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VIKTOR VOVK

W O R L D W AT C H PA P E R 16 7

S T AT E O F T H E W O R L D L I B R A R Y 2 0 0 3

Sustainable Developmentfor the Second World UKRAINE AND THE NATIONS IN TRANSITION

Sustainable Development for the Second WorldUKRAINE AND THE NATIONS IN TRANSITION

V I K T O R V O V K

Thomas Prugh, Editor

W O R L D W A T C H P A P E R 1 6 7

September 2003

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Contents

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Development and the Environment Under Communism . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

The Environment and the Transition . . . . . . . . . . . . . . . . 18

Obstacles and Lost Opportunities . . . . . . . . . . . . . . . . . . . 27

Ukraine: Ten Years After . . . . . . . . . . . . . . . . . . . . . . . . . . 30

The Way Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Figures, Table, and Sidebar

Figure 1: The Second World . . . . . . . . . . . . . . . . . . . . . . . . . 9

Figure 2: Carbon Emissions per Unit Gross Domestic Product,Selected Countries, 1991–99 . . . . . . . . . . . . . . . . . . . . . . 35

Figure 3: Gross Domestic Product per Unit of Energy Use, Selected Countries, 1980 and 2000 . . . . . . . . . . . . . . . . . 35

Table 1: Emissions of SO2 and Particulates, Selected Countries, 1990 . . . . . . . . . . . . . . . . . . . . . . . . . 15

Sidebar 1: Sustainability, EU Style: Royal Road or Obstacle Course? . . . . . . . . . . . . . . . . . . . . 24

5SUMMARY

SUMMARY

The post-communist nations of Central and Eastern Europe(CEE) and the Former Soviet Union (FSU) are undergoing

a difficult transition away from communist industrial society,burdened by a stark legacy of economic rot, government inef-ficiency, environmental degradation, apathy, and distrust ofinstitutions. While the nominal goal is to move to democracyand market economies, hopes for progress in these areas haveoften been disappointed.

Many of the transition problems suffered by these nationsare rooted in their history as part of the Soviet bloc. Communistdevelopment philosophy emphasized heavy industry overconsumer goods, and most other concerns were subordinatedto industrial output, abetted by major energy subsidies andruthless environmental exploitation. Consequently, the CEEand FSU nations suffered radically more severe levels of pol-lution, resource depletion, and public health effects than in theindustrial nations of the West. In addition to being based onunsustainable production methods and equipment, the Sovietsystem proved itself maladaptive to the post-industrial knowl-edge and services economy.

Repression, often brutal, understandably kept dissentmuted during much of this development history, but opposi-tion to political and environmental policies continued to build,and the 1986 accident at the Chornobyl nuclear plant—whichoccurred during the perestroika and glasnost attempts at liber-alization—helped to inspire a period of serious protest. Althoughjustified on their own merits, environmental protests also

Acknowledgments: I would like to express my gratitude to ChristopherFlavin and Gary Gardner for the wonderful opportunity to visit theWorldwatch Institute from August through December 2002 as a VisitingFellow on the State Department’s Contemporary Issues Fellowship Pro-gram and to do independent research on issues of sustainability as theyrelate to the unique political and economic environment of post-com-munist nations, especially in Ukraine. Special thanks are due to Gary Gard-ner, the supervisor of my work at the Institute, who reviewed my researchmaterial and suggested that it could be developed into a feature articlefor World Watch magazine and a Worldwatch Paper as a contribution tothe global dialogue on sustainable development.

I owe a special note of gratitude to my editor, Tom Prugh, for providinghis insightful expertise in reviewing my analysis, and for shaping withskill and grace materials that bound together a wide range of thoughts.I also greatly appreciate Tom’s input as my co-author in our World Watcharticle related to this research. It has been a great pleasure and honor tocollaborate with Tom. Special thanks go to Lisa Mastny for providing mewith copies of many valuable publications on nations in transition, andto Hilary French for bringing to my attention her important earlier paperon Eastern Europe and the Soviet Union. I am also grateful to all of myWorldwatch research colleagues for their comments. Thanks to Ed Ayresfor support in preparing the World Watch article, and Lyle Rosbotham forthe article illustrations and impressive magazine cover design as well asfor making everything look good. Also, I would like to thank Richard Bell,Susan Finkelpearl, Susanne Martikke, and Leanne Mitchell for theirexpertise and help in my outreach efforts.

With deep gratitude, I thank my loving wife Elena, who has alwaysencouraged me in my work and struggle, my father for setting an exam-ple of a life of merit, my mother for her love, and my brother Kostyan-tyn for his interest and support. This paper is for my children Hanna, Ivan,Alexander, and Olga, for helping me to remember that it is their futurein our native Ukraine and on our planet that is at stake.

Viktor Vovk is a senior fellow of the Worldwatch Institute. In Ukrainehe works as the deputy director of the Institute for Sustainable Develop-ment (Kyiv) and serves as a non-staff consultant to the ParliamentaryCommittee on Environmental Policy and Use of Natural Resources. Hisresearch deals with the challenge of sustainable development in thepost-communist world. He has long been engaged in political advocacyand public policy activities in Ukraine, including managing a number ofprojects on sustainable development issues. He has also directed thepublication of the Ukrainian edition of Worldwatch’s State of the World2000–02 reports, Al Gore’s Earth in the Balance, Herman Daly’s BeyondGrowth, and the UN’s Agenda 21.

In 1988–92 Viktor was an activist of the national-democratic move-ment of Ukraine, and in 1990–92 he was one of the founders and deputychairman of the Social-Democratic Party of Ukraine. He has a master’sdegree in physics from the Moscow State University and a Ph.D. from theInstitute for Theoretical Physics of Ukraine’s National Academy of Sciences.

7SUMMARY6 SUSTAINABLE DEVELOPMENT

tapped a broad range of political sentiments, including nation-alist, anti-militarist, and pro-market and -democracy strains. Oneof the strongest protest groups was Zelenyi Svit in Ukraine,which by 1990 had become an umbrella organization with 300affiliates. The growth of the environmental movement and itsinfluence throughout the communist world was great enoughthat it shares in the credit for ending the Soviet empire.

The hopes of combining environmental reconstructionwith market and democratic reforms have frequently been dis-appointed, however. Pollutant emissions initially fell after thecollapse of communism, but largely as a result of a drop in eco-nomic output. Regulators have tended to ignore environmen-tal violations if the alternative was to close plants. In somenations, pollution intensity and the use of energy per unit ofeconomic output have risen. In the chaos of the post-communistsystem, attempts at environmental policy reforms have beenundermined by the weakness of social institutions and thewidespread tendency to ignore or work around the new laws,and the region’s environmental health generally remains poor.

Ukraine embodies many of the post-communist world’senvironmental ills. As a key industrial center of the SovietUnion, it suffered heavily from pollution and careless resourceextraction. Upon achieving independence in 1991, it inheriteda creaky, centralized economy biased toward heavy industryand run by communist-era holdovers less interested in reformthan in their own aggrandizement. Ukraine’s GDP and aver-age personal income both plunged during the 1990s and theexport structure shifted toward commodities and away fromhigh-tech products. At the same time, life expectancies havedeclined, the population is falling, and certain diseases, onceunder control, have re-emerged. The economy has becomemore resource-intensive and environmentally hostile.

Leaders in Ukraine and the other post-communist nationshave missed many opportunities to set their countries on a newcourse, and disaster—economic, social, and environmental—appears to lie ahead for many of them. Yet the turmoil oftransition leaves open the option of reprogramming societyaccording to the principles of sustainable development, which

alone of all economic paths can offer any long-term promisefor improving general human and environmental wellbeing.In Ukraine, at least, this restructuring should begin with a three-part foundation: 1) stressing the idea that sustainability meansmaking life better in general, not just enhancing environ-mental protection; 2) making government widely transparent,participatory, and accountable; and 3) employing incentive sys-tems in preference to the command-and-control approachesthat echo the reviled communist past.

Once this foundation is laid, a suite of additional policiesto advance the sustainable development agenda would include:• a public education campaign to convince Ukrainians that the

current economic strategy of growth in heavy industry andcommodity exports cannot restore previous standards ofliving, much less ensure long-term wellbeing;

• a revenue-neutral shift to an ecological taxation system thattaxes pollution and resource depletion rather than jobs andincome so as to correct the imbalance between the costs oflabor inputs and those of resource inputs;

• improvements in energy efficiency, of which there arenumerous possibilities that would often pay for themselvesrelatively quickly;

• development of renewable energy resources, including bio-fuels, wind, and mini-hydro;

• a regime of fair international trade, which would allowUkraine to protect its environment and economic interestsfrom the downside of globalization; and

• a general principle of self-reliance whenever possible, espe-cially since external investment capital is only likely to flowfrom institutions that embrace the traditional developmentmodel and would impose constraints and conditions atodds with the vision of sustainable development.

The prime mover behind this agenda should be an eco-labor coalition capable of building legitimacy for reforms andpolitical leaders who will pursue them. Its first job should beto fully describe a vision of sustainable development forUkraine that can inspire its people to collaborate in creatinga better future.

9INTRODUCTIONSUSTAINABLE DEVELOPMENT8

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Introduction

In the summer of 1969, oil wastes dumped into the Cuya-hoga River in Cleveland, Ohio—part of the old industrial

heartland of the free-market, capitalist U.S. economy—caughtfire. It had happened before and was not considered espe-cially remarkable at the time. But circumstances of local pol-itics and fortuitous media coverage turned the image of theblazing river into an icon, created a powerful “teachablemoment” for millions of Americans, and helped galvanizesupport for legislation to clean up surface waters all over thecountry. The Clean Water Act was passed three years later.

In 1986 in Ukraine, before that country achieved inde-pendence following the breakup of the Soviet Union, a reac-tor at the Chornobyl nuclear power station blew up andreleased a cloud of radioactive gas that spread hundreds ofmiles. This disaster, an iconic event of a wholly greater mag-nitude than the incident on the Cuyahoga, was the productof an industrial communist economy. It too stimulated powerfulpolitical forces for environmental reforms.

Today, the economies of Ukraine, the former SovietUnion, and many other post-communist nations of the Sec-ond World* (see Figure 1) are once again largely focused on

* The 27 post-communist countries of Central and Eastern Europe (CEE) andthe Former Soviet Union (FSU) are Albania, Armenia, Azerbaijan, Belarus, Bosniaand Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Hun-gary, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, FYR of Macedonia, Moldova,Poland, Romania, Russian Federation, Slovak Republic, Slovenia, Tajikistan,Turkmenistan, Ukraine, Uzbekistan, and Yugoslavia (Serbia and Montenegrosince 2003). As Second World nations, they lie on the spectrum between theFirst World of industrialized, highly developed nations and the Third Worldof developing nations.

10 11INTRODUCTION

way toward long-term sustainability. But the case is not yetproven, and recent political developments in the United Statesremind us that progress is intermittent and painful. A moreinteresting, and possibly more hopeful, situation has arisen inthe post-communist nations, where the collapse of the oldcommunist order has triggered a difficult period of change andadjustment—and possibly opened a window of opportunity fora more radical vision of sustainability to blossom.

That window, however, is in danger of closing. The col-lapse offered an unexpected chance for the post-communistnations to reorganize their economies and societies accordingto new principles. However, Western institutions stepped inwith a ready-made blueprint of the post-collapse transition todemocracy and market economies. Specifically, the WorldBank, the International Monetary Fund, and other interna-tional institutions imposed the so-called “Washington con-sensus,” a suite of structural adjustment measures that havebeen routinely applied, with deeply mixed results, to manydeveloping countries. This is unlikely to work well in thenations in transition. For one thing, decades of repressive andpaternalistic government have generally left them without thecivic traditions (faith in government and respect for civilrights and the rule of law, for instance) that are necessary fordemocracy and rational markets. It is naive to simply imposedemocratic structures and market mechanisms in place ofthe old structures and expect the result to work as they do inWestern nations.

More importantly, the imposition of the Washingtonconsensus reforms represents a grave failure of imagination.Swapping formulaic communism for formulaic capitalism issimply the substitution of one kind of flawed industrialism foranother. And industrialism in any form is wildly out of touchwith the ecological demands and limits of the real world.

What’s needed is a better theory: an interdisciplinarysynthesis of ecological ideas, new economic theory, social sci-ence, and politics. The paradigm of political economy thatemerges from this synthesis would seek to harmonize humaneconomic activity with ecological reality. It would also strive

SUSTAINABLE DEVELOPMENT

resource extraction and industrial production, with little regardfor the environment. (Russian oil companies, for instance,spill more oil every day than was lost by the Exxon Valdez.) Theenvironmental performance of the capitalist West is better inmany respects, but still far from sustainable. The United States,the winner of the Cold War and the avatar of triumphantcapitalism, in particular has much to answer for. It continues,for example, to emit greenhouse gases in ever-larger quanti-ties even as the evidence piles up that such gases are warmingthe globe. And despite the European Union’s relatively pro-gressive environmental policies, its own environmental assess-ment body has concluded that conditions there are worsening.As for the rest of the planet, the record is mostly one of accel-erating pollution, biodiversity loss, habitat destruction anddeforestation, and resource depletion, regardless of the eco-nomic model employed.

Capitalism (based on neoclassical economics) and com-munism differ in obvious and important ways, but both areexpressions of the industrialism that was born in the 19th cen-tury. Both succeeded in achieving traditional industrial goalsby marshalling large amounts of energy and other forms of nat-ural capital and turning them into manufactured capital (build-ings, cars, ships, planes, weapons, appliances, etc.). Both viewthe natural world as merely a stock of resources without intrin-sic value, a source of inputs to the economic process. Both seethat process, in turn, as linear rather than cyclical, and in gen-eral have tended to abstract from reality and paint incompleteand dangerously misleading pictures of the way the worldworks as a physical system.

In short, both capitalist and communist economies oper-ate in violent disharmony with the global ecosystem. Thetheories that underlie them—neoclassical economics andMarxism—ignore or disregard fundamental truths about therelationship between ecosystems and economies and thussow the seeds of their own destruction.

The emergence of the “post-industrial” economy in theWest—with its theoretical emphasis on services, dematerial-ization, industrial ecology, and information—may point the

1312 SUSTAINABLE DEVELOPMENT DEVELOPMENT AND THE ENVIRONMENT UNDER COMMUNISM

to balance the drive for personal freedom and expression ofself-interest with society’s necessary role as trustee for theinterests of the public at large, future generations, and theglobal ecosystem. And just as this paradigm explicitlyacknowledges the value of biodiversity in preserving theecological functions of the Earth’s systems, it also recog-nizes the importance of preserving ethnic and cultural diver-sity and national identity. There can be no universallyapplicable plan for sustainability.

Given the extent of the trauma and disruption caused bythe collapse of communism in the Second World, any courseof transition is bound to be difficult. The Second World coun-tries must confront the economic, political, social, and envi-ronmental legacies of communist industrial society. But thepolicies in effect during the transition so far are often failingto arrest, let alone reverse, the environmental devastationwrought under communism. And for most people living inmany of these countries, the reforms have yet to show anypromise for even restoring the state of economic and social well-being that existed under communism, much less for improv-ing it. Given the general advantages of reform based on theideas and principles of sustainable development, it may be thebest and most hopeful way to guide these nations out of theupheaval of transition. What the post-communist nationsneed, perhaps more than anything, is a vision that offers anappealing future—not only better than the troubled present,but better than any the present course might lead to. A sus-tainable society could fulfill that vision, and the turmoil of tran-sition offers an opportunity to shape expectations and steerdevelopment toward sustainability.

This paper summarizes the history leading up to the cur-rent dilemma in much of the Second World, analyzes thedimensions of that dilemma, and suggests some policies thatcould push reforms in the direction of open economies andsocieties guided by sustainable development ideas. The latterpart of the paper shifts focus to look in detail at Ukraine,which has one of the worst environmental records among thenations in transition.

Development and the Environment Under Communism

The communist rulers of the Soviet Union set themselvesthe task of being able to compete with the western pow-

ers for the military and ideological domination of the worldand thus achieve the eventual global victory of communism.In their view, this required primacy in industrial production.By the 1950s, they had achieved a highly industrialized, butalso centralized and internationally isolated economy—whicheventually turned out to be a serious disadvantage.

The banner of glorious industry was a powerful iconsymbolizing the progress that communism had brought theSoviet Union. Heavy industry was idolized as the heart ofcommunism as well as the basis of military power. The resultwas a near-obsession: Soviet development strategy directed allhuman and economic resources to the goals of building up ahuge heavy industrial complex, the outputs of which were thenmostly poured back into that same complex. Consumer goodsand human welfare were given essentially no role in Sovietdevelopment. By the end of the 1980s, Soviet steel productioncapacity was around 160 million metric tons. U.S. steel capac-ity was 90 million metric tons at the time—in an economysome eight times larger. Per dollar of gross national product,the Soviet Union was producing 15 times more steel than theUnited States.1*

Soviet industrial development was also characterized bythe rapacious use of natural resources without proper con-sideration for the carrying capacity of nature. In the 1930s,the necessity of the “great transformation” of nature in theinterests of rapid industrial growth was proclaimed one of thegreatest challenges of socialism (the intermediate stage ofthe Soviet quest for communism). Communists saw nature asa limitless reservoir of resources with no intrinsic value thatcould and should be conquered and transformed to serve

* Endnotes are grouped by section and begin on page 46.

1514 DEVELOPMENT AND THE ENVIRONMENT UNDER COMMUNISMSUSTAINABLE DEVELOPMENT

human purposes, on any scale necessary. A key feature of this approach to development was the

subsidizing of energy consumption. Energy prices were typi-cally 20–25 percent of real energy costs in the Soviet bloc, evenlower in the U.S.S.R. Along with outdated industrial tech-nologies, this resulted in extremely high energy intensities ofproduction (energy use per unit of output), 5–10 times higher,in some sectors, than in the West. Even the oil shocks of the1970s—which triggered a four-fold increase in world energyprices—had little effect on these intensities, since the com-munist economies were isolated from international markets.2

These factors—the idolatry of heavy industry, the drivefor relentless growth and military parity with the West, theruthlessly instrumental view of nature, and energy subsi-dies—combined to give the communist world some of theworst environmental problems on the globe. By most indi-cators of pollution (especially with regard to water, air, andtoxic waste), the communist countries of Central and EasternEurope and the FSU were among the lowest ranking nations.By the late 1980s, air and water pollution were many timeshigher there than in the richer countries on their western bor-ders, and were far higher than in countries with comparableincome levels elsewhere. Vast areas of the U.S.S.R. and East-ern Europe became heavily contaminated with various pol-lutants, public health declined, and many fossil-fuel andmineral reserves were depleted.3 For example, a 1997 envi-ronmental outlook report by the U.S. National IntelligenceCouncil cited estimates that emissions of key air pollutants inthe CEE nations in 1990 were several times higher than inWestern Europe (see Table 1). The resulting rate of infant res-piratory diseases in CEE countries in the early 1990s was 20times the rate in North America. CEE economic losses relatedto poor health and lower productivity were put at 2–11 per-cent of gross domestic product (GDP), compared with 1–2 per-cent in Western nations.4

This approach could not support long-term develop-ment. While it proved suitable for achieving traditional indus-trial objectives, it failed spectacularly when the post-industrial

knowledge and services economy began, in the early 1970s, tostress energy and materials efficiency, computers and infor-mation processing, telecommunications, waste managementand recycling, and other modern technologies. The commu-nist approach was also sharply at odds with the liberalizationof human potential necessary to extend development in thenew economic environment. The totalitarian and centralizedcommunist industrial society, in contrast to the democratic andmarket-based capitalist world, found its internal developmentpotential exhausted. Its economy became more and moreinefficient, and its struggle for global dominance ended in ColdWar defeat.

In the midst of the catastrophic environmental degra-dation accompanying the long industrial development phase,a few voices of warning or dissent were heard. The underlyingprinciple of “nature for the benefit of communism” was ques-tioned, to an extent, during the political thaw of the early1960s. But it was not until Mikhail Gorbachev’s perestroika(“transformation”) initiative (a clumsy effort to rescue thedeclining communist regime) and the 1986 Chornobyl nuclearcatastrophe that ecological issues became the subject of intensearguments in the media and society as a whole—and then envi-ronmental protection became one of the main targets of

Emissions of SO2 and Particulates, Selected Countries,1990Country SO2 Particulates

(tons per 1,000 persons)

Bulgaria 117.0 91.8Czech Republic 178.3 72.9Hungary 114.9 46.5Poland 102.4 89.0France 27.0 5.3Germany 23.9 4.3Italy 41.8 7.8United Kingdom 61.9 8.9

Source: See Endnote 4 for this section.

TABLE 1

1716 DEVELOPMENT AND THE ENVIRONMENT UNDER COMMUNISMSUSTAINABLE DEVELOPMENT

Svit (Green World) movement in 1987. Ukraine suffered someof the worst industrial pollution in the Soviet Union, and thelatent resentment of the imposed, centrally planned industrialprojects was unleashed by Chornobyl, prompting the foun-dation of Zelenyi Svit. Within two years it had become anumbrella organization with 300 affiliated groups through-out Ukraine.7

Zelenyi Svit’s campaign, which focused heavily on nuclearpower, sponsored mass demonstrations and petitions andbore fruit relatively quickly. The authorities canceled severalnuclear power projects and other environmentally harmful ini-tiatives. They made other concessions as well, such as declas-sifying information about the Chornobyl accident and researchon the correlations between pollution and human healthproblems. Zelenyi Svit, with the strong support of the Ukrain-ian national-democratic movement Rukh, also drafted envi-ronmental proposals for the Ukrainian Parliament, whichwere instrumental in getting all of Ukraine declared an envi-ronmental disaster area.8

By the late 1980s the Soviet environmental movementwas working hard to become a political player. At the sametime, newly established political forces were rapidly incor-porating environmental concerns into their programs. Thisphase of politicization was marked by the formal integrationof environmental, democracy, and market concerns (joinedin the national republics with the idea of national revival andindependence).

Progressive and increasingly visible politically, the envi-ronmental movement became an important factor in thesocial and political arena during the Soviet Union’s final years.By 1990 the movement numbered hundreds of environmen-tal NGOs operating at local, regional, and national levels. Thesize and political influence of these environmental groupsgrew rapidly shortly before the collapse of the U.S.S.R., andsome experts even give the environmental movement a shareof the credit for bringing down the Soviet empire.9

A similar pattern emerged in Central and Eastern Europe.There, a strong environmental component distinguished the

perestroika. Beginning in 1987, Soviet authorities issued anumber of important environmental regulations. Under thepolicy of eco-glasnost (“openness”) the process began of declas-sifying environmentally sensitive information and making itavailable to the public. Thereafter, environmental awarenessand the environmental movement developed rapidly andbecame key catalysts for social change. As the linkages amongenvironmental destruction, human health problems, and thepractices of the communist regime became clear, mass politi-cal opposition emerged in sufficient strength to support pub-lic demonstrations. The most coherent environmentalcampaigns initially were anti-nuclear. The horror of Chornobyl,the visible weakness of the government in dealing with it, andthe secrecy and distortion in the subsequent treatment ofevents, all produced widespread “radiophobia” and rising mis-trust of the authorities.5

In the non-Russian republics, the emerging environ-mentalism combined with both nationalist and anti-militarymovements. Official declarations of support for the environ-mental cause further fueled this mobilization phase. In the late1980s, the emergence of organizations with a broad socialbase and strong nationalistic tendencies brought a new dimen-sion to the Soviet environmental movement. The movementrapidly politicized in the Baltic republics (Estonia, Latvia, andLithuania) and the Caucasian republics (Armenia, Azerbai-jan, and Georgia) as well as in Ukraine, where environmen-talism was blended with the theme of national revival andindependence. Environmental problems were blamed on thecentral government and on Russian domination, thus providinga unifying base for diverse environmental groups and pro-moting their integration with broad national-democraticmovements.6

Moscow thus confronted multiple voices from differentrepublics, accusing the central leadership of bringing theU.S.S.R. to the brink of environmental crisis and demandingfull control over their indigenous national resources. Whileeach of these movements was a major political challenge, themost serious came from Ukraine, in the form of the Zelenyi

1918 THE ENVIRONMENT AND THE TRANSITIONSUSTAINABLE DEVELOPMENT

anti-communist revolutions of 1989 and the environmentoften served as a rallying point from which broader demandsfor political change emerged. Initially perceived as relativelybenign by the regional communist governments, environ-mental movements in the region soon acquired unstoppablemomentum.10

The Environment and the Transition

The strong politicization of the environmental movementin the communist world helped achieve the breakup of the

Eastern bloc and the Soviet Union as its core. However, thepolitical promise of combining environmental reconstructionwith market and democratic reforms essentially failed, espe-cially in the countries of the former U.S.S.R.

During the perestroika period, the status of the envi-ronmental movement as a politicized force within the broaddemocratic opposition was closely tied to the democracy-market-environment linkage. This in turn was seen as a polit-ical strategy to solve the problems caused by communist rule,including environmental problems. Most people who joinedthe movement in the late 1980s shared the illusion that theWest didn’t have profound environmental problems andbelieved that introducing decentralized market mechanisms,democratic institutions, and Western technologies wouldquickly change the environmental situation. Almost no oneunderstood that instant capitalism and integration into theworld economy would not work environmental miracles,and might actually have adverse impacts.1

Another expectation was that the prompt transition todemocratic institutions would automatically increase the envi-ronmental accountability of the state and improve environ-mental regulation and enforcement. Many people failed to seethat Western environmentalism functions within a system ofestablished democratic institutions based on a tradition ofpublic trust in governance and the rule of law, and a culture

of compliance. Simply adopting numerous unrealistic lawscould not ensure the formation of such a civic society. In fact,in the new and more relaxed circumstances, the key playersaffecting the environment—the government, businesses, andcitizens—all quickly inclined toward violating legislation andusing extra-legal methods to pursue their goals.

Many mainstream economists believed that the transitionto a market economy offered a new promise for the environ-ment. Theory predicted several benefits:• Highly polluting sectors like heavy industry and energy

would be particularly hard hit as economies turned away fromthe priorities and methods dictated by planned economic sys-tems, thus promoting industrial restructuring and long-term environmental improvement.

• Reforms to make energy prices correspond more closely toreal costs would encourage energy efficiency and thus reducepollution.

• Stronger application of the “polluter pays” and “user pays”principles, along with privatization and better pricing ofinputs and outputs, would create incentives for reducingmaterial consumption and waste.

• Outdated technologies and processes would be replaced by“win-win” investments that reduce pollution emissions andincrease profits. Such investments were expected to becomequite common because the marginal costs of environmen-tal improvements in these countries were much lower thanin Western Europe.2

Some of these expectations were realized, at least in part.The environment clearly appeared to benefit in the early yearsof the transition to a market economy, as the closure of the old-est and most inefficient factories reduced the levels of manypollutants by as much as 40 percent.3 But after these early gains,progress stalled. The turmoil of transition created many unan-ticipated difficulties—including the fall in economic output andliving standards, the loss of markets, and severe financialshortages—that eventually affected the environment andundermined environmental policy reforms. Some of the gravertrends included the following:


privatization), they have often stopped regulating the pro-ducers’ activities as well. In areas where there are few sourcesof employment and income, governments are inclined toallow the uncontrolled exploitation of the environment. AsChristopher Thies of Greenpeace’s forest campaign put it,“Over-consumption causes major global environmental prob-lems, but an economic crisis is equally risky: everything isbeing produced at the cheapest possible level.”8 This ten-dency is contrary to the need to employ to a greater extentthe “polluter pays” principle.

Rising energy intensity. The relative increase in depend-ence on heavy industries in Ukraine, Russia, and some othertransitional economies means that the use of energy in rela-tion to GDP has grown. Energy intensity rose 52 percent inUkraine and 23 percent in Russia between 1990 and 1997.9

These and other Second World countries remain among theworld’s most inefficient users of energy. Although some of theformer Soviet bloc economies (e.g., Czech Republic, Hungary,and Poland) have made progress in this regard, they still lagfar behind Western European economies. While it is clearthat real economic improvement without energy efficiencygains is scarcely feasible, those gains will only be achieved asgovernments begin charging prices that closely reflect energycosts—and most consumers will face crippling increases inpower bills unless they can adapt to the pace of energy pricereform. The potential for improving energy efficiency in thesecountries is great and many of the necessary investmentswould quickly pay for themselves. The chief problem is the lackof capital.

Financing environmental reconstruction in the SecondWorld poses its own set of problems. During the years ofcentral planning, industry depended on public funds forenvironmental investments. These funds came partly fromgovernment budgets and partly from pollution charges. Theenormous drops in economic output reduced both the rev-enues from pollution charges and from taxes (and thus gov-ernment budgets). As a result, the money available forenvironmental investment declined significantly in most

Declines in economic output. Enormous drops in outputtook place in the first few years of the transition in all post-com-munist countries, with gross domestic product (GDP) shrink-ing by between 18 percent (Poland and Hungary) and about60 percent (Lithuania and Ukraine).4 The sharp decline inemissions of key pollutants was mostly a consequence of thisreduction in output. However, radically lower output—i.e., fac-tory closures—also meant unprecedented job losses. Envi-ronmentally positive changes arrived hand in hand withincreasing poverty, unemployment, and social frustration,and a new gap between the rich and the poor, which contin-ues to widen.5

Pollution-increasing structural economic shifts. In somepost-communist countries pollution has not fallen propor-tionally with the drop in industrial and economic output. InRussia, for instance, while emissions of various air pollutantsdeclined from 1990 through 1997—by 37 percent for carbondioxide and sulfur dioxide, 34 percent for particulate matter,29 percent for nitrogen oxides, and 25 percent for volatileorganic compounds—GDP fell 42 percent.6 Similar patterns canbe seen elsewhere in the Second World, indicating that pol-lution intensity (emissions per unit of economic output) inmany nations has increased, for two main reasons. First, dueto the hurried integration of the post-communist nationaleconomies into the world economy (accompanied by the lib-eralization of foreign trade, the fall in real incomes, shrinkingdomestic consumer markets, etc.), the decrease in output wasoften greatest in the lighter economic sectors (such as consumergoods and services) with lower levels of pollution. Second, intheir quest for survival, industrial firms have been less carefulin meeting environmental standards and more prone to cut cor-ners in following environmental laws.7

Lax regulation. At the same time, regulators in manypost-communist nations have ignored violations of environ-mental standards when strict enforcement might cause plantclosures, higher unemployment, and other social problems.In carrying out market reforms, governments have not onlywithdrawn from economic responsibility for production (via


countries in transition (though available funds recoveredsomewhat in some CEE nations in the late 1990s).10 In Rus-sia, for instance, installation of new pollution control equip-ment fell sharply between the late 1970s and the early 1990s,by 69 percent for smokestack scrubbers, 64 percent for indus-trial water recirculation equipment, and 79 percent for waste-water treatment hardware.11

Governments in these countries felt constrained at thatstage to give priority to investments that would increase eco-nomic output and restore living standards, and very littlepublic money was available for environmental improvement,especially in the early years of the transition. And, as notedabove, governments have been reluctant to press for stricterenvironmental controls at a time when many businesses arestruggling. Consequently for many years too little has beeninvested in basic maintenance and pollution-control equip-ment, particularly in the FSU nations, where many factoriesare more polluting than ever.

This fiscal challenge confronts all post-communistnations, but is especially acute in the 10 nations of Central andEastern Europe that are in line for admission to the EuropeanUnion12 (see Sidebar 1, pp. 24 and 25). To qualify, these “acces-sion” nations must meet stringent EU environmental regula-tions. The areas that need most attention are:

Waste management. Shifts to Western-style consumptionare intensifying already severe pressures on municipal wastemanagement capacity.

Contaminated sites. The estimated total of such sites inthe region is more than 300,000.13 Soil contamination aroundabandoned military bases poses the most serious risk.

Pollution control. This requires private investment inmore efficient and less polluting technologies, but it will takeat least 20 years. The CEE countries cannot afford to replacetheir capital stock any faster.

Water. Usage is more wasteful and standards for treatmentof drinking water are lower than in the EU. Moreover, manylarge industrial enterprises once pre-treated their wastewaterdischarges, but as they are split up and privatized there is a risk

that increasing amounts of industrial discharges, such as heavymetals and chemicals, will flow directly into municipal sew-ers not equipped to handle them.14

A 1998 EU Commission report for Europe’s environ-mental ministries estimated that the accession countries willneed to spend about 120 billion ECU (European currencyunits)* to comply with the EU directives.15 However, fundingenvironmental improvements in these countries on this scaleis very problematic. Western financial support for environ-mental investments in the region has actually declined since1994 and environmental loans from international financialinstitutions have fallen sharply.16

Although foreign direct investment in environmentalprojects in the nations in transition grew in the late 1990s, com-panies were reported to be highly selective about where theyinvested. Nearly three-quarters of all investments went to justfive countries (Czech Republic, Hungary, Kazakhstan, Poland,and Russia).17 Foreign investors are expected to become evenmore selective if the region’s economic problems continue.

The transition period has had profound effects in thehuman and social dimensions as well as on the environment.A 1999 report from the United Nations Development Pro-gramme (UNDP) concluded that the transition has led toincreases in poverty, crime, disease, and mortality rates. In par-ticular, a human crisis of monumental proportions emergedin the former Soviet Union.18

The transition years “have literally been lethal for agreat many people,” according to the report. The biggest sin-gle cost has been the loss of life among young and middle-aged men, which is reflected in an abnormally low ratio ofmen to women in the total population. In Russia alone,nearly 5.9 million men are “missing”; Ukraine is missinganother 2.6 million. The total for the transition nations isnearly 9.7 million. The causes include rising suicide rates, thehealth-care crisis, and an increase in self-destructive behav-ior. The report asserts that men were hit hardest by hurried

* In June 1998, 120 billion ECU equaled about US$133 billion.


In the nations of Central and Eastern Europe before the collapse of communism, the administrative machinery employed to address environ-mental problems superficially resembled that of Western nations:environmental laws and regulations, framework acts, environmental min-istries, and the use of pollution fees and fines. A crucial difference wasthat communist systems made governments responsible for both environ-mental protection and economic production and growth. Growth usuallywon out, and discontent with the state of the environment in the CEEcountries was a factor in the 1989 revolutions, as environmental activismchanneled and fronted for more sweeping political aims.

The post-revolutionary enthusiasm for environmental protection subsidedin most of the CEE countries as more pressing issues absorbed the avail-able energy and resources. More recently, in the 10 CEE nations now in line to join the European Union—Bulgaria, Czech Republic, Estonia,Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia—theenvironmental agenda has been dominated by the need to align existingpolicies with the 200 or so environmental acts, decisions, and strategiesspelled out in the EU’s Acquis Communautaire, the common body of EUlegislation. Compliance poses a formidable challenge.

The environmental requirements are extensive and technical, apply toboth substance and process, and demand highly competent statebureaucracies to transpose and implement. They will also cost a lot ofmoney. The EU heavily subsidized the previous accession of Spain, Portu-gal, and Greece, but cannot now afford such subsidies, and more than90 percent of the total transition costs—estimated at nearly 120 billionEuros—will have to be borne by the CEE accession countries themselves,with whatever help they can muster from non-EU international donors. A related issue is the possible conflict between pollution and revenues. Economic output and pollutant emissions both fell sharply after the com-munist collapse. Economies have rebounded in the accession nations(which may make it easier to raise the funds necessary to comply withEU directives), but it’s not certain that growth can be sustained withoutviolating those requirements.

Other complications reflect the social and political dimensions of thetransition. For example, accession countries have little discretion in com-plying with EU directives, so in effect they are being imposed from afarwithout regard for local circumstances or needs—a process made deeplyunpopular under communism. Moreover, the rigid and demanding

nature of the requirements has all but hijacked national, regional, andlocal environmental initiatives. The EU agenda is so consuming ofresources that it has taken precedence over national priorities and to a large extent shaped NGO environmental activity as well. Thus theprocess has suppressed the articulation of many domestic interests.

Governments also need to cultivate popular support for the requiredchanges, but bureaucracies often still regard public participation as both-ersome or even subversive. The voice of the people, in particular as it isexpressed by NGOs, has not been openly invited to speak and may notbe heard clearly even if it is so invited. The accession process is movingrapidly and has brought the accession countries to a critical junction: itcould lead to more open, transparent, inclusive, and engaged societies,or it could merely reinforce existing structures of decision-making,strengthen the oligarchies, and cement popular apathy and passivity.

Finally, it’s not clear that strict adherence to the requirements will move a country toward sustainability. Critics argue that EU policies still stresslarge-scale conventional, not sustainable, economic development. TheEuropean Environment Agency reported in 1998 that there had been no general improvement in 12 environmental problem areas over theprevious five years. In May 2003 the agency reported that many envi-ronmental trends are still negative and that certain gains, such as reduc-tions in greenhouse gas emissions, resulted mostly from the recession and Eastern Europe’s loss of heavy industry.

The accession countries’ embrace of EU standards is, on balance, likelyto improve the European environment. But the EU model—voluminous regulations requiring high administrative capacity and compatible socialinstitutions—is not without problems. It may not enable even current mem-bers to achieve sustainability, and it could reinforce the general senseelsewhere in the Second World that sustainability is only for rich nations.Its narrow vision of sustainable development as enhanced environmentalprotection—separate from enhanced quality of life for all—underminessupport for sustainability in the struggling post-communist countries.

So in some respects EU membership may be a gilded cage. The non-accession post-communist countries may be better off following their ownpath toward sustainability, so they can approach sustainable develop-ment as a means of improving wellbeing in general and develop policiesthat make sense where they must be applied.


Sustainability, EU Style: Royal Road or Obstacle Course? SIDEBAR 1 Sidebar 1 (continued)

2726 OBSTACLES AND LOST OPPORTUNITIESSUSTAINABLE DEVELOPMENT

among the different CEE and FSU nations; many of the CEEnations, for instance, have been able to avoid much of the highhuman cost of transition, or managed by the late 1990s torecoup their losses. These nations are now the chief candidatesfor EU membership.25

Obstacles and Lost Opportunities

For a time, leaders of the environmental movement inmany of the former communist countries had unprece-

dented opportunities to influence the decision-making processand create new environmental legislation. Nevertheless, theactual state of the Second World environment generallyremains poor, and in some countries the enforcement of envi-ronmental legislation has weakened and nearly lapsed.

There are many reasons for these setbacks, includinglimited resources and the perceived conflict between envi-ronmental and economic goals. Even economically marginalfactories and businesses provide critical employment, and reg-ulators are often in no position to put them out of business orimpose economic stresses on them. The goal of a cleaner envi-ronment is repeatedly put off until some undefined future whenthe economy will be stronger, institutions more viable, and pop-ular support for enforcing the law revived.

Other obstacles are linked to the problems of social trans-formation, and include inexperience in self-government, offi-cial corruption and inefficiency, poorly functioning legalsystems, and pervasive cynicism. A crucial feature of these coun-tries is that the entire society is in flux; people are learning tofunction in startlingly new circumstances and, unfortunately,in a poisoned social atmosphere. In most, the law is essentiallydiscredited or there are no law-based traditions to draw uponin working out society’s problems. Legislators are having toreinvent themselves as the designers of effective laws in coun-tries where the concept of law has been abused for years. Leg-islators know all about “aspirational” laws that set idealistic

transition to free markets in post-communist countries andare now living shorter, unhealthier lives.19

The human impact of the transition is also reflected ina variety of other developments: • Widespread poverty and a growing gap between the rich

and the poor in these countries threaten human security. Theshare of people living on less than $4 a day soared from 4 per-cent in 1988 to 32 percent in 1994.20 Even now, according tothe World Bank’s World Development Report 2003, in some Euro-pean nations in transition many people live on less than $2a day. In Bulgaria the share is 22 percent, in Russia 25 percent,in Romania 28 percent, in Ukraine 31 percent, and in Moldovaa shocking 38 percent.21

• Crime has risen dramatically. For example, the number ofcrimes registered between 1989 and 1996 rose almost seven-fold in Romania and more than three-fold in Czech Repub-lic and Bulgaria. Recorded drug crimes increased almostfive-fold in Russia between 1991 and 1996.22

• In most of the Second World countries, diseases that had beenbrought under control by standard immunization programshave re-emerged as a result of crises in public health care,among them tuberculosis, polio, and diphtheria.23

• Black market transactions have become an important sourceof income for many people, especially the unemployed.The “shadow” (unofficial) economy equaled more than 25percent of GDP in Russia and as much as 40 percent inYugoslavia and some countries of the FSU during the periodfrom 1996 through 1998. Other estimates suggest that, bythe mid-1990s, over one-third of economic activity in the FSUcountries took place within the unofficial economy, whilein Central and Eastern Europe the average was close to one-quarter. Interregional variance was large; in some countriesthe share was 10 to 15 percent while in others it exceeded50 percent.24

The UNDP report suggests that the unevenness of the tran-sition has favored “the young, the dynamic, the mobile, [and]the connected” while ignoring the vulnerable. There are alsosignificant differences in the human impact of the transition

2928 OBSTACLES AND LOST OPPORTUNITIESSUSTAINABLE DEVELOPMENT

(often unrealistic) standards for their exhortational value, butlack experience with working legal systems that aim for achiev-able goals.1

The templates for environmental laws in the FSU coun-tries are often the laws of the communist period, which weretypically stringent but impractical. They often specified resultsfar beyond industry’s capacity to comply and were not testedin any public process to determine their viability or accept-ability. Current efforts to draft environmental laws are builton this shaky foundation. They concentrate on the product(laws) without considering habits and experience, and thusillustrate the triumph of hope over experience; the assump-tion seems to be that better laws alone will stimulate betterpractice. However, centrally based directives have not suc-ceeded in controlling pollution or preserving natural resources.They have failed to consider whether the society has thecapacity and will to attain its environmental goals, if theinstitutions exist to support implementation, and what thesociety is willing to spend.2

In addition to the effect of these institutional deficits, dur-ing the transition the Second World environment has suf-fered from a wholesale capitulation to short-term needs that,while perhaps understandable, has been devastating nonethe-less. The late-1980s political promises of the national democ-rats (environment, market, and democracy) were soon sweptaside by the shock therapy of hurried economic liberaliza-tion, as the International Monetary Fund and the World Bankimplemented the so-called “Washington consensus” on reformsthat had been widely applied to developing nations: structuraladjustments that entailed opening up the economies, macro-economic stabilization, price liberalization, and privatizationof state-owned enterprises.3

In the ensuing upheaval, environmental concerns rapidlylost priority and were subordinated to debates on the economiccrises. Many people, including the relatively affluent and edu-cated middle class that had been the backbone of the move-ment, became preoccupied literally with making ends meet.In the former Czechoslovakia, for example, only 14 percent of

citizens identified the environment as a priority in 1992, com-pared with 83 percent two years earlier, while NGO member-ship throughout Central and Eastern Europe fell.4 In the FSUcountries, opinion polls conducted in early 1990s revealed thatthe environment ranked lower among citizens’ concerns thanin previous years and was topped by rising prices, food short-ages, increasing crime rates, and the weakness of authorities.5

In this atmosphere of economic decline and increasing polit-ical discord, public support for the environmental cause dra-matically diminished, triggering a crisis in the environmentalmovement and a decline in its activities. In turn, the envi-ronment dropped out of the platforms of most influentialpolitical parties. The abstract notions of “environmental pro-tection” and “healthy environment” appear in many of thoseprograms, but they are just empty slogans unsupported by seri-ous proposals for, or commitment to, environmental reforms.

With the environment no longer a major independent ele-ment on the political agenda of the former communist nations,the way has been cleared for a tide of “pragmatic” policy deci-sions that have restored the pre-transition rate of environ-mental degradation. The governments in the former Sovietrepublics quickly resumed their role as a major anti-environ-mental force and dusted off old policies, which continued tobe pro-industrial and growth-oriented without any seriousconsideration for the environment. For example, the Ukrain-ian parliament, facing energy shortages and the high costs ofenergy supplies imported from Russia, voted in late 1993 to can-cel a moratorium on new nuclear reactors and to continue tooperate the remaining units at the Chornobyl power station.Some industrial enterprises in Russia formerly closed for envi-ronmental reasons were re-opened and FSU governments’ long-standing emphasis on extractive exploitation of natural resourceswas renewed. Russian oil production, for instance, is nearly backto pre-collapse levels and now generates about $57 billion a yearin revenues. In Kazakhstan nearly 70 percent of recent directforeign investment has gone into resource extraction, whichnow accounts for almost half of industrial output.6

Another factor helped marginalize environmental causes:

3130 UKRAINE: TEN YEARS AFTERSUSTAINABLE DEVELOPMENT

the revived influence of the old communist nomenklatura.* Farfrom banishing this ruling class, the collapse of communismmerely drove it to evolve into new oligarchic clans, which thenshaped market reforms in ways that secured their seizure ofnational assets and monopolistic control of markets. Duringthe privatization (often illegal) of state enterprises, the oligarchsin most cases became owners of major resource-extractingand industrial businesses. They also became the most power-ful lobby in the government, one with a strongly anti-envi-ronmental tilt.7

The network of the elite with a vested interest in the con-tinued exploitation of the environment is far-reaching. Itincludes all those who enjoy economic and social benefits thatdepend on environmentally harmful or risky enterprises:many scientists and engineers, officials, workers fearful of los-ing their jobs, and residents of centrally planned industrialtowns in which the employment possibilities are limited butenvironmentally degrading.8

In the current atmosphere of “wild capitalism” and flour-ishing corruption, neither the oligarchs nor many other newbusinessmen have any incentives to obey environmental reg-ulations. They are inclined to exploit legal loopholes andweak law enforcement to maximize profits. In at least onerespect—the way it artificially separates the economy from theenvironment and promotes the one to the detriment of theother—the new political-economic system now taking root inmost of the Second World countries hardly differs from the oneit replaced.

Ukraine: Ten Years After

In recent years several systems have been developed to assessand compare nations’ environmental performance, with the

aim of determining the long-term environmental sustainability

of their economies. These systems vary in their assumptionsand methodologies, and whether any of them actually meas-ures sustainability is still an open question, but Ukraine doesnot place high on any of the rankings. The World EconomicForum’s Environmental Sustainability Index, for example,ranks Ukraine 136th out of 142 nations. The World WildlifeFund’s 2002 Living Planet Report, which uses the ecofootprintmethodology, puts Ukraine 111th out of 146 nations. One ofthe most comprehensive systems, developed by Robert Prescott-Allen and described in his book The Wellbeing of Nations, ranksUkraine 128th out of 180.1

Ukraine’s low sustainability rankings reflect its develop-ment history. Ukraine was among the Soviet Union’s leadingindustrial and technological centers because of its industrialbase, educated and hardworking population, and rich mineralresources, all of which were extensively exploited by the Sovi-ets. In 1990 about 40 percent of the U.S.S.R.’s military-indus-trial complex was located in Ukraine, including sophisticatedenterprises producing space rockets, missiles, military transportaircraft, aircraft carriers and other warships, tanks, and equip-ment for spaceships, satellites, and nuclear power stations.2

Ukraine also hosted heavy industries with huge metal andchemical plants, oil refineries, and hundreds of mines fromwhich coal, iron ore, uranium ore, and many other importantresources were extracted. With only about 18 percent of theU.S.S.R.’s population and less than 4 percent of its territory,Ukraine accounted for more than 30 percent of Soviet indus-trial production and 25 percent of agricultural production.3 Thisoutput, however, was achieved at the cost of extensive over-use and depletion of natural resources and vast environmen-tal pollution, of which the radioactive contamination of largeareas of land by the Chornobyl accident is only the best-known example.

Ukraine achieved independence with the collapse ofthe Soviet Union in 1991. The auspiciousness of the moment,however, was dampened by the daunting array of environ-mental and developmental problems the new country faced.Ukraine inherited a failing, highly centralized economy with* The ruling class of elite, Communist party bureaucrats.


industries based on inefficient and outdated technologiesand strongly biased toward heavy industry. If the SovietUnion’s economy was like a decrepit ship that had runaground and broken up, Ukraine’s was an ugly piece of thatwreckage—severed from the larger structure, dysfunctional,and poorly equipped to cope with the additional shocks thatsoon followed. Inefficient use of energy proved to be a majorweakness, for example, when Russia in 1992 abruptly beganraising energy prices to world market levels. Another greatshock came when the once-closed (within the borders of theFSU and the Soviet bloc) and vulnerable national economy wasintegrated, virtually overnight, into the global economic sys-tem. Moreover, after 70 years of communist rule the newlyindependent Ukraine had an inadequate governance structure;most social institutions either were ruined or discredited andnew ones had not yet been created. National traditions hadlargely been suppressed and lost, and virtually everyone wassaddled with the obsolete myths, mind-sets, and mental mapsof communist industrial society.

Thus, Ukraine required (and still requires) efficient gov-ernance, social and technological innovations, market reformsand economic restructuring, new social institutions and devel-opment of civil society, as well as new patterns of thinking.However, the ruling elite in Ukraine—once just a provincialcommunist bureaucracy in the FSU—failed to formulate andimplement a modern and prospective development strategy toaddress the new economic, social, and environmental chal-lenges. The government declared the formal goal of the tran-sition to democracy and market economy, but market reformswere delayed significantly and, since their inception, havebeen carried out in a very inconsistent way. The important ques-tion of whether market forces alone could shape the neweconomy to satisfy the nation’s long-term requirements wasnot even considered. Not only has sustainable developmentnever been formulated as a goal, the Ukrainian people havenever been given any clear vision of the destination point ofthe nation’s transition process.

Meanwhile, economic, social, and environmental

conditions in Ukraine have worsened. In the 1991–1999period, Ukraine’s GDP dropped by almost 60 percent andaverage personal incomes fell more than half (in real terms).4

The environment suffered during the reform period evenmore than during Soviet rule, mostly because the economy’sstructure tilted even farther toward heavy industries (metallurgy,mining, chemical and oil-refining industries, and energy).The share of these resource-intense and environmentallyunfriendly industries in the industrial output of Ukraine hasmore than doubled in recent years, from 23 percent in 1991to 58 percent in 2000. While in the 1990s total industrialproduction plummeted to half the 1990 level, the fall in thelighter and cleaner sectors of the industry, including hightechnologies and machine building, was even more drastic.5

In general, Ukraine has failed to take advantage of glob-alization, partly because of problems caused by the economicstructure, pricing policies, and outdated industries inheritedfrom the Soviet era. Although the export share of GDP over thelast three years has ranged between 55 and 60 percent, whichis typical of countries with open economies, the export struc-ture has rapidly altered for the worse: metals, chemicals, andagricultural products are now the major exports, while high-tech exports have declined. In 2000, the share of heavy indus-trial products in Ukrainian exports was over 60 percent. Metalproducts alone accounted for about 40 percent.6

The environmental effects of the shift in the Ukrainianeconomy can be seen even more clearly in certain macro indi-cators. Consider, for instance, the carbon intensity of theeconomy (carbon emissions per unit of economic output).*Worldwide, between 1950 and 1999 the number of tons ofcarbon emitted for each million dollars of gross world prod-uct fell 39 percent; the average decline during the 1990swas 2 percent per year. By contrast, between 1992 and 1999Ukraine’s carbon intensity rose 29 percent and is now almost

* This measure is important because human-caused carbon emissions contributeto global climate change. Ukraine would be obligated to curb carbon emissionsat the 1990 level under the terms of the Kyoto Protocol, which it has signedbut not ratified.


four times higher than the world average.7 The same patternis reflected in energy intensity (energy used per unit of eco-nomic output). Although energy use has fallen in Ukraine overthe past decade, the much steeper drop in economic outputhas kept Ukraine’s economy much less energy efficient thanthose of other industrial and post-communist nations (see Fig-ures 2 and 3).8

As these examples suggest, the environmental costs ofthe Ukrainian economy have risen and the country’s GDPcomposition has become more resource-intensive and envi-ronmentally hostile. These are serious and negative trends thatdemand urgent attention, but the government continues toregard economic growth as the dominant policy goal, to beachieved at any expense. For example, in 1999 the govern-ment enacted a tax law that effectively subsidized the outdatedmining and metallurgy industries and thus encouragedincreases in wasteful consumption of natural resources, envi-ronmental pollution, and energy imports from Russia.9

(About 50 percent of Ukrainian steel production capacityemploys the Siemens-Martin process, developed in the 1860s.Many plants date from the early 20th century.10) These sub-sidies helped mining and metals production contribute heav-ily to economic output growth of 21 percent between 2000and 2002.11

While the government has much to answer for in itsmyopic approach to development, the Ukraine business com-munity must share some of the blame. Because Ukraine inher-ited an extremely inefficient economic system with outdatedindustries, a huge inventory of obsolete manufacturing equip-ment, a habit of inefficient use of natural resources, and a badlyneglected environment, the transition to sustainable businesspractices is one of the most pressing challenges faced by busi-ness. Progress toward sustainability will be impossible with-out socially and environmentally responsible businessesprepared to evolve their practices and take part in creating arational and enforceable regulatory structure (taxes, subsi-dies, environmental standards, tradable permits, and so on).Ukrainian industry in particular badly needs efficient and

1999199819971996199519941993199219910

200

400

600

800

1000

Met

ric to

ns p

er m

illio

n do

llars

, PPP

bas

is

JAPAN

UNITED STATES

CHINA

RUSSIAN FEDERATION

UKRAINE

Sources: See Endnote 7 for this section.

Carbon Emissions per Unit Gross Domestic Product,Selected Countries, 1991—99

FIGURE 2

JAPAN

UNIT

ED

S

TATE

S

CHINA

RUSSIA

N

FED

ERATIO

N

UKRAINE

1.41.6

4.1

20001980

0.7

4.2

1.6

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3.1

0

1

2

3

4

5

6

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PPP

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Gross Domestic Product per Unit of Energy Use,Selected Countries, 1980 and 2000

FIGURE 3


eco-friendly technologies, effective environmental and resourcemanagement, and clean and safe production systems.*

Unfortunately, the Ukrainian business community isdominated by oligarchs who have ignored modern businesstrends. The leading industrialists and businessmen (mostlynomenklatura holdovers) have generally proved to be limitedin outlook and archaic in thinking. Driven by a narrow-minded understanding of self-interest and anxious to makequick money, they are unconcerned with long-term threats andopportunities. Their major preoccupation is to milk the out-dated industrial base for short-term profits. Modernizationand the development of a long-term business strategy have lostout to the ongoing struggles among the oligarchs to redistributeexisting industrial assets and financial flows and to move upin the oligarchy. This general blindness among Ukrainianbusinesses to the strategic economic advantages of environ-mental and social responsibility was the main reason thatefforts in 2000 and 2001 to establish a Business Council for Sus-tainable Development failed.12

The single result of these dual failures of government andbusiness is that the political profile of sustainable developmentin Ukraine is extremely low. The government has willfully neg-lected these issues, and although the rate of environmentaldegradation is worsening the government has offered no ade-quate political response.

Nowhere are official attitudes toward the problem betterrevealed than in the story of Ukraine’s National Commissionon Sustainable Development (NCSD), which was set up inresponse to commitments Ukraine made following the UnitedNations Earth Summit in Rio de Janeiro in 1992. The Cabinetof Ministers formally established the NCSD on December 31,

1997, with the official mission of advising the government onsustainable development and developing new approaches toachieving the nation’s economic, environmental, and socialgoals.13 But the commission has been a travesty from thebeginning.

First, it was created after a serious delay (several years laterthan corresponding bodies in many other countries) and wasformed—in keeping with the worst Soviet bureaucratic tradi-tions—by appointing the vast majority of members from stateministries and agencies, thus giving no voice to other sectorsof Ukraine society. During the five years of its formal existence(1998–2002), Commission meetings were convened only fivetimes, the last two of which were held in 2002 on the eve ofthe World Summit on Sustainable Development in Johannes-burg—almost literally at the last minute.14

Second, the Commission was supposed to elaborateUkraine’s National Strategy of Sustainable Development intime for adoption by 2002, as stipulated by Ukraine’s com-mitments under Agenda 21 and the Rio+5 UN resolution. Butthe NCSD failed to prepare a draft document and submit it tothe Cabinet of Ministers. A draft was prepared by the Cabinet,but in 2002 the Parliament rejected it, leaving Ukraine toapproach the Johannesburg summit meeting without anynational sustainability strategy.15

This sorry state of affairs is born, first and foremost, ofignorance of sustainable development ideas, which is wide-spread among government officials and the general publicalike. There is a serious lack of information on sustainabledevelopment principles and their policy implications, even atrudimentary levels, let alone the advanced knowledge gainedin recent years in countries where the notion is embracedenthusiastically. Millions of words on sustainable developmenthave been published worldwide in the last decade, but verylittle of that information is available in the Ukrainian language.And to the extent that officials, businesspeople, and the pub-lic are aware at all of sustainable development ideas, they tendto cast those ideas narrowly in terms of environmental pro-tection. The “development” in sustainable development has

* These don’t have to be created from scratch. The World Business Council forSustainable Development, for example, has worked out a sustainable businessstrategy (eco-efficiency), which exploits the positive links between resourceefficiency, environmental improvements, and economic benefits. Adoptingeco-efficiency practices can boost companies’ environmental performance,which increases their competitiveness in the global marketplace and createsnew business opportunities. There are also many other sources of guidanceon best practices in business and environmental regulation.

39THE WAY FORWARD38 SUSTAINABLE DEVELOPMENT

not received the attention it is due. Highlighting the advan-tages of sustainable development for the country’s future,and creating a sense of urgency about it, must be key featuresof any policies designed to steer Ukraine away from the eco-nomic, social, and environmental disasters that appear to liedown the current path. We conclude with a review of somegeneral principles and some specific policy prescriptions,which, if embraced and adopted, could begin this criticalchange of course.

The Way Forward

Sustainable development poses different challenges in dif-ferent places. What sets Ukraine and the other Second

World nations apart is the legacy of communist rule—the left-over mindsets, the outdated economic structure, the tradi-tion of environmental rapacity—and the unexpectedopportunity offered by the sudden collapse of the old socialorder and the freeing up of economic and social assets for reor-ganization according to new principles. The key question is,of course, Which principles?

In contrast to the poorest nations of the Earth, by 1990the Second World countries were misdeveloped, rather thanunderdeveloped. They thus faced the need for a wide-rangingsocietal transformation that had never been attempted before.However, the rote application of the Washington consensusmedicines to the peculiar fever of the Second World has leftmany of its people poorer and less secure and their nations’economies more primitive, i.e., they have become producersof primary commodities for world markets rather than mak-ers of high value-added finished products. The environmen-tal damage caused by this process is significant, and Ukraineand the other nations suffer from a self-defeating lack of a long-term development perspective.

Ukraine’s current plight can be likened to an airline jour-ney. The plane has just taken off, leaving the old, crumbling

Soviet airport behind forever. However, the destination isuncertain. The navigational computer is up for grabs; ideally,the coordinates that ought to be punched in are Democracy,Market Economy, and Sustainability. However, the initialflightpath seems to be toward a point marked by Autocracy,Oligarchy, and Decline. In the current atmosphere of oppor-tunism and evolving institutions, the challenges facing Ukraine(and much of the Second World) are to prevent society frombeing hijacked by the forces of predatory capitalism and to steerdevelopment toward a sustainable order that works for every-one, now and into the future.

Achieving these goals will require close attention both tobroad policy approaches that can lay a foundation for theideas of sustainable development, and to specific policies—asustainable development tool kit—that can build a sustainablesociety thereupon. The first such broad policy was identifiedby Johannah Bernstein of the Stockholm Environment Insti-tute, who rightly argues that in order to get sustainable devel-opment firmly onto a national political agenda, it must becharacterized as process for improving living standards andenhancing the quality of life. In addition, Bernstein says, sus-tainable development must be promoted as an overarching pol-icy framework for national governments to use in guidingvarious sectoral policies. And to demonstrate that it is viableand feasible, sustainable development must be “translatedinto concrete operational guidelines to guide the policy mak-ing processes of the key economic sectors.”1

Here, international institutions have a crucial role to playin Ukraine, because their actions can either accelerate orretard progress toward sustainable development. To date, theprograms of UN institutions and foreign aid agencies inUkraine have not been effective in raising public and gov-ernmental awareness of the benefits of sustainable develop-ment due to their narrow vision of sustainable developmentas an enhanced environmental protection agenda. Carefulcoordination and coherence are needed between the nationaldevelopment policymaking process in Ukraine and the instruc-tions that Western donor governments give the international

41THE WAY FORWARD

the European Union are often too expensive for post-com-munist nations laboring under severe financial constraints, andtheir adoption might force these nations to pass up importantopportunities for improvements at surprisingly low cost. (Thisis happening now in the 10 CEE countries, which are requiredto harmonize their environmental policies with EU regulationsin spite of promising experiments with incentives in the firstyears of reforms; see sidebar, pp. 24 and 25.) Further, the com-mand-and-control approach appears to be both costly andineffective without a culture of compliance and a strong legalsystem. It also requires monitoring and enforcement capabil-ities that are unrealistic for most nations in transition. Ukraineneeds realistic environmental policies that provide ongoingincentives for efficiency and that integrate the principles of flex-ibility, cost effectiveness, and tradability.

As for the tool kit of specific sustainable developmentprograms, the first indispensable item is a rejuvenated NationalCommission on Sustainable Development. The NCSD cannotfulfill its mission without a radical re-organization of itsstructure and work. Members of the NCSD should beappointed from the public and private sectors and should rep-resent all the key stakeholders—governmental agencies, busi-nesses, research institutes, and relevant NGOs. Reform inUkraine will be impossible without the active involvement ofcitizens and private businesses in the public policy process anddecision-making.

The NCSD should become the lead national body inforging consensus on Ukraine’s shift to sustainable developmentby bringing together diverse interests to identify and developinnovative economic, environmental, and social policies. Itshould also work to raise public awareness, demonstrate theimplementation of the policies that foster sustainable devel-opment, and evaluate and report on progress along this path.In particular, the NCSD ought to focus first on the followingbasic issues:• Barriers obstructing progress towards sustainability• Ways to raise sustainable development on the national polit-

ical agenda and to generate political will for the integration

40 SUSTAINABLE DEVELOPMENT

institutions and their foreign aid agencies to more effectivelypromote the sustainability agenda in its economic, social,and environmental dimensions.

Second, sustainable development depends on gover-nance systems that are “transparent, participatory, andaccountable, with full access to relevant information anddecision-making processes by all the stakeholders.”2 In West-ern democracies, this ideal is honored by observance relativelywell; in Ukraine, it is honored mostly in the breach. Westerndonor governments and foreign aid agencies could encourageprogress toward transparency and broader participation by notrestricting their working contacts in Ukraine to state offi-cials. Opaque bureaucratic procedures and the limited involve-ment of independent representatives of the public have beenkey factors in the low efficiency of foreign technical assistanceaimed at promoting sustainable development in Ukraine. Itis not surprising that the Ukrainian public has the impressionthat some foreign aid programs and the private interests of cor-rupt governmental officials often tend to converge.

Considering the low level of social capital and the fact thatthe entire society is in flux, governance system reform and insti-tutional changes are, to an extent, prerequisites for shifting tosustainability. Sustainable development goals will thus have tobe considered in parallel with other objectives of social trans-formation to overcome the legacy of communist industrial soci-ety. However, this creates an opportunity to build a broadpublic coalition to support change.

A third broad principle is that Ukraine needs to stressincentive-based rather than command-and-control approaches,for at least two reasons: incentives will be far more compati-ble with the open market reforms needed to put the country’seconomy on a sound footing, and they will avoid the top-downheavy-handedness of the discredited policies of the commu-nist past.

Economic instruments such as pollution charges andfees, as an alternative to command-and-control regulation, werefirst introduced late in the communist period but workedpoorly. The rigid environmental policies that dominate in

4342 THE WAY FORWARDSUSTAINABLE DEVELOPMENT

of sustainability issues into current political, economic, andsocial reforms

• Approaches to restructuring the economy and integrating sus-tainable development into all sectors

• Governance system reform and institutional changes as pre-requisites for shifting to sustainability

Additional items for the tool kit include the following:Public education on development trends and strate-

gies. This is perhaps the single most critical element in any real-istic strategy to move Ukraine toward sustainability. A publiceducation campaign should be designed to raise awareness ofmodern development alternatives and the fact that Ukraine’scurrent strategy—relying on growth in outdated heavy indus-tries—cannot restore lost living standards in this decade, letalone provide a solid basis for boosting the economy in the longrun. From a human wellbeing perspective, the Ukrainian com-modity-producer niche in the evolving global economy hasobvious limits that undermine the prospects of a better future.

One of the few benefits inherited from the communistpast is the high level of human capital (education) in Ukraine,and it is the wide class of middle-aged professionals thatshould be the primary target of the education campaign. Theprofessionals themselves need to be assisted in overcoming theoutdated industrial-growth patterns of thinking, understand-ing the sustainability issues, and developing a long-range out-look. From this base, the new ideas have a strong potential tospread among wider social groups.

Ecological tax reform. Ukraine’s current tax system isseverely out of balance. It makes labor too expensive (additionalpayroll taxes and mandatory social contributions, paid byemployers, average about 40 percent of a salary), which dis-courages employment, encourages payment of wages in cash,and fuels the unofficial economy. It also makes energy and nat-ural resources—especially since they are subsidized by thegovernment—relatively cheaper, thus encouraging inefficiencyand waste.

Ukraine should restructure its taxation system accordingto the principle of eco-taxes, i.e., tax lightly the things you want

more of (labor and income), and tax more heavily what youwant less of (resource depletion and pollution of the envi-ronment). The tax base can be shifted from labor and incometo resource throughput at the depletion or pollution end, orboth. The tax shift should be made revenue-neutral to mini-mize political opposition. (For example, in the short term it willbe necessary to avoid antagonizing the oligarchs, and allow-ing them to pay less in labor-related taxes could compensatefor higher resource taxes.) This would provide strong incentivesfor job creation and for higher and officially paid wages, onthe one hand, and for enhancing resource productivity on theother. The prospects of tax reform in Ukraine are brightenedby the fact that the current Western-style tax system wasintroduced as a part of market reforms, is relatively new, andhas not yet become deeply entrenched in the Ukrainian econ-omy. Thus, this tax shift could be a key part of structuraladjustment in Ukraine.

The introduction of a tradable pollution permitting sys-tem might also be very useful.

Improvements in energy efficiency. The potential forimproving energy efficiency in the Second World is great andmany of the necessary investments could pay for themselveswithin a short time. (As usual, the main problem is lack of cap-ital.) To radically reduce its energy consumption, Ukraine willneed to enact a set of energy efficiency policies, including tech-nical improvements, structural economic shifts to less energy-intensive activities, and changes in energy use patterns.

Development of renewable energy resources. Ukrainehas some of the best agricultural land in the world and farm-based renewable energy products such as biomass, ethanol, andbiodiesel have great untapped potential. These fuels repre-sent a win-win-win situation: for the environment because theyburn cleaner; for Ukrainian farmers because they woulddecrease farmers’ vulnerability to speculative seasonal pricesfor fuel, expand the agricultural market, and provide an eco-nomic stimulus for rural Ukraine; and for the country in gen-eral because they would reduce reliance on oil imports andincrease energy independence. Extensive agricultural lands

4544 THE WAY FORWARDSUSTAINABLE DEVELOPMENT

optimal use of local resources.Finally, what will be the moving force behind all these

reforms? One obvious candidate is an eco-labor politicalcoalition. While the NCSD (once reconstituted) can set thetone at the top and provide an official blessing for sustainabledevelopment, only a political movement can build legiti-macy for reform-minded political figures and generate the pres-sure necessary to begin meaningful change toward a sociallyand environmentally sustainable post-transition economy—such as pushing through the NCSD overhaul and conductingthe education campaign just described. It is critical tostrengthen the existing trade unions, define common inter-ests with the environmental movement, and establish theirclose cooperation to increase the political profile of sustain-able development in Ukraine.

In order to develop as a modern nation and secure itsnational interests, Ukraine must become aware of the eco-logical challenges and trends that are shaping the future ofhuman civilization and become proactive in its search for ade-quate responses. This ambitious goal requires a comprehen-sive development strategy that will provide a new perspectivefor the nation and a clear vision of the possibilities. The firstjob of the eco-labor coalition, perhaps, ought to be the artic-ulation of that vision, one that will inspire the suffering peo-ple of Ukraine—not a grim call for sacrifice, but a hopefulexhortation to collaborate in building a better future. Ukrainemust also find leaders who understand the handwriting on thewall and have the courage to face up to its message: just ascommunism succumbed to the failure to see the economic andecological truth, capitalism—whether predatory or enlight-ened—can be destroyed by the same blindness.

are uncultivated and there is great potential for increasingagricultural productivity, so the country could afford to devotesubstantial areas to energy crops. As for renewably generatedelectricity, less than 9 percent of Ukraine’s electricity nowcomes from renewable generation,3 but renewable sources,including wind and mini-hydro, show some potential forexpansion. Wind energy capacity, for example, is currently only40 megawatts but the estimated potential is 5,000 megawatts.4

Fair international trade. In many cases trade liberaliza-tion degrades Ukraine’s natural capital by encouragingunhealthy patterns of commerce and resource exploitation.Ukraine is often forced to export environmental carryingcapacity or natural capital that is in great demand domestically,which prevents national businesses from using this capital forvalue-added production (as in the cases of export of scrapmetal and sunflower seeds). To mitigate the adverse impactsof globalization on the Ukraine environment, specific economicinstruments should be used to protect the environment andnational economic interests. For instance, environmental tar-iffs should be used to tax pollution-related exports and dis-courage export of scarce resources. The use of such instrumentsis complicated by threats of economic sanctions from theEuropean Union and the obstacles they might pose to mem-bership in the World Trade Organization.

The principle of self-reliance. In the years of transitionto an open market economy, global economic forces, struc-tures, and constraints have replaced communist central plan-ning and Moscow’s dictatorship in Ukraine. However, externalpriorities still prevent Ukraine from freely shaping a nationaleconomy that would serve her people and their interests.Embracing self-reliance at the national level means seeking theright balance between the society’s openness to globaliza-tion and protection of its national interests, environment, andidentity. This policy seeks a more national orientation and aimsto develop domestic production for internal markets as the firstoption, opting for international trade only when it is clearlymuch more efficient. At the local level, communities shouldbe enabled to maximally satisfy their needs themselves with

4746 ENDNOTESSUSTAINABLE DEVELOPMENT

and Bruce A. Larson, eds., Controlling Pollution in Transition Economies: Theo-ries and Methods (London: Edward Elgar Publishing Ltd., 1997); also from HilaryFrench, Green Revolutions: Environmental Reconstruction in Eastern Europe and theSoviet Union, Worldwatch Paper 99 (Washington, D.C.: Worldwatch Insti-tute, 1990), pp. 40–48.

3. Emissions declines from Bluffstone and Larson, op. cit. note 2, andnumerous other sources.

4. Bluffstone and Larson, op. cit. note 2, and Ukrainian government pub-lications.

5. United Nations Development Programme, Transition 1999: Human Devel-opment Report for Central and Eastern Europe and the CIS (New York: Oxford Uni-versity Press, 1999).

6. Organization for Economic Cooperation and Development, OECD Envi-ronmental Performance Reviews: Russian Federation (Paris: OECD Publications,1999).

7. Anil Markandya, Sustainable Development and Economic Transition in Rus-sia: What Issues? What Agenda? Environment Discussion Paper No. 22 (Cam-bridge: Harvard Institute for International Development, July 1997),www2.cid.harvard.edu/esd/iep/edp22.pdf, viewed 10 October 2002, pp. 2and 3; Stephen Carter, “Economy vs. Environment in Russia,” The Ecologist,December 1999, p. 436.

8. Christopher Thies cited in Carter, op. cit. note 7.

9. Rising energy intensity in Russia from Vladimir Sidorenko, “Assessmentof Basic Macroeconomic Nature Management Indicators for the Russian Fed-eration and Regions,” Towards a Sustainable Russia (journal of the Center forRussian Environmental Policy), November 2000, p. 28; in Ukraine from Ger-man Advisory Group on Economic Reform (With the Ukrainian Govern-ment), The Next 1,000 Days: An Economic Reform Agenda for Ukraine (Kyiv:November 1999), available at www.ier.kiev.ua/English/books_eng.cgi, pp. 60and 61.

10. Markandya, op. cit. note 7, p. 3. For a theoretical discussion of financingenvironmental reconstruction in the post-communist nations, see TheodorePanayotou, Effective Financing of Environmentally Sustainable Development in East-ern Europe and Central Asia, Environment Discussion Paper No. 10 (Cam-bridge: Harvard Institute for International Development, October 1995),www2.cid.harvard.edu/esd/iep/edp10.pdf, viewed 10 October 2002; for evi-dence on environmental spending in Russia, see National Intelligence Coun-cil, “The Environmental Outlook in Russia,” Intelligence CommunityAssessment 98-08, January 1999, pp. 20, 22, 23.

11. National Intelligence Council, op. cit. note 10, p. 23, citing RussianCommittee for Environmental Protection.

Endnotes

Development and the Environment Under Communism1. Jeffrey Sachs, Economies in Transition: Some Aspects of Environmental Pol-icy, Environment Discussion Paper No. 1 (Cambridge: Harvard Institute forInternational Development, February 1995), www2.cid.harvard.edu/esd/iep/edp1.pdf, viewed 10 October 2002, p. 4.

2. Energy prices in the Soviet bloc and effect of oil shocks from ibid.; sec-toral energy intensities from ibid. citing Tomasz Zylicz, “Implementing Envi-ronmental Policies in Central and Eastern Europe,” Economic Department,Warsaw University, 1993.

3. Hilary French, Green Revolutions: Environmental Reconstruction in EasternEurope and the Soviet Union, Worldwatch Paper 99 (Washington, D.C.: World-watch Institute, 1990), pp. 10–28; Sachs, op. cit. note 1; and Zylicz, op. cit.note 2.

4. National Intelligence Council, “The Environmental Outlook in Centraland Eastern Europe,” Intelligence Community Assessment 96-08D, December1997, pp. 7, 11, 14, 15; data in Table 1 from Margaret A. Walls, “Motor Vehi-cles and Pollution in Central and Eastern Europe,” discussion paper ENR 93-22 (Washington, D.C.: Resources for the Future, October 1993).

5. French, op. cit. note 3, pp. 5–10, 28–40; Natalia Mirovitskaya, “The Envi-ronmental Movement in the Former Soviet Union,” in Andrew Tickle and IanWelch, eds., Environment and Society in Eastern Europe (Harlow: Longman,November 1998), pp. 30–66.

6. French, op. cit. note 3, pp. 6, 9, 31; Mirovitskaya, op. cit. note 5, pp. 42, 43.

7. Mirovitskaya, op. cit. note 5, pp. 42, 43.

8. Ibid.

9. Sachs, op. cit. note 1; Mirovitskaya, op. cit. note 5, p. 46; opinion of Har-vard historian Paul Josephson cited in Rob Edwards, “Hot History,” New Sci-entist, 22 January 2000, p. 30.

10. French, op. cit. note 3, pp. 5–10, 31.

The Environment and the Transition1. Natalia Mirovitskaya, “The Environmental Movement in the FormerSoviet Union,” in Andrew Tickle and Ian Welch, eds., Environment and Soci-ety in Eastern Europe (Harlow: Longman, November 1998), p. 52.

2. Theoretical benefits from several contributions in Randall A. Bluffstone

49ENDNOTES

Obstacles and Lost Opportunities1. Ruth Greenspan Bell, “Building Trust: Laying a Foundation for Environ-mental Regulation in the Former Soviet Bloc,” Environment, March 2000, pp.20–32.

2. Ibid.

3. For a theoretical discussion of the implementation of the Washington con-sensus in the post-communist countries, see Thomas Lines, “Transition toWhat? Restarting Development After Communism,” IDS Bulletin, vol. 29,no. 3, pp. 1–9.

4. Theodore Panayotou, Effective Financing of Environmentally SustainableDevelopment in Eastern Europe and Central Asia, Environment Discussion PaperNo. 10 (Cambridge: Harvard Institute for International Development, Octo-ber 1995), p. 2, citing D.C. Esty et al., “Environmental Protection and EconomicTransition” (Yale University, 1995, no other citation information available);www2.cid.harvard.edu/esd/iep/edp10.pdf, viewed 10 October 2002.

5. For a discussion of the impact of “shock therapy” on the environmentalmovement and policy in the FSU, see Natalia Mirovitskaya, “The EnvironmentalMovement in the Former Soviet Union,” in Andrew Tickle and Ian Welch, eds.,Environment and Society in Eastern Europe (Harlow: Longman, November 1998),pp. 44–46; opinion poll data from ibid., p. 58.

6. Pragmatic policy decisions and re-opening of industrial entreprises in Rus-sia from ibid., p. 45; emphasis on extractive exploitation is author’s conclu-sion based on numerous sources; Russian oil production and Kazakhstandirect foreign investment from Russian mass media.

7. Mirovitskaya, op. cit. note 5, pp. 58, 59.

8. Ibid.

Ukraine: Ten Years After1. World Economic Forum ranking from Environmental Sustainability Index,at www.ciesin.org/indicators/ESI/rank.html, viewed 4 August 2003; WorldwideFund for Nature ranking from Living Planet Report 2002, online edition,www.panda.org/downloads/general/LPR_2002.pdf, viewed 12 December 2002;Prescott-Allen ranking from Robert Prescott Allen, The Well-being of Nations(Washington, D.C.: Island Press, 2001), p. 267.

2. Viktor Vovk, “Ukraine in the Context of Global Trends and Scenarios ofWorld Development,” in a special issue of the independent cultural journalÏ, No. 22, 2001, pp. 38–55, available in English at www.ji.lviv.ua/n22texts/vovk-en.htm.

3. Ibid., p. 46.


12. Based on research published in EU Enlargement and Environmental Qual-ity in Eastern Europe and Beyond, proceedings of a conference held in Wash-ington, D.C., on March 14, 2002, at the Woodrow Wilson InternationalCenter for Scholars.

13. Vanessa Houlder, “Unexpected Opportunities,” Financial Times, 30 Sep-tember 1998.

14. Ibid.; see also National Intelligence Council, “The Environmental Outlookin Central and Eastern Europe,” Intelligence Community Assessment 96-08D, December 1997.

15. This compliance cost estimate, from the EU Commission’s 1998 “Com-munication on Accession Strategies for the Environment,” COM (1998) 204,has been widely cited. Although the initial estimate was further refined andreduced in 2000, new legislation in 2000 and 2001 added requirements thatwill increase the financing needs. For details see the Commission’s 2001Communication “The Challenge of Environmental Financing in the Candi-date Countries,” COM (2001) 304, http://europa.eu.int/eur-lex/en/com/pdf/2001/com2001_0304en01.pdf.

16. For a discussion of these issues, see John M. Kramer, “Enlargement andthe Environment: Future Challenges,” in EU Enlargement and EnvironmentalQuality in Eastern Europe and Beyond, op. cit. note 12, pp. 96–99; decline in West-ern support from Houlder, op. cit. note 13.

17. Houlder, op. cit. note 13.

18. United Nations Development Programme, op. cit. note 5.

19. Ibid., pp. 5, 39–46.

20. Ibid., p. 21.

21. World Bank, “Selected World Development Indicators,” World DevelopmentReport 2003 (New York: Oxford University Press, 2003), pp. 236, 237.

22. United Nations Development Programme, op. cit. note 5, pp. 24, 25.

23. Ibid., pp. 5, 45.

24. United Nations Development Programme, op. cit. note 5, p. 9; other esti-mates from Daniel Kaufmann and Alexander Kaliberda, An “Unofficial” Analy-sis of Economies in Transition: An Empirical Framework and Lessons for Policy,Development Discussion Paper No. 558 (Cambridge: Harvard Institute for Inter-national Development, October 1996), www.cid.harvard.edu/hiid/558abs.html,viewed 10 October 2002.

25. United Nations Development Programme, op. cit. note 5, pp. iv, 9.

51ENDNOTES

15. NCSD failure from Semenets, op. cit. note 14, and author’s involvementas the parliament’s non-staff consultant.

The Way Forward1. Johannah Bernstein, “Earth Summit 2002 Workshop Discussion Paper,”Stockholm Environment Institute, 2000, obtained by the author at the EarthSummit 2002 meeting, World Conservation Union Washington Office, Feb-ruary 2000.

2. Ibid.

3. U.S. Energy Information Administration, Country Analysis Brief: Ukraine(Washington, D.C.: August 2002), www.eia.doe.gov/emeu/cabs/ukraine.html,viewed 31 July 2003.

4. Black and Veatch International, Renewable Energy Country Profile/Ukraine,http://projects.bv.com/ebrd/profiles/Ukraine.pdf, viewed 31 July 2003.


4. Economic indicators based on Ukrainian government data from Vovk, op.cit. note 2, p. 47.

5. Ibid.

6. GDP share and structure derived from the President’s Address to the Par-liament of Ukraine, On the Internal Situation and International Position of Ukrainein 2002, Kyiv, 2003 (in Ukrainian).

7. Worldwide carbon intensity trend from Seth Dunn, “Decarbonizing theEnergy Economy,” in Lester Brown et al., State of the World 2001, a WorldwatchInstitute report (New York: W.W. Norton & Company, 2001), p. 84; Ukrainecarbon intensity trend is the author’s calculation based on carbon emissiondata from Oak Ridge National Laboratory and BP Amoco, and World Bank dataon GDP in purchasing power parity international dollars, presented in Vovk,op. cit. note 2, p. 47.

8. World Bank, 2003 World Development Indicators, Table 3.8 (Washington,D.C.: April 2003).

9. The law (“Conducting an Economic Experiment at Ore-mining and Met-allurgical Enterprises of Ukraine”) was in effect between July 1999 and Janu-ary 2002. It temporarily reduced taxes on profits and certain fees, and for 68enterprises forgave all fines and penalties arising from delays in payment oftaxes, fees, and other obligations before July 1999.

10. About 50 percent of Ukrainian steel is produced using the open-hearthmethod, compared with about 20 percent worldwide. The industry’s antiquatedtechnology and decaying capital stock make it extremely energy intensive, withenergy costs estimated at more than 30 percent of total production costs. Laborproductivity is also low, at roughly one-quarter the EU level. Ukraine steel pro-duction is sustained by exports and accounts for about 40 percent of foreignexchange revenues. See Nina Legeida, The Economic Implications of GovernmentSupport for the Steel Industry: The Case of Ukraine, Working Paper No. 16, Insti-tute for Economic Research and Policy Consulting (Kyiv), September 2002; avail-able at www.ier.kiev.ua/English/papers/papers_eng.phtml; p. 8.

11. President’s Address to the Parliament of Ukraine, op. cit. note 6.

12. Vovk, op. cit. note 2, p. 50, based on the author’s experience as a WorldBusiness Council for Sustainable Development liaison in Ukraine and anactive member of the initiative group to create a Ukrainian council.

13. Ibid., p. 51.

14. Ukraine NCSD formation from ibid.; information on the NCSD meetingsfrom Serhiy Semenets, director of the Institute of Sustainable Development(Kyiv), personal communication.

53INDEX

France, 15

Germany, 15glasnost, 5, 16Gorbachev, Mikhail, 15Green World movement, 6, 17greenhouse gas emissions, 10, 25Greenpeace, 21

Hungary, 15, 20, 23

International Monetary Fund, 11, 28Italy, 15

Japan, 35

Kazakhstan, 29Kyoto Protocol, 33n

Lithuania, 20Living Planet Report, 31

Marxism, 10mining, 33, 34

National Commission on Sustainable Development(Ukraine), 36, 37, 41, 45

NGOs, environmental activism, 17,25, 29

nomenklatura, 30, 36nuclear power

Chornobyl, 5, 8, 15–17, 29, 31moratorium, 16, 17, 29

Oligarchic clans, 25, 30, 36, 43

Perestroika, 5, 15, 18Poland, 15, 20, 21, 23pollution

carbon emissions, 10, 25, 33

control equipment, 22in Former Soviet Union, 5, 6, 14nuclear contamination, 5, 8,

15–17, 29, 31permits, 34, 43post-communist policy, 6, 19–21taxes, 7, 19, 21, 24in Ukraine, 17waste management, 22

poverty, 20, 23, 26predatory capitalism, 39, 45Prescott-Allen, Robert, 31

Renewable energy, 7, 43, 44Romania, 26Russia, see also Former Soviet Union

black market economy, 26energy intensity rise, 21, 32environmental regulation, 29gross domestic product, 21, 26, 35men to women ratio, 23pollution, 20, 22

Soviet Union, see Former SovietUnion

Stockholm Environment Institute,39

sulfur dioxide emissions, 15sustainable development goals, 7,

38, 39–45

Taxespollution, 7, 19, 21, 24reform, 7, 21, 34, 42–44

Thies, Christopher, 21

UkraineBusiness Council for Sustainable

Development, 36, 36nChornobyl accident, 5, 8, 15–17,

29, 31democratic transition, 30–33economic instability, 6, 7, 33, 34education campaign, 7, 42, 45energy efficiency, 7, 15, 19, 21, 43energy intensity rise, 21, 34


Bernstein, Johannah, 39black market transactions, 26Bulgaria, 15, 26Business Council for Sustainable

Development (Ukraine), 36,36n

Capitalism, 10, 11, 18, 30, 39, 45carbon emissions, 10, 25, 33Central and Eastern Europe, see also

specific countriesblack market economy, 26democratic transition, 5, 12, 24,

27, 41gross domestic product, 14, 20pollution, 5, 14, 22post-communist countries, 8n, 9

China, 35Chornobyl, 5, 8, 15–17, 29, 31Clean Water Act (U.S.), 8communism

communist economy, 6, 8, 10, 13environmental destruction,

14–18industrial development, 13–15

crime, 26, 29Cuyahoga River, 8Czech Republic, 15, 23, 26Czechoslovakia, 28, 29

Disease, 14, 23, 26

Earth Summit (Rio), 36eco-labor political coalition, 45economy

black market transactions, 26capitalism, 10, 11, 18, 30, 39, 45communist economy, 6, 8, 10, 13environmental reform finance,

19, 21, 23, 36, 41growth, 7, 24, 29, 34, 42international trade, 7, 20, 44, 45oligarchic clans, 25, 30, 36, 43

output declines, 6, 19–21, 24, 34predatory capitalism, 39, 45sustainability, 26, 38–45tax reform, 7, 21, 34, 42–44transition to market economy, 5,

11, 19, 20, 30–33, 44unemployment, 20, 21, 26

education, 7, 42, 45energy

efficiency, 7, 15, 19, 21, 43intensity rise, 14, 21, 34renewable energy, 7, 43, 44

environmentactivism, 6, 17, 24, 25, 27–29, 45degradation under communism,

14–18Environmental Sustainability

Index, 31reform finance constraints, 19,

21, 23, 29, 36, 41regulation, 16, 18, 20, 22–25, 30,

36ntransition period, 18–27, 30–33

European Union, see also Centraland Eastern Europe

Acquis Communautaire, 24environmental assessment, 10environmental regulations,

22–25, 41, 44sustainability plan, 24, 25

Exxon Valdez, 10

Former Soviet Union, see alsospecific countries

black market economy, 26communist economy, 6, 8, 10, 13democratic transition, 5, 12, 27,

28, 30–33environmental destruction,

14–18, 29gross domestic product, 20, 26industrial development, 13–15oligarchic clans, 25, 30, 36, 43pollution, 5, 6, 14, 22post-communist countries, 8n, 9

Index


environmental regulation, 29, 34gross domestic product, 6, 20,

21, 33–35international trade, 7, 20, 44, 45men to women ratio, 23National Commission on

Sustainable Development, 36,37, 41, 45

oligarchic clans, 36, 43pollution, 17, 33renewable energy, 7, 43, 44sustainable development, 6, 7,

39–45tax reform, 7, 21, 34, 42–44ten year assessment, 30–38Zelenyi Svit movement, 6, 17

unemployment, 20, 21, 26United Kingdom, 15United Nations

Development Programme, 23, 26Earth Summit (Rio), 36

United Statescarbon emissions, 10Clean Water Act, 8gross domestic product, 35National Intelligence Council, 14

Washington consensus, 11, 28, 38The Wellbeing of Nations, 31wind energy, 7, 44World Bank, 11, 26, 28World Economic Forum, 31World Summit on Sustainable

Development (Johannesburg),37

World Trade Organization, 44World Wildlife Fund, 31

Yugoslavia, 26

Zelenyi Svit movement, 6, 17

On Climate Change, Energy, and Materials160: Reading the Weathervane: Climate Policy From Rio to Johannesburg, 2002157: Hydrogen Futures: Toward a Sustainable Energy System, 2001151: Micropower: The Next Electrical Era, 2000149: Paper Cuts: Recovering the Paper Landscape, 1999144: Mind Over Matter: Recasting the Role of Materials in Our Lives, 1998138: Rising Sun, Gathering Winds: Policies To Stabilize the Climate and Strengthen

Economies, 1997130: Climate of Hope: New Strategies for Stabilizing the World’s Atmosphere, 1996

On Ecological and Human Health165: Winged Messengers: The Decline of Birds, 2003153: Why Poison Ourselves: A Precautionary Approach to Synthetic Chemicals, 2000148: Nature’s Cornucopia: Our Stakes in Plant Diversity, 1999145: Safeguarding the Health of Oceans, 1999142: Rocking the Boat: Conserving Fisheries and Protecting Jobs, 1998141: Losing Strands in the Web of Life: Vertebrate Declines and the Conservation of

Biological Diversity, 1998140: Taking a Stand: Cultivating a New Relationship With the World’s Forests, 1998

On Economics, Institutions, and Security166: Purchasing Power: Harnessing Institutional Procurement for People and the

Planet, 2003164: Invoking the Spirit: Religion and Spirituality in the Quest for a Sustainable

World, 2002162: The Anatomy of Resource Wars, 2002159: Traveling Light: New Paths for International Tourism, 2001158: Unnatural Disasters, 2001155: Still Waiting for the Jubilee: Pragmatic Solutions for the Third World Debt Crisis,

2001152: Working for the Environment: A Growing Source of Jobs, 2000

On Food, Water, Population, and Urbanization163: Home Grown: The Case for Local Food in a Global Market, 2002161: Correcting Gender Myopia: Gender Equity, Women’s Welfare, and the

Environment, 2002156: City Limits: Putting the Brakes on Sprawl, 2001154: Deep Trouble: The Hidden Threat of Groundwater Pollution, 2000150: Underfed and Overfed: The Global Epidemic of Malnutrition, 2000147: Reinventing Cities for People and the Planet, 1999136: The Agricultural Link: How Environmental Deterioration Could Disrupt Economic

Progress, 1997

Other Worldwatch Papers

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Vital Signs 2003 NEW!Written by Worldwatch’s team of researchers, this annual provides com-prehensive, user-friendly information on key trends and includes tablesand graphs that help readers assess the developments that are changingtheir lives for better or for worse.

State of the World 2003Worldwatch’s flagship annual is used by government officials, corporateplanners, journalists, development specialists, professors, students, and concerned citizens in over 120 countries. Published in more than 20 different languages, it is one of the most widely used resources foranalysis.

State of the World Library 2003Subscribe to the State of the World Library and join thousands ofdecisionmakers and concerned citizens who stay current on emergingenvironmental issues. The State of the World Library includesWorldwatch’s flagship annuals, State of the World and Vital Signs, plusall four of the highly readable, up-to-date, and authoritative WorldwatchPapers as they are published throughout the calendar year.

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