Ukrainian Land Forces Tank by military journalist Taras Gren MOD Ukraine

Ukraine: Limping Through the Crises

Despite the ongoing armed conflict with Russian-backed separatists, rampant corruption and a lackluster economy, there may be hope for Ukraine’s future in the form of its civil society. In this piece to mark Ukraine’s independence day, Eamon Driscoll examines the crises that have gripped Ukraine since its independence in 1991, and the obstacles facing a nation with the potential to become a prosperous European power. 

For an in-depth, bespoke briefing on this or any other geopolitical topic, consider Encylopedia Geopolitica’s intelligence consulting services.

When I had the great pleasure of living in Ukraine in 2012-13, my local friends in Odessa often told me that they had endured three crises since 1990. I understood these to be independence and the subsequent collapse of the economy from 1991-94, the Orange Revolution in 2004, and the global financial crisis starting in 2008. I was also told that there would be a fourth, which came much sooner than anyone had anticipated. In truth, Ukraine has never fully recovered from the effects of sudden liberation from the Soviet Union and its history since 1991 has been littered with corruption and suppression. In the country boasting the unhappy honor of the second-highest bribery rates in Europe after Moldova with 38% of households reporting a bribe paid, cynicism towards government is rampant. In November 2012 when smoking was made illegal on the streets and in restaurants and bars, the common joke was that it was just in time for policemen to collect bribes to buy their wives’ New Year presents.

Ukraine’s economy took a full decade from independence to begin to improve. The World Bank data tells the story: it fell to its lowest point in 2000 before rising dramatically to two peaks in 2008 and 2013, then falling due to the financial crisis and the revolution, respectively. Carbon dioxide emissions fell drastically after independence and have never recovered, not due to any environmentally-friendly policies but the simple fact that the country remains mired in the grip of the Soviet industrial economy. The modern world has largely passed it by, and even before the war in the Donbas, that region – the most productive in Ukraine – produced heavy machinery which only Russia would purchase. The population peaked in 1993 and has been falling ever since; its 2016 population of 45 million was roughly equivalent to the 1965 figure. Yet despite the statistics, Ukrainians remain an optimistic people. The country boasts some of the most fertile farmland in Europe, and many of the youth believe there is a future for their country in closer ties with the EU. And most tellingly, they have come out to support two revolutions. That optimism has suffered, though. The Orange Revolution failed, and Russian intervention in Crimea and the Donbas has caused the collapse of the Euromaidan Revolution as well.

I met a variety of people during my time in Odessa. I met people in their young twenties who were eager for opportunities in Europe. In fact, mere hours after the European parliament voted to introduce a visa-free regime for Ukrainian citizens, the passport website crashed, suggesting either than many were eager to travel, or eager to escape. I also met people who felt that Russia was forever the brother nation of Ukraine, and that closer ties would only benefit both, bona fide neo-Nazis who looked to Hitler as a role model, and far-right nationalists who felt the call of Stepan Bandera. It was plain that few in Ukraine wanted to develop a civil society that would help foster a genuine democracy and challenge the oligarchs. In the absence of a vibrant civil society, Ukraine has failed to develop into a modern European state, despite its best efforts to prove otherwise. Despite all its advantages and opportunities as a European country sharing a border with the Schengen Zone, Ukraine’s GDP (PPP) per capita is still just slightly above that of Bhutan, according to the IMF. Neighboring Belarus, Europe’s last dictatorship, has a figure more than double Ukraine’s.

Despite this, there is hope for Ukraine. The IMF’s sizable bailout program to the tune of $17.5 billion is providing the country with the funds necessary to make the necessary reforms and develop the foundation for a strong economy, but it comes at a price. Ukraine will be forced to repay its debt by handing over 40% of all its income over 4% of GDP growth, which is expected to take twenty years. Economic recovery has been slow, and Ukraine has consistently failed to uphold its end of the bargain and meet the mandated reforms. Regardless, the IMF still provides money, most recently $1 billion in April 2017, though the expected payment was $1.7 billion. In 2016, growth finally moved up for the first time since 2011, but not enough that the IMF loan would start being paid off. Moreover, Ukraine even owes Russia payments on a $3 billion bond, a sum which rises by $700,000 for each day of delinquency. Surprisingly, a London lawsuit ruled in favour of Russia over Ukraine’s delinquency, despite claims by Ukraine that this was brought about by Russia’s military annexation of Crimea.

The effects of the Euromaidan Revolution and the conflict with Russia will affect an entire generation of Ukrainians at the very least, and could have further effects on Europe as a whole.

Desperate for funds, Ukraine seems now to be on the verge of falling apart. Already a nation with a weak central government, the revolution that overthrew Yanukovich followed by Russia’s annexation of Crimea and the rebellion in the Donbas has physically cloven the state and crippled its economy. The effects have even been felt in the Pacific, as North Korea’s newfound skill with ICBMs has been connected to a factory in Dnipro (formerly Dnepropetrovsk), in Ukraine. That factory made rocket engines for the Soviet Union and for Russia, but after conflict broke out, Russia canceled its contracts with the factory. While the Ukrainian government is unlikely to be involved, this sale of black market parts to a pariah state like North Korea strongly suggests that the state is incapable of securing itself. It is certainly possible that the relevant parts might have travelled to North Korea via Russia, but that would require them crossing the highly-monitored front line. It should be noted that the above-linked Newsweek article incorrectly places Dnipro in the separatist-controlled breakaway republics.

The economic issues have caused further issues. Bankruptcy has hit four-fifths of all state-owned agricultural companies, further complicating issues of where the IMF money will go. Corruption remains rampant across the country, and with a slow-burning war still being fought, President Poroshenko runs the risk of empowering paramilitary groups such as the Azov Battalion by allowing them to fight the war in place of conscripted soldiers. As the war drags on, meanwhile, Poroshenko’s poll rating continues to plummet. A Gallup survey in 2015 noted that his approval rating of 17% was lower even than Yanukovich prior to his removal from power the previous year. In March 2019, Ukraine will hold a presidential election; polls taken with prospective candidates show Poroshenko regularly receiving support of 12-15% of the population, seemingly low but given the wider range of possible candidates still good enough for second-place behind Yulia Tymoshenko, whose complex political resume in Ukraine includes heroine of the Orange Revolution, former Prime Minister, and former inmate.

The war in the Donbas is likely to coalesce into yet another frozen conflict in a post-Soviet state. Both the Donetsk and Luhansk People’s Republics have been recognized only by South Ossetia, itself a breakaway state in Georgia. Meanwhile the economy, showing little power to improve as long as the war is ongoing and corruption is unchecked, is draining the domestic support that Poroshenko had enjoyed in the aftermath of the revolution. In a sign of growing discomfort, the government has shown some signs of paranoia; Mikheil Saakashvili, former President of Georgia and former governor of Odessa region, was stripped of his Ukrainian citizenship in July 2017 on the grounds of providing false information on his citizenship application regarding the fact that he is a wanted man in Georgia on the charge of exceeding his presidential powers. Those charges may well be politically-motivated, but stripping his Ukrainian citizenship is certainly politically-motivated. This was a known fact prior to his assumption of Ukrainian citizenship which only became a cause of concern after Saakashvili’s relationship with Poroshenko soured.

If Poroshenko is concerned about a political rival to the point where he is willing to deport him, it begs the question of the stability of Ukraine’s infant democracy. It has already shown to be shaky, with no president unaffected by corruption scandals or able to provide lasting economic growth. A weak central government enables the paramilitary battalions and oligarchs to claim more power for themselves, and Ukraine is unlikely to see the end of this crisis any time soon. The effects of the Euromaidan Revolution and the conflict with Russia will affect an entire generation of Ukrainians at the very least, and could have further effects on Europe as a whole.

What Ukraine needs more than anything is a vibrant civil society. It has shown flashes of one in the Orange and Euromaidan Revolutions, but the country needs to maintain this energy and focus it into developing an active and involved citizenry. The government would need to recognize the role civil society can play and allow it to be included in decision-making while not integrating it into the government. By extension, this will take power away from the paramilitary battalions and oligarchs, who are not likely to relinquish their hold on local authority. By holding local and federal government to account, the people as a whole can transform their country in the European nation they imagine themselves to be. Such a move will require a shift in perspectives away from the communist legacy of pervasive government, but the great interest the younger generations have in being part of Europe can be used as a tool to design a new and open Ukraine.

However, for civil society to flourish, the war must come to an end. This would likely mean abandoning the separatist-controlled land to fail of its own accord as Ukraine develops and prospers, or agreeing to preserve the autonomy of Russian-speaking regions as a constitutional guarantee, while paying pensions, collecting taxes, and providing basic services to reestablish the relationship between these regions and Kiev. As long as the war goes on, Ukraine will continue to be stuck in the mud and unable to find its way out of the crises that have plagued it for a quarter century. Ukraine’s future can be bright and successful, but will ultimately require that the country be lifted out of this cycle of crisis. By concluding the war and encouraging the growth of civil society, the country can begin to look forward to a future in which Ukrainians can be proud of their home as a modern and European state.

Eamon Driscoll is a graduate of the University of Ilinois who is currently completing his postgraduate studies in Geopolitics, Territory and Security at King’s College, London. Eamon has experience living and working in both Ukraine and Russia, and now focuses on issues in Russia and the wider Commonwealth of Independent States. His current academic focus is on the Russian enclave of Kaliningrad and how its unique position has forced the region to develop differently from other Russian territories, especially in the shadow of the ongoing crisis in Ukraine.

For an in-depth, bespoke briefing on this or any other geopolitical topic, consider Encylopedia Geopolitica’s intelligence consulting services.

Photo credit: Taras Gren/Ukrainian Ministry of Defence

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