Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

The threat was not lost on Russia, and its threats of sanctions mattered: 25 percent of Ukraine’s exports went to the EU, but 26 percent went to Russia, and much of the rest went to CIS states within Putin’s reach. In early September Yanukovych was still browbeating reluctant pro-Russian members of his party to accept the Western deal.37 What was not clear, until Kiev received the IMF’s letter of November 20, 2013, was quite how unattractive the Western terms would be. The IMF offered Ukraine only $5 billion and noted that it would be expected to use $3.7 billion of it to repay the 2008 loan due in 2014. No one in Kiev had reason to expect generosity from the IMF. But the EU’s offer came as a real shock. A committee of German experts had estimated that Ukraine would stand to lose at least $3 billion per annum in trade with Russia due to sanctions. In Kiev the estimated loss had been inflated to something closer to $50 billion. Brussels swept all these figures aside.38 In conjunction with the Association Agreement, all that the EU was willing to offer was 610 million euros. In exchange the IMF demanded big budget cuts, a 40 percent increase in natural gas bills and a 25 percent devaluation.39 It was anything but the pot of gold that Yanukovych had promised. There were Ukrainian oligarchs with personal fortunes larger than this. Even without considering the sanctions to be expected from Russia, to have accepted such a deal would have been a political disaster.40 In Kiev ther...