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Monday, July 16th, 2007
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This Week

THE REPUBLIC OF KYIV

The capital’s prodigious growth and development presents the danger that the rest of Ukraine could be forgotten and left behind More

VALUING TRANSACTIONS: HOW MUCH IS IT WORTH?

M&A transactions involving non-traded stock have traditionally been benchmarked against exchange prices, but in Ukraine the small market size means this process is uncommon More

SWEDBANK CONCLUDES TAS DEAL

Swedbank expects high performance from its newly-acquired Ukrainian unit as the local banking sector continues rapid expansion More

SEVEN HILLS: TIME FOR BUSINESS

The Scorpio Real Estate Group’s Kyiv-based firm is launching its first projects in Ukraine after years of market watching. We met Seven Hills’ CEO Ari Schwartz to find out why More
 

News

THE REPUBLIC OF KYIV

The capital’s prodigious growth and development presents the danger that the rest of Ukraine could be forgotten and left behind

As you head east out of Kyiv and pass beyond Boryspil airport, the sleek six-lane highway transforms into a rutted, pot-holed lane and you find yourself in the run down environs of Boryspil town, where a worryingly little amount appears to have happened since the collapse of the Soviet Union in 1991. There is no border crossing or customs barrier to mark the transition but nevertheless anyone making this journey will be all too aware that they have left the Republic of Kyiv behind and have entered Ukraine proper. The difference is so stark that evidence can be seen in almost every aspect of street life, from the type of cars on the roads to the fashions on display.

Tatty kiosks offer second rate wears and crumbling old buildings house bootleg video stores while ruddy-faced drunks amble about among the crowd of village people and trashy ladies with badly dyed hair and too much makeup. This is not a uniquely Ukrainian problem, of course. All big cities stand in contrast to the hinterlands around them, but rarely in the developed world will you see such drastic differences in everything from architecture to standards of living as those which separate Kyiv from the rest of the country.

Ukraine’s divide between burgeoning urban wealth and rural poverty stands in contrast to much of Europe and is closer to the Third World model, and while you could put together a convincing argument that Kyiv is clearly part of Europe, western observers who are impressed by the city’s sensational development are really only seeing a tiny portion of the biggest picture.

The division between Kyiv and the rest of Ukraine has been one of the main reasons why the capital is experiencing something of a population explosion amid a national demographic crisis that has seen the overall number of Ukrainians plummet. But this is only natural - after all, everyone would like to live in the Republic of Kyiv, but tellingly now only the privileged few can afford it. The real estate boom has pushed prices so high that all but the wealthiest from the regions could even consider getting onto the property ladder, which in itself is a form of financial apartheid far more exclusive and rigid than any visa scheme or application process.

The end result is a widening of the gap that separates the Ukrainian capital from the rest of the country, turning Kyiv into some sort of EU colony while the rest of Ukraine slips away into post-Soviet poverty. The best hope of reversing this trend lies with the emerging middle classes, who are increasingly choosing to live in houses built in any of the former dacha villages that surround Kyiv and all the major Ukrainian cities. As they move out of town they bring their wealth with them, and it is only a matter of time before the facilities craved by the middle classes follow.

Whether it will be enough to even out the cavernous differences between the Republic of Kyiv and the rest of Ukraine remains to be seen, but it will be a step towards somewhat alleviating the situation.

Peter Dickinson
Peter Dickinson is Chief Editor of What's On Kyiv, Eastern Europe's longest running English-language weekly magazine. He can be reached at p.dickinson@tmu.in.ua.
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