Ukraine: a political rollercoaster
Since the 2004 Orange revolution, the Ukrainian public has become blasé about politics: it’s simply been too much of a rollercoaster. The country has seen a peak in shocking events this spring, after the President’s dismissal of parliament, followed by the latter’s threat of impeachment of the President, allegations of bribery in the Constitutional Court, armed conflicts and a temporary state of emergency in the capital. Politics has become a soap opera that means nothing to the daily lives of ordinary Ukrainians. If the media ran allegations that the President was a serial killer, the weary public would struggle to raise an eyebrow.
Perhaps more surprisingly, foreign investors are not much bothered either. Regardless of recurrent disorders in politics, the country has seen a 7% GDP rise in 2006, and another 7% is expected this year. International companies, among them giants such as Mittal Steel, Coca-Cola and Nestle are making huge returns, and investors’ appetites continue to grow. This month, US private company Contour Global plans to invest $300m in power generation and central heating systems in the Ukraine. Meanwhile, domestic business groups are starting to access the international capital by conducting IPO on the London, Warsaw and Frankfurt investment markets. In 2005, XXI Century Investments, a real estate and development company, was the first in the region to be listed on the London Stock Exchange, where it raised $120m. Now Ukrainians are preparing larger offers, such as the Ferrexpo iron ore business which brought its owners $420m last week. On the whole, a stable economy shifts the focus of the general public to economic rather than political issues.
So the situation in the Ukraine is positive but still has a long way to go. Corruption, ineffective courts and poor infrastructure remain obstacles for doing business in the Ukraine. Incomes are unevenly distributed, and the amounts of foreign investment remain low compared to central European levels. Another danger is the level of Russian interference while the EU remains unengaged. Unfortunately, the Ukraine’s geopolitical position is such that it suffers every time there are tensions between Kremlin and the west. There is no sign that these will be in short supply over the next few months. But the Ukrainian public, on present form, may not even care.