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UKRAINIAN INFRASTRUCTURE BECOMING a PART of the WESTERN WORLD Eastern Mind Western Values UKRAINIAN INFRASTRUCTURE BECOMING a PART of the WESTERN WORLD

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UKRAINIAN INFRASTRUCTURE BECOMING a PART of the WESTERN WORLD Eastern Mind Western Values UKRAINIAN INFRASTRUCTURE BECOMING a PART of the WESTERN WORLD eastern mind western values Strategeast UKRAINIAN INFRASTRUCTURE BECOMING A PART OF THE WESTERN WORLD eastern mind western values UKRAINIAN INFRASTRUCTURE BECOMING A PART OF THE WESTERN WORLD 5 EXECUTIVE SUMMARY 7 INTRODUCTION 8 INFRASTRUCTURE: KEY POINTS 10 ADVANTAGES 12 MAIN CHALLENGES 14 RAILWAYS 16 ROADS 18 PORTS 20 AIR TRANSPORTATION 22 POST OFFICE 24 INTERNATIONAL COMPETITIVENESS OF THE UKRAINIAN INFRASTRUCTURE 24 UKRAINE’S TRANSIT ABILITIES 28 FINANCING AND INVESTMENTS INTO THE INFRASTRUCTURE eastern mind western values Released by Strategeast StrategEast is a strategic center for political and diplomatic 28 STATE-PRIVATE PARTNERSHIPS solutions whose goal is to reorient the elites of these nations that broke away after the dissolution of the Soviet Union and to guide and assist them into closer working relationships 29 UKRAINE AND THE WEST: with the USA and Western Europe. © 2017 Strategeast Center. All rights reserved. No part of this publication MOVING TOWARDS EACH OTHER may be reproduced or transmitted in any form or by any means without per- mission in writing from Strategeast, except in the case of brief quotations in the media. Please direct inquiries to: [email protected] 30 LIST OF SOURCES 2 STRATEGEAST EXECUTIVE SUMMARY Last year, the Ukrainian Government prepared Ukraine is very important to the European Un- what is in essence a revolutionary project to ion as one of the key countries involved in bring changes to Ukraine’s infrastructure. The transportation to and from the EU. However, scale of the project is comparable only with the Ukraine’s excellent transit capabilities have not integration of East European countries into the been yielding a positive result in the 21st cen- European Union’s infrastructure in the 1990’s tury; it is estimated that the country’s transit po- and 2000’s. The project, which the Ministry tential utilization rate is currently only 25-30%. of Infrastructure of Ukraine has already begun implementing, embraces all the key areas of Insufficient anti-corruption legislation and im- the country’s infrastructure - airports, road- plementation, lack of funding, absence of ways, railroads, sea and river ports, and the control mechanisms, and ineffective regula- postal service: tion and tax system are the main challenges that the Ukrainian infrastructure needs to over- • In 2017 the process of turning Ukrainian come in the foreseeable future. Railways into a corporation should be com- pleted Each of the parties involved – the Ukrainian • Approximately 1,000 km kilometers of government, the Western establishment and roadways have been repaired in 2016, and organizations, and the Western business – more than 2,000 km are to be completed need to take a series of steps in order to se- in 2017, improving the transportation infra- cure Ukraine’s fast and efficient transition into structure the world of modern infrastructure. • A number of investment and develop- ment agreements were signed in 2016. The package of planned reforms is beneficial Those agreements were aimed at competi- and valuable not only to residents of Ukraine, tion development, logistical independence, but also to the entire Western society. These and infrastructure modernization reforms will deal a major blow to corruption in • Leading low cost airline companies intend Ukraine and decisively re-orient the Ukrainian to start operating flights to Ukraine in the economy, trade, and people away from the nearest future, increasing the tourist stream destructive way – which they have been drawn and reducing ticket prices to because of historical factors – and towards • In April 2017 the process of turning West Europe and the USA. Implementation of the Ukrainian Postal Service from a state these reforms will also strengthen the Ukrain- owned company into a public corporation ian security system, which in the future may was completed, paving the way towards merge into the global common system of se- transparency and implementation of West- curity aimed at protecting the entire civilized ern corporate culture world from the global threats. 4 STRATEGEAST eastern mind western values 5 INTRODUCTION The reform of Ukrainian infrastructure is in its in particular, ones that possess global experi- very first stages. During the 25 years of inde- ence and the most cutting edge technologies, pendence, over the course of which constant- believe in the future of Ukraine and come to ly changing governments did not define their manage Ukrainian ports, build toll freeways, geopolitical choice, the Ukrainian roads have and fly Ukrainians in their planes around the come into disrepair and need an almost com- world. We believe that Western companies will plete overhaul, the rolling stock of the railroad be able to bring with them the newest, most ad- is 90% worn out, the ports have lost a major vanced standards of management to Ukraine, share of strategic cargo, only 5% of the coun- teach Ukrainian workers, grow a generation of try’s population use air transportation, and 80% competitive managers, bringing them up us- of post offices do not have computers. ing Western standards of labor culture. Those are the people who will build the new Ukraine, The scope of activity is vast, and one should modern and European. admit that Ukraine is unable to carry out the tremendous efforts to reform the industry on We believe that only the unification of Ukraine its own. Ukraine needs the support of Western with the Western world by means of mod- partners – political, technological, managerial, ern infrastructure – roads, airplanes, railroads, legal, and financial. ports, postal service – will allow the Ukrainian residents to become Europeans. It will bestow Three years ago Ukraine made its geopolitical upon them the feeling of having been accept- choice having paid for it with the lives of Maid- ed into the European family of peoples. In June an revolutionaries and continuing to pay for 2017 the European Union will be visa-free for that choice every day with the lives of soldiers Ukrainian residents to travel. The goal of the and citizens lost in the war with Russia and the Ukrainian government infrastructure projects separatists supported by her. We believe that is to provide Ukrainians with the opportunity to there is no way back for Ukraine – no return to utilize this chance – to see Europe and to cre- totalitarianism, back to USSR. Now our West- ate business and cultural contacts there. ern partners should also believe in the finality of this choice. We call upon the West to believe in Ukraine, invest into Ukraine, assist Ukraine, and to help Believe in it and start aggressively investing into her make it along the tough journey of transi- Ukraine. It is important that Western companies tioning from the East to the West. 6 STRATEGEAST eastern mind western values 7 After the outbreak of conflict in eastern Ukraine km 22 000 mln In the last 10 years the amount of cargo carried Railroad which interact 300 21 Metric tons of loads Airports by Ukrainian transportation has dropped by with railroads of seven 40%. The greatest decrease happened after the neighboring countries carried annually outbreak of conflict in eastern Ukraine in 2014. Prior to the warfare in the east of the country, six Ukrainian railroads generated $5 billion annually, provided 37% of all cargo transportation, and served as one of the most important channels for 30 the exportation of goods. International railroad gauge changeovers 170 000 km Automotive roadways 2 200 km Waterways The geographic infrastructural potential utilization rate is only 25–30% Development of the infrastructure requires 13 $8-10 bln USD of private investments Seaports annually over the course of 12-15 years. On its own Ukraine is able to finance the infrastructure in the amount of $1.5 bln USD 11 annually. River terminals 8 STRATEGEAST eastern mind western values 9 Tallinn Klaipeda Minsk Lviv Slawkow Kyiv Matowce Chornomorsk Odesa Dostyk Aktau Poti Batumi Aljut Istambul Zonguldak Derinjy Samsun Turkmenbashi Astara Anzali UKRAINE IS CONVENIENT TRANSPORT HUB BETWEEN EUROPE AND ASIA Bander-Abbas LOCATION+EDUCATION. TWO DEFINITE ADVANTAGES portation corridors. Priority financing will be al- THE LEVEL OF EDUCATION located to transportation corridors connecting FOR THE WESTWARD ADVANCEMENT the eastern and western parts of the EU. An Ukrainians have a historical predisposition to- accent has been made on the corridors being wards wanting to be educated people. Con- GEOGRAPHIC LOCATION have not been yielding a positive result in the multimodal – regardless of the direction, each tributing factors include the makeup of the 21st century. Various estimates put Ukraine’s transportation corridor should comprise at least population, the nation’s striving towards being The strategic location, whose potential is with- transit potential utilization at 25–30%, although three types of transport, connect three coun- educated and cultured, the western influence, out a doubt far from being utilized, can be a experts believe that Ukraine’s transit capabilities tries, and have two trans border sections. and the historic connection with the USSR – powerful catalyst for the development of the can exceed 200 million metric tons per year. nationwide enterprises, global thinking. country as well as for the West. A central axis passes through Ukraine; that axis Ukraine is very important for the European Un- defines the primary railroad and automobile LEVEL OF EDUCATION ion as one of the key countries for the transpor- Historically, over the
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