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After Yanukovych
Ten Challenges for Ukraine

It isn’t clear how long the uncertainty over Ukraine’s new course will last. But the challenges that the country is facing are more obvious. Here are a few of the major ones.

Published on: February 27, 2014
Lilia Shevtsova, an AI editorial board member, is senior fellow at the Carnegie Moscow Center.
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  • free_agent

    You write, “Velvet Revolution in Poland”.

    The references I find use the term “Velvet Revolution” only for Czechoslovakia, not Poland.

  • Pete

    “Western governments demonstrated a lack of coordination in its policies toward Ukraine. They had no political will to deal with Ukraine’s problems. ”

    If by Western, you mean the U.S., then you may be mistaken lack of interest with a lack of political will.

    The point in fact is that the average American does not really care what happens in the Ukraine. Sure, we wish you well ……but stay out of our pockets.

    And if the Ukraine must go begging, let it go to the rich EU which is their neighbor.

    And as far as the Russian speaking area of the Ukraine in the southeast is concerned, the Ukraine would be better off with it in the long run. You’ll see.

  • Julie Leighton

    Building Blocks of Stability:

    Ukraine should primarily be concerned about devising exit strategies based on real fiscal and trade principles.

    Facts: The country is in financial trouble.

    Ambiguities: The amount of the damage is unclear, as is the potential for default. There are suspicions that economic recklessness has been the established practice of past politicians, and that Yanukovych’s spending mannerisms may have been comparatively middle of the road.

    Difficulties because of this:

    1. Ukraine has no idea how much money it is going to need in loans. As of today, estimates ranged from 15 to 35 billion dollars. Yatsenyuk has said that he will ask for an initial loan of fifteen billion. He has also pledged that unlike his predecessors, he will abide by the IMF contingencies and austerity measures in order to get the necessary funding.

    In application:

    The IMF has refused to loan any money until it has reviewed the true state of Ukraine’s finances. Legarde has also told Yatsenyuk to refrain from quoting figures; they are purely estimations and may not be realistic.

    Two points to consider:

    1) Yatsenyuk cannot possibly guarantee adherence to austerity measures when he does not know their severity. In a country as politically unstable as his currently is, it is very likely that austerity will only heighten tensions. Also, with reelections in May, cutbacks would probably prevent Yatsenyuk from winning a popular election; which means that there is a higher risk of a political extremist assuming office. In this case, rigid adherence to IMF protocol may be too shortsighted and damaging in the long term.

    2) Ukraine has a history of superficially agreeing to IMF austerity decrees, and not implementing them once they have received the funds. This may factor into the organization’s willingness to approve a larger loan.

    American and European Funding:

    Kerry has said that the American government is working on an initial one billion dollar loan with potential for future cash grants. This money is not contingent on the IMF review.

    The issue of EU funding is muddled. Reports range from 610 million to one billion dollar loans; but this amount is contingent on the IMF findings.

    Practically speaking, any amount of money loaned or granted by any governmental organization is a short term solution.

    The real issue that needs to be addressed is the matter of trade. The August Trade Wars demonstrated that Ukraine is much more dependent on Russian trade than the international audience conceptualized. In application, this means that even if Russia were to accept a pro-Western, possibly EU affiliated Ukraine, it could still cripple the country almost immediately by arbitrarily halting trade–on any product. Ukraine is simply too liable.

    This is something that the EU and US can counter. Rather than focusing on short term aid packages, both entities should concentrate on formulating long-term and sustainable partnerships with Kiev. This would help solidify Ukraine’s regional independence by decreasing its reliance on Russia, and the promise of economic stability would help balance the local political situation.

    The key to Ukraine is fiscal responsibility and financial independence; without these two factors there will always be a risk of social instability and political jeopardy. Can this be achieved without the country allying with either the EU or Putin’s Eurasian Union? Ideally, yes. Ukraine has too much potential to be short changed by geopolitics.

    Rather than perpetuating polarization with “new Cold War” rhetoric, constructing a commercial coalition with Kiev should be the name of the game.

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