Kharkiv looks to challenge eastern Ukraine preconceptions

Strolling through the lively, leafy central park in Kharkiv on a spring Saturday, the serene scene and smiling faces that greet a visitor are in striking contrast to the image most outsiders have of eastern Ukraine. Since tensions with neighbouring Russia exploded in 2014 following the ousting of Kremlin-backed Ukrainian president Viktor Yanukovych and separatist uprisings in the eastern part of the country, this part of Ukraine has made international headlines for all the wrong reasons.

The second largest city in Ukraine and situated just 38 kilometres from the border with Russia, Kharkiv went through extremely dark and dangerous times in the immediate aftermath of the Euromaidan revolution. The unrest that would later grip eastern Ukraine started first in Kharkiv. Separatists stormed city hall, where mayor Gennadiy Kernes, first deputy mayor Igor Terekhov and a few bodyguards were holed up. They managed to repel the rebels, but Mr Kernes – an ally of Mr Yanukovych who was seen to be pro-Russian – had a dramatic choice to make: back the separatists and tilt closer towards Moscow, or support the new Ukrainian national government.

In the end, he threw his support behind Kiev, and Kharkiv was spared the violence and upheaval suffered by neighbouring cities that declared themselves independent, such as Donetsk and Luhansk. Mr Kernes paid a price for his stance, though, in form of a sniper’s bullet that left him in a wheelchair and very nearly killed him.

Securing the future

“If we had made a different choice, Kharkiv would now be in a tragic situation like Donetsk and Luhansk,” says Mr Terekhov, the mayor’s hard-driving hyperactive righthand man. “Instead, our city is peaceful and secure.”

That existential crisis averted, the local government has turned its attention to internal matters and embarked on an ambitious programme of municipal projects aimed at improving liveability and citizen services. “We’re striving to make our city look more modern and be more convenient for citizens,” says Mr Kernes.

Along these lines, the reconstructed Maxim Gorky Central Park for Culture and Recreation is a signature project of the administration and is the heart of the city’s strong civic life. Covering 62.4 hectares – bigger than the Vatican City, as locals like to point out with pride – it includes a dizzying array of well designed recreational facilities, sports fields, rollercoasters, elaborate playgrounds, sculptures, bandstands and concert areas, all free to use. It buzzes with people throughout the day and into the evening. A nearby zoo and oceanarium are now also in the works.

A centre of transparency

Another pet project of the local administration of which the mayor is fiercely proud is the Kharkiv Regional Service Centre. The largest of its kind in Ukraine, the centre was created by the Kharkiv Regional State Administration, Kharkiv City Council and international organisations such as USAID and the International Development Law Organization and officially opened by Ukrainian president Petro Poroshenko in September 2017.

Offering a point of contact for more than 400 citizen services, the centre serves more than 3000 people per day, and is designed to maximise transparency (a key topic in Ukraine, given the high levels of corruption in the country) and efficiency (something Ukrainian governmental bodies are not known for). For example, the design is open-concept with cameras everywhere, to prevent bribe-taking. Business registrations can be carried out in as little as 24 hours, the centre’s managers say. It is being presented as a model for Ukraine as a whole.

Along with large-scale infrastructure upgrades supported by the European Bank for Reconstruction and Development (EBRD) and European Investment Bank – including an extension of the metro to the city’s international airport and the building of two new stations and an electric depot – and a raft of smart-city projects, it is all part of a drive to demonstrate that the city is functioning well and make it accessible for residents, visitors and, crucially, investors. Amid all the turmoil of the surrounding region, Kharkiv is starting to get its point across.

“The attractions of Kharkiv for investors are clear,” says Sevki Acuner, Ukraine director for the EBRD. He adds that the city is showing the “leadership, commitment, engagement and success” that the EBRD likes to see from its partners.

Low-cost benefits

From an investor perspective, there are certainly cost advantages to exploit in Kharkiv. In fDi’s European Cities and Regions of the Future 2018/19 rankings, published in February 2018, Kharkiv was ranked as the most cost-effective large city in Europe. Of the 40 large European cities studied, Kharkiv was found to have the lowest average annual salary for skilled and semi-skilled workers; minimum wage; cost of establishing a business; firing costs; and rent for grade A office space. It also had the second lowest costs for electricity and corporation tax.

Quality and skills also need to be part of any corporate location equation and here Kharkiv stacks up relatively well. Among large European cities, it posted the second highest expenditure on education and number of higher education institutions in the ranking. Of the 20 Ukrainian cities studied, Kharkiv had the highest proportion of companies in the knowledge sector, the second highest number of jobs created by FDI and the third highest level of FDI capital expenditure on R&D projects.

To date, a lack of international awareness has been the main limiting factor for Kharkiv’s investment drive, though local officials hope to change that by becoming more proactive in their international outreach. Already, they say, foreign delegations are arriving in the city in droves – and are very likely pleasantly surprised to find a place that is at odds with the global preconception about eastern Ukraine.