Why they look West – Ukraine, poverty and the EU

21 March 2014

This newsletter is also available in Serbian: Zašto oni gledaju Zapad – Ukrajina, siromaštvo i EU

They are looking West

Dear friends,

In recent months large numbers of Ukrainians braved first the cold, and then snipers, protesting and waving the blue star-spangled flag of Europe. This has angered leaders in the Kremlin, leading to the dramatic confrontation over Crimea. It also left many in the EU confused how to respond.

Should the EU, or future Ukrainian governments, withdraw the promise of deeper integration in order to placate a grim and threatening Russia, as some in the EU are arguing behind closed doors? Is Ukraine's still undefined "European perspective" worth the risk of offending Russia?

Or have Ukrainians, by defending their right to ratify an Association Agreement with the EU – and to pursue deeper integration in the future – in fact kept open the single most promising path for their country to transform itself for the benefit of its ordinary citizens?


Geopolitics and the average household

Focus for one moment on the situation of ordinary citizens, the lives of average households living between Lviv and Kharkiv. The most basic fact about Ukraine is that it is poor. In fact, Ukraine is one of the poorest countries in Europe; only Moldova, Georgia and Armenia are poorer. The Gross National Income per head in Ukraine is lower today than it is in Kosovo, which is the poorest country in the Balkans.

Kiosk in Kiev.Photo: flickr/sugarmelon.com

Poverty gap: EU, Balkans and Ukraine

Gross National Income per head, current US$ at market exchange rate 2012




European Union (28 countries)
Bulgaria (poorest EU member)



In a new Rumeli Observer – Why they look West – Ukraine, poverty and the EU – you find a table of the forty-six richest countries in the world in 2012. To be rich or poor is, of course, a matter of comparison. Here we take as reference point the richest country in the world and consider countries to be prosperous if they have at least one eighth the Gross National Income per head of the frontrunner. In 2012 the richest country in the world was Norway, followed by Switzerland and Denmark.


The most exclusive country club in the world

Oslo Opera House. Photo: flickr/ howardignatius Zurich. Photo: flickr/Szczepan Janus

Oslo – Zurich

A few things are remarkable in this list.

First, most of the forty-six countries were already prosperous in global terms half a century ago (North America, Western Europe, Japan, Australia). Most emerging economies are not yet members of this club: not China, not Brazil, not India, not Turkey. Russia barely makes the list.

Becoming prosperous relative to traditionally wealthy countries is very hard. It takes decades of stable growth. Still only a minority of the world's population lives in these prosperous states: in 2012 about 1.3 billion people, out of an estimated global population of 7 billion.

Second, all but two members of the European Union are on this list, members of the club of the world's rich countries. There are only two exceptions: Bulgaria and Romania.

Third, the most promising strategy to become part of this exclusive club is to make the effort to join the European Union. To see this, compare the 2012 list of the world's richest countries with that of 2002.

The 2002 list contains forty-one countries, home to 1.1 billion people. In the decade between 2002 and 2012, Mexico and Lebanon fell out of the list of the prosperous. Only seven newcomers broke through: two petrol states (Russia, Venezuela); Chile; and four European countries: Estonia, Latvia, Lithuania and Poland. Even in 2002 many countries that appeared among the rich for the first time then had focused for years on joining the EU.


The story of Greece

Sitia. Photo: flickr/lentina_x Athens. Photo: flickr/Magi Edos

Sitia – Athens

Once an EU member joins the club of rich nations it remains there, despite severe crises later. This holds true for countries that were poor five decades ago (Portugal, Spain, Greece) but remain in the club of the prosperous top forty. This is not obvious: other countries, which remained on their own, such as Mexico or Argentina, have dropped out.

Take the case of Greece. Its recent economic plight has been seen by some as evidence of the limits of the European Union's ability to bring about convergence. However, look at the story of the Greek economy, seen through Gross National Income per head since 1980 (Greece joined the EU in 1981).

Greece's GNI dropped in the first years after accession, then grew sharply, most spectacularly after 2000. Between 2010 and 2012 it dropped again. And yet, this is still a crisis in a country that has remained one of the most prosperous in the world, and the richest in the Balkans.

GNI per capita Greece 1980 – 2012





Historically, rich countries have formed contiguous geographical blocks. This remains true. Growth spreads through intense contact, openness and exchange between neighbours.


Why the protestors on Maidan are right

Maidan people. Photo: flickr/snamess Vladimir Putin. Photo: Wikimedia Commons

They know something he does not – or does not care about

The experience of EU integration and prosperity has strong implications for enlargement policy.

The protestors on Maidan, Kiev's central square, were right: the most promising strategy for ordinary Ukrainians to live a better life is not to stay on the sidelines or to look East, as they had done since gaining independence in 1991, but to integrate with their Western neighbours.

EU integration is not a magic wand. In the case of Greece it has taken a generation to become prosperous. EU integration also does not prevent future crises. But as a medium-term strategy to catch up it has worked, again and again, for countries from the Atlantic coast to the Baltic Sea. This is because it is a process based on openness, on meeting demanding standards, on learning from the most successful economies in the world and on receiving feedback from them.

Ukrainians, like Finns or Austrians during the Cold War, might well decide to remain neutral in terms of military alliances. NATO is also unlikely to offer Ukraine the kind of security guarantee it has offered to the Baltic States. However, no one interested in the welfare and long-term stability of the Ukrainian people can expect them to renounce the possibility to follow in the path of Poland or the Baltic states when it comes to EU integration. This also holds true for Moldovans and Georgians. It is also to be hoped that the EU as a whole will respond by following the recommendations to offer a long-term membership perspective, as recently proposed by Enlargement Commissioner Stefan Fule and the European People's Party. As the EPP declared in Dublin on 7 March, Ukraine "has a European perspective and may apply to become a Member of the Union."

This is not a matter of geopolitics, spheres of influence, or the prestige of autocratic leaders. European integration holds out the prospects for better lives for millions of households. No one can legitimately ask Ukrainians, Moldovans, and Georgians to give up their European perspective just to please the Kremlin. It would be far too big a sacrifice, with consequences for the next generation.

Best regards,

Gerald Knaus