Is Ukraine a Failed State?

[lordtiberius]

FWIW, America has a trade surplus with Ukraine

[RichyRich]

Apparently in Lvov/Lvov, there will be a general strike by the authorities which will take place today (Monday)... not sure if I read it right but that appears to be what's happening, if that is indeed the case then I feel that perhaps this will be a revolution rather than just riots, hopefully it'll work out better this time.

Also Vitali Klitschko of Udar was heckled when asking protestors to go home to spare bloodshed, I hope he achieves his aims of becoming president, I feel that he will get the most done in terms of the greater Ukrainian good although Russia will hate him

[lordtiberius]

Lvov's mayor promised no violence to any protestor

http://www.Kievpost.com/content/ukraine/Lvov-mayor-says-no-force-will-be-used-against-Lvov-protesters-332710.html

[AvHdB]

http://news.liga.net/video/politics/933684-na_koleni_mraz_video_izbieniya_berkutom_lyudey_na_bankovoy.htm

It seems to be a wait and lets see what happens next moment in Kiev.

As I understand the article that a peaceful march was disrupted and there were numerous brutal beatings including journalists by the "police".

From the article some of the replies are quite interesting.

[Chris]

There were protests in most of the major cities of WU over the weekend, my BiL attended one in Chernivtsi. Not sure if they are going on during the week, will no doubt find out later.

[andrewfi]

If I was a Ukrainian I wouldn't want free trade, they have no idea what our big businesses will do to them!!

That is true. Let Tesco and Wal-Mart loose over there and they can kiss goodbye to any local chains. Even more money will be exported.

Back in the early 90's the Ukrainians made a choice that they'd not 'liberalise' their economy so that foreign entities could enter Ukraine and take it over. This meant supporting inefficient industry sectors and refusing inward investment. Undoubtedly this has reduced the rate at which people's living standards have increased.

The choice was not easy to make because most countries made a different choice and were 'rewarded' for doing so. When I was studying the Ukrainian economy I was concentrated upon the sugar and grain markets but what I learned seemed to apply across the board. In the long term it is a winning strategy for a country to maintain its own industries rather than sell them out. Had Ukraine given unfettered access to the sugar refining industry then it is almost certain that it would have been bought and closed down because the major world stakeholders had excess capacity. A short term gain in national revenue would have been counteracted by a long term reduction due to the industry sector disappearing.

By contrast, in Estonia the government enabled foreign investment and as a ministerial adviser here told me years ago, those same investors were now reducing the ability of Estonian businesses to compete internationally. For example, most cheese production is now owned by Finnish businesses. Go to Finland and you will not find Estonian cheese. The companies are not allowed to export to Finland - yet previously they did. Another example, at the time I was researching this stuff Estonian bakery products were much cheaper than their Finnish counterparts. I was able to find ready buyers in Finland for such products. When we got to the point of signing purchase agreements with out chosen supplier we were told that any contract we signed would forbid the export of the product to Finland, the market of the Estonian baker's owner.

This ownership by outsiders of manufacturing capacity gave Estonia a boost in living standards but then became a dead weight upon the economy. The type of agreements forced by foreign owned suppliers are illegal under EU law but very hard to countervail.

In Ukraine not all businesses in all niches are viable but history will almost certainly show that the policies of governments since independence have been sensible, no matter how much they have been blackened by those with an interest in taking over those business and industry sectors.

Opening up markets to the EU as would be required with any kind of association treaty could be very damaging for the longer term success of the country. Russia and the CIS on the other hand seem to have much less interest in such activities. The problem is that it is easy to spin, for the benefit of the citizenry that the immediate benefits of EU association are great but much harder to tell people of the reality behind the smiley mask.

[AvHdB]

Andrew makes an interesting point.

In some areas Ukraine can compete internationally but one wonders if there government "supports" were removed if this would continue so. I am referring to raw metal production and pipe production.

Regarding farming it is a complicated matter. The greatest asset of Ukraine is it's farmland. I am not aware of Ukraine producing in great quantities sugar beets. This crop is still heavily subsidized in Western Europe, with the farmers of Germany, Belgium, The Netherlands and France benefiting from this. If the EU subsidizes were to be removed I am confident French farmers would start to sounding allot more English with there views about Brussels.

Ukraine has a good memory regarding the collectivization of the farmlands in the Soviet Union period. The government has made it very difficult for foreign agriculture concerns to enter the Ukraine market and own or control farm lands. Further concerns such as Raiffeisen* and to a smaller extent the Rabo bank which are in fact banks for farmers and not true banks in the Anglo-American definition have patiently waited and waited and hoped. Corporate farming firms are for all purposes not present in Ukraine and firms such as Monsanto and DuPont have comparable to the farmed land small operations in Ukraine.

Av

*Raiffeisen bank has been frequently accused of money laundrying. Journalists have published articles about this banks practices in the former Soviet Union that are not flattering.

[el_guero]

....


Ukraine has a good memory regarding the collectivization of the farmlands in the Soviet Union period. The government has made it very difficult for foreign agriculture concerns to enter the Ukraine market and own or control farm lands. Further concerns such as Raiffeisen* and to a smaller extent the Rabo bank which are in fact banks for farmers and not true banks in the Anglo-American definition have patiently waited and waited and hoped. Corporate farming firms are for all purposes not present in Ukraine and firms such as Monsanto and DuPont have comparable to the farmed land small operations in Ukraine.

Av

*Raiffeisen bank has been frequently accused of money laundrying. Journalists have published articles about this banks practices in the former Soviet Union that are not flattering.

    

[Chris]

I wrote a bit on farming in Ukraine back in 2009, and a British Company that was doing well over there, not sure what the situation is right now though.

[andrewfi]

I wrote a bit on farming in Ukraine back in 2009, and a British Company that was doing well over there, not sure what the situation is right now though.

Neither do I, but the company was leasing the land, yes? The government were very keen to avoid loss of the land to foreign entities which is why agricultural lands sales to foreign entities were banned. The British firm were doing what companies moving into China did. Invested money and made technology transfers in order to benefit from low resource costs. The profits that accrue from enhanced productivity due to technology and management input can be very worthwhile, that is, in truth, what makes investing in low labour cost economies worthwhile - almost no benefit unless the association increases productivity.

[el_guero]

I wrote a bit on farming in Ukraine back in 2009, and a British Company that was doing well over there, not sure what the situation is right now though.

Chris,

It is nice to read that someone actually knows something about Ukraine ....

wayne

[Chris]

I wrote a bit on farming in Ukraine back in 2009, and a British Company that was doing well over there, not sure what the situation is right now though.

Neither do I, but the company was leasing the land, yes?

Yes!

The government were very keen to avoid loss of the land to foreign entities which is why agricultural lands sales to foreign entities were banned. The British firm were doing what companies moving into China did. Invested money and made technology transfers in order to benefit from low resource costs.

Yes they were keen on that and as you say why sales to foreignors were banned

The profits that accrue from enhanced productivity due to technology and management input can be very worthwhile, that is, in truth, what makes investing in low labour cost economies worthwhile - almost no benefit unless the association increases productivity.

Increased productivity is not hard when you compare what they are competing with, but as you rightly say, its what has to happen to make it worthwhile.

[Chris]

I wrote a bit on farming in Ukraine back in 2009, and a British Company that was doing well over there, not sure what the situation is right now though.

Chris,

It is nice to read that someone actually knows something about Ukraine ....

wayne

Well when one spends a lot of time somewhere, and they take an interest, they usually pick up on stuff, unless they are completely ignorant/oblivious to what's happening around them that is.

[andrewfi]

Productivity comes from three factors:
1) Resource quality
2) Technology
3) Management

Ukraine has very fertile land, historically Ukraine's black earth was the region's breadbasket and so provides excellent resource capability.

Technology inputs were very poor. Not that people knew nothing or were stupid but lack of money and access to credit meant that technology and infrastructure could not be improved.

Modern management from the UK where we are very efficient in agriculture synergises the above factors.

The real concern of the government was that if land was sold that in many cases it would be taken out of production in order to maintain markets in other countries. In addition there was genuine concern that the current landowners the former collective workers might end up selling out their land and end up becoming only workers on other people's land. The organisation of land and its production is quite an interesting topic in itself.

[sashathecat]

I wrote a bit on farming in Ukraine back in 2009, and a British Company that was doing well over there, not sure what the situation is right now though.

Landkom was bought out by Swedish company Alpcot Agro which controls vast tracts in Russia and Ukraine.

[Chris]

I wrote a bit on farming in Ukraine back in 2009, and a British Company that was doing well over there, not sure what the situation is right now though.

Landkom was bought out by Swedish company Alpcot Agro which controls vast tracts in Russia and Ukraine.

I suppose they were ripe for it! Landkom's success was to negotiate thousands of lease deals to put together huge new farms, they were also helping local hospitals, which in turn gained them more community support.

[ashbyclarke]

Is it just me, or are some people missing a point or two here? Or is it me?!

Membership to the EU means more than a little free trade, full membership will mean an awful lot more to the average Ukrainian, let me note some below, perhaps anyone with a greater knowledge could correct me!!

- Fags would go up in price significantly in order to have full membership, no more £1 a packet! £5-8 is reasonable
- Health and safety be implemented, red tape, lots of it in reality
- Chains of shops will disappear overnight unable to compete with the incoming groups who will not contribute in anyway to local taxes
- no longer can a firm change it's own light bulb
- certificates for all electrical equipment, yes even your kettle each and every year (employers only)
- disabled parking spaces, hundreds of them
- human rights!
- Limited corporate revenue as it'll be taken offshore
- clampdown on cash transactions, every large transaction needs be accounted and investigated, you can't pay cash or take cash in large amounts from your bank without a good reason, yes it's true.
- Labour workers (plumbers, electricians etc) need be qualified, registered and take regular tests, i.e more tax
- Someone falls over in the street, someone will pay financially
- The list goes on!!!

More red tape BS than you could possibly imagine, whilst your small firms get to grips with it the big boys would already be exploiting your market place with higher corruption you could never imagine possible.

Not to mention taxes, higher gas and electricity bills.

Any completive edge that they might have had with low labour costs would be negated by higher red tape?

My opinion is Ukraine can only see the positives, maybe i'm wrong? Or do these problems exist in Ukraine now?

[Slumba]

Is it just me, or are some people missing a point or two here? Or is it me?!

Membership to the EU means more than a little free trade, full membership will mean an awful lot more to the average Ukrainian, let me note some below, perhaps anyone with a greater knowledge could correct me!!

Assume that a smooth-handed , apple-cheeked and baby-faced  Brussels man shows up in one of the grimier farming areas and starts lecturing the locals about how they need to do tests for fertilizer runoff from their farms... what do you think will happen to him?

[ashbyclarke]

Is it just me, or are some people missing a point or two here? Or is it me?!

Membership to the EU means more than a little free trade, full membership will mean an awful lot more to the average Ukrainian, let me note some below, perhaps anyone with a greater knowledge could correct me!!

Assume that a smooth-handed , apple-cheeked and baby-faced  Brussels man shows up in one of the grimier farming areas and starts lecturing the locals about how they need to do tests for fertilizer runoff from their farms... what do you think will happen to him?

Ha ha!! Can you imagine them being told that's not a strawberry... it's the wrong shape!!!

Yes a strawberry looks like this, but it doesn't taste of strawberry any longer!

I'm not so sure who's got it right or wrong, things certainly taste a lot better in the FSU, but don't look the same. 

[Manny]

Is it just me, or are some people missing a point or two here? Or is it me?!

Membership to the EU means more than a little free trade, full membership will mean an awful lot more to the average Ukrainian, let me note some below, perhaps anyone with a greater knowledge could correct me!!

Assume that a smooth-handed , apple-cheeked and baby-faced  Brussels man shows up in one of the grimier farming areas and starts lecturing the locals about how they need to do tests for fertilizer runoff from their farms... what do you think will happen to him?

They said that about the Baltics. They changed. The EU wore them down with promises of roads, infrastructure and a whole new gravy train for local politicians to jump on.

[Anteros]

If I was a Ukrainian I wouldn't want free trade, they have no idea what our big businesses will do to them!!

That is true. Let Tesco and Wal-Mart loose over there and they can kiss goodbye to any local chains. Even more money will be exported.

I would support small business in Ukraine trading with the EU to import money, but to do that they need a postal system that works faster and probably Paypal and EU bank co-operation.

And these large corporates don't pay any tax, that's the land of the free for you, the poor pay, the rich don't. Google as example, although it's been proven transactions have taken place in UK still don't pay any tax, those who are challenged make a contribution, not what's actually due. Prosecute them, not a chance.

Thing with Ukraine if it had any aspirations would use it's workforce to be the manufacturing arm of Europe, it could generate a huge amount of employment, the whole of Europe as it's customer base, China would have serious competition, cheaper export costs and a much quicker delivery time. Unfortunately nobody wants to start from the bottom and work up.

I recently saw a black Hugo Boss peacoat at Macy's which was made in Ukraine (it was fairly expensive) and several months prior to that I noticed some Lowe Italian brand hiking boots at REI which were actually made in Ukraine (again fairly expensive).

[el_guero]

Is it just me, or are some people missing a point or two here? Or is it me?!

Membership to the EU means more than a little free trade, full membership will mean an awful lot more to the average Ukrainian, let me note some below, perhaps anyone with a greater knowledge could correct me!!

Assume that a smooth-handed , apple-cheeked and baby-faced  Brussels man shows up in one of the grimier farming areas and starts lecturing the locals about how they need to do tests for fertilizer runoff from their farms... what do you think will happen to him?

Ha ha!! Can you imagine them being told that's not a strawberry... it's the wrong shape!!!

Yes a strawberry looks like this, but it doesn't taste of strawberry any longer!

I'm not so sure who's got it right or wrong, things certainly taste a lot better in the FSU, but don't look the same. 

One of the nice things about Ukraine .... the food is real, not artificial ....

[redroo]

can we get back to the point this was a TRADE AGREEMENT, not full membership to the EU, that was being negotiated.
Ukraine would be decades away from being able to join the EU, and that would be AFTER they had implemented western type "rules". The ruling elite would have to clean up their money and practices for starters.....how long do you think that might take? 

I stand with LT in my disgust at the violence directed towards (mostly) peaceful protest. Let me tell you if some imported "russian" goon started beating me I would drive a bulldozer at them also. I hope Putin is watching and getting just a little nervous at what his bullying has set off?

Oh, and I am another that enjoys the taste of berries and tomato's over there compared to the GM type crap we have to eat in the west

[Barbossa]

They said that about the Baltics. They changed. The EU wore them down with promises of roads, infrastructure and a whole new gravy train for local politicians to jump on.

Okay, I caught that Manny.  I just can't believe it is coming from you.

[lordtiberius]

Kudos Red,

The West has a two prong approach to this crisis.  The Swedes and the Poles stand with the opposition.  The US wants to negotiate with the current regime.  One of the defecting Regionnaires (Inna Bohoslovska) said (in an interview with The Kiev Post) that this is plot by Putin to get Crimea and seize Eastern Ukraine even though Yanokovych is loosing support in the Donbass and 100 members of his 225 governing coalition did not vote for his government in the first test vote to ditch Azarov and  Yanokovych.  People on this board and in the sister board disparage the Orange Revolution but Yanokovych bludgeon three times more people than Kuchma - to Kuchma's credit.  In Yanokovych's defense, Bohoslovska thinks that Yanokovych is the cat's paw of Putin and that Putin is puppeteering through Viktor Medvedchuk.

http://en.wikipedia.org/wiki/Viktor_Medvedchuk

This could go sideways in so many ways.  But if Putin botches this, he will give his enemies a blue print to get rid of him.  If he wins, it will be in no large part because of the incompetency of our State Department.  Ambassador Dan Brooks Baer and his husband is chairing a meeting of the Organization for the Security and Cooperation of Europe.  The Poles cite the Guardian in boycotting the event.  Our own Ambassador Geoff Pyatt agrees with the Washington Post in tweeting against revolution.  John Kerry is in Moldava snubbing Ukraine.  In his place is Victoria Nuland, Assistant Secretary of State.



If that name is familiar, it's because of something else she did or didn't do but nobody can prove it: