What happened in Ukraine to cause this? From all appearances, it seems that Ukraine is now living through what Russia endured in January-February 1992: the beginning of reform and the liberalization of prices.
As experience shows, every radical reform in Eastern Europe needs western economic advisors -- at least in the early stages. That's the way it was in Poland, in Russia, and now in Ukraine.
Reformers in these countries do not invite foreign advisors because they don't know what to do. They invite them in order to clearly mark the direction of the course of reform. Moreover, in the eyes of the educated public, an authoritative western advisor can put an important "seal of approval" on any new reforms.
In Russia's case, Yegor Gaidar initially invited Harvard professor Jeffery Sachs, who was already known for his application of "shock therapy" in Poland. He also turned to the Stockholm professor Anders ?slund and several other monetarists.
In the early stages, these advisors directly participated in government decision-making. But the honeymoon was soon over: Already in the summer of 1992, Sachs and his western colleagues were playing only a minimal role. Shortly thereafter, they left altogether.
In Moscow, people even started joking that Russia had been ruined by three western advisors: Marx, Engels and Sachs. This joke, of course, is unfair to Sachs, but it does make one point perfectly clear: Western market economists, like the reformist governments that consult them, are fated to be unpopular.
However, despite this general rule and his own personal experience in Russia, ?slund has decided to give it another go. He recently became an official consultant to the new president of Ukraine, Leonid Kuchma.
?slund is completely absorbed by his new love, reforming the Ukrainian economy, and is convinced that the current circumstances are considerably more promising than those Russia faced in 1991. He recently laid out his views on the perspectives for reform in Ukraine.
?slund believes that Ukrainians, earning an average of about $30 a month, look on Russia (where the average wage is nearly $100 a month) as an example of successful reform. In addition, Ukrainians have learned to hate inflation, and production and consumption are currently at very low levels. In ?slund's opinion, this means that the price of reform will be lower in Ukraine than it has been in Russia. He also notes that Ukraine has a fair number of liberally oriented mayors and regional governors and the bureaucratic apparatus itself favors reform.
?slund also argues that international financial organizations have learned from their mistakes in Russia and are now working more actively in Ukraine. In fact, ?slund said that the main problem in Ukraine is that things are going so well that the reformers may lose their vigilance.
It is too early to tell whether he is mistaken in these evaluations or not. However, if ?slund is willing to help the reformers despite his past experience, then for that he deserves sincere respect.
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