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Ukraine's Impending Debt Restructuring

Diplomatic efforts are once again under way to establish a more lasting ceasefire in eastern Ukraine via the "Minsk peace talks redux" (see story). While Angela Merkel's diplomatic efforts should be applauded, chances for success remain poor. The Russian government simply has no incentives to stabilize the situation. Applying pressure on Western-backed Ukraine is part of Russia's foreign policy with significant popular support. Putin is not as interested in the Russian insurgents in Ukraine gaining autonomy as he is in embarrassing the West.

The military threat and the resulting humanitarian crisis in the east however are only a part of the threats Ukraine is now facing. The nation's economy is in deep trouble and the fiscal situation is becoming increasingly untenable.

The nation is running out of foreign exchange reserves after defending the currency in the face of significant capital flight over the past couple of years. Exports… Read More …