The European Union on March 5 announced an offer of 11 billion euros in financial assistance to Ukraine to help boost the country's impoverished economy. Although the money will be provided via series of loans and grants in future years, it represents a substantial level of assistance to Ukraine in its current political turmoil.
There are a variety of different opinions regarding the impact of these 11 billion euros. The Ukraine's interim government will feel more secure having these funds available – they send a message to the outside world that the EU and U.S. will not ignore Ukraine's problems. However, is this sum enough to stabilize the political situation in Ukraine and buy the support of its people?
Ukraine's political stability is determined by following factors:
One is Russia's attitude to Ukraine. After Viktor Yanukovych was forced to leave the country, Russia decided to mount a vigorous fightback on Ukraine, of which the Crimean independence declaration is a key part of the strategy. The EU's 11 billion euros will certainly lead to Russian countermeasures.
Another one is uncertainty over the EU's long term support to Ukraine. The president of Ukraine, Oleksandr Turchynov, has said that the Ukrainian deficit will reach 35 billion USD in the next two years. However, an EU official states that Ukraine’s current financing need is about 40 billion USD. From this perspective, the EU believes 11 billion euros will be enough to over the short-term deficit, and this money is related to IMF’s agreement.
What is behind the 11 billion euros?
After the return of Yulia Timoshenko, it seemed that Ukraine had a relatively clear political leadership and a clear election path, but in fact political conflict of interest between the various political factions continues.
The preference of the 60% of the population who are Russian in the Ukrainian presidential election is another uncertainty.
The EU sets preconditions on its support. It is requiring that the Ukraine carry out rapid political and economic reform, and the majority of the funds must be approved by the individual EU countries. One prerequisite of the approval is of course to ask Ukraine join the NATO as soon as possible.
Therefore, the 11 billion euros is unlikely to be enough to buy Ukraine's support; they seem more like a political gesture that will not live up to its promise. It is important that Ukraine understands and utilizes this signal, rather than accept it with blind optimism. The move has increased the complexity of Russia's attitude to Ukraine, but it is unlikely to shake Vladimir Putin's determination to fight back. As a basic principle, it is not going to be easy to deal with the situation with money alone, while disregarding Russia's attitude.
The article is edited and translated from 《110亿欧元难买乌克兰乐意》, source: CCTV news, staff writer: Shang Han