The Age of Magic Money
Can Endless Spending Prevent Economic Calamity?
In the weeks leading up to the European Union’s Vilnius summit in late November, it seemed all but certain that Ukraine was pivoting West. At the meeting, the EU and Ukraine were expected to sign an Association Agreement, which would have abolished trade barriers between the two and required Ukraine to undergo some EU-mandated political and economic reforms.
But then, days before the summit, Ukrainian President Viktor Yanukovych announced that any agreement with the EU would have to be put off due to reasons of national security. Ukraine, its occasionally authoritarian president had concluded, would not be able to withstand the intense economic pressure that Russia would apply if he signed the deal. Russia’s aim? To goad Ukraine into joining its own Customs Union with Belarus and Kazakhstan, which would preclude association with the EU.
Yanukovych’s unexpected decision has made his job more difficult. Enraged citizens, carrying