A video roundtable explains why the IMF, Europe, and Western corporations don’t have the country’s best interests at heart.
by Alexander Reed Kelly for The Nation
Nearly a year and a half after the Euromaidan protests ushered a new government into power in Kiev, Ukraine is still in trouble. Some 6,200 people have been killed, more than 15,000 wounded, and 1.2 million internally displaced in a civil war that had by mid-March, according to the new president, Petro Poroshenko, destroyed “around 25 percent of the country’s industrial potential.”
The country’s economy is out of control: Trending downward since the end of 2013, Ukraine’s gross domestic product is declining at a massive, accelerating rate. The World Bank predicts GDP will contract by as much as 7.5 percent during 2015. During 2014, the amount of money brought in on exports dropped by 40 percent, and between the beginning of 2014 and spring of this year, the goods and services available in the country became nearly 50 percent more expensive as the currency used to pay for them lost two-thirds of its value.
Ukrainians need rescuing. The question is: Can the policies favored by the new government save them?
After endorsing the anti-government protesters that filled the streets of Kiev in November, 2013, the United States gave its blessing to a change of government in the following February, one year ahead of Ukraine’s scheduled democratic elections. The government that rules from Kiev today is therefore distinguished from its predecessors by its distinct amenability to US interests—and dramatic coolness to Russian concerns.
In a sign of this shift, on June 27 of last year, this government, led by Poroshenko and Prime Minister Arseniy Yatsenyuk, signed the Ukraine-European Union Agreement—the rejection of which by the previous government had precipitated the protests. The EU agreement reorients Ukraine’s political, economic, and military activities toward those of Europe (and by association, the United States) and has become one of the chief instruments of Western influence in Ukrainian affairs.
The other instrument is an agreement with the International Monetary fund to receive $17.5 billion in bailout loans in exchange for key changes to Ukraine’s economic policy. By accepting this deal, Ukraine effectively forfeited its sovereignty, handing over to foreign governments the power to write its own laws. These loans are attractive to Ukraine because at the beginning of 2015 it lacked the money it needed to make payments due during the year on existing foreign debts. If Ukraine defaulted on those payments, it would risk losing the ability to borrow the money it needs to support its national budget—money which for a variety of reasons it is unable to generate itself.
So Ukraine is hard up, unable to help itself and in no position to make demands. This development, say many scholars and experts, means that this crisis has become an especially attractive opportunity for foreign interests looking to expand their wealth, property holdings and geopolitical influence. Writing and speaking from the margins of the discussion, these experts say that the policy solutions proposed by the West through the economic agreement and the IMF loans threaten only to deepen Ukraine’s troubles—and with nuclear powers struggling on either side, they risk a world war.
In an effort to get a clearer view of these developments and a sense of their probable outcomes, I asked three experts to join me for a video-recorded discussion in the Brooklyn office of Verso Books. They are Michael Hudson, a former balance-of-payments economist for Chase Manhattan Bank, distinguished research professor of economics at the University of Missouri, Kansas City, and an author of a major study of the IMF; Jeffrey Sommers, associate professor of political economy at the University of Wisconsin-Milwaukee and a visiting lecturer at the Stockholm School of Economics in Riga; and James Carden, a former adviser to the State Department on Russia and a regular contributor to The Nation. The three videos below are excerpts from our discussion.
Putin’s role in the current showdown between Russia and the West has no doubt been significant, but his actions have also been grossly distorted by the government propaganda and biased media of Western Europe and the United States. Hudson, Sommers, and Carden regard him with the same skepticism they would any contemporary leader, but here they are chiefly concerned with understanding what is driving Western involvement. They recognize, for instance, that Ukraine possesses an abundance of natural resources that, if developed, could produce vast fortunes for whoever held the claims of ownership. This includes reserves of oil, natural gas, and minerals, including uranium—the fuel for nuclear reactors and bombs. Two-thirds of the country’s surface is covered with a nutrient-rich “black earth,” soil which, despite being poorly utilized, has made Ukraine the world’s third-largest exporter of corn and fifth-largest exporter of wheat. US agricultural corporations Monsanto and Cargill have made no secret of their interest in this land.
Western energy interests have similarly worked to position themselves to gain access to Ukrainian petroleum. In spring of 2014, three months after the pro-Western government came to power, the Ukrainian energy company Burisma Holdings announced that Hunter Biden, son of US Vice President Joseph Biden, had been appointed to its board of directors.
These resources would become available to international interests mainly through the changes to Ukrainian economic policy prescribed in the Ukraine-European Association Agreement President Poroshenko signed in June 2014. But raw resources are not the only prizes sought by Western statecraft.
Formed immediately after the end of World War II to finance the reconstruction of Europe, the International Monetary Fund has operated for seven decades with a mandate to help develop the economies of less-than-wealthy nations by organizing and administering loans from creditors around the world (though mainly from the United States and Europe). The IMF offered its current package of loans to Ukraine under the pretense that, in addition to enabling the government to pay its debts, the terms that come with them will help develop the national economy and bring about needed reforms, including some aimed at cleaning up the government’s notorious culture of corruption. Hudson says these loans amount to little more than a tool for keeping the country “on a short debt leash”—a form of servitude that empowers the United States to use the Ukrainian government as a regional extension of US political, military and economic power. But we don’t need to begin with Hudson to realize that the IMF program won’t help ordinary Ukrainians. President Poroshenko himself told Ukrainians that neither the loans nor the reforms would help them.
“Life won’t improve shortly,” he said in mid-March, shortly after the fund approved the loans. “If someone understands the reforms as improvement of people’s living, this is a mistake.”
Sommers sympathizes with Ukrainians who want to believe that joining the West would raise their standard of living to that which became standard throughout the United States and much of Europe in the post-war period. But that’s not likely to happen, he says, because the policies being “offered” to Ukraine are the “exact opposite” of those that made Europe prosperous after World War II.
Indeed, certain reforms will make essential goods far more expensive for Ukrainians. In the name of bringing the price of oil in line with that sold on European markets, state subsidies for cheap heating oil will disappear. Estimates say the price of gas will rise 280 percent by 2017. Ukrainians who recognize this are not pleased.
“I’ll just have to stop eating, I guess,” 77-year-old pensioner Valentina Podenko told Business News Europe earlier this year. “I didn’t know [the gas charges] will increase, especially by that much.”
Some number of Ukrainians will have the means to uproot their lives and pursue better conditions elsewhere. As the country deteriorates along the well-tread lines of austerity, social unrest and armed violence, large numbers of the skilled and educated can be expected to flee.
Outsiders may think this crisis has no significance for their lives. They are wrong. The states that are opposed in this conflict are modern, industrialized, and nuclear-armed, therefore many experts recognize the whole crisis as the most dangerous global political and military development since the end of the Cold War. Following the collapse of the Soviet Union in 1991, the United States spent nearly a quarter of a century as the world’s economic and military superpower, opposed only occasionally by militant groups operating out of third-world nations. Conditions have changed since then, and now the United States finds itself locked in a potentially existential battle with a highly organized nuclear power.
At present, four months into a largely successful cease-fire between the government in Kiev and the rebels in Ukraine’s east, it might appear that the risk of outright war between the Western powers backing Kiev, and Russia, which backs the rebels, has diminished. But preparations being made by governments on either side suggest otherwise.
In keeping with a stream of antagonistic remarks toward Moscow by US President Barack Obama and British Prime Minister David Cameron, NATO’s top military commander, Philip Breedlove, has urged armed responses to nearly every movement the Russian military has made since the region was destabilized upon the fall of President Viktor Yanukovych’s government.
Claiming an increase in Russian military activity along their borders, the Nordic countries—Norway, Sweden, Denmark, Finland, and Iceland—in April announced their intent to form a military alliance to oppose “Russian aggression,” which they called the “biggest challenge to European security.” On the same day it was reported that Poland would spend $44.6 billion modernizing its arsenal with a new missile defense system, attack helicopters, submarines, armed vehicles, and drones.
Observers on all sides are eager to assign blame for the danger these developments represent. The prevailing view among Westerners—and Western-looking Ukrainians—is that Putin provoked Ukraine’s new government, and by extension, the West. Putin has left no doubt about his willingness to use force (in March he told reporters he was prepared to use nuclear weapons if the fighting on his border spiraled out of control), but what is the evidence that Putin instigated the conflict? Western leaders claim he fired the first shot, so to speak, when he sent Russian soldiers into the Crimean peninsula after the change of government in Kiev. What they don’t mention is that the United States has been meddling in the affairs of eastern Europe for decades.
The transfer of control over Ukraine to an aggressively pro-Western regime thus constitutes the successful culmination of years of work by US officials. Indeed, Carden suspects that the invitation for Ukraine to join Europe’s economic association will serve as a means to expand NATO’s jurisdiction through Ukraine and up to Russia’s western border. “With all the trouble that the European Union is having digesting its newest members,” he asks, why would they want “to bring on a basket case like Ukraine?” From the Russian perspective, NATO’s old Cold War goal—of encircling Russia with its forces—is being achieved.
American officials want the world to believe that Ukrainians are locked in a battle for liberation from Putin, that Russian military activity in east Ukraine is part of a plan to recover Ukraine for the benefit of Russia, and that Europe and the United States are offering Ukrainians freedom, democracy, and a shot at life in a “free market.” They do not add, as Sommers does, that the Russians who inherited the collapsed Soviet Union also hoped Russia and the United States would become economic partners. They looked to the United States for help with development, but were disappointed. This unfortunate result is consistent with the policy of Carter-era national security adviser Zbigniew Brzezinski, which states that the United States should treat any country that is economically self-sufficient as a military threat. Washington thus supported the anti-Russian Maidan movement in Kiev, Hudson says, in part to undermine and further isolate a Russia that, under the leadership of Vladimir Putin, had recovered both its self-sufficiency, its pride, and—in the US view—its obstinance.
These videos were produced by Endless Picnic.
Alexander Reed Kelly of (The Nation)
“Ukraine Is In Crisis. Here’s Why the West Can’t Save It.”
Where do I begin? The title of the article is misleading. The ‘West’ (whoever they are), has no intention of saving the Ukraine, (or the Ukrainians).
The imperialist Oligarchs wish to own the Ukraine (they own much of it already), and they wish to enslave its Russian (er-Ukrainian) inhabitants. They have succeeded in intimidating many, killing some, and driving more than a million out of their homes and into a status of Refugees. That is what they do. They don’t develop, they steal and destroy. Look anywhere on the planet, from Palestine, to the Native Americans, to the northern half of Mexico, to Iraq, to Afghanistan, to Vietnam, to Libya, to Syria, to Detroit, to Puerto Rico, Guantanamo, Guam, etc., and you will see the pattern. Desolation Row.
Much of Kelly’s essay is useful and informative; however, as with Mr. Hudson, these “economists” make too many Political Concessions (or possibly misdirections) as they innocently weave their thesis.
This is inserted into the beginning of a paragraph, that correctly warns of the risk of heightened conflict between Russia and the United States: “At present, four months into a largely successful cease-fire between the government in Kiev and the rebels in Ukraine’s east,” This half-sentence begs the questions,
1. Does the continual bombardment of Donetz, a city of 1 million, and the leveling of a dozen other, once inhabited towns, resemble a “largely successful cease-fire”?
2. This cease fire is “largely successful” for whom?
3. The “cease fire” is between who and who?
Where has Kelly been since Minsk 2?
They never (some warn “never say never,” but I’ll say “never” until proven wrong), – They never discuss the operative political system within the United States. They never challenge the major American political premise, that it (the United States) is a “democracy,” and, somehow, represents some quantity of freedom. They never make the basic extrapolation that is so necessary in order that we understand the nature of the enemy (the actual nature of the problem). They never fully describe the enemy. “He was big, wore a flannel shirt, smelled of fish, and spoke with a raspy voice…” Or something like that.
On the other hand:
Edward Snowden has revealed much of the controls the United States government exercises over its people (subjects). So has Ron Paul, Jesse Ventura, Noam Chomsky, even former President Jimmy Carter, and Julian Assange, and Chelsea Manning, and Dennis Kucinich, additionally, Ron Paul’s son, the not as good as his father, Senator Rand Paul has held several filibusters in order to expose the lack of Liberty within the United States.
But not a mention, not a whimper, not an analysis from the ‘economists.’ One cannot analyse economy or politics without at least a passing reference to the political foundation of the contestants. I’m not picking a fight with Kelly, or Hudson, just raising a point of order. Why do they not finish their analysis, by at least a cursory description of the combatants. “In this corner, 160 pounds, with a record of 21 wins, 2 losses and 18 knockouts…”
Why they never comment on the nature of the American/Zionist government, is of vital importance. To properly expose the enemy (or praise a friend), they must break with the criminals of the Democrat, as well as the Republican gangs. They must choose the path of solitude, burn some bridges, and perhaps, lose their tenure, and, if they are worthy, complete their thesis.
For the Democratic Republics!
IMAGINE
This has been troubling me since this Ukraine debacle began. Why is it that the voices of these obviously astute and intelligent men are totally ignored in the Western Media? How is it that the Prime Minister of Canada can make the outrageous statement that Russia cannot be allowed to join the G7 as long as Putin is in charge, and yet no-one calls him on it? What right do these people have to tell anyone outside their borders to do anything?
I am incredulous as to the machinations of the west and their holier than thou attitude.
And sadly, maybe the only way to end this idiocy, is a financial war in which the west is decimated, otherwise they will never be brought to heel until this planet is unlivable.
Some of the critique against Ukraine is retarded, like them ending subsidies for heating oil, although I agree that the Ukies have shown themselves to be idiots in general.
Norwegians have expensive heating oil, because we are supposed to use wood and other renewable energy sources for heating. Supplying firewood, is also a beneficial source of income from farmer’s kids, and the same could easily be true if the Ukraine burn locally produced wood, rather than imported oil.
I do think that modern economic theory is much bulls**t, but that subsidies is crap, is one thing they are correct on.
You can’t switch from one fuel to another just like that. How do you burn wood in an oil or gas-fired heater? Besides, Ukraine is short of wood, it’s mostly open steppe country. But the heaters are communal, big boilers pushing hot water through apartments and even whole villages, far the cheapest and most efficient way of central heating where temperatures often go below zero for days at a time.
Gas and electricity have been subsidised since Soviet times. Suddenly increasing the price (now in 3 steps to nearly double in under a year) is ridiculous, because incomes have gone down, not up, in that time/ Many people are unemployed, and no benefits are being paid, not even pensions. So all they’ve achieved is those people who are not on a communal heating system are just going to freeze this year.
Not to mention that the Hryvnia has collapsed so even without the removal of subsidies the price for gas and oil would be shooting up–and as you say people are not even making much in Hryvnia. It shows the bankruptcy of Western policy that even after the Ukrainians have given the US the war of chaos on Russia’s border the US wanted the West is still happy to let the hapless Ukrainians suffer as their economy melts down.
Who said the West wanted to save the Ukraine? They aren’t even trying to save Greece, so what makes anyone think they would take on the even more insane task of saving the Ukraine?
“Western leaders claim he (Putin) fired the first shot, so to speak, when he sent Russian soldiers into the Crimean peninsula after the change of government in Kiev. What they don’t mention is that the United States has been meddling in the affairs of eastern Europe for decades.”
Haha, right on the money — literally! I would make exactly suchlike pronunciamentos too, were I to descend into the depravity of a “Western leader” specimen. FYI: We’re not talking about any buggered “leaders” at all here. What passes for “Western leaders” is merely a despicable coterie of grossly overpaid employees working in the propagandistic sector of the Western Imperialist Bourgeoisie. You certainly don’t disappoint your employer by speaking truth to power. Might call for “consequences” if you don’t watch your step.
As always, I’m immensely pleased whenever the Crimea events form part of the anti-Russian screamfest. Western dregs raging and fuming in real pain and anger = Great Fun Indeed,
The outlook for Banderastan is quite grim. However, with the exception of the breakaway regions, this was at the Ukro citizenry’s very own discretion, was it not? Drooling Western bootlickers getting exactly what they asked for. In the words of George Soros himself:
“Dear Ukros, you have served my class interests marvellously. Now, you’d better show some tangible gratitude to your overlords. And rest assured that, from now on, any protesting will be dealt with instantly and without compunction.
Thanks once again. May Bandera relieve your excruciating pain.”
So lets see if we can break this down into easy to understand laymen’s terms. A country,any country,but in this case Ukraine.Lets their criminal groups gain power.And take a mostly self sufficient nation.Turn it into a basket-case,destroy its Soviet era industries,and borrow its way into enormous foreign debt.Then ,a new criminal gang takes power by kicking out the other gang.Worse than the other criminal gang that ruled,they aren’t content with stealing.These scum are murdering their own citizens as well.And they believe its the “smart” think to borrow even more enormously from foreigners.Not to develop their economy and solve their problems.But purely to pay the interest on current debts to foreigners,and keep their murderous regime in power longer.All the while the brainwashed Ukrainian citizens, in all but Donbass,and a few others throughout Ukraine, are too terrified to revolt.And the West,is hoping to use this new fascist junta as a weapon against Russia. There now,that explains this crisis in everyday language,that even the Western “sheeple” can understand.
So many annoying unfriendly comments, by readers who cast doubt on the natural wisdom of the Western public in general!
What “sheeple” are we talking about? This video shows you that some NATO citizens have thoughtfully considered the issues, and are ready to meet the challenge of the Russkis head on.
https://www.youtube.com/watch?v=CNr5czZKEdk
Matt Janovic…are you Ukrainian ?
He is being sarcastic.But concerning that petition. As I mentioned the other day I said I thought Russians wouldn’t be hateful enough to sign something like that.Well some in Russia decided to test that and tried a petition about bombing the US.And Russians refused to sign it just as I thought,good on them.It shows people there have a more intelligent insight into World events than many in the West (certainly than most in the US at least).
Uncle, I tried to find how many people did Mark Dice interview; no luck on his websites, so far. But where did you read that Russians refused to sign such a petition?
Story here with original Dice video in USA, then the Russian version, filmed in Crimea. Russian video has no subtitles, but has been translated underneath.
http://fortruss.blogspot.com.au/2015/06/the-battle-of-petitions-who-wants-to.html
Thanks, KK
I laugh at the fools of Kiev, the suckered public and the damned suffering their own fate as slaves to the oligarchs and Western ideologues.
I laugh and the gods laugh, too.
The Ukrainians have wasted their lives and destroy their country.
That Sommers guy tries to downplay what Hudson says by saying the US is merely “picking winners”. Yes of course because he is ever so reasonable.
Yeah and the Right Sector and Azov are clearly part of the those “winners”. Those guys aren’t just “neo” nazi. They are full on Nazis. Their antecedants were trained by and for the original Nazi government. Not some figurative nazi-like organization. Not some spiritual successor. They were trained and even a part of actual historical Nazis outfits. One of their heroes was kept on ice by the CIA in Berlin after the war and had been trained for years by the SS until the KGB killed him. These groups had so much pull this man was declared a national hero. Most of you know this man’s name, does Sommers?
I suppose this is better than nothing. Almost no one in the US media or academia (where I am) other than Stephen Cohen will say anything.
I suppose its instructive, to some degree, that people will produce their own forms of “limited hangouts” without even needing the input of a propaganda maestro.
Sommers says its not that simple. Yes of course there are many currents underlying a country/area of tens of millions which has been a center for conflict for centuries. But this does not mean we cannot put 1+1 together to equal 2.
To say that Nazis have not gained significant power within the Ukraine is to deny reality. It has nothing to do with being overly simplified. This is provably and obviously true. Are there other things going on too? Yes of course. This is the typical strawman bullshit thinking that afflicts most of the US. This inability, this rush towards denial.
To follow this correct line of thinking would be lead to heretical conclusions. Thus we must undermine this correct method of inference, because the alternative is simply not allowed. To follow this line of thinking leads to only one conclusion; current US foreign policy is evil. By its own standards its evil. For those of you who were not raised in the US it may be hard to fully understand that such a thing is essentially heresy. Supposedly we have free speech and stuff. But this is enforced by a twisted and strange form of inculcation. Some section of the US talking heads say these things all the time in reference to many topics often not even foreign policy related. They say it so much that its almost noise and often in ways that are silly or obviously tied to some ideology. It is inherently part of the Red Team vs Blue Team paradigm of US politics. Thus US citizens are conditioned to ignore and disregard this “simple” but correct conclusion. Yet at the same time the inculcation that the baseline of the US is inherently good is a non-stop process, that is constantly reinforced.
The pendulum swings back to such an extent that there is already an implied assumption that if you come to such a conclusion your are a kook regardless of how you came to such a conclusion.
To avoid such a problem they will literally render themselves incapable of performing certain types of useful thinking and drawing certain very useful conclusions.
It is ironic that Sommers makes a distinction between malevolence vs stupidity while agreeing that NATO is a destabilizing force as he exhibits the same exact flaw he believes the architects of such evil are guilty of. But its not stupidity, its foolishness (at least on his part. For the neo-cons its malevolence couched in pure arrogance.) This is in a backasswards way an attempt by him to be more “objective” by avoiding emotionally charged monikers. It is a good point that one might as well look at the functional effects and not worry so much about whether its intent is truly malevolent, but then to use that to sweep actual facts under the rug? The US is constantly inundated with strawman effects like this, to the point many people seem to think its not just valid but an actually good method of argument rather than a known invalid and dishonest type of rhetoric. Of course most people in the US are never educated as to what such a distinction even means. Certainly the journalists aren’t.
This is the bottom line. There are full on, true Nazi with significant power in the Ukraine. They are roving the streets of Odessa and Kiev in masked bands. Stamping a boot onto the face of anyone they can to silence them and make them march to the beat of their drum. If you cannot admit this then you are a fool or a liar. If you would like to tell me there are other things going on then I will certainly be willing to listen and might possibly agree. But if you cannot admit the presence and power of these Nazis then you have been so unwise as to rip out a functional part of your ability to reason and replace it with political bullshit and are therefore, to some degree, a fool.
This type of foolishness afflicts a large majority of the US (and perhaps the rest of the West I can’t really say). You can say that well they are still good people if they just understood. Are they? Are we (having been born and still live in the US)? Or is it simply cowardice? In the US negligence is a possible part of many felonies even without malevolent intent. Excuses and denial. There is a difference between not being aware of something and doing everything you can to run from something.
Of course such a thing is not isolated to the US, its part of human nature. The staggering thing is the unsaid edifice as it relates to this particular subject. Its is one of the main reasons the willful blindness seems so insane. On some level most people understand a certain amount of persuasion is necessary and that some ideas/views are particularly intractable for any particular individual. But to see just flat out blindness on such a grand scale that is so consistent. It can make your mind reel, it seems unnatural almost. Implausible.
In my opinion one of the main sources is institutionalized inculcated intellectual cowardice. The main symptom of this is a certain sort of foolishness that has far reaching consequences.
It is unfair, to some degree, to single out Sommers in this manner as he has many things right and is being more fair than most westerners. But this particular thing is so emblematic of the blindness that occurs and its a rather key point. Admitting there are Nazis running large swaths of Ukraine would literally make most “normal” US citizens do a complete 180. This is another thing US people are conditioned to. Nazis=bad. It would be so powerful that it would undermine the Commi=bad && Putin=Commi. Nazis trump Commis in US modern mythology and you need two things to make Putin evil so that’s just a lot more awkward to propagandize. Its not a small point, regardless of how “fair” he may be about many aspect, completely undermining a game-changing point may be “simple” but its also powerful.
Excellent comment and reflexion. Thanks a lot.