By Lenka Kollar

Last week, INSEAD hosted the Ukrainian Minister of Economy for a dialogue with MBA students on reforming the Ukrainian economy. Aivaras Abromavicius has been in the office for just over three months and already set an aggressive plan in place to repair and expand the economy.

In addition to repairing the recent crisis, Abromavicius wants to undo bad policies from the last 20+ years. This involves deregulation, privatization, tax reform, and restructuring the ministry. Instead of dissolving the ministry completely, he hired a new leadership team, only keeping half of the employees, and drastically cutting the bureaucracy, or "fat," of the ministry and associated processes. 

Abromavicius is bringing in an international team and benchmarking other countries in initiatives such as tax reform and privatization. One of the primary hurdles is addressing the culture of corruption rampant in the nation. I liked the idea of joint customs control at the border to alleviate this issue.

Many of my Russian classmates were concerned about the current relations, political and economic, between Ukraine and Russia. I echo their concerns because Ukraine has a very important geopolitical position between Russia and the EU. Major gas pipeline from Russia to the EU run through Ukraine and the EU is reducing its dependence on energy from Russia. 

Abromavicius' reforms may be controversial but drastic policies are often needed in times of crisis. Outside perspective from foreigners and the private sector can bring value but do they really have what is in the best interest of Ukrainian citizens? Can we learn from a country in crisis to implement economic reforms elsewhere?

By Lenka Kollar

Last month the European Commission announced their plan to integrate all 28 national energy markets of the EU, with the main goal of independence from energy imports (i.e. gas from Russia). The current fragmented system will be transformed into an "Energy Union" where gas and electricity are freely transported within Europe.

The EU as a whole is the largest importer of natural gas in the world and many member states are 100% dependent on Russia for gas. To alleviate this dependence, the EU plans to build a new “southern corridor” that will pump gas from the Caspian basin to Europe via Turkey.

An EU-wide regulatory framework will also call for a unified energy policy, which may prove to be a challenge. Will Germany and Austria be able to agree on a policy that includes nuclear energy? How will renewables be leveraged in a larger, more complicated market? The EU's target is to have nearly a third of electricity from clean energy by 2030. 

Each of the member states has different resources and different costs for producing electricity. A unified grid and gas network might mean that energy prices are reduced in some states at the expense of consumers in others. Formulating an energy strategy, taking into account all of the European stakeholders, will be complicated and likely involve intense negotiations between states. 

However, the benefits for an energy union are apparent: reduced dependence on gas imports, more options for consumers, and investment into a smarter grid to increase energy efficiency. And, maybe Germany will even reverse their nuclear energy phaseout mandate?