Foreign investors wary as Ukraine plumps for Russia

Ian Bond, director of foreign policy at the Centre for European Reform (CER), warns that in the long run the agreement will leave Ukraine lagging behind in terms of modernisation and ever more vulnerable to the whims of a capricious Russia. "Instead of diversifying Ukraine’s gas supplies and increasing its energy efficiency, this agreement is likely to ensure that Ukraine continues to be tied to Russia, subject to the threat of gas supplies being turned off for political or economic reasons," says Bond. Bond points out that Ukraine has a lot of industrial and agricultural potential and cites Poland as an example of how the tough medicine of the EU and International Monetary Fund can pay off in the long run. "Ukraine’s future in a protectionist Russian-dominated trading block looks unpromising. Borrowing money to invest in modernisation makes sense; taking out loans to enable Ukraine to avoid modernising does not," he says. ..."No one will take at face value statements from Yanukovich or [prime minister] Azarov that they support European integration any more," says CER's Bond.