Can Kiev make face to mounting economic problems and social unrest?

Federica Mogherini, High Representative of the Union for Foreign Affairs and Security Policy and Vice-President of the EC, went to Kiev where she met with Petro Poroshenko, President of Ukraine. (On the left side) Petro Poroshenko, in the centre, and Pavlo Klimkin, Ukrainian Minister for Foreign Affairs, on the left. (On the right side) Federica Mogherini, in the centre, and Jan Tombiński, Head of the Delegation of the EU to Ukraine, on the left. (EC Audio-visual Services, 16/12/2014).

Federica Mogherini, High Representative of the Union for Foreign Affairs and Security Policy and Vice-President of the EC, went to Kiev where she met with Petro Poroshenko, President of Ukraine. (On the left side) Petro Poroshenko, in the centre, and Pavlo Klimkin, Ukrainian Minister for Foreign Affairs, on the left. (On the right side) Federica Mogherini, in the centre, and Jan Tombiński, Head of the Delegation of the EU to Ukraine, on the left. (EC Audio-visual Services, 16/12/2014).

The time of truth for the European Union’s strategy on the Ukrainian question finally came. Brussels is about to let the poor country not only be dismembered, but what will be left of it will be pushed into an economic and political inferno. As it happens, Commission President Jean-Claude Juncker essentially ‘ordered’ Kiev to “bring peace to Donetsk and Lugansk”, knowing that the only way the Ukrainian government can achieve this, is to accept the separatists’ demands for autonomy.

Then, Juncker asked the new administration to correct the country’s deeply rooted macroeconomic and structural problems, recognising at the same time that despite the fact, “Ukraine will need USD 15 billion in addition to what is already planned. The EU can only help within its budget”. This plainly means that the EU simply cannot afford that kind of money, while the US has made clear that it’s Europe’s responsibility to economically support Ukraine. Let’s take a closer look.

Ukraine out in the cold

As a result Ukraine will be left out in the cold. Without all those billions, Kiev cannot subsidise the household and business natural gas bills, because Russia stopped to subsidise them herself. Moscow now sells its fuel to the ex-protégé more expensively at costs close to market prices but still Kiev cannot afford it without the West’s help. The interim solution agreed for this winter has cost dearly to the EU and cannot serve as a long-term arrangement. Juncker clarified that also. Add to that the lack of the needed financing to avoid mass layoffs and disintegration in the government sector, Ukraine’s social structures and state services would be soon dismantled.

There is no need to go through the EU-Ukraine relations history. It’s very well-known to be repeated. Brussels and the other major EU capitals supported, if not stirred up, the pro-western insurrection of various groups that ended up in the Kiev Maidan revolution. Now the country is definitively divided in the pro-western part under the Kiev government and the eastern region under the spell of Moscow.

Definitely estranged with Russia

The above mentioned Juncker quote is a direct recognition of this division. Of course the West doesn’t officially accept the annexation of Crimea by Russia nor does it consent to a full self-rule for Donetsk and Lugansk. If it did this would have amounted to a free gift to Vladimir Putin, the autocratic ruler of Kremlin. Understandably, the West saves this concession to be traded with Moscow.

The definite detachment of Kiev from Moscow leaves it out in the cold, at least energy and trade wise. Kiev is to lose billions from the hostilities with Russia, relating to the energy and trade sectors. If you add to that the costs to correct the structural distortions of an economy politically and fraudulently managed, the needs of Kiev amount to so many billions, that the West is unwilling and rather unable to provide. Instead, Brussels offers advice and a completely inadequate economic backing, compared to the immediate needs of Ukraine.

In need of billions and offered millions

On 3 December the EU disbursed €500 million. This was the second and final loan tranche of the EU’s €1 billion Macro-Financial Assistance (MFA II) programme for Ukraine, approved earlier in 2013. According to Juncker, prior to the 3 December disbursement, three transfers under this instrument were made earlier in 2013: “€100 million on 20 May, €500 million on 17 June and €260 million on 12 November. The final disbursement of €250 million is expected to be made by spring 2015, provided that Ukraine shows satisfactory progress with the accompanying reforms”. It’s as if the EU wants to buy Ukraine cheaply and by instalments.

There is no doubt that Kiev apart from its military difficulties in the east, it already encounters grave social problems in the heart of the country. The Brussels instructions to restructure the economy and reform the state machine to make the package more efficient and able to stand on its own feet, cannot be undertaken on the cheap nor can it be accomplished easily. Not without a deep incision on the Ukrainian society and major social unrest.

Then how is the Ukrainian government to encounter the multiple economic problems and the social turbulences that go along? Probably Kiev and Brussels have in mind to employ the services of the armed right-wing groups to suppress the social discontent which is already visible and surely bound to grow further. Of course, such an undemocratic prospect would not bother Moscow, for as long as Donetsk and Lugansk remain under her spell. This is probably the base of the recently restored warmer winter climate between Russia and the EU.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

Sanctions on Russia to be the biggest unity test at this European Council

Higher education becoming again a privilege of the wealthy?

A new crop of EU ‘Boards’ override the democratic accountability and undermine the EU project

What have the banks done to the markets making them unable to bear cheap oil?

Banks get trillions and the unemployed ECB’s love…

WEF Davos 2016 LIVE: “It is the implementation, Stupid!”, German Finance Minister Wolfgang Schaueble points the finger to Greece from Davos

How painful is the Greek tragedy for the Germans?

Hardened creditors drive Greece to dire straits; Tsipras desperate for an agreement

A Sting Exclusive: Towards better business opportunities for the EU and its neighbours, Commissioner Hahn live from European Business Summit 2015

Is continuous sanctioning the way to resolve the Ukrainian crisis?

EU Commission closer to imposing anti-dumping duties on Chinese solar panel imports?

An Eastern Wind

The US banks drive the developing world to a catastrophe

The Council unblocks all EU budgets

Minsk “ceasefire” leaves more doubts than safety, with EU already planning steps further

Predicting two more years of economic stagnation

G20 LIVE: “This was not an attack against France, this was an attack against the universal human values!”, EU President Juncker cries out from G20 in Antalya Turkey

Eurozone: Black economy loves the South

“They are trying to make improvements, but of course they are quite slow for my generation”, Vice President of JADE Victor Soto on another Sting Exclusive

Is Eurozone heading towards a long stagnation?

WEF Davos 2016 LIVE: “Chinese economy has great potential, resilience and ample space for policy adjustment”, China’s Vice President Li Yuanchao reassures from Davos

Trump and Brexit: After the social whys the political whereto

How dearly will Germany pay for the Volkswagen emissions rigging scandal

US prosecutors now target Volkswagen’s top management, upsetting Germany

European financial values on the rise

Theresa May in search of a magic plan to invoke Article 50 and start Brexit negotiations now

Can China deal with climate change without the U.S.?

The European Commission to stop Buffering

1 million citizens try to create a new EU institution

Can ECB’s €60 billion a month save Eurozone?

MWC 2016 LIVE: CEOs issue rallying call to drive ‘gigabit economy’

MWC 2016 LIVE: The top 5 themes of this year’s Mobile World Congress

Eurozone retail sales fall shows recession

A new world that demands new doctors in the fourth industrial revolution

Youth not prioritised in new Commission

UK economy in dire straits: leading banks now officially plan to Brexit too

EU-US resume trade negotiations under the spell of NSA surveillance

TTIP’s 11th round major takeaways and the usual “leaked” document

The way to entrepreneurship in the developing world

A Monday to watch the final act of a Greek tragedy; will there be catharsis or more fear?

Disaster Medicine in Medical Education: the investment you just can´t afford to ignore

Real EU unemployment rate at 10.2%+4.1%+4.7%: Eurostat Update

Eurozone: New data show recession and debt closer to explosion

The ITU Telecom World on 14-17 November in Bangkok, Thailand

Data show EU Economy in a stubbornly subdued state

“We need to use the momentum globally to ensure that corporations pay their fare share of taxation”, EU Commissioner Valdis Dombrovskis outlines from the World Economic Forum 2017.

The Americans are preparing for the next financial crisis

Switzerland to introduce strict restrictions on executive pay

European tourism remains a strong growth factor

Can the EU really make Google and Facebook pay publishers and media?

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s