Ukraine’s prime minister is a former mayor of the city of Vinnytsia and has brought his ethos of decentralization to his role at the head of the national administration in order to unlock the country’s massive economic and civic potential. Here, he discusses what his country has to offer as it seeks investment, both economic and political, from European Union leaders such as Germany, as well as the progress already made in making a success story of today’s Ukraine

What have been your biggest priorities since taking on this role, and what are your current objectives with regard to Ukraine’s relationship with Germany?

When I chaired the Government in 2016, Ukraine was in a very difficult situation – as a result of Russian Federation’s invasion we had seven percent of our territory occupied, and a drastic drop in GDP of 20 percent. That is why the first priority of our Government was to return Ukraine to economic growth and stabilization of the country. I am happy to state we managed to cope with it – for the third year in a row Ukrainian economy is growing, in particular in the second quarter of 2018 we saw 3.8 percent GDP growth. 

Apart from economic aspect, we have a number of key tasks in front of us. We have to protect our land. We have to restore our territorial integrity. It is not only political will or political efforts that we are talking about in order to protect our country in front of the aggressor; we are also talking about making the country stronger in terms of military potential to protect itself. Another task that we have in hand is to carry out the right reforms in such a way so that the country can reach its potential. This is a huge country, with a population of 45 million. It can offer so much.  

With regard to Germany, if we take a retrospective look at the situation, at the time of Russia’s invasion, Ukraine was not a strong or a stable economy, but at that very point, we received strong support from Germany, and personally from Chancellor Angela Merkel. Germany is extremely important for us as a partner both in terms of politics and in terms of the economy. Following the 2014 crisis, Ukrainian producers successfully reoriented from Russian to other markets, including the EU and Germany. That is why now Germany is our first trade partner in Europe and second in the world. We are looking forward to developing our bilateral trade relations further. We know that we are quite interesting to Germany from the point of view of investment.

In 2015, the leaders of Ukraine, Russia, France and Germany agreed to the Minsk peace deal, a package of measures to alleviate the war in eastern Ukraine. What needs to be done further to make progress on the peace agreement, and how can Germany best use its influence to help resolve the conflict?

Through the hardest times for our country, Angela Merkel showed unprecedented leadership qualities by providing us with support, both political and otherwise. Within that approach, the Minsk Accords came to pass. We view the Minsk Accords as an instrument to restore our territorial integrity. However, the issue is that the Russians invaded our country with their arms and soldiers, and although they have joined the Minsk agreement, with all of the obligations that this represents, they are still not following those obligations. Therefore, the key to solving the issue and stopping the war is now in the hands of Russians.

What does Ukraine’s ongoing commitment to EU integration and becoming part of NATO mean for the peace process, Ukraine’s stability and its territorial integrity?

We are a sovereign country. We have the right to decide who we are and be who we choose to be. Ukrainians in their majority are saying they want to be part of the EU, and that they want to be part of NATO. This is what they want and nobody can force them to do otherwise.

In 2016 Ukraine and the EU began applying a Deep and Comprehensive Free Trade Area agreement.  What is the current status of the continued progress of Ukraine’s shift towards the European Union and your ambitions for Ukraine’s future EU status?

It is a question of support for our internal reforms. It’s not only the unity with the European Union that is quite important; it is the fact that Ukraine is becoming a strong democratic and strong economic partner. Of course, at this pass, the situation is very difficult. We need support. But we are not asking for handouts. We are saying that we are part of the democratic world. We are a big European country. We have been attacked by Russians, and we need this support and assistance. That is why we are coming with these issues to the European Union as a partner. Presently, I believe that considering we are in a situation where we have issues connected with the past, such as problems with our internal systems of governance, we need this support as much as possible, and as strongly as possible.

From the point of view of economic growth, we are rebuilding local administration governance. For eight years, I was mayor of a major Ukrainian city. I found that the system of administration didn’t allow for the cities to avail themselves of all of the opportunities. We have therefore brought in a reform of decentralization – certain measures and certain instruments in order to allow these local systems to reach their full potential. We have passed over more money, more funds, and more administrative powers to the local level, and the communities are growing as a result. We are completely changing the system of public administration. We are reforming the energy sector. We have rebuilt the pension system, education and healthcare. We have designed and built a strong anticorruption legal framework. In order to ease doing business, including by foreign companies, in the last three and a half years, we have deregulated the systems more than had taken place in the previous 20 years – in particular, we canceled over 700 restrictive pieces of legislation. We are building new infrastructure. We have formally started the privatization processes. It is no longer just about reforms. We are laying the foundations of a new state, essentially a building a new Ukraine and this provides us with the opportunity to grow.

What challenges do you face in creating this new Ukraine?

The mistakes of the past are holding us back somewhat. For example, from 2005 to 2013, the state debt of Ukraine grew by $50 billion. We have to spend $5 billion a year to pay off the debts, and this is five percent of the country’s GDP. We are spending the same amount of money on our military sector. The pension fund reform costs $6 billion a year. And we now have to pay back those debts accumulated from 2005 to 2013. That is why we need the support of the international community in order to maintain our position and continue with our reforms. What I personally would like to see is a more active stance on this position by our partners. And once again, we are not asking for handouts. We need cheaper and more efficient financial instruments than we have now. With these instruments, we will be able to be more efficient, to grow faster and to become a more stable and stronger partner.

What would you like to see in terms of support from partners?

I would like to mention that Russia is just waiting for Ukraine to have more and more economic trouble because a strong economy is the basis for stability. When there are Russian tanks standing on the eastern border of the EU, everybody in the EU must understand that it’s not only the task of Ukraine to protect the borders, but it is our joint common responsibility. Not supporting Ukraine means supporting the Russian Federation, and supporting an aggressor. This is unthinkable in the civilized world. Of course, the growth of trade and investment is very important, as is finding new ways for business to grow. We are trying to meet these needs by connecting both Ukrainian and German entrepreneurs by striking new contracts over there and opening up windows of opportunity for both countries. Angela Merkel’s presence with me at the Economic Forum in Berlin will be a clear signal for both countries that we are ready to support this cooperation, and that we are looking for new ways to develop stronger economic ties between the two countries. The spectrum of investment opportunities is as wide as possible here.

What are the main opportunities for German-Ukrainian economic partnership?

So far, we are quite a serious partner in terms of automobile parts production. Our agricultural sector is quite attractive in terms of investment, as is our energy sector. In the second quarter of the year, we had growth of 3.8 percent, and we aim to increase this to as much as five percent. But for that to happen, we need investment in Ukraine. As the Head of the Ukrainian Government, I am interested that these investments are successful and mutually beneficial – so that they bring use to Ukraine and the partners investing in us. That is why we are working on creating an attractive environment for business. The message to German investors is that if they come to Ukraine, they will be successful. Ukraine is rich in new opportunities. The economy will grow, but the greatest potential we have is our people because they are highly qualified professionals who are ready to work. We have created a new brand recently, Ukraine Now, which encapsulates the new, transforming Ukraine. We are in the process of transformation. But our standards, our trends, and our direction are all pro-European. And that means that with every single year that passes, we will have more and more opportunities for investors from Europe.

What part of the transformation of Ukraine thus far are you most proud of?

Decentralization. This is the idea that I came to the government to work on in 2014 when I was the Vice-Prime-Minister and Minister for regional development. I managed to gain support from many colleagues who supported this idea and put it into motion. This has provided an opportunity to open up new horizons for the development of our communities. Today, those communities that in the past were dying out have started to live anew.

Germany is in talks with Russia about building the Nord Stream 2 gasline, which would bring gas through the Baltic Sea from Russia to Germany, and Angela Merkel has said that it is critical that Ukraine keep its role as a transit nation. What are your thoughts on the Nord Stream 2, and how can it be built while still satisfying the economic needs and security of Ukraine?

The Russian attack on Ukraine is an example of hybrid warfare. They have employed military measures, but they have struck us economically. There is aggression in energy, information and cyberattacks. These are all the elements of the same war that has been launched. You must understand that it’s not Ukraine that this war was waged against. Russia has waged this war against the democratic world. Russia’s goals are wider than just its actions in Ukraine. They stopped the gas supply. But the problem was that we stood firm. Instead of falling, we started to grow. We have made the right decisions that are changing the country and will keep changing the country. We have reoriented our energy sector. We used to get 100 percent of our gas from Russia. Understand that gas is not only an energy resource for our country; it is a life resource for Ukrainians because of our cold winters. They used our gas dependence as a weapon. Nord Stream 2 is a weapon that Russia is using to bring it closer to other countries. This is a sword held against the democratic world. This is the sword that will be a risk for every single independent state in the democratic world. Every single kilometer of that pipeline is a risk. Their strategy is the following: in order to build this gas pipeline they will promise everything to everybody. When they finish the construction work, physically they will destroy the Ukrainian gas supply system. We are trying to warn everybody. Have a look at what they did here in Ukraine. In the near future, it will be copied in the European Union – no questions asked. And it can come along quite quickly. That is why it has to be stopped. The Ukrainian gas pipeline system is a strong and reliable system. It was built in Soviet times in order to transfer gas to Europe. It has unique safe storage facilities and capacities. We are saying to our partners, to our friends and our allies: let’s manage this system together jointly and then you won’t be dependent on Russia. When Russia says that it will provide transit through Ukraine, it is a lie. Why? Because the Budapest Memorandum signed by Russia was a lie. They were not planning to follow through with it. The same goes for the Minsk Accords. They are not planning to follow them. So, why look for other reasons? We won the Stockholm arbitration hearings. Russia is not following the decision of that hearing; they will never follow the obligations that are placed on them. Everybody should remember this.

What would be your final message for the readership of Die Welt?

The message is clear and the message is that Ukraine is a reliable partner for Germany. Ukraine is moving in the right direction. Ukraine fights for democracy and against aggression. And Ukraine does this not only for itself but for the rest of the democratic world. Germany is the leader of the democratic world, so we are fighting together and we will win together.