Ukraine's Current Status Quo: Prosperity, Freedom, and Geopolitical Location

    A new wave of political prosecutions, including investigation of the Orange Revolutionary and former Prime  Minister Yulia Tymoshenko (BYuT), provides a clear-cut evidence that the Yanukovych administration curb a political freedom by prosecuting Ukraine's political opposition. The Yanukovych administration steps on a very slippery slope of their policy. If they slip, Ukraine will become a country with curbed civil liberties and human rights like Russia. While the current policy costs Ukrainains their political freedom, it does not come for free to President Yanukovych (POR). He is loosing public support. Kuzio (2010) writes that Yanukovych can increase his public support if he can increase social welfare, reduce inflation and unemployment. I agree that President Yanukovych can play a card of a policy trade-off between freedom and prosperity. In other words, President Yanukovych can get away with his policy by gaining public support if his policy leads to economic prosperity. The Yanukovych administration does not have to go too far in a search for a policy template. They can use their previous experience from the Kuchma administration. Anyways, majority of the Yanukovych administration are the Kuchmists. Or they can follow the Putin’s policy. Either way Ukraine’s economic prosperity will come at the price of political freedom as it happened in Russia.



    In 2009 Ukraine was free as it had never been before. The Polity Score that measures the level of political freedom (e.g. 0 denotes absolute autocracy and 20 denotes consolidated democracy) was 16.36 for Ukraine and 9.22 for the rest of the FSU countries (Polity IV, 2009). Ordinary Ukrainians enjoyed a higher level of political and economic freedom than Belarusians and Russians. Belarus, Russia, and Ukraine were moving in different directions. Belarus and Russia slipped into autocracy. Ukraine became one of the freest countries in the FSU region (Freedom House, 2009). Also, the annual research report “Nations in Transit” released by Freedom House in June 2009 demonstrated that Ukraine’s quality of political institutions was above that of the FSU and Russia. Ukraine had a more independent judiciary than Russia and the rest of the FSU. The independence of mass media and the development of the civil society were very close to the levels in developed nations. The democratic institutions at both state and province were also of better quality. The electoral process was very transparent and up to democratic standards. The rule of law, the civil and the political rights were much stronger in Ukraine than anywhere else in the FSU. Overall, the report showed Ukraine as a free state with a consolidating democracy as compared to non-free and authoritarian Russia and the rest of the FSU, except the Baltic States. Unfortunately, the situation has changed drastically since the Party of Regions came to power.  


    Now the Yanukovych administration is changing a political status quo for the worse. They are prosecuting the political opposition and curb individual political freedom. Eventually, President Yanykovych will have to offer a compensation for his current misbehavior if he wants to retain his public support. Will President Yanukovych try to trade economic stability with Ukrainians for their liberties? Kuzio (2010) writes that Ukrainians cannot be bought off. He writes that “Ukraine is not Russia, where abundant deposits of raw materials are exported and provide a large amount of support for the state budget. Prime Minister Vladimir Putin has been fortunate in being able to buy off Russians by trading (economic) stability for democracy through record-high oil and gas prices throughout most of this decade”. Even if it is true, it does not mean that President Yanukovych will not attempt to use the policy trade-off.


    Will it be a wrong policy? Yes. Will it stop the Yanukovych administration? No. His administration that consists of the Kuchmists knows how wrong policy can pay off. The Kuchma administration gravitated towards Putin’s standards of media and political freedom during the 2004 presidential campaign. Unlike Russia, the authoritarian glitch in the Kuchma administration triggered the Kuchmagate and the Orange Revolution. As a result, Mr. Kuchma and his protégé, Mr. Yanukovych, were ousted from the government by the Orange Revolution. While the Yanukovych administration knows how wrong policy can pay off, the long-term iron grip on the political power demonstrated by Belarus’ Lukashenka, Russia’s Putin, Turkmenistan’s Niyazov, Kazakhstan’s Nazarbaev, and Azerbaijan’s Aliev tell them that it can be done. It is a rare case when Ukraine’s geopolitical position is its curse. If Ukraine were located somewhere in the Western Europe, the Ukrainian government and public would be less exposed to the past and modern period of the totalitarianism of the former Soviet Union region.

The Yanukovych Administration Unleashes a Full-Blown Political Terror

Ukraine's Office of General Prosecutor launched investigation against Mrs. Yulia Tymoshenko, former Prime Minister (BYuT), on embezzlement charges. Kyivpost writes that "Tymoshenko said after questioning Wednesday that the probe centres around her alleged misspending of $280 million (€200 million) received for the sale of carbon credits under the Kyoto protocol". Since the prosecution considers her flight risk, she cannot travel overseas.

Her political party, BYuT, has already reacted to a new twist in the series of political prosecutions by blocking the Parliament and fighting with the Regionals (Party of Regions) there. Mrs. Tymoshenko says that President Yanykovych controls her investigation. It seems to be true that the Office of General Prosecutor receives orders from the Yanukovych administration. Many allies of Mrs. Tymoshenko are arrested or under investigation. Her former deputy and closest political ally, Oleksandr Turchinov, is under investigation. The General Prosecutor issued the arrest warrant for Bohdan Danylyshyn who was Minister of Economy in the Tymoshenko government. Mr. Lutsenko, the former Minister of Interior, is under the investigation on embezzlementt charges too. Mr. Lutshenko allegedly raised a salary of his personal driver by rigging the payroll system.

 Mrs. Tymoshenko's allies find themselves in a circle of fire. The political terror becomes a mundane part of Ukraine's reality with a full-blown prosecution of anyone affiliated with the political opposition. The Yanukovych administration does not spare anyone. It does not matter whether it is a president of the Donetsk university opposing a real estate development on the public property of his school or it is a group of Kharkiv residents opposing a real estate development of the public park. The Yanukovych administration is drunk with the power. The recent political prosecutions have already topped the "achievements" of the Kuchma administration. Shall we witness a revival of the seemingly forgotten year of 1937 from the Soviet history? It is simply unacceptable. I do not understand why the rest of the world does not react to the political terror in Ukraine. 

The Yanukovych administration, however, gambles with the Tymoshenko case. It is not the first time that Mrs. Tymoshenko is under investigation. The Kuchma administration went even further by throwing her in the jail. But the political prosecution made Mrs. Tymoshenko the victim of the political terror in the eyes of Ukrainian voters. As a result, she lead the Orange Revolution and rose to the power. If the charges do not stick again, the Yanukovych administration can step in the same river twice.   

Chernobyl as Tourist Hot Spot

The Wall Street Journal writes that Ukraine's government will turn Chernobyl into the official tourist spot for the upcoming EURO 2012. "Ukraine's Emergency Situations Ministry said Monday it is working on a plan to open the area around the defunct plant—where a reactor exploded on April 26, 1986, spreading radiation across the then-Soviet states of Ukraine, Belarus and Russia—to visitors starting next month.The ministry said radiation levels in certain parts of the so-called exclusion zone, which stretches 30 kilometers (19 miles) around the exploded reactor, were now returning to normal levels."
I am not sure whether it is a really cool place to go on a tour. It is a deserted city. Though it could be a hot spot for the extreme tourism. You can play paintball there or do a base-jumping from the roof of the nuclear power plant. It will be interesting to see what revenues the Chernobyl will generate in 2012. By the way, several tourist companies have already been running the unofficial Chernobyl tours. So the government will just make it de jure.

Sex Slaves and Human Trafficking... From Ukraine to USA

MSNBC's Meredith Vieira goes inside the human trafficking and underground prostitution scene in the United States in “MSNBC Undercover: Sex Slaves in America,” which premiered Monday, Dec. 3 on MSNBC. One episode is about two Ukrainian "Work & Travel" students who looked forward to working in a restaraunt in Virginia Beach, VA but they were forced to work in the strip club in Detroit, MI.  Here is a link to the video.
Unfortunately, the human trafficking is rampant in Ukraine and other Eastern European countries. It does not look like the government does anything to fight it.

Russia Will Host the Soccer World Cup 2018

Russia won the right to host the 2018 Soccer FIFA World Cup. Russia's Prime Minister Putin promised the FIFA that Russia would invest billions of dollars in stadiums, roads, hotels, and other infrastructure. Right now Mr. Putin says that Russia will spend about $10 billion. The KyivPost writes that Mr. Putin expects major companies to foot some of the bill.
Russia will have to build 13 stadiums and renovate three major stadiums, including Luzhniki. Mr. Putin project the cost of stadium construction to be about $4 billion. Russia proposed to host the World Cup in 13 major cities: Kaliningrad, Kazan, Krasnodar, Moscow, Nizhny Novgorod, Rostov-on-Don, St Petersburg, Samara, Saransk, Sochi, Volgograd, Yaroslavl, and Yekaterinburg.

Azarov's Tax Code Causes Public Protests

Ukraine's parliament passed the Tax Code proposed by Prime Minister Azarov (Party of Regions) and his government. Now the Tax Code waits for President Yanukovych's (Party of Regions) "approval". In brief, the Azarov's Tax Code is draconian. It offers tax incentives to the corporations and high-income households while it shifts a tax burden on small- and medium-size businesses and middle-income and low-income households. The bill was passed quietly without any public discussion. The Azarov's Tax Code, however, caused massive public protests when the legislation became publicly available. It consists of several chapters written by both local and foreign experts. Chapter 14 of the Tax Code is the most controversial. If it remains unchanged, it will drive the small-size business (e.g. sole proprietorship) to a brink of bankruptcy. When the government faced public protests, Mr.Azarov (Party of Regions) played the nastiest political trick. He said that the small- and medium-size businesses would bankrupt the welfare and social security system if they opposed the new legislation. Despite his provocative announcement, Ukrainians seem to be united. If President Yanukovych signs the bill, protesters promise to repeat the Orange Revolution. 
Here are links to videos featuring public protests:
http://glavnoe.ua/video/v643
http://glavnoe.ua/video/v640

     

The 2010 Best Economics Blog

My colleague, Olga Nicoara, won the 2010 Best Economics Blog Award from the Marketing Degree. I highly recommend her blog for my readers interested in the political economy of the Soviet and post-Soviet countries. Congratulations!!!

The Political Economy Of Hurricane Katrina And Community Rebound

I am excited to inform you that The Political Economy Of Hurricane Katrina And Community Rebound (November 2010, 272 pp, $ 99) featuring the chapter that I co-authored with Dan Rothschild (The Mercatus Center) came out finally. Go ahead and buy it online!
The book is edited by Emily Chamlee-Wright, Elbert H. Neese Professor of Economics, Beloit College and Affiliated Senior Scholar, The Mercatus Center, George Mason University, US and Virgil Henry Storr, Senior Research Fellow and Director, Graduate Student Programs, Mercatus Center, George Mason University and the Don C. Lavoie Fellow, Program in Philosophy, Politics and Economics, Department of Economics, George Mason University, US. Contributors include E. Agemy, J. Bleckley, E. Chamlee-Wright, D. D’Amico, J. Hall, S. Horwitz, A. Kashdan, L. Krasnozhon, P. Leeson, A. Martin, E. Norcross, D. Rothschild, P. Runst, E. Schaeffer, D. Skarbek, A. Skriba, R. Sobel, V. Storr

Here is an abstract: In 2005 Hurricane Katrina posed an unprecedented set of challenges to formal and informal systems of disaster response and recovery. Informed by the Virginia School of Political Economy, the contributors to this study critically examine the public policy environment that led to both successes and failures in the post-Katrina disaster response and long-term recovery. Building from this perspective, this book lends critical insight into the nature of the social coordination problems disasters present, the potential for public policy to play a positive role, and the inherent limitations policymakers face in overcoming the myriad challenges that are a product of catastrophic disaster.

UTA Students Visit the Bureau of Engraving and Printing

I am serving as a faculty adviser to the student organization, the National Association for Business Economics - UTA chapter, affiliated with UTA Economics Department. Last Friday we went to the Bureau of Engraving and Printing in Fort Worth, Texas. There are only two BEPs in USA: one, in Washington, DC; and two, in Fort Worth, TX. Tour was really interesting. UTA students get a chance to see the money creator as well as the inflationary machine with their own eyes. The most interesting fact is that the BEP works 24 hours a day, Monday through Friday, and now it is printing $386 million a day or $16 million an hour. Given the recent announcement about the quantitative easing, it will take the BEP-FW 1550 days to print $600 billion that FED will use to purchase the US government bonds. If the BEP-DC prints at least at the same rate, it will take both BEPs 775 days or more than two years to print $600 billion. Unless my calculations are wrong, the whole situation around the quantitative easing seems to be very interesting.

Life under Yanukovych

I would like to explain why I disagree with the Economist on the local elections in Ukraine (“Life under Yanukovich”, November 6-12, 2010). The Economist writes that President Yanukovych cannot mirror Putin's policy because, "unlike Russia, Ukraine does not have enough resources to carry on without (economic) reform." If there is a resource requirement for a sustainable autocracy, I am not aware of it. The Economist argues that President Yanukovych has to implement economic reforms to remain in the office for the second term. If reforms fail or stall, President Yanukovych will be tempted to hold on to power by repressive means. But it is exactly what is going on in Ukraine now. The local elections show that the Yanukovych administration is the ruthless repressive bureaucratic apparatus. The state prosecutes and interrogates political opponents. Many allies of Mrs. Tymoshenko are arrested or under investigation. The government ruthlessly manipulates election laws and thuggishly rigs the elections. The official results contradict the exit polls for the first time since the Orange Revolution. If local elections happen to avoid falsification, the Yanukovych administration forces the democratically elected mayors or members of city councils to join the ranks of the presidential party, the Party of Regions. The list of repressive means goes on and on.


I agree that the Orange Revolution serves as the reminder of the failed repressive regime of President Kuchma. The Yanukovych administration that mainly consists of the Kuchmists remembers really well those events. But Niyazov’s Turkmenistan, Nazarbaev’s Kazakhstan, Aliev’s Azerbaijan, and Lukashenka’s Belarus tell President Yanukovych that Ukraine can carry it on without the resources of Russia. Is there life under the repressive regime of President Yanukovych? No.

Is There Life Under President Yanukovych?

The Economist has great article "Life under Yanukovych" about the local elections in Ukraine. Here is a link to the article. And here is a link to my opinion. The article is very optimistic. Its central message is the following: given the elections are falsified, President Yanukovych cannot lead Putin's policy because, "unlike Russia, Ukraine does not have enough resource to carry on without reform." I strongly disagree.

Ukraine's Municipal Elections Will Be on Halloween

Ukraine will have the municipal elections on October 31, 2010, the Halloween Day. These elections are more likely to become the first non-democratic elections since the 2004 Orange Revolution. The political situation is very dramatic. The Yanukovych administration ruthlessly suppress the political opposition. 

Most municipal and mayor elections will be the one-candidate elections. The red tape of the centralized bureaucracy hinders the democratic process of candidate nomination and registration. Facing outrageously ruthless government pressure, candidates from the political opposition could neither nominate nor registerr themselves for the upcoming elections in several provinces, strongholds of the presidential party, Party of Regions. Some candidates are forced to revoke their nomination in support of the incumbent candidates who are members of the Party of Regions. By default, most municipal and mayor elections become the one-candidate elections. In Eastern provinces such as Donetsk, Kharkiv, and Luhansk advertising companies refuse to provide time and space for political advertisement of the opposition’s candidates.

The government cements the vertical integration of power at the speed that reminds the second term of the Kuchma administration. The Yanukovych administration forces all government officials to enlist in the Party of Regions. Also, President Yanukovych abuses his power by calling for criminal investigations of the opposition’s politicians. Many allies of Mrs. Tymoshenko are arrested or under investigation. Her former deputy and closest political ally, Oleksandr Turchinov, is under investigation. The General Procurator issued the arrest warrant for Bohdan Danylyshyn who was Minister of Economy in the Tymoshenko government. All recent events remind the tragic events of 1937. 

Several NGOs called for responsible public action in the upcoming elections. Most Ukrainian voters tend to agree on the new consensus that they have to vote "against all" since there are no other options in most provinces. The following banner says: "Election on the Halloween. October 31st. If you don't vote, the evil will win!" 

Ukraine's First Lady Quotes Mises, Hayek, and Professor Peter J. Boettke!

I would not believe it if I did not read it myself. In the July issue of Ukraine's leading newspaper Pravda,
former first lady, Kateryna Yushchenko, quotes Mises, Hayek and ... my dissertation advisor, Professor Peter J. Boettke. Mrs. Yushchenko wrote her op-ed about free market debate in Ukraine. She makes excellent points.
Here is a link to the original and here is a link to the Google translation. Since the Google translation is not perfect, I just want to clarify it. Mrs. Yushchenko quotes Dr. Boettke drawing analogy of the heavily regulated market economy with the Olympic swimmer in shackles. She quotes Professor Boettke saying that "if you put shackles on legs and hands of the Olympic swimmer, wrap heavy chain around him, and drop him in the swimming pool, he will drown. But you still can't say that he can't swim." Neither you can say about the heavily regulated market economy that free market does not work. Really great op-ed!

Ukrainian Dance

Everyone asks me about Ukrainian national dance. It can be different. Here is a link to the performance by the Zorya Ukrainian Dance Ensemble at the Texas State Fair, Dallas, TX on Oct 10, 2010. It was awesome.

The 2010 Nobel Prize in Economics

Peter Diamond (MIT), Dale Mortensen (Northwestern U), and Christopher Pissarides (LSE) won the 2010 Nobel Prize in Economics for their contributions to the theory of unemployment. Congratulations! Their work on job search theory, wage stickiness, hysterisis, job creation, and job destruction shed new light on our understanding of unemployment.
It's interesting that the US Senate rejected Peter Diamond's nomination for the Federal Reserve Board back in April 2010. His intellectual influence still carries on to the FED through his former student and current chairman of the FED, Ben Bernanke.
Also, the 2010 Nobel Prize in Economics is a good reason for celebrating the Austrian Economics because the prize-winning work on employment includes insights from the Schumpeterian creative destruction and the Hayekian discovery process.

Yanukovich's Party of Regions Beats Up People, Cuts Down Trees, and Auctions Off Public Park

Kharkiv, the second largest city of Ukraine, became a place for the blood-shedding stand-off between residents of Kharkiv and the Kharkiv mayor. On June 2, 2010, the mayor's security service stormed a camp of protesting Kharkiv residents. The Kharkiv police observed the battle without taking any sides. Protesters sought refuge in the standing-by police officers who denied them in protection. The protesters were insulted, beaten up, threatened with chain saws so they had to flee. The police arrested and removed the remaining protesters.

Kharkiv residents were protesting mayor's decision about real estate development of the city park, Gorky Park. The park's square footage is approximately five times as big as New York's well-known Central Park. According to the real estate development plan, the private contractor would built a highway across the park and gated residential communities with amenities such as tennis courts and swimming pools. The plan looks like a normal real estate development but it violates the law. The Gorky park is public property designated for recreational activities. It cannot be a subject for a real estate development. 
I watched the events closely because it's my hometown. I hoped that the common sense would take over corruption and lawlessness. It didn't! Kharkiv's deputy mayor Gennady Kernes and Kharkiv's governor Michael Dobkin who are members of the presidential party, Party of Regions, were ruthless and unstoppable.  
Here is a link to the documentary(CNN video) that shows how the stand-off between residents of Kharkiv and the Kharkiv mayor's office ended on June 2, 2010. It's shocking that the police officers did not protect citizens from unidentified security guards (thugs) who removed demonstrators from the designated area of real estate development. The video has comments from the crime witnesses. Subtitles have a correct translation.
Here is a link to the website of NGO Kharkov Forest.
Here is a map with the real estate development plan of the Gorky park, provided by the NGO Kharkov Forest.

A Farewell to Democracy, Free Media, and Free Enterprise: Ukraine's Prospects Revised

In my old post I wondered whether Ukraine had a strong political opposition to counteract advances of President Yanukovich against democracy, economic freedon, and free media. My answer was yes. And I  was too optimistic. I thought that either former prime minister Yulia Tymoshenko or former president Viktor Yushchenko could stop the Yanukovich machine. They failed again. Everyone left Tymoshenko. Her former sponsors and party members are in the Yanukovich team now, not always voluntarily. Yushchenko is a political ghost. Nobody can stop President Yanukovich and his Party of Regions, at least, in Ukraine. The Yanukovich administration did more in six months than the Kuchma administration in ten years. The Yanukovich administration curbed media freedom, oppressed small-scale and medium-size business, and installed dictatorship.     
A farewell to freedom of speech. The Yanukovich administration curbed freedom of media really fast. Ukraine's mass media looks like Russian media now. Nobody criticizes President Yanukovich openly. It got to the point that the Voice of America can lose its broadcasting partners in Ukraine very soon as it happened in Russia. 
A farewell to free enterprise. The Yanukovich administration hammered small-scale and medium-size businesses with oppressive tax policy. The new tax code promises to become the apocalypse of economic freedom in Ukraine. All small-scale and medium-size businesses move their operations to the shadow economy before the new tax code will go in effect.
Finally, a farewell to democracy! The Yanukovich administration won the case vs the 2004 Constitutional Amendment in the Constitutional Court of Ukraine. The 2004 Amendment was very important step in Ukraine's democratization. It was once in a lifetime opportunity.  In brief, this amendment separates powers between president and prime-minister where the former is responsible for foreign policy and the latter takes on duties of domestic policy. Not anymore! The executive power is centralized now! The Constitutional Court ruled last Friday that the 2004 amendment violated the Constitution of Ukraine and thus the Constitutional Court overruled it. Did I mention that right before the seminal ruling four judges of the Constitutional Court were replaced with four new judges affiliated with the Party of Regions.
So, Ukrainians, please, say a farewell to democracy for the next five years at least. But it's no the saddest part. It's really sad that if Yulia Tymoshenko won the presidency, she would do the same. The only difference is that the Party of Regions could stop her. Who is going to stop the Yanukovich machine?   

Happy Birthday to Ludwig Von Mises!

Today, 129 years ago, the distinguished economist and the leader of the Austrian School of Economics was born. His work is outstanding. It is very broad ranging from topics of socialism to the quantity theory of money. Ludwig Von Mises taught at the University of Vienna, Austria, and later at New York University, USA. If you have not read his work, please, start reading it now. 
It's a very interesting fact that Ludwig Von Mises was born in Lemberg in Galicia province of the Austro-Hungarian Empire. Now,  Lemberg is know as .... Lviv, Ukraine. I wonder whether anybody celebrates his birthday in Ukraine?

Facebook of Ukraine's Agriculture

 Let me introduce Volodimir Ambrossov (Professor at Kharkiv State Agricultural University) and Viktor Stotsky (former governor of Novodalazhsky county, Kharkiv province). They played and continue to play a very important part in the economic development of Ukraine’s agro-producing industry. I have a huge respect for them. Dr. Ambrossov and Mr. Stotsky are the faces of Ukraine’s agro-producing sector.


Dr. Ambrossov is a seminal figure in Ukraine’s land reform. He worked together with Pavlo Gaydutsky (former Director of Department of Agriculture) on the project of the 1999 Reform. Dr. Ambrossov is not an arm-chair agricultural economist. He served as President Kuchma’s representative in Kharkiv province. His main task was to advance the land reform and supervise the land privatization. Now he leads a consulting group that conducts analysis of agro-producing industry.
Mr. Stotsky actually knows Dr. Ambrossov very well. They were classmates when they went to Kharkiv State Agricultural University. Since then their paths have crossed many times though they chose different career paths. They are still friends. Mr. Stotsky started his career as a farm manager. Later he was elected as a governor of Novodalazhsky county in Kharkiv province. Now Mr. Stotsky serves as an economic adviser of Kharkiv deputy Shklets.



Dr. Volodimir Ambrossov.



Viktor Stotsky.



Fact of the Day

Average Ukrainian household spends almost 60 percent of its income on food (thnx2: Ukrainian Economist’s Oleksandr Shepotylo). Only three percent of the household income goes into eating out and entertainment. According to the CIA World Factbook, Ukraine’s GDP per capita was $6,300 in 2009 (134^th place in the world).

The SUSTA Protests against Ukraine’s President Yanukovich in New York

I didn’t blog for some time. But Ukraine is getting more interesting with every day since Mr. Yanukovich became Ukraine’s president. Today I received a message on Facebook from the SUSTA – The Federation of the Ukrainian Student Organizations of America. Today the SUSTA members will protest against Mr. Yanukovich’s visit to New York. The Ukrainian Weekly will feature their demonstration. Here is a message:


On the occasion of today’s visit by the newly-appointed Ukrainian President Victor Yanukovich, members of SUSTA - the Federation of Ukrainian Student Organizations of America (Союз Українських Студентських Товариств Америки), along with the Ukrainian-American community and the worldwide Ukrainian diaspora would like to share with you our deepest concerns regarding the recent anti-democratic developments in Ukraine.

In the recent months since his election into office, the pro-Russian President has taken alarming steps to compromise Ukraine’s national identity and sovereignty. To name just a few:
•the unconstitutional extension of the lease for the Russian Black Sea Fleet in Crimea;
•the rising dependence on Russia to provide for Ukraine’s security and stability which poses a definite threat to Ukraine’s sovereignty;
•the denial of Holodomor as an act of genocide and its removal from the official presidential website;
•recent censorship of the press, targeting several independent Ukrainian television stations;
•the new government’s move to control the judicial system by granting the president power over the hiring and firing of judges; and,
•the non-bloc status of Ukraine, which threatens Ukraine’s Euro-Atlantic integration and future NATO membership

As if these were not enough, certain parliamentarians of President Yanukovich's Party of Regions, together with some satellite parties, appointed a controversial figure by the name of Dmitri Tabachnik as the Minister of Education and Science of Ukraine. Sadly, Mr. Tabachnik is widely known for his anti-Ukrainian, anti-democratic, pro-Russian, xenophobic attitude towards ethnic Ukrainians, especially to those living in the Western part of the country. In some of his statements, he has specifically formulated discriminatory wording which is comparable to that used by the Nazi propaganda with respect to the Jewish people during WWII. In fact, he proceeded to follow policies which diminish the Ukrainian language on the national level (i.e. cancelling university examinations in the Ukrainian language, issuing decrees to cease movie translations in Ukrainian, intimidating and arresting university faculty and students for simply exercising their democratic rights, etc)…

It is hard for us all to observe Mr. Yanykovich’s and Mr. Tabachnik’s current reversals of the former President Victor Yushchenko’s democratic policies. It seems that the current administration’s damaging political actions reflect the refusal to acknowledge Ukraine as an independent country and threaten the very existence of Ukraine as a young democratic nation. As citizens of the Ukrainian-American community (and the world Ukrainian community at large), we are greatly disturbed by these recent anti-democratic policies of Mr. Yanukovich, his newly-appointed government and parliamentary counterparts. As proud Ukrainians, we firmly uphold and vehemently defend a strong, self-sufficient, independent state where Ukrainians are free to express their opinions, are cognizant of their culture and history and are proud of their unique heritage!

The time is NOW! We cannot allow President Yanukovych to threaten Ukraine's freedom any longer!!! We must defend Ukraine’s integrity and sovereignty!

We would like to thank all of you for joining us here today to voice your own concerns regarding the future of Ukraine as a country, its independence and the plight of its people. It is up to each one of us…

Sincerely yours,
Vera A. Partem, SUSTA 2010-2011 President and Executive Director
Olya Yaruchkivska, SUSTA 2010-2011 Vice President
Roksolana Starodub, SUSTA 2010-2011 Treasurer
Ostap Tymchyk, SUSTA 2010-2011 Secretary

The Post-Soviet Potemkin Village

I am reading a book "The Post-Soviet Potemkin Village: Politics and Property Rights in the Black Earth" that is about land reform politics in Russia and Ukraine. It is written by Jessica Allina-Pisano, an Associate Professor in the School of Political Studies at the University of Ottawa. Professor Allina-Pisano conducted more than 300 interviews in Ukraine and Russia between 1997 and 2006. So far I just read two chapters that showed her profound knowledge of the politics in Ukraine and Russia. Her research is very interesting and I look forward to reading her book.

Ukraine’s Fiscal Policy Hurts National Exporters

Ukraine's fiscal policy forces the national exporters to a bankruptcy. A large number of export-oriented companies complain that the state refused to issue VAT (value-added tax) refunds because of exponentially increasing foreign and national debts. In Ukraine the Commerce Code and the Tax Code clearly state that the exporting companies should receive VAT refunds to avoid a double taxation because their products are subject to VAT in the importing countries. The state, however, issues tax refunds only to few companies that supported President Yanukovich in the 2010 Presidential elections. Other companies have to pay a high price for their political views. One of the largest steel-exporters, Arcelor Mittal, plans to lay off thousands of workers if the company does not receive VAT refund in the amount of $312 million (2.5 billion UAH). A transnational agro-producing corporation, Cargill, left the Ukrainian grain market because the government refused to reimburse VAT in the amount of $100 million (800 million UAH). Other exporters also face potential downsizing if the state defaults on VAT liabilities.

Should Ukraine Go Green?

I would like to talk about Ukraine's environmental policy. Here and there Ukraine is pressured by international donors to develop sustainable environmental policy. I agree that Ukraine needs to responsibly conserve natural resources for the future. A responsible conservation must be based on a cost-benefit analysis so that our generation internalizes full costs of our actions today without passing our costs on future generations.

The problem is that the international organizations offer financial aid for the development of the recycling infrastructure. Available financial packages provide a wrong set of incentives for Ukrainian entrepreneurs because they can subsidize economically inefficient projects. The best case in point is a recycling factory in Kharkiv, the second largest city of Ukraine. Several entrepreneurs tried to build the recycling factory twice. The factory was build to assist the city of Kharkiv with a curbside recycling program. Each time they received a grant from the international donors and the city. And each time the factory went bankrupt.

Before more mistakes are made, Ukraine needs to learn a lesson from USA that a curbside recycling does not conserve resources. Industrial and large-scale recycling can conserve resources if a necessary infrastructure is in place. In USA it's very costly to run curbside recycling programs. You need to run trucks across the city to collect recycling bins. Trucks burn diesel fuel, pollute air, cause traffic, and waster other resources. On average, 85% of curbside recycling programs waste resources in USA. For instance, LA County has 800 trucks instead of 400 trucks on roads each day because of a curbside recycling program. Excessive number of trucks causes excessive air pollution.

The recycling is also a manufacturing process that can conserve resources. For example, 95% of a value of aluminum can is in electricity so the recycling preserves energy. However, aluminum cans constitute a trivial part in the US recycling. Americans mostly recycle plastic, cardboards and paper products that are worthless in terms of recycling.

Thus, the recycling should not be done to feel good. The recycling as any type of economic activity must be a subject of a thorough cost-benefit analysis. Ukraine should learn the lessons from the recycling experience of USA before more grants will be received to build more recycling factories.

Here is an outstanding interview about recycling in the US with Daniel Benjamin, the distinguished professor of Economics at Clemson University in South Carolina. He is also an author of an essay "Eight Myths about Recycling".

NATO, Good Bye!

It happened at last. Ukraine's parliament will change Ukraine's status from potential member of NATO to a neutral status. Ukraine's president Yanukovich said that he would look forward to the parliamentary session and he supported the decison of status change. If anyone keeps score in terms of US and EU foreign policy in the FSU region, Putin's Russia is leading in the series with a pretty large handicap. Here is a piece about Ukraine's NATO bid.

Ukraine’s Prospects

I am reading couple books – Economic Analysis of Property Rights by Yoram Barzel and Free Market Environmentalism by Terry Anderson and Donald Leal. These books are not about Ukraine. But these books have great insights that can be applied to Ukraine. So here is what I am thinking.

Human values matter only for human decisions. Human beings always respond to incentives. Price provides the strongest incentive since money matter a lot for most people. Price sends a correct signal only in a free market and democratic society. Otherwise, a price signal comes with a white noise - a market distortion (e.g. central planning in the former Soviet Union). Then everything goes wrong. Free market economy needs democracy as much as a democracy needs market economy. Without a free expression of a political will, a dictator can destroy an unfettered faith in a free market process. Without a faith in a free market, people will not respect market prices and property rights. Without a free market, a democratic society can't use its resources efficiently because the social decisions are not based on the market prices. The final element is a rule of law. Without a rule of law, a democratic nation with a free market economy will always operate at a suboptimal level because a cornerstone of a free market society – private property – is not protected by the law. Thus, a nation can prosper only if three elements are in place. Otherwise, a nation is doomed to be an underachiever.

So where is Ukraine now? Ukraine has two elements in place – an emerging free market economy and a consolidating democracy. The rule of law is a weak link in Ukraine's path of post-socialist development. A recently elected Ukraine's president – Mr. Yanukovich - is more likely to follow the Putin's Russia style of command and control rather than a very hands-off approach of his predecessor – Mr.Yushchenko. It's a no-brainer to predict Ukraine's path of development under Mr. Yanukovich. His team will curb media freedom, redistribute state property through privatization to his donors, increase a tax burden on private sector except friendly corporations, and cater specifically to the Russian interests. Does Ukraine have a strong political opposition to offset any potential damage to be made by Mr. Yanukovich. Yes. At least, three politicians can resist Yanukovich's advancement against democracy and free market. It will be former prime minister Yulia Tymoshenko, former president Viktor Yushchenko, and former parliamentary speaker Arsenyi Yatseniuk. I guess that we will see really soon whether the Ukrainian trinity can work effectively from the barricades of the parliamentary opposition.

Free Market Environmentalism in Montana

      I am writing this blog post from a small town surrounded by snow-capped mountains and livestock ranches. I am in Bozeman, Montana, where I have started a research fellowship at the Property and Environment Research Center. PERC is the leading research organization in the environmental economics. In USA it's the oldest and largest institute dedicated to improving environmental quality through free markets and private property rights. PERC actually pioneered the free market approach to the environmental economics known as free market environmentalism (FME). I am very excited to work here side by side with the most distinguished economists such as Roger Meiners, Daniel Benjamin, PJ Hill, Terry Anderson, Bob McCormick and many others. I have not met everyone yet because PERC has a pretty large stuff with many visiting scholars.
      At the PERC my mission is to present an economic analysis of Ukraine's the most controverial land reform known as the 1999 Reform. I will use a firm-level sample from Ukraine’s agro-producing industry to assess an economic efficiency of agro-producing firms created in a wake of the 1999 Reform. My preliminary analysis indicates that a fully delineated and secure system of private property rights leads to large positive gains in economic efficiency. In Ukraine, agro-producing firms with a well-defined and secure governance system have twenty percent higher level of productive efficiency.

The Political Economy of Natural Disaster: from Iceland’s volcanic eruption to USA’s Hurricane Katrina

The recent failure of a centralized government-controlled response to a natural disaster led to a shutdown of the European airspace and thousands of stranded travelers across the world. If you followed the news, you know that a volcanic eruption in Iceland generated clouds of volcanic ash and blocked the airspace between Europe and other regions. You should also notice that the volcanic-transportation crisis also revealed a failure of a centralized European transportation system to deal with any kind of natural disaster effectively. The whole concept of Eurocontrol, the Brussels-based agency that coordinates the European air traffic, has been undermined when European countries started lifting their air travel bans one by one. Thus, Iceland's volcanic eruption reminded us once again the folly of the centralized government control over business activity and its efficiency in responding to the natural disaster. That's why I want to recommend you reading a new book, The Political Economy of Hurricane Katrina and Community Rebound, published by Edward Elgar that focuses on the political economy of the 2005 Hurricane Katrina by critically examining the public policy environment that led to both successes and failures in the post-Katrina disaster response and long-term recovery. Building from a perspective of the Virginia School of Political Economy, this book lends critical insight into the nature of the social coordination problems disasters present, the potential for public policy to play a positive role, and the inherent limitations policy makers face in overcoming the myriad challenges that are a product of catastrophic disaster.

Contributors include a number of distinguished established economists as well as outstanding young economists: E.M. Agemy, J. Bleckley, Emily Chamlee-Wright, Daniel D'Amico, Joshua Hall, Steve Horwitz, Andrew Kashdan, Leo Krasnozhon (humbly yours), Peter T. Leeson, Adam Martin, E. Norcross, Daniel Rothschild, Petrick Runst, Emily Schaeffer, David Skarbek, Anthony Skriba, Russ Sobel, and Virgil Henry Storr.

Can We Explain the Bloody Protests in Kyrgyzstan?

Bakhtiyar Igamberdiev, Assistant Professor from Kyrgyzstan's Issyk-Kul State University, will present his research at George Mason University's Institute for Conflict Analysis and Resolution (ICAR). Professor Igamberdiev, ICAR Visiting Scholar, is working on his dissertation thesis about the contemporary political economy of Kyrgyzstan. He will speak about current political events in Kyrgyzstan. A topic of his guest lecture, Five Years Since the Tulip Revolution: Economic and Social Policy, Bringing a Bloodier Revolt, is extremely important and timely in a light of the current events in Kyrgyzstan. Professor Igamberdiev will explain the causes of the bloody protests in the former Soviet state. He will show how public policy implemented after the Tulip Revolution lead to a significant deterioration of the socio-economic conditions and public unrest. Professor Igamberdiev will address the most important question: Is there a constructive escape from recent conflict?

I would like to express my deep condolences to the people of Kyrgyzstan. I wish that a conflict will be mitigated very soon without a loss of human lives on both sides of the conflict.

 

From UkraineWatch

Russian-Kazakh Cuisine in Virginia

I am always asked about Ukrainian cuisine. What's it like? And I've already blogged about it.
Here is a new place, Cafe Assorti, that offers a mixed Russian-Kazakh cuisine and it seems to have several food items from Ukrainian cuisine such as ravioli (pelmeni), cutlets (kotleti), meatballs (tefteli), pirogi, crepes (blinchiki), summer soup reminding French vichyssoise (okroshka), and borscht.

in reference to: CAFÉ ASSORTI (view on Google Sidewiki)

My GMU Fellow-Blogger is Under Hacker Attack

As a follow-up on my previous post about InZero invention, here is example of how it's really easy to breach anybody's computer security via the PDF attachment.

in reference to: North Korean Economy Watch » Blog Archive » Someone is not playing nice…. (view on Google Sidewiki)

Free Trade Hits Hackers Hard!

Who could figure that the main breakthrough in hackproof hardware-based computer systems would come from … Ukraine. Yes, the Ukrainian programmer, Oleksiy Shevchenko, employed by the Kyiv-based American IT company came up with ingenious invention, the reversely engineered computer system. It protects your computer by creating its virtual copy so that hackers, spywares, viruses and other web-based security breaches end up in a wrong, non-existing, computer system. By the way, the estimated losses from hacker attacks are pegged at more than $1 trillion per year. According to the Ponemon Institute's survey, 85% of companies and agencies have suffered security breaches and data losses over the previous year.

Now Mr. Shevchenko works in, a tiny, Herndon (Virginia, USA) startup called InZero Systems side by side with Mr. Hughes, former president of General Motors' international operations and of Lockheed Martin. The BusinessWeek reports that the InZero has already been tested by the US "military's Defense Advanced Research Projects Agency (DARPA) and several companies that specialize in finding cracks in computer security. No one has broken in". Since InZero wants to catch a big fish, the US DOD, both Mr. Shevchenko and Mr. Hughes face a burden of proof that InZero has no built-in back door left for Eastern European spies. Let's cross our fingers that the red tape of the American bureaucracy will not stall the technological breakthrough. The Obama administration actually thinks about speeding up a bureaucratic review of export-oriented products that are sensitive to the national security. Now the US Department of Commerce can take up to 60 days to review the export-oriented product. President Obama wants to slash it down to 30 minutes!

The estimated cost of InZero software is $25 for individual users versus more than $1 trillion in losses from hacker attacks per year. If it is not the Pareto improvement, then what's that? The InZero is a direct outcome of free market forces. It is a by-product of globalization, free trade, and outsourcing. Isn't it the best way to give a lecture about benefits of free trade? I'll test it on my students in the International Economic Policy class. Rock on!

From UkraineWatch

Finally… a Ph.D.

I am thrilled to inform you all that I have defended my dissertation successfully. My defense ended just a few hours ago. My deepest appreciation to my dissertation committee - Dr. Peter J. Boettke (Chair), Dr. Peter T. Leeson, and Dr. Frederic E. Sautet for their guidance and support in my graduate studies.

This August, I am heading to Texas. I'm joining the Economics Department at the University of Texas in Arlington. I am thrilled about this opportunity and will sadly miss George Mason University which had been my home for the past four years.

    

Gorbachev's Op-Ed in the New York Times

I believe that it's the first time when Mr. Gorbachev praises President Boris Yeltsin and denounces post-Yeltsin Russia's government.

Here are some quotes:

"President Boris Yeltsin’s 1996 re-election and the transfer of power to his appointed heir, Vladimir Putin, in 2000 were democratic in form but not in substance. That was when I began to worry about the future of democracy in Russia."

"I sense alarm in the words of President Dmitri Medvedev when he wondered, “Should a primitive economy based on raw materials and endemic corruption accompany us into the future?” He has also warned against complacency in a society where the government “is the biggest employer, the biggest publisher, the best producer, its own judiciary ... and ultimately a nation unto itself.”

in reference to: Op-Ed Contributor - Today’s Russia - Perestroika Lost - NYTimes.com (view on Google Sidewiki)

Stand-up Comedy Brightens Up a "Dismal Science"

Here is a couple of jokes from the economists:

ROBERT GORDON, Northwestern University: The fastest way for a billionaire to become a millionaire is to invest in airline stocks.

CAROLINE HOXBY, Stanford University: An economist, a sociologist and a psychologist are golfing together. And they are golfing behind a guy who is blind. And the psychologist said, you know, I really am trying to understand what must be going through this man's mind. And the sociologist says, oh, but, you know, think about the interesting social interactions that he's having with other people on the golf course. And the economist says, this is so inefficient. He should be playing at night.

in reference to: Stand-up Economist Finds the Light Side of a 'Dismal Science' | PBS NewsHour | Feb. 4, 2010 | PBS (view on Google Sidewiki)

GMU Economics Student's Journal Becomes Hollywood Movie

In April 2004, Lieutenant Colonel Michael Strobl, USMC, came across the name of 19-year-old Lance Corporal Chance Phelps, a young Marine who had been killed by hostile fire in Al Anbar Province, Iraq. Strobl, a Desert Storm veteran with 17 years of military service, requested that he be assigned for military escort duty to accompany Chance’s remains to his family in Dubois, Wyoming. Strobl, who is now a PhD student in Mason’s economics program, recently had his journal turned into a movie called “Taking Chance.”

in reference to: Economics Student Strobl's Journal Becomes Hollywood Movie (view on Google Sidewiki)

Human Trafficking in Ukraine

The US State Department publishes a Trafficking in Person report annually. Ukraine is ranked on the Tier 2 Watch List. Amanda Kloer discusses this situation in details.
To read more, click on the link below.

in reference to: Human Trafficking in Ukraine: The Origin of a Stereotype | End Human Trafficking | Change.org (view on Google Sidewiki)

Fact of the Day

It's a very interesting fact that almost 80 percent of Ukraine's mass media is owned by only four entrepreneurs (oligarchs, tycoons): Dr. Pinchuk, Mr. Akhmetov, Mr. Taratuta, and Mr. Kolomyisky.

FOX Covers Ukrainian Holodomor

The Glenn Beck Program covers Ukrainian Holodomor in its The Revolutionary Holocaust series.

in reference to: YouTube - Part 3| Glenn Beck Documentary: "The Revolutionary Holocaust: Live Free...Or Die" - 01/22/10 (view on Google Sidewiki)

Stealing Popcorn

Today HQ of Mr. Viktor Yanukovich's presidential campaign showed Stealing Popcorn that was originally presented in LA more than a month ago. I've not seen it yet. But it seems that the movie represents a mix of documentary and fiction. It's about corruption in Ukraine, the Lazarenko case, and Mrs. Yulia Tymoshenko who is allegedly associated with Mr. Lazarenko's embezzlement. Btw, Stealing Popcorn features a well-known Columbia University's Professor of Post-Soviet Foreign Policy Tymothy Frye, Ukrainian-born Emeritus Professor of Economics at University of California - Berkeley, John Letiche, and UCLA's Associate Professor of Political Science Richard Anderson.

Mr. Pavel Lazarenko was Ukraine's PM between 1996 and 1997. He was accused of fraud and embezzlement of $200 million. He escaped Ukrainian justice by flying to USA where he was arrested and convicted by the American justice system. Mr Lazarenko was sentenced to nine years in federal prison. In 2004 Mr. Lazarenko posted $86 million bail to remain under house arrest at an undisclosed location in California. The Transparency International named Mr. Lazarenko the eighth most corrupt political leader in recent history.

Here is a link to a screening of Stealing Popcorn in LA, Jan 21, 2009.

Here is a link to the movie.

Mr. Viktor Yanukovich Won the 2010 Presidential Election

According to all exit-polls, former PM Viktor Yanukovich defeated the incumbent PM Yulia Tymoshenko in the 2^nd round of the 2010 Presidential election.

Here is a link to all exit-polls.

Ukraine's Central Election Committee (CVK) counted 99% of votes. Former PM Viktor Yanukovich received 48.69% of votes and the incumbent PM Yulia Tymoshenko received 45.73% of votes. Though Mr. Yanukovich's lead over Mrs. Tymoshenko dropped from 10% to 3%, Mrs. Tymoshenko still lost the 2010 Presidential election.

Here is a link to a map that shows a distribution of votes across provinces. An ideological difference between Eastern and Western Ukraine seems to persist.

Is the 2010 Presidential Election a Repeat of the 2007 Parliamentary Election?

Dear readers,

How many difference can you find between the results of the 2007 Parliamentary election and the 1st round of the 2010 Presidential election?

From UkraineWatch

From UkraineWatch

The 2010 Presidential Election in Ukraine: It’s a Final Countdown

I really love this 80's rock song. Yeah, it's the final countdown for the 2010 Presidential Election in Ukraine. This Sunday Ukrainian voters will chose their next president. Will it be an odious former PM Viktor Yanukovich who was officially backed by the Kremlin in 2004 and tarnished his political reputation by using his de jure political power to rig the 2004 presidential election? Btw, the law suit against Mr. Yanukovich never made it to the Supreme Courte. Will it be another nevertheless odious incumbent PM Yulia Tymoshenko who drove Ukraine's economy to the brink of collapse by using command-control approach and choking individual economic freedom? Btw, the Kremlin considers Mrs. Tymoshenko the second BFF (after Mr. Yanukovich) since she can take all credits for the recent gas deal between Russia's state-owned Gazprom and Ukraine. According to the newly signed gas contract, among all European countries, Ukraine will pay the highest price for the Russian gas.

From UkraineWatch

Anyways, whoever wins this election should make it in a true democratic process! Nobody wants to repeat the Orange Revolution. Moreover, Ukrainians are not really psyched about the upcoming 2^nd round because very few voters can tell a difference between candidate Y and candidate T. Honestly, what's the difference? Mr. Yanukovich never disguised his pro-Russian political and economic preferences. PM Yulia Tymoshenko's economic policy did not leave much of a choice for Ukrainian business. At the present moment, Ukraine has the largest number of international trade restrictions. Russia does not really care about it because the Kremlin still apathetically negotiates its WTO membership. I am surprised that the WTO has not addressed the Ukrainian situation yet. Well, it's understandable because the Sino-US trade war is much more fun to watch. Plus, the global economic crisis is not over yet. And some countries kind of overreacted with their own trade policies. All this together keeps WTO busy.

Honestly, the previous presidential elections were much more interesting because there was always something at stake (see figures below). The 1991 presidential election was important in terms of state-building. The newly independent state needed a democratic leader such as Mr. Leonid Kravchuk (1991-1994). However, the incumbent president Kravchuk catered more to the nationalist constituency in the Western Ukraine so that the 1994 presidential election allowed the Eastern Ukraine to bring pro-Russian technocrat, Mr. Leonid Kuchma, to the power.

From UkraineWatch

The 1994 presidential election played a seminal role in the emergence of the region-based division among Ukrainian voters. In 1994 it became clear that the Western provinces held a strong preference for nationalist pro-Western politics, while the Eastern and Southern provinces strongly supported technocratic pro-Russian politics. Another interesting observation was that the Central provinces turned out to become the potential swing constituencies.

The 1999 presidential election also spiced up the Ukrainian politics. That year the Ukrainian voters had to make a crucial choice between two antagonistically ideological candidates: a left-wing pro-Russian Mr. Petro Symonenko, a leader of the Communist Party, and a right-wing incumbent president Kuchma (1994-2004) who learned to balance out his foreign policy between both EU and Russia. The leader of the Communist Party failed to capitalize on nostalgic political preferences of the Soviet-generation constituency. By receiving only 37.8% of votes, Mr. Symonenko succeeded in swinging only several Central and couple Southern provinces. In the meanwhile, most of the former Kravchuk constituency located in the Western provinces and the stronghold pro-Kuchma constituency in the Eastern provinces came united against the ghost of the communism. Since then the left-wing politicians witnessed a tremendous drop in their popularity. The communist front-runner Petro Symonenko received only 4.97% and 3.54% of votes in the 2004 and 2010 presidential elections, correspondingly.

Then Ukraine had the Orange Revolution in 2004. The 2004 presidential election will always be a historical landmark of Ukraine's state-building. After all calamities surrounding rigged 2^nd round and its rerun in the late December, a nationalist liberal pro-Western candidate and former PM Viktor Yuschchenko won the election with 51.99% of votes. Once again the same swing Central provinces gave Mr. Yushchenko so needed handicap. The incumbent PM Viktor Yanukovich lost not only election but also his PM position. Furthermore, the authoritarian glitch in the Kuchma administration tarnished former PM's political reputation significantly. While Mr. Yanukovich received 44.25% of votes in 2004, his popularity dropped to 35.3% votes in the 1^st round of the 2010 presidential election. Nonetheless, Mr. Yanukovich received a ten-percent lead over the incumbent PM Tymoshenko. The incumbent president Yushchenko (2005-2010) who became ultra-nationalist closer to the end of his term received only 5.45% of votes. It's actually very interesting fact about the 2010 presidential election that for the first time in the recent political history of Ukraine the incumbent president did not make it to the 2^nd round. On the other hand, the 2^nd round offers Ukrainian voters a cliché choice between two PMs: the former and the incumbent. Once again, what's the difference?

From UkraineWatch

Nonetheless, I am sure that the final results of the 2010 presidential election will give us more fodder for further discussion of Ukraine's political institutional development. The key to a victory in the 2^nd round of this presidential election is a candidate's ability to capitalize on constituencies in the swing Central and Southern provinces. But I guess it's too late to give this piece of advice, ha!

From UkraineWatch

From UkraineWatch

Assorted Links

1. Reuters writes that "Ukraine's Yulia Tymoshenko vowed on Thursday to call people onto the streets in a second "Orange Revolution" even fiercer than that of 2004, if rival Viktor Yanukovich tried to rig Sunday's vote for president". What can I say? First, it's not the first time when the incumbent PM Tymoshenko uses a scare-everyone-to-hell strategy (e.g. the Swine Flu outbreak). Second, how can Mr. Yanukovich rig votes if he does not have the so-called adminresource. In other words, you can't rig votes if you are not in power.
   
2. The Christian Science Monitor's Fred Weir writes that "Ukraine votes Feb. 7 in a runoff between bitter rivals Yulia Tymoshenko and Viktor Yanukovych that some say could destabilize the democratic process". Several economists such as Dr. Acemoglu, Dr. Johnson, and Dr. Robinson (AJR) would agree that a status quo change in de jure distribution of political power would cause a status quo change in de facto distribution of political and economic power. So far Ukraine's post-socialist political and economic development shows that de facto institutions cause a change in de jure institutions.
   
3. Finally, here is much more interesting piece of news. The BusinessWeek's Halia Pavliva writes that "Ukraine will seek to borrow $500 million to $1 billion by selling Eurobonds as early as next quarter, Economy Minister Bohdan Danylyshyn said, as Europe's hardest hit economy looks for ways to restructure its debt". That's a great point because Ukraine's current debt is a serious economic problem. But I would respectfully disagree that Ukraine is Europe's hardest hit economy. What about the Baltic trinity? Well, they are at least the consolidated democracies so we can leave them alone for now. What about Russia? It was hit really hard by the global economic crisis. Btw, what is happening to Russia's ginormous stabilization fund?