authoritarian, be likely an anti-Western – or at least not pro-Western -political entity, and be without a true market economy that is properly guided by laws. For Belarus it would result in insufficient exposure to the outside world culturally, economically, intellectually and politically. The country would thus likely remain economically backward, politically under-developed with a weak civil society, and would suffer further loss of its national identity. For Russia creation of E.S.U. would also be a step backward. Its authoritarian temptation would likely grow stronger. The joys of big power status would be diminished, not just by its military cost, but by the amount of leadership energy that would have to be wasted on governing a semi-empire, instead of focusing on modernising and building a contemporary nation state, Russia, as it is, faces some serious predicaments. The first one is the crisis of identity. Is the Russian Federation a nation state, is it still an empire, what is the common denominator, what is the root foundation of the state, what is the glue that holds the Federation together? h t t p : / / w w w . j i - m a g a z i n e . l v i v . u a
pean country, especially in the industrial sector. That is because the centralization and concentration of industrial production in Ukraine was much higher compared to both developed countries as well as to the republics of the former USSR, including Russia. But reform has been carried out very inconsistently, very slowly, and very unsystematically. The most important sectors in the economic structure of Ukraine were primary processing of raw materials, the fuel-energy complex, and enterprises producing military equipment and the so-called ‘production of the means of production of the means of production’. The portion of economic sectors directed immediately at consumers and their needs was too low. Therefore, it was necessary to carry out basic structural reforms at both the micro and macro levels. Moreover, the state continued supporting the traditional ‘base’ sectors (which in many developed countries lost status long ago). The consequence of these processes was that recently the demands of our economy for materials and energy grew by 40 – 50 per cent. However, the ‘drug like dependence’ on the import of fuels has increased. In addition, state support of big non-restructured enterprises in the traditional sectors of the economy has drastically narrowed the prospects of development of small and
Another dilemma is that Russia is still a nuclear giant but an economic dwarf. Reconciling these two realities is not easy. Also, the Russian Federation is a Eurasian country, neither fully belonging to, nor excessively loved by either Europe or Asia. Finally, the Russian Federation is not only populated by orthodox Slavs. Other ethnic and religious groups might feel rather uncomfortable, rather restless in a Slavic Union. Some of the Russian elite accepts the notion that it does not pay to be an empire in the contemporary era, that it is better to dominate other countries economically, rather than politically or territorially. Also, and this is a very important notion/ the cost of governance increases exponent/ally with geographical spread and cultural diversity, which more than offsets the economic advantages of scale. This is one of the reasons why many small and homogenous Nordic European countries, or Slovenia, have been economically successful. When I predicted the disintegration of the Soviet Union in a book published in 1980 entitled Road Maps to the Future -toward more effective societies, which appeared later in 7 other
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BOHDAN HAWRYLYSHYN UKRAINE BETWEEN EAST AND WEST, NORTH AND SOUTH: GEOPOLITICAL OPTIONS AND CONSTRAINTS
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medium-size business. Ukraine is the only post-Socialist country in which small business not only periodically slowed its development, but even regressed. Nowadays it produces 8 per cent of the gross income while in the developed countries its portion reached the level of 40 – 50 per cent. For example, the number of small enterprises in Ukraine per 1.000 inhabitants is 10 times less than in Poland. In the second half of 1998 it has become obvious that relative monetary and financial stability at the expense of reforms is practically impossible. Though outside influence (the crisis at the Asian financial markets as well as the August default in Russia) has ultimately aggravated the situation, it was not the immediate reason. The total crisis of state finances, retaining stability of the national currency at the expense of unprecedented growth of inner and especially external debts, – all pointed toward a cardinal turn in economic policy. At the end of 1998 and throughout 1999 something was done to mend the situation (cutting the budget expenses, decreasing the deficit, accelerating the privatization processes, liberalizing the currency market, etc.) As for cardinal changes in the attitudes toward economic policies, that is the task of the Cabinet headed by Victor Yuschenko. In the most general form, the assignment he has to perform was formulated by a French economy ex-