Ukraine discovers that EU association is a poisoned chalice

Meanwhile, Donetsk starts to recover despite ongoing aggression from the Ukrainian fascist regime.

Proletarian writers

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Ukraine's Privatbank has been declared insolvent and nationalised, absolving corrupt oligarchs of billions of dollars worth of debt

Proletarian writers

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A year on from when the EU association agreement kicked in, an agreement to secure which took the ousting of a lawful government, the imposition of an illegal junta and the instigation of a bloody ongoing war of national oppression in the east, Ukrainians are counting the bitter cost of this fateful decision.

Worst hit have been the country’s farmers. The agricultural sector accounts for around 40 percent of exports and is a traditional mainstay of the economy. In Soviet times, indeed, it was knows as the breadbasket of the USSR. But under the association deal, most agricultural commodity exports are severely limited by EU import quotas. Once the quota is exceeded, punitive taxes come into operation. The New York Times gives the example of honey exports, for which the quotas are so small that they were filled in the first six weeks of 2016. (Ukrainian farmers, poised for growth, stumble after EU deal by Andrew Kramerdec, 23 December 2016)

Such have been the consequences of giving up access to the Russian market and staking everything on ‘association’ with a club that will probably never admit Ukraine as a member.

In exchange for donning this economic straitjacket, what progress has Ukraine made towards being accepted into the European fold, the prospect of which was dangled in front of deluded Maidan demonstrators? Less than zero.

When in Holland a non-binding referendum came out by two-thirds against ratification of the association deal, the Dutch government pleaded with Brussels to help turn public opinion round by issuing further guarantees that Ukraine would not be admitted as a member. On 15 December the EU obliged, issuing a statement to help Dutch MPs ride roughshod over the referendum verdict. The statement spelled out that the association agreement “does not confer on Ukraine the status of a candidate country for accession to the union, nor does it constitute a commitment to confer such status to Ukraine in the future”. (Dutch MPs support Ukraine association only to please Brussels overlords, RT, 18 January 2017)

Ukraine’s banking system totters

The parlous condition of Ukraine’s economy was underlined a week before Christmas when PrivatBank, owned mainly by oligarch and political fixer Kolomoyskyi, was declared insolvent and nationalised, thereby relieving its former owner of a mountain of bad loans racked up by all his many cronies.

The bank, which holds up to a half of all deposits in Ukraine, not least those of 3.2 million pensioners, turned out to have a hole in its balance sheet amounting to $5.5bn, thanks to widescale ‘related-party lending’. The central bank chief said that 97 percent of the bank’s loan book was to “related entities” and accused Kolomoyskyi of failing to “recapitalise” the bank (ie, to refund the cash squandered on his cronies’ dodgy business ventures). (Relief as Ukraine nationalises largest lender by Roman Olearchyk and Neil Buckley, Financial Times, 19 December 2016)

In truth, what the government has really nationalised is not the bank but the debt, leaving a black hole which one way or another will end up being paid for by hard-pressed Ukrainian workers.

Nor will this panic nationalisation for long avert new shocks to the market. Suggestions by the finance minister that bondholders will be expected to help fund PrivatBank’s restructuring through a ‘bail-in’ have already seen the bank’s eurobonds suffer a collapse. Far from solving Ukraine’s economic woes, it merely serves to throw a light on the degree to which the prostitution of the country to the EU, IMF and Nato has spread corruption into every corner of public life.

Kolomoyskyi’s career illustrates well how the crony network operates: in addition to commanding a business empire spanning oil, metals, airlines and media, he has bankrolled fascist militias against the Donbass and even strutted for a spell as the governor of Dnipropetrovsk region. Ukraine is corrupted from the top to the bottom, and it is the irresponsible vassal relation with imperialism to which Poroshenko’s junta has committed the country that has made it so.

The only thing keeping the economy going at all is regular infusions of cash from the IMF to buy it a war that cannot be won.

Donetsk rebuilds

Meanwhile, in the heroic east, the people of the Donbass stand bloody but unbowed in the face of the war of national oppression being waged by the Ukraine army and its fascist auxiliaries.

Donetsk and Lugansk stand ready to implement the political settlement that they long ago signed up to in Minsk, along with the junta, but have also declared their determination to stand firm in self-defence so long as Poroshenko continues his two-track approach: procrastination over implementing the accords and continued sporadic (and murderous) shelling along the contact line.

In a sign of the indomitable spirit with which the Donetsk People’s Republic (DPR) faces the future, it was announced in January that Kozhevnya, a village that was razed to the ground in 2014, is to be fully restored. A DPR statement explained: “This locality was destroyed almost completely in the military confrontation of the DPR army and the Ukrainian troops at the very outset of the war. A small village on the border with the Russian Federation became a hot-point of fighting for the strategic direction.”

Announcing the restoration, DPR head of state Alexander Zakharchenko, recalled some personal memories: “I feel like I returned to that period two years ago. In Kozhevnya there was hell. Fights were very heavy. We got surrounded … Ukrainian military filled all the wells with animal corpses; we were left without water. After several hours of heavy fighting we were drinking water just from a local pond. But then it was the tastiest water for us ever.

“Now I am happy that we are not defending this village any more, but ready to restore it. These are very beautiful places: ponds, blue rocks visible at sunrise, the incredibly beautiful nature. I want life to return here. I am very grateful to students for being ready to help.

“Once the construction is launched, I will come personally and conduct the youths round the sites of our fights … I am sure that Kozhevnya will become the first restored village and will give a start to the big construction. We will restore all the villages of the Donetsk People’s Republic destroyed by war.” (First-ever major reconstruction to be launched in DPR, Donbass Defence Journal, 12 January 2017)

Victory to the anti-fascist resistance! Long live the people of the Donbass!