Ukraine Waits for Solutions to Its Problems from Everyone but Itself

Saturday 1 November 2014

Ukraine Waits for Solutions to Its Problems from Everyone but Itself

Pyotr ISKENDEROV | 01.11.2014 | 13:53

At trilateral talks held in Brussels on October 30th, Russia, Ukraine and the European Commission reached an agreement on Russian gas supplies to Ukraine and gas transit to Europe. It is a temporary solution to this problem, since the agreement only covers the next five months – until the end of March 2015. Shortly before this, European Commission President Jose Manuel Barroso made it clear that emergency lending to Ukraine, including for the payment of its Russian gas debts, would not exceed €790 million (Ukraine is asking for €2 billion). Money for Ukraine can only be taken out of the pockets of European taxpayers.

But European taxpayers are already disgruntled.“I get the feeling that Ukraine is waiting for solutions to its problems from everyone but itself,” declared Slovak Prime Minister Robert Fico during talks with German Chancellor Angela Merkel. “I would like to see what measures Ukraine itself is undertaking to solve its own problems,” he added. Fico recalled that when Slovakia gained independence 21 years ago, everyone in the republic had to start afresh, the population lived through extremely difficult reforms, and nobody from abroad paid off a single one of Bratislava’s debts free of charge.

Everyone understands that, one way or another, the European Union will have to take on the cost of Ukraine.

Ukraine’s insolvency, coupled with its government’s habit of tapping into transit gas flows, are a dangerous mix that will primarily affect Europeans counting on stable Russian gas supplies.

It is not surprising that the provision of aid to Ukraine became a key issue during recent intense consultations.

There is no doubt that the €790 million Barroso has promised a collapsing Ukraine is not much. It is true that Barroso is Portuguese and is perhaps intending to use the European Commission’s money to help Portuguese banks led by Banco Espírito Santo that are currently experiencing hard times. The Bank of Portugal has already been given a rescue package of €4.4 billion and is going to be given more still.

Brusselsalso has a much more ambitious financial instrument at its disposal by way of the European Stability Mechanism (ESM), which, when it was set up, had a capital of €500 billion and has already given €100 billion to bail out Spanish banks and €9 billion to stabilise Cyprus’ financial system. In addition, the ESM is actively issuing bonds. A new issue of these securities totalling €4 billion was recently placed on the market with a maturity of two years. When it comes to Ukraine, however, the ESM is not promising to help.

So who exactly is going to end up paying for the geopolitical experiments of Washington and Brussels in the former Soviet Union? According to The Wall Street Journal, it is going to be the governments of EU member states. The newspaper is hoping that the current situation might create pressure on EU member states to intervene and close the gap.

Translating the diplomatic language, this means that the EU’s governing bodies will expect European capitals to shoulder half of the aid to Kiev, if not more.

You will recall that just one of Ukraine’s gas debts to Gazprom is $5.3 billion, and Kiev still needs to prepay for future supplies. Russian Energy Minister Alexander Novak sees “guarantees from first-class European banks, bridge loans (short-term loans to cover the current payments of a troubled borrower - P.I.), funds from the European Bank for Reconstruction and Development and the European Commission” as possible sources of funding for Ukraine...

Brusselsis looking at it differently, however; it prefers to shift Ukraine’s gas debts onto the shoulders of ordinary Europeans.

The financial situation in the EU at present is not the best. The European Commission still does not have a long-term anti-crisis strategy and is lurching from one anti-crisis programme to another – from the establishment of stabilisation funds to the direct purchase of debt obligations. Under the circumstances, it would be fitting for Europeans to ask their own governments as much as the European Commission why they are kindling the flames of the Ukrainian conflict, why they are closing their eyes to Kiev’s militant tendencies, why they unleashed a sanctions war against Russia and why, after all that, they are complaining about the financial problems? The answer lies in geopolitics. As does, by the way, the creation of the very same eurozone that is currently being forced to save Kiev with money.

The Ukrainian crisis that has been going on for nearly a year and the thousands of people who have paid for it with their lives are evidence of what happens when politics is deprived of common sense. Perhaps the approaching winter will force Europeans to better understand the simple truth.

“Europe needs to take responsibility. Unfortunately, the European Union may not have enough political will to cope with the historical challenge that has arisen before it,” writes the French newspaper Le Monde. The European Union is hurrying to strengthen its shaky economic position, and now all it needs to do is convince the EU taxpayers to put up with just a little bit more for the sake of Ukraine.