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Ukraines political direction and business regulations are failing to attract investment, causing drops on nearly every international rating and lining the pockets of corporate raiders. Rather than fight the decline the government opts to impose new restrictions on freedom of speech instead. According to the International property rights index, Ukraine is number 127 out of 129 countries when it comes to the protection of private property(1). By adopting illusionary reforms of the court system and regulatory policy, the authorities become no more capable of establishing transparent and unified rules for the economic and political arenas. As a result the country is loosing the confidence of foreign business. Foreign direct investment in Ukraine in the first quarter of 2011 was only 894.3 million US dollars. Lets face it… Our leaders simply dont seem to understand how societies work. The majority of the world lives within the generally accepted principle that the rule of law is a good thing for society and that without the rule of law societies simply degenerate.



In Ukraine our elite believe that they can fly in the face of modern civilisation and build a society that will work almost exclusively in their interests. They fail to see that their approach has negative consequences for both the people and themselves. The opposition in their turn has failed to offer any viable options or strike an effective compromise with the government for the sake of the nation. In the first 3 months of 2011 foreign direct investment into Ukraine has fallen year on year by 73.75% as the international business community demonstrates that the business risk in Ukraine is just too high. Most of the money that is being invested is coming from Cyprus, in other words it is Ukrainian or Russian money coming home. In the past the politicians have been able to blame their singular inability to attract serious foreign investors on the economic crisis or the gas crisis or the Russians… but today the only thing to blame is current governmental policy.



Stability or stable decline? 2011 has not been a good year for Ukraines standing in many global ratings(2). Social development is down 7 places in the United Nations rating, dropping Ukraine to the 83rd position. Forbes magazine rate Ukraine as forth place in the world for ‘worst economies beating only Madagascar, Armenia and Guinea. The FBK, an auditing consultancy, Progress Rating positions Ukraine as second to last on a list of 101 countries. The negative estimate of Ukraine by international organisations covers such a diverse range as to rule out any individual political prejudices. It instead depicts a world with genuine concerns over the economic situation in Ukraine and the social impact of such a decline. All eyes look to the President to stem this downwards slide and stop Ukraine becoming the black sheep of European politics. In January 2011 we published a league table using 2010 data of 25 major international ratings where Ukraine was either at the bottom or close to the bottom.



However over the past 12 months, instead of improving the outlook the current government has succeeded in reducing the national rating of Ukraine across more international indicators. The worst of which is the 35 position fall in the corruption perception index which must be an all time record for a government that claims to be fighting corruption. The practice of illegally seizing businesses from their rightful owners is returning in Ukraine. Ukraines corporate raids arise out of competitive conflicts and usually involve pressure from law enforcement authorities and a final court decision that favours everyone except the lawful owner. Recent examples include: "Indar" Kyiv plant, "Investor" Kharkiv joint-stock company, "Rosava" plant in Bila Tserkva, "Nemiroff" distillery and many others. Just four years ago Mykola Azarov, at the time first Vice-Minister, claimed that corporate raids had been eradicated in Ukraine. Experts and Ukrainian businessmen alike can only see the problem of corporate raids escalating.



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