Sympathy alone will not heal Ukraine’s wounds

Sympathy alone will not heal Ukraine’s wounds

The downing of Malaysia Flight MH17 over Ukraine has caused a groundswell of anger against Russia.

This has translated into a sweep of global sympathy for Ukraine which is understandable but must not be allowed to cloud our understanding of what the future may have in store for this hapless country, writes Professor Stefan Hedlund.

International sympathy alone will not alleviate the deepening crisis. And even Western promises of help over Ukraine's massive debts, which will have to be repaid, can provide no more than temporary solace.

On July 18, 2014, the International Monetary Fund (IMF) announced it had reached a 'staff level' agreement with Ukraine, paving the way for a second tranche of the two-year US$17 billion Stand-By Arrangement agreed in April 2014. While the IMF notes that the Kiev government is on track with its commitments, it also warns that, 'the programme hinges crucially on the assumption that the conflict will begin to subside in the coming months.'

Is this a realistic assumption? Hardly.

While investigators sift through the debris at the MH17 crash site the carnage in other parts of eastern Ukraine is ongoing.

And even if, against all the odds, Russian President Vladimir Putin were to decide that support for the rebels must cease, this would contribute little towards resolving the country’s slide towards status as a 'failed state'.

The Ukraine government, formed in February 2014, has a heavy bias towards the central and western parts of the country. It lacks legitimacy in the east. It is supported by extreme right-wing forces such as the 'Azov battalion' which is presently recruiting extremists from abroad, ranging from neo-Nazis from Britain to white power activists from Sweden.

Its ability to unite Ukraine and win acceptance for the brutal fiscal austerity measures called for by the IMF is brittle at best.

Similarly, it cannot be ignored that the Ukrainian economy is in tailspin. The IMF has revised its forecast for Ukraine's 2014 GDP from five to 6.5 per cent contraction.

Others are even more pessimistic. The war-torn Donbass region is (or was) the industrial heartland of Ukraine, and will not be easy to piece back together. According to the UN High Commissioner for Refugees, the number of Ukrainian refugees in Russia has reached 110,000, with a further 54,400 having been internally displaced. More will follow.

If the Kiev government persists in refusing to settle its bills with Russian energy giant Gazprom, it will run out of gas by October. Even if the flow were to be resumed, some four million households are likely to find they are unable to pay their bills. Social unrest will follow.

Looking towards the immediate future, the IMF warns of a need for a 'substantial increase in external support on adequate terms'. In plain English, this means that when winter comes the West must stand ready to put up added billions – on loose terms.

In a press release on June 25, 2014, the European Commission claimed it was ‘determined to make sure that Ukraine has all the support it needs, in the short and long term, to undertake the political and economic reforms that are necessary to consolidate a democratic, independent, united and prosperous Ukraine'.

All the support it needs? These are big words.

Making such open-ended commitments may be politically expedient in the short term. But it is also foolhardy.

Once Ukrainians begin to realise the lack of substance in all the promised support, a backlash of resentment will follow, further undermining an already weak government.

Time, perhaps, to stop talking and start acting?

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