A $5 billion downpayment on Ukraine's future

The first IMF financial aid to Ukraine reflects an astounding turnaround in civic reform and national identity, despite Russia's threats and a deep legacy of corruption.

Prime Minister Arseny Yatseniuk and Finance Minister Natalia Yaresko address the media in Kiev March 11 after the International Monetary Fund signed off on a $17.5 billion aid program for Ukraine.

Talk about a slap on the back for a good start. The International Monetary Fund has given $5 billion to Ukraine despite an ongoing armed rebellion. The money is the first of a $17.5 billion commitment by the global body to a country that perhaps has set a record in restoring trust with the rest of the world and in reviving the trust of its citizens in a new government.

The $5 billion arrives after Ukrainian lawmakers approved key reforms, many of which were driven by popular demands for clean and transparent governance during last year’s Maidan Revolution that overthrew a corrupt, oligarchic regime.

Ukrainians also now feel a stronger national unity, reflected in the polls, that is being bolstered by support from the European Union and by lingering threats of further Russian incursions.

“We are seeing Ukraine slowly climbing out of a big hole,” says Anders Aslund of the Peterson Institute for International Economics.

The world has much to rejoice and to support as Ukraine steadily embraces a rules-based system and starts to set a model for other ex-Soviet states, including Russia, that remain stuck under authoritarian regimes. In fact, one suspected motive of the Kremlin’s aggression is that it may not want a fellow Slavic nation to be democratic and out of its sphere of influence.

Ukraine’s new spirit of civic responsibility, reflected in its active civil society, is essential to its ability to endure the reforms, such as cuts in state pensions and direct energy subsidies. Other reforms, mainly aimed at corrupt habits, are more popular. They could be difficult to implement, however, if the country’s wealthy oligarchs can still pull strings or if corrupt state workers are left in office. Last year, Ukraine was near the bottom in a global ranking of corrupt countries, lower than Russia.

Ukrainians are coping with high inflation, a contracting economy, and a million war-displaced people. Yet they still need to conduct further discussions on the moral underpinnings of their society and government. The IMF and other donors will be watching closely, doling out further aid carefully in coming years, as reforms are implemented. Much depends on how well the respective political parties of President Petro Poroshenko and Prime Minister Arseniy Yatsenyuk work together.

Ukraine’s reforms are critical to peace building in Europe, pacifying a restless Russia, and spreading democracy in post-Soviet states. After a year of hard work and war, Ukraine deserves a $5 billion reward to keep its reforms going.

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