Ukraine gained the status of a full-fledged player in global politics even before it declared its independence. It suffices to recall that the Ukrainian Soviet Socialist Republic was among the 51 states that established the UN in 1945
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| PHÎÒÎ: PHL |
After the referendum on December 1, 1991, which approved the Act of Proclamation of the Independence of Ukraine by 90.92% of the 84.18% of Ukrainians, more than 140 countries recognized Ukraine as an independent state within three months.
It turned out to be a much more difficult task for the country establishing itself as a full-fledged member of the world economy. In the first years of independence Ukrainians increasingly doubted the capacity of their country’s economy to guarantee them an independent life so they would not simply exist as an appendage of the Russian economy.
The year 1993 saw a particularly grim picture. Over the course of the year, prices rose 100 times and the statements of government officials that “there will come a time when inflation will only be 5% a month” were widely perceived as an unscientific fantasy. It was precisely then that the notion that Ukraine’s main problem was severed economic ties with Russia became popular among politicians, company CEOs and the average citizen.
Over the period 1991-1995, prices in Ukraine rose 119,000 times compared to 1990. This is important to understand the scale of the problems that Ukraine faced after declaring its economic sovereignty and political independence, as well as to objectively assess its progress in the following years.
In the period 1996-2000, prices grew by “only” 2.77 times. Clearly, the word “only” has to be put in quotation marks as this is quite a high level of inflation by normal standards. However, compared to the previous five-year period such a level of inflation meant that Ukraine’s economy had pulled out of galloping hyperinflation and by the same token proved its viability.
In the period 2001-2005, prices grew 1.41 times and in 2006-2010 as of July 2010 – 1.84 times. In other words, even in conditions of the financial crisis that rocked the global economy two years ago, Ukraine managed to dodge hyperinflation.
While the global economic crisis was devastating, on Ukraine’s Independence Day we should remember happier events that occurred in stages reaffirming Ukraine’s status as a full-fledged member of the global economy.
The first stage was the global recognition of Ukraine’s currency. On September 2, 1996, Ukraine began the transition of its devaluating karbovanets to the hryvnia at an exchange rate of UAH 1/100 thousand karbovantsi.
On May 12, 1997, the International Monetary Fund disseminated a press release that the government of Ukraine said it will assume obligations pursuant to Article 8 of the IMF statute. In other word, the Ukrainian currency was granted the status of a freely convertible currency. At that time only half of the IMF member countries could assume the obligation pursuant to Article 8 of the IMF statute.
The second stage was the acknowledgement of the “freeness” of the not only the hryvnia, but the entire economy of Ukraine. It took another decade to get to this stage. On December 1, 2005, the European Union officially announced the granting of Ukraine the status of a country with a market economy at the EU-Ukraine Summit. On February 17, 2006, the U.S. granted Ukraine the same status and on May 16, 2008 Ukraine was accepted as a member of the World Trade Organization.
Of course, how slowly Ukraine passed through these stages compared to other former socialist countries that already managed to be accepted as EU members is quite laughable. But Ukraine is moving along this path anyway, just that its path is a much greater distance.
Ukraine’s economy was much more deeply entrenched and more solidly integrated into the Russian economy. Furthermore, it was much less free and more distanced from the principles of a market economy that the economies of the newest member countries of the EU.
There is a high degree of possibility that it will take another decade or two for EU member countries to acknowledge Ukraine as a normal country in order for to be considered worthy of acceptance into the EU club.
Conversely, perhaps Ukraine will not be accepted as a member as the EU is not to keen on its internal structure undergoing yet another transformation. But Ukraine cannot hold back this process. The more it feels itself free, the more it will relish such a feeling.
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