Friday, January 14, 2005

Market status vote in the EU helps

Granting market economy status to Ukraine would be good news. FT.com / World / Europe - EU vote boosts Ukraine membership hopes

The revolution has put the EU in a kind of box. Further expansion was not on anyone's agenda as the EU looked to digest the eastern European countries admitted in the spring. And Turkey was the next country that was in the EU's sights. Ukraine was not on anybody's list and, as a matter of fact, some in the EU had made statements that much to the effect the response a friend of mine got when he once asked a girl out: "Not in this lifetime!"

The revolution has changed that. Yuschenko and the people, at least those who took to the streets, all committed themselves to the West and they all faced risks to do it. And the EU spoke up and sided with the opposition and the protestors so that when the dust had settled, which it now has, the EU has had to back up the rhetoric with something substantial to bolster Yuschenko and the west leaners. (The hypocrisy charge is one that the EU is sensitive about. That might be one aspect of liberalism, of the John Kerry type, that we might end up being grateful for.)

This move is that something substantial. It will help to shore up Yuschenko and his support.

One of the problems Yuschenko has, and there are a number of them, is that the people might be to optimistic about what he will be able to do and how fast he will be able to do it. And the dislocation that will come about because of reforms will be something that could create much worse problems for Yuschenko and the reformers than anything that could have happened in the revolution. I think that has more likelihood of bringing the miners from the east to Kiev than Yuschenko's victory had. And they would come en masse.

But this action means that Yuschenko has a little help, that he won't be bearing up things all by himself. The EU appears to be committed to helping him and that is a real good thing. The big problems for Yuschenko still remain though.

As a side note, this will make investment in the Ukraine much more enticing. Market economy status will make it easier to market to the EU and that will make businesses here more viable and more interesting as possible investments. Let's face it, regardless of the amount of corruption here, and it should be put into context--there is corruption in any number of other markets businesses are investing in--the growth rate here has been phenomenal over the past couple of years. Of course, from where the economy and production has been, there was only up as a direction to go in. But even so, 13% growth is a significant growth rate and rivals the economic tigers of the Far East.

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