Economic opportunities or integrational challenges — The case study of Ukraine

Abstract

The following dissertation discusses the Europeanization process of Ukraine and the challenges it will pose. Despite notable changes during the last six years, it still needs to be apparent whether Ukraine has its place in European integration. In 2022, candidate status has officially been provided to Ukraine, and many politicians are urging a fast-track membership. Despite the fact that war caused massive decrease in economic output, the country still has its huge potential and after the conflict it is likely that it will not return to the Russian interest zone; Ukraine’s only option is the EU, but it requires preparation form both sides. The main idea for this research arose from the geopolitical challenge faced by the post- Soviet countries. The work argues that a security-related evaluation should be added alongside the economic readiness evaluation for the Eastern Partnership countries to understand their assessment better. As the possibility of disintegration is also a real threat and a valid option in the coming years, external and internal challenges of Ukraine has been discussed as well. One of the goals of the research was to assess the recently executed reforms. Some of the positive aspects are: restored anti-corruption institutions, proper land reform that increased Ukraine's agricultural competitiveness, banking system have been reformed, de-oligarchisation law was created. All in all, during the last 3-4 years, long-awaited fundamental changes have started in the country and Zelensky still has the opportunity to continue this his way on this path. Another important goal of the writing was to assess Ukraine’s economic situation based on an adapted version of Palánkai’s framework. Overall, the integration analysis has shown beyond any doubt that Ukraine is not ready for European integration at the moment, as it has not been able to meet most of the criteria and expectations. It is worth mentioning that there have been positive changes in several areas, such as price liberalisation, international trade increased, IT sector was booming and corruption was decreasing. However, there are still severe shortcomings in competition policy, financial sustainability and macro stability, not even mentioning the available level of skilled labour which will be a huge challenge after the war ends. There is indeed a vast economic potential in Ukraine, but they could not use it for 30 years. Providing them immediate EU membership would cause further problems within the country's economic structures. They must eliminate most of their shortcomings, and the EU should help and supervise them. The third goal was to create a composite indicator and then apply it in the comparison between Ukraine and other EU candidate countries. Based on the result, Ukraine is behind not only the least developed EU Member States, but even many Western-Balkan countries are in better shape. With the assistance of the created composite indicator, the main economic aspects have been compared. Ukraine is an agricultural and industrial country with vast natural resources, in parallel the Balkan countries are a collection of small countries with diverse economies ranging from service-based to industrial and manufacturing-oriented. In terms of economic indicators, the Balkan countries and Ukraine differ significantly. The Balkan countries have a higher GDP per capita at PPP than Ukraine, and their economies have grown faster in recent years. The Balkan countries, particularly Serbia and Montenegro, have attracted noteworthy foreign investment in recent years, while Ukraine has struggled to attract foreign investment, with corruption and political instability being mainly barriers. Another relevant difference is their levels of entrepreneurship and innovation. The Balkan countries have a relatively high level of entrepreneurship and innovation, with many successful start-ups and technology companies emerging recently. Based on the findings, their situation differs from the Western Balkan countries. They are far from the maturity level that Montenegro and Serbia are already representing. Regarding the non-economic research of the work, the goal was to understand the external actor's roles and interests on the one hand, and present the internal obstacles that Ukraine is facing on the other hand. It is obvious that the American hegemony is declining, and more and more challenges are rising towards their global leading role. From the EU's side, a higher contribution is being demanded to its security as their bandwagoning strategy cannot be obtained anymore. It became clear after the breakout of the war that only with commercial relations it is not possible to ensure peace, the role of security has significantly increased in the international relations. Another important aspect is that the EU needs a more straightforward concept of how to deal with the Eastern Partnership countries. From Russia's perspective, these countries are part of their interest zone and willing to take even military actions to protect their influence. Nevertheless, there are also many concerning factors in Ukraine internally. Their identity seeking problem still is a significant challenge, and it is also an open question of how the oligarchic elite will react and behave themselves during the war. The already achieved results from the last 6-7 years are showing that the Ukrainians are determined in joining the EU and potentially NATO. If they will receive the necessary economic, military and legal support then their goals can be realized, it will only be a question of time. However, momentarily it would be a controversial decision to provide them fast-track membership in any cooperation. The most relevant limitations of the study were the following: limited scope - geopolitical aspects were missing; time constraints – the effects of COVID and the breakout of the full scale war were only partially covered; data accessibility – in this part of the world data collection is always a challenge. However, there are general limitations that the research could overcome: generalisability and challenges with replication. As a result of this work further researches can be conducted in the topic. First and foremost, the adopted integration maturity assessment can be used for other Eastern Partnership countries. In parallel, a similar composite indicator can be replicated for the political and institutional aspects. Another part of the topic that would worth to research is the geopolitical aspects of the question. The war in Ukraine can be seen as a challenge towards the unipolar system, it is basically a post hegemonial conflict. But it is a highly relevant question whether it will turn to a bi or multi poral one by the end of the decade. In this work there was no opportunity to discuss these significant questions, but its results could contribute to a further research related to the above mentioned problems.