Vladimir Shlyomin

O

n the eve of the presidential elections in Ukraine two leaders have declared themselves: Viktor Yusheko, the former prime minister of Ukraine, who gained a reputation of a pro-Western politician, and Viktor Yanukovitch, the currently effective head of the Ukrainian government, who seeks a closest approach towards Russia. However, a closer look at election speeches reveals that a new president whosoever compared to his predecessors will not have to exert so much effort to keep balance between the East and the West. Ukraine seems to have already determined direction of its further development that is an independent policy based on an effective economical model and pragmatism.

"We can positively say it right now that Ukraine has been success in passing through a recovery phase of the post-crisis period,"- says Prime Minister Viktor Yanukovitch. In his opinion today the social and economic situation in the country on the whole is significantly different from what Ukraine faced several years ago.

First of all Mr. Yanukovitch outlines higher living standards of the population. According to him in 2003 Ukraine saw a 23% pay rise on the whole. An average salary in state financed organizations, with all wage arrears in this sector being completely redeemed, increased by 44%. Unemployment officially registered in the country went down to a minimum level of 3.6 %.

Secondly, in the opinion of the head of the Ukrainian government it is very important that Ukraine has reached a higher rate of the economic growth under obvious predominance of intensive factors. Thus, in 2003 labor capacity in the Ukrainian industry grew up by 20%. Viktor Yanukovitch believes that Ukraine has already shifted to an economic growth of an investment type that, in his opinion, is evidenced "by the fact that the rate of growth of investments into fixed capital (about 28%) now exceeds the rate of GDP growth (about 9.4%)". During the first years of independence Ukraine saw an increase of $1 bln. USD in direct foreign investments. The volume of credit financing Ukraine got in 2003 was 1.6 times more compared to the previous year, with the volume of long-term credits increased in 2.6 times. This fact shows that the role of the banking system in the Ukrainian economy gets more and more important.

With reference to 2003 statistics Victor Yanukovitch outlines a leaping growth of 36% in the output of machine building industry and a significant increase (by 30% to 40%) in the number of new technologies, processes and new types of equipment implemented over that period which fact could be considered an indicator of investment activity. According to Prime Minister some sectors oriented to domestic needs, including food processing, paper making, printing, construction and construction material industries now demonstrate "superiority rates" of growth (18% to 26% on the average) in their output. A higher wholesale turnover, which constitutes a 20% increase, is another evidence to active development of the domestic market.
Ukraine has strengthened its position on foreign markets as well. Thus, an increase in its export volume has exceeded 29%, with the share of products oriented to final consumption constantly growing in the whole structure of the Ukrainian export.

In Viktor Yanukovitch` s opinion an economic sense of reforms for Ukraine to carry out in the future is obvious that is to create a sound post-industrial model of economy. Mr. Yanukovitch insists that an economic upturn is "not an end to itself but a means to create public goods and a way to ensure a qualitative growth in prosperity of citizens".

"We should have a clear vision of social and humanitarian criteria of our reforms, - says Mr. Yanukovitch, - If, due to some circumstances, this vision is lost any program whatever well devised it could be will become a useless piece of text. Bearing this in mind, first of all we should embrace a strategy aimed at a consensus with elites as an agreement between corporate, political and civil communities to move in a certain direction. With such a consensus achieved, active subjects of state and economic development will treat all the provisions of a state strategy as "reference points" and as a system of geopolitical and geoeconomical navigation, not as another attempt of state bodies to meddle with life of the society."

The Ukrainian government sets itself a strategic task to carry out radical structural reforms of the economy and ensure an intensive capitalization thereof. During the next years the country will see a system modernization of its production to overcome a tendency to technological aging. "It is necessary to create conditions for developing new sectors of economy where new generation technological modes could be implemented and, after finishing an industrial phase in development of the Ukrainian economy, to take to creating a post-industrial society in the country," – poses a task the prime minister.

An increase in GDP, that is expected to be 2.3 to 2.4 times higher by the year 2015, will serve a general macroeconomic criterion. To ensure such an increase it is supposed to maintain a faster growth of knowledge-intensive industries, development of national infrastructure, in-principle improvement of investment climate and faster refresh of personnel in the field of state and corporate management.

According to the effective head of the Ukrainian government knowledge intensive industries like aerospace and defense industries should serve a basis for structural reforms in the Ukrainian industry on the whole. Fiscal and financial systems will also need to be dramatically improved. "To implement innovation investment reforms we need to set up a sound banking system and a modern credit and financial infrastructure capable of operating the whole range of financial instruments,"- says Mr. Yanukovitch.

Compared to Russia with its huge oil and gas reserves, Ukraine likewise most other European states is dependent on energy import. Therefore, Prime Minister believes that another priority of a long-term state strategy is to get the Ukrainian economy reduce its energy consumption down to EU standards. As to the Ukrainian fuel and energy complex itself, he offers to actively take to an intensive upgrade of power plants and diversification of power supply sources.

Assuming a preferable geographical location of Ukraine, a key task should be set for Ukrainian transport complex to create a network of international transportation corridors and bring all kinds of transport available in Ukraine up to the European level.

In the opinion of Viktor Yanukovitch a country like Ukraine can successfully develop its economy only on the basis of an innovative economic model. When addressing his electorate Mr. Yanukovitch states: "We will develop our economy based on knowledge and through creating conditions for intensive interpenetration of national science and entrepreneurship combined with financial and intellectual "capitalization" of the economy." Here Mr. Yanukovitch introduces a pretty enigmatic definition of "a regional innovative policy" which in his opinion should be based on "on a principle of partnership between the power and business" and "a market of intangible assets".

"The proposed economic strategy can be success only provided a significant strengthening of social directivity of the reforms,"- reminds Viktor Yanukovitch once again. In his opinion reforms in the social sphere should give able-bodied citizens an opportunity to reach higher living standards and ensure an unbiased access to basic social services of high quality.

Certainly, implementation of the proposed strategy implies a favorable geopolitical environment.

"I believe we have already set up our priorities with regard to this issue, – says Viktor Yanukovitch, - On developing relationship with Russia, our nearest neighbor, we pursue creation of a common economic space. I think both Russia and Ukraine will benefit from this. Moreover, it is directly linked with our economic policy with regard to markets of foreign countries. It is of interest to us that both Ukraine and Russia would enter into WTO simultaneously to combine their efforts in upholding some stands of mutual interest. At the same time, we should make an agreement that if one of our two countries enters into WTO, it should assist its partner with entering into the world trade organization as soon as possible."

According to Mr. Yanukovitch such synchronization of efforts will not impede independent policy for any of the two countries. "We need to develop markets for our products. That is why we need to work with the European Union as in terms of the trade turnover the European Union remains our biggest partner after Russia. Today our trade turnover with Russia comes to $15 bln. USD compared to $12 to $12.5 bln. USD in our trade turnover with EU," – pragmatically says the Ukrainian prime minister. Moreover, with the aim to develop cooperation with EU he also proposes to consider a possibility to harmonize legislation.

"On the whole most of the issues on relationship between Ukraine and other countries are reduced to a necessity to improve compatibility of our national economy, – says Viktor Yanukovitch, - When implemented our strategy will allow us to solve one of the most important issues Ukraine faces in this century i.e. to obtain equal rights among the countries which determine the level of social, economic and technological development in the world."