Ukraine goes on spiralling down – By Alexander Mercouris

As political conflict continues and corruption remains as before even Ukraine’s most fervid Western friends are now in despair

 

As news of the bizarre antics in Kiev involving former Georgian President Mikheil Saakachvili – now  released again this time by a court after having been arrested for a second time – continues, I recently read an article about Ukraine which gives just about as bleak a picture of the state of the country as it gets

….the news out of Ukraine over the past few weeks has been dire.  The country’s prosecutor general has disrupted investigations by its National Anti-Corruption Bureau with the apparent consent of Mr. Poroshenko.  The interior minister has intervened to protect his son from similar scrutiny.   Officers in the security service, the SBU, have tried to arrest Mikheil Saakachvili, the former Georgian President turned Ukrainian corruption fighter, only to be driven back by protesters.  Prosecutors are targeting anti-corruption activists; the army, interior ministry troops and private militias work at cross-purposes, answering to different politicians or oligarchs.  Mr. Poroshenko’s government has been seriously weakened.

This is in fact an accurate description of the sort of things that happen in Ukrainian politics in any given week.  The only thing that makes these events at all unusual is that they are being written about in this way by a journal which up to now has been one of the most fervid supporters of Ukraine’s Maidan “revolution” (aka “the Revolution of Dignity”).

That journal – from whose latest article on Ukraine the above extract is taken – is The Economist.

The Economist is not the only pro-Maidan anti-Russian journal to write recently about Ukraine in this way.  An article in the website of the rigidly Atlanticist Atlantic Council makes the same points.

Hand-wringing about continued corruption in Ukraine following the Maidan “revolution” is nothing new.  Former US Vice-President Joe Biden said many of the same things about corruption in Ukraine and the need for ‘reform’ there during a visit to Ukraine in September last year.

The latest flurry of Western complaints about the state of Ukraine come alongside publication of data about the disastrous decline of Ukraine’s economy.  Here is how an article from RT sums it up

The latest research shows the people of Ukraine have the worst living standards among all of Europe.

An average Ukrainian earns just €190 per month, or just a little over $220, according to the study by Texty.org.ua. The highest average net salary, according to the analysts, is in Switzerland. An average Swiss earns no less than $5,000 per month after taxes.

In November, Ukrainian Economy Minister Stepan Kubiv admitted the economy lost $15 billion annually after Russia closed its borders to consumer goods from Ukraine, almost a fifth of the country’s GDP.

The current gross domestic product of Ukraine is $93 billion. Before the Maidan revolution at the end of 2013, Ukraine’s GDP was $183 billion.

The RT article overstates the extent of the contraction of Ukraine’s GDP.  The figures given are based on calculations of Ukraine’s GDP based on the exchange rate of Ukraine’s currency relative to the US dollar.  This is an artificial measure of GDP vulnerable to changes in the exchange rate.

If the more accurate purchasing power parity measure of GDP is used then Ukraine’s GDP increases to $368 billion, which however is still less than a tenth of Russia’s.

This is a precipitous decline for what was once one of the most economically developed regions of the USSR, and which because of its Soviet legacy of strong industries, rich farmlands, large population, abundant natural resources and access to the sea ought to be a rich country.

Suffice to say that whilst living standards in Russia are now significantly higher than they were before the Soviet collapse, Ukrainian living standards – which have never recovered to their Soviet levels – have since 2014 fallen back still further.

Ukraine’s tragedy is that there appears to be no route out of this crisis.

As it happens every so often one comes across claims that the situation in Ukraine is ‘stabilising’.  Then something happens – such as the bizarre antics involving Mikheil Saakashvili – which shows the opposite.

On the question of the economy, I remember having identical discussions in the mid 1990s with various people about the ‘economic stabilisation’ which was supposed to be happening in Russia.

When an economy has contracted as severely as Russia’s did in the early 1990s and as Ukraine’s did in the period 2014 to 2015 even minimal amounts of economic activity – such as always happen even in the most collapsed economies – can distort the statistics to make the situation look better than it really is.

The mere fact for example that Ukraine this year has received $4 billion from abroad – $3 billion which it borrowed itself at very high interest, $1 billion which it was given by the IMF – which is a very considerable amount of money for a country like Ukraine (4.3% of GDP calculated on a nominal basis, 1% of GDP calculated on a purchasing power parity basis) will have made the GDP statistics about the economy look better than actual economic conditions in the country really are.

This is of course always assuming that the statistics are being collected and collated properly, which in countries such as Russia was in the 1990s and such as Ukraine is now they never are.

That Ukraine’s statistics are not reliable has in fact been confirmed by studies of its population statistics, which show massive distortions intended to conceal how bad the country’s demographic situation has become.  There is no reason to suppose that the same distortions do not affect the economic data.

Again the example of 1990s Russia is useful.  It is now generally acknowledged that Russia’s real economy continued to contract every year throughout the period from 1994 to 1998 when Boris Yeltsin’s government and the IMF were claiming to see in the statistics evidence of a ‘stabilisation’.  The truth became clear in 1998 when the whole House of Cards, which was what the Russian economy had by then become, simply collapsed.

The event which precipitated the Russian economic collapse in 1998 was a collapse in oil prices.  The event which averted a total collapse of Ukraine’s economy in the period 2014 to 2015 was also a collapse in oil prices.

The benefits of that oil price collapse have however been squandered.

The Maidan regime used the space the collapse in oil prices gave it to increase spending on the military and to reduce further Ukraine’s economic ties to Russia.

This is the exact opposite of what a Ukrainian government really concerned about the economy would have done.  If Ukraine’s government had really been concerned about stabilising the economy it would have sought a rapprochement with Russia – Ukraine’s obvious energy supplier and the traditional market of its goods – and sought Russia’s help to bring the war in eastern Ukraine to an end.

None of that can however happen whilst the present Maidan regime remains in power since it would represent a repudiation of the Maidan movement’s entire programme, which is to distance Ukraine as far from Russia politically, culturally and economically as possible.

Which brings me back to the cause of Ukraine’s crisis.

Notwithstanding protestations to the contrary made by various people – including by the way President Putin – the issue behind the political conflict which in February 2014 brought the Maidan movement to power was not corruption; it was Ukraine’s relations with Russia.

In 2014 Ukraine’s oligarchs overwhelmingly backed the Maidan movement and bankrolled its protests since they were adamantly opposed to closer relations with Russia but wanted instead closer relations with the West.

This was because – diametrically opposite to what Western commentators say – they were alarmed by the way Putin’s government after 2000 managed to rein in Russia’s oligarchs, and were alarmed that if Russian influence in Ukraine grew so that Ukraine became fully integrated in the Eurasian institutions the same thing would be done to them.

The Western powers backed Ukraine’s oligarchs in 2014 because their entire policy since the USSR broke up in 1991 has been to detach Ukraine from Russia.  This was what the benighted association agreement between the EU and Ukraine – the nominal issue behind the 2014 Maidan protests – was ultimately all about.

It was this mutual opposition to closer ties between Ukraine and Russia which created the commonality of interest between Ukraine’s oligarchs and the Western powers, both in 2014 and earlier, which set the scene for the 2014 Maidan ‘revolution’.

That ‘revolution’ of course needed its foot-soldiers who were to be found in Ukraine’s various ultra-rightist and neo-Nazi groups.  However as The Economist slips out in the article which I have quoted from above, these “private militias….answer to different politicians or oligarchs” ie. they are ultimately controlled by the oligarchs as well.

Needless to say the great majority of Ukraine’s people were not involved in the 2014 events, and based on what I am hearing from people who know about the situation in Ukraine today, they have now become utterly cynical and disillusioned.

To imagine that such a system created as a result of what it is not altogether wrong to call a criminal conspiracy (after all it did result in the violent overthrow of Ukraine’s constitutional and democratically elected government) is capable of carrying out ‘reform’ or ending corruption in Ukraine is beyond fanciful, and it is testament to the seemingly unlimited detachment from reality of some people in the West that they still appear to expect it.

The trouble is that though the people of Ukraine are utterly cynical and disillusioned, the extraordinary violence the Maidan regime can be counted on to use against people who it is able to define as ‘pro-Russian’ makes it all but impossible to see how a change of course can be brought about.

This opens the way for chancers and adventurers like Mikheil Saakashvili to make their pitch, which is what we are seeing in Ukraine now.

Needless to say if Ukraine had a properly functioning political system someone like Saakashvili would be making no impact there at all.  The fact that he is making an impact despite the minimal level of his public support (no more than 2% according to some polls) shows how dysfunctional Ukraine’s political system actually is.

I would add that given how corrupt and politicised the Ukrainian judiciary has become, the fact that a court has now ordered Saakashvili’s release is a sure sign he is getting support from elements within the Ukrainian power system (Tymoshenko? Kolomoisky?) who are hostile to Poroshenko, and who are using Saakashvili as a weapon against Poroshenko.

The victims in all this are of course the people of Ukraine, who are trapped in a nightmare created for them by Western policy in exactly the same way and to the same extent that the people of Libya say are.

No wonder that with their living standards having collapsed and with all hope of things getting better having gone they are now voting with their feet, leaving Ukraine in growing numbers, causing Ukraine’s population to collapse, just as its economy has.

 

What do you think?