Putin is the key to Ukraine success with an IMF loan

  • Thursday, June 11, 2015 8:01pm
  • Opinion

WASHINGTON (AP) — So far, the International Monetary Fund is giving Ukraine a passing grade on early efforts at political and economic reforms as it spends a first installment from a four-year, $17.5 billion loan program.

But in the end, Russian President Vladimir Putin holds the trump cards in Ukraine’s drive to extract itself from Moscow’s orbit.

Until Wednesday, there had been a lull in the war between Ukrainian forces and Moscow-backed Russian separatists in the key industrial and coal-mining region in the east of Ukraine.

The Putin-friendly separatists and Ukrainian regular forces again engaged in heavy fighting on Wednesday, a spike in violence that tapered again on Thursday.

It appeared, as fighting diminished at the end of the week, that Putin was not ready yet to play his trump.

So far more than 6,400 people have died in the on-again-off-again battles that have severely damaged the Ukraine economy and disrupted critical trade with Moscow.

Andrew Weiss of the Carnegie Endowment says the IMF is in “a race against time.”

“The fragility of the Ukrainian state is such that if Moscow significantly ratchets up the pressure it may be very hard for the (Ukrainian President Petro) Poroshenko to deliver on ambitions for significant economic reform and changes in the political system,” Weiss said. “If you take that pressure alongside of the bad habits and business-as-usual conduct of the Ukrainian elite who have led the country for most of the past 25 years, the prospects for the reformist movement in Ukraine look quite challenging.”

The IMF sees things differently.

At the end of a May 12-29 assessment visit, IMF Ukraine mission chief Nikolay Gueorguiev said goals set for Ukraine in March had been met and “all structural benchmarks due in the spring are on course to be met, albeit some with a delay.” The IMF would not be specific about goals.

Even so, Gueorguiev issued a mixed first review of Ukraine’s progress in using the fund’s first $5 billion tranche of the total four-year loan of $17.5 billion to reverse the former Soviet republic’s slide into bankruptcy and to root out endemic corruption.

The bad news: The IMF projected a 9 percent contraction in the already faltering Ukrainian economy this year, with inflation topping 46 percent.

The good news: The shrinking GDP forecast actually suggested signs of stabilization, given that it includes a horrendous 17.6 percent contraction in the first quarter of 2015. And, said Gueorguiev, the Kiev government’s “commitment to the reform program remains strong.”

The IMF put Ukraine under what is known as an Extended Fund Facility, the $17.5 billion loan program, after earlier and more limited IMF assistance programs failed under the leadership of ousted pro-Russian President Victor Yanukovych. He was forced from office after months of protests by Ukrainian activists disgusted with the corruption and his having reneged on promises of closer ties to the European Union. He fled to Moscow, and new elections put Petro Poroshenko in the president’s office.

Ukraine had been under Moscow’s thumb because of a deep history of trade links during Soviet times. And the bulk of its energy supplies came from Russia. Now, the country is struggling to build a system of other suppliers.

What’s more, Putin took revenge for Yanukovych’s ouster by seizing the strategically important Crimean peninsula. He also began — the United States and other Western allies claim — sending arms and troops to mainly Russian-speaking separatists in the eastern portion of Ukraine. Putin denies Russian involvement in the fighting.

At stake for the 188 member-nation IMF is repayment of the $17.5 billion loan. The government must show it is meeting goals for the next tranche of $1.7 billion.

The big and risky IMF four-year loan program was heavily front-loaded with a $5 billion disbursement shortly after the program was announced in March.

“In recent months, signs that economic stability is gradually taking hold are steadily emerging,” Gueorguiev said in his statement about the review.

And the forecast for a big jump in inflation, he said, was mainly the result of one-time currency devaluation and a big boost in energy prices as the government cut back on subsidies for oil and gas.

Another big snag that could upend the IMF program — beyond a resumption of all-out war — is the expectation that Kiev will be able to get out from under or reschedule $15.3 billion indebtedness and interest payments.

Negotiations with debt-holders is said to be going badly and could snarl progress in the IMF loan program.

Putin won’t be on the guest list when President Barack Obama and other world leaders assemble in Germany this weekend. Russia was kicked out of the group of powerful countries, then known as the G-8 (now the G-7) because of its actions in Ukraine.

It appears unlikely, however, that the U.S. and Europe will toughen sanctions on Moscow without a major increase in Russian aggression. European nations with strong financial ties with Russia fear the sanctions could damage their own economies.

More in Opinion

A roll of “I Voted” stickers await voters on Election Day in Alaska. Voters overwhelmingly rejected the prospect of a state constitutional convention. (Ben Hohenstatt / Juneau Empire File)
Opinion: Election winners, losers and poor losers

Tshibaka and Palin misread Alaskans by thinking Trump’s endorsement all but guaranteed they’d win.

This 1981 photo provided by the Centers for Disease Control and Prevention (CDC) shows an electron micrograph of Respiratory Syncytial Virus, also known as RSV. Children’s hospitals in parts of the country are seeing a distressing surge in RSV, a common respiratory illness that can cause severe breathing problems for babies. Cases fell dramatically two years ago as the pandemic shut down schools, day cares and businesses. Then, with restrictions easing, the summer of 2021 brought an alarming increase in what is normally a fall and winter virus. (CDC via AP)
Alaska Voices: What Alaskans need to know about RSV

By learning more about respiratory illnesses and taking helpful actions, we can all take steps to improve the situation

Homer Foundation
Point of View: Multiplying the power of every local dollar given

Each community foundation is a public charity that focuses on supporting a geographic area by pooling donations to meet community needs

The Homer Public Library as seen on Aug. 18, 2021, in Homer, Alaska. (File photo by Sarah Knapp/Homer News)
Point of View: Banning books corrodes diversity and inclusion in our community

Recently, a community member requested that a long list of books be removed from the children’s collection

Peninsula Oilers fans display encouragin signs for Oilers’ pitcher Bryan Woo, Friday, June 28, 2019, at Coral Seymour Memorial Park in Kenai. (Photo by Joey Klecka/Peninsula Clarion)
Gavel (Courtesy photo)
Opinion: Judging judges — balancing the judicial selection process

Alaska’s method of selecting judges can be and should be improved.

Sarah Palin speaks at a July 11 Save America Rally featuring former President Donald Trump at Alaska Airlines Center in Anchorage. (Mark Sabbatini / Juneau Empire File)
Opinion: The realities of Palin’s political demise

Palin wouldn’t be running for the seat if Rep. Don Young was still alive

Former Democratic state Rep. Beth Kerttula holds up a sign reading “Vote No Con Con,” during a recent rally at the Dimond Courthouse Plaza in Juneau. Ben Hohenstatt / Juneau Empire File)
Opinion: What can a liberal and conservative agree on? Voting against a constitutional convention

“We disagree on many issues. But we… urge Alaskans to vote against Proposition 1.”

A “Vote Here” sign is seen at the City of Kenai building on Monday, Sept. 21, 2020, in Kenai, Alaska. (Clarion file)
Down to the wire: Be prepared before you vote

Remember your voice counts and all votes matter

Soldotna City Council member Justin Ruffridge. (Courtesy photo)
Voices of the Peninsula: We must refuse to reward ugly political tactics

With our vote we have to show that extremism and dishonesty do not win the day

U.S. Sen. Lisa Murkowski attends a joint Soldotna and Kenai Chamber of Commerce Luncheon on Wednesday, May 5, 2021 in Kenai, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
U.S. Sen. Lisa Murkowski attends a joint Soldotna and Kenai Chamber of Commerce Luncheon on Wednesday, May 5, 2021 in Kenai, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Voices of the Peninsula: Lisa Murkowski represents everyday Alaskans

While working for Lisa, I witnessed her considerable command of the issues