Tuesday, December 17, 2013

Ukraine Continues Tilt Toward Russia

In the Middle Ages, Kiev served as the capital of Russia.  Now it serves independent Ukraine in that capacity.  Over time, Russia and Ukraine separated culturally, linguistically, and nationally.  Now Kiev once again looks to Russia for leadership and support.

Ukraine in terms of size is about the size of Texas or France.  Next to the North American Great Plains, its soil potentially can produce more than any region on Earth.  Its 45 million people live in a state of chronic underdevelopment.  The nation suffers from severe corruption and holds the fifth lowest international credit rating.

Twenty years of independence from the old Soviet Union brought disastrously bad government to a nation with energy reserves, a seaport, and food production capacity that could easily provide for a continent.

Ukraine naturally shied away from Russia at first.  Russia dominated the old Soviet Union which in turn terrorized Ukraine.  Stalin ripped away from the land tens of millions of innocent farmers and others.  Over the USSR's entire history, Ukrainian language and culture were stifled.

Ties to Europe and the United States grew.  Ukraine wanted to participate in institutions such as the European Union and NATO.  Economic instability in the past several years has made help from the EU come with conditions.  These include applying to the IMF and signing a free trade agreement.

Full free trade with Europe would help Ukraine develop itself.  It can cheaply produce enough food to sell to all of Europe.  France, Germany, and other countries, however, continue to cling to agricultural subsidies.  For Ukraine to get ahead, it needs to be able to exploit its competitive advantages in land and cheap labor.  A free trade pact would merely open the door to European manufactures without helping Ukraine develop its agricultural sector.  Some in the United States have floated the idea of a bailout, but with the US and the EU experiencing their own debt crises, this will not happen.

Enter Vladimir Putin and Russia.

Putin seems to have figured out what Britain learned after the American Revolution.  Gain influence over an independent nation's economy and get the benefits of colonialism without the costs of administration.  Britain, the United States, Japan, and others have all adopted that lesson at some point after hard lessons learned about war, conquest, and colonialism.

Russia has extended its hand to Ukraine, offering a trade deal and other forms of assistance.  This will tie Ukraine more strongly to the nation that served as its overlord during Czarist and Soviet times.

Many in Ukraine see this as too risky.  Thousands have rioted in protest against rising Russian influence.  Russian ties to Belarus have resulted in the near merger of the two states.  This will likely not change Ukraine's official position.

Putin will continue to channel efforts into building an informal empire dependent on Moscow.  This is a less risky strategy than China's new belligerence in the Far East, but it is no less important.

As for Ukraine, its potential remains untapped.  But a country the size of France with oil, gas, and food capability is not a forgettable part of the world's balance of influence.

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