Economics
Ukraine Cuts a Deal It Could Soon Regret
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Ukraine has gotten some breathing room, but at what cost? President Viktor Yanukovych and Russia’s Vladimir Putin today announced that Moscow will invest $15 billion in Ukrainian government securities while cutting the price Kiev pays for Russian gas imports by about one-third.
The deal provides an urgently needed infusion of foreign cash to prop up Ukraine’s dwindling currency reserves and ensures the government can avoid politically unpopular gas price hikes before the 2015 elections. All told, the assistance will “be sufficient to sustain Ukraine’s balance of payments for around two years,” Neil Shearing, the chief emerging-markets economist at Capital Economics, wrote in a note to clients.