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- The Rule of Law
- Francis Bacon
- Supply-Side E co n o m ics
- T h e Prim acy of Foreign P o licy
- From Under the Rubble
Competition for the right to govern and for political power must take place
among serious political parties. A political party is a unique modern institution.
It is not as association, a club, a brotherhood, a congregation, a confession, a
faction, a lobby, a special interest group or a single-issue pressure group.
A national political party has to have an outward outlook and reach,
members in every constituency, a national programme or platform, and an
open membership. The newly independent states must have more than one
serious and coherent political party and far less than the embarrassing and
self-defeating number o f 20 or 30.
Political parties must for the most part be informed by the political and
ideological legacy o f the West and the real remaining differences between
left and right, liberal and conservative.
The Communist party, which in fact was a fanatical ersatz religious sect,
must remain outlawed on the principle o f “the separation between church
The Rule of Law
A state is a constitutional and an architectonic order in which there is a
rule o f law and a constitution based on viable laws, a constitution o f order
You build a state from the bottom up like a house, or rather you bring it
up like a child. This must be based on a proper conception o f the nature o f
the human being as a creature o f God with God-given rights which the state
is established to protect. This is contrary to statism and totalitarianism.
8 Michael Oakeshott,
On Human Conduct,
Oxford, Clarendon Press, 1975.
Statism and totalitarianism are based upon the principle that “everything
is forbidden unless permitted by government”. A civilised democratic state is
based on the opposite principle o f “everything is permitted unless expressly
forbidden by law”. This is similar to the Ten Commandments, most o f which
are formulated in the negative: Thou shalt not.... And what is not expressly
forbidden is permitted.
Professor Hayek has distinguished states that are based on nomos or telos;
procedure or cause. The state should essentially be like a night watchman.
When the people are up and about and working the state should sleep. When
the people are sleeping the state should be watching for foreign enemies.
An economy is an aspect o f the state. Economic conduct is a part o f and an
aspect o f human conduct in general. As I said earlier, an economy is struc
tured and shaped by the political order and the constitution. There are essen
tially only two types o f political orders and therefore two types o f economies.
There are planned or command economies and free or liberal economies. In
other words, there are either variants o f mercantilist, feudalist, socialist or
communist economies, or free enterprise so-called capitalist economies.
Capitalism, o f course, is a Marxist misnomer for free enterprise and unhin
dered entrepreneurship. Karl Marx confused the early monopolistic capital
ism o f 19th-century industrial Britain with the exclusive reign o f capital.
Hence, the name capitalism for a free-enterprise, liberal, democratic political
and economic order. The question since has been, is there “a third w ay”
between capitalism and communism? This quest has driven Catholic social
thought from "Rerum Novarum” to “Centessimus Annus” in May 1991, when
Pope John Paul II moved away from a redistributionist approach based on
liberation theology and renewed the church's emphasis on free enterprise,
the production o f wealth, work and fair proflt.9
Francis Bacon was the first to synonymise a state with an economy. For
Bacon an economy was the state. This was a mistake. An economy is not a
state and a state is not an economy. A state or a polis has an economy. First one
must build a state as a precondition for a thriving and developing economy.
Supply-Side E co n o m ics
Free enterprise or capitalist economies have had a tendency or inclination
towards either “demand-side” (or Keynesian and Galbraithian) thinking, or
“supply-side” thinking as articulated by Adam Smith and George Gilder. In
the welfare capitalist state since the N ew Deal o f the 1930s the dominant 9
9 John Paul II, "Centessimus Annus”,
vol. 21, no. 1, May 1
, 1991, p. 2-24.
THE UKRAINIAN REVIEW
orthodoxy has been demand-side thinking in which the emphasis has been
on demand as an engine o f growth. And, o f course, wealthy, developed
countries can and perhaps should afford demand-side policies for some
time. But not forever. Underdeveloped or developing economies (or mined
ones like in the former USSR), on the other hand, are better served by sup
ply-side economics in which the inventive supply and production o f goods
creates a demand and fuels the economy.
Take the issue o f foreign aid. Should the West aid the ailing economies o f
the East? Should the newly independent states ask for foreign aid? Will for
eign aid help or hinder? Contemporary supply-side experts on development
like Professor Peter Berger go so far as to say that foreign aid has caused
underdevelopment. In other words, it seems that the newly independent
states o f eastern Europe will have to virtually pull themselves up by their
T h e Prim acy of Foreign P o licy
Here w e come to “the primacy o f foreign policy over domestic policy”, as
taught by Dmytro Dontsov and usually inverted by modern political ana
lysts. The new states need an independent, loyal military for self-defence
and protection, and that must be one o f the first acts o f nation- or state
building in eastern Europe.
In the old pre-communist patrimonial regime and during the communist
era in the USSR, Ukraine was a subject o f Russia’s foreign policy in spite o f
Russia’s propaganda about family, fraternity and "little brotherhood”. In the
post-communist order o f independent states Ukrainian-Russian relations
must continue as foreign policy relations. But it must be remembered that
unlike domestic policy, foreign policy can change suddenly, radically and
forcefully. Therefore, just as politics must drive economics, foreign policy
must drive domestic policy and the prospect o f sudden foreign policy
changes must be faced squarely.
From Under the Rubble
A truly independent, autonomous and sovereign state based on its own
rule o f law designed to protect the basic God-given human rights and liberty
(political and econom ic) o f individuals is the ultimate assurance that all
remaining vestiges o f communism and imperialism will be removed. But
before w e can build these newly-independent states in what were previous
ly captive nations w e must first get out from under the rubble. 1
10 G eorge Gilder,
Wealth and Poverty,
N e w York, Basic Books, 1981.
T o do that w e must remember Professor Murray Rothbard’s recent obser
vation about de-nazification and de-communisation and the double standard
that still continues to exist in the West. Professor Rothbard said:
“Regarding Europe I have a nagging tw o-fold question:
Why has no one remarked on the incredible double standard
in establishment treatment o f ex-nazi and communist regimes?
Both were despotic, evil and genocidal. After W orld War II
Nazis and collaborators were: (1) slaughtered on the spot by
vengeful Communist successor-regimes or by Communist par
tisans (as in Italy and France); (2 ) indicted and convicted by
the Allies and then successor regimes for ‘war crimes’ against
humanity with leaders put to death or sentenced to long jail
terms; (3 ) masses o f officials w ere 'denazified and jailed or
prevented from holding office’; and (4) for the past 47 years
alleged ex-nazis were made to stand trial in their Communist-
run homelands or Israel.
Consider the contrast in treating Communists since 1989.
Not only guards but high officials, even secret police officials,
have not only not been executed or tried for their crimes
against humanity, but most o f them are still there, still in place
— either as bureaucrats serving new regimes or as ‘former’
Communists n ow calling themselves ‘social-dem ocrats’ or
whatever. There has been no policy o f de-communization and
no lustration law ”.11
And before a new house or an independent nation-state can be construct
ed the ruins o f the previous structure must be completely cleared.
Murray Rothbard, “Cultural Revolutions: Regarding Europe” , Chronicles, October
1992, p. 7-8.
THE UKRAINIAN REVIEW
THE FORMATION OF LEGAL TIES BETWEEN
THE EUROPEAN COMMUNITY AND UKRAINE
The history o f direct legal relations between the European Community (EC)
and Ukraine is rather short and fairly uneventful. There are several reasons for
this. To start with one should recall that official relations between the EC and
the former USSR (which included Ukraine) were established only in June
1988, when the Joint Declaration on Mutual Recognition between the EC and
the Council for Mutual Economic Assistance (COMECON) was signed in
Luxembourg.! This paved the way for the conclusion, at the end o f 1989, o f a
trade, commercial and economic cooperation agreement between the USSR
and the EC and also an agreement on trade in textile products.2
The collapse o f the USSR, following the landslide vote for independence
in the all-Ukrainian referendum o f December 1, 1991, aborted a projected
new broader agreement between the EC and the Soviet Union. This had
been proposed by France and Germany only one year after the first agree
ment between the two sides was signed. The proposed agreement had had
twin aims: political and economic. It was intended to reflect the EC commit
ments to democratic reform within the Soviet empire, on the one hand,
while, on the other, it might have led to the formation in the foreseeable
future o f a free trade area including the Common Market and the internal
market o f the USSR.
The overw h elm in g pro-independence vote o f the Ukrainian p eop le
prompted the EC to issue on December 2, 1991, a Declaration on Ukraine.3
This welcom ed the democratic manner in which the referendum had been
conducted and called for Ukraine to pursue an open and constructive dia
logue with the other republics o f the dying Soviet state in order to ensure
that all existing international obligations were maintained. It also included a
number o f clauses relating to Ukraine’s commitments to respect all the inter
national obligations o f the USSR in the realm o f arms control and nuclear
non-proliferation. In the Declaration the EC called on Ukraine to accept joint
liability for the Soviet Union’s foreign debts.
The response o f newly-independent Ukraine to this document and similar
acts o f a number o f other states was very rapid and constructive. On
Victor Muravyev, a lawyer, holds a doctorate in law from Kyiv University. H e is a Professor
at the Department o f International Law o f the Ukrainian Institute o f International Relations,
w h ere he teaches European Community law and international law.
Official Journal o f the European Community (OJEC),
1988, LI 57/35.
1989, L 397/2,
1990, L 68/2.
5 Source: EC Commission.
Decem ber 5, 1991, the Ukrainian Parliament adopted an “Appeal to the
Parliaments and People’s o f the W orld” expressed its willingness to comply
with all the main provisions o f the EC Declaration.4 5
Nevertheless, it has taken some time for the EC to accept the new realities
which emerged after the breakdown o f the USSR. The process o f rapproche
ment between the EC and Ukraine has not always been totally smooth and,
on occasion, has been fraught with misunderstandings. Thus, the EC turned
out to be among a small group o f somewhat confused states and interna
tional organisations which precipitated the official recognition o f the so
called Commonwealth o f Independent States — to the great surprise o f the
parties to the agreement on the CIS w ho when signing it had no intention of
creating a new international legal entity.
On the other hand, the EC and its member states realised fairly rapidly
that the collapse o f the USSR w ou ld demand the reappraisal o f their
approach towards the newly independent states (NIS). N ow they w ould
have to deal with each republic separately, even while at the same time try
ing to maintain the economic and political stability o f the territory o f the for
mer Soviet empire by preserving existing ties among the NIS. For this rea
son, in the first half o f 1992 the EC institutions adopted several decisions on
the distribution among the NIS o f import and export quotas formerly allocat
ed to the Soviet Union.5
Parallel to all this, the EC began reallocating its economic and technical
assistance to the former USSR. At the beginning o f 1992 the technical assis
tance programme was reshaped and renamed TACIS (Technical Assistance
for the Commonwealth o f Independent States). This programme aims at
helping the recipients to introduce a system o f trade regulation compatible
with the General Agreement on Tariffs and Trade (GATT). Such a system
will facilitate the subsequent integration o f the CIS states into the open inter
national system and, in time, further improvements in access to markets.
The areas covered by TACIS include human resources’ development, food
production and distribution, networks (energy, transport and telecommuni
cations), enterprise support services, and nuclear safety. Within the frame
work o f TACIS, new indicative programmes have been signed with each of
the former republics, including Ukraine, reflecting their particular needs.
Thus, o f the 300 M ECU allocated in 1992 to indicative programmes, Ukraine
received 47 M ECU.6 Particular emphasis is placed on the sphere o f privati
sation in Ukraine.
EC efforts in the field o f nuclear safety were extended in June 1992 by the
signing o f an agreement with Russia, Belarus and Ukraine setting up a pro
Decem ber 7, 1991, p. 2.
5 See Commission Regulation N 723/92 o f March 23, 1992, OJEC L 79/5; Council Regulation
N 848/92 o f March 31, 1992,
L 89/1; Council Decision o f March 31, 1992,
N o. L
6 Source: EC Commission.
THE UKRAINIAN REVIEW
gramme for studying the radioactive contamination resulting from the
Chornobyl disaster. This programme is intended to broaden the technical
skills needed to contain such accidents, to improve emergency management
procedures, and so on. The total cost o f the programme is 10 M ECU.7
However, the most dramatic step made by the EC in its relations with
Ukraine and other NIS was the decision to reach an agreement on coopera
tion with each o f them individually. On April 6, 1992, the EC Commission
submitted to the EC Council o f Ministers a directive on the negotiation of
cooperation agreements with Russia, Belarus, Kazakhstan and Ukraine.
These will replace the 1989 treaty with the USSR on trade, commercial and
econom ic cooperation, the provisions o f which the EC has continued to
apply up to now. The new agreements constitute a further step forward in
the recognition o f the drastic changes that have occurred in this region.
They will put an end to the sometimes ambiguous stance taken by the EC
with regard to the CIS, since their conclusion will mean the establishment o f
permanent bilateral political and economic relations between the EC and
each o f the other NIS with which separate agreements will be reached. For
Ukraine, this means the start o f a process o f integration into the larger
Europe on the basis o f geographical position and the sharing o f common
political, economic and legal values.
Nevertheless, some time still had to elapse before the EC and Ukraine
began their first contacts aimed at the conclusion o f such a cooperation
agreement. This delay may be explained by several factors. Firstly, it seems
that the Western World had been bewildered by the fact that Ukraine estab
lished its independence so rapidly and so peacefully. The West needed
time, therefore, to formulate its strategy towards this “n ew ” country. The
lack o f a coherent policy towards Ukraine was concealed by eloquent dis
cussions on the place o f Ukraine in the future European structure and the
need for Ukraine to maintain her traditional economic ties with the other
NIS on account o f the high degree o f regional specialisation within the for
mer USSR, the heavy degree o f interdependence, and the fact that it would
be counter-productive to erect new trade barriers between the independent
republics, just at the time when the Maastricht Treaty stipulated the elimina
tion o f the remaining economic and legal restrictions within the EC.
It seems, however, that the most important fact is that the EC was unwill
ing to disrupt the established pattern o f relationship between its members
and what had been the former USSR. In these relations the Soviet Union had
served mainly as a supplier o f raw materials to Western Europe and consti
tuted a very large potential market for goods from the EC. Hence the EC
was rather reluctant at first to assist the NIS to carry out structural economic
reforms. Quite obviously the EC is not interested in new competitors in its
own market, particularly at a time when some o f its member states such as
7 Source: EC Commission.
France, Germany and Great Britain are facing serious economic problems
while the prospects for consolidation within the EC are not too bright.
This approach can be observed in some publications analysing the rela
tions betw een the EC and Eastern Europe, the authors o f which, while
admitting that in terms o f economic cooperation, the EC and Ukraine can
complement each other, nevertheless assign Ukraine a place in the backyard
o f the larger Europe.8 9
As for the Ukrainian policy towards the EC, this is based on a strong
desire to becom e an integral part o f the enlarged European economic, politi
cal and legal space. The arguments are that geographically Ukraine is situat
ed in the heart o f Europe, and has various ties, deeply rooted in history,
with a large number o f European countries. On the other hand, Ukraine is
very keen to reshape the whole spectrum o f her relations with her neigh
bours in order to make them more efficient. It is well understood by many
Ukrainian politicians that if the country wants to be an integral part o f the
larger European area, she must live up to common European standards.
Accordingly, the Ukrainian officials in charge o f foreign policy have
w ork ed out a system o f priorities in which cooperation with Western
Europe is considered o f paramount importance, ranking immediately after
ties with the countries contiguous to Ukraine. To some extent this essentially
pragmatic system resembles the concept o f concentric circles so dear to the
heart o f the EC Commissioner Jacques Delors.
However, one has to admit that the Ukrainian system needs more precise
definition as regards the EC as a whole. It is even more important to have
proper financial resources and personnel possessing the expertise to deal
with the EC in order to bring this concept to life. Unfortunately, nowadays
Ukraine suffers from a lack o f both money and qualified personnel.
Despite this unfavourable background, both Ukraine and the EC have
managed to reach many points o f common interest. The rapprochement
between them was reinforced by the talks between Jacques Delors and the
Ukrainian President Leonid Kravchuk in Brussels on September 14, 1992.
This was the first meeting o f the highest officials from both sides.
In his address to the meeting Leonid Kravchuk praised the launch o f
TACIS and promised to base Ukraine’s cooperation with the EC on the prin
ciples o f the CSCE Final Act ("Helsinki Accords"). Kravchuk and Delors
signed a Joint Statement confirming the need to formalise by an exchange o f
letters the continuing mutual obligations o f Ukraine and the EC under the
above-mentioned trade agreements o f 1989. They also expressed their inten
tion to reach an agreement on partnership and cooperation. It was agreed to
set up a Ukrainian permanent mission to the EC and a delegation o f the EC
Commission to Ukraine.?
8 See, for instance, Perdita Fraser,
The Post-Soviet States and the European Community,
London, 1992, p. 25-26.
9 Source: EC Commission.
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