Exacerbating crisis in Ukraine: Looking over the brink?
- Exacerbating crisis in Ukraine: Looking over the brink?
Not long ago, Andriy Lalak was treated like one of BM Bank's most valued customers. But when he shows up there now, employees avoid him like the plague.
Halyna Pastushuk reports
For over a month, Lalak has been trying unsuccessfully to withdraw 100,000 hryvnyas ($11,700) from his account, money he says he needs to expand the small trading company he runs in the western Ukrainian city of Lviv.
But Ukraine's cash-strapped banks, reeling from declining liquidity and a choked-off credit market, have suspended all cash withdrawals. Lalak and a small group of friends have begun to stage daily protests outside the bank.
Last week, Ukraine narrowly averted a new natural-gas conflict with neighboring Russia when it paid off the final $50 million installment of a $360 million gas bill to Gazprom just hours after Russian Prime Minister Vladimir Putin threatened to cut off supplies for the second time this year. Difficult negotiations are expected with the International Monetary Fund (IMF) over an emergency loan.
Getting through the current crisis, which many economists call the worst global downturn since the Great Depression, presents a daunting challenge for even the most cohesive and focused governments -- and Ukraine's government is neither.
Observers say the endless bickering between President Viktor Yushchenko and Prime Minister Yulia Tymoshenko, allies in the pro-Western Orange Revolution just four years ago, is tearing the elite apart and handcuffing anticrisis efforts as the government seeks foreign assistance to ward off economic catastrophe.
"There is a total inability among the Ukrainian elite to deal with the crisis, at the economic and also at the political level," says Eugeniusz Smolar, director of the Warsaw-based Center for International Relations. "This is a time of national crisis and they are acting as if it were one of those standard mini-crises that they have been facing. This is not like that. This is a mega-crisis."