Ukrainian’s Income One-Third of Polish Workers' Income

Former Ukrainian President Viktor Yanukovych’s mansion.

The overriding problem for the Ukraine is that the country has been run like a money making machine for the oligarchs and political cronies. Here the Cato Institute’s Dalibor Rohac lays bare the real crisis in the Ukraine.

It’s now a decade since Ukraine’s “Orange Revolution” brought hope that the country could be liberated from its post-Soviet legacy and join the ranks of the successful transitional countries of Central and Eastern Europe. The question now, of course, is whether Ukrainians do better this time around. But to really understand where Ukraine is headed, it’s important to understand the roots of the unrest that led to the ousting of President Viktor Yanukovych.

First, the country’s oligarchic elite, which ruled the country for the past two decades, cared little about the prosperity of ordinary Ukrainians. The evidence is not just in the tacky mansions of President Yanukovych and his men, but also in the fact that the average income in Ukraine is roughly one third of that in Poland even though both countries started from around the same point in 1990.

Second, the change of government in Ukraine follows a miscalculation on the part of the Kremlin, which long considered Ukraine as its client state, dependent on imports of natural gas from Russia. Ukrainians simply lost patience after their government effectively followed instructions from Moscow and canceled the broadly popular association agreement with the EU. Now that the plan to bully Ukrainians into submission has backfired, Russian President Vladimir Putin is likely to leverage the situation to push claims to parts of Russian-speaking Eastern Ukraine — most prominently Crimea and the port of Sevastopol.