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Thursday, March 13, 2014
Costly Ukraine
Facing economic collapse, Ukraine is an expensive prize for the West

Ukraine may well be the geopolitical prize that nobody can afford to win. As the country deals with yet another political turnover, the U.S. and the European Union have had a look at the Ukrainian government's books. It's a grim picture that is testing the political will and financial wherewithal of potential Western benefactors.

"The real question now is how much of the burden of dealing with Ukraine is going to be European and how much the Europeans are going to be able to slough off onto the American taxpayer," said Wayne Merry, a scholar at the American Foreign Policy Council. Right now, he said, Ukraine is fairly low on Washington's list of priorities amid bigger problems in Syria, Iran and elsewhere.

The EU recently agreed an 11-billion-euro (approximately NT$461 billion) aid package for Ukraine, but Ukraine's acting finance minister, Yuri Kobolov, said the country needs US$35 billion (approximately NT$1 trillion) to cover this year and next. Jonathan Adelman, professor of international relations at the University of Denver, said he sees little chance of the U.S. coming through at a time of budgetary difficulties. "There's going to be no enthusiasm here to pay the tens of billions of U.S. dollars it would take to bail Ukraine out," Adelman said.

The current crisis in Ukraine blew up when President Viktor Yanukovych, at the last minute late last year, backed out of a deal with the EU in favor of a promised US$15 billion (approximately NT$455 billion) bailout from Russia. That angered Ukrainians from pro-European central and western regions.

Russia's bailout is now on hold after the Ukrainian parliament voted to remove Yanukovych, who fled the capital. The country has only gotten US$3 billion (approximately NT$91 billion) of the Russian money. While the EU has stepped in to help bridge Ukraine's short-term financing needs, a new government will have to negotiate a full-fledged assistance package with the International Monetary Fund.

Merry said the Europeans may not have understood what they unleashed by courting Ukraine. "A lot of people in a lot of those capitals — Berlin and Paris to name two — think that the EU got too far out in front of itself, didn't think through what it was doing, and got involved in what was a zero-sum game with Russia," Merry said.

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