It has been all over the news and has been going on for months. Finally, last week Ukrainian opposition protesters achieved what they were fighting for: the removal of President Viktor Yanukovych. Protests began late last year, when the Ukrainian government rejected a trade agreement with Europe- favoring closer ties with Russia. Among discontent with corruption and social oppression, protesters manifested against the eery relations with Russia, which they felt was dominating their government. Essentially, they want to establish effective relations with the EU as soon as possible. Though protests were relatively uneventful in previous months, they turned very violent last week. At least 88 people died from the clashes last week; most were protesters, but some police officers are also among the deceased. Ex-President Yanukovych now faces an arrest warrant for the scale of violence used to suppress protesters. His whereabouts are unknown, seeing as he fled Kiev soon after the rally.
But the Ukraine now faces a very difficult financial situation. First of all, this political outcome is clearly unfavorable for Russia- which hoped to maintain its control over the formerly-Soviet state. And in reaction to the outcome, Russia has halted its $15 billion bailout package. However, this is quite the predictable reaction from the Kremlin, and I suspect opposition leaders took this into account or where at least aware of this implication. But will this effect be significant? Well, Ukraine’s $176 billion economy is in turmoil following months of protests and last week’s clashes. $15 billion is a considerable proportion of the country’s economy.
Now opposition leaders must find a supplement for this aid, in order to effectively pay back debt and essentially keep the economy running. That is where Western Europe and the United States come in. Sunday, the Obama administration worked with the European Union in order to draw up a bail-out plan for Ukraine. Ukrainians seek $35 billion in assistance – in order to avoid default. Its Finance Ministry said it will first seek a loan from the United States and Poland within the next two weeks, and later hopes to raise it to around $35 billion by the end of 2015. Though specifics on other European’s assistance are not clear at this point, it’s very likely that countries like Germany and France will also be interested in providing aid.
The interesting part of this assistance-package is that the United States invited Russia to participate. Maybe it’s just how I see it- as a slap in the face for Russia- but it does make sense for Russia to be interested in doing so. Putting aside politics (in which the Russians have mainly lost here) it is still in Russia’s best interest to have a sustained Ukrainian economy. Essentially, nobody will benefit from seeing Ukraine bankrupt, and there is enough incentive to keep this from happening. Though it will not be easy for Ukraine after this victory, also considering that some of the Eastern part of the country still supports Russian ties, there is much reason to predict that complete economic turmoil can be avoided.