Ukraine's Challenges, the West's Response
Mired in political gridlock, battered by economic crisis, and uncertain about its foreign relations, Ukraine faces a difficult year, a year that will end with a presidential election. How is Ukraine coping with these difficulties? And how should the West respond in helping Ukraine meet the challenges before it?
Ambassador Pifer begins his assessment of Ukraine’s challenges by identifying the four key issues it will have to face this coming year. Firstly, Mr. Pifer argues that a serious problem is the incompatible relations between Ukraine’s president, Viktor Yushchenko, and Ukraine’s prime minister, Yulia Tymoshenko. Mr Pifer identifies the energy situation as a key battle issue between the two. Most seriously, Mr. Pifer believes that such feuding compromises Ukraine’s ability to deal with serious issues such as energy and the economic crisis. In addition, Russia seems to play the two against each other. Therefore, Mr. Pifer argues that the West begin by getting the two to cooperate on key issues. Mr. Pifer also stresses the need for a coordinated US-EU stance and also proposes the possible revival of a US-Ukraine bi-national commission.
An aspect of Ukraine clearly being affected by this feud is Ukraine’s handling of the economy. Mr. Pifer examines how Ukraine was suddenly hit hard by the global financial crisis in October 2008. This was partly caused by a fall in the global demand for steel, one of Ukraine’s key exports, and led to further inflation and investors avoiding the country. Ukraine also received $16 billion from the IMF on the conditions of having almost no budget deficit and fell short of this condition earlier this year leading to a delay in the transfer of funds from the IMF. While some believe in a possible recovery in 2010, Mr. Pifer argues the West can help in several ways. Firstly, it must push Ukraine to continue to follow IMF conditions to receive the vital funding. Mr. Pifer also proposes an international donor conference for Ukraine to receive the additional money it needs but will not receive from the IMF. He argues for the abolition of Ukraine’s “communist” commercial code and the freer sale of land to get the agricultural market flowing.
Another possible crisis point is Ukraine’s energy situation. Mr. Pifer examines Ukraine’s dependence on Russia and how during the January crisis it did not pass any reserve gas onto its Western neighbors, weakening its international reputation. Mr. Pifer does recognize Ukraine’s efforts to lessen its use of natural gas, particularly due to the increase in prices. However, he argues Ukraine is still very vulnerable, and this is not helped by the fact that Ukraine’s own energy agency is nearing bankruptcy as it maintains unsustainably low prices. Therefore, Mr. Pifer believes the first step forward is, although tough, for energy prices to be raised. Then, the West should offer technical assistance to improve the efficiency of Ukraine’s energy system. Finally, Ukraine should seek EU funding to modernize its pipelines.
The final issue Mr. Pifer addresses is Ukraine’s complex foreign policy. Mr. Pifer explains Ukraine’s difficult relationship with Russia is marred by differences over energy, NATO, and Georgia. Mr. Pifer also cites Russia’s resources in Ukraine to stir tension if it wants to weaken the country. Another serious aspect is Ukraine’s uncertain relationship with the EU consisting of support from the Baltic states and reluctance from the Western states such as France and Germany. Mr. Pifer feels it is important for the West not to give up on Ukraine but to push the country to forge a consistent line between president and prime minister. The US should also let Ukraine know how much support it would receive were it to become involved in an economic conflict with Russia.
Mr. Pifer concludes by stating that the US should be clear that this new attempt at resetting relations might not survive a Russian-initiated crisis with Ukraine.
In answering the audience's multitude of questions, a variety of issues were raised. Discussion included key points such as the receptiveness of Ukrainian leaders to international advice or the impact of Ukraine's membership of the World Trade Organization. One issue Mr. Pifer particularly emphasized was his belief that Ukraine should not be part of NATO as long as public opinion stands against it.
about the speaker
Steven Pifer is a visiting fellow at the Brookings Institution and a (non-resident) senior adviser with the Center for Strategic and International Studies. A retired Foreign Service officer, his more than 25 years with the State Department focused on U.S. relations with the former Soviet Union and Europe, as well as on arms control and security issues. His assignments included deputy assistant secretary of state in the Bureau of European and Eurasian Affairs (2001-2004), ambassador to Ukraine (1998-2000), and special assistant to the president and National Security Council senior director for Russia, Ukraine and Eurasia (1996-1997). He also served at the U.S. embassies in Warsaw, Moscow and London, as well as with the U.S. delegation to the Intermediate-Range Nuclear Forces negotiations in Geneva. He holds a B.A. in economics from Stanford University, where he later spent a year as a visiting scholar at Stanford's Institute for International Studies. He is a member of the Council on Foreign Relations.
Sponsored by the Forum on Contemporary Europe and the Center for Russian, East European and Eurasian Studies.