The Heritage Foundation sought to bring a small measure of encouragement to Ukrainians this week as they continue their months-long protests for democratic and market reforms in the streets of Kyiv and throughout Ukraine.
At a presentation sponsored by the U.S.–Ukraine Business Council and the Bleyzer Foundation on February 13, Heritage analysts reviewed Ukraine’s economic freedom scores in the 2014 Index of Economic Freedom and urged the adoption of reforms by the Ukrainian government.
Although there have been some improvements in Ukraine’s economic freedom performance since the Index began in 1995, the country’s score of just 49.3 means that its economy remains in the bottom Index category—“repressed.” Ukraine is the 155th freest out of 178 countries ranked in 2014 and is last among the 43 countries measured in the European region.
Heritage analysts noted that the protest movement in Ukraine is about more than just local politics and Russian political interference—it is also a cry by the Ukrainian people for economic freedom. Ukraine has lost many of the gains it enjoyed after the fall of communism two decades ago, but even the modest improvements in economic freedom in recent years has whetted the appetites of Ukrainians for more.
Also featured at the February 13 Heritage event was Oksana Kuziakiv from the Institute for Economic Research and Policy Consulting in Kyiv. Kuziakiv reviewed her recently published study on the key impediments of business development in Ukraine. She noted that increased regulatory pressure, on top of economic uncertainty due to political unrest, has had a very negative effect in investment and economic growth in Ukraine.
Over the 20-year history of the Index, Ukraine’s economic freedom score has advanced by over nine points with gains in half of the 10 freedom indicators, including better monetary stability and greater openness to global trade. Since President Viktor Yanukovych took office in 2010, however, the country has registered steadily deteriorating scores on property rights, corruption, financial freedom, and investment freedom.
As Heritage Vice President Jim Carafano notes, the period of maximum danger for Ukraine will begin the moment the Olympic torch in Sochi is snuffed out. That is when Russian President Vladimir Putin is expected to give the all-clear signal to his buddy Yanukovych to start up the rough stuff again with the protesters. And that is why the message of economic freedom is so important today.