Russia Buys Off Ukraine In An Attempt To Prevent Eurozone Growth

The Ukraine prime minister Mykola Azarov has said that a deal with Russia has staved up bankruptcy and provided stability for the country, avoiding a total social collapse that many, including the prime minister saw the Ukraine heading towards.

Despite having agreed to EU association agreement last month, and despite mass protests that have brought Kiev to a standstill the government has joined forces with Russia.

It’s easy to see why when you look at what’s on offer. Russia will be buying $15bn of Ukrainian government bonds and has slashed the price of the domestic gas it supplies to the country.

Speaking last night prime minister Azarov said:

“What would have awaited Ukraine? The answer is clear – bankruptcy and social collapse. What a present for New Year that would be for the people of Ukraine.

The agreements between the Ukrainian and Russian presidents allow us to plan the years to come as years of development and people’s confidence about their stable lives.” (source)

Protesters are calling for the resignation of President Viktor Yanukovych who they say has sold out the country to Russia. Many people in Ukraine remember clearly living under communist Russian rule and have a major distrust of the country.

“He has given up Ukraine’s national interests, given up independence,” Vitaly Klitschko, an opposition leader and heavyweight boxing champion, told the crowd yesterday. (source)

Russia stands to gain a great deal from the agreement. President Putin wants to bring Ukraine, which has a large, mineral rich market, into the Eurasian Union that he is planning to build with other ex-Soviet states such as Kazakhstan and Belarus. His aim is to make the Euraisian Union a serious challenger to the economic might of the EU, China and the United States. Ukraine is the most populated of the former states and Putin has for the time being at least stopped the country forging closer ties with the EU. Something hundreds of thousands of Ukrainians are not happy about.

Putin’s determination to tie Ukraine closer to Russia may  have more to do with military might than economic assistance. Several thousand miles of Russia’s eastern flank now has the ‘friendly’ countries of Ukraine and Belarus between him and Europe. Any US missiles sited in Poland will now have to travel through airspace that is not allied to Europe, making an attack more difficult. Having Ukraine allied to Europe, and therefore indirectly to the United States would not have been an option he was comfortable with.

With Kazakhstan shielding much of southern Russia Putin is putting up physical barriers against attacks coming from the west.