Ukraine-IMF Bailout Talks Breakdown

(Vatican Radio) Talks between Ukraine and the International Monetary Fund on more than 15 billion dollars in financial assistance have failed. The IMF says it will continue to hold a new round of negotiations. Yet, the troubles come at a difficult moment for the financially troubled former Soviet republic.

listen to the report by Stefan Bos in Ukraine...

Talks between Ukraine and the International Monetary Fund on more than

15 billion dollars in financial assistance have failed. The IMF says it will continue to hold a new round of negotiations, but the delay could not have come at a worse moment for the financially troubled former Soviet republic.


At a local market in the Western Ukrainian town of Uzhhorod residents are not suprised that the international lender is reluctant to transfer 15 billion dollars to this troubled nation.


People here view Ukraine as a failed state such as Somalia. The only difference: Here it's snowing, in winter.

Judges, policemen and an army of bureaucrats bought their lucrative jobs, says an elderly man, who is afraid
to give his name.

"Ukraine doesn't need money from the IMF," he said, with his wife holding him tightly as they strolled through the market.


CORRUPTION CRACKDOWN

"Ukraine can easily improve the economy by cracking down on corruption in the local and national administrations. Everyone steals from the clerk to the chief," the man added.

Besides tackling corruption, the IMF has urged Ukraine to introduce reforms in especially the energy sector. That also means higher prices for electricity and natural gas.


But 62-year old salesperson Ilona Nagy doesn't agree. "We think that if this top officials will steal less, than it will probably not be necessary to rise prices [or] to ask money from abroad," she told Vatican Radio.


"The problem is stealing and the huge, tremendous, corruption here," she noted.


Those sentiments worry President Viktor Yanukovych who doesn't want another 'Orange Revolution' -- a reference to pro-democracy protests of 2004 -- this time involving the many impoverished people here.


WAR VETERANS

He also fears widespread anger among war veterans, or those who claim to be a veteran for a somewhat better pension.

Among them is a man who told Vatican Radio that he receives benefits for "helping" to invade Czechoslovakia as a soldier in 1968, when Ukraine was part of the Soviet Union.


To pay him and millions of other senior citizens, Ukraine's government will have to borrow billions on the international market.


But Ukraine faces an uphill battle to convince investors, with an economic crisis and IMF concerns over this country's financial future.