Ukraine’s political and economic conundrum. Informal musings on becoming a nation in an era of globalization

November 25, 2006

The last benchmark era of globalization for current analysts of the process were the decades preceding the First World War. This era of globalization coincided with the height of imperialism and the rise of strong nations and even stronger nationalisms in the West. Competing imperialisms and nationalisms run wild brought the whole process to a bloody end in 1914. After 1918, we saw the end of Empires – the Austrian, the Ottoman. The Tsarist Empire transformed itself into a Soviet Empire after a civil war, policies of conquest, and Stalinist madness – which included various bloody events and even a famine in Ukraine. In Europe, new problematic nation-states were born out of the dismantling of the Austro-Hungarian Empire, and the redefinition of German borders in the East. The Western Allied powers strengthened their Empires – by sharing the spoils of the fallen Turkish and German ones in the Middle East and in Africa. The period in between the two World Wars was an era of de-globalization, and also an era of shrinking prosperity and general economic crisis.

Current globalization critics right and left say that globalization undermines state sovereignty, either by undermining policy space, in particular as regards to social spending or democratic decisions, or by destroying national identity. What wars have not done, Coca Cola and Global Capital manage to do. In fact, what are we having today? Globalization, but no Empires (more or less benign global and regional Powers, of course, but not proper empires with all their administrative and coercive machinery), and continued proliferation of generally democratic/-izing nation-states. In Europe, if there is loss of sovereignty it is because of a fifty-year old process of willingly surrendering sovereignty to a supra-national entity. Today, you need a “strong” (well-functioning) state to be able to make the best out of globalization for your country. And today, when you want to build a properly functioning country, well, you need to play the global game.

Ukraine (where I am right now) is an ideal case study in all these complicated and interrelated issues. Ukraine has only existed for 15 years. It is a former Soviet republic having made itself independent during the collapse of the Soviet Empire. Ukraine has never been independent, discounting its Cossack past when in fact is was a no-man’s land between East and West and a medieval Kievan Rus kingdom.

I read somewhere that US foreign policy theorist Zbigniew Brzezinski said that without Ukraine Russia ceases to be an empire. That’s what happened. But, alone without Russia, Ukraine is learning the hard lesson of becoming a nation.

The first problem is self-definition. How do you properly separate Ukrainian from Russian history? Ukrainian – the language, it is so closely related to Russian. It is being spoken more “outspokenly”, and the choice of using Ukrainian instead of Russian in politics, everyday life and relations with the outside world is very much of a political statement. In my view, Ukrainians do not know themselves what they really are about. Also, how to be democratic, Ukrainian, and allow your minorities – Russians, Jews, Tatars – to be Ukrainian citizens too? Yes, how do you build a civilised modern state faced with all these sensitive issues and avoid the errors and horrors of the Eastern European (sometimes recent) past ranging from pogroms, to ethnic cleansing, and including all shades of racism and discrimination in between? Then comes national economic integration. All but a straightforward issue, deeply intertwined with all the above.

Building a nation entails opening to the world. The Orange Revolution in a sense was an opening to the world and its vagaries; a willingness to be truly Ukrainian and to end the country’s isolation. Both at the same time. The current president is Western-oriented and hopes for EU accession. The country is also opening to foreign capital. Or rather capital is coming to them as the economy is simply booming and Ukrainians are in a great shopping frenzy (so-called “consumer-driven growth”), whatever the political situation of the day (one sometimes wonders….). One of the biggest steel mills, Kryvorizhstal, until the Revolution in the hands of Leonid Kuchma’s son-in-law Pinchuk, was re-privatized, and bought by one of those multinationals who scare/surprise the global business world, the Indian Mittal Steel. Ukrainian business, which is tied to regional and linguistic cleavages – is slowly and half-reluctantly, but surely – learning the language of global capital (cheaper than domestic) from which it is eager to tap: clear property rights, disclosure, transparency, etc. Oligarchs from the industrial Russian-speaking and Russia-oriented East who were tied to the previous Kuchma regime ousted by the Orange Revolution are showing their faces again after the recent elections which brought the pro-Russian forces back onto the political arena. This time buy playing the business-pragmatic game rather than taking too strong political sides. In the meantime, despite the loud political noise, and many contradictory political moves, trade reforms preparing for WTO accession are being passed in parliament. Without WTO accession, no EU free trade agreement, and that is a strong incentive.

Ukraine will have to navigate its way through its double-East-West-belonging. It needs to build itself a strong economy – it is currently still very fragile and the people are still very poor – and will have to overcome one of its major challenges: institutional weakness. This means ending the political gridlock in order to get the actual work done, and rooting out still very entrenched corruption.

Yet Ukraine shows how the process actually goes together – consolidating nationhood and being increasingly connected to the world. Even the “bad guys” – the pro-Russian oligarchs – are starting to play the game. It is either that or being eaten up by the even more powerful oligarchs of… Russia.

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