The battle for Ukraine’s future continues

Source: Ivan Bandura via Flickr

Demonstrations that began in November 2013 in Ukraine turned into violent clashes claiming the lives of at least two people. With talks between the government and the opposition not yet providing a way out of the stalemate, the country’s future hangs in the balance.

The demonstrations turned into clashes between the protesters and security forces after the parliament’s decision to adopt an anti-protest law. Earlier reports from Kiev had suggested that the number of protesters was waning, but the government’s move to pass the law reignited the protests, which then spread to other cities in Ukraine.

Two protesters were shot during clashes near the Independence Square or Maidan, the central square in Kiev that lent its name to the recent wave of protests. The opposition claims that the protesters were killed by riot police or snipers, but the government denies that assertion.

The protests started in November 2013 when the Ukrainian government announced that it would not sign an Association Agreement with the European Union. The agreement would be a step towards further political association and economic integration with the European Union. However, the Russian Federation wants Ukraine to join a Russia-led customs union with Kazakhstan and Belarus. To meet this goal, Russia used all means including threats of fomenting economic catastrophe and state collapse if Ukraine signed the Association Agreement with the EU.

Ultimately, President Viktor Yanukovich announced that Ukraine would not be signing the agreement with the EU ahead of the Vilnius Summit. Shortly afterwards, Russia agreed to buy $15 billion worth of Ukrainian bonds as well as cut the price of gas that Ukraine buys by about one-third from $400 per 1,000 cubic meters to about $268.50.

The recent wave of protests raised concerns that tremors along Ukraine’s long-standing political fault lines may indeed escalate into a civil war. On January 24, Vice President of the European Commission Vivianne Reding told CNBC that she is “very worried about what is going on in Ukraine because that goes in the direction of a civil war.” As the government crackdown on protesters resulted in deaths, some senior officials in the European Union began to openly talk about possible responses, including sanctions if the situation in Ukraine further deteriorates.

However, the EU is also continuing its diplomatic efforts to bring an end to the current crisis while both government officials and opposition leaders in Ukraine have expressed openness to the idea of an international presence or mediation for negotiating an end to the crisis. As Stephen Muester pointed out, imposing sanctions on Ukraine will have little positive effect as it risks pushing Kiev further into the Russian camp.

The civil unrest in Ukraine has made the country’s fragile economy more vulnerable and more dependent on Russian aid. The political turmoil is undermining the already fragile national currency as the Ukrainian hryvnia fell from a rate of 8.3 to 8.5 against the US dollar during the recent wave of protests. Analysts admit that depreciation of the currency could be beneficial for stimulating Ukrainian exports.

However, further weakening of the currency could trigger inflation, which would increase consumers’ unhappiness and possibly increase the demand for foreign currencies in the event that Ukrainian households and businesses rush to convert their hryvnia savings. One analyst argues that “since the hryvnia is still heavily regulated, the sharp depreciation must be part of some concerted strategy to allow something of a correction in the currency.” Thus, the hryvnia is likely “to weaken further over the course of the year,” but Ukrainian authorities are likely to defend the Ukrainian currency’s strength and avoid a sharp drop in the exchange rate.

Ironically, it is the “Faustian” deal made with Moscow that averted the risk of default or devaluation – at least until the March 2015 presidential elections, provided that there is no falling out between Russia and Ukraine before then. Regardless, the political leadership of Ukraine may not last until the scheduled elections. On January 28, Prime Minister Nikolay Azarov offered his resignation to “create more opportunities for social and political compromise for a peaceful settlement of the conflict,” while the Ukrainian parliament repealed the anti-protest laws.

In fact, on January 26, President Yanukovich offered the PM post as well as a deputy PM post to opposition leaders who refused to take the posts to push for more concessions from the government. Although the protests started as pro-European demonstrations aiming to force President Yanukovich to sign the agreement with the EU, “protesters now want nothing less than the resignation of Ukraine’s president.

As the political uncertainty threatens to escalate into further violence in Ukraine, the future of the country depends on the capability of political actors to reach an agreement that would also be acceptable to the majority of protesters.

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Categories: Europe, Politics

Author:Ekin Ozbakkaloglu

Ekin Ozbakkaloglu holds an MA in Russian, Eurasian and East European Studies from Georgetown University and a BA in International Relations from Galatasaray University in Istanbul, Turkey. Her main fields of interest are politics and security in Eurasia, especially in Turkey and the South Caucasus, but her work also focuses on peace and conflict studies, humanitarian affairs, and the European Union. Since November 2013, she is working with the European Stability Initiative’s Istanbul office. She has formerly worked at the Caucasian Institute for Economic and Social Research based in Tbilisi/Georgia, and interned with the Future of Peace Operations program of the Stimson Center in Washington DC and the Georgian Foundation for Strategic and International Studies in Tbilisi/Georgia.

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