What does the latest US warning mean – an interview with Hlib Vyshlinsky

The White House has sent a letter to the Ukrainian leadership with a list of reforms for Ukraine to implement over the next 18 months. The plan is tied to military aid: there will be no military aid if there are no reforms. But it has an additional function – the current US administration is seizing the initiative before the Republicans lose their solidarity on providing Ukraine with weapons.

The American plan includes reforms that will not cause divisions among the population, so there is a good chance that the government will implement them. Commitment to international partners may increase domestic political pressure, as Ukraine is set to join the EU and competes with its neighbours in this process.

The Page spoke to Hlib Vyshlinsky, Executive Director of the Centre for Economic Strategy, about what Americans want from us and what it means for all players.

What does a letter from the White House mean? Is it a signal that we are lazy and need to speed up or is it just ordinary correspondence?

There are two components here. One is the positive scenarios voiced six months ago, that there will be a major counter-offensive and the war will end in a quick Ukrainian victory with a little help from our allies. And then we will distribute money for reconstruction and look at beautiful plans.

This already looks like a scenario that, unfortunately, did not play out. Fortunately, the worst-case scenario did not work out either. Ukraine is liberating its territories, but it is obvious to everyone that the war will not end so quickly. The main plan is to support Ukraine for a long time.

This requires the changes that are needed for Ukraine’s long-term resilience, strength and victory on all fronts. On the other hand, it is necessary for internal political discussions in the United States. In the European Union, there is more or less unequivocal political support for Ukraine, and there is no political opposition. For them, Ukraine is not going anywhere.

There is a confrontation in the United States. The pro-Trump right-wing radical part of the Republican Party is closer to putin. They say: why should we think about Ukraine, why is it important to us, why should we spend money on them, why should we waste our energy on them, it is a corrupt country, and so on. The content of the letter is a reaction to the corruption allegations.

The current US administration is on Ukraine’s side, and it wants to seize the initiative. According to them, there is a plan of action to ensure that Ukraine has strong institutions that are independent of any current political power, so that they make corruption impossible.

What is the risk of losing the United States’ support for Ukraine? And how will the US budget process affect the flow of US aid next year?

First of all, it concerns weapons. No one has as many weapons as the United States. But if you look at the financial part, everything is clear. The US aid in the fourth quarter that the Biden administration has envisaged is more than USD 3 billion. Even if they don’t arrive in the fourth quarter, we will get through this year.

For the next year, we have budgeted USD 43 billion in inflows. Theoretically, they could be slightly less, up to USD 35 billion. Although we can live with such a deficit, everything has a price.

If we budget for a smaller deficit, we will be less able to pay salaries in the public sector.

What will happen if we miss the reform deadlines or fail to meet them?

Now I am confident that we will move forward with the reforms. None of the reforms in the American letter, the commitments in the IMF memorandum and the requirements to the European Union are unpopular. The exception is the revision of gas and electricity tariffs.

The changes envisaged in these amendments largely contribute to the loss of control of the Presidential Office over everything. Bankova Street will no longer be able to give commands to anyone about anything. These are risks for the president, but at the same time, he is interested in Ukraine’s victory to maintain morale and supply of weapons.

Speaking of the EU, how does their pressure to reform differ from the US approach? After all, we will be audited by the European Commission and an independent audit board that will report to it.

The plan, which is being developed jointly with the European Commission, is not yet ready. There is only a concept of the plan prepared by the government together with the European Commission. This is an intellectual exercise in strategic planning, how to give a boost to the Ukrainian economy, how to integrate it with the European Union with maximum benefit for both sides. The terms will be determined during the negotiations.

We hope that in December the start of accession negotiations between Ukraine and the European Union will be announced. We will proceed chapter by chapter in the agreement on joining the European Union.

This also creates internal political pressure. We are moving towards the EU in parallel with Moldova.

Unfortunately, we have a slightly superior attitude towards Moldova. But if it fulfils some EU requirement faster than Ukraine and the media writes about it, with the line “The President’s Office does not want or delays the reform”, it will be a political blow.

We have already had a bad experience. Do you remember when the previous president, Petro Poroshenko, said that only underdeveloped African countries had anti-corruption courts? But in the end, it was created because the IMF money was very much needed. I mean, excuse me for saying this, but we have a lot of this experience, when we got covered in shit, but we did it.

I hope that such experiences will be reflected upon. Anyway, there hasn’t been a single case when Ukraine hasn’t kept its promises since 2014. We did it with delays, scandals, and pressure. But it was worth it.

Interview for The Page.