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Ukraine’s hope for financial downpour from EU fails to come true

April 29, 2015, 19:14 UTC+3 Alexandrova Lyudmila
© ITAR-TASS/Valery Sharifulin

MOSCOW, April 29. /TASS/. The European Union is obviously in no mood to give Ukraine as much money as it would like to have. Also, it will demand reform in exchange for the lending it might be prepared to provide. It is just naive to think that the European Union will agree to do something for gratis. Political reasons are found behind everything, Russian experts say.

The zone of free trade between Ukraine and the European Union will be effective as of January 1, 2016, Ukrainian leaders and the EU leadership said following the just-held EU-Ukraine summit and the international conference in support of Ukraine. Having agreed to open its trade borders in eight months from now, Kiev has said it is looking forward to help from the European partners. However, originally conceived as a meeting of donors, the conference looked mostly as a propaganda event "in support of Ukraine."

The introduction of a free trade zone between Ukraine and the European Union was to take effect on November 2014, but at Moscow’s request was postponed till January 1, 2016. For its part, the EU leadership prolonged the operation of trade preferences for Ukraine. No miracles have happened, though. The Ukrainian GDP’s slump in the first quarter of 2015, in contrast to the previous period of 2014, was at about 15%. The EU was unable to compensate for Ukraine’s loss of the Russian market.

"It is nakedly clear that the EU had never planned to give Ukraine everything it had hoped for," the deputy director of the Economics Institute of the Russian Academy of Sciences, Svetlana Glinkina, has told TASS. As an example she mentioned the history of some European countries. Hungary at as certain point held second or third place in the world by the production of meat and milk per capita. In the very first year the so-called asymmetric agreement of association was in operation Hungary’s export to the European Union was up 1.7%, and its import from the EU, by 17%.

Ukraine these days pins hopes on greater export to the EU countries. But those who know how well the European market is protected will say this expectation is futile, Glinkina said.

"Indeed, what did they hope for at all?" she asks. "Apparently, on political support: the European Union does agree to provide financial support, but not a very big one, against certain conditions and requirements, including drastic cuts in government and public spending. If the requirements fail to be met, nobody will agree to give anything for free. No presents from the European Union can be hoped for."

Ukraine used to maintain quite decent cooperation in the high tech sphere, aircraft-building in particular, Glinkina said. "But who in Europe will ever need that? Europe wants cheap labor and Ukrainian lands, but Ukrainian coal will be of no interest to anyone, because there is Polish coal."

It is a great delusion the very change of the institutional environment, such as legislation, protection of property rights, and the lowering of administrative hurdles, will bring about fast changes for the better. The history of countries that have been EU members for many years is a confirmation of that.

"The West could have provided far greater assistance to Ukraine," says lecturer at the trade policy chair of the Higher School of Economics, Aleksey Portansky. "It is not accidental that Prime Minister Arseny Yatsenyuk complains the Greeks have already received $300 billion from the European Union. But the managerial competence of the Ukrainian bureaucracy is so low that the implementation of reforms looks highly problematic. Naturally, the Western countries are in no hurry to invest."

"It’s like poker. Each player is eager to pass the buck," lecturer at the Higher School of Economics, Anton Tabakh, has told TASS. "Europe points to the IMF, the IMF, to the United States, and everybody points to Ukraine. It is clear that Europe does not have very much money and in the first place it will be saving Greece in a bid to preserve the Eurozone. The IMF demands structural reform. Ukraine keeps talking about wars and revolutions hoping to get a lot and at once. Europe does not want to spend anything at all. It seems to have forgotten already what the fuss was all about when the question of association was brought up."

He believes that politics has always taken center stage.

"Political likes and dislikes prevailed over economic interests. Of course, Ukraine would derive far greater benefits from being a member of the Customs Union. It lacked the resourcefulness and farsightedness to reconcile political and economic interests. Take Kazakhstan, for instance. It manages to be on good terms with everybody."

Tabakh tends to draw Ukraine’s future in very pessimistic terms.

"There will be no disaster, but just ever less economics and trade. There has already occurred one explosion. From this moment on the process of rotting and decay will go on and on…"

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