Monday, April 20, 2009

Ukraine Time Bomb Exploding

Remember last summer after Russia invaded Georgia, and neoconservatives hyperventilated, declaring it the most significant development in world history since the fall of the Berlin Wall? Yeah - oops. If Georgia was the Sudetenland in Robert Kagan's wet dream about the reemergence of a Nazi state, then Ukraine was Austria - the next domino to fall. Turns out that the greatest threat to Ukraine's stability and territorial sovereignty didn't come from the Russian bear next door, but rather from the ravages of economic depression the financial crisis has unleashed. From the New York Times:
Few areas of Europe have taken such a body blow from the world economic crisis as the industrial heartland of eastern Ukraine, home to giant enterprises in the steel and metals industry in which orders have dried up nearly completely and prices have plummeted.

In the Donetsk region, home to 4.6 million people, around 80 percent of the economy is tied to the metals industry. In January, when industrial production dropped by a precipitous one-third throughout Ukraine as a whole, in Donetsk it fell by half against the previous year....

In the absence of a galvanizing voice rallying the workers, or a politician in the Ukrainian capital, Kiev, to marshal the popular anger, Mr. Yeryomin and many others are focusing their unhappiness on the borders of this part of Europe, sliced and diced in countless wars through the centuries.

“I look with pride at Russia,” said Mr. Yeryomin, who lived in Russia as a child and counts himself among the 40 percent of inhabitants of the Donetsk region who are considered ethnically Russian. “We should cut Ukraine in two, and give half to Poland and half to Russia.”

This part of eastern Ukraine has always felt more attached to Russia than to western Ukraine and neighboring Poland. For many here, the fraying economy is accompanied by a sense that officials in Kiev, where the government is paralyzed by political infighting, have abandoned Ukrainians to their fate.

Just last week, more than 10,000 protesters gathered in Kiev to demand a change of government, prompting President Viktor A. Yushchenko to issue a surprise announcement that he was considering early presidential and parliamentary elections.

Whether any politician can allay both the global and the homegrown troubles of the metals industry in Ukraine is unclear. For now, the national currency, the hryvnia, has lost 40 percent of its value against the dollar from its high last year, and the reforms demanded by the International Monetary Fund as a condition for receiving a life-giving $16.4 billion loan are the subject of endless wrangles in an argumentative Parliament.
Economic volatility, ethnic divisions, and the frontier of a former empire: sounds like Niall Ferguson's recipe for upheaval.

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