Ukraine Teeters On The Brink

KIEV, Ukraine -- Steel and chemical factories, once the muscle of Ukraine's economy, are dismissing thousands of workers. Cities have had days without heat or water because they cannot pay their bills, and Kiev's subway service is threatened. Lines are sprouting at banks, the currency is wilting and a government default seems possible.

Vendors sell vegetables at a market where mostly provincial Ukrainians sell their produce in a suburb of Kiev. Ukraine has been hit hard by the global financial crisis and is expected to fall deep into recession this year as the currency weakens and industry has all but ground to a halt.

Ukraine, once a worldwide symbol of an emerging, free-market democracy, is teetering. And its predicament poses a real threat for European economies and other former Soviet republics.

The sudden, violent protests that have erupted elsewhere in Eastern Europe seem imminent. Across Kiev last week, people spoke of rising anger about the crisis and resentment toward a government that they said was more preoccupied with squabbling than with rallying the country.

The sign held by Vasily Kirilyuk, an unemployed plumber at a recent protest, summed up the pervasive frustration: "Get rid of them all," it said.

"There will be a revolt," he said. "And people will come because they are just fed up."

Kirilyuk, 29, was standing in the same central square where throngs in 2004 carried out the Orange Revolution, a seminal event that brought to power a pro-Western government in Ukraine. He said he was a fervent supporter then, but now he and a few dozen others who have set up tents are demanding that the heroes of that revolution step down.

It is not hard to understand why world leaders are increasingly worried about the discontent and the financial crisis in Ukraine, which has 46 million people and a strategic location. A small country like Latvia is one thing, but a collapse in Ukraine could wreck what little investor confidence is left in Eastern Europe.

It also could cause neighboring Russia, which has close ties to eastern and southern Ukraine, to try to inject itself into the country's affairs. The Kremlin also would be able to hold up Ukraine as an example of what happens when former Soviet republics follow a Western model of free-market democracy.

"Ukraine is a linchpin for stability in Europe," said Olexiy Haran, a professor of comparative politics at Kiev Mohyla University. "It is a key player between the expanding European Union and Russia."

That Ukraine can cause problems for Europe was highlighted in January when Ukraine engaged in a dispute with Russia over how much it would pay Russia to use natural gas, as well as transport it to the rest of Europe. The Kremlin shut off the gas for several days, and some European countries went without heat.

The crisis also has cut deeply because people are disillusioned with the government. President Viktor Yushchenko, a leader of the Orange Revolution, is widely scorned. A recent poll found that 57 percent of people want him to resign.

His rivals have also lost popularity, as the public has become exasperated by years of bickering. In February, the International Monetary Fund refused to release the next installment of a $16.4 billion rescue loan because the government would not adhere to an earlier agreement to pare its budget.

The monetary fund is projecting Ukraine's economy will shrink by 6 percent this year, but said it was continuing to work with the government to find a way to disburse the rest of the rescue loan.

Source: New York Times

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