The political economy of civil war: How the Ukraine became as impoverished as Tajikistan in only one year

By Ivan Lisan

Source: http://www.odnako.org/blogs/politekonomiya-grazhdanskoy-voyni-kak-ukraina-za-god-obednela-do-urovnya-tadzhikistana/

Translated from the Russian by Robin

Tajikistan has long been considered the poorest of the former Soviet republics. For example, in 2013 its GDP per capita based on purchasing power parity was $2,536, whereas for the Ukraine it was $8,652. It would seem that to compare impoverished Tajikistan, which went through the crucible of civil war, with the until recently prosperous Ukraine was in bad taste.

But it’s not that simple. The start of the civil war and the disintegration of the Ukraine have rendered ​​such a comparison possible and appropriate, because to understand the extent of the Ukraine’s impoverishment in only one year it is fitting to compare some of its economic indicators with those of Tajikistan.

All civil wars resemble one another

Although the people of the Ukraine began to fight one another in their 23th year of independence, war broke out in Tajikistan only five months after it declared its independence on September 9, 1991. And it was not until June 27, 1997, at the ninth meeting between representatives of the Tajikistan government and the united opposition at the Kremlin that a final peace agreement was signed.

In 1992-1993 alone, about 60,000 people were killed in Tajikistan, and the number of refugees in 1994 alone was estimated at one million to 1.5 million. According to various estimates, the economic damage amounted to $7 billion to $10 billion. About 150,000 houses were burned down and another 15,000 were looted. In the Qurghonteppa Oblast1 in the south, about 80% of the industrial capacity was destroyed. By 1997, Tajikistan’s industrial production had fallen by 72%.

The Ukraine has just started its journey down this bloody path, but even before the Debaltsevo Cauldron the war had claimed more than 50,000 victims according to German intelligence. At the end of the fourth quarter, the Ukraine’s real GDP was down 15.2%, not including that of Crimea and the Luhansk and Donetsk people’s republics, which together accounted for about 20% of the country’s GDP. By February 20, as a result of fighting in the DPR, 90% of its industrial capacity had been destroyed or idled. The destruction of houses and infrastructure is incalculable. And, even though this is just the beginning, the people of the Ukraine have already fallen to Tajikistan’s level of impoverishment.

Basic pensions and salaries

The basic pension in the Ukraine is 979 hryvnia, and the minimum wage is 1,218 hryvnia. The basic pension and minimum wage in Tajikistan are both 250 somoni.

At the official exchange rate, one U.S. dollar was worth 21 to 22 hryvnia on March 14, but the actual rate was 26. The number of solomi to the dollar was 5.53.

So, if we convert the pensions and salaries in the Ukraine and Tajikistan into U.S. dollars, we find the following:

– The basic pension in the Ukraine at the official rate is about $44 (at the real exchange rate it is $37.60), and the basic pension in Tajikistan is $45.20; and

– The minimum wage in the Ukraine at the official rate is about $55 (actually $46.80), and the minimum wage in Tajikistan is $45.20.

For comparison purposes, a year ago, when one dollar was equivalent to eight hryvnia, the basic pension in the Ukraine was $118, and the minimum wage was equivalent to $152.

In September Tajikistan’s president Emomali Rahmon promised to raise the minimum wage by 50%, to 400 somoni. Stipends for students will be increased by an average of 30%. Six billion somoni will be allocated for this purpose.

In the Ukraine, the next increase in the basic pension and the minimum wage is to take effect on December 1 of this year. The Kiev cabinet has promised to raise the basic pension to 1,074 hryvnia, and the minimum wage to 1,378 hryvnia, but only if it is not obliged to cut spending on social programs. Given the IMF’s imposition of austerity measures, an increase in pensions and salaries seems about as likely as landing astronauts on the nebulous surface of Uranus. Even if Emomali Rahmon does not fulfill his promise, in terms of minimum wage and basic pension Tajiks already live a little better than Ukrainians do.

Migrant workers

According to figures provided by Konstantin Romodanovsky, director of Russia’s Federal Migration Service, in 2013 about three million Ukrainian migrant workers earned $27 billion in Russia. At the beginning of 2015, there were more than 1,300,000 Ukrainian men of military age in Russia. Over all, five million to seven million Ukrainians have left the country to seek work and in 2014 they remitted $9 billion to the Ukraine.

The number of Tajik migrant workers in Russia is estimated at one million to 1.2 million, and they account for more than 90% of all migrants from Tajikistan. Together, they sent their families $1.7 billion in the first half of 2014.

The population of Tajikistan in 2014 was 8.2 million people, and the proportion of the working-age population was about 60%, or 4,920,000.

The population of the Ukraine was 45,490,000 in 2013. Since 2014, when the Euromaidan protests started the process of disintegration, Crimea (with about two million people) has officially left the Ukraine, and the Luhansk and Donetsk people’s republics (the LPR with 1.2 million and the DPR with 1.8 million) have for all practical purposes also left. Thus, according to rough estimates, the population of the Ukraine has fallen to 40.5 million. The proportion of the working population in the Ukraine in 2013 was about 48%. Consequently, in 2014 the number of able-bodied citizens was only 19.4 million (if the LPR and the DPR are included, 21.2 million).

If we do a rough calculation of the share of working-age citizens who have left the country in search of work (because this writer does not have data on the number of migrant workers from Crimea and the two people’s republics), it turns out that a quarter to a third of the Ukraine’s working population has left. In comparison, in Tajikistan this number is also about 25%.

Thus, about a quarter of the population has left both Tajikistan and the Ukraine in search of work.

***

Only God knows how long the civil war will last, how many victims it will claim and how many cities it will demolish, but one year after the war began the Ukraine has already reached the level of destruction wrought by Tajikistan’s civil war.

The Ukraine has not yet defaulted on its debt, but its minimum wage and basic pension have fallen to the levels of Tajikistan’s, although a year earlier such a steep decline, which was then only starting, seemed inconceivable. Moreover, in Russia migrant workers from the Ukraine are gradually displacing people from Central Asia.

And this is only the beginning. Now Ukrainians and Tajiks have more than one thing in common. Not only were they both part of the Soviet Union, but they also share a similar fate: with their lives in ruins, they are wandering the world in search of work.