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You're reading: Why is the West playing hardball with Yanukovych?

Opinion
polls show that a great majority of the Ukrainian people now favor EU
integration – 57 to 14 percent, according to one recent poll – as opposed to
hooking back up to Russia in the Commonwealth of Independent States’ Customs/Eurasian
Union, and Ukrainians are voting with their feet and braving the elements in
street demonstrations in favor of Ukraine signing the association and free
trade agreement with the EU. Surely this desire to defend Ukraine’s European
orientation, and the populations’ clear desire for the country to move towards
accepting European core values, should be supported. After all the sums
mentioned as likely needed by Ukraine at this difficult hour, i.e. $15-20 billion,
appear small change relative to the size and strategic importance (energy
supply to Europe) of Ukraine, given the principles of self determination at
stake, and compared to the huge size of Euro-periphery bail-outs.                                      

If
only things were that simple.                                                 

First
thing is first, Ukraine’s need for $15-20 billion in financing is not only
related to the expected costs of trade restrictions already imposed by Russia,
and which are expected to be tightened if Ukraine signs the Deep and Comprehensive
Free Trade Agreement. Even before the imposition of sanctions by Russia earlier
this year, the economy was already in dire difficulties, as reflected by
recession, the maintenance of twin deficits, dwindling central bank foreign
currency reserves and Treasury cash reserves, and a weak/vulnerable banking
sector.

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