Ukraine is the second largest country in Europe, a land of vast fertile plains of barley and wheat as well as heavy industry, with a population of more than 45 million. Once the economic lynchpin of the Soviet Union, today it is a country in transition, gradually shedding the legacy of the communist decades that have for too long held back its economic, political and social development, and seeking a brighter future for its citizens.
Since entering office in 2010, President Viktor Yanukovych has spoken of implementing a series of comprehensive economic, governmental and political reforms aimed at transforming Ukraine into a dynamic, free-market democracy.
Business and government leaders would like to see the pace of reform accelerated in 2012, with top priority given to changes aimed at facilitating enterprise and stimulating investment.
Economically, the country is back on track after the global financial and economic crisis checked its run as one of Europe’s top emerging markets. In 2011, prices and tariffs increased by only 4.6 per cent, representing Ukraine’s lowest rate in the past eight years. Furthermore, GDP expanded by 5.2 per cent in 2011 – the highest figure in the region, beating an estimated 1.6 per cent for the EU and 4.5 per cent for CIS countries.
Economic growth, which is greatly aided by the country’s appeal for international business, is expected to be given an extra boost this year by Ukraine’s co-hosting of the 2012 UEFA European Football Championships in collaboration with Poland.
Key to Ukraine’s future is a pragmatic foreign policy and its relations with its neighbours. Ukraine should make use of its geopolitical advantages and become a bridge between Russia and the West.
Negotiations on an association agreement between Ukraine and the EU were completed at the end of 2011, but at the time of writing the deal was still waiting to be signed, delayed by the fallout from the imprisonment last October of opposition leader and former Prime Minister Yulia Tymoshenko.
Proceeding with the agreement, which includes a comprehensive free trade area, is in the interests of both sides. For Ukraine, furthering political association and economic integration with the EU, its largest trade partner, would enhance the creation of a more predictable climate for doing business, attract new investments into the economy and take the country a step closer to eventual EU membership.
In an encouraging sign of faith, the European Bank for Reconstruction and Development (EBRD), the largest foreign financial investor in Ukraine, last year made its second-largest contribution since the start of its operations in the country in 1993, increasing its investment by 7.1 per cent, compared to 2010, with 41 new deals worth €1.02 billion (£843 million).
Andre Kuusvek, EBRD director for Ukraine, says: “We have increased the level of investment very significantly since the crisis of 2008-2009. Out of the total €7.2 billion of investment, half of that was done over the past three years, compared to the past 16 years before that. This demonstrates the commitment we have.”