When I posted an article last week about the importance of the current Euromaidan protests in Ukraine, I was surprised by how many comments posed the situation in terms of East-West relations, as if the Cold War was still a serious consideration. Then, as the story gained traction in western media, it seemed that many so-called experts saw it the same way.
That’s a gross misunderstanding of the situation. The Cold War is over and has been for quite some time. Ukraine, as well as Russia, is a market economy and has shown little interest in joining NATO or other political alliances.
And that’s why we should all be watching Ukraine, because, while what’s happening there says very little about ideology or the grand chessboard of geopolitics, it says a lot about how technology has transformed the world and how we need to operate in it.
We now live in a new age of disruption in which, as Moisés Naím puts it, “Power is easier to get, but harder to use or keep” and people in positions of authority, whether they be politicians or CEO’s, have far less control than they used to. It is, in fact, complex networks of interests and influence, rather than traditional hierarchies that now determine events.
The Truth About The Russian Resurgence
Almost as soon Vladimir Putin took over, Russia began an impressive economic resurgence. GDP consistently grew in the high single digits, deficits turned to surplus, the central bank began to accumulate massive foreign currency reserves and its credit rating was once again considered investment grade.
When I lived in Moscow in 2003, it was obvious that the country had gotten its confidence back. It was common, especially when speaking in their native language rather than English, for Russian businessmen to talk about dominating Europe economically. Clearly, the country was no longer the basket case it was in the 90’s.
Yet even then there were signs that all was not well. Many of the economic gains were a function of rising oil prices—which increased from under $20 in the late 90’s to a high of $140 in 2008—rather than any intrinsic productivity gains. While foreign investment merely trickled in, capital flight soared, as wealthy Russians shipped their money out of the country as fast as they could.
My impressions on the ground echoed the economic statistics. Sure, there was a lot of money around, but it didn’t seem like the country was improving in any significant way. Nevertheless, Putin felt flush and he was openly looking to flex his muscles.
The Orange Revolution And The Euromaidan Protests
By 2004, I had moved to live in Ukraine and, running the country’s leading news organization, found myself at the center of the Orange Revolution. Over the course of several weeks, millions of people took to the streets to overturn a falsified election. They prevailed, a new election was held and democracy was restored.
Today, millions are once again taking to the streets, but for vastly different reasons. There is no election at stake and no clear leader of the opposition. The issues at hand are largely about economics and corruption. The protestors are braving the cold and tear gas not in the name of a political system or even a particular politician, but for the rule of law and open borders
Russia, of course, figures in, but not in the way most people think. In 2004, when Russia was an economic juggernaut, many of the supporters of the Yanukovich regime talked explicitly about the benefits of having its wealthy neighbor as a benefactor.
Orange supporters, on the other hand, were angered by Putin meddling in Ukraine’s affairs, but had no specific feelings about Russia as a country. They simply refused to be dupes and demanded the right to choose their own leaders.
The current Euromaidan protests are of a much different flavor. Russia, now weakened by falling gas prices driven by fracking and a stagnation of oil, looms decidedly less large. Europe is far more attractive, not because of political concerns, but economic ones and the standards that closer integration represents.
In effect, the issue at hand is less about Russia resources than it is about Ukraine’s.
The Economics Of Talent
The first thing I noticed when I started doing business in Ukraine was the extraordinary talents of its people. I had spent a long time in the region, but had never seen anything like it. It was not unusual to hire a college student, who could speak five languages and perform econometric complex analysis, for $200/month. Technical talent, particularly in web development, was especially impressive.
However, as I learned managing Bigmir, the largest Internet business in the country, Ukraine’s talent is a double-edged sword. In order to compete for the best developers, we were often outbid by outsourcing companies, who were offering their services to international firms like eBay and Skype.
During the 2008 financial crisis things only got worse. As our ad revenues plunged, demand for developers only increased as international firms actively sought out the lower cost, but still high quality Ukrainian developers. As we cut back in every other area, we had to increase our programmers' salaries. We had no choice.
Those same economic forces are only intensifying. On Elance’s platform, Ukraine ranks number three out of all countries in the world for growth in freelancing earnings. As technology diminishes the meaning of borders, ambition is becoming less national and more personal.
And that is what’s bringing people out into the streets. As more and more Ukrainians find themselves successfully competing in the world economy, they are increasingly tired of their country holding them back.
What Lies Ahead
The Euromaidan protests in Ukraine continue with no end in sight. My friends on the square tell me that they haven’t seen crowds of this size since the Orange Revolution in 2004. Yet, after his government survived a no confidence vote earlier this week, President Yanukovich shows no signs of surrender, either.
Even if the government does fall, it’s not clear who would take over. The current favorite is World Heavyweight Champion Vitaly Klitschko, but he lacks experience. Another possibility is former Prime Minister Yulia Timoshenko, who still languishes in prison. Some talk about businessman Petro Poroshenko, who is competent and pragmatic, but lacks a political base.
Yet what is really important is not politics, but economics. The consulting firm McKinsey forecasts that the shortage of top talent in developed countries will only get worse in the years to come. Ukraine, with its multi-lingual, highly skilled workforce has a lot to offer the world and its people will seek the higher pay and economic freedom that comes with integration.
So, in truth, the Euromaidan protests have little to do with the past and everything to do with the future. The people are not going out in the streets to support an ideology, but to join their colleagues in the rest of the world, where they can be judged on the quality of their work rather than the color of their passport.
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