8 October 2014

Ukraine Improves Its Business Ranking

With the votes nearly all counted in the recent parliamentary elections in Ukraine, it’s clear that there is now a broad pro-Western consensus in Ukraine. It seems likely that a coalition will form between Poroshenko’s party and that of Prime Minister Arseny Yatseniuk, along with a third party.

Communists and former president Yanukovych's Party of the Regions have been completely pushed out of parliament – a huge change from previous times. There is now a clear mandate for closer ties with Western Europe and more effective anti-corruption policies by the new government.

No elections were held in Crimea and in parts of Eastern Ukraine around the Donetsk area, where separatists have set up a mini-state with the backing of Russia.

This sweeping victory for pro-Western and modernising parties in Ukraine should end the decades of deciding whether Ukraine’s future lay East or West. It also sends a clear message to the elected politicians that the population expect higher standards of governance and a clampdown on the pervasive corruption that is so hindered Ukraine’s development since independence.

It might be expected that the Russians would be negative about this election result, but initial comments by their foreign minister, Sergei Lavrov, indicated they were accepting the validity of the election. Lavrov told Izvestiya newspaper. “I think Russia will recognize the election results — it is very important to us that Ukraine will finally get a government, which is not focused on internal conflict or ‘dragging’ the country towards east or west divide, but instead work on how to facilitate unity in the country.”

The sting in the tail with this apparent supportive comment is that Lavrov went on to confirm that Russia would also be recognising the result of forthcoming elections in the territory of Donetsk and Lugansk self-proclaimed republics. The new Kyiv administration is likely to see this as Russia endorsing the permanent and illegitimate succession of these Ukrainian territories.

Territorial disputes aside, Ukraine now has a new president and a new parliament with a broadly based consensus on the future direction of the country. President Poroshenko has laid out an ambitious agenda which includes significant changes to Ukraine’s police, justice and tax systems, defence sector and health care – all to be completed by 2020. There is now the opportunity to more quickly modernise the country and bring standards more in line with Western countries.

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