Archive for the ‘Ukraine’ Category
US Policy on Ukraine: Follow the Money
Don’t underestimate the role played by Yanukovych’s foreign-investor-unfriendly economic policy in spurring the US intervention in Ukraine
By Stephen Gowans
A favored leftist explanation of the United States’s and European Union’s intervention in Ukraine revolves around the geopolitical imperative for Washington of containing a US military rival, Russia, and bringing NATO up to its borders by integrating Ukraine into the US-led military alliance. What’s rarely mentioned is that the role played by the United States and its European subalterns in supporting the Maidan uprising and the consequent rise to power of the pro-Western coup government has also been motivated by the goal of building a more congenial climate in Ukraine for the profit-making activities of Western corporations and investors.
While Ukraine’s economy is understood by leftists to be capitalist and therefore not to raise a red flag at the US State Department, it is far from true that Ukraine’s economic policies under the ousted former president Victor Yanukovych were warmly accepted, even tolerated, in Western foreign policy circles. Indeed, from the point of view of the West, Ukraine’s economy left much to be desired. It needed, IMF managers said, to be reorganized by “structural reforms” to “improve the business climate.” [1] What’s important here is not that Ukraine was viewed as infertile ground for capitalist profit-making—but that it was viewed as infertile ground for the profit-making activities of Western corporations specifically.
The Heritage Foundation-Wall Street Journal 2014 Index of Economic Freedom rates Ukraine’s economy as “repressed” along with those of such perennial US regime change targets as North Korea, Cuba, Zimbabwe, Venezuela and Iran—all unfriendly to the idea that economic policy should be formulated to pad bank accounts and bottom lines in New York, London, Frankfurt and Paris. [2] Ukraine’s economic freedom—that is, its adherence to the free enterprise, open markets, free trade agenda favored on Wall Street—is even ranked behind that of Belarus, a country reviled in Western foreign policy circles for its nostalgic attachment to Soviet economic forms. Of 43 countries in Europe, the US ruling class foundation and newspaper rank Ukraine’s friendliness to Western corporate interests dead last, and only a little better than that of communist North Korea and Cuba, socialist Venezuela and economically nationalist Zimbabwe and Iran. So where, in the view of the West’s corporate elite, has Ukraine gone wrong?
The Heritage Foundation and its Wall Street Journal partner have a number of complaints. “Contracts are not well enforced, and expropriation is always a possibility.” “The labor code” they grouse, “is outmoded and lacks flexibility,” meaning it offers too many protections to workers. Government procurement policies are denounced for sometimes favoring domestic firms, and hence, limiting the profit-making opportunities of North American and European corporations. Exception is taken to Ukraine’s state-owned firms, which crowd out private (mainly Western) enterprise, and Kiev’s restrictions on foreign investment, which give a leg up to domestic businesses but cut foreign corporations out of the action.
Some of these noxious-to-Wall-Street barriers to Western profit-making would have been dismantled had Yanukovych not backed away from an agreement with the European Union that would have seen Ukraine get preferential access to EU markets in return for turning over Ukraine’s labor, markets and resources to Western business interests. But, alas, Yanukovych balked and Washington took advantage of the ensuing protests to foment an uprising to bring a biddable pro-foreign-investment stooge to power, backed by fascists and militant Russophobes.
The coup government quickly signed on to an IMF economic reform program which promises to replace the set of economic policies Washington and Brussels have long derogated for being unfriendly to Western investors with one aimed at pushing Ukraine into Wall Street’s good books. Reza Moghadam, director of the IMF’s European Department, explained that “the program…is expected to…help restore confidence among private investors,” to which he might have added, investors of the sort who own mansions in and around New York City and other Western financial capitals. Moghadam adds that “Ukraine needs to undertake deep-reaching structural reforms” to improve Ukraine’s business climate. That roughly translates into holding the line on wages, laying off public sector workers, gutting protections for employees, hiking taxes on ordinary people while bringing them down for businesses, rolling back social services, and throwing open the doors of the economy to Western corporations.
Here are the details. Public sector wages will be held in check while increases in the minimum wage will be capped. At the same time, “expenditure restraint will be exercised through the suspension of” (what the IMF calls) “unaffordable wage and pension increases planned by the previous” (i.e., Yanukovych) “government, public employment reduction…and rationalization of social assistance spending.” So far this is shaping up to mean that “24,000 state workers and 80,000 police officers nationwide are set to be laid off,” [3] with more austerity to follow. And while public expenditures are being reined in in the interests of creating an improved business environment, tax revenues will be hiked, not through increases in corporate taxes and income tax, but on regressive consumption taxes, which fall most heavily on those with the lowest incomes. The wealthy will be spared the burden of contributing to state coffers by measures to “facilitate value-added tax refunds for businesses.” And while ordinary Ukrainians are being squeezed to give more to businesses and investors, a new procurement law will be adopted to deny domestic firms preferential treatment in the awarding of government contracts. North American and European firms will be the principal beneficiaries.
The coup government’s principals, explains Moghadam, “believe there is a window of opportunity for bold and ambitious reforms in order to transform Ukraine” into “a vibrant business environment”—yes, and one that pays dividends to foreigners on the backs of Ukrainians. The sole reason for the existence of Ukrainians (and most of humanity) under the logic of the US-superintended system of global capitalism is to be screwed over in order to make a thin upper layer of Western society fabulously wealthy.
If we accept that the United States’s wealthiest citizens as a class exercise inordinate influence over public policy—a point supported by research presented in an upcoming paper in Perspectives on Politics by Martin Gilens and Benjamin Page [4]–it follows that the principal function of the US State Department and the Pentagon is to support the overseas profit-making activities of US corporations. Hence, what likely lies at the root of US interventions abroad is the defense and promotion of US investor and corporate interests contra the economic nationalist (Ukraine, Zimbabwe, Iran), socialist (Venezuela) or communist (Cuba and North Korea) economic policies of foreign states. Yanukovych’s government gave too many breaks to Ukrainian investors, businesses, and even ordinary citizens, and therefore committed the cardinal sin in the church of US global hegemony: interfering in the profit-maximization of US corporations. That, perhaps more than US geopolitical and military interests, explains why the United States backs the coup in Kiev and opposes the forces arrayed against it.
Russia’s repatriation of Crimea—backed by the peninsula’s largely Russophone population, as it had also been overwhelmingly backed in a 1991 plebiscite [5]—was simply a defensive reaction by Moscow against the danger that the coup government in Kiev would seek to eject it from its naval base on the Black Sea. It was not the aggressive act Western figures of state and their mass media echo-chambers have made it out to be. The true aggressor here is US foreign policy in pursuit of its principal function of promoting the overseas profit-making interests of corporate America.
Postscript
Yanukovych’s successor as president, Petro Poroshenko, announced that “We will do the absolutely unique transformation of our country…with a very good investment climate…with all the necessary things to attract business.” (David M. Herszenhorn, “Pro-European businessman claims victory in Ukraine presidential vote”, The New York Times, May 25, 2014)
1. Interview with Reza Moghadam: Ukraine Unveils Reform Program with IMF Support, IMF Survey, April 30, 2014
2. http://www.heritage.org/index/
3. Anthony Faiola, “In Ukraine, a crisis of bullets and economics,” The Washington Post, April 16, 2014
4. Martin Gilens and Benjamin I. Page, “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens,” forthcoming Fall 2014 in Perspectives on Politics. http://www.princeton.edu/~mgilens/Gilens%20homepage%20materials/Gilens%20and%20Page/Gilens%20and%20Page%202014-Testing%20Theories%203-7-14.pdf
5. Peter Hart, “Radioactive Putin is ‘Stalin’s Spawn’”, Extra!, May 1, 2014
Ukraine and How the West Treats Comparable Events in Satellite and Non-Satellite Countries Differently
By Stephen Gowans
The uprising in Ukraine represents a struggle between the West and Russia to integrate Ukraine economically, and, ultimately, militarily, into their respective orbits. I take no side in the struggle. All the same, each side wants me, and you, to take sides. Since I live in the West, and have greater exposure to the pronouncements of people of state in the West, and to the Western mass media than I do to their Russian counterparts, I’ll concentrate herein on analyzing Western efforts to shape public opinion to support the Western side of the struggle.
First, a few points by way of background.
• Ukraine is divided nationally between ethnic Ukrainians, who are concentrated in the West, and Russians, who are concentrated in the East, and especially in Crimea. Russians in Crimea and the East lean toward integration with Russia, while ethnic Ukrainians in the West tend to resent Russia’s historical domination of Ukraine.
• Crimea, a peninsula jutting into the Black Sea, is the home to the Russian Black Sea fleet. The current president, Yanukovych, extended the Russian lease on the naval base.
• Russian gas bound for Europe transits Ukraine.
• Russia does not want Ukraine to be integrated into NATO, which it views, for sound reasons, as an anti-Russian military alliance.
For the West, integration of Ukraine into its orbit means:
• Expansion of Western business opportunities.
• Growing isolation of Russia, one of the few countries strong enough to challenge US hegemony.
• Influence over transit of Russian gas exports to Europe.
• Military strategic advantage.
It’s instructive to contrast the treatment by Western states and mass media of the uprising in Ukraine with the concurrent uprisings in Egypt (which the West opposes) and Syria (which it supports.)
The Syrian uprising, contrary to its depiction by Western forces as a battle for democracy, is the latest, and most violent, eruption of an ongoing Islamist insurgency dating back to the 1960s and the Muslim Brotherhood’s efforts to oust the “infidel” non-sectarian Arab nationalist government. The insurgency has since mutated into one dominated by salafist, takfiri, and al-Qaeda-aligned fighters backed by hereditary Muslim tyrannies, the Qatari and Saudi royal dictatorships, and former colonial powers, Turkey, France and Britain. The Western narrative makes obligatory references to the Syrian government as a “regime”, complains about its authoritarian nature, insists the insurgency springs from the peaceful protests of pro-democracy activists, and celebrates the “moderate” rebels. The moderate rebels are, in the main, Muslim Brothers. To be sure, they’re moderate compared to the Nusra Front and Islamic State in Iraq and Syria, but they’re not the secular liberal- or social-democrats so many in the West would like to believe they are.
In contrast, the uprising in Egypt against a military dictatorship that ousted an elected Muslim Brother as president is treated very differently. The dictatorship is not called a “dictatorship”, nor even a “regime”, but neutrally, a “military government.” The Muslim Brothers, who have taken to the streets in protest at the coup, and have been gunned down and locked up for their troubles, are not called “pro-democracy activists”, as the Muslim Brothers in Syria are, or even moderate rebels, but an “emerging Islamist insurgency.” Nor is the dictatorship which shot them down and locked them up called a “brutal” dictatorship. The Egyptian dictatorship calls the insurgents “terrorists”, which is dispassionately noted in Western news reports, while the Assad government’s depictions of Syrian insurgents who set off car bombs in crowded downtown streets as terrorists is dismissed as patent propaganda. Egypt’s military dictatorship has banned political parties, tossed political opponents in jail on trumped up charges, and arrested journalists. Over the weekend the Egyptian military killed somewhere between 50 and 60 demonstrators. This is mechanically documented in major Western newspapers. There are no calls for Western intervention.
The recent events in Ukraine are treated very differently. The deaths of a few rioters in Ukraine sparks fevered media coverage and denunciation in Western capitals, while the president’s attempts to quell the disorder by invoking laws restricting civil liberties is treated as a major assault on human rights. Compare that to the relative silence over the deaths of many more demonstrators in Egypt and the suspension of all political liberties in that country. If we should be exercised by the state of affairs in Ukraine, surely we should be incensed on a far grander scale by the state of affairs in Egypt.
Foreign governments stand in relation to the West as satellites, in which case they’re called allies, or non-satellites, in which case they’re “enemies”, or, if they’re large enough, “rivals.” Comparable events in any two countries will be treated in Western mass media differently and using different language depending on whether the country is a satellite (ally) or non-satellite (enemy or rival). Hence, in Syria (a non-satellite) an elected government (elected, to be sure, under restrictive conditions) is called a “regime” headed by a “dictator”, while in Egypt (a satellite) a military-appointed government is not called a “regime” but a “government” and the de facto head of state (a dictator) is simply called “the head of the military.” In Egypt, an emerging insurgency led by Muslim Brothers and Islamist fanatics is called “an emerging Islamist insurgency”, but in Syria, an insurgency reignited by Muslim Brothers and now dominated by Islamist fanatics is called a “rebellion against dictatorship.” In Ukraine (a non-satellite so far as the government goes ahead with plans to align itself with Russia and not the EU) a crackdown on dissent which is mild compared to the crackdown in Egypt (or Bahrain or Saudi Arabia or any other Gulf monarchy satellite of the United States) is treated as a major transgression on human rights, one warranting some form of Western intervention. However, no intervention is called for to stay the hand of Egypt’s military. Through the deft use of language and selective emphasis and silence, Western states concoct and spread through the mass media an understanding of events in far off places that comport with the pursuit of their own interests (which, more narrowly, once you parse them out, are the interests of their wealthiest citizens as a class.)
Efforts to integrate Ukraine into the EU are motivated by the desire of Western states to secure advantages for their economic elite, while efforts to integrate Ukraine into Russia are aimed at garnering benefits for Russian enterprises and investors. The interests of the bulk of Ukrainians do not, however, enter into the equation. Their role is simply to produce wealth for investors—Russian or Western or both—while doing so for as little compensation in wages, salary, benefits and government services as possible to allow the investors to make off with as much as possible. The interests of the bulk of Ukraine’s citizens lie, neither with the EU nor Russian elites, but with themselves.
