Kiev in Crisis

Patriotism Belies Ukraine’s Dismal Fortunes

Merkel Poroshenk Reuters
German Chancellor Angela Merkel and Ukrainian President Petro Poroshenko at the press conference in Berlin.
  • Why it matters

    Why it matters

    Tensions in eastern Ukraine could flare up, causing even more turmoil in a country already hit hard by its economic crisis.

  • Facts

    Facts

    • Tensions are mounting in eastern Ukraine, with troops amassing and rhetoric becoming more belligerent.
    • President Petro Poroshenko’s personal popularity is just 14.6 percent.
    • The IMF predicts the Ukrainian economy will contract by 9 percent this year.
  • Audio

    Audio

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Before rushing off to Berlin on Monday for a crisis meeting with German Chancellor Angela Merkel and French President François Hollande to discuss a path to peace in eastern Ukraine, Petro Poroshenko, the Ukrainian president, took time to address an emotion-laden Independence Day spectacle in Kiev.

“We must walk through the 25th year of independence as if we are walking on thin ice,” he told crowds at  celebrations marking the country’s secession from the crumbling Soviet Union in 1991. “We have to understand that the slightest misstep can be fatal.”

Mr. Poroshenko reviewed the “independence parade” with its array of flags and 2,300 members of the military.

The country has already lost Crimea to Russia and is engaged in ongoing clashes with separatists in the eastern part of the country, despite the Minsk II cease-fire accords that were signed between Russia, Ukraine, France and Germany in February.

Speaking after the talks with Mr. Poroshenko and Mr. Hollande, the German chancellor said later Monday evening that “first and foremost, everything must be done to make the cease-fire a reality.”

There have been continuous violations of the official cease-fire, due to expire at the end of the year, and over the past 10 days tensions have mounted. Violence is on the rise, with both military and civilian casualties. Both sides have been building up troop numbers and ramping up the rhetoric, leading to the threat of further escalation.

“First and foremost, everything must be done to make the cease-fire a reality.”

Angela Merkel,, German Chancellor

Ms. Merkel insisted the meeting was not a snub to Russia’s President Vladimir Putin. “We are here to implement the Minsk deal, not to call it into question,” she said.

Mr. Poroshenko expressed his thanks for the two leaders’ backing. “I’m extraordinarily thankful for the support and the efforts for de-escalation,” he told reporters.

Tensions are rife between Ukraine and Russia, 18 months after the ouster of pro-Kremlin president Viktor Yanukovych.  Moscow’s response – the invasion and annexation of Crimea, and support for separatists in the break-away eastern regions – has provoked Western sanctions and isolated Russia.

The ramping up of military tension has seen a spike of patriotism in both Russia and Ukraine.

A recent survey found 67 percent of citizens are proud to be Ukrainians, up from 61 percent a year ago, though the survey did not include the Crimean peninsula and rebel-controlled areas.

Ukraine-01

 

A major problem for current leadership, however, is that it isn’t benefiting from this wave of patriotic fervor.

With Ukraine’s economy in the doldrums, the ruling People’s Front of Prime Minister Arseniy Yatsenyuk, which had been the strongest political group in the parliamentary elections last fall, would gain no seats in the Ukrainian parliament given its current approval rating of 2.8 percent. Aware of that, Mr. Yatsenyuk has already tried to merge his party with the president’s party, called the Petro Poroshenko Bloc.

The waning popularity of the People’s Front has not been particularly positive for Mr. Poroshenko. Although his party is still the strongest, with 23.5 percent, it is being challenged by former prime minister Yulia Tymoshenko’s Fatherland Party, which has 22.7 percent support.

Meanwhile, Mr. Poroshenko’s personal popularity rating is only 14.6 percent, while Ms. Tymoshenko, who was written off just a year ago, is currently at 13.9 percent.

“Ms. Tymoshenko made a clever strategic move,” said Kiev political scientist Alexander Kawa. “She entered into the democratic coalition, but deliberately avoided becoming part of the government.”

Ms. Tymoshenko, he added, waited until the electorate had reached a critical point of dissatisfaction with the government before she began to “actively criticize it.”

The Ukrainian political leadership is vulnerable on a number of points. Despite several attempts at negotiation, the conflict in the Donbass has yet to be resolved, while the economy remains in a shambles.

The International Monetary Fund predicts the Ukrainian economy will contract by 9 percent in 2015.

In February, international lenders, including the IMF and the European Union, agreed to extend an existing bailout to Ukraine, worth around $40 billion, or €35 billion.

The country is also under pressure from the West to implement constitutional change. But its president may lack the necessary majority to pass a decentralization amendment, which could lead to early elections in early 2016.

Before that occurs, however, the Ukrainian leadership must survive a long winter. It still has no agreement with Russia on deliveries of natural gas. Because of the chronic lack of funds, state energy company Naftogas recently suggested to its Russian counterpart, Gazprom, that further deliveries be paid with an advance on transit fees from Russia.

This scheme, which already has been used once before, is convenient for Gazprom, but the ultimate decision will be made in the Kremlin, which has little inclination to make further concessions to Ukraine.

There is, nevertheless, a glimpse of some good news. The Wall Street Journal reported on Monday that Kiev was nearing a restructuring deal with its creditors, which would give it a 20 percent haircut on the principal of around $19 billion of debt.

The IMF has demanded that the Kiev government reach a cost saving agreement with its lenders as part of its bailout deal.

Time is running out for such a deal, with the next $500 million debt repayment due on September 23.

 

André Ballin reports for Handelsblatt from Moscow. Siobhán Dowling is an editor at Handelsblatt Global Edition. To contact the authors: ballin@handelsblatt.com, dowling@handelsblatt.com

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