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     Feb 24, '14


SPENGLER
Careful what you wish for in Ukraine
By Spengler

Western governments are jubilant over the fall of Ukrainian President Viktor Yanukovich, a Russian ally. They may be underestimating Vladimir Putin: Russia has the option to hasten Ukraine's slide into chaos and wait until the hapless European Union acquiesces to - if not begs for - Russian intervention.

That leaves the West with a limited number of choices. The first is to do nothing and watch the country spiral into chaos, with Russia as the eventual beneficiary. The second is to dig deep into its


pockets and find US$20 billion or more to buy near-term popularity for a pro-Western government - an unlikely outcome. The third, and the most realistic, is to steer Ukraine towards a constitutional referendum including the option of partition.

Judging from Russian press coverage, Moscow already has washed its hands of the feckless Yanukovich. Russia Today whimsically observed on February 22 that Yanukovich lacked the sangfroid of Mikhail Saakashvili, the former president of Georgia and an ally of the West:
Yanukovich could also have dispersed the protesters and maintained public order in the country, whatever criticism it might have brought. This is how the then Georgian president, Mikhail Saakashvili, acted in 2007. He brutally suppressed a peaceful protest and called an early presidential election, which he won, instead of an early parliamentary election, which the opposition demanded and which his party could well have lost. Unlike the Georgian leader, Yanukovich hesitated even when the Ukrainian protest turned Kiev into a battlefield. [1]
Moscow has no need of allies with weak stomachs. But it will withdraw the offer of $15 billion worth of Ukrainian debt purchases and subsidies for natural gas exports to Ukraine and leave the nearly bankrupt country to the ministrations of the West. Careful what you wish for, Russia is telling the West.

Russian Finance Minister Anton Siluanov said that Ukraine should get money from the International Monetary Fund: "We consider that such a situation would meet the interests of Ukraine, would put the country on the path toward major structural reforms. We wish them success in this undertaking and in the rapid stabilization of the political and social situation."

Siluanov is being mischievous. Twice in the past six years, the IMF suspended promised loans to Ukraine after the country refused to cut salaries and pensions and raise energy prices. Russia had offered a loan without conditions; any money the West offers will require austerity measures that no Ukrainian government is capable of enforcing.

The fall of Yanukovich is an embarrassment to Russia, and a well-deserved one, but that does not leave Russia entirely without options. Russia most likely will adopt the same stance towards pro-European Union politicians that the Egyptian military and its Saudi backers took toward Egypt's the Muslim Brotherhood: let the opposition take the blame for economic and social chaos, and then move in when the country is on its knees. The Brotherhood ruled Egypt for a year, and then the food and fuel ran out, 30 million Egyptians, more than half the country's adult population, demonstrated to oust it. The military obliged in August 2013 and immediately obtained emergency loans from the Saudis.

The IMF meanwhile offered Egypt small amounts of money in return for big cuts in government subsidies and got nowhere. It is possible, to be sure, that the European Union and Washington will cough up $15 billion for Ukraine, but this seems most unlikely given aversion of all their governments to further bailouts. As Walter Russell Mead put it, the West brought a baguette to a knife fight; the problem is that even the baguette comes with IMF conditionality. [2]

If the European Union had a vibrant economy, matters might be different. But Europe is barely showing vital signs after the Great Crash of 2008 and the Great European Recession of 2011-2012. Unemployment is stuck above 12%, and industrial production remains 15% below the pre-2008 peak.

Euro Area Unemployment Rate


Europe Industrial Production Index

Source: European Central Bank

Europeans, moreover, are of two minds about prospective Ukrainian membership in the EU. Some European countries, notably the UK, already are fending off unwanted Eastern European immigrants from Poland, Romania and Bulgaria. Germany's Foreign Minister Joschka Fischer came under fire in 2005 after critics claimed that his relaxation of visa requirements allowed a million Ukrainians into Germany, including large numbers of prostitutes and criminals. [3] With some justification, the Europeans suspect that the main reason that Ukrainians want EU membership is that they want to leave their country as quickly as possible.

In the industrialized, Russian-speaking eastern half of the country, EU membership is viewed skeptically. In most of Eastern Europe, Soviet-era heavy industry was closed but not replaced, leading to chronic unemployment. Ukraine's heavy industry may not be the world's most competitive, but it has steady business in Russia. The Ukraine's agricultural West never derived much economic benefit from the economic ties to Russia and understandably feels no loyalty to its former imperial occupier.

When the Europeans sup with Ukrainian leaders, they bring a long spoon. There are no knights in shining armor in Ukrainian politics. Former prime minister Yulia Tymoshenko, now free after being jailed when she lost by 2010 election to Yanukovych, is a problematic personality, to say the least. During the mid-1990s, in the Wild East free-for-all following the collapse of the Soviet Union, she became one of Ukraine's richest oligarchs.

The country also is a demographic deader. At its present fertility rate (1.3 children per female), its 47 million people will shrink to only 15 million by the end of the century. There are at present 11 million Ukrainian women aged 15 to 49 (although a very large number are working abroad); by the end of the century this will fall to just 2.8 million. There were 52 million Ukrainian citizens when Communism fell in 1989. Its GDP at about $157 billion is a fifth of Turkey's and half of Switzerland's.

Ukraine is barely a country, rather an amalgam of provinces left over from failed empires - Russian, Austrian, Lithuanian, Ottoman - cobbled together into a Soviet "republic" and cast adrift after the collapse of Communism. Lviv (Lemberg) was a German-speaking city, part of Austrian Silesia; before World War II a quarter of its people were Jews. Jews were two-fifths of the population of Odessa. A fifth of the population, mainly in the east, are ethnic Russians; a tenth, mainly in the west, are Uniate Catholics, who have a special place in Catholic policy since the papacy of John Paul II.

Ukrainian nationality is as dubious as Byelorussian nationality: neither of them had a dictionary of their language until 1918.

US Assistant Secretary of State Victoria Nuland, whose "F*** the Europeans" remark on an outed tape recording earned her 15 minutes of fame recently, ought to be fired for being plain dumb. Europe will have to pay a good part of the bill for Ukraine's problems one way or the other. The United States Congress won't offer $15 billion to support Ukraine's foreign debt as Russia did last month.

Russia will not abandon Russian-speakers cut off from the Motherland by the collapse of the Soviet Union. One may assume that when local officials in Eastern Ukraine urge the local population to form militias, they may count on some professional assistance. [4] Time is on the side of whomever has the highest pain tolerance, and that is Russia, not the West.

Notes:
1. Ukraine downfall: Lack of leadership to blame?, Russia Today, February 22, 2014.
2. The Great Ukrainian Knife Fight, December 3, 2013.
3. German visa scandal rattles foreign minister, The Guardian, February 15, 2005.
4. Ukraine's Southeast seeks to restore constitutional order, thousands gather in Kharkov, Russia Today, February 22, 2014.

(Some parts of this essay were published previously at PJ Media.)

Spengler is channeled by David P Goldman. He is Senior Fellow at the London Center for Policy Research and Associate Fellow at the Middle East Forum. His book How Civilizations Die (and why Islam is Dying, Too) was published by Regnery Press in September 2011. A volume of his essays on culture, religion and economics, It's Not the End of the World - It's Just the End of You, also appeared that fall, from Van Praag Press.

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