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Why now? Causes and Triggers of the Euromajdan Conflict

Introduction
The recent dramatic changes in Ukraine are a result of several years of political and economic shifts that have weakened the Ukrainian economy and created political tension. But why now? This paper examines the conditions that led up to the recent dramatic change in Ukraine and offers some ideas about what might have triggered this change and what can be expected in the near future.

Political and Economic Context

The economic and political tensions which have led to the Ukrainian conflict date back to the days of the orange revolution and the first multilateral relations with the European Union as the cornerstone of President Yuschenkos opening strategy. This strategy triggered Russia to raise the prices to match the European Union standard prices and generated a politically unstable climate known as the gas wars. These events, as detailed below in the Political Overview section, sped up the breakage of the reformist block and forced the cohabitation of President Yuschenko with Prime Minister Yanukovich, and finally the substitution of the former by the later in 2010. Ukraine, which has been involved in a severe economic crisis during the past years, continued its approach to the Western block and asked the IMF for two bailouts of 5,000 and 15,000 million dollars respectively. Nonetheless, the conditions imposed by the IMF with regards to gas grants and state budget (pressing for the privatization of state enterprises), shifted Yanukovichs opinion about the disadvantages of the economic aid. The bailouts were finally rejected and returned.

Economic Overview
Ukraine has large and fertile lands as well as positive weather conditions for agriculture. In fact, the production and exportation of agricultural products such as cereals, vegetables and fruits has been one of the traditional foundations of its economy. Also, during the Soviet era a powerful mining and processing industry of metals, coal and other chemicals was developed. However, its production dropped in the 80s because of technological obsolescence.

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The modernization attempts of the mining sector and the related heavy industries have been mostly directed to the research and exportation of machinery. This includes a well known aeronautic industry (Antonov). Most of these industries are located in the pro-Russian regions of the country: the Eastern and SouthEastern areas.

Map of salaries: courtesy of wikipedia commons

Linguistic map: courtesy of Wikipedia commons

Ukraine is as well a great consumer of natural gas, which is mainly imported from the Russian Federation. The country is also one of the most important routes for gas transportation to the European Union. The countrys external trade is divided in two main shares, the first one with Russia (between a 33% and a 35%) and the second one with the EU. The latter share is slightly smaller but its chance of growth is greater. Despite these important economic foundations and the countrys potential, the Ukrainian economy is considered weak and unstable. The following graph represents the evolution of the countrys GDP (blue) and its external debt (red).

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200,000.00 180,000.00 160,000.00 140,000.00 120,000.00 100,000.00 80,000.00 60,000.00 40,000.00 20,000.00 0.00 2004 2005 2006 2007 2008 2009 2010 2011 2012

Data from World Bank

We can make a few important conclusions. First, there exists a remarkable relation between the countrys economy (GDP) and external loans (external debt). Second, we can conclude that 2008 financial crisis had a great impact on the Ukrainian economy. Indeed, this impact translated into a deep political erosion of the times government (formed by the orange revolution leaders) and the return of Viktor Yanukovich to the top government posts. The following table provides with data about the deterioration of Ukrainian sovereign debt bonds according to Moodys ratings: Date 24/05/2006 10/11/2006 20/11/2008 12/05/2009 11/12/2010 05/12/2012 20/09/2013 31/01/2014 Rating - Forecast B1 - Stable B1 Positive B1 - Stable B2 - Stable B2 - Negative B3 - Stable Caa1 - Stable Caa2 - Negative

The resume of economic growth in Ukraine in 2010 was mostly due to the agreed bailout of 15 billion dollars which was negotiated by the countrys government and the IMF. The bailout was conditioned to economic reforms such as the end of gas grants, state budget cuts and tax increases. Finally, the bailout was completely refunded when the Ukrainian government rejected carrying out reforms.

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In the following picture the total unemployment rate (blue) and youth unemployment rate (red) percentages are plotted.
20 18 16 14 12 10 8 6 4 2 0 2004 2005 2006 2007 2008 2009 2010 2011 2012

The main conclusion is that the youth unemployment rate is twice as high as the total rate. This fact, along with the salary distribution map, defines the demonstrators profile: young people from the Western areas of the country, where the salaries are lower.

Political Overview
In 1994, a great political change in Ukrainian leadership happened when Leonid Kuchma substituted former President Mr Kravchuk. Mr Kuchma would lead the country for the ensuing ten years, until the events of the orange revolution. Kuchmas policies were against economic reforms in general, but especially against the privatization process of the state enterprises which were inherited from the Soviet era. Despite this political attitude, in 1999 Kuchma chose Viktor Yushchenko as Prime Minister. Mr Yuschenko was an economist with a long experience in the Ukrainian banking system, first in the Soviet system and then in the Central Bank of Ukraine. His greatest achievements were the control of inflation and the stabilization of the new Ukrainian currency (Hryvnia).

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But after a few months, the differences between the President and the Prime Minister emerged, because of the latters reformist zeal and openness toward the Western world. Mr. Yuschenkos initiatives for macroeconomic reform did not go unnoticed to the powerful oligarchies. In March 2002, after the Parliamentary election, the reformist opposition obtained the majority of the Parliaments seats led by Yuschenko, Moroz and Tymoshenko (Leaders of Our Ukraine party, Socialist Party and Yulia Tymoshenkos Block party respectively), and gained support among several social groups. However, Kuchmas party United Ukraine Alliance got a very close amount of votes. Meanwhile, besides the Parliament changed colors, President Kuchma continued fulfilling his political agenda which was linked to Putins ideology and foreign interests, oligarchies interests, and far from increasing civil freedom. A few months after the elections, President Kuchma was accused of being involved in the murder of the journalist Giogiy Gongadze, when one of his personal bodyguards published 500 hours of records of the Presidents private conversations. In response, President Kuchma dismissed PM Yuschenko and appointed Mr Yanukovich, who would become the continuity candidate during the 2004 elections. On October 31st 2004, new Presidential elections took place. In the first round, Mr Yuschenko obtained a slight advantage over Mr Yanukovich, but several electoral irregularities were reported by international observers. In the second round, Mr Yanukovich won with a 49,61% of the total amount of votes while Mr Yushchenko got a 46,61%. Notwithstanding, massive electoral fraud was reported by international observers during this second round. With support of the Parliament and a large sector of the Ukrainian population, Mr Yuschenko influenced the Ukrainian Supreme Court to reject this second round and to call for a new election. These events are known as the orange revolution. In the new vote, Mr Yuschenko was elected President and international observers witnessed a great advance in Ukrainian democratic standards. On February 22nd 2005, Mr Yuschenko swore in as the president and appointed Yulia Tymoshenko as the prime minister. However, a few months later, a corruption scandal burst from within the government, which also affected Ms. Tymoshenko. The Prime Minister was dismissed and substituted, and President Yuschenko started to get closer to Mr. Yanukovichs continuity block, abandoning his reformist zeal and falling under Russian influence after a set of international skirmishes with Russian authorities on the gas prices.

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In March 26th 2006, parliamentary elections took place. The results were favorable to Mr Yanukovichs Party of the Regions, which was shadowed by Tymoshenkos block. President Yuschenko, whose party lost power in Parliament, chose cohabitation between the largest political blocks (reformist and continuity block) and appointed Mr Yanukovich as Prime Minister. In 2007, some representatives of Our Ukraine party defected Mr Yuschenko, tempted by the oligarchies, and joined the Prime Ministers Party of the Regions, effectively destroying cohabitation and forcing the celebration of early parliamentary elections on September 30th. Despite Party of the Regions victory, the reformist block obtained enough seats to confirm Ms. Tymoshenko as Prime Minister. In 2010 Presidential elections took place. After the reformist block (Yuschenkos and Tymoshenkos) crumbled because of the mismanagement of the financial crisis and the gas wars with Russia the previous year, Mr. Yanukovich won and became President. The end of the orange reformism happened when Yulia Tymoshenko was accused of corruption, abuse of office and diversion of public funds (up to 400 million dollars to pay the gas debt to Russia were diverted through her husbands controlled enterprise United Energy Systems of Ukraine). Finally, a new generation of opposition politicians emerged to fill the power void.

Analysis of the conflict Local Actors

The analysis of this information enables us to understand immediately the countrys internal actors, which are listed and described in the ensuing paragraphs: Political establishment: The Ukrainian political class is formed by a mixture of politicians who are affected by corruption and party turncoat scandals, in many cases, and who are linked to the oligarchies due to the dual ownership of the industries. The government is divided in the Presidency, which controls the Ministries of Foreign Affairs and Defense, the General Prosecutor, the Head of the Security Corps, and the Parliament, which appoints the Cabinet and ratifies the Presidential decisions. Because of the countrys conditions and the pressure on its external debt, the government must find international allies (within the Western block or within the CIS) who will provide the country with necessary funds to produce economic growth.

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Oligarchs: many of the largest industries in the country are controlled by individuals, families or consortiums, as a consequence of the particular post-Soviet privatization process. Another great portion of the industries remain under public control. The business oligarchs are linked to the Russian Federation since most of them are based in pro-Russian areas, and because the traditional markets are those of the ancient USSR. Besides, several industries are obsolete with regards to Western standards, but their products are welcome within the CIS, whose technological level is slightly inferior.

Pro-European demonstrators: the higher poverty level and lower salaries in the Western side of the country along with a high youth unemployment rate, explain the different profiles of radical nationalists and anti-Russian groups. The opening of the country to the European Union would be a great opportunity for the Western population because of the Free Trade and the short term Visa Facilitation Agreements, a guarantee against the economic and political corruption which desolate the country and to unlink Ukraine and the Russian Federation.

The Ethnic Russians: a large part of the population from the Eastern side of the country has Russian ascendency and Russian is its mother language. Indeed, many of Eastern citizens also bear a Russian passport. Moreover, the ties between the pro-Russian regions and the Russian Federation are strengthened by the customary trade among the ex-Soviet Union Republics.

International Actors
Russia and the Commonwealth of Independent States (CIS): Russia and the rest of CIS countries are currently in an economic growth streak, despite the global financial recession, mostly due to their hydrocarbon deposits and the expansion of their common internal market. In particular, Russia has recovered its presence in the international scene and increased its foreign intervention after the ascension of Vladimir Putin and the relative quietness achieved with the Russian oligarchs after the 90s turmoil. Some examples of this renewed international power are the invasion of Georgia in 2008 and the secessions of Abkhazia and South Ossetia, or its manifest support to Assads faction and diplomatic

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successes in Syria. Nowadays, the Russian Federation is strengthening its area of influence in Central Asia, the Middle East and Eastern Europe. The geostrategic interests of Russia in Ukraine are described below: Crimea and the ethnic Russians in Eastern Ukraine:

The recent political history of the Crimean region starts in 1992, when Russia cancelled the transference of the peninsula to Ukraine in 1954, and supported the proclamation of independence by the Crimean political institutions. Two years later, the winner of the first democratic elections in the region publicly supported the reunification with Russia and started implementing specific policies to approach the Russian Federation. The program ended with the celebration of a referendum whose result was a 70% of the voters reunifying with Russia. In 1995, Ukraine abolished the Crimean Constitution and the presidential post. Crimea fell under control of the Ukrainian central government. Since the beginning of the Russian economic recovery, the country tried to regain control of those territories which are considered a part of the Federation and which became independent after the fall of the USSR or which are populated by ethnic Russians, as well as to prevent new region secessions, such as Chechnya. The Russian Federation access to the Black and Mediterranean Seas is essential for its Navy and regaining the lost power in international politics. Russia rents the port of Sevastopol and some new bases in the Eastern coast of the Black Sea, including those in Abkhazia. Nonetheless, the control of Ukraine (or its partition) would provide Russia with a larger amount of bases and ports without leasing or making other political concessions so that it can deploy and upkeep its Black Sea Navy, control the Black Sea navigation and gain accesses to the Balkans region.

CIS consolidation and Customs Union:

One of the greatest foreign policy projects started up by the Russian Federation is the consolidation of the CIS and the Customs Union as an alternative to the European Union. The goal of the project is two-folded, firstly to strengthen ties among its members under the Russian leadership, and secondly to create a strategic belt around the Russian Federation--

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isolating it from the Muslim world in Central Asia and the Western block in Europe. Thus, the country is protected by China in the Far East, by the CIS countries in the Eurasian landmass (notice that Kaliningrad produces a nearly complete territorial discontinuity between the Baltic States and the rest of the EU), and the oceans around the rest of its borders. The importance of Ukraine is three-folded in this sense. Firstly, the country has a long border with Russia and acts as a territorial stopper along with Byelorussia. Secondly, since it belongs to the CIS as a participant, its membership is essential to prevent massive fleeing towards Western markets of its members. Thirdly, the Ukrainian market is larger than 40 million people and its heavy industries export a large amount of goods to Russia. Western block: Despite the severe 2008 financial crisis and its consequences on the Western world, the Western block has never given up its program of expansion of democratic liberalism and free market. The interests of the block in Eastern Europe are to add new members to the European Union and allow those states join NATO. European Union Ukraine relations:

Nowadays, the relations between the European Union and Ukraine are articulated by a set of foreign policy instruments such as the European Neighborhood Policy and the Eastern Association program. Ukraines intense multilateral relations with the European Union and its member states during the last decade led to the preparation of an Association Agreement, which is constituted by a Free Trade Treaty and a dialogue about non-visa circulation during short term visits. It is designed to achieve political and economic integration of Ukraine within the EU. The Western defensive network (NATO):

Besides the planned political association and economic integration, since 2000 NATO has helped Ukraine to restructure its inherited massive army (from 700,000 conscripted troops it was reduced to 300,000 professional troops). In 2008, under the auspices of Bush Administration, the United States approached Ukraine and Georgia with the purpose of integrating both countries within the NATO structure, and to subsequently deploy anti-ballistic missiles systems in both territories. This operation was one of the factors which triggered the Georgia war that year. After the war, the integration process became indefinitely postponed.

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Conclusion
The tensions which have led to the Ukrainian conflict date back to the days of the orange revolution and the first multilateral relations with the European Union as the cornerstone of President Yuschenkos opening strategy. This strategy caused the gas wars when Russia raised the prices to match the European Union standard prices. These events, as detailed above in the Ukrainian politics dynamics section, sped up the breakage of the reformist block and forced the cohabitation of President Yuschenko with Prime Minister Yanukovich, and finally the substitution of the former by the later in 2010. Ukraine, which has been involved in a severe economic crisis during the past years, continued its approach to the Western block and asked the IMF for two bailouts of 5,000 and 15,000 million dollars respectively. Nonetheless, the conditions imposed by the IMF with regards to gas grants and state budget (pressing for the privatization of state enterprises), shifted Yanukovichs opinion about the disadvantages of the economic aid. The bailouts were finally rejected and returned. In this context, the trigger for the current conflict was the announcement of the signature of the Association Agreement with the European Union. Russia, fearing exports from the EU through Ukraine would be without border tariffs (since in this country both EUs and CIS Free Trade areas would overlap), diminished the amount of goods that it was importing from Ukraine, raised the gas prices and threatened to expel Ukraine from the CIS and the Customs Union. Due to the weak Ukrainian economy, the structure of its industrial sector and the technological gap, Ukraine is not in a strong position to compete within the EUs common market. Furthermore, political interference by the Western block in Ukraines internal politics and the chance of a forcible privatization of the state enterprises (many of which could be bought by foreign investors), explain why the Association Agreement was rejected, especially after Russia offered a bailout of 15,000 million dollars (the main reason for approaching the EU) and a discount in the gas prices. The Western population of Ukraine interpreted these events as serious international pressure exerted by the Russian Federation and an increase in corruption which desolates the country. As a result, the radical nationalist and pro-European sectors reacted starting the riots.

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Finally, it is important to mention that Russia is not willing to leave the ethnic Russians in Eastern Ukraine, or to renounce its opportunity to promote its international interests, especially in the peninsula of Crimea. To further their interests, it is possible that Russia will breach Ukraines territorial integrity and then absorb the pro-Russian regions as it did during the crisis in Georgia.

Sources: The quest for freedom - Jess Lpez Mdel World Bank Data bank Wiki commons - Maps of Ukraine