Ukraine’s IT boom could speed up EU integration

Ukraine has a literacy rate of 99.7 percent, which is higher than most EU states

June 2017 will mark the three-year anniversary of the association agreement between the European Union and Ukraine, and while the Eastern European state has taken major steps towards European integration, its progress has been slow.

With the signing of the EU agreement in 2014, it seemed as if Ukraine’s dream of Western integration would finally become a reality. This feeling materialised in 2015 as Ukraine took significant steps in its fight against corruption.

Last year, however, presented new challenges.

The failure to remove various corrupt government officials undermined progress. Furthermore, as anti-corruption efforts stalled, Odesa governor Mikheil Saakashvili, among others, resigned in frustration.

Events within the EU further stymied Ukraine’s progress towards European integration.

In April 2016, the Dutch overwhelmingly rejected closer EU ties with Ukraine. Matters became worse in June when the United Kingdom, one of Ukraine’s staunchest advocates in the EU, voted to leave the bloc.

Implementation of the agreement allowing visa-free travel to the EU has also been delayed. Given these developments, Ukrainian enthusiasm for Europe is slowly waning as many Ukrainians believe the EU may not deliver on its promises.

Critics of Ukraine argue that it is far from ready to join the EU, citing corruption as its major hurdle.

Furthermore, some EU members are concerned that Ukraine’s economy would be a drain on European resources.

This comes at a time when the EU faces the loss of the UK, one of its biggest financial contributors. Some critics argue that it will take at least 20-25 years for Ukraine to be admitted into the organization.

Ukraine continues to face these problems in 2017. It was ranked 131st in the world on the Corruption Perceptions Index, and the war in Donbas has escalated.

New case

While Ukraine’s future may seem bleak, the eastern European state has a new case to present to the EU.

Its educated populace and the IT sector may accelerate the membership process and boost national morale during this difficult period in its history.

Ukraine has a literacy rate of 99.7 percent, which is higher than most EU states. This statistic demonstrates that it can be a vital member of the international community.

The well-educated populace has also led to a booming IT sector, with venture investments in Ukrainian start-ups jumping 237 percent from 2014-2015.

There are currently over 100,000 skilled IT professionals in Ukraine, and the training and knowledge of Ukrainian software developers are on par with those of Silicon Valley. The IT sector accounted for 3 percent of Ukraine’s annual GDP, and has generated billions of dollars in exports.

The work of these Ukrainian developers has not gone unnoticed. Corporations such as Snapchat and Uber have performed well in Ukraine.

Moreover, GitLab co-founder Dmitriy Zaporozhets was listed in Forbes 30 Under 30 as one of the most successful people in the world in the enterprise technology sector.

In addition, international companies are outsourcing to numerous Ukrainian tech start-ups.

Firms such as Ecois.me and Petiole have gained international acclaim and were recognized for their contributions to the Ukrainian market.

Given their expertise, Ukrainian developers would be a valuable asset to the European community as they have demonstrated that they are very motivated, well-trained, and capable.

The recent rise in Ukraine’s tech industry has had a major impact on foreign investment. The tax burden in Ukraine is one of the lowest in Europe, and many investors have capitalised on this opportunity.

Investors

Private sector technology firms from Sweden have invested millions of dollars into the tech industry.

The strong performance of IT companies such as Sigma Software and Beetroot have encouraged others, like Danish company Clio Online, to enter the market.

As the IT sector continues to expand it is likely that private tech companies from other EU members will conduct business in Ukraine. This partnership could strengthen international cooperation between the EU and Ukraine.

The IT sector in Ukraine could also help reduce corruption. During the early 2000s Estonia invested heavily in the tech industry, even choosing to develop electronic services to oversee transactions online between government and citizens.

These programs established greater transparency and facilitated good governance. In the words of former Estonian president Toomas Hendrik Ilves, “you can’t bribe a computer.”

Thanks largely to the effect of technology, the Baltic state is now ranked 23rd in the world on the Corruption Perceptions Index.

Using Estonia as a model, Ukraine’s IT sector could play a critical role in fighting corruption, thereby building confidence in Ukraine and easing the concerns of critics in the EU.

With demonstrated strength in the growing IT sector, Ukraine is showing that it can compete with the tech industries of any Western state, and data processing solutions can contribute to greater efficiency and investments across both the private and public sectors.

This suggests that Ukraine is not as far behind as critics suggest, and that skeptics in the EU should not be so hasty in dismissing a potential engine of growth on the continent.

Author: Mark Temnycky is a Ukrainian-American pursuing a masters in public administration and international relations at the Maxwell School of Citizenship and Public Affairs in Syracuse University, New York, in the US

Source: Euobserver

Ukraine and Canada: a history of settlement and a future for investment

I have been in Ukraine since October 2014; I arrived soon after the Revolution of Dignity began. 

The revolution created both a strong desire for reform and a call for social justice, but at the same time it also led to the occupation of Crimea and the beginning of the Russian-backed aggression of Donbas. As a result, Ukraine has needed to deal with a very broad range of challenges, and all at the same time. This has meant that despite the efforts of many ambitious and smart people, reforms haven’t moved as quickly as many Ukrainians had hoped. Nevertheless, more has been done in these past three years than in the previous twenty-four years. It’s certainly encouraging and we’re beginning to see the results now. 

On the economic side, we can see the growth going ahead in bounds. Ukraine did not have a viable army in 2014; certainly not one that was combat worthy. Civil society and the population stepped in to remedy much of that, and the state has been catching up. It plays more a role as a deterrent, which we hope will make a peaceful solution more viable.

Obviously, many issues remain outstanding both with Russia, for example, as well as the international court and the challenge that was launched at the beginning of March in the Hague is evidence of that. Ukraine’s relationship with the EU continues to be redefined and Canada has been a strong partner throughout.

Our economic relations are fairly modest. In terms of exports from Canada, 2016 was a record year and the best since 1991, reaching 265 million Canadian dollars. According to our statistics, Ukraine’s exports to Canada were 107 million Canadian dollars. We are confident that more can be done now, with our Canada-Ukraine free-trade agreement.

The International Trade Centre in Geneva did a study, and Canada ended up in the top ten underserved markets when it comes to Ukraine, in terms of not fully using the existing potential. Because of that we believe that both the attention and the publicity surrounding the free-trade agreement, as well as the provisions of the document itself, will help remedy that. In order to help that process along, we’ve launched a Canada-Ukraine Trade Investment Support Project with the Conference Board of Canada and the Canada-Ukraine Chamber of Commerce which aims to help build Ukraine’s capacity to use these opportunities.

I think the other key element, which is not yet covered by the current version of our free-trade agreement, is trade in services but we are open to negotiating this over the next couple of years. When it comes to Canada, certainly sales of software and computer services probably are, by all accounts, greater than goods’ exports at this point, both in terms of product development, outsourcing and maintenance. There is a lot of activity, and sales into Canada. Certainly, I would say over 100 million Canadian dollars a year, if not 150 million. 

Thanks to the Ukrainian diaspora in Canada there’s a widespread awareness of Ukrainians, and by extension, Ukraine. It’s not something you need to explain to most Canadians. That makes Canada a little different from many other countries, and it means there are already people there with cultural empathy and openness to the market.

On the other hand, it also comes with some disadvantages. Some of these people, with personal links to Ukraine, tried to do business in the early years, of the 90s. Many of those business ventures did not work in the Wild West atmosphere that existed at the time and the bad memories of some of those smaller-scale (and larger-scale) problems persist. So, we need to overcome those. In the past year and a half we’ve seen the arrival of major Canadian players, such as Fairfax Financial, investing in Ukraine. We’re seeing bigger players with deeper pockets who are willing to take on board the Ukrainian risk in order to also take advantage of the Ukrainian opportunities.

I am of Ukrainian origin myself. I was born in Toronto and I lost some of my illusions about Eastern Europe there. I try to encourage people in Canada, from whatever background, to take a realistic view of the market.

Does Ukraine have an image problem? I think there’s no doubt that there are perception issues out there. In territorial terms, the military conflict concerns approximately about seven per cent of the country, if we include both Crimea and the Donbas, and three per cent, if just the Donbas. Certainly, one of the things that I remind my Canadian country people about is that it is 1,300 km from the western border to the line of contact in the conflict zone, and that’s a very long distance, indeed.

ABOUT ROMAN WASCHUK

Roman Waschuk is Ambassador of Canada to Ukraine. He began his career with the Department of External Affairs in 1987. First posted as second secretary (political) in Moscow, he subsequently served as counsellor (political) in Kyiv and counsellor (political) and minister-counsellor (political/economic) in Berlin. He also served as Ambassador to Serbia, with concurrent accreditation to Macedonia and Montenegro. He graduated from the University of Toronto (MA in History).

Source