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A top Ukrainian industrialist says it is wrong to blame all the economic woes facing the country on the continuing conflict in the Donbass region.
Speaking in Brussels, Anatoliy Kinakh, a former Prime Minister of Ukraine, said the major challenge for Ukraine was to create the necessary “conditions” to allow it to emerge from the economic damage caused by its ongoing conflict with Russia.
Such conditions include stimulating foreign investment, strengthening the role of the business community and tackling internal corruption.
It could take 7 to 8 years, he believes, before the war-torn country reaches “European standards.”
Kinakh, PM from May 2001 to November 2002, is now president of the Ukrainian League of Party of Industrialists and Entrepreneurs.
Kinakh was in Brussels on Wednesday to attend the two-day European Business Summit where he was due to deliver a keynote speech.
Ahead of that event, he said that despite the bitter year-long war with Russia he believes Ukrainian integration with Europe is “irreversible”.
The trade association agreement between the EU and Ukraine also offers, he said, a “unique opportunity” for the country to “create European standards”, including human rights protection, fair competition and rule of law.
Another precondition for meeting such conditions is a continuing dialogue between all interested parties, he said.
“The business summit offers a good playing field for such lines of communication,” he said.
He pointed out that the Donbass region, prior to the war, accounted for 15 per cent of Ukrainian GDP and 28 per cent of income from overseas exports.
The conflict with Russia “put at risk” attempts to rebuild the economy.
“However, we cannot justify all our economic problems on the war. We have to do more to stimulate a good investment climate,” he said.
“The ongoing internal reforms must be implemented within the framework of the association agreement with the EU.”
Kinakh, a former (long serving 1992-2014) People’s Deputy of Ukraine added, “We are grateful to the EU for its supportbut what we also need in particular is private investment. The EU is not just a market for our goods but can also help stimulate the modernisation of my country.”
He believes it will take “7 to 8 years” for Ukraine to attain the European standards he seeks but this, he went on to warn, it is strictly conditional upon a speedy resolution to the war.
His comments come in the wake of a dire warning from the Washington-based World Bank which said last week that Ukraine’s ongoing conflict with Russia has left the country facing years of recession.
As the country struggles to break ties with Moscow and implement structural reform, the organisation cut its 2015 growth forecast to -7.5pc, following a contraction of 6.8pc in 2014. Last October, it forecast that the Ukrainian economy would shrink by 1pc this year, while the International Monetary Fund has forecast a contraction of 5.5pc this year.
Ukraine’s conflict with Russia, which escalated after Russia’s annexation of Crimea, has also hurt Moscow. Dmitry Medvedev, Russia’s prime minister, admitted last week that the double shock of the collapse in oil prices and Western sanctions following the annexation last year presented an unprecedented challenge for the economy.
He said the economy had contracted by 2pc in the first quarter alone compared with the same quarter in 2014, and added that the sanctions could cost Russia €75bn this year - or around 4.8pc of gross domestic product (GDP).
The Ukraine parliament recently passed measures on an array of financial, tax, regulatory and other provisions aimed at improving its nearly collapsed economy.
The new Ukrainian government has averted financial collapse thanks only to a huge bailout from the International Monetary Fund and other supporters.
Many of the legislative provisions recently adopted
are related to demands by creditors for sweeping economic and regulatory reforms, especially in the energy sector.