By Taras Ilkiv, Kyiv Feb 4, 2014
European Union has started to take action in Ukrainian crisis, stating it can provide financial assistance to weakened economy of this post-soviet country, which was gripped with mass protests after the failure of a landmark deal on association and free trade zone with the EU in November last year.
On Monday, Feb 3, European Commission President Jose Manuel Barroso made a cautious statement that Brussels together with partners discusses financial aid for Kyiv.
Problems with state finance became in November a stumbling block to the European way of Ukraine, when the government suddenly refused the deal with EU, explaining this decision with possible losses in trade with Russia.
“We are now discussing with our partners what we can do to overcome the difficulties, not because of their agreements with us”, Barroso said.
Following the suspension of European integration, suffered from expensive Russian energy Kyiv received from Moscow a substantial gas prices discount, which government of Mykola Azarov was unsuccessfully seeking for the past three years.
The Kremlin also opened Ukraine a credit line of $15 billion, prompting experts to talk about the full switchover of president Victor Yanukovych in the sphere of influence of Vladimir Putin.
“Our credit and gradual reduction of quarterly energy prices caused due to the desire not to support any particular government, but the Ukrainian people”, – Putin said at a Russia-EU summit, commenting on the resignation of the government of Azarov, which fallen a victim of prolonged protests in Kiev.
Protests, which began as a pro-European in the end of November, broke out with renewed vigor in December after police special forces have cruelly dispersed a peaceful demonstration, becoming the biggest uprising in the history of Ukraine’s independence because of bloody clashes in the center of Kyiv, as well as kidnappings and killings of protesters in January.
“Ukraine faces challenges. We are discussing with our partners to help Ukraine with the prospect of it follow the European way”, – assured the head of the European Commission, which has previously cautiously commented crisis in Ukraine, urging the opposition and the authorities to dialogue.
Depletion of foreign exchange reserves, frolicking treasury, industrial production fall and zero GDP growth in 2013 puts Kyiv in a stalemate in front of the money of Vladimir Putin, who hosts the Olympic Games in Sochi in February.
Barroso statement may indicate that the West is ready to argue with the Kremlin for the future of Ukraine, not wanting to have on its eastern borders one more example of an authoritarian state as it was with Alexandr Lukashenko’s Belarus.
Meanwhile experts link the brute use of police forces against peaceful protesters exactly with Russian influence. Hard pressure from the EU and the U.S. cooled radical gusts of Yanukovych, and soon after that Moscow has indicated that may not continue a vital credit line for Kyiv, stopping at the allocated $3 billion.
The big issues that add fuel to the fire are the devaluation of the national currency to level of post-crisis 2009 and billion payments on the IMF loans. On the other hand, S&P and Moody’s decided to lower the sovereign ratings of Ukraine, reacting to the political conflict and clashes in Ukraine.
Uncertainty of the situation in Ukraine and the Russia’s distraction to the Olympic Games can be a good moment for the EU to persuade Kiev to his side. To do this Brussels needs to offer the real financial assistance, promoting the resumption of cooperation between Ukraine and the IMF.
Rational spending of western money can be guaranteed by the the newly formed government, composed of representatives of the opposition and the Yanukovych team, which can be created with the mediation of the EU and the U.S. in the near future.
However, while the tone of statements by Russian politicians about Western interference in the internal affairs of Ukraine, as well as slowness in EU actions together with the lack of political compromise and frustration of people in the opposition leaders, could plunge Europe’s largest country into chaos with unforeseeable consequences.