Gas and chocolate

摘要

The Ukrainian economy is a mess. Its currency, the hryvnia, has lost almost 20% of its value in the past month. Foreign-exchange reserves have tumbled to $15 billion, despite the imposition of capital controls (see chart 1). Bank deposits fell by more than 3% in the first half of February and, since the revolution, the government has imposed limits on further withdrawals. Tax revenues have collapsed and pension payments have been delayed. The country was in poor-enough economic shape before all this: it was one of the reasons why Viktor Yanukovych, the deposed president, chose $15 billion in Russian loans over a deal with the European Union-the decision that led to his downfall. Having propped up the Ukrainian economy, Russia seems to have the power, as energy provider, trading partner and creditor, to cripple it.