FacebookTwitterGoogle+RedditEmail

Dr. Strangelove Over Ukraine

by JEFFREY SOMMERS

Events in Ukraine are providing plenty of theater, but little economic change. Since the USSR’s collapse the ‘set’ has been changed many times over several acts of our long-running Ukrainian ‘play.’ Rotating oligarchs shift in and out looting the ‘set,’ but without a shift in plot. One set of oligarchs merely replaces another, with the periodic display of  ‘color revolutions’ as wardrobe changes to re-animate the tired theme with a sense of novelty. Russian and Ukrainian nationalist continue to spar in a Spy vs. Spy fashion, while Ukraine’s economy continues to unravel and its people continue their exodus on an Old Testament scale to the ‘promised land’ of the EU.

The scene for the original plot was set in the closing stages of the Cold War. George Bush (the elder) promised Gorbachev that if the Soviets let the Warsaw Pact go, Russia would never have to worry about the expansion of NATO. The US responded to this deal by immediately taking the former Warsaw Pact into NATO and then moving into the former USSR territory itself by taking in the Baltics. Nobody could blame the new entrants for wishing NATO entry, given their Soviet occupation past. But, neither could anyone blame the Russians for feeling utterly betrayed by the US and NATO for breaking their word.

Thereafter, Eurasionists in the US State Department wanted more. For them, the goal was the further break-up of Russia and its ‘near abroad’ and remaking it in the image of a neoliberal periphery. For Russia, the ‘game’ has had an existential character. Russia was imploding (whether by their own actions, pressure from the West, or a combination of the two are all points for debate). For Russia, NATO’s moves into Georgia cut too close to the bone and Russia responded, yet the threat of NATO taking Ukraine represented taking Russia’s ‘heart’: the very ancestral home where ‘Russia’ was founded.

Meanwhile, the EU has thought it could reprise its earlier eastward expansion into the former Warsaw Pact that delivered a consumer goods export windfall. This alleviated West European unemployment resulting from the Maastricht Treaty’s punishing fiscal and monetary requirements to create its currency union. Ukraine’s purchasing potential, however, is less than the countries that bordered Germany who were integrated into West European markets. An export boom is unlikely to occur with the proposed Association Agreement. Indeed, the possible damage to Ukrainian markets from poorly executed trade liberalization and non-visa regimes could flood the EU with cheap labor. This outcome would work to further erode Europe’s historically unique (and largely successful) ‘Social Market.’

Ukraine has suffered in this Big Powers crossfire that has left them indebted to both Russia & the EU. Meanwhile, ethnic Ukrainians see the EU as a ‘savior.’ What they fail to recognize is that they are only seeing the last vestiges of a ‘Social Europe’ that in the main has been sacrificed on the alter of neoliberalism. In short, Ukraine’s ‘savior’ is a phantom that no longer exists.

Victor Yanukovych is a crook, yet the reappearance of Yulia Tymeshenko merely represents the return of ethnic Ukrainian oligarchs. It also means nothing little will change on economic policy. Yanukovych resisted the imposition of “structural adjustment” designed to ensure foreign bondholders get paid. The new Ukrainian government will ensure bondholders get paid through an IMF and/or ECB stabilization program. Yet, nothing will be done to address national economic development. There will be no consideration of Modern Monetary Theory or Land Value Tax alternatives. The US/EU plan would be to continue loading down Ukraine with debt and through this means control assume control over their economic policy. A ‘structural adjustment’ policy (today fashionably rebranded ‘austerity’) will be imposed and its young people would continue streaming out. Meanwhile, Russia has only offered debt relief (or at least more loans) without development.

Ironically, Russia and Ukraine, again now at odds, would both benefit from similar economic policies. Both need regional economic development. Russia and Ukraine both need to halt the capital flight of their oligarchs and to keep that money for domestic investment. Such moves, of course, would be poorly received by the epicenters of ‘tax dumping’ offshore finance (London & New York, along with regional centers like Riga). Their respective high-end properties should be highly taxed, while reducing income taxes on labor.

The Sochi Olympics represents precisely the kind of development that should take place all across Russia and Ukraine.  Russia should not waste money on sovereign wealth funds and holding hard currency (both of which can be wiped out by economic crisis). Instead, the money should be spent on infrastructure that will transform Russia’s economy and boost living standards for its people. It’s not only much of Russia’s infrastructure that has collapsed the past 2 decades, but its middle class as well. Nothing would go further toward rebuilding Russia’s middle class than a national program to transform the country’s infrastructure. Russia has the means to implement this strategy right now. In short, Sochi shows the way forward. Russia could extend the same help to Ukraine. Russia and Ukraine need a development model that looks much more like post-WW II West Europe than that of 1989/1991.

It’s time to euthanize the Cold War and shut down the old theater and stage an altogether new play….

Jeffrey Sommers is Associate Professor of Political Economy & Public Policy in, and Senior Fellow at the Institute of World Affairs at the University of Wisconsin-Milwaukee. He is also Visiting Faculty at the Stockholm School of Economics in Riga. He is co-editor & contributing author to The Contradictions of Austerity: the Socio-Economic Costs of the Neoliberal Baltic Model.

 

 

 

 

 

 

 

Jeffrey Sommers is Associate Professor of Political Economy & Public and Senior Fellow, Institute of World Affairs of the University of Wisconsin-Milwaukee and Visiting Faculty at the Stockholm School of Economics in Riga. His new book new book (with Charles Woolfson), is The Contradictions of Austerity: The Socio-economic Costs of the Neoliberal Baltic Model

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

December 05, 2016
Bill Martin
Stalingrad at Standing Rock?
Mark A. Lause
Recounting a Presidential Election: the Backstory
Mel Goodman
Mad Dog Mattis and Trump’s “Seven Days in May”
Matthew Hannah
Standing Rock and the Ideology of Oppressors: Conversations with a Morton County Commissioner
Kevin Zeese - Margaret Flowers
#NoDAPL Scores Major Victory: No Final Permit For Pipeline
Fran Shor
The End of the Indispensable Nation
Michael Yates
Vietnam: the War That Won’t Go Away
Michael Uhl
Notes on a Trip to Cuba
Robert Hunziker
Huge Antarctica Glacier in Serious Trouble
John Steppling
Screen Life
David Macaray
Trump vs. America’s Labor Unions
Yoav Litvin
Break Free and Lead, or Resign: a Letter to Bernie Sanders
Norman Pollack
Taiwan: A Pustule on International Politics
Kevin Martin
Nuclear Weapons Modernization: a New Nuclear Arms Race? Who Voted for it? Who Will Benefit from It?
David Mattson
3% is not Enough: Towards Restoring Grizzly Bears
Howard Lisnoff
The Person Who Deciphered the Order to Shoot at Kent State
Dave Archambault II
Standing Rock Sioux Tribe Statement on Dakota Access Pipeline Decision
Nick Pemberton
Make America Late Again
Weekend Edition
December 02, 2016
Friday - Sunday
John Pilger
The Coming War on China
Jeffrey St. Clair
Roaming Charges: The CIA’s Plots to Kill Castro
Paul Street
The Iron Heel at Home: Force Matters
Pam Martens - Russ Martens
Timberg’s Tale: Washington Post Reporter Spreads Blacklist of Independent Journalist Sites
Andrew Levine
Must We Now Rethink the Hillary Question? Absolutely, Not
Joshua Frank
CounterPunch as Russian Propagandists: the Washington Post’s Shallow Smear
David Rosen
The Return of HUAC?
Rob Urie
Race and Class in Trump’s America
Patrick Cockburn
Why Everything You’ve Read About Syria and Iraq Could be Wrong
Caroline Hurley
Anatomy of a Nationalist
Ayesha Khan
A Muslim Woman’s Reflections on Trump’s Misogyny
Michael Hudson – Steve Keen
Rebel Economists on the Historical Path to a Global Recovery
Russell Mokhiber
Sanders Single Payer and Death by Democrat
Roger Harris
The Triumph of Trump and the Specter of Fascism
Steve Horn
Donald Trump’s Swamp: Meet Ten Potential Energy and Climate Cabinet Picks and the Pickers
Louis Proyect
Deepening Contradictions: Identity Politics and Steelworkers
Ralph Nader
Trump and His Betraying Makeover
Stephen Kimber
The Media’s Abysmal Coverage of Castro’s Death
Dan Bacher
WSPA: The West’s Most Powerful Corporate Lobbying Group
Nile Bowie
Will Trump backpedal on the Trans-Pacific Partnership?
Ron Ridenour
Fidel’s Death Brings Forth Great and Sad Memories
Missy Comley Beattie
By Invitation Only
Fred Gardner
Sword of Damocles: Pot Partisans Fear Trump’s DOJ
Renee Parsons
Obama and Propornot
Dean Baker
Cash and Carrier: Trump and Pence Put on a Show
Jack Rasmus
Taming Trump: From Faux Left to Faux Right Populism
Ron Jacobs
Selling Racism—A Lesson From Pretoria
FacebookTwitterGoogle+RedditEmail