Friday, July 08, 2005

Ukranian Reform Very Slow Going

Robert Meyer at Publius Pundit has a money post up summarizing the polical situation in the Ukraine, particularly the failure to pass economic reforms needed for accession into the WTO. He references a great article by Tammy Lynch which directly addresses the politics surrounding this vote and specifically prime minister Yulia Tymoshenko's inability to push the vote through. And why? Meyer's conclusion is that Yushchenko is not getting his hands dirty enough:

Yuschenko’s biggest problem, however, has been his hands-off approach to government policy. This is unfortunate because he has a very pro-market and pro-investment philosophy. Because of this, instead of setting policy, he has served as a more corrective function to Yulia Tymoshenko’s mismanaged populist tendencies.
The biggest example of this was her response to rising gasoline prices. She blamed the rise on a Russian conspiracy due to their virtual monopoly. True, the Russians corner much of the market, but the Yushchenko response would have been to diversify sources of energy. The Yulia response was to input a price ceiling, which caused the oil companies to back off Ukraine altogether, resulting in kilometres of lines at the pumps. When meeting with the heads of the Russian oil companies, Yuschenko publicly scolded her in front of them, though she later said it was necessary so he could assert his authority.
A similar move was instituted on beef prices. The ceilings had to go.

A great deal of my optimism and excitement surrounding the Orange Revolution was based on Yushchenko's background in economics and his reputation as a western-style free marketeer. While I stand by
my earlier assessment of some of the early pessimism regarding Yushchenko's presidency, if Yushchenko abandons economic reform, Ukraine will be no better off than it was under Kuchma, and a frustrated populace is likely to cry out for a centralized economy once again - a proven recipe for failure. Change can be slow in coming, but abandoning the fight ensures failure.


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