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In: Economics

the main economic, political, and social challenges Ukraine experienced in the post-communist period. Evaluate the current...

the main economic, political, and social challenges Ukraine experienced in the post-communist period. Evaluate the current state of democracy in Ukraine.

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Expert Solution

Ukraine's emergence as an independent state is linked to complicated processes of transition characteristic of most post-communist The Central and Eastern European governments. However, after the fall of the communist regime, Ukraine's situation turned out to be more difficult than its neighbors. There are four types of East-European post-communist transformation:

  • substitution of centralised and rigidly managed economy, its political superstructure and the social consequences involved with a modern West-European capitalist model. As a necessary element, this approach assumes a rapid and ultimate abandonment of the old communist model.
  • Transplantation, which can exist in two versions. One presumes that in the process of East-European transformation certain elements of the old order remain unchanged. The other allows the continuing existence of the old institutional structure in which only certain elements of the new system are implemented.
  • Recombination, which implies that neither institutions nor individuals are able to perform rapid radical changes. For this reason the transformation of post-communist European countries means modification and re-configuration of those individual elements that existed in the economy and society when the transformation was launched.
  • Retrogression, which presumes a justified threat that the process of transformation can actually mean a return to organisational and mental forms of the pre-transformation times and thus steer the transformation itself towards collectivism and authoritarianism, and generate fear of the future

Politically speaking, the creation of a dozen new post-Soviet states, and the recovery of national sovereignty and independence by as many more Eastern European countries put unprecedented demands on the institutions of these societies. The new states had in many cases no institutional foundation from which to initiate the process of statehood beyond a collective desire for independence. These countries had only a vague idea about how to establish governance for themselves and no real experience of living within the borders or with the diversity of populations that most of them had to accommodate.

The necessary communication between modern democratic values and goals and methods of public administration, which still remain authoritarian, was not accomplished in Ukraine.

Modern Ukraine 's major civilisation split divides it into two major parts: the central western and the southeastern. One particular feature of Ukraine is the lack of a geographic boundary between various parts of the country. They are usually separated by a large transition zone and we can observe considerable enclaves and intrusions in each of the two regions with characteristic features of the other one.

Democratically-minded Central Western Ukraine consists of mentally and culturally heterogeneous regions. The westernmost regions that were forced to join the USSR (and Soviet Ukraine) as a result of World War II remain most pro-Western and pro-democratic.

The South-Eastern part of Ukraine that was most severely affected by the destructive power of the communist administration remains more homogeneous. The main circumstances that shaped the current image of that region include Stalinist collectivisation and industrialisation.

On the socio economic front, Western Ukraine remained relatively agricultural with some light industrial development, while Eastern Ukraine was a major engine of the Soviet economy, mining a vast reserve of coal, and using those resources to build a massive steel and heavy-machine industry.

Soviet enterprises were not just sites of production, they were also the core of the Soviet welfare state. Factories, in addition to employment, also provided housing, medical care, child-care, education and holidays. Essentially, what many of the Western-minded reformers of the 1990s did not understand was that capitalist property rights would not displace this complex and embedded network of authority, perks and exchange. The post-Soviet state – not only Ukraine – is thus a weak state with extremely strong institutions and local networks; and they are especially strong in Eastern Ukraine, and have been since the death of Stalin. In fact, the entire post-Stalin leadership of the USSR from Khrushchev to Gorbachev was comprised of ethnically Russian functionaries who cut their teeth and had their powerbase in the coal and steel heartland of Eastern Ukraine.

Of only two well-known manufacturing enterprises, Western Ukraine is weaker than its eastern counterpart: a television factory and a bus facility, all of which were secondary to the Soviet economic pecking order. Although there was a large agricultural complex in the area, this industry did not establish the politically influential networks that heavy industry in the East did.

Yet Western Ukraine has become the center of illegal trade in black market goods coming in from Eastern Europe's satellite states. It became a hub for illicit exchange in the Soviet times: not only goods, but also ideas and culture, including Western rock 'n roll, which flowed from the relatively more liberal socialist states of Eastern Europe.

The influence of Soviet industrial relations continues to shape Ukraine's political landscape and the greater post-Soviet space. In the 1990s, Western Ukrainians had less industry to privatize, creating a less powerful network of oligarchs to control the region's economic but also political life.

Ukraine today is a centrist democracy with a division of powers among more or less independent and autonomous executive, legislative , and judicial branches. Such power centers abide by the rules of the constitution or, at worst, invoke the constitution while trying to justify their violations. Left- and right-wing extremists who reject the democratic rules of the game garner only a few percentage points of the popular vote—far fewer than their counterparts in Germany and France.

Ukraine still has an economy which is largely market-based, albeit imperfectly functioning. The oligarchs still play an excessive role, but the system as a whole is capitalistic and has points of dynamism, especially in the information technology, agriculture and textiles sectors. In the last two years, GDP has risen, despite the fact that the country is at war and manages 1,6 million internally displaced people.

The nation has struggled to resolve significant obstacles including an disproportionate role of government in the economy, intraelite and oligarch fights over power of state-owned companies, internal political and social tensions, as well as Russian diplomatic stresses, attempts to manipulate corrupt leaders, politicians, and businesses, and Russian takeover of its territories.

Ukraine has not done everything it could to address its domestic problems, including corruption, which has been a continuing obstacle to necessary reforms as well as a source of vulnerability to Russia.

The 3 important challenges that need to be fixed for the democracy to thrive are as follows

  • The first, is entrenched corruption, that has for decades stifled efforts to bring about economic and political reform. Government and business elites perceive liberalization as dangerous to a comfortable status quo in both areas. There has been significant attention paid to the friendship between Zelendky and the Ukrainian oligarch Ihor Kolomoisky. Any signs of favoritism toward Kolomoisky or his interests could swiftly undercut the image of Zelensky as a reformer and, perhaps more critical, his ability to secure Western support for Ukraine.
  • The second huge problem is, of course, Russian occupation of Crimea and military intervention in eastern Ukraine. Zelensky has repeatedly promised to find a satisfactory settlement with Moscow, both during his campaign and as president. Although his stated acceptance of allowing elections in the Donetsk and Luhansk regions worried some, and resulted in massive protests in Kyiv, Zelensky has since clarified his position and made clear that elections could not take place until Russian troops have withdrawn, militias have given up their weapons, and Ukraine controls its border with Russia. Notwithstanding efforts by American allies to resolve the dispute through the Normandy Group of Germany, France, Ukraine, and Russia, it is unlikely that talks will succeed. Western sanctions on Russia have not caused enough change in the behavior of Moscow.
  • The way that Zelensky has handled the third problem, which is national unity, has been promising. The seizure of Crimea and the brutal combat in eastern Ukraine over the last five years have done much to unify Ukraine in opposition to Russia, but this will not do much to reintegrate the conflict territories. Nevertheless, Zelensky's efforts are commendable.

Ukraine's current conflict is about Ukraine as a pawn, an object in a broader geopolitical struggle which has deep historical roots in old East-West rivalries. More precisely, it is focused on unresolved disagreements between Russia and the US-led Western alliance network about the form, existence, leadership, and composition of which protection arrangement would prevail in the Euro-Atlantic regiments.

If the European Union, the United States or any other foreign player really wants to create a modern democratic society in Ukraine or the post-Soviet world as a whole, they need to promote the transition of what should be the state's welfare and security functions away from rent-seeking oligarchs who have succeeded in holding entire governments hostage to an independent state.

That means doing something that policy-makers in Europe and North America might consider weakening ownership rights. Instead of austerity, we must encourage the formation of a functional and strong welfare state capable of liberating citizens from patronage networks linked to old Soviet industrial structures; and encourage the formation of independent unions capable of representing the economic interests of workers before state.

Only through these institutions can the ‘post-Soviet condition’ finally be relegated to history, and ‘liberal capitalism’ built. Until then, the peoples of Ukraine and many other post-Soviet countries will remain stuck in a post-Soviet state.


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