The economics behind the protests in Ukraine
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An estimated 300,000 protesters in Kiev, Ukraine are blocking government buildings today in the largest political crisis Ukraine has faced since the 2004 Orange Revolution. Demonstrators are calling for a change of government after President Viktor Yanukovych abruptly ditched a deal for closer ties with the European Union. He says the EU integration pact would hurt ties with Russia.
For a look at the economic underpinnings of the Ukrainian government’s eleventh hour decision to nix the deal, Marketplace Morning Report host David Brancaccio talked with the BBC’s Andrew Walker. Walker says by refusing to develop even closer ties with the EU — Ukraine already exports a lot to the European Union — Ukraine’s government may be denying the country “easier access to a very lucrative market.”
“There’s money to be had from it if Ukraine could boost its exports to what is a much richer part of the world than its neighbors on the other side, on the East — Russia and so forth,” Walker says.
But Ukraine also has close ties with Russia, though not quite on the same magnitude with the EU. Walker says that a possible motivation for Ukraine’s actions may be a contentious history with Russia that has at times resulted in Russia denying Ukraine energy imports.
“I think one of the other things at the back of the Ukrainian government’s mind is the thought that by being close to Russia, they’ve got more of a chance of avoiding some of the problems they’ve had in the past, where Russia has turned off the gas caps,” Walker says. “There was a period where it was almost part of the annual routine — where having a row about gas prices, gay payments between Russia and Ukraine, sometimes leading to supply being interrupted. So, close ties with Russia would reduce the risk of that kind of thing happening in the future.”
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