THE UKRAINE:Globalization, Oligarch-style Economic Nationalism, or Siatism?

Jon Kofas writes: The Financial Times of London ran (6/16/04) an editorial decrying the sale of Ukraine's largest steelworks to a group of domestic investors led by the president's son-in-law Viktor Pinchuk. Though foreign firms offered $1.5 billion for the company, the Ukrainian government decided to sell it to domestic investors with obvious political influence for $800 million. Foreign investors, Western governments, international multilateral lending agencies, and western multinational corporations complained. That what has taken place in the Ukraine is economic nationalism dominated by a few corrupt business oligarchs is beyond question, and not just because U.S. Steel and London-based LMN did not win the bid to buy the steelworks company. On the one hand, the Ukraine followed western advice to privatize, but on the other it did not follow western advice to sell its assets to western companies. The question is whether globalization and foreign dependence is better for the Ukrainian workers and consumers than economic nationalism based on a corrupt system. The case of Russia's Yukos company offers an important lesson in microeconomics for countries in transition from Communism to capitalism. Neither globalism nor economic nationalism based on politically-entrenched oligarchs is the best solution at this stage of economic development for those countries. As unpleasant as it may be to free enterprise advocates who want to replicate Western-style capitalism from the Ukraine to Kazakstan, statism may be the best solution for the people of Eastern Europe and Eurasia".