WEBCAST: COVID-19 in Ukraine: Outlook for Pandemic's Impact on Ukraine's Economy, Politics and Society

Since March 3, when the COVID-19 pandemic is believed to have reached Ukraine, the Ukrainian government has introduced increasingly more aggressive policies to contain its spread. But concern is growing about the ability of Ukraine's weak economy and public health system to weather the storm. On this webcast, our speakers considered the impact of the pandemic on the Ukrainian economy, politics, and society.

SUMMARY
During the panel discussion, Ukrainian experts Ilona Sologoub (CEO, VoxUkraine), Victor Andrusiv (Director, Ukrainian Institute for the Future), Andrian Prokip (Senior Associate, Kennan Institute), and Mykhailo Minakov (Senior Advisor, Kennan Institute) considered the impact of the COVID-19 pandemic on the Ukrainian economy, politics, and society. 

Illona Sologoub discussed the economic dimension of the pandemic, stating that Ukraine’s GDP is likely to decrease by four percent or more, depending on the provision of IMF support. She highlighted that – despite a simplification of the procedure for receiving unemployment benefits and some tax relief – the government’s response has been lackluster, largely because it does not have the resources to implement a large-scale response. She added, however, that there was some reason for hope given that the country’s banking system is stronger now than it was during the 2008 financial crisis, and that the agricultural sector is experiencing high demand. 

Victor Andrusiv focused on the political and social aspects of the crisis. He stressed the weakness of the central government, stating that much of the response is being spearheaded by volunteer groups. The newly appointed Health and Finance ministers, Andrusiv highlighted, has slowed government response as the appointees settle into their positions. Noting the disintegration of Zelenskyy’s parliamentary coalition, he predicted a potential parliamentary crisis which could undermine the President’s authority. Ending on an optimistic note, he highlighted that Ukrainian society is much stronger than the state, and that government failures do not herald the collapse of society as a whole. 

Andrian Prokip also considered the social impact of COVID-19 in Ukraine, stating that many Ukrainians do not have sufficient savings to survive long-term under quarantine. Moreover, with the upcoming Easter holiday falling at the same time as the likely peak in the pandemic, Prokip suggested that the next few weeks could have a large impact on the spread of the virus. Like Andrusiv, he highlighted how society and local government are stepping into the vacuum left by the central authorities. He illustrated this trend with an incident from Kharkiv in which the mayor and the local oligarch refused to take direction from the governor, the representative of the central state.

Mykhailo Minakov considered Ukraine’s response to the virus in comparison to that of other countries. Within the post-Soviet space, he suggested, there are three models of response. Firstly, “the deniers,” comprised of the most authoritarian countries such as Turkmenistan and Belarus. Secondly, the “fast responders,” including Armenia, Georgia, and Kyrgyzstan; and, thirdly, the “slow responders” – the category under which Ukraine falls. Similar to Andrusiv and Prokip, Minakov highlighted the increasing tensions between local authorities and the central government, with the former expected to take on increased responsibilities without any additional funding from the state. He concluded by observing that, while many Ukrainians support the government’s measures, their behavior suggests that they still rely predominantly on their friends, family, and neighbors.

Selected Quotes

Ilona Sologoub
“The Ukrainian government’s response is asymmetric. It puts most of the cost of the quarantine on people. My opinion as a citizen is that the government is not being fair to people by putting all the cost on population and business.”

“This is a black swan event, so no estimates are really possible.  But the rough estimate is that this crisis will lead to -4% GDP growth, but if the Government does not secure IMF support the crisis could be much deeper.”

Victor Andrusiv
“We already have two new ministers because the previous ones served only three weeks, and the problem is actually that the parliament exchanged two ministries who actually are at the key ministries under the crisis. It’s Ministry of Finance and Ministry of Healthcare. This means that as newly adopted persons, they need to gain additional time to get involved in the situation and to understand the things right, so they are not able to act quickly. This shows how much the government is not capable to react properly and is not prepared.”

“The local authorities are doing much more now than the central state. And to say the situation all over Ukraine is very similar, I would say. So, of course, they try to solve the problems in different ways, but they are on the front line more than the government.”

Andrian Prokip
“Talking about Ukrainian society, it’s in between two fears: it’s a fear of epidemic—it’s a fear of getting sick—and it is a fear of economic recession, losing jobs, losing incomes, and losing any opportunity to survive.”

“In the very beginning, people were skeptical about all these steps the government took, but now about 83% support the idea of prohibiting any public meetings, any public events. Seventy-four percent agree that penalties should be introduced for violating the quarantine regime.”

Mykhailo Minakov
"We know that Ukraine follows the Italian model, where polyclinics and medical wards become centers of the spread of the infection."  

"The government of Ukraine is playing an unfair game right now putting more and more responsibility on local authorities without providing additional funding so there is a growing tension between local authorities, regional administrations, and central government."