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The Vienna Institute for International Economic Studies, a research center respected for its analysis of Europe’s Eastern neighbours, published a report on 15 April 2015 on what Ukraine and the European Union have to do to reform Ukraine and stabilize its economy. The study paints a gloomy picture of a long and difficult road ahead.
The main points made were:
+ Encourage the Ukrainian government to shift spending priorities from the military to more socially-oriented spending and higher public investments. Forgive a large part of Ukraine’s foreign debt and allow the Ukrainian National Bank enough foreign exchange reserves to move to a more stable exchange rate regime.
+ Financial and material assistance should be rigidly tied to progress on dismantling the oligarchic interests which have captured the Ukrainian state. This will require legal system reforms, the severance of relationships between business and politics, proper taxation of oligarchic assets and confiscation of illegally amassed wealth, including assets parked abroad.
+ Apart from fostering EU integration, restore, as much as possible, trade linkages with Russia and the Russia-led Eurasian Economic Union (EEU) via trilateral negotiations. At the same time, develop a long-term modernisation strategy including an industrial policy to improve competitiveness and restructure sectors such as machinery, railway, chemicals, food processing and nuclear.
+ Put together a coherent package to attract foreign direct investment by revitalising the FDI agency InvestUkraine and by setting up business and industrial parks with clear ownership rights, good transport connections, abundant and reliable energy and water supply as well as the support of the competent local/regional administration. Encourage cross-border production linkages with Central European economies.
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