Last week, NACM Economist Chris Kuehl, PhD talked about Eastern Europe’s need to embrace further reform efforts to have any hope of closing the gap between it and the traditional power economies. It appears that Ukraine has taken a monumental step backwards after abruptly ending negotiations, apparently at the urging of Putin Russia, with the European Union after five year.
The EU and Ukraine had been working toward an “association,” though not as welcome a reception as other member states have received, and a free trade agreement that would have represented a significant step forward. Instead, Ukrainian leadership opted to hitch its economic wagons to Moscow. The Putin government had reportedly been pressuring Ukraine, independent from the Soviet Union for just over two decades, through blocking the flow of manufactured goods and other tactics in an effort to dull its interest in forging the EU deal.
The pull-out by Ukraine’s leaders sparked a rash of protests from a populous that still remembers the difficulties of life under Soviet rule. Now, it would be an understatement to say the future of one of Eastern Europe’s most important economies has been thrown into a state of utter upheaval. And, for a country that has been known to perform poorly in terms of adhering to credit terms, it has made the idea of granting credit to companies based there all the more risky.
- Brian Shappell, CBA, CICP, NACM staff writer