Tags: El-Erian | economic | compromise | Ukraine

El-Erian: Economic Interests May Lead to Compromise in Ukraine

By    |   Wednesday, 19 Mar 2014 10:51 AM

The economic interests of all the nations involved in the Ukraine conflict may lead to a political compromise there, says former Pimco CEO Mohamed El-Erian.

"In a rational content, it would only be a matter of time before it becomes abundantly clear to all major parties involved . . . that the path that the Ukrainian crisis is currently on is detrimental to both their individual and collective economic interests," he writes on The Huffington Post.

"Indeed, the actual and prospective economic losses are likely to be so large as to seriously overwhelm any real or perceived geo-political victory."

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Ukraine is on the verge of serious economic trouble and has a dire need for foreign aid, El-Erian notes. And the country's crisis "entangles Russia, western European countries and the United States," El-Erian writes.

"Neither Russia nor the West can avoid the serious economic damage that would accompany a continued deterioration at the current rate."

Both Western Europe and Russia would suffer serious economic problems if a breakdown in talks over the Ukraine results in broad trade sanctions, financial penalties and boycotts, El-Erian says.

So there is incentive for compromise, he says.

As for Russia, "the financial implications . . . could be very severe," if the West imposes strong sanctions on it, Charles Movit, an economist at IHS told The Christian Science Monitor.

Russian President Vladimir Putin’s willingness to intervene militarily in Ukraine shows that "Russia puts imperial interests above the economic interests of its country and investors," he said.

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The economic interests of all the nations involved in the Ukraine conflict may lead to a political compromise there, says former Pimco CEO Mohamed El-Erian.
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Wednesday, 19 Mar 2014 10:51 AM
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