CSE and CIS
Reform is on the agenda in Kiev. After over twenty years deformed by corruption and incomplete reforms, the demand for “European standards” – an umbrella term for values such as greater transparency and rule-of-law – is stronger than ever. But with Ukraine facing a dramatic recession and a drawn-out conflict in the country’s east, many fear the government will again fail to seize the opportunity to take the painful steps needed to modernise.
Ukrainian authorities are considering how to rebuild Donbass, destroyed by Russian mercenaries. Unless the West takes part in the procedure, decisions are likely to depend on under which variant the most money can be transferred to the pockets of oligarchs associated with the governing team rather than on economic effectiveness.
Two events have called into question the advancing integration of Ukraine with the European Union. President Petro Poroshenko has acknowledged there is no chance of the Ukrainian government winning the war in eastern Ukraine as Russia will not allow that, and so he has pledged a series of major concessions.
The Ukrainian parliament voted the law granting the Cabinet the right to pay its expenses to businesses with Treasury bills up to unlimited value. This practically breaks the central bank’s monopoly on the monetary policy.
Recession looms over Ukraine. The oligarchs rule. A currency crisis may break loose at any time. Foreign investors demand a high risk premium, some of them retreat. High interest rates hamper domestic investment, while domestic consumption is stemmed by recession. And we do not have the first idea how poor our neighbour is.