Countdown: Last Chance for Ukraine
Ukraine's Disappearing Prospects of Signing the EU Association Agreement
The choice is stark: whether Ukraine will be locked in a neo-Soviet ghetto of dependency and corruption for the next several decades, or join the Western world in greater transparency, freedom, and rule of law. Customs Union member Belarus has essentially disappeared as an independent country- they rely on Russia for every bit of energy, resources, and have even sold them their pipelines; while Kazakhstan has chafed under tariff restrictions and imperial pressures. EU AA leaning Armenia, after the leader was recently summoned to the Kremlin to hear Putin's threats, collapsed and joined the Customs Union- they also rely on cheap Russian energy and troops, and have a secessionist province Trans-Dniester supported by Russians. The Customs Union isn't an association of equals, but one of vassals.. or addicts.
The road West wouldn't be easy: Russia regards Ukraine as an integral part- as it's heartland, and it's revenge could be near-psychotic: to pressure their little brother they are threatening yet another gas shutoff (the 4th), and already are embargoing chocolate and numerous other products - $50 mil a month of railroad wagons aren't being shipped North, and trailers of goods have been sitting on the border for 2 months: Russia could strangle the Ukrainian economy. But Ukrainians could sell their products to the 350 million people of the EU without tariffs, reap the freedom of world travel, rather than the undergo the current expensive and lengthy EU visa process; and escape the clammy embrace of their longtime fraternal ruler (300 years), who killed 5-7 million in the genocidal Stalinist famine of 1932-33, as well as millions in purges and Gulags.
Sadly, what seemed like a done-deal has collapsed-
after 15 years to get to this point, the Government said Nov 21st they
wouldn't sign it. Shock and dismay across the country and globe greeted
the government's reversal. For the last week, all signs were bad. They
simply can't release Yulia- the Presidents own Party of Regions chief Yefremov said he had no intention of voting for any of the 6 bills to send her to Germany
for medical treatment, Yanukovich reported told EU enlargement head
Stefan Fule Nov 20 that he wasn't going to sign the PA, he had jetted
off to the Moscow for a semi-secret meeting with Putin to hear his
carrots and sticks Nov. 9 as PM Azarov suddenly claimed requiring
Tymoshenko's release was unjustified and complained, "nobody.. will
offer compensation for the loss of this (Russian) market", they arrested
Tymoshenko's lawyer Vlasenko Nov 8 for an alleged assault that happened
in 2008... they'd already stripped his Parliamentary seat and
immunity, and the Rada (Parliament) passed a bill to prevent popular
boxer/ party leader Vitaliy Klitchko (a German resident) from running
for President in 2015. "Either Yanukovich is losing control of his own
Party, or it's a cynical very nuanced Machiavellian play,' said longtime
Kiev editor Jim Davis. It was always possible this was a carefully
choreographed scheme- wait for the very last minute, release Tymoshenko,
and in the relief, no one will notice that 2 other preconditions were
They also haven't circumscribed the unlimited power of the prosecutor (maybe 1% are found innocent in trials here, and juries barely exist- "persuadable" judges only), they haven't reformed the breathlessly corrupt court or election systems but instead appointed close Yanukovich cronies to run both, they refuse to raise hugely subsidized Soviet level natural gas prices demanded by the IMF for desperately needed loans (people control the central over-heating by always keeping windows open), public support for the EU path has faded to 45% vs only 14% for the Customs Union (another says 58% for**, others have it much more balanced at 40% EU AA and 30% Customs Union, perhaps the best estimate), the European Bank for Reconstruction + Development head canceled a Nov 5 trip to Kiev to sign an anti-corruption agreement (Ukraine ranks 144 out of 175 countries, behind Russia, Pakistan, and Nigeria by Transparency Int.). The ex-con* President's unknown dentist son 3½ years ago Alexander... is now a half-billionaire, and they are known as The Family.
The thinking was even the 10 big oligarchs who rule this country as
their personal plaything didn't want to suffer under the Russian yoke-
the 110 Russian billionaires are richer and more ruthless, and Putin has
not been gentle with them. "Maybe not", said one connected insider-
adjusting to greater transparency is traumatic; even many companies'
ownership here is completely secret. "Many industrialists …ask 'why
should I vote for this (EU)'. We have 77% of our machine building output
going to Russia," said Yefremov. Azarov claimed there already
was a 25% drop in Ukraine's exports from the Russian embargo, now
relaxed since Yanukovich canceled the AA. Since the demonstrations
began, however, almost all have voiced support for the European path,
even Akhmetov, and their TV networks prominently displayed the demonstrators. Even they are appalled at the graft of the Family.
Ukraine is an impressively corrupt nation - the reconstruction of Kiev's Olympic Stadium cost an estimated $700 million, over 5 times what a Hamburg stadium did new... that in a country where wages are 12 times lower and materials probably 3-5 times lower. Even then some workers from the villages who labored a year at 11 hour shifts for $19 were cheated out of $5000. Such is the venality of Ukrainian bosses. Like Dick Cheney in Iraq, Dep. Prime Minster Kolesnikov awarded himself the task of building all the Euro 2012 soccer facilities - Tymoshenko had him jailed for a month in 2005- her current woes may be related. In business dealings, jobs, apartment rentals.. one is more likely to be cheated than not: every arrangement is subject to endless renegotiation, and paying wages monthly makes it easy- after 1 month workers are invested, and often last 3 before quitting in disgust. College students often have to pay for grades or degrees- even exposure of professors' extortion carries little risk. Yanukovich's endless broken promises and false hopes are a graphic example.
The most amazing example are the
raider attacks (only in FSU) where 40-130 thugs with wooden or iron bars
invade a business, beat and throw out the employees, and take it over,
armed with the decision of some corrupt regional judge that they are the
owners. It even happened to the $1.2 billion Ilyich Steel Co.,
the holder of the foundational documents simply sold them for $30,000.
That was reversed after the whole city of Mykolaev screamed bloody
murder. 2 malls
in downtown Kyiv suffered the same fate- inc. one directly under Maidan
(Independence Sq). An enormous percentage of government money
disappears into various pockets; a huge difficulty in getting anything
done here is government or oligarch squabbling about who gets to steal
what. A government inspector of verifying business compliance seemed in a
perfect position to pad his pay: "No, Michael," he said morosely, "only
my bosses are allowed to steal."
was meeting EU standards would moderate Ukrainian rapacious tendencies,
but there has been little evidence of that- the changes they demanded
have been passed in a flurry of last minute bills that few think will be
taken too seriously. For already unpopular Yanukovich, the failure of
the ballyhooed Association Agreement could be fatal in the 2015
election, but he may have calculated that the economic devastation of a
full Russian embargo was worse. Polls show all 3 contenders: heavyweight
boxing champion Vitaliy Klitschko, Yulia Tymoshenko, and former Rada
Speaker Arseny Yatseniuk, beating Yanukovich, though only Klitschko has a
real shot- Yanukovich has packed the
courts, regions, and election boards with his loyalists. Klitschko is
one of the few people in this country untarred by corruption- he has his
own fortune- and with the Rada banning of non-residents as Presidential
candidates.. he finally formally declared himself running. Tymoshenko
is probably destroyed as a political force, and Yatseniuk relatively
Demonstrations broke out in a dozen cities on August 21, including Kiev's Maidan (Independence) Sq. on the 9th anniversary of the Orange Revolution that overturned Yanukovich's first corrupt victory. On Sunday the 24th they had perhaps 70,000 people in European Sq., the largest demonstration since 2004, and are keeping a continuous vigil, though the weather has turned bitter- below freezing after 6 weeks of mild temperatures. The government, seeking to not alienate more, initially has been magnanimous, setting up warming tents and directing police to not being too aggressive. Still, pitched battles have broken out between the security army and protesters trying to block the Cabinet of Ministers. Unlike 2004 however, there are no other independent bodies left in power that could force the signing of the AA or new elections, all have been suborned by Mr.Yanukovich.
Amazingly, for this total betrayal and stunning reversal, the
Yanukovich government got nothing solid from Russia: Azarov claimed they
would renegotiate Gazprom's sky-high gas price- Putin immediately shot
that down: "Gazprom and Ukraine have a contract until 2019", then
brutally raised the pressure and ante for complete capitulation,
claiming the total debt to Russia in loans, gas, etc was $30 billion.
"We will work with Ukraine- not at a loss, but... further in the energy
and financial sector." Without joining the Customs Union, the huge aid
needed is dubious, and once entered into, Ukraine's independence and sovereignty will quickly disappear.
Exhausted by the endless dithering, the EU has still been penurious,
offering only $610 million according to Yanukovich, for significant
Euro-adjustment expenses when Ukraine would also face brutal reprisals
from Russia and stiff competition from Euro producers when tariffs come
down (though it's lower cost products offer some protection). Azarov
complained, (financially) "We did not get support during the hardest
period." Fule disputed that: "We are talking about billions of dollars..
the Association is a measure to .. strengthen financial assistance."
But if Ukraine gets to pay Belarus's gas price (~$170/1000 CuM) in the Customs Union, they would immediately save $2½ billion a year: Belarus is currently subsidized by ~$10 billion a year. Cheap Russian loans can stem the debt crisis Ukraine faces without IMF help, but will increase their abject dependence. Had this government really cared about the $4 billion/year it hemorrhages to Russia for gas, they could have built an Black Sea LNG terminal within a year 5 years ago and bought Algerian gas for 30% of what Russia is robbing them for- $410/1000 CuM, almost the highest price in the world (US prices have been as low as $80)- saving Ukraine $10 billion and preserving its sovereignty. Ukraine's Naftogas pays only $53/1000 cum for domestic gas, allowing middleman like Firtash to make billions off the spread, and subsidizing expensive Russian gas- this is what the IMF was demanding they raise, not direct home prices.
It is tempting to think Ukrainians deserve their fate- they knew whom they were choosing in Feb 2010 in a supposedly honest election, an Eastern Russian-leaning machine poll who had stolen the 2004 election (before it was reversed by the Orange Revolution), beholden to the industrial oligarchs and promising an era of unabashed kleptocracy (one analyst puts the Family's diversion of government funds at an awesome $8-10 billion/year, enough to provoke the anger of the oligarchs, and erase the budget deficit). But the vicious feud between Yuschenko and Tymoshenko had so exhausted the populace that they wanted anyone else. The day Yanukovich was declared the official victor, 2 of 6 interviewees for a radio report, Tymoshenko supporters, had already suffered repercussions.
On the other hand, with a cheap modern reliable transportation, communication, utility, and food system, Ukraine was rated the best poor country in the world (under $3946/yr income: GNI per capita). Unlimited talking, SMS's, Internet on 3 different mobile phone networks costs only $6/month total; unlimited 10 Mb/s Internet- $6/month. The famous black earth is the most fertile on the planet- and could be the most productive. This is a country with spectacular potential- what's holding it back are the criminality of its rulers, the passivity of the people, and the sour fog of Soviet Slavic corruption that covers the landscape like a choking blanket (except in Western Ukraine). The hope, the prayer, the expectation... was that EU Association would finally blow that away and bring in some fresh air.
Even Eastern Russian-speakers wanted to join the EU, but time was almost gone anyway for Ukraine's hopes of joining the world's biggest trading block at $16 trillion- the EU mission returned to Brussels Nov 13 with a presumably bleak assessment, but the EU Foreign Affairs Committee postponed the Nov 18 vote whether to proceed with their offer at Vilnius and extended their rapporteurs' mission until Nov. 28th. Stefan Fule came to put a full-court press on the recalcitrant Ukrainians, and foreign policy ministers of Germany, Sweden, and Austria (where Yanukovich went Nov. 21) pleaded with him to release Yulia... all to no avail.
President Yanokovich's concerns are only short term- avoiding the economic devastation of a full scale Russian embargo that would endanger his reelection in 15 months, and enriching family and friends- when you jail your predecessor and greatest rival over nothing, losing power is not an option. The outrage over reneging on the AA, however, may be a greater threat. His Euro sympathies were always suspect- they didn't jibe with his origin, personality, and tendencies. In a letter from prison, Tymoshenko sagely warned that dumping the EU for Russia would condemn Mr Yanukovich "to live all your life according to its diktats".
Although the EU is concerned about Russian bullying and the prospects of another huge border state under their thumb, this whole eastern enlargement is being largely pushed by Poland and the Baltics. However, the EU leadership will change soon- delaying even a few months could be fatal. If this long-planned signing failed, Lithuania's President warned, "The pause in relations may take a very long period of time." There are many members more concerned with the economic health of current members, and worried about the influx of 15 mil immigrants from Ukraine. If 1/3 of Poland has permanently decamped to Europe because they can make double or triple the wages, what happens when Ukrainians can make 10-13 times more. Azarov blithely and blindly made coy suggestions that negotiations could continue in the Spring, and Yanukovich attended the EU meeting he torpedoed, where he was welcomed surprising warmly by ministers who earnestly lobbied him, thinking the nixing was a ploy. At the Vilnius meeting, Yanukovich repeated that Ukraine was in dire straits and couldn't risk the Russian embargo without major help- wild demands of 160 billion were floated, while Merkel voiced her disgust: "We expected more", and the Lithuanian President said the "Government was leading Ukraine nowhere". "Maybe in 2 years, maybe in 12", said one participant about when the issue of Ukraine might come up again.
It is likely that the
15 year torturous negotiation is over and Ukraine is now sealed in the
neo-Soviet ghetto; it depends if they join the Customs Union or stay
somewhat independent, but for backward, corrupt Ukraine - independence
is no prize, either. Yanukovich called for trilateral talks with Europe
and Russia, but Europe is exhausted and disgusted, and ridiculed the
idea. Now little Moldova, poorest country in Europe, probably can't
resist the Russian bear-hug either- their wine goes primarily to Russia
(though their EU minister said, "There is no intention . . . of
hesitation.") and they did sign it, but there is plenty of time for Vlad
to tighten the screws- Russia protects the breakaway Moldovan province
of Trans-Dniester. Putin was outrageously dishonest
in victory: he said Moscow was "not opposed" to Ukraine signing the EU
deal. "We are not against Ukraine's sovereign choice.", and incredibly
accused the EU of "blackmail" in fomenting the demonstrations breaking out in a dozen cities.
It is a tragedy for Ukraine, and a huge failure for the West, for yet another country to fall back into the pit of the slowly reconstituting Russian Empire, particularly one so cruelly treated over history.
** Another Deutsche Welle poll Nov 18 has it 58% for eventual EU membership, 31% against; breaking at 51 years old- older, they are against it, younger, they are for it- diverging proportionally.
For the Full Story of the Demonstrations w photos, see:
Published by Michael Hammerschlag
Michael Hammerschlag's (Hammernews.com) political commentary and articles have appeared in New York Times, International Herald Tribune, Seattle Times, Providence Journal, Columbia Journalism Review, Hon... View profile
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