Economy Ukrainian revolution's most pressing task

Just hours after the Ukrainian parliament rejected the no-confidence motion in the Yanukovych government Russia’s Gazprom and the Ukrainian energy giant Naftagaz said they had agreed on a deal that will ease Ukraine’s bills over the winter.

Gazprom will accept deferred payment in the spring for gas supplies delivered in October, November and December. It was the carrot after the stick of threatened trade sanctions if Ukraine turned away from Moscow.

But it is not much of a carrot, and it will not go far.

“It’s a small nation when it comes to the broader euro zone but it is a story that could rattle investor nerves especially if there is some sort of contagion that goes through other eastern European countries,” says ETX market strategist Ishaq Siddiqi.

Ukraine has a large debt repayment due soon, and desperately needs cash to pay monthly bills let alone investment capital for the future. Moscow said it would make it worth Kyiv’s while to reject the EU, but the markets are having their say and attacking the hyrvnia. A foreign exchange crisis is on the cards, with only 20.6 billion in the bank, only enough to cover two and a half month’s worth of imports.

Set against this backdrop it is easy to understand the current generation of Ukrainians saying they have seen nothing worth having out of these last 20 years, and are dead set against another 20 of stagnation. In fact the risk is of much worse if Ukraine does not sort out its economy.

Worse, a Ukrainian collapse could have regional repercussions, with economic malaise spreading into eastern Europe, and even Russia may not be immune to some economic blowback should Ukraine fail.