Will Russia ever be more westernized?

Liberated from Russia, westernized to the point of ruin, overwhelmed by crises

Ukraine in the times of Corona - Part 1

It has been a year and a half since the actor Volodymyr Selenskyj announced his decision to go into politics after his moralizing about good and above all bad politics, presented as a soap opera comic. From the enthusiastic and massive approval of the population who promoted him to the presidency and his newly founded party "Servant of the people" the absolute majority in parliament, there are now only miserable remnants.

Even if he tries to cope with this situation with a hysterically quick change of government personnel - the catastrophic situation of the state is not due to that "lack of political experience" his first government suite; it is also not due to the general evil "Corruption", the diagnosis with which he had campaigned and commissioned a large-scale purge of the ruling class and its civil servants.

The chapters follow:

II. The demands of the IMF: enforce respect for the rules of the market economy!
III. Peculiarities of Ukrainian democracy
IV. War and Peace in Donbass
V. "Westernization" of the Ukrainian army

It is simply the case that the state, economy and society in Ukraine are perishing in the course of the intensive support that the USA and the EU have given them since the coup six years ago in matters of hostility towards Russia, the realization of a market economy and democracy. The fanatical anti-Russianism that was brought to power in Kiev at the time divides society and the political class into irreconcilably opposing camps, which are nevertheless called to civilized democratic coexistence; With the increasingly consistent termination of the cooperation with Russia, on which the Ukrainian economy is dependent to this day, he is destroying the traditional livelihoods of the nation. The rapidly growing debts with which the state is doing business are donated by the IMF, World Bank and other benefactors, and as the price for their good service in dire need of the government, they also demand "reforms" that properly fuel the war between the various camps in the country. New livelihoods are not emerging despite the advice of the best experts on successful budget consolidation and growth. The people adapt to the new living conditions and die on average several years earlier, mainly because of alcoholism, HIV, tuberculosis, cholera and other diseases; Those who can seek their fortune abroad, so that the 55 million citizens of Ukraine in Soviet times have now officially become 42.

On top of all this, there is finally another crisis situation: Ukraine, which has been made into an anti-Russian bulwark by the leaders of the western world and which for its entire state existence is dependent on their support, is feeling Trump's disinterest in its holy war and, in view of the mixed up world situation, can not feel it either be more certain how much the protection of the European protecting powers is worth today.

In short: Ukraine could hardly be better equipped to cope with the corona pandemic.

I. The debt state between threatened default and blackmailing of the IMF

In the crisis before the Corona crisis

At the beginning of the year, deliberations by members of the government and representatives of the National Bank come to the public, in which the prime minister says that the president has no idea about the economy, but neither does he himself, which is not good because it is with the economy pretty much goes down the drain. Honcharuk: "Zelenskyj has only a very simple understanding of economic processes. He understands that there is a balance of payments. The balance of payments looks very bad ... And for a president all of this gives the idea that the situation is out of control. We understand it no, we don't have any plans, and we really don't have any ... Economic growth will be slow ... and claims like 'These reforms are kissing the economy death' or 'the Sorosjata1 have come and the economy is growing less' are growing follow ... As for the budget, I don't know how to do this properly. There is no solution. " (112.ua, 15.1.20)

This confession of helplessness and helplessness, which is unusual for leaders, is based on the fact that the bunch of so-called "young reformers" who go by the brisk name "Ze! Team" has moved into the heights of command of the state power, precisely on the contrary, namely was firmly convinced that they now finally have everything in Ukraine correct would do so that the economy should inevitably improve. In accordance with the longstanding demands of the protecting powers, your program consisted of the basic evil "Corruption" to clean up what the nation is said to be suffering from. And second, you should finally get energetic "Reforms" be implemented, the preparation and preparation of the Ukrainian state according to the pattern of the successful organizers of market economy & democracy, which should have failed so far due to the inability or resistance of the predecessor Poroshenko and his predecessors. And it is precisely this conviction that with the best of intentions nothing but the Western recipes for success have been followed, which confronts Zelenskyi's campaigners with the riddle of why they have to register all dismaying facts.

A short time later, the boss puts the government team in front of the door and personally draws a ruthless balance2:

After only two months of the new year, the budgetary target has already been missed by almost 16 billion hryvnia ... Of these, 13 are due to deficits in customs revenue ... We have been told about a determined and uncompromising fight against smuggling. But now it looks like smuggling knocked out customs in this fight ... Industrial production fell by 5% ... Ukraine's fame as an industrial nation is slowly flashing back. When we talk about our industrial potential, we run the risk that people will soon say, 'That was a long time ago and it wasn't true' ... The gas and electricity bills were a mess in January and February ... Sometimes they were they lower, sometimes not. Some people should pay a gas delivery charge for a few months in advance. Elsewhere, prices were charged to those who did not get any gas at all ... Our next ailment is the situation of miners and coal production ... First and foremost, it is about the wages of the miners and the sale of Ukrainian coal. ... more than 11 million retirees. Unfortunately, there is no clear information about the increase in pensions ... The situation is similar in the health sector.

The budget deficit in 2019 was five times larger than in the previous year, the hopefully declared new sources of money are not gushing; neither in customs, because the customs officials prefer not to transfer the money collected there to the finance minister, but continue to cooperate with the smuggling gangs, nor do the estimated revenues from the privatization program come about: "As always, the budget did not receive the expected income from the privatization of state property." (UNIAN, December 27, 2019) Industry stubbornly owes the promised upswing and is shrinking. The attempt to lower gas prices, which the people cannot pay, comes up against energy supply companies who, even on the verge of bankruptcy, need and find intelligent solutions to their problem of looming shortfalls in income: They simply cup the people. Workers, pensioners and the health service do not get the money that Zelenskyj wants to give them, but which cannot be found in the household ...

A success of "opening up" and association with the EU

The object of the government's resolute will to reform, the Ukrainian economy, is in a state of progressive degeneration because it first had to endure the shock of transformation; Then the change of camp imposed by the coup and the war in the East cut off the factories almost entirely from their work-sharing relationships with Russian companies, and finally they are now exposed to competition primarily from EU capital, which, thanks to the Association Agreement, is now also occupying the Ukrainian market . The famous "opening", which was supposed to bring about the connection to the European prosperous zone, leads to nothing more than the progressive deindustrialization of the country.3 The former industrial heavyweight of the Soviet economy - with a potential of the heavy industry up to departments of the aerospace, Missile and aircraft industries - fail on the benchmark of profitability. That the "Glory of the industrial nation Ukraine" under "There was once" IMF accountants also confirm:

Ukraine is one of the 18 countries in the world whose economic performance declined between 1990 and 2017, it ranks fifth from the bottom.
(112.ua, 10.3.20)

The privatization program, with which the government not only wanted to raise budget funds, but also to attract foreign investment in order to set growth in motion, failed both under the previous governments and under Zelenskyi: 4 Most of the plants and equipment are not only moral obsolete, but also physically worn.5 It is true that a large number of state-owned companies is maintained at the expense of the state treasury, as a necessary prerequisite for social survival and private business, but without this being "worthwhile", so under the market economy accounting method According to the IMF, the debt of the 48 largest state-owned companies is growing to almost 20 percent of the gross national product. The interest of foreign investors in the acquisition of Ukrainian industrial companies, on which the entire hopes of the rulers are directed like a panacea, turns out accordingly: It does not exist. 6

This society, which is fundamentally endangered in its reproduction, is now also facing the pandemic.

The corona crisis

The authorities send their people to a large extent into quarantine, however, due to the sparse market economy use "about half of Ukrainians do not have sufficient savings for the entire quarantine period" (UNIAN, 04/04/20). In addition, the transfers of the numerous labor emigrants and thus the maintenance of their families are no longer necessary, 7 because thanks to the national epidemic policy of the European states, more than 1.5 million labor emigrants are chased back to their homeland, which had not given them the opportunity to come back before feed - that's why they left - and they do that even less under today's conditions; 8 after all, the remaining domestic jobs are also endangered:

Half of the Ukrainian companies would not survive a longer quarantine ... while 29 percent have already ceased operations (typical for small businesses). 51 percent of companies can only survive a month without going bankrupt.
(UNIAN, 3.4.20)

The government is launching a program to combat unemployment - "Poverty with work. How the government wants to create 500,000 jobs and how much it will pay" (strana.ua, 23.4.20) - with Selenskyj as already great historical models the highways invade:

I propose that the government develop its own mechanism to create millions of additional jobs in Ukraine ... Thousands of kilometers of new roads and infrastructure will provide the necessary impetus for economic development and the creation of new jobs.
(president.gov.ua, 1.4.20)

The announcement remains, however, because the budget does not provide the financial means for the planned starvation wages.

The President explains the new to his people "Task to survive": "What is needed now is not comfort, but survival. We have bread, butter, milk, cereals ..." (112.ua, 17.4.20), and it is no coincidence that he comes across bread and butter, because in his country, which has one of the most fertile and largest agricultural areas in the world, the food supply is no longer guaranteed: The export of agricultural products is the most important Foreign exchange procurers advised - "40 percent of foreign exchange earnings are generated through agricultural exports" (112.ua, 9.4.20). Although the government is threatening to impose export bans if necessary, increasing quantities are being exported - "hard currency"Foreign exchange income is more necessary than ever in the crisis; 9 and because neighboring countries then also impose export bans on food, the elementary supply is endangered not only by rapidly rising prices, but also by falling quantities.

The new Prime Minister introduces quarantine regulations, but immediately explains that neither the Ukrainian state nor its people can actually afford the required social distancing:

The standstill of a significant part of the national economy cannot last any longer ... People have to make money, the economy has to get going. Ukraine is also not a rich country that can afford to sit idle for six months, sit at home and watch TV ... The government has extended the list of activities that are allowed to take place during the quarantine, among other things the sale of auto parts, poultry farming and the operation of all types of financial institutions, including pawn shops and credit unions.
(Schmyhal, UNIAN, April 4, 2020)

Elementary freedoms such as going to the pawn shop are retained because of massive poverty, while individual quarantine measures cannot be maintained for the same simple reason; the closure of the open farmers' markets excludes the population from their - compared to the supermarket chains - cheaper food and also provokes protests from farmers; the blockade of public transport is being lifted again by some mayors, because otherwise the hospital staff cannot get to their workplaces. The spread of the epidemic coincides happily with the opening of the 2nd stage of a reform of the health system on April 1st, a reform that is committed to creating more "efficiency", or more precisely: more "cost savings". The idea of ​​replacing the free health care inherited from the real socialist past with insurance financed from deductions from wages never came to fruition, because the incomes of most Ukrainians do not allow it, some clinics did not survive these attempts, the staff disappeared in large numbers Number abroad. State responsibility was successfully shifted to the lower state levels under the title of "decentralization", so that their "insufficient funding" of health facilities in turn "[is] compensated by direct formal and informal payments from patients and their families. These now make up 43.4 percent of total health expenditure in Ukraine." (Ukraine Analysis No. 106, 9/11/12)

Foreign advisors tend to misunderstand this shift from one hardship to another as a prime example of corruption endemic in Ukraine.

The current stage of the reform decided under Zelenskyi's predecessor Poroshenko is intended to calculate the health facilities using the principle "The money follows the patient"10 finance that is currently a grandiose "Underfunding" leads:

50,000 health workers could become unemployed as a result of the new funding mechanism. Likewise, around a thousand hospitals will receive less funding in 2020 than in 2019, and 332 medical facilities are threatened with closure. Emergency medicine, interdisciplinary hospitals, oncology centers, veterans' hospitals, most pediatric hospitals, psychiatric facilities and those for tuberculosis patients are at risk of underfunding. "
(President spoke about complaints that he received from health workers, 112.ua, 4.5.20)

In view of these effects of the "second reform stage" that was implemented under him, the President personally had certain doubts about the benefits of this reform, as did the new Minister of Health11:

This is not an optimization. You have to call things by their names. This is a breakdown. This is a mundane reduction in medical staff. If we don't stop it now, the consequences will be as follows: In at least two to three years we will get a 30 percent increase in the tuberculosis rate. We are getting increased mortality from tuberculosis and a reduction in medical staff that will number by the thousands.
(Novoye Vremya, April 25, 2020)

The Ministry of Health then also has to determine that the medical staff makes up one fifth of all Covid-19 infected people, "we have one of the world's highest infection rates among medical personnel" (Rfe / rl, April 30, 2020), because there is a lack of the necessary protective equipment. And the president, who wants to honor the morale of the staff with a 300 percent wage increase, makes himself a laugh or hate number because the money - as almost always with his promises - does not come true

A budget without money

The recipe of the western countries to pump money into society in order to save the survival of the economic subjects cannot be done in Ukraine, because the "normal" budget repeatedly did not have promised funds. The current budget policy tries again to raise money by looting the regions with the help of an enormous shift of tax revenues from the regions to the headquarters and by appealing to the companies:

The companies will have to transfer $ 2.5 billion, not $ 1.5 billion, to the budget ... There are doubts that this amount can come about.
(112.ua, 15.4.20)

In both cases there are well-founded doubts as to whether the persons concerned will follow the instruction at all; in the countryside all possible facilities would then have to be closed. Therefore, such resolutions are also partially revoked, or announcements without consequences remain. As a result, the budget is constantly being changed, because nothing other than a war for money is waged between the authorities, the regions and the powerful economic agents in the entire parliamentary budget consultation. With the commitment of funds, the allocation of which then does not take place at all, a budget that remains largely fictitious, the rulers themselves expose their stance of an energetic crisis-fighting policy as a sham: The new Prime Minister Schmyhal announces the establishment of a stabilization fund and for which everything will be used should, while it is not at all clear whether this fund will come into being at all, ie who will fill it at all. 13

Ultimately - and somehow everyone knows that - the appearance of a state budget stands or falls, a financial management of society by the state with the approval of new loans by the IMF, that is, without that the whole budget is wasted anyway, 14 because it is alone the IMF loans, which since 2014 have prevented Ukraine from officially declaring national bankruptcy.

The state power in the debt trap

In the form of its stand-by agreements, the IMF has been providing so much state solvency for years that Ukraine is able to service and repay its debts and thus maintain a certain legal capacity as a debtor, so that it can also operate on the financial market Can take out loans. As usual, the IMF links these bailouts to a regime that obliges the debtor to sound budgets and systematic reforms. Because he regularly encounters a mixture of unwillingness and inability on the part of the Ukrainian rulers to comply with the requirements, and also because the new head of state gained sympathy during the election campaign with statements such as the IMF should screw his ass up with stuck, the masters of international credit find it necessary to use brute force to gain the necessary insight into capitalist necessity: they first suspend the disbursement of the loan tranche promised under the agreement and start new negotiations in order to feel the rule in Kiev how expensive insubordination to the IMF can be.

With complete success: A small debt crisis develops. Ukraine sees itself referred to the financial market for servicing or repaying old loans as it is due and, in times of zero and negative interest rates, can easily find investors who are brave enough to venture into a "high-risk" area and buy Ukrainian debt instruments. Reward with a high rate of interest - at times the highest rate in the world. The small follow-up problem: By servicing the old debts, the total debt is growing at a new rate:

We had to pay about $ 100 million more a year to service such a 'replacement' of IMF credit with expensive personal loans. But the problem of servicing public debt will be just as acute in Ukraine next year.
(Ukraine-IMF cooperation: Myths and reality, 112.ua, 16.12.19)

- and the question arises how the state will ever be able to get rid of these burdens again:

On October 15, the Treasury Department again placed government bonds for a total of 45 million USD with a repayment date of January 15 and September 30, 2020 and September 29, 2021 ... From January to September 2019, the Treasury Department already has 194.8 billion UAH (7.7 billion USD), 3.8 billion USD and 189 million euros raised! Who will pay these huge and very expensive debts and why? "(112.ua, 10/18/20)" The Honcharuk government has built a pyramid of government bonds from which it is almost impossible to get out.
(112.ua, 6.3.20)

This ugly scenario is then completed by a violent capital flight triggered by the Corona break-in: "In the face of the double crisis of falling oil prices and the coronavirus, the US investment bank Morgan Stanley advised its customers a few days ago to 'sell Ukraine and buy Egypt'." (Junge Welt, March 24th, 2020) A struggle of all parties for dollars available in the country unfolds, the inflation-experienced citizens storm the banks and the reserves of the National Bank are dwindling. The National Bank can no longer find buyers for new bonds and bonds, while Ukraine has to repay foreign bonds amounting to 5.5 billion US dollars in the second quarter. But the IMF is taking its time.

There is growing criticism of the National Bank for trying to slow down the devaluation of the hryvnia by selling its dollars during the crisis instead of using it to combat the pandemic; and in general, their currency and interest rate policies are identified as the cause of the decline in accordance with the IMF guidelines. The point of view that it is better to declare the default in order to get rid of the debt and the IMF regime is gaining more and more support - so that Selenskyj warned his spokeswoman against such calculations with the greatest pathos, citing the human lives to be saved. 16

Peter Decker is the editor of the political quarterly magazine GegenStandpunkt, in the current edition of which you can also read the full article.

(Peter Decker)

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