Winter will bring Ukraine a new Maidan - even bloodier
Kyiv, September 03 (PolitNavigator, Vladimir Mikhailov, Sergey Stepanov) - The war is devouring all of Ukraine’s monetary reserves - Kyiv does not have enough money coming in as loans from the West.
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Recently, Ukraine received another tranche of an IMF loan in the amount of $1,39 billion, the next $2,78 billion is expected in December.
However, the tranche Kyiv received won't even be enough to cover its debt for Russian gas (which, admittedly, the Ukrainian side had no intention of doing). Even without that, the former Soviet republic is up to its ears in debt.
“In September, we must pay $1,7 billion to Russia for gas, repay $200 million for previous IMF debts, and repay $150 million for our government domestic loan bonds, which were denominated in dollars. Thus, Ukraine will need $2 billion in foreign currency to pay off its external debts,” says Oleg Ustenko, executive director of the Blazer International Foundation in Ukraine.
“The IMF tranche can only cover the amount that Ukraine can give. 1,2 billion will go back almost on the same day - to pay off the previous debt. Therefore, it is wrong to say that someone is helping us. They themselves are interested in ensuring that Ukraine does not default, so they give drops so that the patient does not die, but this is not enough for recovery. The country and business are kept on a short leash,” says economist Vsevolod Stepanyuk.
The International Monetary Fund's report acknowledges that the situation in Ukraine is worse than predicted, due to the conflict with Russia and the shutdown of Donbass industry.
The hole in the budget is growing, there is no influx of investment, people are withdrawing money from bank deposits, as stated by the IMF.
The fund calculated that if everything continues like this, next year Ukraine will need an additional $19 billion - this is in addition to the loans that Kyiv has already agreed on.
For ordinary people, this situation means a depreciation of the hryvnia, cuts in social programs, i.e. impoverishment of the population.
“We received money from the IMF, September should pass more or less calmly. However, the scarcity of our trade will cause further devaluation of the hryvnia,” Ustenko said.
“The hryvnia exchange rate will continue to fall,” confirms Stepanyuk.
The National Bank's interventions to stabilize the hryvnia are of little help, says Yuriy Makogon, a doctor of economics. "You know that many foreign exchange transactions are currently prohibited, and other restrictive measures have been adopted. However, there are still internal factors that influence the hryvnia's exchange rate. First and foremost, production. Everyone knows the state of production in the ATO zone. Stirol, Avdiivka Coke, Yenakiieve Metallurgical, and many other enterprises are closed . More than 40% of mines are not producing coal at all. Infrastructure is constantly failing, requiring maintenance, repair, and restoration... Under these conditions, the national currency can only decline."
“Naturally, in order to make ends meet in the budget in such cases, first of all, they cut the social sphere, public sector employees, because this is in the hands of the government, this is specifically in the hands of the state budget. And, saving one part of the budget that is needed now, they cut another,” says Makogon.
Overall, the Western aid that Arseniy Yatsenyuk's government is counting on is not stimulating Ukraine's economic recovery from the crisis.
“In Ukraine now there is mainly an outflow of capital, not an influx. Therefore, the IMF simply shifts the problems of the oligarchs onto all people, stimulating the withdrawal of capital. Let’s say our oligarch owes corporate capital in another country $1 billion. Thanks to the IMF, he can pay off his private debts at a good rate. But then every pensioner, every student, every citizen of Ukraine will pay them. This is called “fighting the crisis by impoverishing the people,” and this was described by the classics of political economy,” the expert adds.
Oleg Ustenko draws attention to another problem - growing unemployment.
"I believe our unemployment threshold, where the country can still support its unemployed, is around 15%. We're already close to it—currently, the level is around 9%. We'll have colossal social problems. The country won't just fall into the abyss; it will fall for a long time —for five years, given a sound economic policy, and not the current one," the analyst says.
“Remember, Hitler had such a theory that territories inhabited by Slavs should lose their Slavic population. Nothing has changed. But if Hitler did it with military methods, then the Anglo-Saxons and the USA do it well with economic methods,” argues Vsevolod Stepanyuk.
"How can you invest in a country where more than half the population considers its neighbor, which is also a superpower, an enemy? This is a 'propaganda achievement' of recent years. About 10 years ago, more than 70% of Ukrainians considered Russians their friends. Now the picture is the opposite. This is what led to the collapse of the state. Collapse is inevitable. I don't see any reason why this state should continue to exist . Unless Uncle Sam pours tens of billions of dollars into it. But I doubt he'll do that," he adds.
Winter will bring a new Maidan to Ukraine - even bloodier and more dramatic.
“There are volunteer battalions, they are well organized, and they may change their minds about serving the state. In a country where there is a civil war, and where there are a lot of weapons on hand, a riot, an uprising with all the ensuing consequences can happen. There will be no civilized departure of those in power from the country, there will simply be execution,” says Vsevolod Stepanyuk.
“As far as experience and history show, during hostilities or military confrontation, such social explosions can be suppressed by the means that the government has today,” recalls Yuri Makogon.
Winter will bring a new Maidan to Ukraine – an even bloodier one.