Smell of winter and war: what the “reforms” in Ukraine are leading to

One of the slogans of the Revolution of Dignity was very laconic - "Ukraine is Europe." This popular-print laconism borders on primitivism, but, on the other hand, it implies some secret sense to whoever wants to see it. As a result, more and more people in Ukraine are beginning to think that if they are Europe, they should enjoy European salaries and benefits and free travel in Europe and should be given lots of loans so as to turn into Europe as quickly as possible.

National policy “I want it! Give it to me!”

The infantile principle that “everybody owes us something just because we are revolutionaries” constitutes the ideological basis of the Ukrainian reforms. This principle is not good for creating (or at least preserving) something but is good for avoiding responsibility and saying, “we can’t do anything because nobody wants to help us!” This infantilism is good for kids playing in a sandpit but not for adults building a state. This is simply funny to hear such words from Ukrainian statesmen. But for the state they are building this is not as funny as it is dangerous.

While speaking at the Yalta European Strategy annual meeting last Friday in Kiev, Ukraine’s Finance Minister Natalie Ann Jaresko said that financial aid from the United States and the European Union was not enough for Ukraine. "We do not have enough money to go further. It is enough for stabilization, but we need to invest in the economy, we need more support," Jaresko said. She added that Ukraine should borrow money not only from the IMF, but also from the EBRD, the EIV, the Export-Import Bank and other big international donors.

Of course, it is good that Jaresko is aware of so many donors but she must also be aware that any debt must be repaid. And, according to the National Bank of Ukraine, the country’s national debt is steadily growing and may amount to 95% of the GDP by the end of this year. So, how are they going to repay it? Especially now that Ukraine’s private creditors, who hold $10bn worth of Eurobonds in the country, have turned out to be unaware of their own consent to write off 20% of the debt – something Jaresko and Prime Minister Arseniy Yatsenyuk were boasting of a week ago. Quite an awkward situation, isn’t it?

More and more people displeased

This is why, perhaps, Petro Poroshenko was so critical of his government in his interview to the National Television Company of Ukraine. Even more, a few days before, he criticized his own self in the parliament. Quite a brave thing to do!

But the most interesting part of this story is that lots of people in Ukraine share Poroshenko’s opinion. A survey held by the Democratic Initiatives Foundation and the Razumkov Center this summer has shown that almost 48% of the Ukrainians see no progress in the ongoing reforms. As many as 25% say that the authorities have done just 10% of what they promised to do, and only 0.6% believe that they have kept more than half of their promises. Only 30% are optimistic about the outcome of the reforms, with almost as many being skeptical. As many as 51% of the Ukrainians believe that oligarchs constitute the key obstacle to the reforms. Some 39% say that the key obstacle is the President – against 37% regarding Poroshenko as the key driver of the reforms.

And this is not the only such poll. A survey by the Rating sociological group says that over 2/3 of the Ukrainians do not support Poroshenko, with 33% being very critical of him. 21% have shown a relatively positive attitude and only 3% have expressed full support of what Poroshenko’s is doing.

The rating of Yatsenyuk is even worse. As many as 52% are very critical of his activities, and only 10% approve of what he is doing.

After the September rise in food, alcohol and public service prices and just a 13.1% raise in the minimum salary (to 1,378 UAH), the Ukrainian government’s rating will certainly go even lower.

Yatsenyuk and his team have proved unable to solve urgent problems. Just remember the situation when Jaresko was forced to ask the G7 to give Ukraine money so it could buy Russian gas for winter.

Last week, Yatsenyuk said that Ukraine had 14.5bn c m of gas in stock, which was not enough for winter. It was then that Ukrtransgaz published a report saying that in Aug Ukraine bought from Slovakia almost 1bn c m of gas. According to Gazprom, if Ukraine continues storing just 53mn c m a day, by the winter it will have just 16.8bn c m in stock instead of necessary 19bn c m. This is why Jaresko was forced to appear in Ankara with that desperate request.

Luckily for Ukraine, Naftogaz has received from the EBRD and the IFC $500mn for buying more gas. On Sept 9, President of the National Bank of Ukraine Valeriya Hontareva said that the EBRD would lend Ukraine $300mn and the IFC would add $200mn.

A very wise way for a government of reformers to solve a problem, isn’t it?

By the way, the core of the Ukrainian Government, the parliamentary coalition, is also losing its popularity.

As many as 49% of the Ukrainians are critical of its work, with only 9% approving of it.

And what is next?

Sad as this may sound, the most probable way-out of the crisis Ukraine was put in some two years ago is war. In his time, Clausewitz said that “war is merely the continuation of policy by other means.”

In the next article, we will try to analyze why this scenario is the most likely for Ukraine.

Andrey Chesnokov, specially for EADaily