Decline in Ukraine

Last year, Ukraine and Turkmenistan were the only former Soviet republics to see their economies shrink. Ukraine's steady decline is the main reason why voters abandoned the relatively reformist governing party in parliamentary elections on March 30. The big winner was the Communist Party, a group so troglodyte that it favors "voluntary reunification" with Russia. The vote practically ensures that Ukraine will see none of the reforms that the country needs.

Since its independence in 1991, Ukraine has had some limited economic success, largely thanks to the skill of the central bank governor, Viktor Yushchenko. The inflation rate, 10,000 percent five years ago, is about 10 percent today. About half the economy is now in private hands, compared with 70 in Russia.

But privatization has not generated economic growth. Important areas, like agriculture, have yet to be touched. The tax system is arbitrary, burdening legitimate businesses and driving them into the shadow economy. Regulation is stifling.

Ukraine's economy also suffers from the country's uneven progress in democratic reforms. Ukraine is one of a handful of former Soviet republics that have had relatively clean parliamentary elections and changed their presidents. Its treatment of national minorities is also good, and it has shown the political maturity to give up its nuclear weapons. But Ukraine's newspapers, and particularly its television stations are politicized and controlled to the point where they cannot keep an eye on the government.

Ukraine is the fourth largest recipient of American aid, but that assistance may be cut in half under a misguided new law requiring the administration to certify that the country is making progress on the problems of a few American investors. The World bank and the IMF should condition their assistance on steps like tax and regulatory reforms designed to speed economic growth. Ukraine's politicians need a clear message that economic reform cannot wait.

-- The New York Times