Could the IMF Get Stuck in the Russia-Ukraine Feud?

In the last several months, Ukraine has taken several steps toward a move advanced relationship with the European Union. Via the BBC: The EU has been pursuing closer economic and social ties with ex-Soviet states for many years, in a so-called "Eastern Partnership". The plan is to sign a far-reaching association and free trade agreement ...

In the last several months, Ukraine has taken several steps toward a move advanced relationship with the European Union. Via the BBC:

The EU has been pursuing closer economic and social ties with ex-Soviet states for many years, in a so-called "Eastern Partnership".

The plan is to sign a far-reaching association and free trade agreement with Ukraine - seen as an important step towards eventual EU membership. Agreements would also be initialled with Georgia and Moldova.

In the last several months, Ukraine has taken several steps toward a move advanced relationship with the European Union. Via the BBC:

The EU has been pursuing closer economic and social ties with ex-Soviet states for many years, in a so-called "Eastern Partnership".

The plan is to sign a far-reaching association and free trade agreement with Ukraine – seen as an important step towards eventual EU membership. Agreements would also be initialled with Georgia and Moldova.

Kiev has responded with reforms and legislation, and a flurry of diplomacy is under way to seal the deal in time.

The increased coziness with the EU has annoyed Moscow, which wants Ukraine to instead join the customs union it has formed with several other former Soviet republics. As in other similar cases, there have been vague threats that Moscow might use its control of energy resources to punish Kiev for tilting westward. Lithuania’s president said recently that Ukraine faces "huge, huge pressure from Russia" not to ink the agreement with the EU.

If Ukraine persists, there’s a real chance of economic retaliation from Moscow. And that in turn could put the International Monetary Fund smack in the middle of the high-stakes dispute. Via Reuters:

If the EU-Ukraine pact is signed, and the Kremlin does retaliate in the ways many expect, the EU has plans in place to supply Ukraine with natural gas, as well as arrangements with the IMF for emergency financing – even if some analysts doubt the IMF and Ukraine can bridge long-standing differences.

"The IMF plays a very important role and there are ongoing discussions with them about standby arrangements," said a senior EU official, speaking on condition of anonymity.

A second EU official directly involved in talks on Ukraine added: "There are ongoing discussions to support the IMF and find a way for standby arrangements to be concluded soon."

The head of the IMF’s mission in Ukraine said there was no link between Ukraine signing the EU deal and receiving help.

IMF experts and Ukrainian officials have been sporadically butting headsfor months about what reforms Ukraine must undertake to receive a new round of  international assistance. But if a breakthrough with the IMF would help reassure Ukraine about a move toward the EU, it’s quite possible that big Western states–including the United States–will "encourage" IMF staff to loosen up a bit on their precious conditionality. Several years ago, political scientist Randall Stone provided evidence of just such a dynamic in previous negotiations with big strategic consequences.

David Bosco is an associate professor at Indiana University's School of Global and International Studies. He is the author of books on the U.N. Security Council and the International Criminal Court, and is at work on a new book about governance of the oceans. Twitter: @multilateralist

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