Last week, Ukrainian President Petro Poroshenko visited Washington, determined to put a new, more confident face on his beleaguered country. He made an emotional speech at both houses of the U.S. Congress and met with President Barack Obama. In the end, he left with neither arms nor serious financial aid. Little wonder, then, that back home, Kievans are frustrated and anxious. Facing increasing economic hardship, they have little hope that things will get better.
Things couldn’t get much worse. Ninety-three percent of Ukrainians say that the economy is in bad shape, and they are right. The IMF forecasts a 15 to 20 percent decline in Ukraine’s GDP this year, and Kiev may need an additional $19 billion from the fund just to keep the government afloat. Meanwhile, the hryvnia is in free fall. The devaluation, and a run on deposits (Ukrainians have withdrawn around 101 billion hryvnia since the beginning of the year), recently led to the collapse of 17 of Ukraine’s 180 banks. Fifteen more are close to default.
Alarmingly for average Ukrainians, electricity prices are expected to increase by 10 to 40 percent over the next year and gas for heat by 50 percent. As winter approaches, Kiev is preparing to take extreme steps to counter the effects of the ongoing Russian gas embargo. It has already started importing coal from South Africa (production at many of the country’s mines has been disrupted by the conflict in the east) and turning off electricity twice a day to conserve resources. Hot water, likewise, has been deemed a luxury; the capital city has been without it since July. Local TV stations regularly advertise burzhuikas, primitive stoves that run on wood, and call on people to install water and gas meters in order to save energy. Older people are stocking up on candles, batteries, and flashlights.
In Kiev, where streets were routinely deadlocked before this year’s protests, cars are now few and far between as gasoline prices continue to skyrocket. (They’ve gone up by 50 percent since the beginning of the year.) Although pedestrians may rejoice, the empty roads are a sad reminder of how far the country has fallen. After years of increased level of consumption financed by credit, consumers these days buy only cheaper items, such as local vegetables or Belarusian dairy products. Local shops have even stopped stocking pricy meats and fish for lack of demand. Ukrainians are once again relying on home-grown vegetables, and, last week, a local TV channel launched a new cooking show to teach people how to create low-budget meals.
The government is in dire straits as well. Public-sector salaries have been slashed: people with five years of experience may earn less than $90 a month. To put this in perspective, the monthly utility bill for a two-room apartment in Kiev is about $45. Because it is expensive and cumbersome to fire people, employers simply require employees to take unpaid leave but still show up to work. And even in spite of such practices, unemployment is on the rise, recently topping 10 percent.
Ukraine’s security is another sore spot: some in the West are predicting a disintegration of law and order inside the country thanks to the loss of trust in law enforcement agencies following the Euromaidan protests. In combination with an abundance of weapons, this may lead to the radicalization of political disputes. Ukraine’s external security, of course, is in even worse shape. In late August, pro-Russian forces easily defeated the disorganized Ukraine army at Ilovaisk, devastating several volunteer battalions. The lack of coordination and the absence of reliable and capable military units raises the question of whether the Ukrainian army could make good use of modern weapons even if the West decided to provide them.
Although anger at the presence of Russian troops inside Ukraine led to a renewed sense of patriotism among the Ukrainian population earlier this summer, economic and social realities are starting to bite. The government’s failure to communicate about why people are suffering or to address lingering questions about the persistence of corruption at senior levels of the military has fueled mistrust, as did the special status law granting Donbas, one of the disputed regions, self-government as part of the September 5 Minsk peace agreement, which Poroshenko pushed through parliament -- some argue in violation of the constitution -- by a secret vote.
Further, the recent Minsk cease-fire agreement revealed to Ukrainians just how little power their government has in the east. And the truce is a shaky one; any one of the three groups of rebel fighters -- self-organized locals, battalions of Russian mercenaries recruited through Russian officers’ unions, and Russian troops -- could undo the peace at any time. Many rebels would like to see more direct Russian engagement, believing that the territory currently controlled by separatists is not sufficient to establish a Transnistria-type semiautonomous frozen conflict zone, particularly without Mariupol, the key port city on the Azov Sea.
Although 73 percent of Ukrainians consider peace a key priority, 57 percent support the cessation of Kiev’s antiterrorist operation against the rebels because of the growing casualties. Indeed, there is little agreement among Ukrainians about how peace can be achieved. Many still believe that peace means military victory and compromise equals capitulation. Others believe that leaving the Donbas behind is necessary to move forward as a democratic, Western-looking, liberal nation. Even if the cease-fire holds, this split is unlikely to disappear. Ukraine may end up with a highly divided parliament after the upcoming October 26 elections, which will only further weaken the central government.
It’s time for the West to stop expecting Ukrainians to save the day all by themselves. But what can it do? For those who thought that the EU Association Agreement would be a panacea, an up-to-date estimate from the Ukrainian presidential administration suggests that trade liberalization would lead only to 0.61 percent, 0.62 percent, and 0.64 percent GDP growth over the next three years. And even trade liberalization with the EU is a distant hope: on September 12, Ukraine and the EU decided to suspend the trade part of the agreement until December 31, 2015. In part, the decision was made under Russian pressure, but holding off also means that much-needed customs duties on European products will continue to flow into Ukrainian state coffers.
Ukraine needs more than the current level of Western assistance. But the Ukrainian government also needs to pull its weight, promising (and delivering) transparency. Together with Ukrainian civil society groups, foreign governments and NGOs should also give closer scrutiny to the situation on the ground, doing due diligence on whom it is funding, keeping watch on government conduct, and pushing for economic reform are necessary. But Kiev also deserves a little credit. It faced a hard choice after Ilovaisk: either wage an all-out war with Russia or compromise. It chose compromise as the only viable option, even though it was a hard political sell and even though parliamentary elections loom. At the same time, Kiev and its supporters need to realize that, in the absence of civil dialogue, orders from the top and resolutions from closed-door sessions in parliament will make the Poroshenko administration increasingly look like the Yanukovych one -- perhaps with similar results.