Ukraine: Default rumours Spread, Coalition Government Collapses, Russian Power Grab Coming Any Minute

Tymoshenko Ukraine

Photo: AP

The Ukrainian Government has collapsed as a result of the ruling coalition breaking up, according to the BBC.As a result, rumours of sovereign default are beginning to surface for the already debt troubled state, which had hoped its market fortunes would improve with the election of pro-Russia president Viktor Yanukovych.

If the default rumours are true, Ukraine would be in need of serious economic assistance. The European Union, already tangled up in the Greek crisis, is unlikely to have the will to also support the non-Euro zone Ukraine.

While the potential for the deal the Ukraine has been working on with the IMF to come through remains, this does leave considerable room for Russia to enter into the conversation.

Russia’s relationship with the Ukraine since the fall of the Soviet Union has been mixed, with the country often swapping pro-EU leader for pro-Russian. Now with a pro-Russian leader Yanukovych at the helm, Moscow could try to take this opportunity to reassert influence over its neighbour.

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