U.S. business to commit time and capital to Ukraine, we need to see that Ukrainian government is willing to listen and to act.

The initial indications are encouraging: our affiliated American Chamber of Commerce in Kiev is reporting progress in its dialogue with the Ukrainian government on tax, energy and customs issues. However, a broader engagement is needed. Crucially, the AmCham has started speaking to the new authorities about re-imagining the country’s future.  On June 24, the U.S. Chamber already held a first substantive discussion in Washington with our members, Department of Commerce, and international financial institutions on the best ways to bring market forces to work in Ukraine. In the fall of 2014, many senior US officials will travel to Kiev. We want to make sure they bring with them fresh and creative ideas.

In the words of Thomas Graham , former senior director for Russia at the National Security Council, “Even if Kiev were able to defeat the separatists in the near future – a big 'if' – Putin is betting that the West does not have the patience or resources to rebuild Ukraine.” Business can show him wrong.  Share your thoughts and engage with us in a creating a database of business ideas for Ukraine by following @ChamberUkraine

About the Author

About the Author

Gary Litman headshot
Vice President, Global Initiatives

Gary Litman is Vice President for Global Initiatives at the U.S.