A ship run aground Deepening problems in the Ukrainian economy. OSW Commentary Number 173, 16 June 2015

The drop in Ukraine’s GDP by nearly 18% in the first three months of 2015 (versus the corresponding period in 2014) has confirmed the decline of the country’s economy. Over the last 14 months, the Ukrainian currency was subject to an almost threefold devaluation against the US dollar, and in April 2015 the inflation rate was 61% (year-on-year), which exacerbated the impoverishment of the general public and weakened domestic demand. The main reason behind the crisis has been the destruction of heavy industry and infrastructure in the war-torn Donbas region, over which Kyiv no longer has control, as well as a sharp decline in foreign trade (by 24% in 2014 and by 34% in the first quarter of 2015), recorded primarily in trading volume with Ukraine’s major trade partner, i.e. Russia (a drop of 43%). The conflict has also had a negative impact on the production figures for the two key sectors of the Ukrainian economy: agriculture and metallurgy, which account for approximately 50% of Ukrainian exports. The government’s response to the crisis has primarily been a reduction in the costs of financing the Donbas and an increase in the financial burden placed on the citizens and companies of Ukraine. No radical reforms which would encompass the entire system, including anti-corruption reforms, have been carried out to stop the embezzlement of state funds and to facilitate business activity. The reasons for not initiating reforms have included the lack of will to launch them, Ukraine’s traditionally slow pace of bureaucratic action and growing dissonance among the parties making up the parliamentary coalition. The few positive changes, including marketisation of energy prices and sustaining budgetary discipline (in the first quarter of 2015, budgetary revenues grew by 25%, though partly as a result of currency devaluation), are being carried out under pressure from the International Monetary Fund, which is making the payment of further loan instalments to the tune of US$ 17.5 billion conditional upon reforms. Despite assistance granted by Western institutional donors and by individual states, the risk of Ukraine going bankrupt remains real. The issue of restructuring foreign debt worth US$ 15 billion has not been resolved, as foreign creditors who hold Ukrainian bonds have not consented to any partial cancellation of the debt. Whether Ukraine’s public finances can be stabilised will depend mainly on the situation in the east of the country and on the possible renewal of military action. It seems that the only way to rescue Ukraine’s public finances from deteriorating further is to continue to ‘freeze’ the conflict, to gradually implement wide-ranging reforms and to reach a consensus in negotiations with lenders.

(Table T2) Integrated intensity (peak area) of matrix minerals of ODP Hole 173-1068A

Mass-wasting deposits characterize the Upper Jurassic(?) to Lower Cretaceous sedimentary record of the Iberia Abyssal Plain. These deposits include olistostromes at Site 897, olistostromes and/or possible rock-fall deposits at Site 899, a breccia succession at Site 1068, slumped and fractured deposits at Site 1069, and a breccia succession at Site 1070. Whereas the exact origin of these deposits is uncertain, the regional common occurrence of middle to upper Mesozoic mass-wasting deposits suggests that they record the early rifting evolution of the west Iberia margin. This data report presents both qualitative and semiquantitative results from XRD analyses of the breccia matrix at Site 1068. In this study the matrix is defined as the fine-grained particles (as viewed through a binocular microscope) plus cement. Results are based on analytical methods that aimed to isolate the desired matrix from larger clast contamination prior to XRD analyses. In addition, the breccia was sampled at a higher resolution than was conducted aboard ship, producing a more complete description of downcore matrix mineralogical changes. The data presented here may be used to (1) further justify the subunit designation of Unit IV made aboard ship, (2) help determine to what degree the matrix and the larger clasts (studied in thin section aboard ship; Shipboard Scientific Party, 1998, doi:10.2973/odp.proc.ir.173.106.1998) are compositionally distinct, (3) help identify the extent of hydrothermal fluid migration in the breccia, and (4) support the proposed shipboard hypothesis that the Site 1068 breccia succession resulted from multiple mass-wasting.