Ukraine is far more important than Greece

Nothing to add to this urgent call from Anders Åslund:

“the Kremlin opted for a third strategy [in order to crash Ukraine], identified with Putin’s diabolic aide Vladislav Surkov: a limited but bloody war in the eastern and southern part of only two of Ukraine’s 25 regions, Luhansk and Donetsk, known as the Donbas.

The destruction has been horrendous. The territory now occupied by Russian troops or their subordinates once harbored 3.3 million people, but most have since fled—1.3 million to other parts of Ukraine, 500,000 to Russia, and 100,000 to other countries, according to the United Nations High Commissioner for Refugees. Only pensioners, the destitute and criminals remain.

The economy in this rustbelt of dangerous coal mines and obsolete steel mills is stagnant, but it accounted for 10 percent of Ukraine’s GDP in 2013. The war is the main reason for Ukraine’s economic catastrophe. However, Moscow’s drastic trade sanctions have also crippled the country’s economy.

Last year, Ukraine’s exports to Russia fell by half, equivalent to 12 percent of total exports. That caused Ukraine’s GDP (excluding Crimea) to shrink by 6.8 percent. This year, GDP is likely to drop by a further 9 percent. About 75 percent of this contraction is due to the fighting in the Donbas and Russian trade sanctions against Ukraine.

With its war of destruction, the Kremlin’s apparent objective is to destabilize Ukraine to the point of political collapse. In his documentary film about the capture of Crimea, Putin said he acted when Ukrainian President Viktor Yanukovych was falling. Yet he also piled scorn on Yanukovych.

Clearly, Putin attacked Ukraine’s democratic breakthrough as a preemptive strike against democratization in Russia. Rather than a sign of political strength, this was proof of his political weakness—combined with relative military strength and Western cluelessness.

The European Union and its March 2014 Association Agreement with Ukraine was completely irrelevant. Putin has made clear that he views the EU as a political dwarf.

Yet the EU was important in other ways. Incredibly, the European Commission sees the Russia-Ukraine gas conflict as a commercial dispute rather than an act of war. That’s why, late last year, it made Ukraine pay Gazprom $3.1 billion in disputed arrears, depleting Kiev’s reserves and forcing the collapse of Ukraine’s currency, the hryvnia. It also obligated Ukraine to buy gas from Russia without offering any competition for its harmful acts.

Ukraine should stop trading with Gazprom, which corrupts Ukraine and the rest of Eastern Europe. Tellingly, during the Minsk peace talks, Russia urged Kiev’s destitute government to pay pensions and subsidies to the occupied Donbas, where Ukrainian officials can neither enter nor collect taxes. Russia wants the Ukrainian government to bleed.

Last spring, the EU proudly announced that it had opened its markets to Ukraine, but some 40 key quotas remain, causing its imports from Ukraine to fall sharply in the last quarter of 2014. Europe must open its markets to Ukrainian exports more widely, especially since Russia has closed its own markets as an act of war—and especially since the EU has delayed launching its vital Deep and Comprehensive Free Trade Agreement with Ukraine at Russia’s behest.

Meanwhile, Ukraine’s first serious, able government in years has quickly adopted vital reforms the West had called for. It quadrupled household gas prices on April 1 without sparking any popular protests. It abolished corrupt coal subsidies and has opened up public procurement for competition, and it has cut the oligarchs down to size.

Kiev is doing exactly what it’s supposed to do, but what is the EU doing? It has committed merely €5 billion in loans to Ukraine, compared with €200 billion for Greece. This makes no sense. Ukraine does all the reforms, while Greece has ignored similar demands for years and now openly opposes them. Ukraine has more than four times as many people as Greece, and it is far more strategically important for Europe.

Having lost Greece, Brussels needs a success story—and Ukraine is the obvious choice. But the EU must do far more.

If it won’t give Ukraine the military aid it badly needs, it could at least offer crucial financial aid. The European central banks could easily give Ukraine a €10 billion credit swap, which would stabilize the hryvnia without costing the EU anything, because the ECB could impose strict conditions that force Kyiv to change policies before it needs the swap. The money would stay with the ECB in Frankfurt.

There is no reason not to offer such assistance.”

– There is a reason: Russia has a lot of friends in Brussels, especially among German politicians (outstanding the German Social-Democratic Party and German businessmen who at all cost want to return to business with Russia instead of seeking alternatives in Ukraine – see the examples of Siemens and its turbines business that would allow Russia to provide Crimea with energy or German politicians lobbying for an aircraft factory in Novosibirsk). They are eagerly waiting or pressuring quite aggressively for a “normalization” with the relations towards Russia and pressure Ukraine to “cooperate” with Russia (The German SPD’s politician and President of the European Parliament Martin Schulz) and to stop Ukraine from entering NATO and instead allow Russia back into the G8 (Wolfgang Ischinger, Chairman of the Munich Security Conference). The pre-dominant topic the EU struggles with is to keep up a united stance which apparently exhausts Brussels and European decision-makers so much they have not enough engery left in order to put up pressure in the gas talks and in providing Ukraine with money.

Why do they not realize Russia is just a brink away from total war in Ukraine?

Because they still think Ukraine collapses economically and politically which would not make a large Russian military intervention necessary (in fact the non-provision of help to Ukraine is a proof they silently have hoped for that in order to appease Russia). European decision-makers in their ignorance for Ukraine have not realized the Ukrainian people will no longer allow Russia to crash the country.

The Russian president at all costs wants to upheld his illusion that “Ukraine is not a state”, using all methods he has at his disposal in order to prove it. But all methods – including economic interrelations with Russia (and the notorious gas topic), using its influence to prevent debt restructuring and a solution of the debt issue in Ukraine, corrupting politicians, businessmen, journalists, activists, spreading “kompromat”, using diversionist actions and terror attacks – all methods have been failing even if the situation in Ukraine is dire.

If Ukraine refuses to cease as a state in front of European eyes with those “conventional” methos, Russia in the near future has to decide on an open war in order to destroy Ukrainian statehood.

But for European politicians this option simply does not exist – similar to the subborn refuse that a “Grexit” is not possible and Greece has to stay in the Euro. Ukraine has to collapse and Greece has to be saved. Such is their logic.

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About osteuropa news

Eastern European area studies in English and Germanm
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