Europe ditches Ukraine as it seeks to save Greece

The European Union is all but handing over the former Soviet republic to Vladimir Putin’s Russia

George Soros: ‘There is something fundamentally wrong with EU policy. How else could Putin’s Russia have outmaneuvered Ukraine’s allies, which used to lead the free world?’

LONDON (Project Syndicate) — The European Union stands at a crossroads. The shape it takes five years from now will be decided in the coming three to five months.

Year after year, the EU has successfully muddled through its difficulties. But now it has to deal with two sources of existential crisis: Greece and Ukraine. That may prove too much.

Greece’s long-festering crisis has been mishandled by all parties from the outset. Emotions now are running so high that muddling through is the only constructive alternative.

But Ukraine is different. It is a black-and-white case. Vladimir Putin’s Russia is the aggressor, and Ukraine, in defending itself, is defending the values and principles on which the EU was built.

Yet Europe treats Ukraine like another Greece. That is the wrong approach, and it is producing the wrong results. Putin is gaining ground in Ukraine, and Europe is so preoccupied with Greece that it hardly pays any attention.

Putin’s preferred outcome in Ukraine is to engineer a financial and political collapse that destabilizes the country, and for which he can disclaim responsibility, rather than a military victory that leaves him in possession of — and responsible for — part of Ukraine. He has shown this by twice converting a military victory into a ceasefire.

The deterioration in Ukraine’s position between the two ceasefire agreements —Minsk I, negotiated last September, and Minsk II, completed in February — shows the extent of Putin’s success. But that success is temporary, and Ukraine is too valuable an ally for the EU to abandon.

There is something fundamentally wrong with EU policy. How else could Putin’s Russia have outmaneuvered Ukraine’s allies, which used to lead the free world?

The trouble is that Europe has been drip-feeding Ukraine, just as it has Greece. As a result, Ukraine barely survives, while Putin has the first-mover advantage. He can choose between hybrid war and hybrid peace, and Ukraine and its allies are struggling to respond.

The deterioration of Ukraine’s situation is accelerating. The financial collapse that I had been warning for months occurred in February, when the value of the Ukrainian currency, the hryvnia, plummeted by 50% in a few days, and the National Bank of Ukraine had to inject large amounts of money to rescue the banking system. The climax was reached on Feb. 25, when the central bank introduced import controls and raised interest rates to 30%.

Since then, President Petro Poroshenko’s jawboning has brought the exchange rate back close to the level on which Ukraine’s 2015 budget was based. But the improvement is extremely precarious.

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