What You Need To Know:
✓ Ukraine requires much less bailout money than Greece, can be much more efficient in using them
✓ Ukraine is doing much better on bailout reforms than Greece
✓ Ukraine’s reform priorities should be deregulation & privatization
✓ Ukraine is of greater geostrategic interest for EU than Greece
In his recent article, Senior Atlantic Council Fellow Anders Aslund, a Swedish economist who has been researching Ukraine for over a decade, writes that Ukraine is doing everything right and Greece is doing everything wrong. He elaborates that Greece has not suffered from austerity but because they tried to minimize reforms and budget cuts thereby losing 25% in GDP over the course of six years.
Aslund believes Ukraine requires much less bailout money than Greece and can be much more efficient in using them. The European Union is spending about 240 billion Euro on Greece, while Ukraine has received a $16 billion loan in 2008 and this year will get $5 billion of a $40 billion dollar package negotiated for the next 4 years.
“Why not 10 billion Euro more for Ukraine? It should be used in order to stabilize the reserves so that we don’t have the financial meltdown that we saw last year, which was entirely because the reserves were too small,” says Aslund. He notes that the EU has no obligations to Ukraine, but as they are neighbors he believes it’s in Europe self interest to support stability on the continent.
Hromadske brought up the recent controversial law which would readjust Ukrainian loans taken out in US dollars, to the exchange rate of 2009 rather than today’s higher rate, questioning how that might affect Ukraine’s standing towards additional financial assistance. Aslund believes the new law is completely unacceptable, stating, “It would cost 5-6% of GDP, this would destroy the country to the benefit of a very small upper middle class elite who took these foreign mortgages before June 2009. If it came through I think it would stop all international financing for Ukraine. “
Aslund concludes that Ukraine’s reform priorities today should be deregulation in order to get rid of unnecessary bureaucracy, and privatization to avoid siphoning of funds from state assets.
Hromadske International's Nataliya Gumenyuk and Ian Bateson spoke with Anders Aslund via Skype on July 12, 2015.