Rebuilding Economic and Political Stability in Ukraine

Overview

Ukraine faces two severe and immediate challenges: armed pro-Russian separatists in the eastern part of the country and a sharp, nationwide economic deterioration stemming in no small part from that military threat. Ukraine’s economy has contracted violently over the past year, and it is still burdened by a legacy of corruption and inefficiency that strains its fiscal balances, limits growth, and undermines fragile political unity. Reinforcing and sustaining the economic reform process currently underway is a crucial step toward consolidating the political gains that Ukraine has made since the Maidan uprising in late 2013, and presents a nonmilitary route for the United States and other countries to push back against Russia.

In that context, the Maurice R. Greenberg Center for Geoeconomic Studies at the Council on Foreign Relations (CFR) convened an international group of roughly thirty experts, including government officials, market participants and other practitioners in international finance, political economy, and Eurasian security for a half-day workshop in Washington, DC, in late June. This report summarizes the highlights of the discussion and the views of the workshop participants. Participants sought to understand Ukraine’s economic challenges, explored obstacles impeding economic reform, and identified possible ways for outside actors to support Ukrainian policymakers more effectively during a vital period in the months ahead.

The United States has a profound interest in supporting the emergence of a new, reform-minded government in Ukraine—not just for the sake of the Ukrainian people, but for the sake of the broader American-led international system and for perceptions of the United States’ ability to lead it. In the years ahead, U.S. leadership, not just in Europe, is likely to be tested in terms of its ability to enforce international norms in the face of abuses and coercion comparable to what is currently unfolding in Ukraine. Participants argued that by helping Ukraine’s leaders catalyze Ukrainian economic recovery, the United States could help mount a robust defense of the existing order against revisionist threats—an effort that would pay geopolitical dividends across broad geographical regions. This report, which you can download here, summarizes the discussion’s highlights. The report reflects the views of workshop participants alone; CFR takes no position on policy issues.

Framing Questions for the Workshop

Defining the Problem

What are economic prospects for Ukraine? What are the critical decision points in the next twelve months? What are different security scenarios or variables that may alter this economic outlook?

Identifying "Success" in Ukraine and Obstacles to Progress

What are the identifiers of ‘success’ twelve months hence? Twenty four months hence? What are the conditions necessary to return Ukraine to the markets? What interests are at odds (U.S., EU, Ukraine, and International Financial Institutions)?  Are there significant gaps in the landscape of international institutions that need to be filled? How successful have our efforts been to date? What has worked well? Less well?

Outlining Paths to Improvement

Are there lessons from experience on how to navigate various tensions? Are there new approaches worth trying? What would these approaches require of all sides? What are appropriate next steps?

Charts From This Report