Download Maria Vietz, Priscilla Benner, Ann Joyce, Karla

Ann Joyce, Priscilla Benner, Karla Sofia Leon, Maria Vietz and Sofia Morais
Introduction:
The current political situation in Ukraine has been fueled by the perception of extensive
government corruption, abuse of power, and violation of human rights in Ukraine. The
protests in Ukraine were mainly the result of the Ukrainian government’s decision to
suspend preparations for joining the EU, in favor of closer economic dependence on
Russia. Russia had promised a $15 billion loan to Ukraine with the stipulation that the
country would officially form a government--provided the country will not resume
negotiations to join the EU. As Ukraine was in no condition to fully implement the
policies demanded by the IMF after having lend 15.15 billion in 2010, there was no
possibility of an extension of IMF aid package which has made Russia an important
economic counter-player to the US-EU relations concerning Ukraine.
Theory: Economic support contributes to a hegemon’s influence over strategic allies
without interfering with their sovereign integrity and has been a key aspect of US foreign
policy in the past. (Milner & Tingley, “The Political Economy Of U.S. Foreign Aid:
American legislators and the Domestic Policy of Aid.”)
Hypothesis: By refusing to continue releasing loan funds to Ukraine, the IMF opened
space for Russia to exert influence over Ukraine by lending it much need funds, which
contributed to the collapse of the EU trade deal. Now that Russia is hedging this aid
package, the US will pressure the IMF to loan Ukraine the money it needs, or else
generate its own aid package, thus sustaining its influence in the region.
Puzzle:
Given that the International Monetary Fund did not cede their conditionality demands
when negotiating loans with Ukraine, Ukraine instead became dependent on financial
deals with China and Russia after Ukraine’s refusal to end costly energy subsidies. What
should the IMF, and countries with high levels of influence in IMF, like the US and EU,
do to ensure the Ukrainian future presence in the EU and thus influence over the country,
perceived to be a strategic ally?
Counterfactual:
Look to economically distressed state where the IMF/US has not contributed economic
support and lost influence to competing powers.
 Would the US have crowded out the competing powers had it or the IMF
intervened economically?
 Would the US have lost power in the absence of the competing economic
support?
Ann Joyce, Priscilla Benner, Karla Sofia Leon, Maria Vietz and Sofia Morais
Look to economically distressed states where the IMF/US has exerted economic
influence.
 If they had not, what other state would have stepped in financially and gained
economic influence?
 If the US had not offered economic aid, would its influence have been reduced?
Observable implications:
US increase in influence when the IMF lends to strategic allies.
US decrease in influence when the IMF refuses on the basis of conditionality
Increase of competing powers when they step in after the IMF refuses to lend.