The news from Ukraine over the past few weeks has shocked and fascinated the world.  Protesters took to the streets in favor of closer economic integration with the EU via a trade deal, instead of with Russia in the form of financial bailouts. The protests and ensuing street conflicts led to 82 deaths, and, ultimately, to the ouster of President Viktor Yanukovych. 

The exact timeline of events is as yet still unclear, but Yanukovych seemingly fled Kiev and tried to leave the country after signing an EU-brokered deal with members of the opposition which would have permitted him to remain in power until elections were held. He is still on the run, and the interim government has issued warrants for his arrest on the grounds of mass murder. It has also asked the ICC to put him on trial.

In the meantime, the interim leadership of Parliament, which is led by Oleksandr Turchynov, the acting president and speaker of parliament, is working towards a political compromise. Thus far, they have announced that they plan on altering the Constitution so as to minimize the President’s power in favor of Parliament, and have called for presidential elections on May 25th. This is the same day as the EU elections, and is being interpreted as a symbol of the interim government’s desire for a closer relationship with Europe. 

 

The news from Ukraine over the past few weeks has shocked and fascinated the world.  Protesters took to the streets in favor of closer economic integration with the EU via a trade deal, instead of with Russia in the form of financial bailouts. The protests and ensuing street conflicts led to 82 deaths, and, ultimately, to the ouster of President Viktor Yanukovych. 

The exact timeline of events is as yet still unclear, but Yanukovych seemingly fled Kiev and tried to leave the country after signing an EU-brokered deal with members of the opposition which would have permitted him to remain in power until elections were held. He is still on the run, and the interim government has issued warrants for his arrest on the grounds of mass murder. It has also asked the ICC to put him on trial.

In the meantime, the interim leadership of Parliament, which is led by Oleksandr Turchynov, the acting president and speaker of parliament, is working towards a political compromise. Thus far, they have announced that they plan on altering the Constitution so as to minimize the President’s power in favor of Parliament, and have called for presidential elections on May 25th. This is the same day as the EU elections, and is being interpreted as a symbol of the interim government’s desire for a closer relationship with Europe. 

While the details are being worked out, it is critical, above all, that these important political steps be enabled by strong, transparent legal constructs and institutions, so that the nation can hold free and fair elections in May, and continue holding them in the future. Internationally monitored and recognized elections would help the country heal internally, since the nation suffers from deep ethno-religious and linguistic cleavages, and would hopefully calm the markets and enable economic growth. Various countries have already offered to send observer missions, as have the EU and the OSCE. 

Who will win the elections is far from clear. Vitali Klitschko, the opposition leader and heavy-weight boxing champion, and Mikhail Dobkin, the governor of Kharkiv in Eastern Ukraine are among those that have said that they plan on running. Controversial former Prime Minister Yulia Tymochenko has also hinted that she may run, but has not committed herself. Even more than who wins the elections, however, what is most important is that the Ukrainian people believe they are a legitimate expression of their will. Only in this way can the government concentrate on its many pressing issues.

This is especially true since Ukraine’s economic situation could ultimately prove more dangerous than its politics. The current economic outlook is bleak: per capita GDP has decreased in Ukraine over the past five years, the nation registered zero economic growth in 2013, the debt burden is equivalent to 38 percent of the country’s GDP, with much of it coming due soon, and there is widespread under-employment. The recent protests also shook the markets and decreased confidence further. 

Indeed, the country’s economic condition provided the original impetus for the protests. The protesters believe that the trade deal with the EU, and consequent greater integration, would enable greater economic success – as in the case of neighboring Poland – whereas deeper integration with Russia would uphold the status quo. At the same time, pulling Ukraine out of its economic morass will take more than a trade deal. Ukraine’s interim finance minister, Yuriy Kolobov, announced on February 23rd that the nation will need at least $35 billion in loans in 2014-2015 to avoid default. 

As it has with the political brokering, the EU would be smart to lead on helping Ukraine financially since, after Russia, they have the most to potentially lose from a Ukrainian economic collapse. The EU currently imports 70 percent of its oil and natural gas from Russia, through Ukraine. This is a critical energy supply for the EU and will make negotiating even more complicated because Russia has a history of threatening to cut off the supply. 

In addition to reopening trade negotiations with the EU, Ukraine is also asking for loans from Poland and the US.  The US has already stated that it will support an IMF bailout, and according to Christine Lagarde, the IMF is on “standby” to prepare the loan. This is a reversal of the IMF’s 2012 position, when it said that it would not provide further loans to Ukraine because of its energy subsidies, public deficit, and lack of banking regulation. The IMF’s strict terms likely contributed to Yanukovych turning instead to Russia, and the subsequent rejection of the trade deal. The IMF bailout will require austerity measures; it also remains to be seen if the political will and sense of urgency to implement them exists. 

Meanwhile, Russian leaders have said that they will not provide financial assistance until the political situation is clarified. They have voiced particular concerns about the Crimea and other Eastern parts of Ukraine which are heavily populated by Russian-speakers. Both the EU (via British Foreign Secretary William Hague) and the US (via national security advisor Susan Rice) have warned Russia against interfering.

Depending on what directions things take, this standoff could come to resemble the dangerous conflict over Georgia in 2008. Both American and European diplomacy is hard at work to avoid that outcome, and avert both economic and political crisis in Ukraine.