Ukraine: Strategic considerations.
In this
essay I outline a strategic vision for the state of Ukraine. I begin with the
main principles of the role of the state. I then argue that the Ukrainian state
has largely failed to fulfill its role. I rejoice in seeing spontaneous
volunteer efforts outside the failed state structures and suggest that instead
of trying to administer a multitude of these efforts, the state needs to set a
strategic overall direction so that its people can rally behind it. I suggest
that this direction is ensuring independence from direct foreign interference
now and in the future. Then, I argue that the place to start is with energy
independence. I show that there are not enough resources in the entire domestic
financial system to support Naftogaz in its current incarnation and that it
cannot continue without external technological and financing resources. I argue
that because of their systemic importance, the decisions on Naftogaz are
inherently political and then outline options on dealing with the decision
paralysis at the top, as well as a possible process for getting things started.
I then suggest that once a political decision is made, the process would start
with a standard problem of valuing risky cash flows. I outline the main sets of
cash flows and describe potential but not insurmountable difficulties in
valuing them. I then remark that once the risky cash flows are valued,
policymakers can be presented with the recommendations about what to keep, what
to sell off and for how much, and what to get rid of. I conclude with thoughts
on other types of independence that need to be achieved in tandem.
