Ukraine goes from serious to critical

Ukrainian President Petro Poroshenko congratulates newly elected Prime Minister Volodymyr Groysman who is regarded his loyalist and protegee
Kiev, April 14, 2016: Ukrainian President Petro Poroshenko (R) congratulates newly elected Prime Minister Volodymyr Groysman (source: dpa)

The past few weeks have brought extremely bad news from Ukraine. The country now finds itself at a crossroads, where fundamental and disturbing questions must be asked about its governability. Domestic elites persist in placing their own personal interests above those of the nation, and Western governments are realizing that their ambition to steer Ukraine by remote control has reached the end of the road.The past few weeks have brought extremely bad news from Ukraine. The country now finds itself at a crossroads, where fundamental and disturbing questions must be asked about its governability. Domestic elites persist in placing their own personal interests above those of the nation, and Western governments are realizing that their ambition to steer Ukraine by remote control has reached the end of the road.

The lifeline that keeps the country afloat is a $17.5 billion Extended Fund Facility (EFF) agreed with the International Monetary Fund in March 2015. How much longer the IMF will be able to maintain this critical life support is a crucial question. If and when it decides to pull the plug, other lenders and investors will run for cover, making a sovereign default unavoidable. The political implications of financial failure would be severe. At worst, the looming threat of Ukraine degenerating into a “failed state” would be realized.

Kiev’s implementation of the reforms agreed as a condition for the EFF has been slow and uneven, prompting IMF Managing Director Christine Lagarde to issue repeated stark warnings. Delivery of both the third (September 2015) and fourth (December 2015) tranches of the EFF had already been postponed before the February political crisis erupted, causing even further delays.


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