Ukraine's Winter Of Discontent Gives Way To Spring Of Austerity

Two men play chess in Kiev's Independence Square on Feb. 11. Ukraine's economy is ailing, and the country is facing austerity measures in exchange for an IMF loan. Meanwhile, Russia says it will sharply increase gas prices. i i

Two men play chess in Kiev's Independence Square on Feb. 11. Ukraine's economy is ailing, and the country is facing austerity measures in exchange for an IMF loan. Meanwhile, Russia says it will sharply increase gas prices. Martin Bureau/AFP/Getty Images hide caption

itoggle caption Martin Bureau/AFP/Getty Images
Two men play chess in Kiev's Independence Square on Feb. 11. Ukraine's economy is ailing, and the country is facing austerity measures in exchange for an IMF loan. Meanwhile, Russia says it will sharply increase gas prices.

Two men play chess in Kiev's Independence Square on Feb. 11. Ukraine's economy is ailing, and the country is facing austerity measures in exchange for an IMF loan. Meanwhile, Russia says it will sharply increase gas prices.

Martin Bureau/AFP/Getty Images

After a long winter of protests, Ukrainian activists overthrew their president in February. Now, Ukrainians are staring at the bill they have to pay.

The International Monetary Fund is demanding that Ukraine's new government implement austerity measures in exchange for loans. Russia is threatening to raise Ukraine's heating gas prices by 80 percent. Taken together, this could further squeeze ordinary Ukrainians, some of whom are already getting by with almost nothing.

On a balmy Sunday afternoon, dozens of old men huddle around tables in a Kiev park, playing round after round of chess.

This is what they do every day. Dead of winter, middle of the workweek, it doesn't matter. Chess is a simple pleasure that costs nothing. And these guys have no cash to spare.

One of the men, Yevgeni Yemilianov, says he was Kiev's chess master 30 years ago. Now he makes a living teaching the game to kids. He and his friends are picnicking with brown bread and cured pork fat, raw onions, radishes and, of course, shots of Ukrainian vodka, called horilka. Yemilianov believes that once people hit the bottom, there's no place left to fall.

"Let me tell you. These people who receive $100 a month in pensions? It's not just a little. It's very little. So you can't take anything more from them," he says.

A customer pays for goods at a street kiosk in Kiev on Feb. 26. i i

A customer pays for goods at a street kiosk in Kiev on Feb. 26. Vincent Mundy/Bloomberg via Getty Images hide caption

itoggle caption Vincent Mundy/Bloomberg via Getty Images
A customer pays for goods at a street kiosk in Kiev on Feb. 26.

A customer pays for goods at a street kiosk in Kiev on Feb. 26.

Vincent Mundy/Bloomberg via Getty Images

The Prospect Of More Economic Pain

Even though there's a lot of dire talk right now about Ukraine's economic future, most people here in Shevchenko park are surprisingly blasé. When I ask one man what he'll do if his pension shrinks, he shrugs and takes off his baseball cap, holding it out like a panhandler.

There is every reason to believe things will get worse, though.

Last week, Ukraine's new finance minister, Oleksander Shlapak, spelled it out for reporters.

"The previous government chronically exaggerated income and profits," he said, before running through a list of financial problems: unpaid taxes, booming deficits, rampant corruption and more.

The International Monetary Fund agreed to help Ukraine, with a loan of more than $14 billion. But the check has strings attached — tough austerity measures. Ukraine's parliament rejected the austerity bill the first time, before finally passing it on the second vote.

At Johns Hopkins University last week, IMF chief Christine Lagarde said assessing Ukraine's economic problems is the easy part.

"The difficult part is now for the authorities, for their country, for their people to take it upon themselves to convince, carry out, implement and change the course of that economy," she said.

A woman walks past a local bank in Kiev's Independence Square that was set on fire during Ukraine's recent unrest. The country is now squeezed by IMF-mandated austerity measures and the specter of higher prices for gas from Russia. i i

A woman walks past a local bank in Kiev's Independence Square that was set on fire during Ukraine's recent unrest. The country is now squeezed by IMF-mandated austerity measures and the specter of higher prices for gas from Russia. Marko Drobnjakovic/AP hide caption

itoggle caption Marko Drobnjakovic/AP
A woman walks past a local bank in Kiev's Independence Square that was set on fire during Ukraine's recent unrest. The country is now squeezed by IMF-mandated austerity measures and the specter of higher prices for gas from Russia.

A woman walks past a local bank in Kiev's Independence Square that was set on fire during Ukraine's recent unrest. The country is now squeezed by IMF-mandated austerity measures and the specter of higher prices for gas from Russia.

Marko Drobnjakovic/AP

A Crisis Over Russian Gas

Austerity imposed by the West is not Ukraine's only financial headache. Looking to the East, Russia is threatening to raise Ukraine's gas prices by more than 80 percent. The era of subsidized heating appears to be over.

On Saturday, Ukrainian Prime Minster Arseniy Yatsenyuk insisted that Ukraine won't pay.

"Russia couldn't seize Ukraine by military aggression, so now it uses economic aggression," he said.

His government is prepared to take Russia to arbitration court in Stockholm if the dispute isn't resolved, but Yatsenyuk warned that people need to be ready for Russia to slow — or halt — the flow of gas to Ukraine.

For the old men playing chess in Shevchenko park, the prospect of higher heating prices combined with lower benefits is daunting.

Vladimir Bubnov, 59, works in public transportation. Though these steps are not pleasant, he believes they have to happen.

"These are temporary measures. This is necessary," he says. "And we can't be spending more than we can afford right now."

But his is a minority view.

Geology teacher Sergei Kedun offers a more widely held perspective.

"Austerity won't affect us, because we have no money anyway," he says. "Our people are broke, so what difference does it make?"

He says if the government tries to force Ukrainians to get by with even less than they have now, then Ukraine will just have to have another revolution.

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