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Ukraine’s Global Meaning: Four Theses

Ukraine stands at a crossroads. Let us hope Ukrainians seize the day for good.

February 21 anti-government rally in Kiev. (Credit: Amakuha - Wikimedia)


  • The events in #Ukraine tell us that Europe’s soft power is alive and well.
  • Autocrats can outwit the clumsy EU any time. But they cannot stifle the demand for freedom and prosperity.
  • Crises can be the handmaidens of a change that carries the promise of a better future.

Let us pray for all those who died or were wounded when a major part of the Ukrainian people rose to overthrow a corrupt autocracy. The situation remains fraught with grave risk. But the Ukrainian revolution carries new hope for the country with its particularly sad history – and it carries lessons for Europe and beyond.

1. Europe’s soft power

The soft power of Europe is well and alive. The protests erupted in Kyiv when the now-deposed Ukrainian president turned his back on an association agreement with the EU to team up with Russia instead. In the end, a joint mission by the Polish, German and French foreign ministers, with US backing, helped to pave the way for a breakthrough.

Despite the occasional bureaucratic follies in Brussels and elsewhere, the European Union and the idea of “Europe” still stand for the promise of peace and prosperity, of democracy and the rule of law and for the freedom to work and live how and where people want.

2. Threat vs. model

Ruthless autocrats can try to outwit the rather clumsy 28-member EU any time. But they cannot create what their own people yearn for: freedom and prosperity.

For many Ukrainians, including apparently some of the Eastern oligarchs, Russia is a threat rather than a model. A mismanaged and fragile economy dependent on the price of oil (Russia) is no match for the attraction of a vast and prosperous partner.

Offering access and setting the terms of such access are the most powerful tools which the EU has to shape events in its neighborhood.

3. The idea of Europe

The idea of Europe goes far beyond that of a mere common market. In countries such as the UK and the US, the political power of the European idea can be difficult to grasp. But on the continent, the ideas of peace, prosperity and Europe often go hand in hand.

For example, failing to understand the political glue of Europe was the major mistake many outside observers made when they predicted the demise of the euro one or two years ago.

In the EU, the backlash against painful austerity and reforms will show up in a serious anti-EU protest vote at the EU parliamentary elections this May. But that will likely fade again somewhat when the positive results of the painful reforms at the euro periphery become visible over time.

4. The Putin slide

Despite the glitter of Sochi, the events in Ukraine cast a shadow on the outlook for a Russia a la Putin. Rising commodity prices and ultra-cheap global liquidity had helped the rulers of some emerging markets to hide the costs of corruption and mismanagement for a while.

But with stable commodity prices and a return of capital to the developed world, those emerging markets that neglected to build their non-commodity export base need to adjust.

Instability in those emerging markets that have been mismanaged economically and/or politically could well remain one of the hallmarks of 2014.

Fortunately, many other emerging markets look sound. And the developed world has recovered enough from its own recent crises to be able to cope with some economic problems in emerging markets. And as the events in Ukraine show, crises can be the handmaidens of a change that carries the promise of a better future.

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About Holger Schmieding

Holger Schmieding is chief economist at Berenberg Bank in London. [United Kingdom] Follow him @Berenberg_Econ

Responses to “Ukraine’s Global Meaning: Four Theses”

Archived Comments.

  1. On February 25, 2014 at 5:34 pm Joni Simonishvili responded with... #

    When Ukraine initially negotiated its EU Association
    Agreement it expected economic benefits, knowing full well Russia would object.
    It did not receive the support it rightly or wrongly expected. All countries
    which have sought to join the EU have had similar problems – before Spain
    joined, for example, it was told to develop its industrial base rapidly, with
    little assistance, whilst at the same time decreasing agricultural production,
    its main earner. Eventually the political rather than the economic argument
    told, but Spain’s recent problems have again made people question why it joined
    the European Economic Community, as it was then called, without seeing
    significant economic benefits.

    Russia gave Ukraine the economic support it needed, in the
    form of a 15 billion dollar loan and cheap gas. This may have been a left-handed
    gift but it does help the country. Yanukovych did not turn his back on the EU
    by accepting this loan; he stated openly that his own country was his priority
    and that if the EU wanted to support the country he would accept a similar loan
    from that quarter.

  2. On February 28, 2014 at 5:41 pm Jamil M Chaudri responded with... #

    Salutations, Joni.
    Thank you for trying to bring SUNSHINE to what the unbridled capitalists would like to do. They want countries to “join” so that the rich countries can find more opportunities for investment and consumers to buy their goods, but they do not want to offer financial aid to mitigate the disruption of the economy of the joining-in country. Look at how poor Portugal, Spain, Greece are suffering, and what Ireland went through in the last 10 years.