Report

After the Revolution

Ukraine's new leaders took down a president. Can they rebuild their country?

As Ukrainian leaders trade the barricades for bureaucracy, they're faced with nearly empty government coffers, painful economic reforms, and the looming threat that their success will provoke retaliation from Russia, whether economic or otherwise.

After a bloody week that brought the country to the brink of civil war, opposition leaders succeeded in ousting former President Viktor Yanukovych, who fled Kiev as his government dissolved. Their prize? Dealing with the same economic crisis that helped drive their predecessor from office.

The new Ukrainian government has indicated that it will need roughly $35 billion to get through the next two years, much more than the original $15 billion bailout the government negotiated with Russia last fall.

In addition to putting a price tag on fixing its economy, the Ukrainian government on Monday moved to shore up the country's financial future by picking a new central banker. Parliament voted for Stepan Kubiv, who is a former "commandant" from the protest movement, according to the Kyiv Post. Kubiv said one of the first things on his agenda would be inviting the International Monetary Fund (IMF) to Kiev to restart negotiations over a bailout package.

Over the past few days, Western countries have again welcomed Ukraine to the European fold and now stand ready to offer financial assistance once a new government is in place. In addition to making clear that Ukraine had a path back to financial solvency through the IMF, the United States proffered bilateral aid as well. European officials are also reaching out to Japan, China, and Turkey to organize a Ukrainian bailout, according to Reuters. But the money won't come easy. The IMF has previously outlined its demands, including cutting energy subsidies, slashing government spending, and reining in corruption.

Those conditions are not expected to change -- and will likely be unpopular among Ukrainians -- but some analysts are optimistic that there is a way to fix the economic problems that have plagued the country for over two decades.

"This is a really opportune time to do things that are long overdue, and can be easily blamed on the outgoing administration," Tim Ash, head of emerging markets research at Standard Bank Group, said in an email.

The new leaders were part of the opposition that revolted against Yanukovych's decision to accept Russia's cash and reject closer trade ties with Europe. Now, they are free to put the country back on a European trajectory and reconsider signing the trade and political agreement that Yanukovych rejected, but they may face the same fallout from Russia that he did. Ukraine relies on Russia, not just for trade, but also for natural gas imports.

If Ukraine's short-term financial lifeline comes with the signing of the association agreement with the European Union, which will allow for a free trade zone and lift visa restrictions, it will carry one big additional risk: the threat that an angry Russia could use its energy leverage to try to cow Kiev back into its orbit.

"If the Russians choose to make life difficult for Kiev, they have lots of tools. They could raise the price of gas back to pre-December levels, they could boycott Ukrainian goods, they could even go so far as to shut off shipments of natural gas," said Steve Pifer, a Ukraine expert at the Brookings Institution and a former U.S. ambassador to Ukraine.

While U.S. President Barack Obama and European leaders have tried to convince Russian President Vladimir Putin that a stable Ukraine is more in Russia's interest than a failing state would be, the Russian leader's geopolitical calculations are likely to be different -- leading him to work against any sort of stabilization of Ukraine.

"Putin is going to be tempted to use some of the pressure levers at his disposal to make life difficult for the new leaders. I suspect Russia will be part of the problem, not part of the solution," Pifer said.

Russia holds sway over much of the Ukrainian economy, but Moscow's dominance of natural gas supplies looms largest. Russia has cut off gas supplies to Ukraine several times in the past, and gas trade between the two countries has been at the heart of the tug of war for influence since late last year.

Granted, Russia's energy leverage over Ukraine and the rest of Europe isn't unlimited. Wintertime low temperatures, which spur greater gas demand, will soon give way to spring. Europe is awash in natural gas, which offers insulation against any sudden supply disruptions. In the longer term, Ukraine, Poland, the U.K., and others are trying to kick-start the production of shale gas, which has largely turned the United States from an energy weakling into an energy powerhouse. Future exports of natural gas from the United States could also help Europe shake off Russia's dominance as well.

For now, though, the big questions facing Kiev are threefold. What happens to the preferential deal that ousted Ukrainian President Viktor Yanukovych signed with Russia in December that included $15 billion in aid and a 33 percent discount on natural gas? How painful will the domestic economic and energy reforms needed to satisfy the IMF and the European Union really be? Finally, what will the turmoil do to Ukraine's long-term plans to become a bigger gas producer in its own right and shake off the Russian energy yoke once and for all?

Russia does hold some powerful cards in the short term. Under the terms of the December deal, the price discount will have to be renewed by mutual agreement every quarter. Michael Levi of the Council on Foreign Relations warned at the time of the deal that deep discounts can give energy suppliers big leverage, too.

Ukraine's acting energy minister said Monday that he hoped the gas price would remain stable, Reuters reported. But Dmitry Medvedev, Russia's prime minister and a deputy CEO at Gazprom, laid down his own marker Monday when he said the gas discounts will run their term and will then have to be renegotiated with the new Ukrainian government, "if one appears."

Ukraine's broader trade relationship with Russia could also hang in the balance. Yanukovych decided to spurn the European Union last fall after Russia threatened punishing trade sanctions if he signed the deal.

Russian Economic Development Minister Alexey Ulyukaev said Monday in Washington that his government would have to consider what a new Ukrainian pact with Europe would mean for Russia. He said it was still an open question whether Ukraine could be part of both the Russian and the European free trade zones.

"We decided the three parts -- Ukraine, European community, and us -- will start to talk about if it's really possible to have the two things together," Ulyukaev said. He also made clear that the rest of the $15 billion aid deal that it promised in the fall is not a sure thing. Ulyukaev said it would depend who Russia's "partners" were in Ukraine. A $2 billion bond deal that was supposed to be the latest installment of the aid package fell through last week, after Russia indicated it was backing off because of political instability.

Another big question is how Ukraine balances the need to reform its economy, especially parts of its domestic energy sector, in order to satisfy Europe and the IMF. Under the terms of the association agreement that both sides initialed last November -- but which Yanukovych suddenly ditched, sparking the whole protest movement in the first place -- Ukraine must set market prices for natural gas users in the domestic market, rather than offering discounts that act as a hidden subsidy. Additionally, Kiev has to ensure any energy it exports is priced at the same level as it charges at home.

All that adds up to a political headache for the new crop of policymakers in Ukraine: Any move to raise domestic prices could eventually shore up state finances, which is why the IMF has pushed for such reforms, but could also spark a popular backlash.

Finally, the months of protest, the formation of an interim government, and the prospect of another round of contentious elections raise the question of what will happen to Ukraine's long-term prospects for domestic energy development. Last year, Ukraine signed huge deals with Chevron and Shell to develop shale gas resources and to try to replicate, if on a smaller scale, the kind of energy revolution that has turned the United States from an importer of natural gas to a prospective exporter in just a few years.

Earlier in February, Ukrainian officials said they hoped to finalize the shale deal with Chevron in March. But the turmoil has made it unclear just when those foreign companies can actually start exploration. Chevron said late last week that it was "monitoring" the situation in Ukraine and still needed the Ukrainian parliament to pass additional energy legislation before it can start any exploration work on the $10 billion deal.

Though Ukraine's list of economic challenges is long, the country has managed to tick off its biggest economic obstacle.

"The big problem with the economy was that Yanukovych and his family only had one objective: to enrich themselves," said Anders Aslund, a senior fellow at the Peterson Institute for International Economics. Unfortunately, the Yanukovych family's corruption may have already cost the country about $12 billion, Aslund said.

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Report

Murder and Mayhem in Suriname

How a president's son tried to help Hezbollah attack the United States.  

Dino Bouterse thought he'd struck the deal of a lifetime. It was July 31, 2013, and the head of Suriname's counterterrorism force -- who also happened to be the president's son -- had been carefully cultivating what he hoped would become a lucrative relationship with a pair of Mexican drug smugglers. They had already piloted a "line" for shipping cocaine from Suriname, through Trinidad and Tobago, and on to Fort Lauderdale, Fla., but the Mexicans had in mind a vastly more profitable side venture: building a Hezbollah base in Suriname and arming the Lebanese militant organization against the Americans.

At a meeting in Greece, the 40-year-old Surinamese scion hashed out the details with one of the Mexicans and two purported representatives from Hezbollah. For $2 million cash upfront, Bouterse would provide secure facilities in Suriname where the Shiite militant group could train 30 to 60 men. He would also supply rocket launchers, land mines, and other weapons that could be used to strike U.S. targets.

"You'll fuck the Dutch, and we will fuck the Americans," one of the Hezbollah envoys said at one point.

"I'm totally behind you," Bouterse responded. Later, he sent a text message to an associate back in Suriname: "we hit the jackpot."

That couldn't have been further from the truth. A little more than a month later, Panamanian police arrested Bouterse at the airport in Panama City and extradited him to New York, where he had been indicted on drug-trafficking charges. Then, in November, U.S. authorities unsealed a second indictment that charged Bouterse with providing material support to a terrorist organization. The Mexican narcotics smugglers, it turned out, were U.S. Drug Enforcement Administration (DEA) informants who had been wearing wires the whole time. Their conversations and text messages with Bouterse were later made public in the unsealed indictments.

The episode was more bizarre than sinister. But it serves as an unsettling reminder that Suriname's leading political family has long been involved in unsavory, seedy, and outright criminal activities. The Hezbollah threat may have been entirely concocted by the DEA -- a clever ploy to bring down the reckless younger Bouterse -- but the willingness of Surinamese officials to accommodate a terrorist group so close to the United States should serve as a wake-up call for Washington, which still maintains military ties with Paramaribo. That Suriname is also a thriving narcostate ought also to be cause for concern.

Located on South America's north Atlantic coast and bordering Brazil to the south, the Republic of Suriname is nestled between Guyana and French Guiana, a French overseas territory perhaps best known today for its European "spaceport" and as the former site of the Devil's Island penal colony. It is South America's smallest country and is suffocatingly isolated from the rest of the continent. As noted travel writer John Gimlette wrote in 2011, Suriname, Guyana, and French Guiana have "never felt part" of South America. "The [three] are the odd ones out; they've never been Spanish or Portuguese; they've never known machismo, or Bolívar, or liberation theology; and they're so isolated that there's only one road that links them to the rest of South America."

But barriers -- physical or cultural -- have not kept the former Dutch colony entirely cut off from the outside world. During the Cold War, the United States, on high alert for communist mischief-making in the Western Hemisphere, worried that Suriname would enter the Caribbean Marxist-Leninist firmament headquartered in Fidel Castro's Havana. More recently, the country has been a transshipment point for drugs bound for markets in Western Europe. Porous borders, a vast interior with little government presence, and significant corruption have helped secure Suriname's position as a criminal entrepôt. According to the European Monitoring Center for Drugs and Drug Addiction, it ranks among South America's top five transshipment points for European-bound cocaine.

If any single figure can be held responsible for the country's recent troubles, it is Dino Bouterse's father. Desiré Delano "Dési" Bouterse has ruled Suriname intermittently for more than three decades -- twice as a result of coups he led and now as the country's quasi-democratically elected leader. Dino's criminal escapades have been a reliable nuisance for the United States. But his transgressions pale in comparison with his father's long history of drug trafficking, political violence, and human rights abuses.

The elder Bouterse, a former army sergeant who peddled imported pornography on the side, first came to power in a coup on Feb. 25, 1980 -- an occasion commemorated today in Suriname with a national holiday, the "Day of Liberation and Innovation." Promoting himself to colonel, Bouterse set Suriname on a revolutionary course influenced by Marxist-Leninist notions then in circulation across the developing world.

As he consolidated his dictatorship, Bouterse carried out a series of extrajudicial killings, the most notorious of which were the "December murders" of 1982. Early on the morning of Dec. 8, army personnel rounded up 16 prominent critics of the regime and brought them to Fort Zeelandia, near the capital, Paramaribo. A hastily assembled tribunal led by Bouterse quickly found the prisoners guilty of "anti-revolutionary" activities. Drink-sodden soldiers then carried out the death sentences in the fort's courtyard. According to one account in the Dutch press, Bouterse joined the mayhem, using a bayonet to castrate one man and shooting another in the back.

Suriname in the 1980s had all the raw ingredients for a Frederick Forsyth thriller: a sweltering climate, corrupt despotism, guerrilla war, and Cold War geopolitical intrigues. An armed ethnic uprising in the hinterlands, led by Ronnie Brunswijk, a former bodyguard of Bouterse, was met with savage government repression -- including the killing of 19 women and children in the remote village of Mooi Wana, an atrocity that has been called the "My Lai of Suriname."

But it wasn't what Bouterse was doing in his own backyard that worried the United States. It was his links with the Castro government, Nicaragua's Sandinistas, and the New Jewel Movement in Grenada. As early as 1982, the top CIA analyst for Latin America, Constantine Menges (nicknamed "Constant Menace" by bureaucratic enemies who had tired of his noisy anti-communism), warned his superiors in Langley of "the growing danger" posed by Suriname's leftward drift into the "Cuban orbit."

U.S. President Ronald Reagan came to share this anxiety about Suriname's apparent descent into Castroism. In a letter to Brazil's president in 1983, he pointed to Bouterse's "longstanding predilections toward Cuba and Grenada" and his entrance into the "Cuban/Soviet sphere." At the same time, senior members of his administration were mulling various schemes to remove the bothersome Surinamese leader from power. One such plan, developed by the CIA and later dismissed as "harebrained" by Secretary of State George Shultz, would have used South Korean commandos to overthrow Bouterse. Another would have deployed U.S.-based Surinamese exiles and was reportedly described by Sen. Barry Goldwater, no slouch when it came to anti-communist intrigues, as "the dumbest fucking idea I ever heard."

The U.S. invasion of Grenada in October 1983, aimed at removing a purportedly pro-Cuban regime, had a powerful knock-on effect. Almost immediately afterward, Bouterse broke all ties with Havana. Washington's fears of a communist toehold on the South American mainland abated and relations improved, though Libyan meddling in Suriname continued to trouble Reagan officials.

Not everyone shared Washington's belief that Bouterse was more of a farce than a threat. Suriname's former colonial rulers, for one, still thought he was a menace -- both to the Dutch residents of Suriname and because of his growing role as a drug trafficker. In 1986, the Dutch government, led by Prime Minister Ruud Lubbers, went as far as planning an invasion of Suriname. Eight hundred and fifty Dutch soldiers, with U.S. air and naval support, would arrest Bouterse on drug-related charges. But as with earlier plots, this one fizzled out. Ultimately, Dutch leaders considered the risk of casualties to be too high. More importantly, the Americans, embroiled elsewhere in Latin America and skeptical about the mission's prospects, rejected the Dutch request to provide ships and aircraft.

In 2000, Bouterse was convicted in absentia by a Dutch court for his role in shipping a total of 474 kilograms of cocaine into the Netherlands via diplomatic pouches. Although out of power at the time -- and therefore without official immunity -- Bouterse never served his 11-year sentence because the two countries have no extradition treaty. In 2010, Bouterse's "Mega Combination" bloc won the largest number of parliamentary seats, and the former army sergeant came to power for the third time, offering the electorate "sugary promises for easy jobs and cheap housing," according to one unsympathetic Guyanese editorial writer.

Following the 2010 election, the Dutch promptly cut off security assistance, and the Dutch foreign minister declared indignantly that the new leader was not welcome in the Netherlands "unless it is to serve his prison sentence." Technically, Bouterse remains a wanted man. But the lack of an extradition treaty -- and now, Bouterse's immunity as a head of state -- makes it unlikely the Netherlands will get its hands on him anytime soon.

Few others seem to share the Dutch loathing of the Surinamese premier. Interpol withdrew its arrest order after his election in 2010, and Bouterse has traveled to Brazil, Guyana, South Africa, and the United States (for the U.N. General Assembly meeting in New York). With the exception of the recent Dino Bouterse rumpus, developments in sleepy Suriname only rarely attract the world's gaze.

No one seems to have paid any particular notice, for example, to the April 2013 announcement by Brunswijk, Dési's old nemesis, that he will run for president in 2015. Bizarrely, Brunswijk revealed his candidacy on stage during a concert featuring Rick Ross, the bald, heavily bearded, American hip-hop star. Brunswijk reportedly passed out $100 bills -- and less enthusiastically received Surinamese notes -- to the audience. An influential figure within the Mega Combination, Brunswijk has more than politics in common with the elder Bouterse. Like Dési, Brunswijk was convicted in a Dutch court in 1999 for cocaine trafficking.

Dino, meanwhile, has spent one Christmas behind bars in Lower Manhattan awaiting trial, and it doesn't seem likely that he will be a free man anytime soon. If ultimately convicted, the younger Bouterse could face a life sentence plus 15 years. But so far, neither Dino's exploits nor his father's unsavory past seem to have done any harm to Paramaribo's relationship with Washington. In 2012, the U.S. military supplied $400,000 in naval training, and last March, the Pentagon agreed to provide $500,000 to strengthen the Surinamese army -- support the United States shows no sign of withdrawing.

EPA/ED OUDENAARDEN