By Viktor Andriychuk

Doctor of Economy, Prof., Head of the Department of International Economy

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Global transformations (as a reality and strategic perspective), intensification of general integration factors are becoming are becoming the key trend in the world economy today. So, economization of development and integration make up the dominant, under influence of which a new global economy is being formed. The integrated new global economic relations have ever rising influence upon the scale, rates and proportions of national and global production, create a quantitative and qualitative picture of the world economy of the 21st c. laying down foundations of the security of national and global development. The development of international integration is based on the number of factors; the latter include economic position of a country, groups of countries and regions of the world under conditions of uneven allocation of resources, characteristics of scientific and technological advance; tendencies of demographic development; presence of emergent general issues; market "unification" of economic development etc.

The globalization of economy is caused by basic interdependence of various elements of world economy, its unity and integrity, which increase with growing internationalization of production and turnover, and intensification of integration processes.

The ever greater globalization process is a contradictory process concerning its impact on national economies and world economic development. Therefore, globalization, on the one hand, considerably broadens possibilities of choice for separate countries concerning the use of resources and their comprehensive participation in the system of

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international division of labor (IDL); on the other hand considerably sharpens competition, contributes to manipulation of enormous financial and investment resources, that really threatens the economic securety of underdeveloped economies with low interest and a number of transition economies which include Ukraine now. UNO Secretary-General Kofi Annan was right to declare, that "for millions of people the globalization experience creates no possibilities, but stimulats forces of ruin and annihilation. "

To tell the truth, the globalization of economy today comes forward as a major factor, which, on the one hand, helps to synchronize it in the countries with market economy, while, on the other hand, it brings forward serious problems associated with competition, which washes out whole branches of industries in some countries, leading to their heavier dependence on import, eroding not only their inherent economic structure, but their way of life as well.

Globalization and integration are considered objective and routine; however, we do think that today they are artificially intensified by separate developed economies and world backstage force pursuing its practical and far-reaching objectives. Both trade, and mentality wars, informational and intellectual subjugation, you could even say enslavement, became irreversible realities within such context. And there is a major threat not only for the FSU countries, but for the whole humanity of realization of the so called mondialist or global concept of the "new world order", which provides for the creation of one global state and planetary government.

As they say, we have already had a good chance to experience the realization of the similar ideological pretensions within the framework of centralized command system and authoritarian management, and to have felt the ethnocyde results of such order on our own back. However, if the previous totalitarian regime aimed at global revolution, world socialistic system, creation of soviet man, the global civilization strives to clone a man of the world, nationally indifferent citizen having constituent elements from all over the world (called cosmopolitan in the soviet times), devoid of ethnic roots and cultural wealth, possessed by desire of profit and enrichment only. By the way, it is appropriate to mention here the words of major Ukrainian intellectual and historian born in Kharkiv Hnat Khotkevych, which wrote: "Executing nationality, a man kills the God in himself, destroys some higher type of regulator, which has so far directed his activity... and that may result in ugly things only." Therefore, having failed to come to our senses yet from the communist unification idea, we face this decoy of inevitable lust for global capital.

In that way, acknowledging the objective chatacter of globalization and integration processes as social and economic phenomenon stipulated by the suitable development of new and newest technologies, establishing an unquestionable possibility of influence of the developed economies on globalization and outstanding ability to adapt to it at the expense of concentration of the available resources of scientific and technological advance, we should acknowledge at the same time that such global situation is the result of

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formation of two groups: countries-subjects and countries-objects of historical development. Moreover, the negative impact of globalization (negative emergency) is strikingly felt in the second group of countries including underdeveloped and transitional economies. Essentially, the influence of globalization and integration and complications with transformational changes in the countries with transitional economy, new threats to national security conditioned by negative outcome of these transformations, only update the problem of economic security and external economic security of Ukraine specifically.

There is an important feature of external economic relations, especially of foreign trade, contradicting globalization: their regionalization, i. e. when trade flows are directed to the countries amalgamated by various trade agreements.

Within the limits of regional economic organizations and groups of countries the regional trade liberalization takes place most vividly, without respect to strengthening of the multilateral system GATT/WTO. Ukraine faces now the barest necessity to choose the most advantageous and expedient group among many international regional institutions which were formed on different levels of integrational maturity and purposefulness. Among such regional and integrational alliances, which are the nearest to Ukraine and can be presently interested in mutual cooperation, there are coalitions of the FSU countries and European Community.

For many years in a row our state officials kept declaring the many-vector policy of Ukraine in its foreign relations, and external economic orientations; however, they failed to clearly determine priorities of the program of mutual relations with institutions, the appearance and functioning of which are immediately conditioned by globalization and integration. That is why there are collisions, as far as statements about forming new or aspirations to join existing integration alliances are at variance with demands of appropriate international organizations. Intentions to join them was officially declared more than once earlier.

It is obvious, that among the problems, which presently determine the CEE countries development conditions, an important role belongs to socio-economic transformation and search for the new center of economic and political gravitation and globalization of the world economy following the disintegration of the FSU and socialist pact. All these factors together determine extraordinary importance for the countries of this region of further development of their cooperation with the EU.

It is necessary to note that the main tasks of socio-economic reforming of the CEE countries are determined by the so called Copenhagen criterions, developed in June 1993 during the session of the Council of Europe in Copenhagen, as the EU membership acquirement condition for all countries of our continent. These criterions foresee the following:

* forming of market economy, capable to compete on the common European market;

* stability of democratic state, that guarantees law and order, support of human rights and protect the interests of national minorities; and

* remaking national legislation

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to fit the legal norms of EU.

After that, when ten countries, according to the estimations of European commission, will have fulfilled the aforesaid conditions and will have joined the EU, the territory of European Community will become 34% bigger, and the population will increase 29%; as a result there will be the most important global market with 450 million consumers.

Therefore, in the context of European integration processes the relations of Ukraine with the European Union, CEE and CIS countries will become the major objective. And this package of issues is very important not only for the determination of the short-term foreign trade priorities, but also for the specification of the state development strategy, which should specify the place of Ukraine in the emerging world.

The recent deepening of European integration and territorial expansion of the EU which borders will be in the immediate vicinity of our state make Ukraine to adhere to more active foreign policy. This brings about considerable changes in integration priorities and actual acknowledgement of westernization as the most important direction of the external economic policy of Ukraine. Moreover, it demands adaptation to social and political, ecological and economic determinants, that at some time in the future will give a possibility to to apply for the full membership in the European community.

So, there is the unquestionable thesis, that the core of European policy of Ukraine (which is, by the way, confirmed by official state documents including Presidential Decrees and Decisions of the Verkhovna Rada of Ukraine) is made of priorities oriented towards relations with with the EU, which are considered on the state level as strategic partnership and collaboration, important part of the European security system, and the prerquisite of the common European economic space (CEES).

With respect to this there are certain promising symptoms, that in the nearest future the European Union will grant Ukraine the status of the state with market economy. Under conditions of globalization Ukraine takes an interest in using its scientific and technical potential in different industries together with the European Union which would help both parties to retain their competitiveness in hi-tech industries.

However, against the background of dynamic relations of Ukraine with the European Union there are many points of disquietude. They certainly include protectionism of the European Union concerning the import of some Ukrainian goods: steel, metal production, textile, discrimination of Ukrainian AIC produce keeping it out from the EU markets. And this causes certain collisions, does harm to the issue of alternative integration of Ukraine: either the EU, or Eurasian economic community (EAEC). And today there is one more economic unity-the Common Economic Space combining Byelorussia, Kazakhstan, Russia, and Ukraine.

At the same time Ukraine would like to profit by the advantages of economic globalization, acquire full WTO membership and attract foreign investments.

However, we should regretfully admit that a country, which still experiences the crisis of transitional period, can not aspire to occupy the deserving

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place in the world economy. Our economy is encumbered with considerable debts ($14bn and more) and there is a deficit of marketable products in our export (from 14% to 16%). However, there are good chances for Ukraine to improve its position in the world economy in the future. In order to attain this objective, our external economic strategy should be centered on increasing production facilities, esspecially in the sphere of high technologies. Absolutely, it is not a simple task, if we take into account, that during the years of transformation of our economy there was about no modernization of industrial production and depreciation makes from 70% to 80%, and R&D potential is lost, by and large. However, if there is extra effort and financial backing which includes both domestic and external investments, they can still bring a number of industries up to the world level; in the first place those are industries with preserved productive capacity, unique technologies, qualified personnel and highly skilled producers (aerospace, shipbuilding industry, militarily-cosmic complex).

There is still an unsettled problem of competitiveness today. For the exception of a small number of enterprises, it is a result of artificial and fictitious practice, because (according to timely remarks of R. Halchynsky, Prof.) even overcoming conditions of economic crisis they reduce the cost of production not with better management and innovations, but due to chronic debts and extremely slow payoff. Total debt for 2000 to 2002 made UAH60-70bn, including arrears of payments from UAH4 to 5bn, accounts payable and accounts receivable UAH40 to 45bn, and public due debt of enterprises and organizations almost UAH15bn.

Estimating the effectiveness of entering the world economy system we should not be tempted by the index of trade surplus. The thing is we need to take into account the export structure, and we know that with us it means raw materials export; the export of the high-added-cost production is insignificant. The favorable international set-up can push us under to export more natural raw materials and intermediate product to optimize balances and pay external debts, which are $14bn and more (together with internal ones). However, our raw-material production is ten times more energy- intensive than that in the European Union and cost of power carriers is many times that in Russia; therefore such export can damage our strategic economic objectives creating disproportions on internal market and adding to foreign debt liabilities.

Today the structures of domestic economy are still altered for the worse. If in 1991 the so called basic industries (metallurgy, chemistry, energetics and fuel industry), that is the most capital, energy and labor consuming and, at the same time, ecologically unsafe productions accounted for 25.6%, today the part of these industries only went up making 58%. If in 1991 machine-building accounted for 30.7%, then during the last 2 to 3 years it it reached the level of 12 to 13%, and production of the light industry decreased eight times. These industries are outfitted with morally and by physically antiquated technological equipment; in the meantime, the volume of investments during the years of crisis shrinked five times, wearing out of their funds reaches 70 to 80%, and in

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power engineering the life time of 96% of equipment is already out. Therefore, making an objective valuation of the state of businesses, one should conclude that by all international standards these basic industries are practically broke and, considering the rate of their development, are factually lacking in prospects.

Moreover, with the rising part of the said basic industries the GDP unit power consumption doubled, exceeding various admissible critical limits, because in the Eropean Union they use ten times less equivalent fuel (1.9 kg against 0.2 kg) per this unit (in dollar equivalent).

The aforesaid base industries make almost 60% in the structure of home economy, 80% of the output of which is exported as raw materials or semi-finished products. So, the needs of internal market are extremely modest. If such production and export structures are preserved for the time to come, our debts for energy carriers will never decrease, and the debtor's prison will deepen, and we will "never get out of it" as Director of the National Institute of Strategic Research R. Halchynsky, Prof., maintains.

Therefore, it is not by chance that current agenda includes the issue of payments for energy carriers by the owners of oil and gas mains and gas-holders. From year to year it has become a matter of course for top officials to utter important and just (though, frankly speaking, meaningless cliches) maxims about the necessity of development of the state revival strategy and promotion of domestic production and design high-tech and marketable technologies, whichis the only way to provide for the common welfare and for Ukraine to be acknowledged a developed economy. They declare a need for considerable improvement and perfection of all system of management of the industrial potential, forming a network of scientific backing of the industrial development. However, there are still no practical steps to create the mechanism of innovation. For exmple, how do they promote the development of aircraft construction and shipbuilding? There is no answer to that question, because there is no budgetary financing of these activities. Despite long-standing statements about Russian interest in realization of the An-70 joint project, Russia still makes no financial commitments. Up to now The Antonov Co. has provided for the single- handed financial backing of the project amounting to 90% of the total cost.

As is indicated in the official documents of the Committee for the industrial policy of the Verkhovna Rada, the volume of output in the electronic industry within the industrial sector of economy dropped more than 100 times, three times in motor-car construction and mechanical engineering, one and a half times in instrument-making and electrical industry. In comparison with 1991 the output in electronic industry diminished 95%. Such decline in these branches of domestic industry can not but endanger the economic dependence of the remaining high-end technologies from other states and foreign firms, and thence the threat for the national security of Ukraine.

Finally, we should note, that according to the 2003 international rating estimations of the economical freedom Ukraine occupies the 133rd place in the list of 153 states, 85th place (out of the

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list of 102 states) in the rating of the most corrupted countries of the world and 112th place out of 139 countries in the freedom-of-speech rating. You can take differently the subjectivity of such estimations, but as the saying goes, there is a homespun truth...

One Cabinet document issued in April maintains that there are 16% of poor people in Ukraine, while according to the data of Verkhovna Rada Representative for human rights (ombudsman) N. Karpachova (based on the international technique of computation of purchasing capacity reckoning per capita GDP) the figure exceeds 27%. Under such rating Ukraine today occupies 102th place among countries of the world, along such countries, as Guatemala and almost unbeknown Suriname. Of course, we understand, that all these computations do not take into account the parity of purchasing capacity and index of shadow economy, but even if we take it into account, the general picture remains sorrowful all the same.

There are more interesting statistics of per capita GDP. Luxemberg occupies the first place here (13.2 times higher index than that of Ukraine), then follow the USA (8.95 times), then goes Norway, Ireland, Switzerland etc. And if we consider the former countries, our neighbors in the socialist camp, then this index is better in Czechia- 3.67, in Poland-2.37, in Roumania-1.68 times that of Ukraine. This difference is much bigger if we consider scale of wages.

According to the estimations of the World Economic Forum (published in the Report About Global Competitiveness for 2002), in the rating of eighty-contries development prospects Ukraine (the so called index of increasing competitiveness) occupies the 77th place (against 69th in 2001), leaving below only Bolivia, Zimbabwe and Haiti. Even Bangladesh, Nickaragua and Honduras proved themselves better. By the level of microeconomic competitiveness, that reflects the conditions, which determine dynamics of labor productivity in 80 countries, Ukraine's rating in 2002, as compared to 2001, shifted 10 positions down-from 59th to 69th place.

Considering the above data characterizing general economic position of Ukraine- though not for all criterions possible-one can see for himself, how acute is the problem of determining with whom, in what sequence and priority, on the basis of what forms to integrate?

What are the limits of openness of the domestic economy under such conditions? It is known, that from the standpoint of geostrategy both for radical liberalism and for neoliberalism there is one general question about the forms and limits of entering the world economy, or, to put it more precisely, the issue of openness and closeness of domestic economy. And the key for for the decision making may be found in the sphere of protection of the national interests under conditions of developed interaction, trade, and joining international economic and financial-bank structures. It is axiomatic, that, allowing for the contemporary communication facilities and global information and economic development, isolationism and closeness of economy pushes the country to the ouskirts of world progress.

On the other hand, the full openness

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of economy, glutting of domestic market with foreign commodities (which in nonfoods group reaches here over 70%) and discouraging of domestic production give rise to degradation of national economy, pumping out of resources and pouring them into financial centres of a limited group of countries. Therefore, the openness ought to have certain limits, first and foremost, because of the imperfection of domestic financial markets, their instability and sharp business slumps.

Legally unadjusted openness of economy, unprotected borders of our country with the newly independent states of the FSU led during past almost twelve years to enormous drain from Ukraine of material, human and financial resources, which sharply decreased the investment potential of Ukraine, contributed to the enrichment of a small cluster of oligarchs and sharp lowering of living standards for about 80% of population.

Indisputably, appeal of some leftist radicals to maintain full insulation from the world economy is unacceptable. The issue of some kind of combination of openness and closeness or protection of economy can be correctly solved only on the basis of role determination of internal and external markets, estimation of their priorities for country. If we tacle it in earnest, in business-like fashion, then Ukraine needs a special concept of its entering the world market, which, in its turn, calls for competitiveness estimation performed for the segments of goods market and stock market. And, at long last, there is a need for a conception of effective fiscal policy forming proper foreign trade mode, which could tackle the main issue:

1-optimization of the export / import balance preventing excessive drain of raw materials which endagers the domestic market; and

2-some kind of limitation of import.

Forcing importation of commodities corrupts managers at home. Everybody knows, it is easier to buy, than to make with one's own hands; especially since the currency usually comes not from the sale of domestic commodities, or know-how, but is bought at the exchange.

Unfortunately, the unity of internal and external markets in Ukraine is disrupted. Today some branches of industries are almost fully oriented towards the internal market, and other ones are export-oriented. The major part of metallurgical complex is developed within the framework export iron ore /dollar niche (raw materials appendage). Today due to the sale of iron ore / raw materials production Ukraine receives up to 50% of its currency supply, but this currency is extremely expensive, as stated above, it leads to debtor's prison, that is to self-destruction, which was the term invented by objective economists during the soviet times. The export part in the balance-sheet of basic raw materials is too big and reaches about 60 70% of production volume. We also find this issue in scientific publications by leading specialists in mineral resources; these experts quite reasonably sugest that the strategic reference-point should be the economically expedient extraction level of concrete raw materials, establishing the critical minimum level for the country (both for internal consumption, and for export), which part of raw stuff should be exported, and which

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should remain for internal consumption.

Now for the problem of European and CIS, or, better, Russian vectors correlation in the field of external economic policy of our state: the solution of this "triad" is sufficiently and clearly laid out in the basic document of this strategy-"The European Choice", which reads that "the economic relations with Russia organically coincide with the integration course of our state"and that "Ukraine takes interest in further liberalization of external economic relations with other CIS countries. The main direction of cooperation is oriented towards the formation of the free trade zone, which would support intensification of economic ties, active exchange of capital, goods, services, and man-power. "

This same document plainly defines the subordination course towards optimization of economic relations with Russia and European integration policy of Ukraine. It specifies, that the relations with Russia should "subordinate to the idea of European integration." However, it is necessary to bear in mind, that Russia intends to develop its relations with the EU in quite different (from that of Ukraine) format. If for Russia (which does not care about the EU membership, pretending on its own to become the self-governing integration centre of independent states in the post-soviet space) Eurointegration is not a strategic objective, then for Ukraine the Eurointegration means aspiration for realization of internal systemic transformations, setting of objective preconditions for the FTZ establishment, customs union, and-in perspective- currency integration, at first associated one, and then full membership in the EU. Such scheme of step-by-step decisions is offered by the President of Ukraine to his western partners in the strategical document "The European Choice". So, they aim at different goals; therefore, different mechanisms are chosen to realize the idea of integration. To our mind, the idea about the FTZ within the framework of the CIS does not contradict the idea of Eurointegration.

It is common knowledge that, that the FTZ is not a backbone of integrated international clusters with closed membership, and its creation is only an initial stage and at the same time our "ceiling"-either in our economic relations within the bounds of four states, or CIS as whole-which we couldn't exceed; moreover, we practically have no authority to do so.

While in the EU, the corresponding economic space there is based on much higher integration principles, specifically on principles of customs and currency unions. It seems to us, that the FTZ based on the WTO principles within the CIS bounds is the very mechanism, which can pave the way to Eurointegration for Ukraine. Forming the FTZ on any other principles is the return from Europe to eurasian space, that functionally separates it.

Thereupon Russian suggestion to create common jural field, that is to adapt the existing legislation of the parties to the agreement to the Russian legislation, and to use in future-within the bounds of new integration formation-common currency, that is Russian ruble, as a common circulating medium is an alarming symptom. Such suggestions may boil down to the anti-Eurointegration orientation of the said FTZ. Unacceptability of such developments, and, accordingly, of such positions

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consists in the fact that the economies of Ukraine and Russia have principally different structural distinctions and, naturally, can not develop on the basis of identical mechanisms of economic policy.

In Russia the 2/3 of GDP are provided by the raw stuff (oil/gas) sector which is the backbone factor here. The development of fuel and energy complex in Russian Federation mostly provides for the growth of industrial production, though the growth rate in machine-building last year was only 2% and stagnation went on in the finishing industries. If cast a glance at the dynamics of industrial development in Ukraine, then, according to the return for 1999-2002, production of consumer goods went up 40.2%, and machine-building-38.4% (the gross output rose 20.4%).

Moreover, it is necessary to bear in mind, that a mono-economy is most vulnerable: if Russia receives over 20% of budgetary receipts from petroleum export, it is impossible topay no attention to the world sales opportunities and cost price of power fuel, which obtains (a barrel of Russian petroleum goes for $14, and Quwaiti oil goes for $4). And possible augmentation of petroleum output (as is foreseen in Iraq) can ax prices for this carrier.

Finally, one shouldn't hyperbolize the economic dependence of Ukraine on Russia, because during the last 7 to 8 years the geography of foreign trade was considerably diversified. If in 1994 Russian market consumed almost 50% of Ukrainian goods export, then in 2000 this index was 23.9%, and in 2002 only 17.8%. At the same time the part of Ukrainian export to the European Union grew from 7% to 19.2%. During the last three years the bilateral component in the foreign trade turnover of Ukraine and Russia drastically dropped down as the countries looked for other markets.

From the point of view of estimation of respective economies of Ukraine and Russia such dynamics is rather a positive fact. However, for Russia as the new geopolitical leader this means, that the country has neither necessary resources, nor modern technologies of influence, which could attract other CIS countries on the macrolevel, because there is no general strategy of development of the region, where Moscow desires to play the leading role today. Therefore, it might be interesting to consider three scenarios (riveting attention of mass media of late) characterizing the Ukrainian- Russian relations; they might help to grasp the current situation in the region as a whole.

The first one might be called the upper hand scenario, which envisages consists in establishing order within the framework of existing agreements. It proceeds from the supposition that incompetent officials - and not the lack of the said economic basis- were to blame for all past failures. In this case Russia could even relinquish certain economic interests and agree to create and control the FTZ functioning in the CIS frames, that would provide for economic impulse to the union, which is like the no- fault divorce outfit today. This could be a serious concession to Ukraine, and therefore Russia could wish to obtain something in return. However, if we take into consideration the situation with our bilateral relations, specifically, in power engineering, and allowing for the atmosphere of the last meetings of officials negotiating the creation

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of European Economic Space, it is most likely, that possibly Russia concedes and agrees to create FTZ, with a great lot of exclusions though. Against the background of these circumstances, the suggestions of Ukraine concerning the FTZ creation look rather like successful (or unsuccessful) negotiation preliminaries; it is difficult to foresee, whether they can be a success, though.

The Second Scenario: back to the USSR or Eurasian assault on capitalism. This Second variant consists in the new position, which Russia prefers now, namely the Common Economic Space (CES), a statement about creation of which was proclaimed by the presidents of Russia, Ukraine, Byelorussia, and Kazakhstan on Feb. 23, 2003, that provides for a higher level of integration and creation of supragovernment organ and adoption of common cerrency, as Russian party aspires. However, we stumble upon a problem at once: is this an economic or rather the geopolitical project? Nothing comes out of the fact that it is formulated in economic gibberish. In the foreign trade turnover of both Ukraine and Russia the part of bilateral trade constantly goes down, while ex/imp operations with the EU climb up. Both countries most actively negotiate about their admission to the WTO. At the same time the realization of this second scenario provides for slowing down of negotiations with the World Trade Organization and serious delay of integration into the global trade space.

However, if Russia is ready to go on with the "slow-down of integration", then for Ukraine this means discontinuance of reforms and refusal from the independent external policy. There are other arguments, proving that this initiative looks like a sort of mirage. Another problem is that there is no effective and civilized form of political integration without prior economic and cultural integration.

The third scenario: the last attempt to make it to the west. This variant of development of further relations almost in the epicentre of the post-Soviet region, naturally, cannot be considered an easy affair, although, to our mind, it is the most desired one, because it is based on supposition that the main objective of the new countries consists in promotion of that part of the new economy, which promptly integrates into the global economic space. The only way out for these countries is to compete on world markets, reconstruct their economy, independently negotiate about their admission to the WTO. And, it is possible, in ten to fifteen years, when their economies become self- sufficient and effective, they will be able to start negotiations about economic co- operation, but already on new grounds, even in such formats, as customs or even currency unions. Like it or not one should proceed from economy to policy, and not vice versa.

If Ukraine realizes the second scenario, then it will have to mostly refuse from its independent external policy and slow its rapprochement with the economies of the European Union. And it is beyond doubt, that we can witnesses discussion between adherents of different scenarios.

Proceeding from the positions and objectives of Eurointegration, Ukraine, undoubtedly, is interested in dynamic development of multilateral economic

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collaboration with the CIS countries. And with respect to this the realization of agreements reached this past Feb. 22-23 in the course of quadrilateral meeting of the presidents of Byelorussia, Kazakhstan, Russia and Ukraine may be very important, because deepening of regional cooperation is in accord with the EU principles founded on the understanding that it is only throug collaboration and partnership with its neighbor each separately taken country can fully fulfill its own potential and protect national interests.

Meanwhile, we should take account of some fundamental issues. Namely, the domestic legislation has come nearer to the legislation of the European Union; therefore the renewed legislation harmonization with the CIS countries is very undesirable. It would mean that Ukraine makes the step back from Europe and returns to the Eurasian integration.

Our maximum objective is the establishment of the free trade zone on the WTO principles. This must be our top limit in our economic relations within the bounds of four countries, which we are not allowed and have no authority to transgress.

As regards the question of creation of Common Economic Space (CES), that was declared by the presidents of Republic of Byelorussia, Republic of Kazakhstan, Russian Federation and Ukraine, there is no such neologism in the world theory and practice so far, and it should be formulated for the beginning, specified and filled with concrete meaning.

So, the improvement of mutual trade relations within the Common Economic Space leading the member countries to the World Trade Organization should became a base line strategy.

Hence, there should be a reasonable plan (keeping within the international norms) of initial steps leading to the Common Economic Space and observing the following priorities:

* forming of the free trade zone without exclusions and limitations, including the absence of export and import taxes;

* removal of the non-tariff limitations in the export and import operations;

* arrangements for further harmonization of tax and budgetary policy;

* pursuing coordinated policy in the sphere of tariff and non-tariff regulation, creation of common customs tariff for the members of the Common Economic Space;

* unification of technical regulations and standards, sanitary and phitosanitary measures.

Finally, from the point of view of protection of economic interests and guaranteeing national security of Ukraine, we think it necessary to exert every effort to tackle the problems, associated with the restructuring of domestic economy, bringing down power and metal consumption in the GDP and making marketable high-tech production, guaranteeing multichoice sources of energy carriers and effective diversification of external economic relations.

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Statistics update according to the State Committee of Statistics of Ukraine

Regional pattern of trade by commodities for January-September, 2003

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^* Taking into account the undistributed volumes of commodities in foreign ports which were purchased to provide for vital functions of ships.

COMMODITY PATTERN OF THE TRADE OF UKRAINE IN JANUARY- SEPTEMBER. 2003

Direct foreign investments into Ukraine ¹

¹ Data presented as a sum increasing from the beginning of investing.

The list includes countries which are engaged in the most intensive investment activity with Ukraine.

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The index of the GDP growth in Ukraine for first six months of 2003 according to the State Committee of Statistics of Ukraine

According to the State Committee of Statistics of Ukraine, the nominal GDP made UAH111.143bn in January-June.

In the first quarter the GDP grew 7.9%, and in the second-9.3%, while its nominal value made UAH51.206bn and UAH59937bn, accordingly

The GDP of Ukraine increased 5.3% for 8 months this year. The decline of rates was caused by the GDP falling in July 5.6% because of corn failure.

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