Presentation of the study "The development of political and economic processes in Ukraine in 2014: scenario strategizing"

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On June 26, 2014 a presentation of the study "The development of political and economic processes in Ukraine in 2014: scenario strategizing" was conducted in the Anticrisis media center. The study was prepared by specialists of the Institute for Strategic Studies "New Ukraine".  The Director of the Institute Andriy Iermolaiev,  Institute advisors Irina Klimenko and Vladimir Lupatsiy took part in the presentation. The study aimed at identifying key factors of influence on the development of the socio-economic situation in Ukraine, predict the direction of the situation evolvement and propose an optimal policy in response to the current threats and challenges.

In perspective for 2014-2015 the scenario conditions of the development of the situation in Ukraine will be formed by four groups of factors (alone and in interaction with each other):

  1. The dynamics (localization or escalation) of the armed conflict in the East of the country;
  2. The dynamics of political and economic processes (political dialogue and reforms), which characterize the level of subjectivity of the current Ukrainian authorities;
  3. The nature of relations with Russia;
  4. Cooperation along the lines of "Ukraine - the West."

The study presents three scenarios of political and economic development processes in Ukraine in 2014: basic (autocratic), optimistic, and pessimistic. Experts estimate the probability of their implementation in 2014 and in perspective for 2015-2016.

According to the study, the drivers of the basic scenario ("conservative stabilization")  are the formation of a broad political consensus on the territorial integrity of Ukraine, and postponement until 2015 the strategizing of an economic breakthrough, accompanied by system reforms and political competition.

The foundation of the basic scenario include the assumption of the authorities' ability to localize an armed confrontation and initiate a political settlement of the conflict; introduction of "short" reforms; deepening strategic partnership with the USA and the EU and providing access to financial compensators (international aid).

Among the risks of the scenario, experts point to the following: defeat in the armed conflict; a collapse of the internal political consensus or deformation of the principals of consensus; replacement of national interests with corporate ones (the risk of a new Maidan and loss of control over social and economic processes). The likelihood of implementing the "conservative stabilization" scenario in 2014 — 65%, in  2015-2016 — 70%.

The driver to the implementation of the conditions of the optimistic scenario is the assumption about the possible consolidation of the vast majority of political and economic factors on the basis of a broad program of Western aid targeted at the future integration of Ukraine into the EU common economic space.

Fundamental narrowing of the differences and needs of Ukraine and Western partners, especially the EU and the USA, will open a wide window of opportunities for the implementation of public demand on fundamental changes in society (state reboot) and the relevant capacity and political will of the new government regarding the implementation of the reform program. An important prerequisite of the scenario - engaging members of the armed conflict in the East in a peaceful political settlement of regional problems.

The risk of the scenario lies in the escalating (undisguised or hybrid) of the armed conflict initiated by Russia, which may result in the losing of control over the situation by Ukrainian authorities. The likelihood of implementing the optimistic scenario in 2014 - 5% in 2015-2016 — 10%.

The pessimistic scenario is based on the assumption about the escalation of a new phase of political opposition and / or the economic crisis in Ukraine. Therefore, experts predict preservation (with the risk of escalation) of civil conflict in the East; loss of subjectivity in government's decision-making and domination of a "re-active" policy in dealing with the problems on the national agenda.

The window of opportunity that is opened by these scenario conditions: formation of a new security sector, successive spread of reforms to other components of the law enforcement system and the judiciary; a return to resolving the conflict by political means (even through territorial losses); maintaining partnerships and the financial support of partner-countries; conducting institutional and structural reforms ("out of despair" - because of the acute shortage of finances and the threat of total loss of control over economic and social processes).

The key risk of the scenario lies in the loss of Ukraine's statehood and a chaotic disintegration of the state into several parts. The likelihood of implementing the pessimistic scenario in 2014 — 30%, in 2015-2016  - 20%.

According to the findings of the study, the range of unfolding of scenario assumptions will largely depend on the administrative capacity of the new government to master administrative instruments for the implementation of a multi-dimensional policy. The key risk associated with this problem is the postponement of system reforms until the complete settlement of the situation in Donbas. The multi-dimensional approach lies in the simultaneous implementation of the policy of deep system reforms, localization of the conflict in the East, building an intensive public dialogue aimed at upgrading regional development strategies, as well as the formation of regional programs of socio-cultural integration into a single cultural and information space of Ukraine.

The complete study is available on the website of the Institute for Strategic Studies "New Ukraine":