Ukraine’s central bank, confronted by runaway inflation, has raised interest rates again and warned that Ukraine’s macroeconomic stability is being imperilled by the country’s failure to keep up with the stern timetable of the International Monetary Fund’s aid programme.
Debt trap slams shut
The IMF bailout total of $17.5bn, agreed with the imperialist-backed coup government in Kiev in 2015, is being doled out a bit at a time, with the delivery of each new tranche conditional on what progress the regime has made in rooting out corruption, reducing subsidies and pensions, and opening the door to mass privatisations.
The Kiev regime is praying that the IMF will cough up $3.5bn in the course of 2018, and $2bn of that in the first quarter, but this is not guaranteed. The central bank expects an IMF visit in November to mark the junta’s homework.
This drip-feed approach confirms the humiliating vassal status to which the EU association agreement has reduced Ukraine, and does no more than keep its economy on temporary life support, just enough to fuel its war of aggression against the anti-coup resistance in the east of the country.
Meanwhile, by imposing an economic blockade on both the resistant Donbass and Russia, Kiev is self-harming, deepening its own isolation and its corresponding dependence on IMF handouts.
Attempts to break out of this commercial isolation by exporting into the EU market are being stymied by restrictive quotas. The ‘liberalisation’ of Ukraine’s economy being demanded means free penetration of western monopoly capital into Ukraine’s home economy, with no opportunity for commensurate export growth from Ukraine into the EU market.
With the IMF breathing down its neck about household gas subsidies, Kiev is making matters worse by continuing to play fast and loose with its erstwhile Russian gas supplier Gazprom. After lengthy wrangles over Kiev’s unpaid gas bills culminated in a two-year boycott of Russian gas (with Slovakia helping fill the gap, at a price), Kiev has now said it will condescend to buy Russian gas again – but only if Russia moves the entry point to Ukraine’s eastern border. Gazprom has politely declined, judging such a measure to be “unviable”.
New routes in the pipeline
Ukraine’s gas question is overshadowed by the inevitable arrival on the scene of alternative pipeline routes – routes which are designed to get Russian gas to western Europe without having to go through Ukraine. This not only removes the obligation of paying expensive transit fees, but also avoids the repetition of previous blackmail attempts in which Kiev has sought to internationalise its private rows with Moscow by threatening to turn the taps off, condemning parts of Europe to a chilly winter.
It has been estimated that one such alternative gas route, the Turkish Stream, will reduce Ukraine’s transit earnings by 25 percent. Another, the Nord Stream 2, will pipe gas from Russia to Germany via the Baltic Sea, also bypassing Poland. The US ambassador to Ukraine has warned that this route will reduce the country’s GDP by 3 percent.
Yet despite obstruction from the Baltic states and Poland, the benefits to major EU economies, especially Germany’s, seem certain to ensure that the scheme will go ahead.
The Nord Stream 2 project is run by a consortium of companies, including the French ENGIE and the German Uniper and Wintershall. Whilst Berlin still humours Kiev with vague talk of guarantees for Ukraine’s pipeline future, the option of cheap no-strings Russian gas pumped direct to Germany’s door is clearly in Germany’s own economic best interests – as is the more general development of good commercial relations with Russia.
Sacrificing Germany’s interests on the altar of America’s vendetta against Russia is looking less and less inviting as a policy option for German imperialism. In a recent Stern interview, former German chancellor Gerhard Schroder warned of the dangers of an unnecessary rift between Russia and Germany, acknowledged that Crimea will always be a part of Russia, and worried that “many Russians are disappointed with the German position, especially on sanctions”. (No Russian president will let Crimea secede, TASS, 20 September 2017)
Czech president Milos Zeman was more forthright in remarks addressed to the parliamentary assembly of the Council of Europe (PACE). Noting that in 1954, “Khrushchev [did] an unpardonably stupid thing” in handing Crimea to Ukraine, he argued that “many politicians acknowledge today that Crimea cannot be returned to Ukraine”. He backed up his stance by quoting the former German president Joachim Gauck’s warning that “If we want to take Crimea and return it to Ukraine, this would mean a European war” – ie, an American war fought on European soil.
Zeman concluded that sanctions against Russia were futile. When Kiev responded by saying that Zeman must be mentally ill to say such things, Prague waved this away with the apt remark that this was no more than “cries from the Neanderthal cave”. (Czech president calls Crimea’s reunification with Russia ‘accomplished fact’, TASS, 10 October 2017)
Maidan 2: demagogues united
The disintegration of Ukraine’s economy, the punishing effects of IMF-imposed austerity and the demoralisation brought on by fighting an oppressive war that the junta can never win but which it would be political suicide to walk away from: this toxic cocktail is finding political expression in a second edition of the western-engineered Maidan protest movement.
Like the 2014 original, Maidan 2 is dominated by an array of fascistic groupings and populist demagogues like Mikheil Saakashvili, former puppet president of Georgia, all eager to make hay out of the social crisis.
But there are some key differences. Last time, the focus was on getting rid of the democratically elected Victor Yanukovich, wrongly portrayed as being under Putin’s spell. The belief of many was that with Yanukovich gone and the association agreement signed, Ukraine’s passage into European prosperity was a done deal.
Now, when Saakashvili and others prate about getting rid of Poroshenko, nobody can seriously accuse the president of Russian leanings. Nor can anyone accuse him of being a peacenik, having been the chief architect of the war. All that can be said by his Maidan critics is that he is an oligarch with his hand in the till – a distinction which he shares with every other contender for power, not least Saakashvili himself, who is wanted on corruption charges in his native Georgia.
And now, post-Poroshenko, who believes that a brave new European world will beckon?
Another difference from Maidan 1 is the impact on the youth of three years of fighting the junta’s dirty war, a war which has taken its toll on the aggressors as well. The Duran website has some illuminating figures.
“While many of the most extreme Maidanists are upset that Poroshenko isn’t waging an even more aggressive war against the Donbass republics, many of the new protesters are ex-Ukrainian soldiers who have become distraught at their lack of pay, in spite of having to fight an aggressive war with seemingly no forthcoming resolution.
“Morale among Ukrainian troops is at an all time low, with non-battlefield casualties since the fascist regime came to power hitting 10,103. Over 3,000 troops have been killed away from the war front, with mental illness and desperate acts of internal violence fuelled by alcohol and drugs being primary causes.” (Ukraine is being gripped by a new Maidan by Adam Garrie, 2 November 2017)
The oppressive war against the Donbass people’s republics continues to follow a well-worn track, with Kiev paying lip service to the Minsk peace agreement whilst blocking its implementation at every turn.
For example, Russian foreign minister Sergey Lavrov recently drew attention to the cynical games that the junta plays when it comes to taking practical steps to disengage heavy armaments on both sides. The junta says it will begin to disengage only after the guns have fallen completely silent for a week.
“Since that time – you can learn it from the members of the OSCE special monitoring mission – this organisation reported absolute silence eight times, but each time when the OSCE reported about it and suggested the start of heavy arms disengagement, Ukrainians said: ‘this is your statistics, and we counted one hundred shots’.” (Lavrov troubled that Kiev may sabotage new disengagement efforts in Donbass, TASS, 31 October 2017)
By contrast, the people’s republics of Donetsk and Lugansk, whilst never relaxing their militant defence of their people, have throughout stood ready to honour their commitments under the Minsk agreements.
Victory to the anti-fascist resistance in the Donbass!
