World
Dmitry Minin
February 28, 2014
© Photo: Public domain

The more the acrid black smoke disperses from the burning tyres on Kiev’s Maidan Square, the more quietly and deeply are analysts beginning to think about who has actually emerged as the winner in the latest round of the endless Ukrainian ‘chess tournament’, and how much is still to come? Initial euphoria in the West regarding the fact that while absorbed in competing at Sochi, Moscow was overlooking a tricky combination next door is gradually evaporating. And the question arises: what next? And here it becomes clear that the victory which has been marked by a change of regime in Kiev is highly questionable… 

In a geopolitical sense, Ukraine is a kind of pendulum space in which everything can only remain stable if there is a strong consensus in society and a lack of any major shocks from outside. Both of these conditions were violated today. And if the pendulum swings too strongly to one side, then you can bet that in the next stage, it will swing rapidly back in the opposite direction. It is possible, of course, that with the help of a rather small number of riot police, the point of the swinging pendulum may be seized temporarily, as we are witnessing now, but to expect that it will be brought to a stop in favour of just one section of the population, and that it will stop swinging completely, is sheer Utopia. It is already clear that the putschists in Kiev simply do not know what to do next. What should be offered to the people of Ukraine? Serious passions are beginning to boil over amid the distribution of power and portfolios, the heroes of the barricades are resentful of the fact that they are quickly being forgotten, and Ukraine’s imminent default is no longer a prognosis, but a diagnosis. If this is the latest colour revolution, then it is one of the most desperate and meaningless. It is only exacerbating the problems currently facing the country, without solving a single one. An opportunistic foray is perhaps enough to temporarily seize power over southeast Ukraine (?), but forcing it to be loyal beyond the will of its people is completely impossible. It is just a question of time before the pendulum starts swinging the other way, and such a movement is inevitable. Nobody has any reason to celebrate as far as a ‘victory’ is concerned.

The international rating agency Standard & Poor’s has lowered Ukraine’s foreign currency credit rating to the pre-default level of CCC. According to estimates by the London research company Capital Economics published on 24 February, over the next 12 months Ukraine will need approximately USD 80 billion in external financing. USD 65 billion of this is to service sovereign and corporate debt, and USD 15 billion to cover its balance of payments deficit. In turn, the Ukrainian ‘transition government’ has estimated the size of the financial aid needed to prevent a default at USD 35 billion, which once again shows its incompetence. According to the National Bank of Ukraine, meanwhile, in January the country’s foreign exchange reserves amounted to a total of USD 17.8 billion. Months earlier, this figure was USD 20.4 billion. The situation is being complicated by the fact that a significant proportion of the loans received by Ukraine were denominated in foreign currency, while the hryvnia’s exchange rate to the euro has fallen by more than 10 percent since the beginning of 2014. Also, Ukraine only has enough money to pay for the import of essential goods for the next two months. (1)

Europe, of course, was not averse to doing Russia some harm in her ‘soft underbelly’ with the aim of making Moscow more compliant in its relations with the European Union. It was Brussels that put forward the false alternative seized upon by Yanukovych: «You’re either with us, or against us!» However, nobody even dreamed of taking complete responsibility for Ukraine, the largest country in that part of the world, with the enormity of its problems, and in fact nobody wanted to. It turned out that the sum of EUR 20 billion as European Union support for reforms in the country, a sum that mesmerised many Ukrainians, was mentioned purely for propaganda purposes. It is twice as much as the USD 15 billion that Russia offered to Ukraine, but it is fiction rather than ready cash. Few people noticed the fact that EU experts merely assessed the anticipated cumulative effect of the reforms being suggested to Kiev, which in reality may or may not happen. It is similar to the hypothetical effect of Russia’s accession to the WTO that was calculated by certain analysts. 

In reality, the European Union is intending to give Ukraine considerably less money in the form of a grant. The EU Commissioner for Financial Programming and Budget, Janusz Lewandowski, stated that the EU is prepared to give Ukraine financial aid amounting to just EUR 1 billion. This amount, which is essential to Ukraine while the situation is still unstable, could arrive as early as March, he explained. «But we will only be able to do it if we know what is happening with the country’s finances,» the EU official stressed. And in fact, the money will only arrive if Kiev agrees to a programme of reforms with the IMF. The list of conditions remains the same: cutting government expenditure (freezing salaries and pensions, reducing the number of public sector workers, reviewing the spending of individual state institutions), improving the finances of Naftogaz (reducing public subsidies and subsidies to industry), removing tax benefits, and abandoning subsidies to loss-making government enterprises. First of all, cutting state support will affect the mining industry. The government will have to cut social benefits, review their lists, monetise benefits, and cut the number of people receiving social support. Also, the new authorities in Kiev will need to carry out a pension reform, ensure it has control over the growth of state debt so that the repayments do not have a negative impact on internal demand, and move to inflation targeting. (2) It is easy to see how much these ‘progressive’ reforms differ from the expectations of those in support of Ukraine’s integration into the EU. 

Nobody is in a hurry to reward Kiev for its ‘national revolution’ and speed up the EU accession process. In response to questions posed by Deutsche Welle regarding Yulia Tymoshenko’s promises to demonstrators on Maidan Square that Ukraine will soon be a member of the European Union, the German Government’s Coordinator for Intersocietal Cooperation with Russia, Central Asia and the Eastern Partnership Countries, Gernot Erler, announced: «I remember well how, shortly after the ‘orange revolution’ in 2004, President Viktor Yushchenko and Prime Minister Yulia Tymoshenko tried to open the EU’s doors to Ukraine. In response, the European Union initially suggested a 10-point programme and then an association agreement. But it is perfectly obvious that it was an ersatz, a substitute for EU membership, the prospect of which they unequivocally did not want to give to Ukraine. Knowing this pre-history, it is impossible to see the association as a step towards joining the EU. There is neither the consent nor the desire in the European Union to open its doors to such a large country with such large problems, not to mention all the geopolitical difficulties that would inevitably arise in such a situation in relations with Russia». 

With regard to financial aid, meanwhile, Gernot Erler observed: «It is inconceivable that foreign creditors will give money to Ukraine forever. The national parliaments of the European Union would also never agree to it, without whose sanctions it would be impossible to provide such aid. There will be no money without conditions for reforms». (3) 

Stefan Cornelius, a journalist for the Frankfurter Rundschau, believes that it is too early for Europe to celebrate victory: «Ukraine’s problems have not disappeared along with Yanukovych. The shadow economy of Ukraine’s state institutions, corruption, the power of the oligarchs – all of these long-term problems tormented the country before Yanukovych, and they will continue to torment the country afterwards. Those who are joyfully greeting Yulia Tymoshenko in the hope that with her arrival will come recovery have probably forgotten that from the very beginning of Ukraine’s independence, this woman has been part of the system and brings the heavy burden of the past with her. And now that attitudes have changed, the two poles between which Ukraine is balancing – the EU and Russia – are becoming more important than they have ever been before». (4)

The West does not have any particular feeling of triumph regarding the ‘geopolitical victory’ in Ukraine for the simple reason that there is no victory. There is also the troublesome predicament the West has created for itself by gambling on people who are incompetent, not fully compos mentis, and completely unfamiliar with democratic politics. It is the Ukrainians, who are like brothers to the Russian people, that are becoming the victims of this irresponsible revolutionary experiment, and they can now expect genuine hardships. Furthermore, having gradually started to realise what they are facing in Ukraine, the West would not be averse to sharing the burden of financial assistance to the Ukrainian psuedo-revolutionaries with Russia, which is also looking rather exotic. Thus at a press conference in Kiev on 25 February, the High Representative for Foreign Affairs and Security Policy, Catherine Ashton, unexpectedly announced the importance of maintaining strong ties between Ukraine and Russia (this is how Brussels is currently talking). According to Ashton, in the current situation, Russia must let the country move forward «in the way it chooses» (an interesting way of requesting support for the take-over). Baroness Ashton also observed that «the Ukrainian government must not ignore the interests of a single one of its regions» (of course!). (5) 

It is not just the West that needs to learn from the Ukrainian revolutionary drama. Why, for example, did the South East turn its back on Yanukovych so easily? Because the protest broke out on the basis of social class, and the nationalists were simply able to direct it. Everyone shouted the same thing: «Down with thieves!» With regard to the corrupt regime, the position of every part of the country turned out to be identical, and that needs to be acknowledged. The vast majority of people in Ukraine are in favour of closer ties with Russia, but this majority wants the name Ukraine to be associated with more popular and honourable politicians than the president who has disappeared who knows where. When the Ukrainian pendulum begins moving again, which may happen much earlier than anybody thinks, objective and rigorous criteria will be needed to assess who Russia is going to collaborate with. 

At present, the Russian Orthodox Church is in mourning for all those killed in Ukraine. The Ukrainian Orthodox Church of the Moscow Patriarchate, which is currently under a blanket of threatening clouds, has taken the only right step in such circumstances. The Locum Tenens of the Ukrainian Orthodox Church of the Moscow Patriarchate who has been elected to replace the seriously ill and medically-incapacitated Metropolitan Vladimir is not a hierarch who has long been under the wing of national radicals, but a consistent fighter for the unity of the Russian Orthodox world, the highly regarded Metropolitan Onufry of Chernovtsy and Bukoviny. Many in church circles believe that he is fully capable of resolving the historical issue of maintaining an inseparable and fraternal unity between the entire Russian Church and the Church that has given them guidance.

(1) http://www.dw.de/a-17454528
(2) http://www.dw.de/a-17456710
(3) http://www.dw.de/a-17455904 
(4) http://www.dw.de/frankfurter-rundschau-/a-17453815
(5) http://www.dw.de/a-17456030
The views of individual contributors do not necessarily represent those of the Strategic Culture Foundation.
The Ukrainian Pendulum: Has Russia Lost and the West Won?

The more the acrid black smoke disperses from the burning tyres on Kiev’s Maidan Square, the more quietly and deeply are analysts beginning to think about who has actually emerged as the winner in the latest round of the endless Ukrainian ‘chess tournament’, and how much is still to come? Initial euphoria in the West regarding the fact that while absorbed in competing at Sochi, Moscow was overlooking a tricky combination next door is gradually evaporating. And the question arises: what next? And here it becomes clear that the victory which has been marked by a change of regime in Kiev is highly questionable… 

In a geopolitical sense, Ukraine is a kind of pendulum space in which everything can only remain stable if there is a strong consensus in society and a lack of any major shocks from outside. Both of these conditions were violated today. And if the pendulum swings too strongly to one side, then you can bet that in the next stage, it will swing rapidly back in the opposite direction. It is possible, of course, that with the help of a rather small number of riot police, the point of the swinging pendulum may be seized temporarily, as we are witnessing now, but to expect that it will be brought to a stop in favour of just one section of the population, and that it will stop swinging completely, is sheer Utopia. It is already clear that the putschists in Kiev simply do not know what to do next. What should be offered to the people of Ukraine? Serious passions are beginning to boil over amid the distribution of power and portfolios, the heroes of the barricades are resentful of the fact that they are quickly being forgotten, and Ukraine’s imminent default is no longer a prognosis, but a diagnosis. If this is the latest colour revolution, then it is one of the most desperate and meaningless. It is only exacerbating the problems currently facing the country, without solving a single one. An opportunistic foray is perhaps enough to temporarily seize power over southeast Ukraine (?), but forcing it to be loyal beyond the will of its people is completely impossible. It is just a question of time before the pendulum starts swinging the other way, and such a movement is inevitable. Nobody has any reason to celebrate as far as a ‘victory’ is concerned.

The international rating agency Standard & Poor’s has lowered Ukraine’s foreign currency credit rating to the pre-default level of CCC. According to estimates by the London research company Capital Economics published on 24 February, over the next 12 months Ukraine will need approximately USD 80 billion in external financing. USD 65 billion of this is to service sovereign and corporate debt, and USD 15 billion to cover its balance of payments deficit. In turn, the Ukrainian ‘transition government’ has estimated the size of the financial aid needed to prevent a default at USD 35 billion, which once again shows its incompetence. According to the National Bank of Ukraine, meanwhile, in January the country’s foreign exchange reserves amounted to a total of USD 17.8 billion. Months earlier, this figure was USD 20.4 billion. The situation is being complicated by the fact that a significant proportion of the loans received by Ukraine were denominated in foreign currency, while the hryvnia’s exchange rate to the euro has fallen by more than 10 percent since the beginning of 2014. Also, Ukraine only has enough money to pay for the import of essential goods for the next two months. (1)

Europe, of course, was not averse to doing Russia some harm in her ‘soft underbelly’ with the aim of making Moscow more compliant in its relations with the European Union. It was Brussels that put forward the false alternative seized upon by Yanukovych: «You’re either with us, or against us!» However, nobody even dreamed of taking complete responsibility for Ukraine, the largest country in that part of the world, with the enormity of its problems, and in fact nobody wanted to. It turned out that the sum of EUR 20 billion as European Union support for reforms in the country, a sum that mesmerised many Ukrainians, was mentioned purely for propaganda purposes. It is twice as much as the USD 15 billion that Russia offered to Ukraine, but it is fiction rather than ready cash. Few people noticed the fact that EU experts merely assessed the anticipated cumulative effect of the reforms being suggested to Kiev, which in reality may or may not happen. It is similar to the hypothetical effect of Russia’s accession to the WTO that was calculated by certain analysts. 

In reality, the European Union is intending to give Ukraine considerably less money in the form of a grant. The EU Commissioner for Financial Programming and Budget, Janusz Lewandowski, stated that the EU is prepared to give Ukraine financial aid amounting to just EUR 1 billion. This amount, which is essential to Ukraine while the situation is still unstable, could arrive as early as March, he explained. «But we will only be able to do it if we know what is happening with the country’s finances,» the EU official stressed. And in fact, the money will only arrive if Kiev agrees to a programme of reforms with the IMF. The list of conditions remains the same: cutting government expenditure (freezing salaries and pensions, reducing the number of public sector workers, reviewing the spending of individual state institutions), improving the finances of Naftogaz (reducing public subsidies and subsidies to industry), removing tax benefits, and abandoning subsidies to loss-making government enterprises. First of all, cutting state support will affect the mining industry. The government will have to cut social benefits, review their lists, monetise benefits, and cut the number of people receiving social support. Also, the new authorities in Kiev will need to carry out a pension reform, ensure it has control over the growth of state debt so that the repayments do not have a negative impact on internal demand, and move to inflation targeting. (2) It is easy to see how much these ‘progressive’ reforms differ from the expectations of those in support of Ukraine’s integration into the EU. 

Nobody is in a hurry to reward Kiev for its ‘national revolution’ and speed up the EU accession process. In response to questions posed by Deutsche Welle regarding Yulia Tymoshenko’s promises to demonstrators on Maidan Square that Ukraine will soon be a member of the European Union, the German Government’s Coordinator for Intersocietal Cooperation with Russia, Central Asia and the Eastern Partnership Countries, Gernot Erler, announced: «I remember well how, shortly after the ‘orange revolution’ in 2004, President Viktor Yushchenko and Prime Minister Yulia Tymoshenko tried to open the EU’s doors to Ukraine. In response, the European Union initially suggested a 10-point programme and then an association agreement. But it is perfectly obvious that it was an ersatz, a substitute for EU membership, the prospect of which they unequivocally did not want to give to Ukraine. Knowing this pre-history, it is impossible to see the association as a step towards joining the EU. There is neither the consent nor the desire in the European Union to open its doors to such a large country with such large problems, not to mention all the geopolitical difficulties that would inevitably arise in such a situation in relations with Russia». 

With regard to financial aid, meanwhile, Gernot Erler observed: «It is inconceivable that foreign creditors will give money to Ukraine forever. The national parliaments of the European Union would also never agree to it, without whose sanctions it would be impossible to provide such aid. There will be no money without conditions for reforms». (3) 

Stefan Cornelius, a journalist for the Frankfurter Rundschau, believes that it is too early for Europe to celebrate victory: «Ukraine’s problems have not disappeared along with Yanukovych. The shadow economy of Ukraine’s state institutions, corruption, the power of the oligarchs – all of these long-term problems tormented the country before Yanukovych, and they will continue to torment the country afterwards. Those who are joyfully greeting Yulia Tymoshenko in the hope that with her arrival will come recovery have probably forgotten that from the very beginning of Ukraine’s independence, this woman has been part of the system and brings the heavy burden of the past with her. And now that attitudes have changed, the two poles between which Ukraine is balancing – the EU and Russia – are becoming more important than they have ever been before». (4)

The West does not have any particular feeling of triumph regarding the ‘geopolitical victory’ in Ukraine for the simple reason that there is no victory. There is also the troublesome predicament the West has created for itself by gambling on people who are incompetent, not fully compos mentis, and completely unfamiliar with democratic politics. It is the Ukrainians, who are like brothers to the Russian people, that are becoming the victims of this irresponsible revolutionary experiment, and they can now expect genuine hardships. Furthermore, having gradually started to realise what they are facing in Ukraine, the West would not be averse to sharing the burden of financial assistance to the Ukrainian psuedo-revolutionaries with Russia, which is also looking rather exotic. Thus at a press conference in Kiev on 25 February, the High Representative for Foreign Affairs and Security Policy, Catherine Ashton, unexpectedly announced the importance of maintaining strong ties between Ukraine and Russia (this is how Brussels is currently talking). According to Ashton, in the current situation, Russia must let the country move forward «in the way it chooses» (an interesting way of requesting support for the take-over). Baroness Ashton also observed that «the Ukrainian government must not ignore the interests of a single one of its regions» (of course!). (5) 

It is not just the West that needs to learn from the Ukrainian revolutionary drama. Why, for example, did the South East turn its back on Yanukovych so easily? Because the protest broke out on the basis of social class, and the nationalists were simply able to direct it. Everyone shouted the same thing: «Down with thieves!» With regard to the corrupt regime, the position of every part of the country turned out to be identical, and that needs to be acknowledged. The vast majority of people in Ukraine are in favour of closer ties with Russia, but this majority wants the name Ukraine to be associated with more popular and honourable politicians than the president who has disappeared who knows where. When the Ukrainian pendulum begins moving again, which may happen much earlier than anybody thinks, objective and rigorous criteria will be needed to assess who Russia is going to collaborate with. 

At present, the Russian Orthodox Church is in mourning for all those killed in Ukraine. The Ukrainian Orthodox Church of the Moscow Patriarchate, which is currently under a blanket of threatening clouds, has taken the only right step in such circumstances. The Locum Tenens of the Ukrainian Orthodox Church of the Moscow Patriarchate who has been elected to replace the seriously ill and medically-incapacitated Metropolitan Vladimir is not a hierarch who has long been under the wing of national radicals, but a consistent fighter for the unity of the Russian Orthodox world, the highly regarded Metropolitan Onufry of Chernovtsy and Bukoviny. Many in church circles believe that he is fully capable of resolving the historical issue of maintaining an inseparable and fraternal unity between the entire Russian Church and the Church that has given them guidance.

(1) http://www.dw.de/a-17454528
(2) http://www.dw.de/a-17456710
(3) http://www.dw.de/a-17455904 
(4) http://www.dw.de/frankfurter-rundschau-/a-17453815
(5) http://www.dw.de/a-17456030