There are also economic reasons for dissatisfaction with the new Ukrainian authorities in the east and south of the country

At the time of the collapse of the Soviet Union, Ukraine had excellent starting opportunities. A large domestic market, a population of 52 million people, skilled workers in a wide range of economic sectors, a strong industrial base, nuclear power, fertile land and an advantageous location - the list goes on. In terms of economic development in the early 1990s, Ukraine was ahead of many Eastern European neighbors, including Poland. Per capita GDP calculated at purchasing power parity in both Ukraine and Poland was at $6,000.

But where is Poland now and where is Ukraine?

In Ukraine, everything immediately went wrong. The nineties passed against the backdrop of the collapse of the once large economy - a decline of 10-15% per year became the norm. As a result, by the beginning of the 2000s, the country’s economy shrank by almost 60% - such a transformational decline did not occur either in the former Union, or, especially, in Eastern Europe. A comparable decline was observed only in countries that went through military conflicts and division of territory - Moldova and Georgia.

The general global wave of economic growth acceleration in the first half of the 2000s, and most importantly the dynamic rise in Russia, ensured high growth rates in Ukraine. At the end of 2008, Ukraine grew to a level of 74% relative to the 1990s, but due to the crisis, which rolled out the Ukrainian economy like a skating rink (-14.8% - the deepest failure in 2009 among large countries), the economy rolled back again, and at the end of 2013, the country's GDP is still less than 70% of 1990.

As a result, if on the threshold of market reforms Ukraine was in 60th place in the world in terms of per capita income, now it is not even in the top hundred. And even in peripheral Armenia, which certainly cannot be envied in terms of conditions for development, per capita income is 15% higher. And Ukraine’s new neighbors in the world table of ranks are revolutionary Egypt and African Namibia. In dollars at the current exchange rate, the picture is even worse - $3,900 per capita (112th place in the world). In China, about which until recently they said that they work there for a bowl of rice - $6,600. In Ukraine, the average salary in 2013 was $410, and after the collapse of the hryvnia it was only $330. Real disposable income in Ukraine and China after the devaluation of the hryvnia has almost become equal and is now about $270.

But is everything so bad? For some, it’s even very good. Over the years of independence, a powerful oligarchic class has formed in Ukraine. The fortune of the richest businessman in Ukraine, Rinat Akhmetov, was estimated at $15.4 billion in 2013, which is no less than 9% of GDP. And the entire Ukrainian Forbes 2013 list is almost a third of the Ukrainian economy. For comparison: the wealth of Russia's richest businessman Alisher Usmanov last year was only slightly more than Akhmetov's - $17.6 billion (0.9% of GDP). And the combined wealth of the hundred richest businessmen in Russia is less than 20% of GDP.

It is clear that this money was made on Soviet assets. I would like to tell you how Ukrainian oligarchs raised old enterprises from their knees and turned them into advanced production facilities. But we need to look hard for such examples.

In metallurgy, which became the forge of Ukrainian oligarchs, open-hearth production, which was abandoned in the world more than 20 years ago, was partially stopped only by the global crisis, and before the crisis they accounted for 45% of output. And even in recent years, over a quarter of steel in Ukraine is produced by open-hearth furnaces (in Russia - only 9.6%). Prior to this, exclusively energy-intensive production was quite profitable against the backdrop of low prices for energy resources, including Russian gas.

Significant investments in the sector were made exclusively as anti-crisis measures.

And before that, money was siphoned from factories to purchase other assets - “newspapers and steamships.” It is surprising that both before the crisis and in recent years, investments in the Ukrainian food industry noticeably exceeded investments in metallurgy, although it was the latter that accounted for the main industrial output (up to 30% in the structure of the manufacturing industry and up to 40% of all exports). It is not surprising that the food industry has now taken a leading place in Ukraine.

Now that the inefficient Ukrainian metallurgy is becoming an increasing burden, it is time to start restructuring it with the involvement of European funds and the Ukrainian budget. In general, using the budget in a poor country has become one of the main sources of income. For example, through the “development” of gas subsidies for utility companies - they amounted to more than $500 million a year, while the utilities themselves are chronic debtors to Naftogaz.

Now the new Kyiv authorities are going to stop the vicious practice of subsidies, and along with it they are going to privatize Naftogaz.

It must be said that the issue of privatization is directly related to the revolution. Over the years of his presidency, Viktor Yanukovych has upset an important balance, in which attractive pieces of state property used to go to various oligarchic groups. Under him, assets, for example in the electric power industry, were transferred mainly to one Donetsk group, and most importantly, Yanukovych became interested in transferring assets to his “family” . Privatization is the legitimate prize of the winners. But right now, the authorities and applicants for participation in privatization may face a real social question. The assault on regional administrations from Odessa to Kharkov is the best confirmation of this. People are tired of the fact that no one noticed them for years, and the new “European” government, by repealing the law on regional languages, actually demonstrated the same course.

Now, when in the East they are talking about their rights to autonomy, the possibility of privatization is a big question. Each self-determining region may well claim rights to part of the assets located on its territory and, accordingly, demand a certain part of the income from their sale. This is a very realistic option for large facilities, for example the gas transmission system of Ukraine. In relation to local assets, regional administrations can claim to conduct transactions independently. In this case, the very idea of a new large privatization loses its meaning both for the authorities and for the new applicants.

And the reformatting of the country is more likely than ever. Now the regions where there is active resistance to the new Kyiv authorities account for about 42% of the country's GDP. Moreover, it is in these regions that the main industrial potential of Ukraine is concentrated - 45% of total industrial output. And it is in these regions that people have something to lose if a Free Trade Agreement is signed with the EU.

The divide is very clear - Ukraine's nationalist pro-European West, which accounts for only 16% of the country's GDP, is fighting for its future. And the industrial East protects the present. And somewhere between them are the moderate central regions and Kyiv. In the event of a split, today's Ukraine will be similar to Moldova - the poor agricultural West and the industrial Transnistria, but both regions have an unenviable present and future. Ukraine needs to avoid this and become a strong federation.

How Transnistria does not become Transnistria