Ukraine a pawn in EU chess game

A deal with Ukraine is a part of a geopolitical chess game and the EU would like to take that piece, but can’t afford it, European Asset Fund Manager Eric Krause, told RT.

RT:An unexpected move from Ukraine there, when they could be signing the deal as soon as next week. Why did they stop so quickly now?

Eric Krause: I was surprised myself. I was quite pessimistic at the outcome as I thought they would sign with Europe because the problem is everybody talks about what Ukraine needs and doesn’t need to do, but the issue is that Ukraine got a government which is representing the interests of certain economic groups and Europe is looking to survive. The problem is that Ukraine is in dire economic straits. Ukraine is three to six months from default. They have just been downgraded by Moody’s again and are kept on negative rate watch, which meant that they are soon going to be in the seats. They cannot raise money in markets, they are running a deficit, they are having a lot of trouble keeping the currency stable. So the problem is the EU offers a lot of words, offers thousands, millions of pages of documentation, but they don’t offer what Ukraine needs. And that’s money.

RT:And that money though, clearly here is a country that is virtually bankrupt. Surely the European Union doesn’t want to start bailing out a new member. That would be crazy for Ukraine to join the EU, isn’t it?

EK: That’s absolutely the point. But the thing is that Ukraine is not vital for the EU. It’s a part of a geopolitical chess game and they would like to take that piece, but they are not going to spend a lot of money for it, they can’t afford it. They have got Portugal, Greece, pretty soon they would have France. And this is about core interests. Ukraine is core to Russia. Russia begins in Ukraine a thousand years ago. It’s a vital part of the Eastern European, Russian-speaking states. And Russia has the means and the willingness to provide real support to Ukraine, starting with the gas price.

RT:Can Ukraine then create relationships to keep both sides happy?

EK: It will have to. But I think its main focus is going to be Russia. There is an obvious complementarity. Opening the Ukrainian borders to the EU would be a suicidal because the Ukrainian export capacity is simply not up to European standards, whereas the European import would flood in and wipe out what remains of Ukrainian industry. At the same time Ukraine could no longer export to Russia, it would be a basket case.

RT:Nevertheless, won’t many Ukrainians be very disappointed about this? They see the EU as maybe some sort of solvation, there are huge benefits for the Ukrainians.

EK: I would say that Ukraine is two countries. The western Ukrainians are going to be very disappointed because they see themselves as basically Polish. That’s the problem. On the other hand the other half of Ukrainians are essentially Russians. There are two countries trying to coexist within one national space and it is going to be complicated.

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