Ukraine is on the edge. With Russia seemingly trying to extend her influence in Ukraine, is there an escape route? Russian influence is fundamental in her economy, her energy production, her history, her geography, her people and her politics. The former colonial rulers therefore have the tools to exploit Ukraine. It is no wonder that many in Ukraine look to the European Union as the only ones who can save them from Russian domination.
But Ukraine is the largest country in Europe, not counting Russia. She already has the 6th largest population in Europe. She has a large coast on the Black Sea and is rich in coal and fertile soil. She trades with Europe to the West, the Middle East to the South and Asia to the East. Ukraine’s potential is huge. She can be one of the most influential countries not just in Europe, but on the international stage too.
The main challenge
Corruption is the most major issue that shackles this huge potential. US diplomats have described Ukraine as a kleptocracy (‘rule by thieves’). Ernst & Young called her one of the three most corrupt nations in the world. She was ranked 144th out of 176 countries on Transparency International’s Corruption Perception Index in 2012.
The importance of corruption
Corruption has seeped into every form of potential economic and social revival. One major driver of long-term prosperity is education. But eleven months ago, the Peterson Institute’s Ukraine expert Anders Aslund pointed to corruption as the greatest problem in Ukrainian education. Ukraine’s children are being exploited by the very people who should be helping them. As you can see from the image, 33% of all Ukrainians have paid a bribe for educational purposes. If Aslund is correct, dealing with corruption is the key to unlocking the potential of millions of Ukrainian children.
With low taxes and cheap labour, she should be a honeypot for foreign investors. But corruption is putting businessmen off. Ukraine is 137th out of 185 countries on the ‘Ease of Doing Business Index’. By comparison, her neighbour Georgia, another former Soviet state, is 9th.
Crime, too, is high. The US State Department describes it as
a significant day-to-day threat facing American citizens resident in or visiting Ukraine.
There must be a strong link between the perception of highly corrupt police and high crime rates. Ukraine cannot be independent like this. So if the EU is the escape route from Russia, will membership help tackle corruption?
To the West are some of the richest and least corrupt countries in the world. Joining the European Union would mean quite a bit of extra money coming in for the Government. It would also mean a large amount of agricultural subsidies, which would help Ukrainian farmers and it would mean a free trade agreement with rich countries with plenty of rich investors. On the surface then, the EU is the path away from Russia and the path to prosperity. But here’s the problem.
EU reality – why it’s a bad idea
1) Corruption and regulation. Corruption is a very theoretical concept and its importance can be easily overlooked. You are not talking about an individual case which you can understand; you are talking about a plethora of individual instances, big and small, which suck the life out of a country. One study (Wilhelm, 2002) noted a “very strong significant correlation” between corruption and the overabundance of regulation. This study’s findings can be backed up both logically and in practice. Logically, the more complicated the law is, the easier it is to muddy the waters with what is right and what is wrong. Logically, having qualifications and “assurances of good practice” lead to officials having the power to exploit their position. More regulation leads to a black market, which is cheaper and easier to use. In practice, the world’s least corrupt country (at least by rankings) was one of the most corrupt. But Lee Kuan Yew wiped out much of the need for certificates and qualifications. He believes there is a link between this and Singapore’s falling corruption levels (Lee, 2000). Around 50% of laws in Britain come from the EU and if Ukraine joined, they would face not just more regulation, but more complex regulation with sub-clauses and sub-clauses.
2) Brain drain. A country needs its best and brightest to move forward. With Russia to the East, this is especially important for Ukraine. Poland shows the perils of emigration in the EU. In 2004, Poland joined the EU. By 2006, half a million of Poland’s best and brightest young people had come to Britain alone. Two researchers on the subject wrote in 2010,
The country’s accession to the European Union in May 2004, coupled with unrestricted entry to EU Member States the United Kingdom and Ireland, caused one of the biggest emigration flows in Poland’s postwar history, and the country became one of the largest exporters of labor within the enlarged European Union. In addition to a decreasing birth rate, migration accounted for a real reduction in Poland’s population over the past decade.
Ukraine has a low birth rate too and has millions of fewer citizens today than in 2001. Surely losing the brightest and best could not come at a worse time for her? With the prosperity and opportunity to the West and unrestricted entry, Ukraine would see a brain drain, which can only weaken her.
3) Economic instability. One big question Ukrainians have to ask themselves is, “What are we getting ourselves into?” In an increasingly globalised trading world, Europe’s share of the world economy is decreasing. Just as it’s getting easier to trade more internationally, Europe is becoming less relevant. Normally, this could change with different policies. But many of Europe’s countries are bound together in currency union, destabilising members economically, socially and politically. Ukraine will have joined an unstable customs union which can provide little muscle or strength against Russia. When Ukraine already exports far more to both Turkey and China than to any EU country, why would Ukraine’s government want to make this more difficult?
Ukraine’s only choice is independence. Dealing with your own problems comes with larger rewards. Offers of help from Russia or the EU are false. She must help her own farmers sow the land and help her own businesses to become more attractive for foreign investors.
Ukraine has both the size and the numbers to be a properly independent country who can protect herself from Russia and have a global influence at the same time. She is beautiful in countryside and rich in soil. She has plenty of potential for prosperity. There is no doubt that the path to this prosperity has hardships, but it will be worth it. A proud people will always need an independent nation.