Steel and chemical factories, once the muscle of Ukraine’s economy, are dismissing thousands of workers. Cities have had days without heat or water because they cannot pay their bills, and Kiev’s subway service is being threatened. Lines are sprouting at banks, the currency is wilting and even a government default seems possible.As the article makes clear, financial disaster in the Ukraine, a large land mass of almost 50 million people strategically located on Russia's doorstep, would not be good for Western democracy, capitalism or interests. If the Ukrainian government collapses under the pressure of financial turmoil, there is little doubt that Russia would seek to meddle in Ukraine's domestic politics, expand and entrench its influence and seek to move Ukraine away from the goals of the 2004 Orange Revolution. Free-market capitalism has taken a beating in the country over the past year or so and Russia would like to continue to whither its support. It would also likely step up to aid Ukraine with its debt issues.
Ukraine, once considered a worldwide symbol of an emerging, free-market democracy that had cast off authoritarianism, is teetering. And its predicament poses a real threat for other European economies and former Soviet republics.
The sudden, violent protests that have erupted elsewhere in Eastern Europe seem imminent here now, too. Across Kiev last week, people spoke of rising anger about the crisis and resentment toward a government that they said was more preoccupied with squabbling than with rallying the country.
In February, the International Monetary Fund refused to release the next installment of a $16.4 billion rescue loan to Ukraine because the government would not adhere to an earlier agreement to pare its budget.Europe is failing to step up to offer Ukraine and other Eastern European countries a helping hand. Let us hope that the IMF and EU can put something together relatively soon to at least keep the Ukrainian economy afloat.
Around the same time, Ukraine’s finance minister resigned, saying that the job had been “hostage to politics.”
On Friday, the monetary fund projected that Ukraine’s economy would shrink by 6 percent this year, and said that it was continuing to work with the government to find a way to disburse the rest of the rescue loan.