Is Ukraine a New Titanic?

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Is Ukraine a New Titanic?

"What happens in Ukraine will have global impact"

New York, NY / ACCESSWIRE / April 28, 2014 / Recent events in Ukraine have shaken the entire world. Armed conflicts in the middle of Europe and redrawing of the borders under the barrels of heavy military equipment in the 21st century seemed surreal. All this as the human civilization was becoming more sophisticated and technologically advanced: multinational space exploration and studies of Mars, latest advances in quantum physics, amazing special effects used to enhance global entertainment events like Olympic games -- all fostered hope that our world is evolving towards a new peaceful order. Even the remnants of the severe global financial crisis and discrete regional conflicts around the world could not cloud a pretty bright and optimistic picture of the world's future.

Against this background the Ukrainian events resonated around the world with even greater intensity. Today, citizens of that country nostalgically look at the map, which not even two months ago had Crimea as part of its borders. Before this it was part of USSR, but now it de facto is part of Russia.  Armed conflicts are taking place in the Eastern parts of Ukraine. Government buildings are being taken over in the eastern cities of Donetsk Luhansk, Kharkiv. Long lines for foodstuffs are reminiscent of the Soviet era. Schools and offices close as women and children are afraid to go outside. Gangs of armed men and military equipment can be seen in the cities of Slavyansk, Mariupol, Kramators where clashes with authorities already produced first victims.  Media constantly shows reports of military helicopters circling, military vehicles deployed around the cities and armed separatists securing various sites. Ukrainian police, named "Berkut", whose riot division was disbanded by the new government for their participation in Maidan, are refusing to serve and majority of them are putting in their resignations. Words like "collapse", "chaos", "destruction" and "banderovtsy" are the most popular in the Ukrainian internet space. The most asked question is "What to do?"  

I tried to speak to a number of Ukrainian politicians to find an answer to this question. Some folks simply tried to use the dialog as a personal PR opportunity, others honestly admitted that they no longer understand what is going on and were waiting for the results of the upcoming presidential elections in Ukraine to try and make sense of the situation. There were a few who still talked about the bloodshed of the February Maidan and their calls to arms, whether legally, or not, were of radical nature.  One of the folks I spoke to was Sergiy Klyuyev, a Member of the Ukrainian Parliament, whom I met in Washington some time ago. Up until the recent events Mr. Klyuyev was part of the government majority.

We planned a brief skype chat and ended up speaking for an hour on skype. During our talk it became clear that Sergiy was very concerned about his Eastern Ukrainian constituents and became very emotional every time the subject was discussed. Overall his point of view stood apart and I thought it may offer the reader a different prospective on what should be done to try in bring Ukraine from the brink of the abyss.  

Our conversation began with discussion of the mood of the people who live in the Donbass region of eastern Ukraine (primarily Donetsk and Luhansk regions were most military style takovers are taking place).

Do those people of the coal land consider themselves Russians or Ukrainians? Most important fact, says Klyuyev, is that the majority of the locals there remains for united Ukraine and wants to keep the country whole. On one hand most people want peace and do not want to see the conflict escalated, on the other hand the current economic conditions in the region, still not resolved language issue and extraction of all the regional tax revenues by the central government authorities are no longer acceptable to the people here.  The folks of Donbass also do not like procrastination of the authorities with making key decisions to deal with the situation. However, the factor that scares local people the most, is the gigantic amounts of military style weapons that ended up in the hands of the protestors after the events of Maidan on February this year. Use of weapons on the streets has become somewhat more tolerated in a country where this was unthinkable even as recent as four months ago. Yet little has been done to end the parading of armed paramilitary factions on the streets of Ukrainian cities often condoning those actions as "revolutionary necessity". As result of this lack of enforcement, a number of armed conflicts, which should have been prevented by firm actions of the new government, continues to grow.  These conflicts exacerbated an already dire economic situation and had a devastating effect on Ukrainian businesses, which practically came to a standstill.  

So what can be done to avoid an impending collapse to which the new government is heading so far? The answer is as follows: 

To save Ukraine it is necessary to conduct four-party negotiations between Ukraine, Russia, USA and EU.  Meeting in Geneva is a good start, but the parties must be willing to make meaningful concessions as inability to come to terms will threaten not only the sovereignty of Ukraine, but the overall global stability.

"To negotiate does not mean to show weakness or give in", says Klyuyev.  But besides the Geneva talks, the destiny of Ukraine will also be determined in Kyiv. Instead of settling personal scores and grabbing powerful political posts, the politicians must focus on creating a true Government of National Unity, one where all regions and significant economic subjects are properly represented. The government should focus on addressing issues which fuel separatism and the Parliament should work developing the new constitution taking the version of 2004 as basis and amending it to reflect the changes that took place in the country since then. Undertaking real efforts to stamp out corruption in the country will unite Eastern and Western parts of the country. It is important to address underlying causes, which fuel corruption and deal with simplifying laws on doing business, breaking up decision making process to eliminate controlling monopolies over some decisions which foment corrupt behavior, reduce bureaucracy and increase pay of state workers to levels where corrupt behavior will no longer be attractive.  Strong state and corruption are incompatible concepts, thus in order for Ukraine to prosper, corruption in the government must be stamped out. 

In order to rebuild a strong prosperous state it is important for the government to empower the regional authorities and provide them with resources needed to help the local businesses strive and improve the municipal services to help improve residents' quality of life. Delegate some of the decision making to the regional authorities and make local referendums and town hall style discussions a part of the normal political process.  

The way the centralized budgeting system in Ukraine is set up, the central government first extracts all regional tax revenues and then rebates a small portion back to the local authorities. Thus not a single governor or mayor has any incentive to implement or reward economic development programs as they know that no matter what, the funds generated by such activity will still end up in Kyiv. Also, of the 24 regions comprising Ukraine, only very few are contributors to the budget to begin with, the rest are subsidized by the federal government. The size of those subsidies is dependent on the each region's political prowess in Kyiv and not on the real needs of the folks living in that region. 

The new central government today is promising to start a dialog with the representatives of the Donbass region. Assuming that this will be an earnest dialogue and not a farse, the main themes of it should be as follows:

- Local governors should be elected by the people, not appointed by the President

- Central government should not get involved in the matters which can be resolved by the local authorities

- Regional tax collections should be apportioned by regional authorities, not in Kyiv, as it is stipulated today by the Budget Code.

- No appointments, mandates, programs or empowerments should take place locally, if sufficient provisions to finance them are made in the budget.

As result of the above changes the entire country will become more prosperous and residents will feel more empowered and involved in shaping their destinies. Finally, rebuilding bankrupt and crumbling economy should be addressed in a systematic and strategic manner. After the current situation is stabilized, it is vital that the government enacts measures to improve the investment climate both for foreign and domestic investors and promotes economic development programs to foster growth in key areas where Ukraine can and should effectively compete globally: agriculture, IT, aerospace, machine building, energy generation and mining sectors. Let us not forget that our European neighbors present a terrific example of a highly successful society that can credit a large portion of its economic success to a well-developed decentralized form of government. "I am a well established person. I have my own independent civic position, beautiful family talented grown kids, but we still have to prove to ourselves and to the world our ability and entitlement to live in a free and blossoming country" sums up our dialog Mr. Klyuyev.

These days, many compare Ukraine to Titanic after it already hit the iceberg, got damaged and had its crewmembers argue among themselves as to who should be the captain. The question is if the Ukraine is the Titanic, can it pull the entire European continent to the bottom, as it sinks.  It is time for all parties involved to step back, soberly evaluate the situation and sit down at the negotiating table to help Ukraine make the right moves out of this crisis.


SOURCE: David Stephan for Princeton Council on World Affairs