Ukrainian oligarch Ihor Kolomoisky is urging that Ukraine default on its foreign debt as a way to kick start its economy, but such a step, Mykola Bielieskov says, would cost Kyiv the support it enjoys in the West and almost certainly force it to accept Moscow’s conditions.
In a comment for the Gordon news agency, the deputy director of the Kyiv Institute of World Politics argues default might benefit Mr. Kolomoisky but would be a disaster for Ukraine (gordonua.com/blogs/nikolay-beleskov/v-sluchae-defolta-my-possorimsya-s-zapadnymi-partnerami-togda-vozrastet-veroyatnost-chto-pridetsya-dogovarivatsya-s-rf-na-rossiyskih-usloviyah-995157.html).
Default would give Mr. Kolomoisky a better chance to get more than $2 billion (U.S.) from the International Monetary Fund, but while he might benefit, Ukraine would not, Mr. Bielieskov says. “Debt in the West is something holy,” and any failure to pay what one owes as in the case of default would lead to a break with the country’s Western partners.
That would almost certainly force Ukraine to turn to Moscow and make greater concessions to the Russians than would otherwise be the case, and it would quite likely lead to an economic crisis in Ukraine. Those who point to cases when default led to positive outcomes forget that the positive outcomes came not so much because of default but from other causes.
Ukraine cannot count on them, Mr. Bielieskov says; and so it should not be misled by those who would profit for themselves at the expense of Ukraine and weaken the country, which continues to be under attack from the Russian Federation. Both economics and politics thus dictates that default be rejected.
Paul Goble is a long-time specialist on ethnic and religious questions in Eurasia who has served in various capacities in the U.S. State Department, the Central Intelligence Agency and the International Broadcasting Bureau, as well as at the Voice of America and Radio Free Europe/Radio Liberty and the Carnegie Endowment for International Peace. The article above is reprinted with permission from his blog called “Window on Eurasia” (http://windowoneurasia2.blogspot.com/).