Wednesday 10 September 2014

Ukrainians are better off without rust belt

This is an interesting article about what people in Donetsk think, included this piece of information.

In the first half of 2013, Donetsk region contributed 3.85 billion hryvnia to government revenues but received 13.1 billion in spending including grants and subsidies. The region thus received about 720 million US dollars (at the present exchange rate) more than it contributed over that six-month period. 

For comparison, the Lviv region of western Ukraine made a net contribution of more than 356 million hryvnia (28 million dollars) to the treasury over the same period. According to the government’s official gazette, that means that someone living in a place like Makiyivka effectively benefited from 142 dollars in government spending, while a Lviv resident handed over ten dollars.

Ukrainians should not concentrate on getting back this rust belt, but look westwards - which has the attraction of being precisely what Vladimir Putin does not want them to do. 

Gwynne Dyer takes the same view here.
Let the rebels run the occupied parts of Donetsk and Luhansk (Kiev has no choice in that), but DON’T integrate them into some rejigged federal state where they would hold a veto. And DON’T recognise their legitimacy if they declare independence or join Russia either. Treat them as another Crimea, in other words.
Leave the Russians the task of pouring huge, ongoing subsidies into what is really an immense open-air industrial museum, and concentrate instead on making an economic and political success of the rest of Ukraine – which would still have 90 per cent of the population. 
And wait. Wait for corruption to dwindle and prosperity to grow in Ukraine, as it probably will when the country gets closer to the European Union. Wait for Putin to grow old and/or for Russia to get distracted by events elsewhere. And don’t get any more people killed when further fighting will just lose you more territory.
And a very good article in Deutsche Welle also agrees.

On the other hand, Ukrainians need to be very careful not to tempt Mr. Putin to take more of their territory. I am surprised and relieved that he has not gone further this time, but he can always do so in the future, perhaps to create a useful land bridge between Russia and Crimea. Even if Ukraine can live with frozen conflicts, she also has an unpredictable and violent neighbour and no global policeman will come to the rescue if Russia attacks again. It is this, rather than Mr Putin's military victory, which is the reason why Russia has won this conflict, for the time being. 

But he has lost the hearts and minds of Ukrainians in Kiev and this will count in the long run, as will sanctions and lost investments. It is true that Russians are inured to suffering but the generation that suffered during the war and under Khrushchev and Brezhnev is giving way to one that wants to consume, rather than go without. 

Just like young Ukrainians. 

I cannot see Putin's extraordinarily corrupt system of government standing up in the long-term against the success of free market economics. Russians too will want something better, despite their perennial tradition of autocracy and isolation from the West. Looking at her history, I do not know if Russia will ever have free institutions, but if Eastern Europe is a success it is hard to see why Russia will not copy parts of the EU model, with adaptations. 

But, in any case, in the long term we are all dead.

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