Thursday, October 16, 2008

The latest political drama from Ukraine

I was really surprised to see Ukrainian Prime Minister Yulia Tymoshenko suddenly reverse course and say that she would “accept any conditions” to revive her ruling coalition with President Viktor Yushchenko since they have become bitter rivals in recent years and since their first two tries at coalitions each fell apart within a year. But this piece from clears things up.

The International Monetary Fund is willing to lend Ukraine between $3 and $14 billion to shore up the country’s economy, but only if Ukraine can show some political stability, and that’s where Tymoshenko’s offer comes in. If Yushchenko accepts and they re-re form the coalition, then she looks like a statesman, if he refuses, Tymoshenko can tell the public (and Ukraine’s business community) that she tried to save the country’s economy, and she strengthens her standing for the country’s Presidential election in 2010.

Whether the IMF accepts a third stab at a coalition between two bitter political rivals as a sign of “political stability” though remains to be seen.

Ukraine was already suffering from one of the highest rates of inflation before the global credit crisis set in. Now projections for growth for the coming year are being slashed and citizens are worrying about the health of the nation’s banks. The IMF loan would be used to shore up the nation’s financial sector.
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