Poland’s example may offer Ukraine a way out

May 23, 2014


Since the collapse of the Soviet Union in late 1991, Ukraine has tried — and repeatedly failed — to transform itself into a stable, prosperous democracy. The presidential elections on Sunday, May 25 offers another opportunity to make that happen, for Ukraine to come out from Russia’s shadow and the shadow of its own corrupt post-Soviet limping economy.

While understandably preoccupied with Russian President Vladimir Putin’s designs on the eastern part of their country, Ukraine’s new rulers should look to their western neighbor for lessons on how to succeed. On June 4, Poland will commemorate the 25th anniversary of its historic elections that swept out the Communist regime  and produced a government led by the opposition Solidarity movement. What happened next launched Poland on the path from poverty to prosperity, from dictatorship to democracy, and from the Warsaw Pact to full integration with the West, including the North Atlantic Treaty Organization and EU membership.

If all that seems like an impossible dream for Ukraine today, it’s worth remembering that after Solidarity came to power in 1989, economic prosperity and Western integration looked just as improbable.

Poland and Ukraine had very similar starting points when the Soviet system disintegrated. In 1990, Poland’s per capita gross domestic product was $1,693, and Ukraine’s was $1,569. The derisive term polnische Wirtschaft signaled a state economy characterized by chronic shortages, hyperinflation, corruption and abysmal living standards.

Within less than a decade Poland become a star performer in the region. Now it’s also a star performer within the European Union — routinely posting growth figures that have outpaced older members of that club. In 2012, Poland’s per capita GDP of $12,820 was more than triple that of Ukraine’s $3,867. That laid the groundwork for a truly independent country that could chart its own course.

What did Poland do right? The most fundamental step the new government took was to tackle a broad range of its economic problems right from the start. Spearheaded by Finance Minister Leszek Balcerowicz, the new rulers administered “shock therapy,” slashing subsidies, freeing prices on most consumer goods, creating a convertible currency and encouraging foreign investors.

Initially, this pushed prices up, led to bankruptcies of state companies and rising unemployment — and ultimately led voters to drum Balcerowicz and other reformers out of office in 1991. But it quickly eliminated consumer shortages, ended hyperinflation and allowed private businesses to flourish. Astounding growth soon followed. Pro-reform governments would come back to power, and Balcerowicz continued on his mission, further reducing inflation from 10 percent to 2 percent during his term as chairman of the National Bank of Poland from 2001 to 2007.

By contrast, Ukraine emerged from the collapse of the Soviet Union with a distinctly post-Soviet leadership, dominated by former Communist apparatchiks who indulged in massive corruption. After Ukrainians toppled their government during the Orange Revolution of 2004, the new, self-proclaimed reformers led by President Viktor Yushchenko and Prime Minister Yulia Tymoshenko failed to take even a fraction of the measures that Balcerowicz did in Poland.  Instead, they allowed corruption and incompetence to continue to flourish as they fought among themselves.

Ukrainian PM Yatseniuk walks with officers during a visit to the training camp of the National Guard near KievWith the probable election of Petro Poroshenko, a wealthy candy manufacturer and member of parliament who backed the protests that drove pro-Russian Prime Minister Viktor Yanukovich out of the country, Ukrainians will be gambling that he may finally make a decisive break with the past.

Balcerowicz was in New York on May 21, picking up the Cato Institute’s Milton Friedman Prize for Advancing Liberty. What Ukraine needs is “a cohesive team with a political mandate,” he told me. “I know a lot of Ukrainian economists who are very good, but they never were given the possibilities to reform Ukraine.”

To be sure, Ukrainians face a problem that Balcerowicz and his team did not have: Moscow’s persistent efforts to destabilize their country precisely so that it will not succeed.

But the best way to prove Putin wrong is to get Ukraine’s house in order fast. That will take the kind of courage and determination that Balcerowicz and others in the first Solidarity government demonstrated a quarter of a century ago.

After Sunday’s vote, Ukrainians can’t afford to miss another opportunity to make a new start. This may be their last chance.

PHOTO (Top): Former Polish President and Solidarity founding leader Lech Walesa shows v-sign in front of Solidarity poster during his presidential campaign in Plock in this May 7, 1989 file photo. REUTERS

PHOTO (Inset): Ukrainian Prime Minister Arseny Yatseniuk, center, walks with officers and officials during a visit to the training camp of the National Guard near Kiev May 22, 2014. REUTERS/Andrew Kravchenko


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This article fails to mention that the main reason Poland thrived is due to European subsidies to the Polish economy, delocalization to Poland and use of cheap polish wages. Moreover Poles without jobs are free to move to countries like Great Britain for better wages.
All this is not available to Ukraine and probably won’t be for a very long time as Ukraine is not in the EU, won’t be in the foreseeable future and even if it is- it may not get all the EU funding Poland received

Posted by ccppcc | Report as abusive

It is really meaningful to show here Walęsa.
Many claim that we (Polish peoples) are all happy and, we all love what have been bring to us with liberal capitalism.
Well it is not true, at least not for majority of Polish society.
Walęsa is great example. Symbol of “freedom” fighting for the West, is heated among most Polish peoples for what happened in Poland after 1989. And shows that what is good for West is not necessarily good for East.
For most of Polish peoples 1989 means fall of industry, drastic fall in medical care (average waiting time to see let’s say orthopedist is few months), education, even Polish football teams are on unbelievably low level now.
What is most irritating for many Polish peoples are words like claiming that Poland has so great economy and we are so happy with liberal Chicago type capitalism.
According to official data, Poland is second manufacturer of cars in Europe…
Seriously? So how it is possible that in Poland at “manufacturing” cars works few dozen thousands peoples while in Germany it is every sixth German worker who works in industry associated with car manufacturing?
Answer is simple because we don’t make them we assembly them.
Why it is like that? Well to assembly cars you don’t need to transfer almost any technology or know how. So, real manufacturers move assembling stuff to weak economies with cheap resonably skilled work force like in Poland or Slovakia.
Poland is industrial thus economic disaster with entire industry consist of manufacturers of cheap low tech sub products for West giants and assembly “factories”, there for we are unable to build any new high tech industries especially in UE regulations regime banding any support for local industries which, like past shows is not practiced in mature west economies.
So is Poland so great with IMF model of capitalism offered now Ukraine?
Doubtful, with rapidly grooving debt and economy based in big part on UE supplement in infrastructure and weak low tech industry based on cheap work force we are not.
Sadly future of Spain and Portugal awaits us…
So Ukraine come and join us.

Posted by STheG | Report as abusive

It is easy to stay at the level of economic comparisons. Then on the military point of view since 1989 Ukraine used to be the place where the Russian navy had her harbour. In the navy lies a part of the nuke dissuasion. That’s why Poland Europe and the USA should have been much more helpful for the Syrian upsurge. The fall of Bachar and by consequence the loss of her other harbour on the meditteranean sea by the Russian navy would have been the better help that could have been brought to the Ukrainians.

Posted by meleze | Report as abusive

If per-capita GDP is to be the criterion, why would Ukraine want to go with Poland’s $12,820.00 when it could aspire to Russia’s $14,037.00 for the same time period?

http://data.worldbank.org/indicator/NY.G DP.PCAP.CD

Would Ukraine be able to call upon the massive loans Poland received, and the aid that continues to this day? Would Ukraine want to have some 70% of its banking sector foreign-owned, such as the case in Poland? Since Ukraine is one of the world’s most corrupt countries, perhaps they would not care, but I have noticed that foreign ownership, once gained, is often used by the west to influence policymaking.

Posted by Mark793 | Report as abusive

One day both the United States and Russia will come to realize they both need to stop all meddling in other countries’ internal affairs. I hope Ukraine can get back this and become a properous country that benefits both Europe and Asia.

Posted by MyOwnDisaster | Report as abusive

It’s ok to say that Poland’s case can be an example for Ukraine – the two countries share a lot! At the same time, the two states have distinct differences, too.

Balcerowicz carried his reform plans with a really strong electoral ticket generated by the Solidarity movement that had mobilised public opinion and developed its electoral base over years, while Russia was in disarray itself in the early 1990s and couldn’t inhibit the process. In the instance of Ukraine, the electoral ticket is much more split, at least for now, and Russia is organized enough and determined to be able to harm the process.

Ukrainians will have to find their own best tools and practices for making their revolution a success. They do really well so far! Despite the weaknesses of the Ukrainian state, Putin is definitely on his back foot now, and cannot persuade the public even in Eastern Ukraine with any arguments other than coercion.

In the meantime, what Poles can do for Ukraine now? Build stronger relations between regular people. Poland should open its job market for Ukrainians, local governments should develop partnerships to learn from each other and businessmen should accompany public visits to seek ways to build trade ties and grow business together.

In my opinion, Ukraine can be more consistently pro-European only if regular Ukrainians become acquainted with the concept of the EU and what it actually means. Otherwise, if the political shift is only in the higher echelons of power, common Ukrainians will still easily be swayed by false promises. The Russian propaganda machine will still be able to hijack the process at some point or another. Without direct acquaintance of common Ukrainians with the EU, the whole pro-western shift in Ukraine may eventually turn out to be only skin deep.

Posted by Radek.kow1 | Report as abusive

Ukraine is not a country, never was

Posted by nvgg | Report as abusive

Ukraine will always have problems so long as it continues to exist since it is not a real country with an identity. The East is Russian, the west Polish, the south is Romanian, Hungarian and Slovak. The only solution is to give the lands back to the nations which are the rightful owners and abolish this geopolitical construct.

Posted by Chris122 | Report as abusive

Amazed at the number of commenters who are ready to piecemeal the Ukraine up and give it back to Russia and others. Ukraine did not become a nation purely by accident. It has the potential to become a productive country, which is why Russia is willing to risk so much to reacquire it. The parallels to Poland pointed out here are thought provoking, but the complications of Russian aggression, identity, as well as the geopolitical shifts which have occurred since Poland emerged as an independent nation, cannot be ignored. One can only hope leadership will emerge which is able to transcend violence and corruption in order to realize the Ukraine’s potential. Balcerowicz’s story is a reminder of how thankless the work of rebuilding can be; in today’s Ukraine such work will not only be challenging, it might be lethal.

Posted by MelMarie | Report as abusive

Copycat solutions seldom works, because people differ not so much in languages, as in values – up to the directly opposite view on what is right and what is wrong. Even subtle differences in values results in very different output. Who would expect that in the US people of Scottish descent are 2.5 times more likely to amass a million dollar net worth than people of English descent.

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