FocusEconomics Speaks to Russia Today Regarding Ukraine Crisis

Russian English-language television channel Russia Today recently interviewed FocusEconomics’ Economist Angela Bouzanis about the dire economic situation in Ukraine. Ukraine has had a torrid time over the last year with the military conflict with Russia and now their economy is suffering immensely. Ukraine has been granted foreign aid packages from the West to help their floundering economy, but high inflation, currency devaluation and soaring energy tariffs persist with no signs of improvement. 

When asked who was to blame Angela stated, “You can’t really pick just one person or one policy to blame in Ukraine’s case, it’s basically a combination of the fact that the economy was already weak in 2013 from maintaining the fixed exchange rate and not having diversified or modernized industrial sectors. That combined with the military conflict led us to this situation.”

Angela went on to say that the economic crisis that Ukraine finds itself in is not just the result of a run of bad luck, but years of economic and financial mismanagement. Angela explained that the economic policies implemented by the previous Ukrainian governmental regime under the leadership of President Viktor Yanukovych were fundamentally different from those of the current government. 

“The previous government under President Yanukovych, at the end of 2013, had to choose between two possible solutions to the country’s crisis: Yanukovych was presented with both a deal from Russia and one from the EU, both agreements included an immediate bailout of a failed economy, but the deal with the EU included substantial reforms…Ukraine has historically been reluctant to engage in reform and [the reforms] would have been particularly unpopular.”

Instead, Ukraine chose to make a more straight-forward agreement with Russia, which Angela stated, “translated into more of the same for Ukraine, continuing with the basic structure of the economy.”

In contrast, the current government led by President Petro Poroshenko, went the other route and made deals with the IMF and the EU which included massive reforms: “overhauling the energy sector, removing fuel subsidies, fighting corruption, and modernizing the state bureaucracy…reforms that are a radical departure from the Ukrainian economic structure from before (Poroshenko’s regime).”

If you would like to watch the full interview, check out the video below.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinion of FocusEconomics S.L.U. Views, forecasts or estimates are as of the date of the publication and are subject to change without notice. This report may provide addresses of, or contain hyperlinks to, other internet websites. FocusEconomics S.L.U. takes no responsibility for the contents of third party internet websites.

Author: Brian Dowd, Marketing Coordinator

Date: February 20, 2015