Clockwork Orange? Will the Bell Toll for Yakunovich a Second Time?

There ware widespread protests in Ukraine, especially western Ukraine (Kiev and Lvov).  The police responded violently to protests in Kiev yesterday.  Today, Yanukovich’s chief of staff and the ambassador to Canada resigned.  The police seem to be less aggressive today.

This is a manifestation of the widespread anger at Yanukovich’s decision to spurn the Association Agreement with the EU, and his kowtowing to Russia.  The bow is getting only deeper, as the PM Azarov just announced that Yanukovich was on his way to Moscow to negotiate a roadmap with Putin.  Yanukovich pretends that he can blaze an independent path, but if he really believes this, he is delusional.  He chose Russia, and is going to Putin to receive terms, not negotiate them.

The events in western Ukraine echo the Orange Revolution of almost exactly 9 years ago, in which Yakunovich was ousted as president.  That episode shook Putin to his core, and intensified his already extreme paranoia about western designs to overthrow him.  Putin’s relentless campaign against the opposition in Russia was in large part the product of events in Kiev in 2004.

Given that, I would have thought that Yanukovich and Putin would have potentially anticipated, and acted to undermine and preempt, a repeat in response to the Ukrainian government’s abandonment of the deal with the EU.  That’s why when there were some protests in the immediate aftermath of the vote halting preparations for approving the agreement that I was skeptical that the movement would grow sufficiently to threaten the government.  Now I am not quite so sure.

This bears watching.  In particular, it bears watching to see whether Putin and Russia will intervene more directly if it seems that Yakunovich loses his nerve.

About Craig Pirrong 228 Articles

Affiliation: University of Houston

Dr Pirrong is Professor of Finance, and Energy Markets Director for the Global Energy Management Institute at the Bauer College of Business of the University of Houston. He was previously Watson Family Professor of Commodity and Financial Risk Management at Oklahoma State University, and a faculty member at the University of Michigan, the University of Chicago, and Washington University.

Professor Pirrong's research focuses on the organization of financial exchanges, derivatives clearing, competition between exchanges, commodity markets, derivatives market manipulation, the relation between market fundamentals and commodity price dynamics, and the implications of this relation for the pricing of commodity derivatives. He has published 30 articles in professional publications, is the author of three books, and has consulted widely, primarily on commodity and market manipulation-related issues.

He holds a Ph.D. in business economics from the University of Chicago.

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