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Ukraine in 2016: What will the year of “a monkey with a hand grenade” bring?

Experts forecast that in 2016 Ukrainians will get even poorer because of falling UAH and growing prices. It was hardly a surprise to them...

At the beginning of the year, the General Staff of the Ukrainian Army sent more people to the “ATO zone” – that is, they in the Ukrainian army are not going to fulfill the Minsk agreements. During the previous, sixth, draft, they recruited just 60% of the people they planned to recruit and only 8.5% of them were volunteers. So, we wonder who will this time be ready to risk his life for the welfare of Poroshenko and Yatsenyuk. Last year, 26,800 men in Ukraine evaded draft, while 30% of the draftees deserted.

The Ukrainians are already tired of cursing Yatsenyuk and his “pro-European” Cabinet. All those who can see that no reforms are being carried out, that corruption is growing, that living standard is falling and that there is no chance for improvement. Fewer and fewer people believe that European integration will give something. Today, only 35% of the Ukrainians want their country to join the EU.

Director of the Kiev-based Institute of Political Analysis and International Research Sergey Tolstov says that the EU has never given Ukraine any hopes for its membership.

Despite this, Petro Poroshenko keeps promising that in 2016 Ukraine will have a visa-free regime with the EU. Experts doubt this. Director of the Ukrainian Institute for Analysis and Management of Policy Ruslan Bortnik expects this to happen no earlier than 2017. “The EU is expected to consider this in May-June 2016. So, this may become a reality in 2017 at earliest,” the expert says.

But the Ukrainian leaders keep making fools of their voters. And nobody is asking: why do we need a visa-free regime? Even if the EU and its Schengen Area are still existent in one year, we doubt that the Ukrainians will be able to do there.

President of the Ukrainian Analytical center Alexander Okhrimenko warns that once Ukraine gets a visa-free regime, as many as 5,000,000-7,000,000 Ukrainians will emigrate to Europe. As regards those wishing just to travel in Europe, they will have to show the same package of documents on the border and to prove that they are not terrorists. Besides, they will not be able to stay there for more than 90 days within 6 months.

With Ukraine actively breaking its economic ties with Russia, in some 2-3 years it will face the shutdown of almost all of its machine building, chemical, metallurgical and food companies. According to strategic planning manager from UniCredit Bank Yehor Perelyhin, the Ukrainian leaders rely mostly on agro-industrial sector, but he doubts that one sector can ensure economic growth in Ukraine. “In 2016 GDP will grow by just 0.7-1.4% against planned 2% growth,” the expert says.

“There are different development scenarios. According to the basic scenario, we can expect an economic growth of 1-2% after the 20% drop in 2014-2015. Any jump in prices is followed by relative calmness as usually people run short of money. So, if Ukraine’s National Bank conducts a normal policy, in 2016 inflation may go down to 15-20%,” says Oleh Ustenko from the international Blazer Foundation.

Unemployment rate will stay high. According to ILO, it will be 11%, but with short-time weeks and forced leaves considered, unemployment may be twice higher.

In 2016, UAH rate is expected to be 24.1-24.4 per USD. But former Economy Minister Viktor Suslov believes that it will be at least 30 UAH per 1 USD. “Ukraine is facing a default. And if the IMF program is stopped, the rate may jump to 40 UAH per 1 USD,” Suslov says.

His colleague from the Razumkov Center Vasyl Yurchyshyn expects a 28-29 UAH/1 USD rate.

Both economists do not agree with official inflation forecast of 12% and expect prices to grow by 29.2%. Tariffs will grow by 20%. According to Okhrimenko, the average salary in Ukraine is $190 against $407 in 2013. This is almost the same as in Ghana and Senegal.

“For Ukraine, this year will be the year of a monkey with a hand grenade. Corruption is thriving. Today it is even higher than under Yanukovych,” says Okhrimenko.

According to Head of Europe Without Barriers Iryna Sushko, if in Jan the Ukrainian authorities fail to show that the anti-corruption bureau they set up in Mar 2015 is efficient, they will hardly get a visa-free regime with Europe this year. “Strangely, the Europeans are worried more about our bribers than about the armed conflict developing in the east of our country,” Sushko says.

In any case, Ukraine’s welfare depends on how it will implement the Minsk agreements. “There will be no big war as none of the parties wants it,” political analyst Andriy Zolotarev says.

Ruslan Vesnyanko, specially for EADaily

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