AndyThe BBC reports that the crisis in Ukraine is hitting the economy hard. Foreign trade down $4 million per day, the country has lost $184 million in tax revenue, and the government has had to spend $400 million of its reserves to protect the value of the hryvnya. Ukraines uncertain political and economic future is causing many people to start withdrawing their savings from Ukrainian banks:
Politicians started making political statements and people got scared," said central bank chief Arseniy Yatsenyuk.
"And now we can see that in a few regions of Ukraine, people are withdrawing their deposits."
Mr Yatsenyuk said the bank would strive to meet the demand for cash, and insisted that the financial system was still functioning correctly.
In the long term (and even in the medium term) the economic costs of this crisis are unsustainable for Ukraine. The more people are on the streets protesting, the less they are working. Eventually the economic situation will become so important that demand for the Yushchenko and Yanukovich to find a quick solution will grow. Although this would seem to increase the chances of a settlement, the short time frame will mean that each candidate will have to begin rapidly increasing the pressure on their opponent. This could include upping the intensity of their rhetoric, and consequently the intensity of the protests. The potential for a major miscalculation will increase proportionally.
Current President Leonid Kuchma has mooted the idea of a new election, but a that could take up to a month to run.
Does Ukraine have the luxury of time?
Our bank has limited withdrawls to $200 or the grivnia equivalent. The neighborhood grocery is out of eggs, low on milk, and low on some canned goods I wanted. However, this particular grocery store is still working out the kinks in its distribution system (had two weeks last month with no toilet paper!) so I’m not sure whether it’s just them or a result of the strikes.