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Beating heart of Ukraine independence felt in Buffalo

Beating heart of Ukraine independence felt in Buffalo

Emil Bandriwsky walks by a signed Ukrainian flag that was present at the recent uprising against Russia in that country. It is displayed above a tribute memorial in the Dnipro Ukrainian Culture Center’s lobby on Genesee Street. Robert Kirkham/Buffalo News photos

By Donn Esmonde The Buffalo News Senior Metro Columnist May 3, 2014

The beating heart of Ukraine’s freedom movement fills the building on Genesee Street in Buffalo.

The Dnipro Ukrainian Cultural Center, a gray, three-story structure that most of us pass without much thought, is more than a slice of Eastern Europe on Buffalo’s East Side. The century-old structure is an outpost of solidarity with distant friends and relatives. Its walls barely contain the anger, anxiety and distress over turmoil in a homeland desperate to lurch into the 21st century, yet yoked economically to a historic oppressor bent on retightening its grip.

“All people want is to break free of that Russian control,” Emil Bandriwsky, Dnipro’s treasurer, recently told me, “and to live more like Europeans live.”

The fears inside the Dnipro building are as raw and real as in Kiev. In the lobby is a mini-tribute to Maidan, the capital city’s “independence” square where the ongoing anti-government protests began. The display is a hodgepodge of news photos, testimonials and yellow construction helmets. The modesty of its scope is enhanced by the intensity of its sentiment.

“We don’t hate Russians,” Bandriwsky said of the bordering superpower. “We just want them to go away.”

Many of those with Ukrainian blood here have friends or relatives there. Technology erases the miles. Facebook, Twitter, cellphone and email make it seem like Kiev is across the river, not an ocean away.

“Everyone here feels directly connected to what’s going on there,” said Dnipro regular Dianna Derhak.

The news lately has not been good. Russian President Vladimir Putin has not sat idly by as Moscow’s former colony drifts culturally and economically closer to Europe. Tens of thousands of Russian troops are massed at Ukraine’s eastern border. Russia last month annexed the eastern Ukrainian province of Crimea. Pro-Russian militants have seized government buildings in other eastern provinces and assaulted pro-reform protesters.

“I just spoke by phone with my cousin, Zenon,” in Kiev, said Bandriwsky. “He’s terrified. They think an invasion is imminent. They’re praying.”

Praying for what?

“Praying for God to give our enemies some brains,” replied Bandriwsky, only half-joking, “People are careful what they write in letters, send in emails. When you go outside, you don’t talk about politics, you’re careful what you say. It’s like under Stalinism again.”

The fears are felt half a world away.

“Most of us here are on pins and needles,” said John Riszko, 69, a Dnipro regular with cousins in Ukraine. “It’s a morally depressing situation. I get emails, I spend a lot of my time reading every different angle on things.”

What’s at stake

The unrest started last November, when since-deposed president Viktor Yanukovych rejected closer economic ties with the European Union in favor of tighter embrace with his pal Putin. What was widely seen by Ukrainians as a betrayal of a brighter future sparked protests in Kiev’s central Maidan (pronounce my-DON) square. Violence and skirmishes in the ensuing months spread to the eastern provinces, where Russian influence is greater – even while Ukrainians prepare to elect a new president on May 25.

The growing violence between Ukrainian reformers and pro-Russian militias reflect a larger struggle – between the promise of a more enlightened Western-style future versus the grip of a politically polluted, Russian-influenced past. Although independent since the Soviet Union’s dissolution in 1991, Ukraine remains a politically corrupt state in the economic and militaristic shadow of its long-time oppressor.

“Many Ukrainians have been to Europe, they’ve been to the United States,” said Dianna Derhak, a Buffalo-born Ukrainian-American who specializes in international project management. “They know it’s not a panacea there, but it’s a whole lot better than what they’re experiencing”

Like everyone I spoke to on a recent evening, Derhak – 54, model-thin, with the charm of a talk show host – feels in her soul the hope and pain of what’s happening in her ancestral homeland.

“People just want the police to protect them,” she told me, leaning in to stress every word. “For the hospitals to care for them. For a functioning judiciary. For not having to pay bribes at every turn. Everyone is just sick of it.”

What started largely as a November student protest at Maidan ignited into massive outrage after riot police beat the demonstrators.

“It became more about an institutional disregard for the law that people could no longer tolerate,” said Derhak, who lived in Ukraine for 14 years, and returned in January to join the Maidan protesters. “People had just had enough. It was like, ‘Don’t beat our children.’ ”

Solidarity at Dnipro

There are anywhere from 10,000 to 20,000 ethnic Ukrainians in Greater Buffalo, the meaty, yoke-shouldered Bandriwsky estimated. A core of 200 are active at the volunteer-run Dnipro Center. Named after the country’s largest river, the three-story building is a jack-in-the-box of surprises, from a bowling alley to a basement bar-restaurant. The biggest eye-popper is a grand second-floor theater, its stage front and walls adorned with hand-painted scenes of Ukrainian life. The space has seen everything from political rallies to boxing matches to wedding receptions.

Many of the Dnipro Center regulars speak Ukrainian. They show up in force on Friday nights for pierogi and stuffed cabbage, washed down with dark Obolon beer. Painted high on the building’s flank is the blue and yellow swatch of the Ukrainian flag – symbolizing grain sprung from the country’s rich soil, under a vivid blue sky.

All of more than a dozen Dnipro Center regulars I spoke with recently shared concerns for Ukrainian friends and relatives – and voiced antipathy for a Russian leader they regard as little more than an ex-KGB thug. In an upstairs room hangs a poster of “Adolf Putin,” complete with toothbrush mustache and a swastika backdrop.

Mike Liwicki is a retired FBI special agent who specialized in foreign counterintelligence and espionage.

“Putin was a lieutenant-colonel in the KGB, and in my opinion, you don’t change your stripes,” Liwicki said. “What he’s doing now in Ukraine is terrifying, because I know that Putin is not going to stop. During Sochi, the Olympics, he’s thinking about Crimea. Now that he’s got Crimea, he’s thinking the eastern part of Ukraine.”

In the downstairs restaurant, a continuous feed from a Ukrainian news station played on the corner TV. The crowd scarfing down pierogi at tables or gathered in knots at the bar absorbed televised images of eastern Ukrainian protesters being carried off on stretchers after “encounters” with pro-Russian militia.

“All bad news, all the time,” Bandriwsky cracked.

Russia’s annexation of Crimea last month prompted U.S. and European economic sanctions. Many fear that Putin wants to pick off more former Russian territories. Their concerns were stoked Thursday, when Putin demanded that Ukraine withdraw its troops from the eastern provinces, where pro-Russian separatists – some of them waving Russian flags – occupy government buildings and battle with – or simply assault – protesters.

Bandriwsky and about a half-dozen others from the Dnipro Center soon will travel to Ukraine, as official monitors for the May 25 election. They hope the election of a reform-minded president will end the violence and move the country closer to a European-style modernization – and away from Moscow’s heavy hand. The fear is that Putin – intent on enhancing Russia’s status and influence – will not happily wave good-bye.

“He’s a narcissistic megalomaniac,” said Liwicki, the ex-FBI counterintelligence expert, “who wants to re-create the old Soviet Union.”

Hoping for a better life

Putin’s foil in Ukraine was Yanukovych, the president ousted by Parliament in February who has since fled to Russia. He for many personified the corruption that makes American scandal-mongers look like comparative pickpockets.

The institutional abuse of public trust, not coincidentally, reflects Ukraine’s embrace of the Russian political model: Power concentrated in the president, tight party control and top-to-bottom corruption. No Ukrainian was surprised by the notorious pocket-lining that marked the run-up to Putin’s Sochi Olympics. They live it.

“It’s all right from the Russian playbook,” Derhak said of the institutional dishonesty.

Ernst & Young in 2012 rated Ukraine among the three most corrupt nations in the world. Payoffs to cops, inspectors and judges are accepted as a routine part of doing business.

“If someone has a successful business,” Derhak said, “they’re going to get a visit from the government, saying they need to share – or, when Yanukovych was in power, just a ‘we’re taking over.’ ”

Bandriwsky nodded in agreement.

“It was a straight-up organized crime operation,” he said. “They cleaned out the treasury. Millions in cash, gold.”

Protesters who entered the presidential mansion and estate after Yanukovych fled in February were amazed to find rooms lit with $100,000 chandeliers, a private zoo, a fleet of cars, a boat and an 18-hole golf course – all somehow acquired on a $2,000-a-month salary.

“They had a fetish for Swiss watches,” Derhak noted. “It’s easy for the corrupt to operate and get rich when there is no rule of law.”

Liwicki, the ex-FBI agent, felt corruption’s grip from Buffalo. He sent a $75 stethoscope to a niece in medical school.

“To this day, I have no idea whether she got it,” he said. “You have to bring your own medicine to the hospital, even your own toilet paper.

“I wasn’t going to send money, because we all know what happens,” he added. “We want to help as much as we can, but there’s no guarantee of anything getting to where you want it to go.”

Resistance

Derhak was in Kiev last January and joined the Maidan protesters, clad in hard hats and face masks to neutralize police tear gas. Pro-Western demonstrators threw stones, fashioned Molotov cocktails and lit tire fires against riot police, whose beatings and bullets – notably during a February crackdown – have claimed hundreds of lives. The skirmishes in what reform-minded Ukrainians call “The Revolution of Dignity” more recently spread to the eastern provinces of Donetsk and Luhansk.

“People injured during the skirmishes were kidnapped out of hospitals by government forces, so we stopped using hospitals,” said Derhak, who has lived in a handful of Ukrainian cities. “Groups are afraid to meet in apartments, they know they’re being watched. So they go to restaurants, go to the library … They feel like they are defending their future.”

Living in tents, they came and went, bringing in food, water and firewood – a city within a city.

“When they left the perimeter, they took off the blue-and-yellow” national colors,” Derhak said. “They were afraid of being beaten by [pro-Russian] thugs. But they still came.”

History

Ukrainian antipathy for Russia is hard-earned. The walls of the Dnipro Center’s library are adorned with posters delineating various Russian oppressions and atrocities. Chief among them is the “famine/genocide” of 1932-33, when millions of Ukrainians starved to death while Moscow exported grain.

There is a nearby map of Stalin-era Soviet “relocation camps.” Ukraine was essentially a Russian colony for 300 years, with various attempts to smother its language and culture. So the back-story isn’t pretty.

The country’s bizarrely titled anthem, “Ukraine Is Not Dead Yet,” reflects centuries of subjugation and perseverance.

“The title sounds odd, I know,” said Riszko, who – like many Dnipro Center regulars – speaks Ukrainian. “But when you consider the genocide perpetrated for hundreds of years, it’s like a battle cry.”

Despite heavier pro-Russian sentiments in the eastern provinces, current events are viewed by most Ukrainians through the prism of centuries of abuse by their powerful neighbor. Putin, in that sense, is just more of the same.

Putin’s claim that he is massing troops merely to protect “Russian speakers” in eastern Ukraine has prompted a national joke.

“In Ukraine, people can speak whatever they want in Russian,” Bandriwsky said. “In Russia, they can keep quiet in any language.”

Even the recent annexation vote in Crimea, an autonomous republic within Ukraine with a large Russian-speaking population, is viewed with suspicion.

“People voted like this,” said Dnipro regular Ray Kowalyk, aiming a finger to his temple like a gun barrel. “Or they were threatened with losing their pensions, losing their jobs.”

What Putin will do

Many pro-Western Ukrainians feel Putin’s attitude was captured in a reported 2008 comment to then-President George W. Bush: “You have to understand, George. Ukraine is not even a country.”

Many fear it may not be an independent country much longer, and feel Putin is eyeing former Russian territories on the eastern border.

“Putin claims it’s a military exercise,” Derhak said of the massed Russian troops. “But they’ve started to set up supply lines to support an invasion, that’s how their intentions became clear.”

Russia has an economic stake in stopping Ukraine from westernizing. Closer European ties open Ukraine to cheaper goods and services, which would then funnel into Russia, threatening a payoff-driven economy.

A Ukrainian lurch toward Europe would hurt Russia economically and stain the superpower status that Putin craves. Beyond that, the Russian strongman may fear unrest at home.

“Putin is deathly afraid the democracy movement will spread to Russia,” Derhak said, “inspired by what’s happening in Ukraine.”

Liwicki thinks Putin is counting on appeasement, as he picks off eastern provinces that were once under Russian control.

“He’s a chess player, he’s not going to invade,” Liwicki said. “He’ll take Ukraine piece by piece. The West thinks, ‘OK, we’ll give him this, and maybe he’ll stop.’ He won’t. Putin’s goal is to create a Eurasian Union.”

At Dnipro Center, it’s a shared concern. The pro-Russian militants confronting pro-reform protesters in the eastern provinces are seen as a mix of Russian special forces, local militia and pro-Russian Ukrainians – some of them mercenaries.

“The Maidan protesters were ‘armed’ mostly with sticks, pots and cobblestones dug out of the street,” Bandriwsky said. “They welcomed the media. Contrast that to the eastern Ukrainian ‘self-defense’ forces, some dressed in Russian military uniforms, with automatic weapons and rocket-propelled grenades. Which do you think is the real protest movement?”

At Dnipro Center, the answer is obvious. If only the future were as certain.

email: [email protected]

Dianna Derhak at Dnipro supports Ukrainian freedom

 

JF Automation USA

 

JFA Siemes Controls 1

JF Automation USA is :

  • Expert in industrial control systems and automation
  • A small business electrical engineering company
  • Quality provider of Contract  Electrical Controls Engineers at your site, or at our Tonawanda office
  • Circuit board repair shop for Servo Drive Circuit Boards, and AC or DC drives for all major manufacturers
  • Your partner for PLC installations and upgrades
  • Sales and Service for Siemens PLCs, CNCs, and Servo Drives and Motors
  • Design and Integration of  Automation Systems
  • Provider of Control Engineers and Technicians to Automotive Industry  Tier 1 OEMs
  • Expert in Siemens Software Programming : Step 7 PLC, WinCC Flex HMI, and many Servo Drives
  • Knowledge of Allen Bradley, Modicon-Schneider, Mitsubishi and other PLC languages
  • Located in Tonawanda, NY, with  international engineering offices in Ontario, Canada; and Shanghai, China.

Please visit : www.JFAutomation.ca

Download our brochure here : JF Automation Brochure 2014

An American Engineer in China

An American Engineer’s Observations in China

by Emil Bandriwsky –  June 2013

Chinese computer programmers are skillful and plentiful.  Yet, our small company just completed a contract for a Chinese machine builder that paid premium rates to bring our team from the USA and Canada.  Some factors related to this transaction illustrate major accelerating trends in engineering, manufacturing, and the global economy.

Specific technical expertise.  Our company is among a small group with expertise in advanced Siemens Step 7 PLC programming for automotive engine and transmission manufacturing.  Even though General Motors, Ford, and German automakers have standardized upon this platform there has been no rush to develop a pipeline of skilled engineers, thereby reflecting America’s indifference to both engineering and manufacturing.

Rapid response and short life cycle.  Less than a week after receiving a purchase order we had a team in place literally half-way around the globe.  The trend is clearly toward faster, more flexible, more nimble companies that can assemble ad-hoc teams that combine long term core personnel with contractors.

  1.   Giant multi-national corporations have spread a common base of standardized work practices, terminology, metrics and attitudes around the world.  The McDonalds or Starbucks in Shanghai or Kiev are essentially the same as their counterparts in Buffalo or Seattle.  A Ford Motor factory in China uses very similar specifications and equipment to Ford in France or Brazil, or even GM in Tonawanda.

Anglicization.  The English language is ubiquitous in Chinese advertising and public signage including transportation, airports, and street signs.  Although the Chinese often translate English in rather amusing ways, it has been said that there are more English speakers both in China and India, than in America.  The clever Chinese have developed a “work-around” to fit their unwieldy number of written characters onto a computer or smart phone keyboard; a phonetic system called “Pinyan” is typed in English and is automatically converted into one of the 20,000 Chinese characters.

Internationalization.  I was reminded of the cliché about “the world getting smaller and smaller everyday” as I sat in a Brazilian restaurant with Chinese, Canadian, American and Ukrainian engineers, who drank European beer while the American cartoon “Tom and Jerry” played on a Japanese flat screen TV in the background.  Just last month, our small company, which employs Engineers from all over the world, worked in four separate countries at one time.  America is still a world leader in many ways, but the era of American supremacy in everything under the sun is over with.  China is now the source of more international tourists than any other country; and for the past two years China has overtaken the top spot as the worlds’ largest automotive market.  China has moved past both Germany and Japan with the world’s second largest economy, and in all likelihood will eclipse the total output (GDP) of America in a few years.

Higher Quality Goods and Services.   My first surprise at a Chinese shopping mall was that many common consumer and electronic goods, like TVs, iPads, and Smart Phones, cost 10% to 15% more in China, despite being manufactured there.  This was explained as the result of trade finance peculiarities, and the Chinese government’s encouragement and financial incentives for its export driven economy.  The second surprise was that China’s crowded shopping malls are filled with premium priced, name brand, imported goods; and a large number of Chinese consumers prefer higher priced imported goods, especially name brands, rather than cheaper, domestically manufactured goods.  Smart American consumers know that paying a premium price, strictly to cover brand marketing, does not translate to choosing the best value goods.  However, the easy movement of manufactured goods to or from any point in the world, and the instantaneous transfer of product information means that essentially anyone on earth can tell the difference between a high quality product and a shoddy product.  Chinese teenagers greatly prefer authentic Apple iPhones to knock-offs, and luxury hotels being built in formerly god forsaken corners of the globe are a sure sign that quality standards are becoming universal.

What Does it Mean for Us?

China’s phenomenal growth over the past generation has been fueled by cheap labor, export mania, free market capitalism supported by a one-party Communist state, and an artificially low currency exchange rate.  But due to rising wages in China, and high transportation and transaction costs, there are predictions that that China’s “low wage manufacturing advantage” versus the USA will disappear by 2015.  Does this mean that America will shortly thereafter regain its hegemony over the world economy?  Almost definitely not.  New low wage countries will fill the vacuum at the bottom of the economic totem pole.  But more importantly, there will be global competitors using every other advantage available to them : technology, raw materials, education, proximity to markets and so on.  Ultimately for the American consumer these global economic trends will produce an even broader array of more and cheaper goods;  as long as consumer can afford them.  And that is the problem.  For American workers, producers and manufacturers these economic trends point to an even faster and fiercer battle for the consumer’s dollars, and ultimately for the survival our domestic companies, jobs, and the prosperity of future generations.

DniproFront

The DNIPRO building at 562 Genesee Street in Buffalo, New York, was built in 1914, and purchased by the Ukrainian American community in 1955. Most of the founding members were recent immigrants to America that had been displaced from their Ukrainian homeland by World War Two. They sought to establish a community center where they could maintain their cultural identity, pass their heritage onto their children, socialize, and organize political structures that would continue the struggle for an independent Ukraine.

So it was natural that they would name their new Ukrainian Home after the largest river in Ukraine; which flows past the capital of Kyiv south to Odessa, and empties into the Black Sea.

Over the course of the past half-century, DNIPRO has hosted hundreds of profound and life-changing events; such as weddings, christenings, concerts, movies, childrens programs, banquets, lectures and meetings. For decades, almost anything important that happened in the Ukrainian American community in Buffalo, happened at DNIPRO, or was intensely discussed at DNIPRO.

In 2014 the Dnipro building will be 100 years old. To prepare for the future, DNIPRO has initiated a fund raising campaign to modernize our building and provide more, and better, services for the Ukrainian American Community in Buffalo and Western New York.

DNIPRO is a part of the Ukrainian American Freedom Foundation, which is an IRS recognized “501C3 charitable organization”. All donations are tax deductible.

The DNIPRO Building Renovation Fund has a goal of $100,000. We have already replaced the entire roof, paved the parking lot, installed several new HVAC systems, a new electrical service,  and completed major renovations in the hallways, main basement bar, and second floor bar.

In 2013 Dnipro prepared a new permanent home for the Ukrainain Saturday School “Ridna Shkola”.

Additional planned projects include :  complete renovation of the Main Ball room (“Velika Zalya”), the Taras Shevchenko Library and Conference Room, restoration of the front façade and columns of the building, and  complete repair and painting of the interior of the building.

Download a color brochure here : Dnipro Brochure 2014

 

For Buffalo exporters, ‘China matters,’

$300 billion market beckons U.S. companies, World Trade Center keynoter says

By Emma Sapong | News Business Reporter – October 3, 2013 – 6:53 PM

The Chinese export market is booming for U.S. companies, and as China’s middle class grows, so will opportunities for American businesses, the president of the U.S.-China Business Council said Thursday.

“It’s a $300 billion market for U.S. companies,” John Frisbie said in an interview before speaking at World Trade Center Buffalo Niagara’s 17th annual conference in Statler City. “That’s why China matters; it matters for U.S. companies and for U.S. jobs.”

It also matters in Erie and Niagara counties, where the market for Chinese trade has grown by 330 percent in a decade from $76 million to $333 million in 2012.

“That is significant growth,” said Frisbie, who has been president of the private, nonprofit group that represent 220 companies doing business in China since 2004. His keynote speech was on “Securing Global Trade.”

More than 300 CEOs and other executives from companies in Western New York and Southern Ontario attended, while 22 local companies that do work overseas had their products on display.

“It an opportunity to promote the international market and see what local companies are doing and spotlight their successes,” said Christopher Johnston, president of World Trade Center Buffalo Niagara.

A decade ago, China was far down on the export list for the U.S., but with a 17 to 18 percent a year growth, it’s now the nation’s third largest, behind Canada and Mexico. It’s the sixth biggest trade market for New York, with $4.2 billion in exports for the state, an increase of 192 percent in the past decade. That’s more than double the worldwide growth rate of 89 percent during that time, Frisbie said.

For Western New York, it’s No. 1 export to China is transportation equipment, valued at $99 million, followed by waste and scrap worth $72 million. Frisbie said more growth opportunities are “already baked in” because China’s middle class is projected to double in the coming years to 600 million, increasing demand for consumer goods.

While the Chinese economy is now experiencing moderate growth due to the European economic downturn, China is still a promising market because it’s economy is growing by 6 percent to 7 percent a year, he said.

Even so, many businesses are wary of the Chinese marketplace because of fears about the theft of intellectual property by Chinese manufacturers.

Robert L. Stevenson, president of Eastman Machine Co., a Buffalo manufacturer of fabric-cutting machines, relayed stories of Chinese manufacturers illegally copying the appearance of Eastman’s Blue Streak machine and other products.

“They looked identical to ours,” Stevenson said. Eastman even encountered a Chinese manufacturer whose imitation machine was called “Westman.” The company has addressed These infringements through the U.S. and Chinese legal systems, but it’s a continuing problem.

“We don’t have the resources to play the legal game of Whac-A-Mole,” Stevenson said, adding that after addressing one manufacturer’s transgressions, another case pops up.

Conrad Wong, intellectual property rights officer for the U.S. Patent and Trade Office, said it’s “a multifaceted problem” that “we don’t take lightly.”

He encouraged businesses to check with U.S. embassies and consulates in the countries they are doing business and, if a problem arises, address it within the host country’s legal system. Wong said that China is cracking down on violators but that “it’s not a perfect system.”

“It’s a conundrum,” he said. “It’s a push-pull that does occur, based on human nature.”

email: [email protected]

 

My Best Advice by Deepak Chopra MD

Best Advice:  My Parents, God and Goddess

by Deepak Chopra MD -Founder, Deepak Chopra LLC

February 26, 2013

The best advice I got in life came from my parents. My mother was the archetypal goddess of wisdom symbolized in Saraswati, and my father was the archetypal healer and warrior. His name was Krishna and, like the divine Krishna, he embodied the knowledge and perseverance that guides us on the battlefield of life.

From an early age they impressed upon me through their words and actions that “True success comes from self-power.”

True success was defined as:

  • Progressive realization of worthy goals
  • The ability to love and have compassion
  • To be in touch with the creative power in your inner most being at all times.
  • Self-power was defined as coming from the level of the soul or core consciousness beyond the ego mask. It had the following characteristics:
  • Independence from the good and bad opinions of others but responsive to feedback (personally immune to flattery and criticism)
  • Fearlessness
  • Beneath no one (also superior to no one)These simple principles have guided my entire life and my journey as a physician and healer.Deepak Chopra, MD is the author of more than 70 books with twenty-one New York Times bestsellers and co-author with Rudolph Tanzi of Super Brain: Unleashing the Explosive Power of Your Mind to Maximize Health, Happiness, and Spiritual Well-being. (Harmony).
  • Courtesy of YouTube/ChopraWell
  • Furthermore, I was told that my core being was a field of infinite possibilities, infinite creativity, comfortable with uncertainty, synchronicity, and imbued with the power of intention and choice.

These simple principles have guided my entire life and my journey as a physician and healer.
Courtesy of YouTube/ChopraWell
Deepak Chopra, MD is the author of more than 70 books with twenty-one New York Times bestsellers and co-author with Rudolph Tanzi of Super Brain: Unleashing the Explosive Power of Your Mind to Maximize Health, Happiness, and Spiritual Well-being. (Harmony).

Neighbor Poland is an enticing model for Ukraine

By Christian Lowe and Marcin Goettig – June 23, 2014

WARSAW (Reuters) – World leaders marking 25 years since Poland began its transformation into a free-market democracy had a message this month for neighboring Ukraine: you too could follow the same path to prosperity.

Fundamentals of the two economies suggest Ukraine can aspire to match the progress Poland has made since communism fell. But first it must get to grips with its high energy consumption, and the corruption and poor governance that puts off many investors – precisely the main reasons why Ukraine remains so poor.

Back in 1990, shortly before Ukraine split from the crumbling Soviet Union, it had a gross domestic product per head of population of $6,806 while the figure for Poland was only $5,976. Since then Ukrainians’ living standards have risen little whereas on some measures Poles’ have more than tripled.

“Ukraine has a huge potential for development,” said Pawel Borys, director for strategy and investment at PKO BP, Poland’s biggest bank. “Unfortunately (that) has been wasted over the last 25 years.”

PKO BP owns Kredobank, a mid-sized Ukrainian lender, but Borys was cautious about whether his bank planned to invest more in the country. “It all depends on whether we will see real changes in Ukraine which will create a friendly climate for foreign investors,” he told Reuters.

Poland has become a stable democracy since the first partially-free elections a quarter century ago – notwithstanding a succession of short-lived governments in the 1990s and a current crisis involving the central bank governor and interior minister which might force a snap election.

After short but sharp free-market shock therapy, it has also achieved uninterrupted economic growth for the past two decades, making it an attractive model for Ukraine.

Poland’s GDP per capita in 2012 was $22,783 in purchasing power terms, compared with just $8,478 in Ukraine, according to World Bank figures.

U.S. President Barack Obama, in Warsaw for the anniversary celebrations, told an audience including Ukraine’s newly-elected President Petro Poroshenko that the Ukrainians of today were “the heirs of Solidarity”, the Polish movement that challenged Communist rule in the 1980s.

Polish President Bronislaw Komorowski said his country’s success had been “a huge, enormous example …. In my opinion (this) was a component part of the dreams of Ukrainians, of going down the same road, in the direction of the same values”.

CONVERGENCE

Trying to chart whether Ukraine can match Poland’s economic performance is not an exact science.

There are dozens of factors which could skew forecasts, including Ukraine’s separatist rebellion, and the question of whether Kiev will ever join the European Union. Poland’s accession in 2004 spurred its growth.

But using the Polish example helps at least to establish a rough benchmark of where Ukraine could get to, and the main obstacles it would need to overcome. Several measures of Ukraine’s raw potential suggest it is not far behind Poland, and, in some respects, in an even better position.

In Ukraine, around 80 percent of secondary school students went on to university in 2012, compared with 73 percent in Poland, according to data cited by the World Bank. These figures do not take the quality of the education into account.

Ukrainian labor force participation – the share of working-age people who are either employed or unemployed but looking for a job – was 59 percent in 2012, according to the World Bank, a little higher than Poland’s 57 percent.

The country has vast reserves of iron ore and some of the best farmland in the world. Agriculture occupies over 70 percent of Ukrainian territory compared with 49 percent in Poland.

CHALLENGES

However, two figures show a striking divergence. One is a World Bank measure of energy efficiency. On this, Ukraine produced $3 of GDP in 2011 for every unit of energy equivalent to one kg of oil that it consumed, compared with $8.3 in Poland.

International donors have pressed successive Ukrainian governments to adopt legislation that would improve energy efficiency, but with little success.

Heavy energy use is a particular handicap because Ukraine imports much of its natural gas from Russia, for which it pays a higher price than many of Russia’s EU customers.

With relations in crisis over Russia’s annexation of Crimea and the rebellion in eastern Ukraine, high consumption is also a political risk as it entrenches Kiev’s dependence on Moscow.

Corruption is the other measure on which there is a wide gulf. The Transparency International corruption perception index, which places the cleanest countries at the top of its ranking, put Poland in 38th place out of 177 countries in 2013, and Ukraine in 144th place.

“We have had very bad experiences in recent years, especially with actions of tax offices and court decisions totally failing to meet international standards,” Borys, from Polish bank PKO BP, said of its business in Ukraine.

Corruption translates into lower foreign investment. In the last 20 years Poland has attracted over $180 billion of foreign direct investment, central bank data shows. Ukraine, which has a larger population, has attracted just over $52 billion in the same period, Ukrainian statistics office data shows.

One economist familiar with both countries said Ukraine has potential but because of corruption and governance problems it may be more realistic for it to take as its model not Poland but Romania and Bulgaria, the EU’s poorest members.

(Additional reporting by Marcin Goclowski in WARSAW, Pavel Polityuk in KIEV; Editing by David Stamp)