EU and Transcarpathia

Tuesday, 30 January 2007, 11:33 GMT

EU fuels western Ukraine boom
By Helen Fawkes / BBC News, western Ukraine

Dominated by the Carpathian Mountains, the region of Transcarpathia in western Ukraine looks stunning, but for years this was one of the poorest parts of Europe.

Now it is being transformed.

The European Union has expanded again by taking another two countries - Bulgaria and Romania - which were once behind the Iron Curtain.

It means that Transcarpathia now borders four EU states - and business is booming.

Increased investor interest also followed the mass protests of the Orange Revolution in 2004 which brought Ukraine's pro-Western President, Viktor Yushchenko, to power.

An estimated 200m euros (£131.4m; $258.6m) has been invested in Transcarpathia, at the western tip of Ukraine.

New jobs

More than 4,000 new jobs have been created, with many more on the way.

One source is the Eurocar factory, just a 10-minute drive from the mountains.

It turns out Volkswagens and Seats, but today Sergey Zhuravel is working on the Skoda production line.

"This kind of place provides lots of permanent jobs," Mr Zhuravel said.

"It gives people prospects. They can earn their living, support their families and plan their future."

This factory will soon produce almost 30,000 vehicles destined for Europe every year.

Transcarpathia has special tax incentives and, compared to western Europe, wages are very low. But the biggest selling-point is its location.

Hungary is just a few metres away from the Eurocar factory and the region shares a border with Poland, Romania and Slovakia. All four EU countries are within just a few hours drive.

Around 700 international businesses are now working in the region.

Students hopeful

Since the collapse of the Soviet Union, life here has been hard.

Many people from Transcarpathia were tempted to work abroad, often illegally.

At Uzhhorod University, a class of students are improving their English skills at a discussion club. Most of them though are not planning to leave Ukraine; instead they hope to work for international companies.

"It makes a real big difference if you have a good job, just like everywhere else," says Antonia Kanchiy, a student.

"Less people are going abroad now because more investments are coming into our region. It makes me feel good because I can see progress; I would like to work for the benefit of my country."

New 'Silicon Valley'

With a huge consumer market on its doorstep, Transcarpathia is attracting hi-tech firms.

The US-based company Jabil makes mobile phones and computer components here.

It employs more than 1,000 people and has plans to hire 5,000 more, bringing its production capacity to one million handsets a week.

"We strongly believe that this region can become a kind of Silicon Valley of electronic manufacturing in Europe," says Philippe Costemalethe, General Director of Jabil Ukraine.

"It could be the powerhouse of electronic manufacturing serving the European market."

International businesses would like to see improvements - less red tape and a more stable political climate. Compared to its neighbours, the level of foreign capital coming to Ukraine is still very low.

But already there are signs of the increased prosperity in Transcarpathia.

In the main town, rows of new houses are being built alongside the dingy Soviet-era tower blocks.