Can Ukraine's Revolutionaries Pay the Bills?

Can Ukraine's Revolutionaries Pay the Bills?
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The crisis in Ukraine tends to be presented and interpreted by Western experts as the result of the citizenry's rage over ex-president Viktor Yanukovych's decision to ice the Association Agreement with the EU, opting instead to turn to Russia for a $15 billion bailout and a one-third discount in natural gas prices.

But that's a half-truth at best.

This revolution was a culmination of Ukrainians' simmering anger at a government that had systematically forfeited the public trust with its mismanagement, venality and corruption. Simply scan the photos of opulent -- albeit aesthetically challenged -- homes, some of them mansions, that senior Ukrainian officials inhabited, and the extent of the thievery is apparent.

So the revolution has been realized, and Yanukovych is gone -- now for the hard part. According to the acting finance minister, Yuri Kolobov, Ukraine needs an infusion of $35 billion over the next two years. And in the short term, it requires several billions of dollars just to cover the interest on its debt. Will the EU and the U.S. come through? Cheering the protest movement was easy; delivering the aid Ukraine needs when much of the EU is still in the economic doldrums, and the United States has emerged from, them in a still-unsteady state will prove much harder.

Yes, the IMF will provide some of the cash, but not without concrete commitments from the Ukrainian leadership that it will implement economic reforms, many of which will require belt tightening that will hurt Ukrainians, especially the jobless, the retired and the poor. What's more, these tough steps will have to be taken before the new leaders have built up political capital by showing that they have what it takes to make people's lives better.

Now, Ukraine's leaders may well prove up to the task. But revolutionaries have talents and temperaments that typically are not readily transferrable to good governance, which is un-heroic and even has an element of the clerical. Consider Boris Yeltsin and Lech Walesa: great at the barricades, not so great at the routines of administration.

Watch how the bond and credit default swap markets respond to the new Ukraine. Their behavior will provide telling information about investors' confidence and the burden that Ukraine will have to carry in order to secure new loans. This year, only Venezuela's bonds posted bigger losses in percentage terms than Ukraine's, and bond buyers remain skittish. Who can blame them? Ukraine's interim president, Oleksandr Turchynov, himself warned that the country was in a "pre-default situation."

Russia, needless to say, won't rush to write a check. Look at it from Vladimir Putin's point of view: Why would you come to the rescue of a country that wants to exit your orbit and align with Europe and the United States? Why would you further the consolidation of a revolution backed by the West with the aim of diminishing your security and standing? Here, in effect, is what Putin will say to Ukraine: "So you love democracy? Good luck. And oh, here's the bill."

Moscow won't just fail to offer help; it may decide to impose some hurt. Talk of Russian military intervention amounts to heavy breathing by those who've read too many Tom Clancy wannabes; Putin isn't a fool. He knows that the short, victorious war that Russia managed to conduct in Georgia in 2008 can't be replicated in a country of 45 million people that's nearly the size of Spain.

Moreover, Russia doesn't, contrary to what's confidently asserted by pundits, stand to gain from chaos in a large neighboring country. What happens in Ukraine could easily spill over into Russia, and if there's one thing Putin prizes above all else it's stability.

But there are other ways in which Moscow can make its displeasure known to the new crew in Kiev. Russia accounts for roughly a quarter of Ukraine's exports, and the products it sells Russia can't easily be diverted to Europe: first, the EU's Common Agricultural Policy creates various barriers to agricultural and food imports; second, the manufactured goods Russia buys from Ukraine won't cut it in Europe's market. Higher tariffs or bureaucratic delays at the border will squeeze Ukraine's economy.

Then there's gas. Ukraine gets about 60 percent of its needs from Russia. Moscow is likely to announce that the discount deal was signed with the old government and no longer binds Russia. The fiscal consequences of that will have to be worked into whatever new budget model the post-revolutionary government in Kiev devises.

There are the political challenges as well, and each will be made worse if the economy deteriorates. The biggest is that the opposition leaders, now no longer united by the passion and determination to oust the ancien regime, will have to stay cohesive, at a time when the competitive element in politics and their divergent political orientations will necessarily increase the competition among them.

Recall that the euphoria of the 2004 Orange Revolution soon yielded to dismay, and then disgust, as Ukrainians watched their onetime heroes bickering and backbiting -- and without showing a shred of administrative competence. Yanukovych is vilified today, and rightly so, but let's not forget that he won an election in 2010 that international observers certified as free and fair. Many Ukrainians, and much of the West, welcomed the change, so badly had the Orange folks blown it. Will Ukraine's new leaders learn from history, or will they illustrate the sagacity of Santayana's Dictum? We must hope that the former outcome is what lies ahead, but Ukrainians would be foolish to rule out the latter.

Then there's Ukraine's east-west problem. This chasm tends to be exaggerated and presented as virtually primordial. There are many ways in which the new government -- above all the new president, who will be elected on May 25 now that the vote has been moved up from March 2015 -- can win the confidence of Russophone Ukrainians who fear that their concerns will no longer register in the capital.

For starters, the new leaders can deliver good governance. Yes, Ukraine's east and south are the bastions of Yanukovych's Party of Regions, but neither he nor the party transformed lives in those areas for the better. Yanukovych and his cronies were crooked and incompetent across the board. And when it comes to cultural and educational policy, there's much that the new government can be do to make Russophone Ukraine feel that it's part of the family.

The percentage of Ukrainians in the Donbas who recall the Soviet days with nostalgia and see Russia as Ukraine's preferred partner has been consistently high. But there's a difference between such general sentiments and the more specific, pernicious project of secession. Ukraine's new leaders must assuage concerns in its Russophone south and east and fend off any threats of separation. If they fail, the country's economic problems will only worsen. The May 25 election will be their first big test, as it will reveal the extent of the east-west divide.

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