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After the USSR

An independent Ukraine emerged in 1991, after the dissolution of the Soviet Union. From day one, the country was plagued by corruption and political intrigue. The citizenry were fiercely divided between aligning with the West with an eye to joining the EU or, alternatively, aligning with Russia.

The rapid transition from communism brought severe unemployment and other dislocations that continued for the rest of the decade. Measured GDP dropped 60 percent from 1991 to 1998, leaving most Ukrainians struggling to get by. Widespread shortages forced the government to free the prices of most goods, but it continued to feed subsidies to state-run agricultural and industrial operations.

A loose monetary policy led to hyperinflation. In 1993, prices rose more than a hundredfold. After Kiev introduced a new currency, the hryvnia, in 1996, the economy slowly mended. By 2000, the economy was growing 7 percent annually. Then the global recession of 2008 brought progress to a halt. In November of that year, the International

Monetary Fund (IMF) provided a $16.5 billion stand-by loan for the country.

The breadbasket of Europe had become a basket case.

The history of Russia's transition to a market economy holds the clue as to how that happened. Until 1991, Ukraine's economy was modeled after Soviet Russia's: central planning, central control, and state ownership of industry and resources—an enervating regime of disincentives for individual initiative.

Ukraine's unwinding of state ownership and control spawned the same kind of oligarchs and provided the same rich opportunities for corruption as the transition in Russia. A few well-positioned and shrewd individuals snatched up the country's mining, metals, chemical production, and energy distribution assets on the very cheap. The big difference vis-a-vis Russia was that Ukraine didn't have a Putin to impose limits on the looting. So it continued.

For two decades, Ukraine's oligarchs benefited from cozy relations with government officials, who would accept rich kickbacks to turn a blind eye to the oligarchs' often Mafia-like activities. It has been great for the oligarchs and their political allies, but not so good for anyone else.

Don't Forget to Vote

Going into the 2004 election, the incumbent president and the man with his hands on the levers of state power was the Russian-leaning Viktor Yanukovych. He was being challenged by, among others, Viktor Yushchenko, a popular West-leaning politician who had, just a few months earlier, survived an attempt to poison him with dioxin. The election progressed to a runoff between the two Viktors. A victory claim by incumbent Yanukovych was met with cries of voter intimidation and electoral fraud, complaints that were confirmed by several domestic and foreign election monitors.

In November 2004, thousands of Yushchenko supporters (generally Ukrainian speakers oriented more toward Europe than toward Russia) took to the streets in protest and ensnarled Kiev in a campaign of civil resistance. It was the beginning of the Orange Revolution. Protests spread across the country but remained nonviolent, with the emphasis on civil disobedience, sit-ins, and general strikes. Much of the organizing for the protests was funded by Western money sent through NGOs.

The protestors got what they wanted. In late December, Ukraine's Supreme Court ordered a revote. The balloting was closely watched by domestic and international observers, who by and large pronounced the second runoff "fair and free." The earlier result was reversed, and the West-leaning Yushchenko assumed office.

Through the Orange Revolution and the unseating of a Russian-leaning president, Putin remained true to his publicly professed credo of noninterference in the affairs of other sovereign countries. But it must have tried his patience that the so-called people's Orange Revolution was financed by Western money and largely orchestrated by the NGOs handling that money.

Yushchenko served a full six-year term without drawing active opposition from Moscow.

By the time of the next election, in 2010, President Yushchenko had fallen out with an important ally and leader in the Orange Revolution, former Prime Minister Yulia Tymoshenko, who had developed presidential aspirations of her own. She entered a three-way contest with Yushchenko and the reappearing Yanukovych, which split the pro-Western vote. Yanukovych received a plurality in the first round and then a majority in a runoff against Tymoshenko.

A Moscow-friendly president was back in office. It was up to him to deal with the sorry state of Ukraine's economy. He pleaded and negotiated for help from the West, and he pleaded and negotiated for help from Russia. He vacillated between aligning the country politically with one and then the other. He was gambling that beggars could be choosers.

Yanukovych was still fishing for the best deal when his government came under attack at the end of 2013. Demonstrations in Kiev's Maidan Square protesting a proposed agreement with Russia turned violent and then turned into a violent insurrection. In the end, Yanukovych was pushed out and a West-leaning government was installed.

 
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