Ukraine Is Losing Its Battle for Independence

By , Maxim Kniazkov, formerly a correspondent for the Soviet news agency Tass, is senior partner with Yellow & Blue Associates, a Washington, D.C., consulting firm. Olga Onischenko is a Ukrainian journalist.

ABOUT a year ago, the Deutsche Bank published a report portraying Ukraine as the most promising among the former Soviet republics.

This spring, however, an unidentified US official said of Ukraine: "We are not going to throw money down a rat hole, and until [Ukrainians] make the tough choice Russia has made, they are a rat hole."

The absence of any real movement toward reform in Ukraine could become a tragedy for millions of Ukrainians. For paralysis at the top could ultimately cost Ukraine its independence. The new leaders of Ukraine, both ex-communists and democrats, have failed to set their country on the course that would ensure its prosperity and even survival.

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Two issues have dominated the Ukrainian political life in the past six months: the Army buildup and relations with Russia. However, the essential issue of the revival of the moribund Ukrainian economy has remained largely on the sideline.

All that Ukraine managed to produce in that time is two competing economic plans, both of which envisage sweeping privatization and incentives for foreign investment. But they remain on paper because the competing political factions that produced them are still locked in their fight for predominance.

President Leonid Kravchuk displays a serene attitude. Asked at a recent press conference whether he was concerned about Russia speeding up its reform while Ukraine was trailing behind, he replied: "We will not compete."

The Ukrainian leadership apparently sees the results of the December 1991 referendum, in which 90 percent of Ukrainians voted for independence, as a good-for-centuries mandate. But Ukraine still has to prove to its own population and the world that its independence is not an adventure but rather a viable endeavor deserving international respect.

Public opinion in Ukraine has been extremely volatile. On March 17, 1991, only seven months before the landmark independence vote, 75 percent of Ukrainians voted in another referendum for the preservation of the Soviet Union. The about-face in December could be explained primarily by the total loss of trust in Mikhail Gorbachev's leadership and the hope that the Ukrainian leaders would be able to bring about a better life.

The people may discover that those leaders are not up to expectations. Reasons for disillusionment are appearing. For instance, gasoline in Ukraine now costs three times as much as in neighboring Belarus.

More unpleasant surprises are on their way. While Mr. Kravchuk sees no need to compete with Russia in the area of reforms, Moscow moves forward leaving Ukraine far behind. If everything goes as planned, by Aug. 1 Russia will have in place a $6 billion ruble stabilization fund. The ruble will become freely convertible.

SINCE Ukraine is full of savings in rubles, it would mean a fatal blow to Kiev's plans to introduce the Ukrainian national currency, the grivna. If there are no similar stabilization provisions for the grivna - and we were told by the IMF officials that there were no such plans at this point - Ukrainians are likely to resist the exchange of rubles for a nonconvertible new currency. People will continue to trade in rubles, and an essential prerequisite for an independent economy in Ukraine is likely to be

wrecked.

As further reforms in Russia begin to bear fruit, a lot of residents of Ukraine will start asking: Did we act smartly in December of 1991? Second thoughts will first take hold in the eastern and southern regions of Ukraine that have a substantial minority population and, therefore, are less nationalistic. Then doubt and confusion will spread to other localities. Ukrainian politicians, both left and right, will have a chance to see how efficiently the smell of good sausage coming from across the border ne utralizes patriotic fervor.

The Ukrainian leaders will have two options then. One is to curtail independence by connecting the country to the Russian economy. Politically, that would be unacceptable. The other option would be to follow the so-called "Albanian path," to cordon off the country from the world and rely on nationalism and repression.

Ukraine is a gorgeous land inhabited by wonderful and hardworking people who deserve to live in independence and prosperity. But it needs a new breed of politicians who would know how to achieve this goal and would not compromise by their policies, or the lack of them, the noble cause of Ukrainian independence.

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