Ukraine In The Context Of The Global Trends And Scenarios Of The World Development
© V.Vovk, 2001
Ukraine's development as a modern nation and its capacity to secure national interests in today's world essentially depend on its deep integration into the current civilizational processes. This ambitious goal requires a comprehensive development strategy elaborated with proper consideration for the challenges of the 21st century and the global trends that are shaping the future of humanity.
THE GLOBAL TRENDS AND CHALLENGES OF THE 21ST CENTURY
The Physical Limits to Growth
Two hundred years ago, in 1798 Thomas Malthus, a British clergyman and intellectual, first raised the question of constraints on population and consumption growth provided by the limits of the Earth's carrying capacity. In historical context of his time this issue was formulated as a warning of future food shortages and famine as an inevitable consequence of the exponential population growth.
170 years later, in 1970-71 a research team of the Massachusetts Institute of Technology, commissioned by the Club of Rome, undertook a two-year study to investigate the long-term causes and consequences of growth in population, industrial and food production, natural resources consumption, and pollution of the environment. A computer model based on the system dynamics method was created to simulate the world evolution with the viewpoint of the economy and the environment as one system. The results of the study were presented to the general public in the well-known book, The Limits to Growth , which created a furore and was widely debated by scientists and public activists, as well as parliaments. It contained a conditional warning to humanity:
"If the present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime within the next 100 years. The most probable result will be a sudden and uncontrollable decline in both population and industrial capacity."
It also sent a message of promise stating that it was possible to alter these growth trends and to establish ecological and economic stability that would be sustainable far into the future.
Besides, due to this and other studies an important distinction between growth and development was drawn and highlighted. Growth is connected to increase in size by processing larger volume of materials, while development is related to expansion of potentialities. Thus, quantitative growth and qualitative development follow different laws. As noticed in a document of the World Bank, "Our planet develops over time without growing. Our economy, a subsystem of the finite and non-growing Earth, must eventually adapt to a similar pattern of development" . In fact, although there are physical limits to growth, there are no limits to development on a sustainable basis.
Gradual understanding by the nations and their political leaders of the new challenges of the 21st century resulted in a new positive vision of the future that was formulated in 1980s by the Brundtland Commission: "Humanity has the ability to make development sustainable – to ensure that it meets the needs of the present without compromising the ability of future generations to meet their own needs" .
In 1991 the same team updated and expanded their research by using the new data on the world's resources and environment, recent information and reasonable assumptions on global trends in technologies and environmental policies, as well as different hypothesis about future human responses to this challenge. The results of the new study were published in the 1992 book, Beyond the Limits  and showed the variety of future paths that depend on our crucial choices. The book described 13 different scenarios through 2100, most of which show decline and collapse of human civilization, with only 2 scenarios that include a potential transition to a sustainable world.
It should be noted that the analysis of the above computer simulations clearly indicated that technology-market responses are not enough. Technological progress and market flexibility will be necessary and important factors to bring the world to sustainability but the latter will require something more essential. A crucial factor will be human mindsets, beliefs and values, that is – human wisdom. Both positive scenarios take this component into account as the basis for deliberate social constraints on material consumption and population growth. A transition to sustainable development is technically and economically possible, though it is psychologically and politically daunting. At present a significant number of scientists, public activists and politicians believe that it will require a new Sustainability Revolution as profound as the previous two great revolutions of human civilization – Agricultural and Industrial.
Human Social Systems and Development Scenarios
The idea that future paths of human development depend on the prevailing patterns of thinking, social values and institutions, has been increasingly recognized. In this respect the scenarios using qualitative analysis of driving forces, flexible approach to the future and strategic thinking, rather than mathematics and computer models, are also of great interest. The World Business Council for Sustainable Development has constructed three different scenarios of how the world might unfold that diverge depending on the possible human responses to the challenge of sustainable development . Thus, the branching point of these stories lies in how human actors will respond to the problems that face them.
In the FROG! scenario people simply ignore their social and environmental problems, relying upon the dynamic of economic growth and the technological innovations, and keep on doing "business as usual". Tension in North-South relations is not eased; in particular, those nations who are striving for economic development argue that if the developed countries insist on protection of the environment, they should "First Raise Our Growth!". The habitual reliance on market and technologies, however, is not sufficient to solve the indicated long-term problems. By 2050 there is evidence that the darkest predictions are actually nearer to the truth than the more optimistic ones. Thus, in this scenario the response is inadequate – the human social systems are unable to move toward sustainability – and, therefore, threatens basic survival of both human and environmental ecosystems.
In this story, people react like the proverbial frog: when placed in hot water, the frog leaped out to survive; but placed in cold water, that was gradually heated, the frog was boiled to death.
GEOpolity assumes that, when problems reach a crisis point, people will turn away from the ineffective institutions of government and business to seek new models that will take into account those human values, which seem to be ignored by the narrow economic approach. In this scenario the response is to build an interlocking governance structure coordinated at the international level – such as the Global Ecosystem Organization (GEO), which has broad powers to protect the environment and preserve society, even if doing so requires economic sacrifice.
Though it leads to a sustainable society, such perspective may shock many Europeans and Americans, as it seems to reflect the mind-sets historically typical of Asian nations, particularly of China.
Finally, in the Jazz scenario people try to embody their growing environmental and social standards within the modern economic paradigm. Diverse players – governments, businesses, NGOs, and consumers – experiment with ad hoc alliances and innovative forms to solve the problems in the most pragmatic possible way. They act together as partners or else they fail. In this story markets are harnessed for finding appropriate solutions. Thus, a transition to sustainable development is based on the search for effective ways to incorporate environmental and social values into market mechanisms using the driving force and the full power of self-interest to survive and develop.
Sustainable Development on the International Arena
Since the first UN conference on the environment was held in Stockholm in 1972 international community got a great number of warning signals of the need to take a balanced and integrated approach to environment and development questions. During the 1980s UN World Commission on Environment and Development chaired by Gro Harlem Brundtland, Prime Minister of Norway, made an important contribution to raise this issue on the international political agenda. As the result of these efforts the nations of the world called for the United Nations Conference on Environment and Development, which was held in Rio de Janeiro, 3-14 June 1992. This conference, also known as Earth Summit, addressed the problems of today and also aimed at preparing the world for the challenges of the 21st century.
The adoption of the Rio Declaration on Environment and Development, Agenda 21 Program and other documents of the Earth Summit hopefully marked the beginning of a new global partnership for a sustainable future. It was declared that "integration of environment and development concerns and greater attention to them will lead to the fulfilment of basic needs, improved living standards for all, better protected and managed ecosystems and a safer, more prosperous future. No nation can achieve this on its own; but together we can – in a global partnership for sustainable development" .
The Rio Declaration and Agenda 21, which were adopted at the highest level, reflected a formal consensus on the need of transition to sustainable development and allowed achievement of some limited political commitments on global cooperation in this sphere. However, modern humankind is divided into "nation-states" that contribute unevenly to the burdens on the carrying capacity of the Earth. This causes arguments between rich and poor nations over how to apportion responsibility for reversing the planet's ecological decline. Besides, for almost all nations economic growth is still the major concern, with sustainable development acknowledged as important but not pressing.
Nevertheless, ecological globalization in its many forms may pose enormous threat to national environment and ecosystems, and already challenges the traditional international governance structures. Environmental problems are climbing ever higher on the international agenda, preoccupying diplomats more and more. For example, the number of international environmental treaties over the past few decades has climbed to more than 230 .
The global challenge faced by the international community embraces various aspects of international relations:
Many developments in today's global affairs like debates over globalization and the third world debt crisis, poverty reduction strategy, global climate change and Kyoto protocol on carbon emissions, trade regime for genetically modified organisms, as well as many other international issues can be better understood in the light of the global challenge of sustainable development.
Yet nations are not prepared so far to grant any significant and growing powers to international environmental institutions. Thus, successful implementation of the Rio Declaration, Agenda 21 and other international documents on the environment and development is first and foremost the responsibility of national governments. They have to elaborate national strategies and plans, and to pursue correspondent policies, which are crucial in achieving the sustainability goals. International cooperation can only support and supplement such national efforts.
UKRAINE: 10 YEARS’ BALANCE
Ukraine's rank in the context of transition to sustainable development
In 2001, the World Economic Forum in Davos at its annual meeting presented the Environmental Sustainability Index (ESI) developed by its Global Leaders for Tomorrow Task Force, which compares nations on a range of indicators and allows to measure their overall progress toward a sustainable society . ESI was developed for 122 countries for which detailed information on the ESI’s elements was available. The ESI scores are based upon a set of 22 indicators, each of which combines a few variables for a total of 67 underlying variables that are empirically measured. These indicators were deemed the most relevant constitutive elements of the five core components:
The ESI permits cross-national comparisons of environmental progress in a systematic and quantitative fashion. A high ESI rank indicates that a country has achieved a higher level of environmental sustainability than other countries; a low ESI rank signals that a country is facing substantial problems in achieving environmental sustainability along multiple dimensions.
The five highest-ranking nations in the 2001 ESI are Finland, Norway, Canada, Sweden, and Switzerland. Ukraine, scoring the 110 position, is among the lowest-ranking countries. Low ESI rank of Ukraine is a reflection of both the serious problems nation inherited from the USSR and the negative results of the so-called "reforms" during the first decade of independence.
The development motive in the USSR
Communist rulers set the task of being able to compete with leading powers for domination in the world (understood as military and ideological domination). This required achievement of the front lines in industrial production. In particular, such an ambitious objective implied an accelerated industrialization of the country. This task was partially fulfilled in the 1930s (before the World War II) and accomplished in the 1950s. A fairly industrialized but highly centralized and self-isolated economy was created in the USSR. The latter, however, turned out to be one of the most serious disadvantages of the industrial society of Soviet (communist) type.
Another serious flaw in the USSR’s industrial development was an increasingly extensive usage of natural resources without proper consideration for the carrying capacity of nature. Communists always considered nature as something that should be conquered and transformed to serve their purposes. The perception of human being as the Master of Nature was the prevailing pattern of thinking during the communist era that provided a philosophical basis to the growing consumption of natural resources and large-scale transformation of nature in general.
The environment was almost completely neglected by the communist rulers, as there was a clear conflict between environmental protection and their growth objectives. The Soviet leadership was reluctant to use its scarce financial resources to clean up or protect the environment. For dozens of years both human and natural resources of the USSR were mobilized to achieve military parity with the West and to withstand the West all over the world in order to become a global superpower and maintain this status. Thus, communists were misusing natural resources and seriously overstressing the country’s ecosystems. As a result, much of the USSR’s territory became heavily contaminated with various pollutants.
The false development motive could not provide a solid basis in the long run. The communist development policy proved to be quite suitable for achieving traditional industrial objectives. However, it failed when the so-called post-industrial "knowledge and services economy" focused on efficient use of energy and natural resources, waste management and recycling, computer and information technologies, telecommunications, and other modern issues which gradually came to the front line of the development objectives. The communist industrial society, by contrast to the capitalist one, appeared to be inadequate to resolve the issues on the modern agenda. Its internal development potential was exhausted, its economy became more and more inefficient, and it lost in the Cold War and eventually had to surrender.
Ukraine in the former USSR and post-Soviet reforms
As a part of the Russian Empire, Ukraine was one of the most industrialized provinces with well-educated population. The role of Ukraine even grew during the Soviet time when it became one of a few leading industrial and technological centres of the USSR due to its existing industrial base, educated and hardworking population and rich mineral resources, which were extensively exploited by the Soviets.
In 1990 about 40% of the USSR’s military industrial complex was located in Ukraine with some main machine-building corporations producing modern space rockets, inter-continental and middle range ballistic missiles, warships, tanks, space satellites, equipment for nuclear power stations, etc; as well as heavy industries with huge metal and chemical plants, oil-refineries, hundreds of mines extracting mineral resources like coal, iron ore, uranium ore and many other important resources. In general, Ukraine, having about 18% of the USSR’s population and less than 4% of its territory, accounted for more than 30% of its overall industrial production and 25% of its agricultural output.
These results, however, had been achieved at the expense of extensive and overstrained usage of natural resources and vast environmental pollution; thus, causing a great part of Ukraine to become an environmental problems area with depleted energy and other natural resources. The well-known accident at the Chernobyl nuclear power plant and subsequent radioactive contamination of large areas of Ukraine’s territory is only one of a number of serious environmental problems facing Ukraine.
In 1991, as the result of the collapse of the USSR, Ukraine gained its independence. However, the starting point was very complicated and had some serious disadvantages with regard to the modern world trends.
Ukraine inherited from the USSR a failing highly centralized economy with industries based on inefficient outdated technologies and with essentially unbalanced economic structure (composition). In fact, the economy of newly independent Ukraine was just an ugly wreck-piece of the outdated economy of the failed superpower. In particular, inefficient use of energy proved to be one of the most critical factors when Russia in 1992-93 abruptly increased prices for energy supplies to the level of the world market prices. Another shock came from the hastily attempts of the Ukraine’s integration into the world economy when the earlier closed (within the borders of the former USSR) and vulnerable national economy was suddenly opened to the surrounding world.
After 70 years of communist rule the newly independent Ukraine had inadequate governance structure: most of social institutions either were ruined or lost credibility, and new ones were not created yet. Besides, national traditions had been lost; virtually all Ukrainian population was still affected by the obsolete myths, mind-sets and mental maps of the communist industrial society.
Thus, Ukraine required (and still requires) efficient governance, social and technological innovations, market reforms and economic restructuring, creation of new social institutions and development of civil society, as well as new patterns of thinking.
The ruling political elite in Ukraine, which used to be just a provincial communist bureaucracy in the former USSR, failed to tackle these problems and provide adequate leadership to the nation. It failed to work out, formulate and implement a modern and prospective development strategy to address the new economic, social and environmental challenges.
Transition to market economy was declared. Market reforms, however, were started with a significant delay and have been carried out in very slow and inconsistent way. Besides, the important question whether monetary market forces taken alone could shape the new economy that would satisfy the national needs in the long run was not answered or even stated. The objective of achieving sustainable development has never been formulated and set forth. In fact, the Ukrainian people never got a clear vision of the destination point of the country’s transition process.
Industrial and environmental decline
As the result the economic, social and environmental situation in Ukraine has been greatly aggravated. In the period 1991-2000 the Ukraine’s GDP dropped by almost 60%, the average personal income (in real figures) is now approximately 2/5 of what it was in 1990.
The environment has been neglected in the process of market reforms even more than during the Soviet rule. This is mostly due to the fact that economy’s structure has declined further, with heavy industries – metallurgy, mining, chemical and oil-refining industries, and energy sector – dominating more than earlier. The share of these intense resource-consuming and environmentally unfriendly industries in the economic output of Ukraine has more than doubled over the last 10 years – from 23% in 1991 to 58% in 2000. While in the 1990s Ukraine saw the overall industrial production plummet to half the level of 1990, the fall in the lighter and cleaner sectors of the industry, including high technologies and machine building, was even more drastic.
The macro indicators, like energy use, generation of industrial wastes, pollution emissions to the atmosphere per unit of GDP, explicitly show the growing inefficiency of the Ukrainian economy and growing consumption of natural resources per unit of GDP (measured in purchasing power terms).
Consider, for instance, the carbon intensity of the energy economy, as measured in emissions per unit of economic output. This ratio is becoming an important indicator of our movement toward sustainable development, especially in the context of the global warming problem and Kyoto Protocol on greenhouse gas emissions. Between 1950 and 1999, the number of tons of carbon produced for each million dollars of gross world product was reduced by 39%, from 250 to 150 tons per million dollars of output, with a 2% annual average during the 1990s . By contrast, between 1992 and 1999 Ukraine's carbon intensity grew by 29% – from 455 to 585 tons – and is now almost 4 times higher than the world's average amount (See Figure 1.).
The same pattern is true for the energy intensity of Ukraine's economy, that is the amount of energy required per unit of nation's economic output. Although energy use has fallen in Ukraine over the past decade, much steeper drop in economic output has pushed the country’s energy intensity upward by 52%. Between 1992 and 1999 Ukraine's energy intensity grew from 25,000 to 38,000 Btu per 1 dollar of national GDP, that is 2.7 to 5.4 times higher than in Poland, USA, Germany, and China (See Figure 2.).
As its economy recovers, Ukraine is projected to halve its energy intensity over the next 20 years – albeit to the level that will still be 2 to 5 times higher than in developing and industrial countries . To radically reduce its energy consumption, Ukraine will need to enact a set of energy efficient policies, which would include technical improvements, structural economic shifts to less energy-intensive activities, and changing patterns of energy use.
The above examples are just a few of many evidences of the fact that the environmental price we pay to our economy has grown and the country's GDP composition has become more resource-consuming and environmentally unfriendly over the years of the on-going transition. Transition to what and which way? – we ask.
Lack of responsibility of Ukrainian business
Since Ukraine inherited from the communist rule an extremely inefficient economic system with out-dated industries, inefficient use of natural resources and entirely neglected environment, transition to sustainable business practices is one of the main challenges faced by the national business. In particular, Ukrainian industry has a tremendous need for efficient and eco-friendly technologies, effective environmental and resource management, clean and safe production systems.
In order to help world businesses respond to the new environmental challenges the World Business Council for Sustainable Development (WBCSD) has worked out a modern sustainable business strategy – the Eco-efficiency concept, which makes a positive link between resources efficiency, environmental improvements and economic benefits. This concept helps companies understand that better environmental performance increases their competitiveness on the global market. Eco-efficiency as business strategy also provides new business opportunities and thus helps companies get engaged in both domestic and international efforts towards sustainable development.
Thus, Eco-efficiency concept with its pragmatic and business oriented approach towards sustainability could make an important contribution to Ukraine’s sustainable future. Moreover, Ukraine's progress on this path will be impossible without socially and environmentally responsible businesses prepared to provide leadership as a catalyst for change towards sustainable development, and to participate in policy development to create an appropriate regulatory framework. In particular, a dialogue between the government and the national business could promote more rational and enforceable regulatory decisions on taxes, subsidies, environmental standards, tradable permits, etc. Companies, in turn, could promote Eco-efficiency through high voluntary standards of environmental and resource management in their business.
Unfortunately, Ukrainian oligarchic business has fallen far behind the fundamental shifts in the world business and failed to recognize the modern trends. Most of the leading Ukrainian industrialists and businessmen, whose origin from the former communist nomenclature is well known, have proved to have quite limited mindsets and archaic patterns of thinking. They are anxious to make quick money. Their driving force is a narrow-minded understanding of self-interest that does not include strategic thinking and planning. They don't need the assessment of long-term threats and opportunities, and care little about the future. Their major concern now is short-term profits, which they derive from the outdated industrial base seized, often illegally, after the disintegration of the communist superpower.
Thus, most of Ukrainian businessmen are paying little attention to the modernization issues and business strategy development. They are concerned more with the on-going fight to redistribute the existing industries and financial flows, and to achieve a higher position in the oligarchic hierarchy in the country which seems to them to be more important. Besides, a recognition of the fact that Eco-efficient manufacturing has a positive public relations and marketing value that translates into higher sales and increased market shares, in particular, that environmentally aware export markets could more easily be accessed, is quite uncommon for the today's business managers in Ukraine.
On the whole, Ukrainian businesses at present don't see strategic economic advantages in being environmentally and socially responsible. This has been the main reason for the failure of an initiative to establish a national Business Council for Sustainable Development in Ukraine that was launched in 2000. The mission of a national BCSD could be to get sustainable development onto the agenda of Ukrainian industries and to promote the business contribution to sustainability issues in Ukraine. This initiative, however, didn't find until now sufficient understanding among the Ukrainian businessmen and so far has not been supported with their commitment.
A need for new national leadership
We have to note that despite the acute problems and new challenges faced by Ukraine at the beginning of the 21st century the idea of sustainable development is not well known in Ukraine. The principles adopted at the Earth Summit in R³î-de-Janeiro (1992) have not received appropriate reflection in the public opinion in Ukraine and have not been implemented in the state policies, programs and economic practice. Advanced experience of the world's leading countries gained in the recent years is still unknown to general public and governmental officials responsible for policy- and decision-making. In spite of a great number of publications on sustainable development issued in the world in the last decade, any relevant information in Ukrainian language is very scarce.
As the result, there is a serious gap between the current reforms in Ukraine and the challenge of transition to sustainable development.
A bright manifestation of this situation is the story of the Ukraine's National Commission on Sustainable Development (NCSD) created according to Ukraine's international commitments. It was formally established by the Cabinet of Ministers of Ukraine on December 30, 1997 with the official mission to advise the government on sustainable development and develop new approaches to achieve the nation's economic, environmental, and social goals. In this respect it's important to note the following.
Firstly, the NCSD was created several years later than correspondent bodies in other countries (for instance, in the USA it was established in June 1993). Secondly, the Commission was formed according to the worst Soviet bureaucratic traditions with the vast majority of members appointed from the state ministries and agencies. Thirdly, during 4 years of its formal existence (1998-2001) the NCSD meetings were convened only 3 (!) times, the last two of which were held in December 2000 and May 2001.
The last but not the least, the Commission was supposed to elaborate Ukraine's National Strategy of Sustainable Development, adoption of which by the middle of 2002 is stipulated by the UN documents. This strategy should strengthen national potential to work out and pursue economic, social and environmental policies adequate to contemporary and future problems. The NCSD has failed to prepare a draft document and submit it for consideration to the Cabinet of Ministers and the Parliament of Ukraine. Moreover, it didn't reach an agreement even on the concept that could be put into the basis of the national sustainable development strategy. And the concept's draft prepared by the government was rejected in 2001 by the majority of the parliamentary standing committees. Thus, Ukraine is approaching the Rio+10 Summit without any national sustainable development document.
It is now evident that to fulfil its mission the NCSD should be radically re-organized. Members of the NCSD should be appointed from the public and private sectors and should represent a diverse range of governmental agencies, businesses and non-profit organizations with experience relating to matters of sustainable development. The success of reforms in Ukraine is impossible without active involvement of citizens and private business in the public policy process and decision-making.
The NCSD should become a major national body to forge consensus on Ukraine's transition to sustainable development by bringing together diverse interests to identify and develop innovative economic, environmental and social policies. It should also work to raise public awareness, demonstrate implementation of the policies that foster sustainable development, evaluate and report on progress on this path.
Eventually, integration of the long-term tasks of the society transformation to achieve sustainability of economic development and environment (as stipulated by the Earth Summit and subsequent UN documents), and the current tasks faced by the Ukrainian society will provide a solid foundation for reforms in Ukraine and a deeper vision of the future prospects of our nation. The national sustainable development strategy should fully consider the specific Ukrainian problems, the modern world trends and the experience of the leading industrial powers.
Thus, Ukraine needs national leadership that would take into serious consideration the warning from ecological economists that the failure to tell the ecological truth could undermine capitalism, just as the failure to tell the economic truth undermined communism .
To become a modern nation Ukraine needs a new development strategy that will provide a new perspective and a clear vision of the prospective future. We believe that the market and democratic reforms alone are not sufficient. The new philosophy of Ukraine’s development should, in our opinion, be based on new ideas, with proper consideration of the most fundamental trends that are shaping the future of our planet. To this end Ukrainian elite has got to answer the simple questions: What is today’s world, where is it going, and what could be our way and our place in it?
We strongly believe that the independent Ukraine should choose the road of transition to a modern post-industrial society, which embraces, besides market economy and democratic institutions, one more crucial social principle – sustainable development that means living within the carrying capacity of the Earth. The role of national intellectuals, business communities and political elite in achieving this objective can not be overestimated.