The Coming (Ukrainian) Winter of Discontent

As the long hot  Ukrainian summer turns to autumn and winter, the euphoria by  Western Ukrainians of having thrown  off any servitude to  Russia will begin to recede…

The new Kiev government  signed  the IMF agreement so it could access a $17.1 billion bail-out package spread over 2 years. That money will be used to repay  international bank  debt, and will not reach  the Ukrainian population. And, as with all  IMF agreements  there are conditions… These include:

  • Achieving a self-sustained energy sector- ie cutting the subsidy  to  Ukrainian consumers and thus increasing prices significantly
  • Balancing budgets as soon as possible ( Kiev has to determine how to  do  that-likely by  increasing taxes and decreasing expenditure (note that  the  Verkhovna Rada (Ukrainian parliament)  has already   approved a temporary 1.5% increase in  taxes to  cover the costs of the war in the East).
  • Reduce corruption,  and “improve the business climate”, to  achieve high and sustainable growth. (note that  “improving the business climate” generally means  reducing subsidies to  consumers, tax incentives to businesses, opening up  Ukrainian businesses to foreign  ownership  etc etc..
  • Pension reform (ie pension cuts and raising  the age of entitlement) have been on  the agenda for a number of years now with  previous IMF agreements, but no  previous Kiev government has been   ‘brave’ enough to   battle the ferocious  activism by   unions and pensioners against  the  draft pension reductions.

This current government led by prime minister and  neocon  Arseniy Yatsenyuk has actively pushed  for a 50%  reduction in  pension from  $160  to  $80 per month for all  pension types along with  a 50% hike in  gas prices .

In just one example of the concessions to  banking solvency Ukrainian  citizens are having to make as of July 1st 2014,  the average cost of heating a standard fifty-square-meter apartment  has risen from about 200 hryvnia to 280 hryvnia (from $18 to $25) per month. It’s a significant hit, considering that the average monthly wage in Ukraine is only about 3,150 hryvnia ($275), more than half of which typically goes toward food, Sergei Kiselyov, an economist from the school of political analysis at the Kiev-Mogilyanskaya Academy, said.

While Yatsenyuk’s policies will  undoubtedly  reduce the influence of  the old Ukrainian oligarchs, the new “transparent ” systems will enable  US and European  companies  the opportunity to  purchase   failing Ukrainian businesses at  rock-bottom prices and in  a new “business-friendly” environment  where  worker exploitation can become the norm.

Yatsenuk (both as a Jew and because of his pro-U.S./pro EU and internationalist  business  policies)  is  anathema to  the Right Sektor and Svoboda parties. Both  right wing groups  are patiently waiting their moment. The  journey to  the Reichstag of their long dead German hero reminds them that patience  and a sense of impeccable timing  are crucial to their ultimately taking the reigns of power in Kiev and smashing any remaining Russian influence in Ukraine.

Ukrainians, Eastern  and Western, are well-educated  but particularly in  the West, have a high rate of poverty, and a long history  of well-deserved grievances against  Soviet Russia. President Putin  as an  ex Soviet KGB man, becomes an  easy  target  for that  anger.  As I noted in  the previous blog on MH17, Vera Graziade, a young British/Russian/Ukrainian says it all :  When you have one big bad figure, and everything is Putin’s fault, the world is simple and you don’t need to think anymore.

While the war in the East provides a very useful  patriotic focus for Western Ukrainians as they fight the evil “Russian terrorists”; that   jingoistic fervour will be hard to maintain unless  the “terrorists” are able  and willing to hit back  at Kiev on  Western Ukraine soil. It will become more and more evident to  Western Ukrainians that they have been conned by  all  the talk of ‘terrorism’ and Russian infiltrators.

While there are increasing numbers of   media reports of desertions from  the Ukraine Army ,and resistance to  further mobilisations, the extent and impact  of these is hard to judge at  this point.

The  callousness of the nazi-like references to  Russian speaking Ukrainians as sub-human and genetically inferior beings  (even President Poroshenko, who  formerly  enjoyed  very  good business relations with the Russians over the border,   has sunk  to   racial  inferiority references about   the people in the East) casts a long shadow over  any potential  for reconciliation between  East  and West  Ukraine.  The neo nazi  influences of the Svoboda Party and Right Sektor seem to have permeated  throughout the ruling cliques in Kiev.  In their view, the Colorado  Beetles (referencing the  black   and orange emblem of  St George so  revered by Russian speaking  Eastern Ukrainians),  must be stamped out underfoot by  the ‘pure race’ of Western Ukrainians .

The irony is that of course, most Ukrainians are of Slavic origin like most Russians, and  share more commonalities of culture than  they do  differences.  However their differences and grievances have been exploited by  outside influences; first  by  the Nazis, and later via  significant  Western intelligence operations in the West  during and after the cold war in order to  undermine Russian influence,  and latterly by  the  purely amoral  connivance of  neocon stormtroopers  like Victoria Nuland (US-Assistant Secretary of State) .

In the past decade we have also  seen the advent of the European Union seemingly help-bent on incorporating  any Russian “satellite” into the Union regardless of the cost to  central  EU states. Whether Ukraine will  be able to access the huge investment and underwriting from  the EU that  Poland has seen, remains to be seen; but in the current economic climate in the EU, that appears unlikely.

Certainly  EU investment and incorporation of European values and  a corruption-free state , is what many in Maidan Square demonstrated for: -along with the opportunity to migrate to  EU states for higher  wages!

It now appears increasingly unlikely in  the short to medium  term that  Ukraine could become an EU member,  particularly with  the anti- democratic  tendencies  entrenched in  Kiev via the Right Sektor and Svoboda Party, as demonstrated by  the   elimination of the Ukrainian Communist  Party.  Those anti-democratic tendencies will become more and more embedded and the  paramilitary influence of the Right Sektor more powerful,  the longer the war in the East continues.

In addition  the war is undoubtedly bleeding Ukraine dry economically. (hence the “temporary”  1.5% war  tax recently imposed by Kiev)

Eastern Ukrainian industrial  infrastructure , (although much of it  outdated Soviet style industry) has provided much income to  the state via predominantly  steel  exports to Russia . Business Insider notes that  exports to Russia accounted for nearly a quarter of Ukrainian external trade and contributed around 8 per cent of GDP before the war. Thirteen per cent of Ukraine’s iron and steel exports used to go to the neighbouring country. That income  resource  is now closed until  such  time as Kiev decides to  negotiate, rather than  impose its will  on Eastern Ukrainians.  While defeat  for the separatists is almost inevitable (given the balance of military  weight)  without real Russian support, victory  for Kiev needs to  come soon.  Kiev may have been banking that the destruction of the industrial   and commercial  infrastructure  in the East could  provide an opportunity for European/U.S.   re-investment, but this is unlikely in  the present international  economic climate.

While the separatists certainly are not  supported by  everyone in Eastern Ukraine  and there will be many in  the East  who  will  welcome victory  by Kiev, the level of anger and resentment towards Kiev for the death  and destruction, and the genuine  fear of  the phobic anti-Russian neo-nazis installed in  positions of state influence in Kiev, will   create a burning resentment  that will  likely erupt again  and again in violence , unless there are more intelligent politicians in power than those who hold sway in Kiev today.

The vicious anti-Russian  propaganda  of the Right Sektor and others in  Western Ukraine against   Russian-speaking Ukrainians is likely to have poisoned  potential  detente between the two   populations for a long time to  come.

As this bombastic jingoisim  begins to lose its appeal  to the majority of Western  Ukrainians,   the resentments and fears of  the previous decades of corruption,  violence and poverty  will  begin to re-surface, as  gas price hikes and pension cuts begin  to bite and  winter approaches. Undoubtedly this is the opportunity that the  Svoboda Party and the Right Sektor will have been waiting for…

Yatsenyuk and Poroshenko  knows this all  too  well- they  will be desperate to  “finish  the job” in Eastern Ukraine in the next  month; although paradoxically it would also be useful politically for those currently in  power in Kiev  to   not include Eastern Ukrainian voters in  the next  Rada parliamentary  elections scheduled for late September/October, as they  would skew the vote towards more  federalist  and less  neocon   perspectives .

One other issue to consider is the urgency of Kiev being able to fast-track   shale extraction in  the Dnieper-Donets basin  in Eastern Ukraine.  Curiously (!)   the first  assault by  the Kiev military  was at  Slayvansk,  the likely centre for shale oil  extraction in  the basin. War creates many possibilities for those who  are victorious….including of course  U. S.  Vice -President Jo Biden’s son , R Hunter Biden.

or see economist Michael Hudson’s take on this…

Maidan re-visited….

Postsript

Read this excellent piece of analysis of the Ukrainian  neo-nazi  movements in  Ukraine by Jonathan Marshall at Consortium News  here

Links

https://twitter.com/tristanmasat

http://www.reuters.com/article/2014/07/28/ukraine-crisis-economy-east-idUSL6N0Q021220140728

http://www.indymedia.org.uk/en/2014/06/516850.html

http://www.bruegel.org/publications/publication-detail/publication/843-ukraine-can-meaningful-reform-come-out-of-conflict/

America Started This Ukraine Crisis
http://www.williampfaff.com/modules/news/article.php?storyid=690

Nazi Roots of Ukraine’s Conflict

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