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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

A signal?

US Treasury Secretary advised Ukraine to seek assistance from the IMF
25 February, 2014 - 10:43

Ukraine has not a strong anarchist movement. However, its small or even tiny cells that have had little impact on the current events are receiving daily evidence of the validity of their ideas and, conversely, the absence of strong constructive ideas within the central government, which is facing unprecedented challenges and problems. It seems that the country is now threatened with not only split, but even disintegration. This influences both the West’s attitude to Ukraine and Russia’s stance.

“We will certainly keep cooperating with Ukrainian partners across the board, as we have agreed,” Russian Prime Minister Dmitry Medvedev said on February 20. “We strive to do our best to fulfill the promises that were given to them.” “At the same time, it requires,” the head of the Russian government continued, “our partners themselves to be in good shape and the current government of Ukraine to be legitimate and effective, not a doormat for everyone to clean their feet.” “Only then can we develop a full economic cooperation,” concluded Medvedev.

Russian President Vladimir Putin clearly promised on February 19 to fulfill all agreements with Ukraine, including, apparently, the 15 billion dollars loan facility. However, the situation in Ukraine is changing very rapidly, and it seems Medvedev decided to slightly correct his generous patron’s stance and back off some. It was no accident that the Irish Stock Exchange had announced that the listing of the additional issue of Ukraine’s two-year eurobonds, amounting to 1.9 billion dollars, which was held on February 17, was made in error.

So, our lender whose tempting proposal made Ukraine to suddenly turn away from Europe has already pulled a fast one on our country. How are we to survive under conditions of acute social and political conflict and the continued downturn in the economy? The fall in industrial production, according to the State Statistics Service, was 5 percent year-on-year in January 2014. Money is now required not for development, but for basic survival.

But it seems that we cannot expect them directly from the EU or the US. US Treasury Secretary Jacob Lew advised Ukraine on February 20 to turn to the IMF. “At the core they have an economic crisis and they are going to need to deal with it,” the minister said at a conference hosted by the World Affairs Council in San Francisco. According to Lew, “And the mechanism that is best for Ukraine to deal with it would be to come to the IMF and have a package where they put in place economic reforms where they get the support that they need in exchange for the steps to fix their economy.”

In his comment for The Day, political scientist Mykhailo Nepran called Lew’s statement a very good sign for Ukraine. “The US is the largest contributor to the IMF. Their voice in decision-making of this organization is effectively decisive,” the expert said. “If the US Treasury recommends Ukraine to turn to the Fund, it is a direct signal: guys, come and you will have a great chance (I am not talking about guarantees) to get assistance. Of course there will be strings attached, it is clear. Reforms in Ukraine are not just overdue, but very much so. It is doubtful that the loan will be given to the current government, given its reputation and its caretaker status, but the next government and its application will be welcomed by the IMF. This is a direct offer of financial assistance.”

“However, economic reform is a quite painful surgery. No one wants to talk about it now,” the expert continued. “Euromaidan protesters as well as their opponents are equally unwilling, because it would require raising utilities tariffs to bring them into line with costs and doing other things that may affect the interests of the masses. This should have been done 10-15 years ago, but our officials have been always postponing hard decisions, wanting to let someone else to take responsibility for them. I do not think these measures can bring to life a new protest, but politicians will need to face the people and explain that we are living beyond our means. I repeat, this is a very positive signal for Ukraine.”

By Vitalii KNIAZHANSKY, The Day