Greece, Ukraine and the EU

I just don't get where Wolfgang Münchau is coming from in his current writing on Europe. In The real threat to Europe lies in Ukraine rather than Greece Financial Times 04/26/2015, he once again minimizes the threat of a "Grexit" (Greece leaving the euro) to the euro currency zone, writing, "Grexit would be a calamity for Greece and a huge financial and reputational loss for the EU. The EU should try to prevent it. but Grexit would not destroy the monetary union, and may even improve it in the long run. But success or failure of EU policy towards Russia and Ukraine could make or break the EU."

But then he cheerfully suggests several things the EU could do to buck up Ukraine's economy. Locked in a conflict with Russia, which has effective control over significant parts of Ukraine's territory, Ukraine's Western friends helped them out with an IMF loan they can barely pay which required them to adopt drastic austerity measures. Which Münchau is more-or-less fine with: "a country has no choice but to prioritise reforms if it lacks the basic infrastructure of a modern economy. The new government is clearly determined to set up such an infrastructure, and has made progress in the fight against corruption."

Münchau argues that Ukraine needs a "hard debt restructuring" that reduces the principal, something Greece isn't even asking for but is still meeting massive resistance from Angela Merkel and the EU elite.

He also writes:

Ukraine will need more financial assistance from the EU — not only loans, but also grants because even a debt restructure will not get this war-torn country back on track. So far, the EU has dispensed €1.6bn in what it calls macro-financial assistance, and €250m in grants for fiscal stabilisation. A marginally higher amount of assistance has been approved for later disbursement. By comparison, the total of the two Greek programmes has been €195bn so far — about 100 times as much. Greece is, of course, a member of the EU and the eurozone, but this is gap is still disproportionate. Of the two, Ukraine is the bigger country — in terms of population, land mass, and economic output.

Let's see. Greece is a member of the EU, Ukraine is not. Greece is a part of the eurozone, Ukraine is not. Greece is a member of NATO, Ukraine is not. Greece is in control of all of its own territory, Ukraine is not.

Given the level of controversy and venom and nationalistic rhetoric in Germany over the assistance to Greece, how realistic is this? And of course one condition of Greece's getting that "assistance" was for Greece to take on more debt. Along with ruinous austerity programs.

And Angela Merkel will agree to undertake a far more generous program with Ukraine? Well, there is the Russian threat European policymakers are in a froth about, not entirely without reason.

Still, Greece (and Spain and Portugal and Italy) would be justified in asking why non-EU, non-eurozone, non-NATO Ukraine should get far more generous help that they can expect to receive and far more solidarity than they get in a much more formal partnership than Ukraine has with Europe.

Maybe the Greek moves in cultivating improved relations with Russia are savvier diplomacy than the EU elite seem to think!