Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

In October 2008 Ukraine had no option but to follow Hungary to the IMF. Kiev signed up to a $16.4 billion loan package. The IMF’s approach was not demanding by its usual standards. It asked for Ukraine to fully fund its budget, to set a realistic exchange rate and to ensure that its financial system was stable. But even this was more than Kiev could manage. The exchange rate was allowed to devalue from the overvalued rate of 5 hryvnia to the dollar to 7.7, though unofficially it traded as low as 10 to the dollar. The tax increases and subsidy cuts necessary to balance the budget were ruinously unpopular.60 Asked in 2009, “Who bears the most responsibility for the difficult socioeconomic situation in Ukraine?” 69 percent blamed the heroes of 2004, with 47 percent singling out Yushchenko and 22 percent naming Tymoshenko. Yushchenko’s personal approval rating hovered between 2.5 and 5 percent.61 The upshot was paradoxical. On the one hand, the impasse in Ukraine’s post–cold war development was more evident than ever. What hope there was of economic development lay in further integration with the West even at the expense of painful structural adjustment. On the other hand, by the autumn of 2009 the most popular politician in Ukraine was Viktor Yanukovych, the representative of the Russian-oriented “party of the regions” with its base in eastern Ukraine, the thuggish dinosaur of the transition era whose rigged election victory in 2004 had triggered the Orange Revolution. The on...