1). “Taking the Capitalist Road Was the Wrong Choice For Ukraine, Says Ukraine Expert”, May 5, 2023, Natylie Baldwin interviews Renfrey Clarke, Covert Action Magazine, at <https://covertactionmagazine.com/2023/05/05/taking-the-capitalist-road-was-the-wrong-choice-for-ukraine-says-ukraine-expert/>
2). “Poverty skyrockets in Ukraine”, 24 October 2022, Andrea Peters, World Socialist Website (WSWS), at < https://www.wsws.org/en/articles/2022/10/25/gsdz-o25.html >
3). “Impoverishing Ukraine: What the US and the EU have been doing to the country for the past 30 years: Part 1”, 22 March 2022, Andrea Peters, World Socialist Website (WSWS), at < https://www.wsws.org/en/articles/2022/10/25/gsdz-o25.html >
4). “Impoverishing Ukraine: What the US and the EU have been doing to the country for the past 30 years: Part 2”, 23 March 2022, Andrea Peters, World Socialist Website (WSWS), https://www.wsws.org/en/articles/2022/03/23/bc65-m23.html
Introduction by dmorista: These four articles all discuss the process of impoverishment that has afflicted Ukraine. In item 1). “Taking the Capitalist Road Was the Wrong Choice For Ukraine, Says Ukraine Expert” Renfrey Clarke discusses some of the issues he wrote about in his recently published book, The Catastrophe of Ukrainian Capitalism: How Privatisation Dispossessed & Impoverished the Ukrainian People. He notes that:
“Ukraine had been one of the most industrially developed parts of the Soviet Union. It was among the key centres of Soviet metallurgy, of the space industry and of aircraft production. It had some of the world’s richest farmland, and its population was well-educated even by Western European standards. ….
“Fast-forward to 2021, …. and the picture in Ukraine was fundamentally different. The country had been drastically de-developed, with large, advanced industries (aerospace, car manufacturing, shipbuilding) essentially shut down. (Emphasis added)
“World Bank figures show that in constant dollars, Ukraine’s 2021 Gross Domestic Product was down from the 1990 level by 38 per cent. If we use the most charitable measure, per capita GDP at Purchasing Price Parity, the decline was still 21 per cent. That last figure compares with a corresponding increase for the world as a whole of 75 per cent.”
Add in the various declines and debacles of the last 15 months and the situation is even more dire. Yet Zelenskyy is still traveling around the world to obtain more weapons and ammunition with which to launch Ukraine’s much discussed “Counteroffensive”.
In Item 2)., “Poverty skyrockets in Ukraine”, Andrea Peters discusses the terrible economic changes in Ukraine, since the intensification of the conflict with the Russian incursion into Ukrainian areas other than just the DonBas and Crimea as of February 22, 2022. In Items 3)., “Impoverishing Ukraine: What the US and the EU have been doing to the country for the past 30 years: Part 1”, and 4). “Impoverishing Ukraine: What the US and the EU have been doing to the country for the past 30 years: Part 2”, Peters takes an in depth look at how the E.U. and U.S. Capitalists dismembered the much more prosperous legacy left over from the Soviet Union.
In Item 3). Peters points out that:
“As measured by GDP per capita, Ukraine, with its 44.13 million inhabitants, is the poorest or second poorest country in Europe. It competes with Moldova, with about 2.6 million people, for these inauspicious titles.
The bottom 50 percent of Ukraine’s population gets just 22.6 percent of all the country’s income and 5.7 percent of its wealth. The top 10 percent own nearly 60 percent of Ukraine’s net personal assets, according to the World Inequality Database, a publication put out under the directorship of three of the globe’s leading specialists in inequality—Thomas Piketty, Emmanuel Saez, and Gabriel Zucman. In 2018, Ukrainian households’ average net savings stood at minus $245. (Emphasis added)
Another report I read recently noted that the 86 Oligarchs, who largely own and operate Ukraine, have all taken up residence in Monaco. They spend their days making business deals to increase their wealth, and their evenings in the glittering night life and the casinos. While the opportunities that arise in a war–shattered society, are different from those in a more normal country the Ukrainian Oligarchs are, along with the oligarchs and corporations from the U.S. and the E.U., ready to pounce on whatever profitable venture comes up. Selling off the assets of Ukraine, from the black earth to the women, are major business operations now.
1). “Taking the Capitalist Road Was the Wrong Choice For Ukraine, Says Ukraine Expert”, May 5, 2023, Natylie Baldwin interviews Renfrey Clarke, Covert Action Magazine, at <https://covertactionmagazine.com/2023/05/05/taking-the-capitalist-road-was-the-wrong-choice-for-ukraine-says-ukraine-expert/>
31–39 minutes
(Caption: [Source: cnn.com] )
Renfrey Clarke is an Australian journalist. Throughout the 1990s he reported from Moscow for Green Left Weekly of Sydney. This past year, he published The Catastrophe of Ukrainian Capitalism: How Privatisation Dispossessed & Impoverished the Ukrainian People with Resistance Books.
In April, I had an email exchange with Clarke. Below is the transcript.
Natylie Baldwin: You point out in the beginning of your book that Ukraine’s economy had significantly declined by 2018 from its position at the end of the Soviet era in 1990. Can you explain what Ukraine’s prospects looked like in 1990? And what did they look like just prior to Russia’s invasion?
Renfrey Clarke: In researching this book I found a 1992 Deutsche Bank study arguing that, of all the countries into which the USSR had just been divided, it was Ukraine that had the best prospects for success. To most Western observers at the time, that would have seemed indisputable.
Ukraine had been one of the most industrially developed parts of the Soviet Union. It was among the key centres of Soviet metallurgy, of the space industry and of aircraft production. It had some of the world’s richest farmland, and its population was well-educated even by Western European standards.
Add in privatisation and the free market, the assumption went, and within a few years Ukraine would be an economic powerhouse, its population enjoying first-world levels of prosperity.
Fast-forward to 2021, the last year before Russia’s “Special Military Operation,” and the picture in Ukraine was fundamentally different. The country had been drastically de-developed, with large, advanced industries (aerospace, car manufacturing, shipbuilding) essentially shut down.
World Bank figures show that in constant dollars, Ukraine’s 2021 Gross Domestic Product was down from the 1990 level by 38 per cent. If we use the most charitable measure, per capita GDP at Purchasing Price Parity, the decline was still 21 per cent. That last figure compares with a corresponding increase for the world as a whole of 75 per cent.
To make some specific international comparisons, in 2021 the per capita GDP of Ukraine was roughly equal to the figures for Paraguay, Guatemala and Indonesia.
(Caption: Street vendors in Kyiv. Manifestation of a depressed economy. [Source: sott.net] )
What went wrong? Western analysts have tended to focus on the effects of holdovers from the Soviet era, and in more recent times, on the impacts of Russian policies and actions. My book takes these factors up, but it’s obvious to me that much deeper issues are involved.
In my view, the ultimate reasons for Ukraine’s catastrophe lie in the capitalist system itself, and especially, in the economic roles and functions that the “centre” of the developed capitalist world imposes on the system’s less-developed periphery.
Quite simply, for Ukraine to take the “capitalist road” was the wrong choice.
NB: It seems as though Ukraine went through a process similar to that in Russia in the 1990s, when a group of oligarchs emerged to control much of the country’s wealth and assets. Can you describe how that process occurred?
RC: As a social layer, the oligarchy in both Ukraine and Russia has its origins in the Soviet society of the later perestroika period, from about 1988. In my view, the oligarchy arose from the fusion of three more or less distinct currents that by the final perestroika years had all managed to accumulate significant private capital hoards. These currents were senior executives of large state firms; well-placed state figures, including politicians, bureaucrats, judges, and prosecutors; and lastly, the criminal underworld, the mafia.
A 1988 Law on Cooperatives allowed individuals to form and run small private firms. Many structures of this kind, only nominally cooperatives, were promptly set up by top executives of large state enterprises, who used them to stow funds that had been bled off illicitly from enterprise finances. By the time Ukraine became independent in 1991, many senior figures in state firms were substantial private capitalists as well.
The new owners of capital needed politicians to make laws in their favour, and bureaucrats to make administrative decisions that were to their advantage. The capitalists also needed judges to rule in their favour when there were disputes, and prosecutors to turn a blind eye when, as happened routinely, the entrepreneurs functioned outside the law. To perform all these services, the politicians and officials charged bribes, which allowed them to amass their own capital and, in many cases, to found their own businesses.
Finally, there were the criminal networks that had always operated within Soviet society, but that now found their prospects multiplied. In the last years of the USSR, the rule of law became weak or non-existent. This created huge opportunities not just for theft and fraud, but also for criminal stand-over men. If you were a business operator and needed a contract enforced, the way you did it was by hiring a group of “young men with thick necks.”
(Caption: Ukrainians protest corruption in their government. [Source: washingtonpost.com] )
To stay in business, private firms needed their “roof,” the protection racketeers who would defend them against rival shake-down artists—for an outsized share of the enterprise profits. At times the “roof” would be provided by the police themselves, for an appropriate payment.
This criminal activity produced nothing, and stifled productive investment. But it was enormously lucrative, and gave a start to more than a few post-Soviet business empires. The steel magnate Rinat Akhmetov, for many years Ukraine’s richest oligarch, was a miner’s son who began his career as a lieutenant to a Donetsk crime boss.
(Caption: Rinat Akhmetov [Source: celebritynetworth123.com] )
Within a few years from the late 1980s, the various streams of corrupt and criminal activity began merging into oligarchic clans centred on particular cities and economic sectors. When state enterprises began to be privatised in the 1990s, it was these clans that generally wound up with the assets.
I should say something about the business culture that arose from the last Soviet years, and that in Ukraine today remains sharply different from anything in the West. Few of the new business chiefs knew much about how capitalism was supposed to work, and the lessons in the business-school texts were mostly useless in any case.
The way you got rich was by paying bribes to tap into state revenues, or by cornering and liquidating value that had been created in the Soviet past. Asset ownership was exceedingly insecure—you never knew when you’d turn up at your office to find it full of the armed security guards of a business rival, who’d bribed a judge to permit a takeover. In these circumstances, productive investment was irrational behaviour.
NB: I’ve heard that one source of opposition to political decentralisation—which would appear to have been a possible solution to Ukraine’s divisions before the war—is that centralisation benefits the oligarchs. Do you think that’s true?
RC: There’s no simple answer here. Politically and administratively, Ukraine since independence has been a relatively centralised state. Provincial governors aren’t elected but are appointed from Kyiv. This has reflected fears in Kyiv of separatist trends arising in the regions. Here, obviously, we should have in mind the Donbas.
Despite being centralised, the Ukrainian state machine is quite weak. A great deal of real power lies with the regionally based oligarchic clans. Unlike the situation in Russia and Belarus, no single individual or oligarchic grouping has been able to achieve unrivalled dominance and curtail the power of the chronically warring business magnates. Ukraine has never had its Putin or Lukashenko.
The system in Ukraine can thus be described as a highly fluid oligarchic pluralism, with control over the government in Kyiv shifting periodically between unstable groupings of individuals and clans. On the whole, the oligarchs over the decades seem to have been content with this, since it has prevented the rise of a central authority able to discipline them and cut into their prerogatives.
NB: You discuss how the enforced economic separation between Ukraine and Russia has been detrimental to the Ukrainian economy. Can you explain why?
RC: Under Soviet central planning Russia and Ukraine formed a single economic expanse, and enterprises were often tightly integrated with customers and suppliers in the other republic. Indeed, Soviet planning had often provided for only one supplier of a particular good in a whole swathe of the USSR, meaning that cross-border trade was essential if whole chains of production were not to break down.
Understandably, Russia remained by far Ukraine’s largest trading partner throughout the first decades of Ukrainian independence. Despite problems such as erratic currency exchange rates, this trade had compelling advantages. Customs barriers were absent, and technical standards, inherited from the USSR, were mostly identical. Ways of doing business were familiar, and negotiations could be conducted conveniently in Russian.
Perhaps most critically important was another factor: The two countries were on broadly similar levels of technological development. Their labour productivity did not differ by much. Neither side was in danger of seeing whole industrial sectors wiped out by more sophisticated competitors based in the other country.
Nevertheless, one of the truisms of liberal discourse, both in Ukraine and in Western commentaries, was that the close economic ties with Russia were holding Ukraine back. There was said to be an urgent need for Ukraine to turn its back on Russia, identified with the Soviet past, and to open itself up to the West. Ukraine’s commerce with Russia, in this scenario, needed to be replaced by “deep and comprehensive free trade” with the European Union.
This controversy had wide-ranging ideological, political and even military ramifications. But to be brief, by 2014, opposition within Ukraine had been overcome and an Association Agreement with the EU had been signed. By 2016 trade between Ukraine and Russia had shrunk dramatically, to the point where it was much less than commerce with the EU.
The shift to integration with the West, however, did not bring Ukraine the promised surge of economic growth. After a severe slump in the aftermath of the Maidan events of 2014, Ukrainian GDP saw only a weak recovery between 2016 and 2021. Meanwhile, the country’s trade balance with the EU remained strongly negative. Integration with the West was doing far more for the West than for Ukraine.
(Caption: Victoria Nuland hands out cookies to protesters in Maidan Square during uprising. Integration with the West following the coup has been far better for Western countries than for Ukraine, whose economy has done worse under the new order. [Source: twitter.com] )
NB: You made an interesting comment about pro-Western liberals in both Russia and Ukraine (including Maidan protesters/supporters): “Like their counterparts in Russia, the members of these ‘Westernising’ middle layers tend to be naïve about the realities of Western society, and about what incorporation into developed-world economic structures means in practice for countries whose economies are far poorer and more primitive.” (p. 9) Can you describe the actual effect of the policies that resulted from Maidan and the signing of the EU Association Agreement? It sounds like a case of “be careful what you wish for.”
RC: If you want to break the hearts of Ukraine’s liberal intelligentsia, just remind them that economic growth in the European Union is stagnant, and European societies crisis-ridden.
Ukraine now has an economic integration agreement with the EU, allowing for extensive areas of free trade. But Ukraine isn’t being integrated into European capitalism as part of the high-productivity, high-wage “core” of the system. After all, why would EU countries want to give themselves an extra competitor?
Instead, the role Ukraine has been assigned is that of a market for advanced Western manufactures, and of a supplier to the EU of relatively low-tech generic goods such as steel billets and basic chemicals. These are low-profit commodities that Western producers are tending to move out of in any case, especially since the industries concerned can be highly polluting.
In Soviet times, as I’ve explained, Ukraine was a centre of sophisticated, at times world-class, manufacturing. But in the mayhem surrounding privatisation, investment levels collapsed, innovation virtually ceased, and products became uncompetitive in developed-world markets. In the dreams of liberal theorists, foreign capitalists had been going to troop over the border, buy up ruined industrial enterprises, re-equip them and on the basis of low wages, make attractive profits from exports to the West. But Ukraine had a criminalised economy run by oligarchs. Rather than swim with sharks, potential foreign investors opted overwhelmingly to stay away.
(Caption: Chess factory in Ukraine during Soviet period. [Source: sovtime.com] )
The dropping of EU import tariffs was predicted to turn this situation around, by making the attractions of investment in Ukraine irresistible for Western capital. Meanwhile, the foreign investors were supposed to out-compete the oligarchs, and force reforms on the corrupt, business-unfriendly state machine.
But none of this has really happened. Foreign investment has remained tiny. At the same time, free trade with the EU has meant that Western manufacturers, with higher productivity and a more attractive range of offerings, have been able to take over large parts of the Ukrainian domestic market and drive local producers out of business.
As an example, I could cite the Ukrainian car industry. In 2008 the country produced more than 400,000 motor vehicles. The last important year of production was 2014. Then in 2018 a reduction of tariffs brought a huge increase in imports of used cars from the EU, and output of passenger cars in Ukraine effectively ceased.
(Caption: UkrAutoProm plant: Car production in Ukraine is way down. [Source: open4business.com] )
NB: On a related note, I can’t help but observe that Ukraine seems to have fallen victim to neoliberal corporatist policies that benefit more powerful outside powers—the kind of policies that used to be criticised and opposed by the anti-globalisation movement of the 1990s. The left used to recognise these economic policies, when they were imposed on weaker countries, as a form of neocolonialism. Now it seems like the left—at least in the U.S.—has been reduced to a frightened waif obsessing over a caricaturised form of identity politics and regurgitating the latest war propaganda. What, in your opinion, has happened to the left?
RC: In my view, most sections of the Western left have failed to come up with an adequate response to the war in Ukraine. Fundamentally, I see the problem as rooted in an adaptation to liberal attitudes and habits of thought, and in a failure to educate a whole generation of activists in the distinctive traditions, including the intellectual traditions, of the class struggle movement.
Today, numerous members of the left simply lack the methodological equipment to understand the Ukraine issue—which is, to be fair, fiendishly complex. Here I’d make two points. First, it’s critically important for the left to reach a clear understanding of whether present-day Russia is, or is not, an imperialist power. Second, in addressing this question, there’s no way the left should allow itself to rest on the thinking of The Guardian and The Washington Post. Our methodology has to come from the tradition of left thinkers such as Luxemburg, Lenin, Bukharin and Lukács.
The liberal empiricism of The Guardian will tell you that Russia is an imperialist power, as “proved” by the fact that Russia has invaded and occupied the territory of another country. But even in recent decades, various countries that are manifestly poor and backward have done precisely this. Does this mean we should be talking about “Moroccan imperialism” or “Iraqi imperialism”? That’s absurd.
In the classic left analysis, modern imperialism is a quality of the most advanced and wealthy capitalism. Imperialist countries export capital on a massive scale, and drain the developing world of value through the mechanism of unequal exchange. Here Russia simply doesn’t fit the bill. With its relatively backward economy based on the export of raw commodities, Russia is a large-scale victim of unequal exchange.
For the left, joining with imperialism in attacking one of imperialism’s victims should be unthinkable. But that’s what many leftists are now doing.
Since the early 1990s, NATO has expanded from central Germany right to Russia’s borders. Ukraine has been recruited as a de facto member of the Western camp, and has been equipped with a large, well-armed, NATO-trained army. Imperialist threats and pressures against Russia have multiplied.
Imperialism has to be resisted. But does this mean that the left should support Putin’s actions in Ukraine? Here we should reflect that a workers’ government in Russia would have countered imperialism in the first instance through a quite different strategy, centred on international working-class solidarity and revolutionary anti-war agitation.
Obviously, that’s a course Putin will never follow. But does Russia’s decision to resist imperialism through methods that aren’t ours mean we should denounce the very fact of Russian resistance?
Again, that’s unthinkable. We have to stand with Russia against the attacks on it by imperialism and by the Ukrainian ruling class. Of course, Putin’s politics aren’t ours, so our support for the Russian cause must be critical and nuanced. We’re under no obligation to support specific policies and actions of Russia’s capitalist elite.
That said, the left-liberal position, of seeking victory for imperialism and its allies in Ukraine, is deeply reactionary. Ultimately, it can only multiply suffering through emboldening the U.S. and NATO to launch assaults in other parts of the world.
NB: The war has also been a disaster for Ukraine economically. In October last year Andrea Peters wrote an in-depth article on how poverty had sky-rocketed in the country since the invasion. Some figures she cited included:
*10-fold increase in poverty
*35% unemployment rate
*50% reduction in salaries
*public debt of 85% of GDP
I’m sure it’s even worse now. It appears that the U.S./Europe are almost completely subsidising the Ukrainian government at this point. Can you talk about what you know of Ukraine’s current economic conditions?
RC: Ukraine’s economy has been shattered by the war. Government figures show GDP in the last quarter of 2022 down by 34% on the level a year earlier, and industrial production in September down by a similar amount. In March this year the cost of direct damage to buildings and infrastructure was put at $135 billion, and more than 7 per cent of housing has reportedly been damaged or destroyed. Huge areas of cropland have not been sown, often because fields have been mined.
The military draft has taken large numbers of skilled workers from their jobs. Other highly qualified people are among the Ukrainians, reportedly at least 5.5 million, who have left the country. An estimated 6.9 million people have been displaced within Ukraine, and this has also affected production.
(Caption: [Source: bbc.com] )
According to Finance Minister Serhii Marchenko, just one-third of Ukraine’s budget revenue now comes from domestic sources. The difference is having to be made up by foreign loans and grants. This aid has been enough to keep annual inflation at a relatively manageable level of about 25 per cent, but workers are rarely being compensated for price rises, and their living standards have collapsed.
In many cases, the Western aid is not in the form of grants but of loans. By my calculation, Ukraine’s external debt in January was about 95 percent of annual GDP. When and if peace returns, Ukraine will have to sacrifice its foreign exchange earnings over decades to pay back these borrowings.
( Caption: [Source: dreamstime.com] )
NB: Ukraine’s PM Denys Shmyhal has stated that for 2023 alone Ukraine will need $38 billion to cover the budget deficit and another $17 billion for “rapid reconstruction projects.” It would seem that it’s not sustainable (politically or economically) for the West to provide this kind of money for any length of time. What do you think?
RC: The figure I have for total planned U.S. military spending in 2023 is $886 billion, so the NATO countries can afford to maintain and rebuild Ukraine if they want to. The fact that they’re keeping the Ukrainian economy on a relative drip-feed—and worse, demanding that many of the outlays be paid back—is a conscious choice they’ve made.
There’s a lesson in this for developing-world elites that are tempted to act as proxies for imperialism, in the way that Ukraine’s post-2014 leaders have deliberately done. When the consequences get you in deep, don’t expect the imperialists to pick up the tab. Ultimately, they’re not on your side.
NB: The Oakland Institute published a report in February of this year about a specific aspect of the Western-influenced neoliberal policies on Ukraine—agricultural land. One of the first things Zelensky did after he took office in 2019 was to force through an unpopular land reform bill. Can you explain what this law was about and why it was so unpopular?
RC: By 2014 Ukraine’s farmland had almost all been privatised and distributed among millions of former collective farm workers. Until 2021 a moratorium remained on sales of agricultural land. This moratorium was overwhelmingly popular among the rural population, who distrusted the land-office bureaucracy and feared being swindled of their holdings. With only small acreages, and lacking capital to develop their operations, most landowners opted to lease their holdings and to work as employees of commercial farming enterprises.
The result has been described as a “re-feudalisation of Ukrainian agriculture.” Entrepreneurs with access to capital, often established oligarchs but including U.S. and Saudi corporate interests, amassed control of vast lease holdings. With land rents cheap, and wages minimal, the new land barons had little reason to invest in raising productivity, which remained low despite the rich soil.
(Caption: [Source: foreignbrief.com] )
To this situation, already deeply retrograde, the International Monetary Fund and other institutional lenders brought the wisdom of neoliberal dogma. For many years, structural adjustment programs attached to IMF loans had insisted on the creation of a free market in agricultural land. Ukrainian governments, aware of the massive hostility to the move, had dragged their feet. It was Zelensky whose resistance finally broke. Since mid-2021 Ukrainian citizens have been able to purchase up to 100 hectares of agricultural land, with the figure to rise to 10,000 hectares from January 2024.
In theory, large numbers of small landowners will now sell their land, move to the cities, and take up life as urban workers, while rising land values will force commercial farmers to invest in raising their productivity. But these calculations are almost certainly utopian. Unemployment in the cities is already high, and housing tight. Small farmers are unlikely to risk mortgaging their land to improve their operations while profits remain slender, interest rates high, the banks predatory, and officials corrupt at every level.
The real logic of this “reform” is to strengthen the hold on agriculture of the oligarchs and international agribusiness.
NB: The World Bank recently came out with a report stating that reconstruction after the war ends will cost at least $411 billion. When the fighting ends, what kind of policies do you think would give Ukraine the best chance at building a more stable and equitable economy in the long term?
RC: How is the fighting to end? At present, the Russian forces seem unlikely to be defeated, at least by the Ukrainians. Meanwhile, the closer a Russian victory, the greater the prospect of full-scale imperialist military intervention.
Suppose, though, that Zelensky were to sit down with Russian negotiators and hammer out a peace deal. Realistically, this would require a recognition by Ukraine that the Donbas and Crimea had been lost, along with Zaporizhzhia and Kherson provinces. Neofascists would have to be purged from the state apparatus, and their organisations outlawed. Ukraine would need to break its ties with NATO, and its armed forces would have to be cut to a level the country could afford.
If such a deal were reached, of course, Ukrainian ultra-nationalists would line up to assassinate Zelensky. If, that is, the CIA didn’t get him first.
Presuming there can be an “after the war,” what might it look like? We must remember that Ukraine is now one of the poorer parts of the capitalist developing world. For countries in this general situation, there can be no genuinely “stable and equitable” economic future. Such a future is conceivable only outside capitalism, its crises, and its international system of plunder.
But let’s suppose that an independent Ukraine were somehow to emerge, that it was at peace, and that it was able to pursue some kind of rational economic course. In the first place, this course would involve a careful demarcation of the economy from the advanced West. Ideally, Ukraine would still have extensive trade with the EU. But this could not be at the cost of allowing unrestricted imports to stifle industries and sectors that had the potential to reach modern levels of sophistication and productivity.
Ukraine’s trading relations need to be based primarily on exchanges with states that share the country’s general level of technological development, so that commercial competition promises stimulus and not annihilation. This shift would involve the re-establishing of a dense network of economic relations with Russia. It would also feature an expansion of already extensive (in 2021) trade with states such as Turkey, Egypt, India and China.
In politico-economic terms, Ukraine’s future doesn’t lie in “integration with the West”—a destructive fantasy—but in the country taking its place among the member states of organisations such as BRICS, the Belt and Road initiative, and the Shanghai Cooperation Organisation. For its financing needs, Ukraine needs to repudiate the IMF and look to bodies such as the Asian Infrastructure Investment Bank.
Those are necessary changes, and would greatly improve Ukraine’s prospects. But ultimately, a “stable and equitable” future needs much deeper transformations. It will require ousting the country’s crime lord oligarchs from control over the economy.
In some thirty years, and despite Western aid, Ukraine’s liberal reformers have made little progress on this front. The “middle layers” of the country’s society are simply not able or inclined to carry out such an overthrow. They have little social weight, and are not an independent force. Those of them who don’t work directly for the oligarchs are enmeshed, in many cases, in the corrupt state machine that the oligarchs control.
(Caption: [Source: euromaidanpress.com] )
The only social force in Ukraine that has the massive numbers to end oligarchic power is the organised proletariat. Unlike the “middle layers,” the country’s workers have no stake in preserving oligarchism, and have the potential to act independently of it.
NB: You reported from Moscow in the 1990s for the newspaper Green Left. How did that come about, and what stands out to you most about your time in Russia?
RC: As a Russian speaker, I was sent by the paper in 1990 to Moscow—then the capital of the USSR—to report on the progress of perestroika. I was expecting to be there for about two years, but acquired a Russian family and stayed for nine.
I had only a small income from the paper. My wife and I lived better than the neighbors, but not by much. I watched and reported as highly qualified workers were plunged into destitution. Their wages unpaid, their savings of decades erased by inflation, they sold household belongings outside metro stations, and lived on potatoes dug from their garden plots.
(Caption: Street flea market in Rostov-on-Don in 1992. [Source: wikipedia.org] )
The eeriest experience was watching people try to cope with a drastic inversion of beliefs and values. Wherever Soviet society had put a minus, Russians were abruptly commanded to put a plus. Behaviour that had earlier been regarded as contemptible—hustling, speculating—now won praise in the media.
Among the people I knew, I suspect the most traumatised were Western-oriented intellectuals who for years had longed for the Soviet Union to perish, and for capitalism to replace it. Now capitalism had come—and it was a nightmare.
In these circumstances more than a few Russians lost their moral bearings completely. Anything seemed permitted. I remember setting out one morning to take my little boy to his day care. On the pavement not far from our building, we encountered a freshly murdered corpse.
Meanwhile, a tornado of history swirled round about. As a journalist I was in the “Russian White House,” the parliament building up the Moscow River from the Kremlin, during the coups of 1991 and 1993. In 1998 I reported as the government effectively declared itself bankrupt, defaulting on its debt obligations. By that time, 40 per cent of the economy had evaporated.
I remember those years, though, as in some ways the richest and most rewarding of my life.
2). “Poverty skyrockets in Ukraine”, 24 October 2022, Andrea Peters, World Socialist Website (WSWS), at < https://www.wsws.org/en/articles/2022/10/25/gsdz-o25.html >
Poverty in Ukraine has increased more than tenfold since the outbreak of the US/NATO-Russia war, according to the latest data from the World Bank (WB). Officially, 25 percent of the country’s population is now poor, up from supposedly just 2 percent before February 2022. Both numbers are a huge underestimate, as Ukraine already had the lowest or near-lowest GDP per capita of any European country before the Russian invasion, and its government has long set an absurdly low poverty line in an effort to undercount the number of people living hand to mouth.
People queue up to wait a ration food from World Central Kitchen organisation in the center of Mykolaiv, Monday, Oct. 24, 2022. [AP Photo/Emilio Morenatti]
With officials predicting that the poverty rate could rise to as much as 60 percent or more next year, levels of deprivation are emerging in Ukraine that have not been witnessed on the European continent since the end of World War II.
Unemployment is now running at 35 percent, and salaries have fallen by as much as 50 percent over the spring and summer for some categories of workers. The lowest paid segments of the workforce—students and unskilled laborers—are estimated to be surviving on a monthly wage of about $291. With its economy on track to contract by 35 percent this year, according to the International Monetary Fund, Ukraine’s public debt has now soared to 85 percent of GDP.
Basic goods and services are both unavailable and unaffordable for millions, as inflation, which stood at 24.4 percent as of September, eats away at workers’ salaries and pensions. A recently released joint study by the World Health Organization and Ukraine’s Ministry of Health found that 22 percent of people in Ukraine cannot access essential medicines. For the country’s 6.9 million internally displaced, that number rises to 33 percent.
Eighty-four percent of survey respondents said that prices are too high, and 46 percent said that what they need is simply not on the shelves. The medications that are hardest to get—those that treat blood pressure, heart problems and pain, as well as sedatives and antibiotics—reveal a population struggling to cope with decades of poverty-induced ill health and the physical and psychological trauma of war.
While US and NATO officials are able to dispatch massive amounts of firepower to Ukraine’s front lines within a matter of weeks, the delivery of life-saving humanitarian goods is seemingly an impossible logistical challenge.
Meanwhile, COVID-19 is spreading, with another 23,000 cases recorded between just October 10 and 16. Ukraine’s coronavirus vaccination rate is under 45 percent, and only a small fraction of the population has ever gotten a first or second booster dose. Even before the outbreak of the war, Ukraine was, in the words of President Zelensky himself, “medically naked” as the result of years of austerity measures imposed by overseas lenders.
More than 7 percent of the country’s housing stock has been damaged or destroyed, and millions have lost access to heat, electricity and water. Last week, 30 percent of the country’s power stations were knocked offline. According to news reports, in preparation for the winter, people are gathering wood and building makeshift stoves in abandoned buildings that still have roofs. Under these conditions, the government in Kiev recently made the helpful suggestion that everyone charge their devices and stock up on batteries and flashlights, in anticipation of ongoing rolling blackouts.
Among the most vulnerable are the elderly, immobile and disabled. Out of a prewar population of 44.13 million, Ukraine has 2.7 million people officially registered as having a disability. Thousands among them are housed in grossly underfunded and often horrific orphanages and nursing homes, where they are especially vulnerable to the ravages of war. Human Rights Watch and other nonprofit groups issued statements in August noting that authorities had overlooked many of those institutionalized in these settings in their evacuation plans, leaving them stranded. Reports surfaced of the mentally infirm chained to beds and undernourished children left to lie in their own waste. In September, the Western media carried news stories claiming that Russian forces were using these populations as “human shields,” failing to mention the fact that for the Ukrainian government they had long been human trash.
The government in Kiev is requesting large amounts of aid from international agencies and foreign states, as the overwhelming majority of its domestic budget is being eaten up by military expenditures and debt servicing, as well as the payment of salaries and pensions. According to Prime Minister Denys Shmyhal, 60 percent of Ukraine’s budget is now devoted to defense. World Bank regional country director for Eastern Europe Arup Banerji recently stated that if Ukraine does not receive more financing soon, it will have to either further cut social spending or resort to simply printing money, thereby driving up the inflation rate.
Speaking last week at an annual meeting of the International Monetary Fund, Ukrainian President Zelensky requested another $55 billion from the international community—$38 billion to cover next year’s budget deficit and $17 billion for infrastructure. The World Bank estimates, however, that Ukraine’s overall rebuilding costs at more than six times that amount, $349 billion.
But foreign governments are not nearly so generous with their purses as they are with their stocks of arms. While financiers and politicians have repeatedly spoken about the necessity of giving Ukraine grants in Marshall-Plan-like funding schemes, much of what the country is currently promised is coming in the form of loans or not coming at all.
In an October 12 commentary published in the South China Morning Post, right-wing economist Anders Aslund noted that of the $35 billion the IMF has pledged to Ukraine to help it keep its government running and schools and health care facilities open, it has released just $20 billion. And of the 9 billion euros the EU committed to the country in May, just 1 billion has been sent.
Speaking about Ukraine’s “very large” financing needs, in mid-October IMF Managing Director Kristalina Georgieva noted that her agency is gearing up for talks with Ukrainian officials “to discuss Ukraine’s budget plans and a new IMF monitoring instrument, which should pave the way for a full-fledged IMF program once conditions allow.”
In other words, should there be anything left of Ukraine, the IMF is intent on using the physical destruction of the country to increase its oversight of the government and economy and force through privatizations and massive cuts to social spending. The recent appointment of Ukraine’s Minister of Finance Sherhiy Marchenko as rotating chair of the IMF’s Board of Governors is an expression of the full commitment of the Ukrainian bourgeoisie to this longstanding project. International lenders have been bleeding Ukraine dry for decades.
And even under conditions in which grants, as opposed to credits, are extended to the country, Ukraine will be kept on a tight leash. A recent analysis by Deloitte Insights, an online publication by the international financial management, first emphasized the importance of “anti-corruption” and “fraud prevention” in all ongoing funding deals with Ukraine. When it suits them, the international community will, once more, discover that Kiev’s “freedom fighters” are a bunch of thieves.
In an expression of what is being prepared, over the course of the summer the Ukrainian government pushed through, with the avid support of its Western allies, a series of “reforms” gutting salaries and workers’ rights on the basis of the fact that martial law had been imposed in the country. So-called “zero-hour” contracts are now legal. In addition, all those employed by small- and medium-sized enterprises, about 70 percent of the workforce, have been denied the workplace protections granted in the national labor code, which is no longer applicable to their category of employment. While allegedly these measures are to be temporary, the government clearly intends for them to continue indefinitely.
In motivating the passage of the new legislation, Zelensky’s grossly misnamed Servant of the People party insisted that Ukraine suffers from “extreme over-regulation of employment” that “creates bureaucratic barriers … for raising the competitiveness of employers.” Minister of Parliament Danylo Hetmantsev denounced labor regulations as being at odds with a country that is “free, European, and market-oriented.”
3). “Impoverishing Ukraine: What the US and the EU have been doing to the country for the past 30 years: Part 1”, 22 March 2022, Andrea Peters, World Socialist Website (WSWS), at < https://www.wsws.org/en/articles/2022/10/25/gsdz-o25.html >
This the first installment in a two-part series.
At last Wednesday’s gathering of US congressmen to hear the words of Ukrainian President Volodymyr Zelensky, House Speaker Nancy Pelosi opened the event by crying out, “Slava Ukraini”—“Glory to Ukraine”—no less than five times. This expression has become popular in Washington, London, and elsewhere as of late, with British Prime Minister Boris Johnson also bellowing out the cry in a session of the House of Commons and on Twitter.
American President Joe Biden, while not yet tackling the two Ukrainian words, claims at every moment that the more than one billion dollars’ worth of armaments he has poured into Ukraine—enough for every citizen to kill every other multiple times over—is to defend the “freedom” and “dignity” of that nation.
The origins of the term “Slava Ukraini” reveal something about the real relationship of the US and NATO to Ukraine’s working masses of all ethnicities and linguistic groups—Russian, Ukrainian, Jewish, Polish, etc. As biographer Grzegorz Rossolinski-Liebe explains in his book about Ukrainian fascist leader Stepan Bandera, “Slava Ukraini” was part of the salute delivered by members of the Organization of Ukrainian Nationalists and its military wing, the Ukrainian Insurgent Army, which were collectively responsible for the mass murder of tens of thousands of Soviets, Jews and Poles during World War II.
Neither the United States nor the EU nor any of their related institutions care now or have ever cared about the people of Ukraine, much less their liberty. Even as they have been using the country as a cat’s paw in their battle with Russia—as a result of which massive amounts of firepower are making their way into the hands of today’s Ukrainian fascists, and parts of the country are being blown to bits—the US and the EU have been economically strangling the Ukrainian people for decades.
International Monetary Fund Managing Director Dominique Strauss-Kahn (R) greets Ukraine President Viktor Yanukovich (L) at the IMF Headquarters April 12, 2010 in Washington, DC. [Photo: International Monetary Fund, Stephen Jaffe]
As measured by GDP per capita, Ukraine, with its 44.13 million inhabitants, is the poorest or second poorest country in Europe. It competes with Moldova, with about 2.6 million people, for these inauspicious titles.
The bottom 50 percent of Ukraine’s population gets just 22.6 percent of all the country’s income and 5.7 percent of its wealth. The top 10 percent own nearly 60 percent of Ukraine’s net personal assets, according to the World Inequality Database, a publication put out under the directorship of three of the globe’s leading specialists in inequality—Thomas Piketty, Emmanuel Saez, and Gabriel Zucman. In 2018, Ukrainian households’ average net savings stood at minus $245.
The median household income in Ukraine is around $4,400 a year, about on par with that of Iran, whose economy has been operating under crushing sanctions for years. The average wage in Ukraine is estimated to be just €330 a month, and the state-mandated minimum a worker can be paid is €144. According to the Ukrainian government, an individual ought to be able to survive on less than half that amount, as the subsistence minimum is €64. Retirees who are at the bottom rung of the pension scale take home €50 a month.
The country’s Institute of Sociology reports that the typical Ukrainian family spends 47 percent of its total income on food and another 32 percent on utility bills. In 2016, nearly 60 percent of people were poor according to government standards, including 60 percent of kids. That poverty rate dropped to “only” 37.8 percent in 2019. The UN Food and Agricultural Organization found that in 2020 15.9 percent of Ukrainian children under 5 were malnourished, and in 2019 17.7 percent of women of reproductive age were anemic, a condition caused by lack of iron in the diet. That number has been steadily rising since 2004. Twenty-four percent of the population is obese.
Between 2014 and 2019, the birthrate fell by 19.4 percent. Ukraine’s mortality rate is extremely high—14.7 per 1,000 people. It is well above that of many countries in Africa, the poorest continent on the globe. Its suicide rate, according to the World Bank, ranks 11th in the world. With deaths outstripping births by more than two to one and hundreds of thousands emigrating annually in search of anything better, the country’s population has shrunk every year since 1993. There are 8 million fewer Ukrainian citizens today than there were 30 years ago.
One could go on. Apart from the super-rich and a narrow layer of middle and upper-middle class people concentrated in the major cities, Ukraine is a sea of deprivation.
This is a direct outcome of economic policies imposed on the country by the very states that today parade around declaring their love for Ukraine. In an immediate sense, the current situation has its roots in the 2014 US-backed coup that brought to power a government in Kiev that immediately signed an association agreement with the EU requiring it to implement severe austerity measures. But it has even deeper roots.
The social and economic disaster in that country can be traced back to the Stalinist bureaucracy’s dissolution of the Soviet Union at the end of 1991 and the restoration of capitalism in all of the newly independent nation states, which saw their full integration into global financial and trade networks. Through a series of policies collectively known as “shock therapy”—worked out in close collaboration with Western advisers—nationalized property was transferred to private hands. Former Communist Party officials and their children, economic managers and directors of major Soviet factories and sections of industry, as well as criminal elements active in the shadow economy, won out at the expense of the working masses, through a combination of outright theft and bargain basement fire sales of Soviet resources.
Out of this wrecking operation, competing factions of big business emerged in Ukraine that were centered in Donetsk in the east and Dnipropetrovsk to its west, with coal mining and processing, energy production and transit, and metallurgy being their main sources of wealth. Banking and media empires emerged, and new sources of profits were soon realized in consumer products and agriculture.
The ranks of Ukraine’s billionaires began to grow from this period forward—Victor Pinchuk ($1.9 billion), Renat Akhmetov ($7.6 billion), Igor Kolomoyskyy ($1.8 billion) Henadiy Boholyubov ($1.1 billion), Petro Poroshenko ($1.6 billion), Vadim Novinsky ($1.4 billion), and on. For decades, Ukrainian politics has been consumed by conflicts, alliances, splits in alliances, and warring among them, which have intersected with the question as to whether the country would be pulled into closer economic relations with Europe, maintain its strong ties with Russia, or somehow manage the two simultaneously. The warfare has unfolded as geopolitical tensions between Washington and Moscow have grown, with Ukraine understood as a key zone of competition.
During the 1990s, even as great sums were being accumulated at one end of the spectrum, Ukraine’s economy was in free-fall. With per capita GDP declining by 8.4 percent between 1993 and 1999, its economy was among the worst of any European country. Inflation was at times completely out of control, reaching an annual high of around 376 percent in 1995, thereby wiping out the savings and spending power of Ukrainian workers early in the process of market restoration.
“Many young people, who lacked alternatives in the early 1990s, joined gangs and were used as pawns in the process of accumulation by criminals,” observes political economist Yuliya Yurchenko in her 2018 book Ukraine and the Empire of Capital, with warfare between competing business clans producing at times bodies in the streets. A two-and-a-half fold increase in crime between 1988 and 1997 was largely driven by various forms of “theft, robbery, swindling, and extortion” and “bribe taking, counterfeiting, and trading in narcotics,” she notes.
During this time, Ukraine received 10 loans from the International Monetary Fund (IMF) and the World Bank, in the start of what would be a near-constant process of borrowing from international financial institutions over the course of the 2000s and 2010s. The terms of the loans have centered around a 1994 “Memorandum on Questions of Economic Policy and Strategy” signed by Ukraine and the IMF that, in the words of Yurchenko, “effectively limited Ukraine’s government decision-making power.”
Agreements with other international financial institutions, such as the European Bank for Reconstruction and Development, drafted on the principle of cross-conditionality—i.e., creditors set terms that coincide and reinforce one another—established similar limits. The noose around the loan recipients’ neck tightens in multiple directions.
Lenders demanded that the government in Kiev end policies that created obstacles for foreign trade, eliminate price regulations, reduce the state budget deficit, cut subsidies to “unproductive” industries, make manufacturing outlets more competitive by modernizing their plants and laying off workers, privatize more state-owned property, cut budgetary expenditures by targeting social programs and pensions, and impose value-added taxes such that the collection of money from sales would fall more heavily on consumers as opposed to business.
While these processes have accelerated and/or slowed down at times depending on whether the administration in Kiev has been more US- or more Russian-allied, every Ukrainian government has been a partner in implementing the demands of global capital. Having emerged out of the ashes of the great barbeque that was the breakup of the Soviet Union, the ruling class of Ukraine is a comprador class in the most complete sense of the term.
In 1998, for instance, Ukraine’s parliament granted President Leonid Kuchma the authority to impose a 30 percent reduction in government expenditures. This was done because the IMF told the country to do so. “In addition to meeting fiscal and monetary targets, the government must pass legislation on privatisation, tax reform, energy and agricultural sector restructuring, and flushing out its massive ‘shadow economy,’” observed an August 1998 article in the Financial Times.
“The reforms,” writes Yurchenko, “created mutually reinforcing negative effect on the economy by opening up outdated industry for competition with foreign transnational corporations and by reducing financial state support for enterprises and citizenry thus making the latter poorer and the former even less competitive with expected negative aggregate consumption and potential revenue drop.”
Ukraine’s debt continued to balloon over the course of the coming years, increasing from $10 billion in the period from 1997-2002 to $100 billion in 2008-2009, the equivalent of more than 56 percent of the country’s GDP and more than double the total value of all its exports at that time. While it has fluctuated in recent years, it is basically at the same level today as it was a decade ago. As a result, Ukraine has ended up in a constant cycle of indebtedness, careening at times towards default due to broader crises in the world economy, such as the 2008-2009 crash.
To be continued
4). “Impoverishing Ukraine: What the US and the EU have been doing to the country for the past 30 years: Part 2”, 23 March 2022, Andrea Peters, World Socialist Website (WSWS), at < https://www.wsws.org/en/articles/2022/03/23/bc65-m23.html >
This is the second installment of a two-part series.
In addition to breaking up whatever was left of Soviet-era nationalized property and the social welfare state, austerity measures were aimed at disciplining Ukraine’s oligarchs. While their wealth was accumulated on the basis of the country’s integration into the world market, and thus made possible and sustained by the centers of global capital, investors from the West hesitated to descend directly into the dog-eat-dog world of Ukrainian big business, where bribe-taking, ever-changing economic laws, tax rates that on paper sometimes exceeded profits, and the use of bankruptcy for profiteering were rampant.
“[O]mnipresent lawlessness were damaging for foreign relations, political and trade. Western investors from the USA, the EU and particularly Germany (Ukraine’s strongest EU-isation backers) became ‘disenchanted with the country,’” notes Yurchenko. Still, they salivated at the prospect of getting access to tens of millions of consumers and wage-labor that was cheap and skilled. According to Yurchenko, “In a personal interview with the Corporate Europe Observatory think-tank, the former Secretary General of ERT, Keith Richardson, said that the demise of the USSR was as if they ‘have discovered a new South-East Asia on the [EU] doorstep.’”
Concerned not just about the loss of potential investment opportunities in Ukraine but also the geopolitical future of the country, the United States and Europe responded. First, a whole number of business associations and advisory groups—American Chamber of Commerce (ACC), Centre for US-Ukraine Relations (CUSUR), US-Ukraine Business Council (USUBC), the European Business Association (EBA), and the Centre for International Private Enterprise (CIPE)—were either created or mobilized for the purposes of, in the words of the EBA, “discussion and resolution of problems facing the private sector in Ukraine.”
These institutions were staffed with representatives from major Western corporations and Ukraine’s business elite, with many sitting on more than one board. By 2010, 105 of the world’s top 500 transnational corporations were active in them. They sought out, or even established, lobbying groups and advisory councils active in Ukraine’s government.
These include such bodies as the Investors Council under the Cabinet of Ministers of Ukraine, the Working Group of Justice (co-chaired by the European Business Association) under the Ukraine’s Ministry of Justice, the Working Group on Tax and Customs Policy (also co-chaired by the EBA) under the country’s Ministry of Finance, the Foreign Investment Advisory Council of Ukraine (FIAC) under the president of Ukraine, and the Public Councils that are within different ministries and state committees.
Over time, the lobbying groups and advisory councils, according to Yurchenko, collectively got their hands into all of the following areas of Ukrainian governance; the “reduction of state control over economic activity and marketisation alike”; the “simplification of import and export procedures, harmonisation of regulations with the EU in IT and electronics sector, revoking of medication advertising ban, creation of State Land Cadastre in preparation for land privatisation, simplification of market entry for pharmaceutical and insurance companies from the EU”; and “market reform; fiscal and tax policy; banking and non-banking financial institutions and capital market.”
Furthermore, being housed in government agencies, these groups did not just make suggestions as to how Ukraine ought to transform its economy, they were involved in the drafting of law and strategy documents laying out state policy. In short, there is not even one degree of separation between Ukrainian governance and Western corporations, financial interests, and state power.
Between 2006 and 2013 alone, Yurchenko found upwards of 50 instances of “successful lobbying” by just the European Business Association—in other words, the EBA’s suggested policies became Ukrainian law. The Americans have also had their direct means of leverage. The Centre for International Private Enterprise, one of the many lobbying organizations active in Kiev, “serves as a bridge agency between the US Congress and Ukraine’s authorities by proxy of ACC (American Chamber of Commerce). The Centre is run by the Chamber but is in fact one of the four programs of the National Endowment for Democracy (NED) that is funded by the US Congress,” notes the scholar.
As Western political and business interests have increasingly been integrated into the Ukrainian state, the IMF, other foreign lenders, and the EU have used the ongoing crisis in the country’s economy to pile on the pressure. They have regularly held back on releasing loans or signing trade agreements because Kiev has not privatized and cut enough. When, in order to get the promised money, the government has pushed through the required measures, the outcome for the population has been devastating.
An April 2009 article in the New York Times devoted to Ukraine’s failure, yet again, to meet the requirements of foreign lenders noted that while tens of thousands of jobs had been axed in the country’s industrial towns in the east, bankers viewed it as still not enough.
In Donetsk, “unemployment has officially almost doubled, to 67,500, in the past two months, and the authorities suspect that up to one-third of the 1.2 million registered workers are toiling for a small fraction of their nominal salary,” wrote the newspaper, adding, “In Makeevka, with 400,000 residents, just outside Donetsk, the Kirov factory laid off nearly all its workers in December and January. Now, an average of four people vie for every job. In nearby towns, that ratio soars to 70 or 80 people for every available job, officials say.”
But, citing the comments of a bank analyst in Kiev, the Times observed that still more was expected. Another steel producer in Donetsk, the analyst said, “could easily cut 20,000 to 25,000 people and keep the same output.”
As part of the process of making Ukraine’s economy “more competitive,” the IMF and the EU have demanded the raising of the retirement age, the ending of fuel subsidies that enable households to afford to heat their homes and cook their meals, and the selling-off of the country’s highly profitable timber and agricultural lands. The latter in particular has been long sought, as Ukraine has 25 percent of the world’s “black earth,” some of the most naturally fertile soil in the world.
All of this and more have now been achieved. A 2017 study of Ukraine’s garment industry published in the Journal for Labour and Social Affairs in Europe noted that the Kiev government has introduced the following measures in response to the demands of the international financial institutions and EU representatives over the last several years. It has:
Frozen the legal minimum wage and stopped adjusting it to the cost of living.
Reduced social welfare payments and pensions by ending cost of living indexing.
Changed the labor code to restrict union access to workplaces, make the disclosure of “commercial secrets” grounds for dismissal, require unionized workers to agree to overtime, end limits on the number of overtime hours workers must accept, permit factories to monitor workers using cameras and other technologies, and end the requirement that unions agree to a layoff.
Increased utility charges dramatically.
Placed a moratorium on inspections, including labor inspections, in small businesses. (This resulted in the growth of wage arrears from 1.3 million hryvnia in 2015 to 1.9 million in September 2016.)
Decreased employers’ mandatory social insurance contributions, thereby ensuring there is less money for social services and pensions.
Cut the number of public sector employees.
Canceled family payments for childbirth, childcare and schools.
Closed hundreds of hospitals.
Stripped higher education and cultural institutions of funding.
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