After four months of domestic and geopolitical crisis, Ukraine is engaged in an arm wrestling with Russia, through the involvement of the US-EU. The territorial integrity of the country after the annexation of Crimea is not a solved issue. The economy will experience a severe recession this year though it should be less severe than in 2009 from a pure economic standpoint. The emergency financial support of the US and the EU should prevent a sovereign default in the very short term. But the confidence shock of the IMF-supported program - which is badly required for securing repayments of the total external debt (public & private) - will not happen if geopolitical tensions do not ease rapidly.
Faced with centrifugal forces
The political crisis that broke out in late November 2013 led to the overthrow of the pro-Russian government of Viktor Yanukovych who ran away in Russia in February 2014. The domestic political crisis has since transformed into an open diplomatic crisis between, on the one hand, the new interim government led by Arseniy Yatseniuk (the leader of the main opposition party) officially recognised and supported by the United States and the European Union, and on the other, Russia which does not recognize the interim government. The interim government would remain in place until new presidential elections scheduled for May 25.
Following the change in power in Kiev during the last week of February, Russian military forces were sent to Crimea. On March 16, the Crimean population voted in favour of the incorporation of the peninsula into Russia and, on March 18, it has officially become a part of Russia. Obviously, nor the interim government in Kiev neither western governments recognize the legality of this incorporation.
BY François FAURE