A Glimmer of Hope as the Kiev “Interim Administration” Faces a Losing Struggle on Three Fronts

April 17, 2014
James George Jatras
Deputy Director, AIU

In what may be a last chance to find a peaceful solution to the Ukraine crisis, talks began today in Geneva among four parties: the European Union, Russia, the United States, and the unelected “interim administration” that took control in Kiev after the collapse of the February 21 power-sharing agreement between President Viktor Yanukovych and leaders of the Opposition. Early reports indicate tentative agreement based on broad national dialogue and constitutional reform.

Meanwhile, it is increasingly clear that the interim administration is contending with at least three existential challenges – none of which it has much hope of winning:

Demands for self-rule in eastern Ukraine: Kiev’s attempts this week to suppress by force popular autonomy demands in the eastern oblasts seem to have ground to a halt almost before it started. Amid reports of three local activists killed in Mariupol, the willingness or ability of Ukrainian forces ordered to carry out an “anti-terrorist operation” has been thrown into question by the apparent defection of some army personnel to local militias and the capture of armored vehicles. Also problematic is the uncertain loyalty of Berkut special police and Alfa unit commandos, who having been demonized by the “EuroMaidan” forces for resisting their takeover in Kiev, have little reason now to suppress Ukrainian citizens opposed to the new administration. Also unclear is the strategy behind the offensive, which has little chance of success against an increasing number of brushfire takeovers.

The internal, extremist threat: While critics of the Kiev administration are accused of overemphasizing the significance of radical nationalists like the “Svoboda” party or violent extremists like Pravy Sektor (“Right Sector”) in the ouster of the elected Yanukovych administration, that doesn’t mean they didn’t perform the role of a critical, armed spearhead, without which the revolt would have failed. Even now, more moderate elements of the Kiev administration remain to some extent hostages of their unsavory allies. Both Svoboda and Pravy Sektor hold influence in the Kiev administration greatly disproportionate to their public support according to polling data. Worse, Pravy Sektor militants maintain a significant armed “street” presence, one that could be turned against the administration if it fails to meet their expectations. Indeed, the quixotic “anti-terrorism operation” in the east may in part have been undertaken to appease militants camped outside the Verkhovna Rada demanding action against so-called “separatists.” Comparatively moderate elements in the interim administration have indicated a dual policy of trying on the one hand to suppress “illegal armed groups” and, on the other hand, to recruit their members into a new “National Guard.” As reported by Stratfor, these somewhat contradictory efforts are unlikely to remove the militants as an ongoing menace:

“National Guard membership enables Right Sector members to work with local law enforcement to ensure public order, but it also provides a genuine opportunity for Right Sector members and other extremists to further militarize as they integrate into Ukraine's national security infrastructure. . . . Because of the group's fluid membership structure, however, Right Sector's more radical elements will likely resist efforts to be co-opted. As Kiev moves forward with its efforts, these elements will continue to present a threat to both pro-Russian and pro-European moderates.”

Economic and fiscal collapse: Meanwhile, the Ukrainian economy continues in free fall, with the hryvnia dropping 35 percent against the U.S. dollar since the beginning of the year and plunging 69% against gold in the same period. Currency reserves are insufficient to cover even two months’ worth of the country’s imports. On April 14th, Ukraine’s central bank raised the discount interest rate to 9.5%, up from 6.5% and nearly doubled the overnight loan rate to 14.5% from 7.5% in a desperate move to curb inflation and stop the slide to what may be almost certain default. It does not help, of course, that anti-Kiev takeovers are occurring in precisely the most productive industrial zone of the country and one heavily dependent on economic ties with Russia – nor that Russia may start to insist on prepayment of gas deliveries to Ukraine. Finally, the Kiev administration can look for no early bailout commensurate with the sea of troubles rising against it. Promised aid packages from the European Union and the United States are both insufficient in terms of timing and magnitude, and “help” from the International Monetary Fund, if it comes at all, may at best be a mixed blessing that further alienates the population from the unelected Kiev leadership:

“It’s also worth taking a second to remember that the ‘reforms’ demanded by the IMF primarily amount to harsh austerity measures (primarily cuts in gas subsidies) that are massively unpopular among Ukrainians and that will have a hugely negative impact on the population’s living standard, which isn’t very high to begin with. There’s a reason that Yanukovych and every other post-Soviet Ukrainian leader has obstinately refused to implement these reforms (Ukrainians hate them!) and it doesn’t take a particularly active imagination to devise a scenario in which the reforms backfire and ultimately cause the onset of yet another political crisis.