Ukrainian media reported on good news - the IMF may mitigate conditions for a Kiev loan. The compromise that Ukrainian Prime Minister Mykola Azarov was hoping for is nearly reached. A political analyst Boris Kagarlitsky talked in a live feed of Pravda.Ru about whether the expected loan would help to solve the problems in Ukraine and what is the future of Ukrainian-Russian relations.
Boris, do you think that the IMF would really soften their demands for higher tariffs for gas and heating for the population and give a loan to Ukraine as Prime Minister Mykola Azarov is hoping, and would this help to solve the financial problems of the country? Or are the chances of getting the loan still slim, and Kiev will have to compromise?
"I think Azarov was simply painted into the corner. On the one hand, there are protests, on the other hand, the deteriorating financial position (that gets worse day by day, hour by hour). I also think that both the IMF and the European Union will act in a very tough manner and will try to squeeze more out of this situation than before. If the Ukrainian government chooses to compromise, it will give itself away.
They do not have the game, as they say. The only thing they could do is to take a tougher stance, not to make concessions, not to show softness but show toughness and rigidity, and not towards demonstrators on the Maidan, but in relation to Western partners. And by the way, it would be good if they explained their people not how great everything would be under the European integration, but what is really going on.
Because then they would have real support. Now there is no support because they first explained how great the European integration would be, and then backed off, turning in the opposite direction. Now their potential electorate (not just their supporters) is demoralized and disoriented, because in the course of three weeks they've said completely different things, and they are very weak in the face of the West. Therefore, the only salvation would be to change the government, really, and appoint a new prime minister, like Primakov in Russian in late 1990s."
"Some unknown person who would be tough and take a stance in relation to the West. In order to confidently talk to Russia and to negotiate with Russia on favorable for Ukraine conditions, Ukraine should have a strong position in relation to the West. When it is weak in relation to the West, it is really helpless in relation to Russia as well, because in this case it looks like a weaker player to Russia that Russia wants to bend. It comes down to who would bend it stronger, and, of course, the West is stronger here.
Which case would be economically worse for Ukraine?
"In fact, the economic calculation is obvious. Of course, Russia is not a great gain for Ukraine, let's be honest. Of course, we would love to be a gain for Ukraine. In reality, today we are a lesser evil for Ukraine if the Ukrainians were to look at the situation objectively, without ideological blinders. Of course, in this case, integration with Russia gives more for Ukraine's development than a turn towards the European Union. There is a very funny phenomenon: Russia is economically integrated with the European Union much more than Ukraine. This is another interesting paradox.
Our trade with the European Union in the proportional size of the economy, in my opinion, is twice as large as with Ukraine. Do you understand? Ukraine is very economically integrated with Russia, and most importantly, there is the issue of technical standards. If you start changing technical standards to fit the EU, it would mean great spending, significant replacement of technologies, equipment, and so on, and this is a simply horrific blow to the industry.
With the existing technical standards Ukraine can now sell everything it needs to Russia, but at the same time it can sell it at the domestic market. If it follows the path of European integration, it turns out that everything that is sold in the domestic market for domestic prices still needs to be produced in accordance with the European standard. That is, they need to redo all technical standards for the internal market, change the equipment, process maps, and so on, and so forth. Working with Russia, they do not need to do it. In this sense, of course, it is more profitable and easier to work with Russia."
How does the political instability in Ukraine reflect on Russia?
"Instability, I think, does not change anything. Strictly speaking, Ukraine is a country where instability is a chronic condition. Over the time that Ukraine has been independent or semi-independent, since the days of Bohdan Khmelnytsky and including the period of the Civil War, it had always been unstable. The only time Ukraine was a stable state was when it was part of the Russian state. And yet, as we see, the country can live with instability. I recently visited Kiev - a beautiful city where you can party, eat, where people are happy. Generally, one can live quite alright in unstable Ukraine. There is another problem - for Russia, of course, an unstable partner in the West is a factor aggravating its own domestic economic crisis, which, again, is home-grown, created with our own hands, but exacerbated by the external factors, and the situation will worsen."
What do you think about the view that Russia is pushing Ukraine into the arms of the European Union because it presents itself as a "big brother" that looks at Ukraine from the top down? If, for example, Russia was building the relations with Ukraine as an equal partner, maybe there would be no Euro Maidan?
"I think this is correct. We are having a very strange conversation now. It is permeated with ideology, although at the base of it there are very pragmatic, economic things. It is an amazing situation where on the surface there is one thing, and deep inside there is a completely different one. There is virtually no communication, therefore emotional cultural and political content of the political process clearly do not match its essence, you know? Here is a document on the table stating what technical standards are changing, and how much you can bring in and how much you can take out, and so on, it is a very tough economic document. Why do we talk (Russians, Ukrainians, left and right) about European values, Slavic brotherhood, that "Ukraine has betrayed us," that "Russia is a terrible threat," "Big Brother"? We are talking about wrong things. Look at the numbers, at the tables, then talk."
What do these numbers tell us?
"According to the numbers it is obvious that Russia is more profitable for Ukraine. Russia is a better partner for Ukraine now than the European Union. But another thing is that we could be an even better partner if we behaved differently in the domestic affairs, if we had adjusted our economic policies, if they were more social and more oriented towards the domestic demand, and so on. We would be a better partner if we developed our industry, really developed it, not just in words, then there would certainly be orders for Ukrainian businesses, and they would rely on us more."
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