Austrian economist described how Ukraine can quickly integrate into EU

Kyiv: Ukraine has all prospects for membership in the European Union, but this requires more efforts and more serious reforms. How to overcome corruption and what to expect from the Eastern Partnership summit was told by Austrian economist, head of the initiative group on European integration of the Southern Balkans, as well as the chairman of the organization “Europeans for tax reform” Gunther Felinger told Front News.

 

On tackling with corruption in Ukraine.

 

Ukraine is fantastic country and it has a wonderful future ahead, I am convinced. And also the changes since 2014 have been very positive. But it is not so easy to change the country. It is not 2-3 years’ process; we have to thinking decades. And the experience of Europeans on tax reform is was very successful in South-Eastern Europe. And in Ukraine it will be also very successful. What is needed in the for fight for anticorruption is the cooperation with European Union, this is very important.

 

And for example in South-Eastern Europe we have created our own agency to make a regional exchange of experience, how anticorruption can best be fought. Because it is impossible for political elite to be so courageous and to take itself off these opportunities alone. So it can only have made a regional context and only with the help of European Union. So we have own regional organization it’s called Regional Anti-Corruption Agency and Ukraine should join that, it would be one step forward.

 

And the second proposal is I think when it comes to reforming justice system at the moment Ukraine and the EU are only ready for cooperation platform and advisory platform. In Kosovo, for example, it was possible to have executive mandate for the EU mission in the rule of law, it’s called EULEX.  And I think also Ukraine should think if it’s not better to share some of the sovereignty already, because European Union is very much about sharing sovereignty. This is your ultimate goal. So, also in the rule of law and in the issue of who is controlling the prosecutor. In this very tight history of networks between all the personalities, it’s very hard to change that. What I think is necessary is a have executive mandate of the European Union advisory mission.

 

It’s not easy, I understand because you are very sensitive in the issues of sovereignty and independence, but it’s one vital point to understand when you join the European Union you are no longer a sovereign Ukraine, you are member state of super national European Union. And this pulling off sovereignty has been very important, and it’s a big shock in a way but it has to be done. I think the earlier – the better to be explained to the people and to the political elite that in many aspects, for example, Austria in 1995, it was very difficult to accept to the political elite that somebody from the competition authority of the EU comes and checks banking market, industry market, energy market and we have to comply. There is no alternative. And the same process I think is necessary for Ukraine now to really have a cooperation in the important point of anticorruption, because alone Ukraine not able to do that. 

 

On the Ukrainian integration to the EU and upcoming the Eastern partnership summit

 

In general, that’s very positive initiative, because Eastern Partnership is the success and Eastern Partnership + is the success. But it is not good enough. We, as the EU, have to be at the framework to stabilize the Eastern Partnership countries. And this can only be done the stability when we give a green light for full membership of Ukraine, Georgia, Moldova and the countries who want in the region and they can join the EU completely.

 

What the Parliament has mentioned is very positive: joining the EU customs union, joining potentially Schengen and making sector integrations it’s a next big step obviously because there are also some countries in the EU who a little bit afraid of Russia or very afraid of Russia or have business ties with the Russian leadership.

 

So, it’s really still an ongoing struggle inside the EU to give a green light for Ukraine to join, because it will mean a lot of changes in the EU.

 

Ukraine is not country like Estonia, it is not 2 million countries, it is 40 million countries, it is a lot of land, it’s very expensive, it’s not a normal club to EU like a golf club – you pay a membership free and you are there. No, this means hundreds of billions of euros of transfers in the future decades to come to Ukraine to bring this country on the level which EU think is appropriate in eco culture, in municipal services, in infrastructure. This is the most expensive project we have undertaken in the last 20 years to bring Ukraine in.

 

So understand that well that a lot of people in the budget committees in European parliament say how much will that cost, it’s not so easy. Because I understand here everybody in Ukraine thinks we will be rich country potentially, we will be rich together and that is. But you know, that will be for fifty years. It will be enormous investments of the European member states who ultimately give the budget of the EU to invest in Ukraine in terms of infrastructure, eco culture, municipal services and other things that EU is doing.

 

So, we have to be a bit more ambitious that means Ukraine has in the last years especially not been very ambitious. At this stage of development to put so much money in pavement in Kyiv and new asphalt, the education law, the health law – it is all very important for people, I don’t want to talk negative. But you know a really important things are the big step forward in bringing the economic system of Ukraine to normal standards in the land market, capital market, labor market.

 

You still have a lot of tradition of the Soviet Union in your hearts and heads. It’s very difficult to overcome, to understand that because of these 100 terrible years. But as long as you think you can organize labor and capital like you do today it’s very difficult for those who is pro Ukrainian in the EU to say that this country is ready, you have to give “yes” to euro perspective.

 

It’s very good what is happening in Eastern Partnership debate this week. But the EU and Ukraine to be a very seriously in the next months, next important months because in the next half year there is a majority in the Ukrainian Parliament for the decisive reforms which are leaded and they are mentioned by the IMF, by the World Bank, by the EU and it is a little bit of a push to focus on the really important laws like economy is a key, in the energy market.

 

But when you see the drive which the South-Eastern European reform countries after the war, until 2000 we had a wars in the Balkans. And then they were much more desperate and they had to go much faster, Georgia, for example, had much faster reforms.

 

I understand that, because you are big country, so elite is already very developed but have no completely transformed in European direction in the key essential issues. And you have a majority in parliament now to education law, to health law so why not to have that as well as for a changing a tax code, very important for our movement obviously. Reducing the tax rates to 10% like Georgia, like Kosovo, like Macedonia, like Bulgaria, like Hungary has 9% now. And also to make more simple the Tax Code.

 

And these I think are the essential issues which can be done to summer 2018 and it will be much more successful country and then the point will come when you are ready for the EU application. You have a lot of partners and arguments will be good but this is homework here Ukraine still has to make.

 

We have 6 countries in the Eastern Partnership: 3 of them have the will and want to join the EU and NATO. Georgia, Moldova and Ukraine have expressed it. So, they are one group. In Armenia, Azerbaijan, Belarus they have however different policy priorities. But these 3 countries we think are one group and they should get a green light from the EU for membership this week. It would be the best format. If that’s not possible at this summit, there will be a summit next year. And idea to turn them from partners in to potential candidate countries, this is a status of Kosovo and of Bosnia at the moment in the list of EU membership applications and this would be a proposal in 2018. You have seen a lot of support already with DCFTA which were also with Georgia and there is a visa liberalization. It was a big step, but nevertheless the next big step is definitely the green light for potential EU candidate state agreed by the Council in 2018.

 

On the deployment of the UN peacekeeping mission in Donbas

 

It’s very terrible, it’s a Russian aggression and I feel the pain. I personally worked a long time in Albania, Kosovo after the war. It a very dramatic and tragic what is done by the Russian Federation. So it is needed to educate very strongly that Ukrainian authority see the success models of what was done in the 1990s in the Balkans in terms of peacemaking. And this is the same model for Donbas and Crimea.

 

So there will be UN in charge in administering, securing and developing of these territories and the status will be decided in 10 years after the mission was completed in whatever 15 years after reestablishment of rule of law, political and democratic freedom and then there will be decision made. Clearly that international law doesn’t allow these annexations to be rewarded politically. So is no options for Donbas and for Crimea to join into Russian Federation.

 

This part of Ukraine will be handed over similar may be with good case is a reintegration of the Eastern German states into the German state after the end of communism. And this will come by time, at the moment it’s the best for the people there living and for the political system of Ukraine and for Russians as well, to be honest nobody in Russia wants this war to go on, it’s only in the Kremlin which thinks that this is profit for them. Most of the people in the Russian Federation will want peace in Europe and will have not to have to pay these enormous costs of that war and afterwards the reconstruction.

 

So, the best is when the UN to take over in Crimea and in Donbas.

 

On the situation with Georgia ex-leader Mikheil Saakashvili

 

He is a great hero for everybody who loves transformations, success stories, what he done in Georgia is obviously first class case of fighting corrupting, improving a country from real misery towards a very good development now rewarded by the EU with visa liberalization, DCFTA and hopefully also a future in the European Union, imagine that. Many people in Europe probably don’t really point Georgia on the map. He was really the man who made this possible by this transformation success, that people now know Georgia, respect it. And we will much hope that one day Georgia will be member of the EU, member of NATO.

 

He has also done a lot of good things in Ukraine, but in general I little bit disappointed by this current confrontation between president Poroshenko and president Saakashvili, because the only one profit can be opponent of the EU and European Ukraine. It would be better if there will be some kind of cooperation platform and I can only call the personalities who interested in success of European integration of Ukraine to find understanding and consensus and some kind of mutual respect in dealing with each other. It’s a competitive world, they are competing for one the same position, I understand it, but they have to respect serious approach to each other and not to escalate this confrontation in coming year towards the presidential elections of Ukraine. Who will be the president of Ukraine ultimately for us as Europeans is not our issue. And we hope that the pro-European direction of Ukraine continues and it will be a real pillar of stability, success of this part of the future EU that Ukraine wants to be part of.

 

On introducing the euro in Ukraine

 

In the South-Eastern Europe Montenegro and Kosovo, they have unilaterally introduced the euro already. It’s not really popular with European Central bank, that’s true, and some of the member states will be against that as well but actually in favor of introducing the euro as well in Macedonia, in Albania, in Serbia, in Bosnia and also in Moldova and Ukraine and if the Georgians want so why not? Because it is ultimate expression of European unity to use one currency. And the currency is open for everybody to use it and why not to use it in Ukraine as well.

 

I understand a lot of people have patriotic pride on their own currency. Austrians, we left a shilling, especially Germans left the mark, but ultimately it’s much cheaper to have one currency in a common market because you don’t need to exchange, you have less risks.

 

And my best argument is like this. It’s a question, does political elite of a country really have the capacity to deal seriously with the currency, because the currency is always a big temptation. You can devaluate it, you can inflate it, you can abuse it a lot and you somehow don’t make the real reforms. The capital market, the labor market and the land market, for example, you don’t do this reforms, but what you do is you deflate your currency, you decrease the value.

 

So, basically that’s a rather easy way, basically everybody has to pay the cost of transformation and you don’t have to vote in the parliament on the key issues which are painful because you always have a vested interest.

 

So, having a currency like the euro takes a way to power to decrease your currency. What I say is for Ukraine to do it is a courageous step, of course, you have a lot of patriotism behind your currency and you have a lot of people like in Central bank who really don’t want this.

 

But I never said that you should join Eurozone, you will not seat in the European Central bank, you will not have a vote. It’s just a unilateral declaration that you scope your currency from the hryvnia to the euro and it’s the most powerful expression you can make that you really want to be in European Union and it’s a bit gate crashing too. But I ask myself what other forms of policy options you have available in current political climate and situation to really speed up and contrary to South-Eastern Europe you have a very powerful enemy in the East, which is ready to use force and it is able to use force and in a way with nuclear arms and military capacity and prove already twice in Ukraine and Georgia and in Moldova that it is absolutely ready to interfere.

 

Introducing the euro is of course courageous but it is not a risky undertaking, because it was done in many countries of eastern Europe, it’s in the most of the countries and doing it fast, decisively and with conviction and doing it in a way surprisingly I think would be the best option to make clear to everybody in the world where you belong to.

 

Imagine, in 2019 comes another president like Yanukovych, I don’t want to say that this is happening but it was already when we had a big hope in the Orange times and we fought everything is now fixed in European Ukraine, I think the irreversibility of the Ukrainian west integration cannot be achieved so easily with EU-NATO integration because that was strategy of Putin occupied Crimea and Donbas, so it’s more difficult with NATO integration at the moment because of the ongoing war. Mister Putin has already introduced a Ruble in Crimea and Donbas, so why not to do euro in the free Ukraine.