Ukraine may be offered a 'discount' of 25% off list prices from its sole supplier Russia's Gazprom and some additional loans up to $15 billion to extricate itself from the effects of a crippling drought and mismanagement that saw a dramatic reduction in Ukraine's grain harvests and exports. It's not clear how this 'discount' will be treated and repaid, in cash or in kind from future exports. Bloomberg suggests an announcement as early as tomorrow.
While the EU has properly said that it wouldn't negotiate on 'markdowns' to conditions for joining the European Union, it is also short-sighted not to realize what's at stake with Ukraine. It was the "Russian breadbasket" in the halcyon days of Communism. It could be a major exporter to the EU if development projects could be brought on stream, and Ukraine needs an energy import portfolio that contains more than one partner, which is today Russia.
It is unlikely that President Yanukovych can again turn his eyes to the formal EU entry process, as President Putin would be greatly distressed by any such move which would cause him to lose face. The protesters, so far, have shown much more substance and courage than our own cartoonish "Occupy Wall Street" protesters. But, economics more than politics will carry the day from here.
If the EU bureaucrats can muster up some creative alternatives to the full fledged, heavily administrative procedures for EU membership, there can be a real choice for the people of Ukraine to stand behind. The people in the street need some support from Brussels, Paris, Bonn, and Washington.
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