WASHINGTON – Ukrainian President Petro Poroshenko recently authored an upbeat op-ed piece for the WSJ in which he painted a very positive picture of his country. Notwithstanding Putin’s aggression, the loss of Crimea and the costly conflict in the East, we learn that Poroshenko’s new, fully democratic government is filled with smart young reformers.
Are things getting better?
They are winning a serious fight against corruption and inefficiency. Lots of good people are lending a hand in this nation wide effort aimed at modernizing Ukraine. Soon enough investors from all over the world will see all this and Ukraine will offer them wonderful opportunities and more.
This positive depiction of Ukraine is both farcical and sad, because it is patently one sided. I am not questioning Poroshenko’s desire to modernize his sorry country. I assume his sincerity. I also assume that there are indeed many western educated and highly qualified Ukrainians who are doing their very best to turn this former Soviet Republic around.
Leaving the bad stuff out
That said, if you tell a story about a country in serious turmoil, you cannot just omit the bad stuff. Indeed, as Poroshenko tells us what great progress Ukraine has made, all international economic and business publications write that the country is totally broke and on the verge of financial collapse.
The ongoing quasi-war with Russia is costing a lot, while Ukraine is at a stand still. According to the FT: “The economy is in a state of collapse, having contracted by nearly 18%, year on year, in the first quarter of 2015”. We also learn from various media reports that financial assistance provided by the IMF and other bilateral aid packages is too modest, and therefore it does not even begin to help. To start with, there are US $ 40 billion dollars to be paid back to foreign bond holders. And there is no money.
The FT makes the case for helping Ukraine, via debt forgiveness (the bond holders would have to take a major hair cut) and other forms of aid –for political reasons. Indeed, Ukraine is a large, strategic country, right at the eastern edge of Europe. It is in the interest of the West to save it. May be so.
However, in order to have a serious conversation about any rescue packages or bail out strategies, (whatever the chances of success), it would be good for President Poroshenko to tell the world how things really are. The fact that Ukraine is on the verge of collapse is not just a detail.
Sugar coating an economic and financial disaster does not help Poroshenko’s credibility.
And it certainly does not help Ukraine.