How The IMF Turned Ukraine Into Europe’s Colonial-struck ‘Liberia’

Condoleezza Rice

Condoleezza Rice (AP image)

Earlier this month while delivering a public lecture in Kiev, “The Challenges of an Ever-Changing World,” former US Secretary of State Condoleezza Rice made an inspiring remark for anyone who might have been thinking that life in Ukraine was bad:

“You should go to Liberia where the standard of living is much lower, and then you will be thankful.”

Ironically, Forbes Ukraine reacted to this with a slightly perplexed analysis that nonetheless led to a conclusion of flawless logic: “Although Liberia has one of the weakest economies in the world, it lags only slightly behind Ukraine with respect to a number of macroeconomic parameters,” and the magazine supported its argument with some anemic statistics (failing however to mention that Liberia’s 85 percent unemployment rate is far worse than Ukraine’s, even today).

The rapid deterioration of the Ukrainian economy over the past two post-Maidan years is no longer a taboo topic in the international press (the prominent US academic and former diplomat Nicolai Petro’s recent article in the Guardian made that crystal clear). But to make a long story short, the full picture looks even more depressing:

People are scrambling to get out of Ukraine. A Kiev-based headhunting agency claims that according to their polls, 70 percent of the population does not see any future in Ukraine. Ten out of eleven (!!!) Ukrainians are ready to leave the country if offered a job abroad. Forty percent of Kiev’s white-collar workers do not see a secure future for themselves nowadays. Another opinion poll shows that compared to the pre-Maidan period, public pessimism is on the rise. Only 19 percent of the respondents expected 2016 to bring positive changes for Ukraine (down from 42 percent in 2013).

These sentiments are quite understandable if we look at average incomes in Ukraine. According to official data from the finance ministry (as of March 2, 2016), the average salary in Ukraine is only 4,362 hryvnas per month (approximately 145 Euros).

The minimum monthly wage is currently set at 1,378 hryvnas (46 Euros). Therefore, the vast majority of working people in Ukraine have to get by on a salary of 2,000-3,000 hryvnas (70-100 Euros) each month. And the number of employed is declining every day.

In September 2015, Ukrainian Minister of Social Politics Valery Yaroshenko acknowledged that the unemployment rate had reached its highest point in the history of Ukraine as an independent country, with 23 percent of young Ukrainians unable to find work (in the parts of the Donetsk region that are controlled by Kiev the jobless rate does approach that of Liberia – 50 percent!).

Low wages and high unemployment are not the only challenges an ordinary Ukrainian has to cope with. To meet the requirements of the IMF, the Ukrainian government must increase the rates it charges for housing and public utility services at least twice per year. As a result, in January 2016 the average bill per household jumped to 1,250 hryvnas – an 80 percent increase from 695 hryvnas a year ago.

Thus, theoretically (and often factually) a family supported by only one working member and living in a modest apartment might need to survive on the beggarly 128 hryvnas – barely more than 4 Euros (!) – that is left each month after housing and utility costs have been paid! Indeed, taking into account some difference in its latitude (and climate) today’s Ukraine might rightly be called a Northern Liberia!
Meanwhile the index of commodities prices in Ukraine rose 40.3 percent in 2015. And since this crisis coincided with a 15 percent cut in the pensions of retirees who work a side job (this “cost-saving measure” was announced by PM Yatsenyuk in January 2015), clearly the majority of elderly Ukrainians are now facing a disaster.

 

So far they have managed to survive thanks to their personal savings, but that resource is drying up: according to the National Bank, in 2015 Ukrainians sold 2,233 billion USD and bought only 0.684 billion USD. Local experts estimate that Ukrainian citizens will exhaust their personal savings by the end of 2016.

So it’s no wonder that Ukrainians are leaving their country en masse for Europe, mostly headed to Poland (around 400,000 crossed that border last year), in a desperate attempt to find any paid job. There they are cheated, abused, and cynically exploited, but they prefer to stomach such treatment rather than trying to eke out a miserable existence at home:

Ukraine’s rapid deindustrialization is picking up speed. The abrupt severing of the traditional ties between Russian and Ukrainian businesses, due to suicidal Kiev-imposed regulations, resulted in a 10.7 percent decline in GDP in 2014 and another 13.4 percent drop in 2015. Foreign trade, both imports and exports, decreased by one-third. The naive expectations of the incumbent government in Kiev – that Ukrainian products could obtain access to European markets – have been torn to shreds (Nicolai Petro offers one anecdotal fact: Kiev’s biggest European export, under the agricultural quotas established by the EU-Ukraine Association Agreement, is honey).

This situation of social and economic degeneration, along with the ready availability of weapons smuggled out of what is known as the “ATO Zone,” has led to an unprecedented tsunami of criminal activity in Ukraine. In the two years since Maidan, the number of recorded criminal offenses has doubled there. In reality, marauding crowds, armed robberies, and street killings are becoming an everyday event and many incidents go unreported. According to the latest findings from the Hague Institute of Innovating Justice, 44 percent of Ukrainians do not trust their national judicial system or law-enforcement agencies.

A number of nationalist gangs (volunteer battalions) seem to operate out of reach of the law and ignore any attempts by the public authorities to rein them in. The most recent scandals (amber-smuggling in the Rovno region, the blockade of Crimea, and the barriers set up to bar Russian transit trucks) are just the tip of the iceberg of the criminal activities of radical groups in Ukraine that have received media attention. Most criminal incidents do not make the headlines. For example there are around 100 cases currently languishing within the legal system against members of the Aidar battalion who have committed criminal offenses, including charges of serious war crimes in the Donbass, all of which are gathering dust in Ukrainian courts.

Dutch football fans who used to visit Euro-2012 in Ukraine and now thoughtlessly sharing #TakIsJa hashtag, should understand that the country they saw 4 years ago does not exist anymore.

There is effectively no state in Ukraine. The authorities are busy ingratiating themselves with every available power figure — the US Embassy, local oligarchs, Right Sector, and various Mafia groups — seeing in those the only keys to the government’s own legitimacy and ability to hold on to power. But one point that they apparently do not understand is that any government lacking public support on the ground and dependent on exterior agents is more vulnerable than they could ever imagine. Did the Liberian dictator Samuel Doe, who took power as a result of a US-backed coup d’etat in 1980, ever dream that in ten years he would be forced to eat his own ear and then be publicly executed by a rival tribe? The leaders of “Northern Liberia” may have their own political tracks, but not the final destiny…

Reprinted with permission from the Oriental Review.

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