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24 December, 2013 00:42   ▪  

Anders Aslund: Ukrainian people are the biggest losers in the Ukraine-Russia Deal

The big losers in the Ukraine-Russia Deal concluded on December, 17 are the Ukrainian people, whose future Ukrainian president Viktor Yanukovych has jeopardized. The question remains whether they will tolerate being treated like this, , says Anders Aslundf, Swedish economist and a senior fellow at the Washington-based Peterson Institute for International Economics, Andres Aslund

“Vladimir Putin's Dec. 17 meeting in Moscow with Ukraine's politically besieged president, Viktor Yanukovych, must be viewed as quite a victory for Putin…. This deal can also be seen as a victory for Yanukovych, personally,” the expert says while pointing out that “the main losers in this deal, clearly, are the Ukrainian people.”

If the opposition fails with its aim to attract deputies from the Yanukovych party for the voting to oust the current government, Ukraine may enter the sad authoritarian path of Belarus and Russia, consigning it to a bleak economic future, dependent on Russia and hobbled by a corrupt system that enriches Yanukovych's cronies, says Aslund.

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“Details will continue to emerge, perhaps pulling the bigger picture into focus, but right now it appears that this deal is heavily one-sided and greatly favors Russia. Yes, Moscow's sovereign wealth fund is supposed to buy $15 billion of Ukrainian bonds. But this is not a grant, it's merely a line of credit that will have to be repaid; the terms are not concessionary,” the export urges.

Russia has also agreed to abolish various trade sanctions against Ukrainian exports to Russia from railcars and steel pipes to chocolate. But! “According to World Trade Organization rules, however, the Russian-imposed sanctions were illegal and it is a shame that the United States and the EU did not act more forcefully within the WTO on behalf of Ukraine,” Mr. Aslund stresses.

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Russia also cut the price of its gas exports to Ukraine for the first quarter of 2014 by one third to $268.50 per 1,000 cubic meters, providing considerable cost savings for Ukraine's energy-dependent producers and consumers. But this is not a gift either; in fact, it's an approximate market price, the expert reminds.

“Finally, a few agreements were concluded on production cooperation involving large Antonov transportation airplanes, shipbuilding, and construction of space rockets… Such cooperation should have occurred long ago, but Russia was more interested in punishing Ukraine than in mutual cooperation like this. In the end, Putin's successful hardball strategy has come at very little cost and very significant gain. It has blocked Ukraine from orienting its economy toward the West and enhanced Russian power and prestige in its former territories. For Yanukovych, it's a win, too. While he might be hated on the Maidan, he's now free to continue to rule in a manner that is both corrupt and authoritarian. The big losers are the Ukrainian people, whose future he has jeopardized. The question remains whether they will tolerate being treated like this,” Anders Aslund says.

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