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