Thursday, December 12, 2013

A Quiet Crisis in Ukraine.

Recent developments in Ukraine have been reported as a situation where Ukrainian President Yanukovych is portrayed as 'negotiating' trade, aid and loan packages between the European Union and the Soviet Union for the benefit of his country. In truth, he doesn't have the power to negotiate anything with either side, and his status as a political lame duck makes his own political value to Russia precarious.

The Wharton School published a note from Sophia Opatska,CEO of the Lviv Business School in which she cites reports that the President has misappropriated more than $6.5 billion in recent official assistance flows for the benefit of his own family.  He has already treated himself as a satellite Russian oligarch, and the EU really had no choice but to say that it wouldn't negotiate terms of an EU entry with the Ukrainian President.

The Ukrainian people have a natural affinity for the more open economic systems of the European Union, but the bureaucratic requirements for a full entry are not just too costly, and they are really unwanted by the now badly beholden President Yanukovych.  The EU should find a way to trade more with Ukraine without the full rigmarole of official membership.

Further 'aid' from Russia will be too onerous and expensive, and any proceeds will do nothing for the people because of the corrupt nature of the government.  As Opatska writes in her note, "When it comes to corruption, the country ranks 144 out of 177 countries, tying with Nigeria, Iran and the Central African Republic."

While protests in the Ukraine have been ongoing since mid-November, they are attracting very little attention in the West because of the focus on the Middle East.  As important as we thought the Tienanmen Square protests in China were, what is going on in Ukraine is worthy of  equal attention, especially for Europeans who could see a potential economic good neighbor withered underfoot by Russia and a proxy government of Ukraine.   

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