Searching ways to overcome crisis

LVIV — The main result of the 9th Lviv International Economic Forum was described as the creation of an attractive investment climate, although the advertised “Memorandum on Measures to Help Regional Development” was never signed by the ranking officials who attended the forum. The organizers told The Day the reason was the change in the protocol of the political leadership and promised that the memorandum would be signed shortly. The 9th Lviv International Economic Forum was held under the motto “Investments. Innovations. Competitiveness” and took place on the plush premises of the Riksos resort at the Ukrainian spa Truskavets, attracting over 450 participants from 20 countries. Needless to say, it was closely followed by the media, considering the main item on the agenda: “How Can Ukrainian Regions Survive the Crisis and Emerge Rejuvenated.”

“As a result of the world financial crisis, the Ukrainian economy has entered a deep recession phase in the fourth quarter of 2008, and the process is still underway.” All forum participants agreed with this formula. President Viktor Yushchenko of Ukraine clearly defined the main drawback of the Cabinet’s policy: “the absence of reforms, resulting in the budget policy being the same as last year, with the economy’s revenues having dropped seriously.” The President also defined the main task to be carried out by the government before the end of the year: find the “right balances in three positions”: the national budget, Naftohaz’s budget, and the Pension Fund’s budget. Yushchenko added that he feels optimistic, because the Ukrainian economy has unique prospects: “It is actually a sleeping elephant waiting

to be awakened by modernization.” Yushchenko stressed that the financial crisis is for Ukraine not only a negative phenomenon but also an opportunity to carry out reforms in the economic sphere. He then addressed the foreign investors who had come to Truskavets: “You have made no mistake by attending our forum, because you now have an opportunity to duly assess Ukraine’s economic prospects, especially in its western region.”

Dr. Ihor Burakovsky, director of the Institute for Economic Research and Political Consulting, assessed Ukraine’s overall situation in his report “World Economic Crisis: Impact on the Regional Aspect of Ukraine’s Economy.” He believes that the reason behind the sharp decline in the real consumer output and investments are the lower actual per capita incomes and business revenues against the background of unavailable credit funds. The lower market demand for the traditional Ukrainian export goods had a negative effect on the steel and chemical industries. The curtailed exports and foreign capital influx and the concurrent need to make large payments on previous foreign loans resulted in a gap in the balance of payments, followed by a considerable drop in the hryvnia exchange rate.

Burakovsky believes that this crisis is additional proof that the lack of structural and institutional reforms limits Ukraine’s ability to adequately respond to the challenges born of the crisis, on the central as well as local level: “Even now it is clearly apparent that reviving our economic growth will demand large-scale efforts on all official levels; this will largely depend on the world economic dynamics.”

Ukraine is pinning big hopes on Euro-2012. A statement to this effect was made during the forum by Vice Prime Minister of Ukraine Ivan Vasiunyk, who stressed that Euro-2012 “is not a redistribution of resources between the cities, but a real chance to make changes [for the better] in the regions,” so as to finally modernize the whole country. He went on to say that Ukraine is “bound” to clear all hurdles, because Euro-2012 is an apt opportunity to solve a number of problems: “The cities involved in the Euro-2012 project will benefit from it, and everyone who knows how to kick the ball must join this game.”

Vladyslav Kaskiv, the prime minister’s aide for attracting foreign investments, suggested new approaches to help foreign investors inject their money into Ukraine’s economy. He said that the government had to designate 10 strategic investment projects (totaling seven billion US dollars) and that these projects will be supported on a sectoral or regional basis. Kaskiv added that the government was planning a fund to finance the project documentation for such tangible investment projects. A road show would be held at the world’s finance centers to promote these projects. The Ukrainian image would be upheld with the aid of the world’s reputed media, including BBC, CNN, and Euronews. He informed that a National Ukrainian Investment Promotion Agency had been founded.

Prime Minister Yulia Tymoshenko of Ukraine attended the forum to take part in a sitting of the Regional Leaders Club to discuss “Topical Mechanisms of Socioeconomic Development of Ukrainian Regions in Conditions of Crisis.” She said: “There isn‘t a single government that would want to operate during a crisis.” She believes, however, that this crisis won’t last long: “The year 2010 will be the year when we will exit the world financial crisis, as well as the drawn-out recession.”

In her blitz presentation Tymoshenko placed the main emphasis on her government’s “point of view on how best to develop the regions, so we can have a strong regional policy after the crisis ends.” The prime minister attached special importance to the decentralization of the executive branch in terms of regional politics and regional administration. She also broached the subjects of decentralizing the financial resources and the right way to handle the land as the main resource of every community, so as to produce an attractive investment climate within each such community through a joint effort on the part of the central government and local authorities.

In fact, creating an attractive investment climate could be described as the main result of the 9th Lviv International Economic Forum, considering that the officials from most Ukrainian regions did not sign the “Memorandum on Measures to Help Regional Development.” The organizers point to the change in the forum’s format as its greatest achievement. They feel sure that this year’s forum was more European, in that it attracted a great many VIP guests and served to worthily to promote Lviv oblast as both a cultural center and a venue of meetings between politicians, businessmen, diplomats, officials representing various funds/foundations, banks, and a great many media people. Another important aspect, they insist, is the launch of the Lviv Investment Agency that will work on both the quantity and, more importantly, quality of investment proposals.