The headline in the Kyiv Post (11 March) declared: “Good news for Ukraine: IMF money, non-lethal aid coming”. This paper, mainly written for Western-orientated business people and expats, exposed the reality in today’s Ukraine – what is good news for some, is disastrous news for others.
In January, the IMF spoke about Ukraine receiving a $40 billion economic assistance package, although, in reality, two to three times that sum is desperately needed. Now the good news apparently is that the IMF has agreed to stump up $17 billion. It comes with devastating conditions attached. The head of the central bank has reported that the deal will mean gas prices increasing by 280% and heating by 66%. Following the announcement of the deal, Finance Minister Natalya Yaresko announced the “privatisation of everything that is possible to privatise with the plan to start this year”. Up to 3,300 organisations employing a million people are on the chopping block.
The US is sending “non-lethal” military drones and Hummer armored personnel carriers supposedly to assist in maintaining the ceasefire between the Kiev regime and the separatists in the east of Ukraine. This is in addition to the stepping up of the NATO presence in the Baltic region last week, with the arrival of 3,000 US troops accompanied by hundreds of tanks, helicopters and other equipment for a “three-month exercise”. This will last, according to one general, “as long as necessary to deter Russian aggression”.
Superficially, the last week or so has seen an easing of military tensions. Both sides have claimed that heavy artillery has been withdrawn from the immediate frontline, fulfilling the agreement made at the Minsk-2 talks in mid-February, which were intended to see an end to the fighting in Ukraine. Following the deal, however, Ukrainian troops were forced to make an undignified retreat from the so-called “Debaltsevo boiler”, with the loss of many lives. This was followed by new outbreaks of fighting again around Donetsk and in the south, with armed forces concentrating in Novoazovsk and preparing for an assault on Mariupol.
Intense shuttle diplomacy led by German Chancellor Merkel and French President Hollande preceded the Minsk talks. EU leaders worry about both the economic effect of the conflict and the catastrophe that could result if the confrontation escalates. They used promises to increase financial aid to encourage Ukraine’s President Poroshenko to talk, and threats of further sanctions to put pressure on Russian President Putin.
Trying to save face when addressing troops who fled Debaltsevo, (called Debaltseve in Ukrainian) Poroshenko described the event as “persuasive proof of the defense potential of the army and the effectiveness of the military command". Merkel’s spokesperson, Steffan Seibert, also clutching at straws, admitted that “the Minsk process is under strain, it has perhaps been damaged, but we still believe it makes sense to continue working.”
EU and US disagree
Divisions between the Western powers had escalated before the talks. US suggestions that the west should supply Ukraine with arms met the retort from Merkel that Russia would increase its supply to match. David Cameron and the British government were sharply criticised by former top NATO commander General Sir Richard Shirreff as a “diplomatic irrelevance” in the crisis, which he fears “could lead to an all-out European war”. But notwithstanding this hawkish criticism, the UK had already sent millions of pounds worth of “humanitarian aid” to Ukraine – Kevlar helmets, bulletproof jackets, clothing and bedding for use by Ukraine’s military, as well as 75,000 tonnes of diesel fuel. The Ukrainian army received 20 second-hand Saxon armoured vehicles from an undisclosed British company.
Within Europe too, business interests who are losing money due to sanctions are becoming more vocal. The initial intransigent statements by the Czech government against Russia have been tempered as a result of business pressure. The country’s President, Milos Zeman, says the EU should recognise Russia’s takeover of the Crimea. In Germany, many companies are reportedly “lobbying like hell” to avoid further sanctions.
Minsk deal unsustainable
Putin has been stepping up diplomacy to strengthen his position. No longer able to lean just on a layer of European right populist parties for support, such as Le Pen’s National Front, Austria’s Freedom Party and Germany’s National Democrats, the Russians have been trying to use economic carrots and sticks, in particular the Turk Stream gas pipeline aimed at strengthening ties with the authoritarian Erdogan regime in Ankara. Turk Stream replaced the now-abandoned South Stream, which was intended to boost support in countries such as Italy and Austria. Friendship with Hungary’s right populist government was cemented during Putin’s recent visit, when he promised two new atomic reactors for the country.
It was never realistic to think that the Minsk-2 agreement would resolve the conflict. Sixteen hours of “very difficult” negotiations resulted in a list of conditions, including an immediate ceasefire, the withdrawal of heavy weapons, elections in the disputed republics, the release of all hostages and prisoners, the restoration of benefit and pension payments, the restoration of Ukrainian control over the border and a special status for the disputed regions under a new law on de-centralisation. The failure to implement any one of these demands would lead to the derailment of the agreement – and the actions of each of the parties before and after the agreement demonstrates that none of them can be trusted.
Even before the terms were agreed in Minsk, the deal was unravelling. Putin attempted to delay the truce by up to 10 days to allow the separatists time to take Debaltsevo – in informal discussions Putin reportedly said that “Debaltsevo has to fall”. One of the signatories to the deal, Denis Pushilin, head of the Donetsk republic, said: "We do not have the right [to stop fighting for Debaltsevo]. It’s even a moral thing. It’s internal territory.” In the days following the deal, officials in the corridors of the Kremlin were reportedly saying openly that their task was to pick the deal apart bit by bit.
Moscow – signs of power struggle
Although Putin still enjoys high domestic poll ratings, mainly due to his stance on Ukraine and ‘strong’ foreign policy, the worsening economic situation in Russia and budget cuts has led to more open opposition.
Last week, Moscow was full of gossip about the reasons for Putin’s absence following the cancellation of a visit to Kazakhstan. Some even suggested he had died or was debilitated after a stroke, while other rumours swirled that he was with his girlfriend in Switzerland as she gives birth. He reappeared in public after 10 days, possibly suffering from the flu or a recurrence of the back injury he sustained while flying a glider in 2012. Yet during his absence, the theories that there is some sort of power struggle going on behind closed doors gained credence.
Conflicts between hawks and doves within the Kremlin seem to be more successfully disguised than even in Soviet times. Business interests angry at losing money from sanctions and the economic crisis are balanced by those who earn more rubles on foreign markets due to currency devaluation. Those that think the rebel republics in Ukraine have been let down by Russia following the Minsk-1 ceasefire last September are opposed by those who resist further intervention, in part because according to opinion polls the overwhelming majority of Russians do not want to see Russian forces openly involved in Ukraine.
The regime still publicly maintains the fiction that Russia is not directly involved but accepts it is fighting a “hybrid war”– avoiding outright confrontation but increasing covert actions and support for those on the front line. But Putin’s statements during the Minsk negotiations and the statements by Alexander Zakharchenko, leader of Donetsk, who threatened to move northwards and attack Kharkov, the country’s second city, seem to demonstrate that the hardliners are stepping up pressure.
There are other hints that a struggle is taking place within the elite. The announcement that a group of Chechens had been arrested for the murder of opposition politician Boris Nemtsov was in itself unusual – it was made by the head of the country’s security force, the FSB. It soon became clear that Zuar Dadayev, the key suspect, was a former police chief, and now senior commander in the special forces of Chechen hardline ruler Ramzan Kadyrev, who is also a fierce Putin loyalist. Many of these Special Forces have been involved in fighting on the pro-Russian side in East Ukraine. On the evening of the arrest, Kadyrev publicly praised Dadayev as a “real patriot” before attending an award ceremony at which Putin presented him with the ‘Order of Honour’. Some of Russia’s press suggest that this indicates an open conflict between the FSB and Kadyrov’s people, and thus by implication with Putin himself.
Before his mysterious disappearance, an interview with Putin was filmed and broadcast over the weekend in which he stated explicitly that he ordered a special operation to take over the Crimea in February 2014. Although there was undeniably a popular mood amongst most people in Crimea to leave Ukraine, Putin’s latest comments completely contradicts the Kremlin’s earlier version of events in which they deny taking any action before the referendum on March 16th. This “admission” follows another interview on a Russian right-wing channel with the notorious Igor Girkin (aka “Strelkov”), the ex-Russian special services operative who played a key role in the Crimean events. Describing how the referendum would not have been possible without Russian forces, he complained "I did not see any support from the (Crimean) state authorities in Simferopol where I was. It was militants who collected deputies and forced them to vote. Yes, I was one of commanders of those militants". Whether in making his admission Putin was accepting, under pressure, responsibility for his actions or whether he was demonstrating his hardline credentials is a matter for speculation, but once again hints at a power struggle taking place within Kremlin walls.
Poroshenko under pressure
The situation in Ukraine, it seems, is no better. On returning to Kiev after Minsk, Poroshenko made clear that moves towards decentralisation of power in Ukraine would be limited, and he completely ruled out federalisation. He threatened to introduce martial law over the whole country if the peace deal broke down. This would put the army in control, allowing them to control the streets, impose curfews, introduce censorship, ban parties and mass gatherings.
Poroshenko also faces growing difficulties. Compared to others in his government, he is a “dove”. Prime Minister Yatsenyuk, pushed by his coalition allies and opposition leaders, is more hawkish. Yatsenyuk, at a cabinet meeting, called for the “mobilization of the army, of the government, of the whole state apparatus for defence of Ukraine and every single citizen" stating that “the main thing on which I insist is that the state border should be protected by arms…the state border should be and will be built. Whoever speaks out against the building of such a border and defence cordon will get a one-way ticket to the other side of the wall”.
While the pro-western liberal and far-right politicians want to step up the war against the eastern parts of Ukraine, the population is growing increasingly despondent.
In the disputed republics, the civilian population spends their days in underground cellars, increasingly desperate for food. Many queue for hours awaiting the much lauded “humanitarian aid” from Russia only to be disappointed as just a few get hand-outs of cabbage, milk and eggs. They struggle by, with no wages, pensions, energy or other necessities.
Just as desperate are those press-ganged into Ukraine’s armed forces and the situation facing relatives who worry about their fate. After frantic cell-phone calls from their relatives in Debaltsevo, who angrily said they had been told to stay put and left to die in a trap, relatives organised a series of road blockades in Kiev. They demanded either the immediate withdrawal of Ukrainian forces from Debaltsevo or for decisive military action to release their men.
The Kiev government faces increasing difficulties in mobilising the army. Up to 20 journalists and activists have been arrested for spreading ‘anti-mobilisation propaganda’. Military draft officials complain that even in those regions that are traditionally nationalist, such as Ternopil, in West Ukraine, less than half of the 14,000 people called up for medical examinations actually presented themselves. In one village, 45 of the 60 men due to be drafted fled the country. In another village, all those eligible for call-up left. Ironically, many of these reportedly ended up in Russia.
Due to the weakness of the official Ukrainian armed forces, the ‘volunteer battalions’, many of which are controlled by the far-right, play a more important and independent role in the war. The neo-fascist-led “Azov” battalion, although supplied by Kiev, spent the week after Minsk preparing to attack Novoazovsk in the south. Now these battalions have formed a national coordinating body, strengthening their autonomy from Kiev.
Ukrainian and Russian economies in crisis
While the war is clearly far from over, the economic freefall is definitely continuing. The value of the Ukrainian currency, the hryvnia, fell from 18 to 31 to the euro in February alone. The rate of decline of industrial production is worsening – in January it was 21% lower than a year before. In Donetsk, the drop was 49% and in Lugansk it was 87%. Many mines are no longer operable. There have been protests by miners and other workers in Kiev over cutbacks. The contempt shown by the ruling elites and oligarchs in both parts of the Ukraine to the working class was shown by the horrific mine accident in Donetsk in early March in which 34 miners lost their lives. This privately owned mine is recognised as one of the most dangerous in the world having suffered eight fatal accidents so far this century – in 2007 three separate accidents took over 150 lives. Workers at the mine, which is in the disputed Donetsk republic, who were sent back to work just days after March’s explosion complain that the owners are not prepared to stump up a modest 50,000 euros for gas detection equipment. The privatisation programme being pushed by the Kiev government at the IMF’s behest will only worsen this situation.
The economic collapse caused by chaos and war is made even worse by the Russian looting of industrial resources from the region. The Russian government’s official paper, Rossiskaya Gazeta, for example, reports that the Lugansk factory making spare parts for the railways was packed into over 60 lorries and the whole lot driven over the border and located in an empty factory in the Rostov region. The factory director took Russian citizenship. This, pointed out the newspaper, was a successful example of the government’s import replacement strategy, meaning it no longer had to buy parts from Germany!
This asset stripping does little to help the Russian economy. Not a day goes by now without bad economic news. Construction in Moscow is expected to fall by up to 30% this year, car sales are at a long time low and even the police and FSB have been told to make savings equivalent to 100,000 jobs. Government spokesmen warn this crisis is more serious than 2008, when trillions of rubles were used to bail out banks and companies were told to avoid redundancies. This year the number of unemployed, currently five million, is expected to increase by 40%. Hundreds of thousands of migrant workers from Central Asia have returned home because of the poor pay and job prospects, on top of the state’s racist policies. Some correspondents have raised the prospect of Prime Minister Medvedev being replaced by the more liberal former finance minister, Andrei Kudrin, or of a coalition government to be formed if things keep getting worse.
Need for an independent, socialist workers’ alternative
As long as the situation is left in the hands of vested interests and their military sidekicks, there can be no long lasting solution to the Ukrainian crisis. Even if Minsk-2 can somehow be revived and a Minsk-3 negotiated, the economic conditions that cause the poverty, corruption and despair will still exist, while NATO and Russian military forces will continue to face each other across the region. Only a mass movement led by a genuine independent working-class party can force out the region’s authoritarian regimes and create a worker’s government that introduces socialist policies to transform the lives of the majority.