The European Union Isn't Going To Bail Out Ukraine
The European Union has had a pretty rough run over the past seven years. Economically, things are simply catastrophic. The Eurozone is not only experiencing an output slump that is even worse than the great depression, it is also teetering dangerously close to outright deflation. Unemployment remains persistently high everywhere except Germany: it is still above 25% in both Greece and Spain, and above 10% in Portugal, Italy, and France. The forecasts are hardly encouraging, with expectations of little or no growth in 2014 and an exceedingly modest rebound predicted for 2015. The situation is so desperate and hopeless that respected economists like Tyler Cowen have started to compare the performance of the more sclerotic European economies with the de-industrialization of 19th century India.
Politically, things aren't a whole lot better. The most recent elections to the European Parliament in late May saw Euroskeptics and radicals of various stripes storm to unprecedented victories. Even The Economist, which has been relentless in its promotion of the EU, sounded the alarm, admitting that the previous "bastion of European federalism" was set to become a "beachhead for all sorts of anti-Europeans." There's also the small matter that Viktor Orban, Hungary's president, has all but declared war on "liberal democracy." This is just a little bit awkward because Hungary is a member of an organization explicitly founded on liberal democratic concepts. The EU is now in the unprecedented position of needing to confront an avowedly "illiberal" regime within its own ranks.
As I hope the above makes clear, the EU is barely holding itself together. Even in a relatively optimistic scenario, it will have experienced a "lost decade" of economic growth, and tens of millions of Europeans will have had their professional lives deeply and negatively impacted by the European elite's inability to effectively respond to the crisis. Political radicalism has already been strengthened to a frightening degree, and its anyone's guess where the process will lead. In such a situation the EU is pretty obviously not in a position to bail anyone else out. Economically the EU doesn't have the money and, politically, there is no will for further "expansion."
Swedish Foreign Minister Carl Bildt, who is well known for his extensive use of social media and for his support of Ukraine's integration into European institutions, hasn't gotten the message though. The other day he tweeted the following:
Important that Germany Chancellor Merkel now raises the issue of EU help in rebuilding of Donbass region. Will be needed. And expensive.
To the extent that Bildt convinces anyone in Ukraine that the EU will ride to the rescue he is being cruel. There is no other word for it. The EU is not going t help rebuild the Donbass. Full stop. Even if the EU (read: Germany) had sufficient funds at its disposal for this sort of effort, which is increasingly doubtful, the recent election made clear that popular enthusiasm for the EU project is evaporating almost in real time. There is precious little enthusiasm among the German public for bailout of other Eurozone members. The idea that Germany will consent to spending tens of billions of dollars rebuilding Eastern Ukraine is completely and totally divorced from political reality. Can anyone seriously imagine Angela Merkel, whose country recently had its 2014 growth estimate downgraded to a mere 1.5%, going in front of the German public to demand a substantial outlay for Ukrainian infrastructure? It would be political suicide, and Merkel is clearly a clever enough politician to understand this.
Ukraine and its political leadership needs to understand that, regardless of Bildt's musings, the country's "European choice" is not going to be underwritten by anyone else. Basic political reality in Germany and the EU, particularly the rapid growth of Euroskepticism, means that no help will be forthcoming. Kiev will have to chart its own course, and will need to find a way to pay for the (enormous!) expenditures of repairing its Eastern industrial heartland.
http://www.forbes.com/sites/markadomanis/2014/08/25/the-european-union-isnt-going-to-bail-out-ukraine/
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