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‘Any government willing to cooperate with the IMF will be heralded as legitimate’

Published time: March 02, 2014 07:31
People queue at an exchange counter in central Kiev on February 28, 2014 (AFP Photo)

The West's proposed financial aid will not solve Ukraine’s economic problems, but increase austerity, professor of political economy Jeffrey Sommers told RT.

If the self-proclaimed government in Kiev cooperates with the IMF, it will be regarded as legitimate in the West, even if its decisions are unpopular in Ukraine itself, Sommers says.

RT: Who do you think would be willing to foot that bill of $35 billion that Ukraine needs to stay afloat?

Jeffrey Sommers: I think it is certainly unlikely that either the EU or the US will come up with that level of funding especially given the tendency towards cutting budgets and austerity in either country. Now of course the IMF very much would like to come forward with the stabilization program and of course this would result in austerity being imposed on the Ukrainian economy and people but it is just difficult to say whether they’ll muster the political will to come with that level of funding and it does not really do anything to solve medium to long run problems in the Ukrainian economy anyway.

RT: Many within the country consider the current government illegitimate, would international organisations, like the IMF, be open to dealing with it?

JS: Well I think unfortunately any government that expresses its willingness to working with IMF in imposing the structural adjustment is going to be heralded as legitimate and so represent the popular will whether it does or does not.

People come out from a bank office in central Kiev on February 28, 2014 (AFP Photo / Bulent Kilic)

RT: Any cash would most likely come with unpopular reforms. How could that affect the already explosive situation in the country?

JS: Well I think the current government as it is currently composed will just blame Russia for the problems that will come with an austerity budget. So they have the opportunity to deflect the information either by IMF or even the EU. So I think that is one of the consequences that we might see. Of course Ukraine’s economy is a very precarious place right now. It could be more competitive if it could receive the reduced energy prices which Russia was offering. That would make its chief export sector – metals even more competitive and it can be quite good for it. But if Russian gas prices go up for Ukraine, this could be quite bad for them.

RT: Given East Ukraine, which is gripped by mass pro-Russian protests, is the most economically developed part of the country. How will the current divisions affect Ukraine's economy?

JS: Well it is really depended upon how much control the central government can assert over the east. So if the east loses its export markets in Russia, it can also be quite devastating for it. Ukraine has international markets beyond Russia and the CIS for its metal products but again if Russian gas prices for Ukraine go up then those metal products are going to be less competitive on the world markets. So it is a very difficult situation for Ukraine and its economy.

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