Capitalism, poverty and Russification in the Ukraine

October 14, 2008 21:03 | by Stephen Velychenko

All who follow the activities of Ukraine's capitalists know well some of the results of their "business activities" - not the least of which has been the horrific destruction of Kyiv. While Ukraine's politicians engage in seemingly endless confrontation, the oligarchs continue "business as usual." This includes, regrettably, a corporate-led destruction of lives and property beginning with parks and playgrounds in Kyiv, to the demolition of a 12th century cathedral in Chernihiv to make way for a casino-hotel complex.

Even presidential decrees failed to stop someone from building a monstrous high-rise for the rich on the banks of the Dnipro, near the Marianska Palace that now blots its once beautiful sky-line. Since few oligarchs pay taxes, the corresponding short-fall in revenue means the government cannot maintain run-down public areas and services, which then discredits the government in citizens eyes. What people do see, however, are ever-more "private" buildings and sites that are not only clean but "safe" thanks to innumerable "private security" guards.

This "privatization of security" is an indication of something the average citizen does not see - a re-feudalization of society that is occurring under the name of "free-market economics" or "capitalism" - that is, a situation where the government no longer has a monopoly on the control of violence within its borders. That control is now shared, as it was centuries ago, with privately-commanded armed- men which were then called mercenaries and who in Ukraine today are now called 'okhorona'. The rich and powerful in Ukraine today even want to pass a law that, as in feudal times, would allow them to evict and resettle whoever lives in buildings they want to demolish and replace with more of the monstrous highrises for the rich that now dot Kyiv's landscape. Despite the persistence and extensive nature of this criminal activity, there is no organization similar to Corporate Watch monitoring it - given the rampant corruption in government the guilty are almost never fined or jailed.

Another area of activity where the owners of private corporations are engaged in activities which are difficult to imagine as in anyway helping Ukrainians overcome their historical legacy of foreign domination is publishing. Here owners foreign and native seem to be more interested in keeping Ukraine under Russian influence than in helping its government create a national public communications sphere. As any one who has been to Ukraine knows, even in the capital, it is almost impossible to find a Ukrainian-language newspaper or popular glossy-magazine. In a country where less than 17 % percent of the population is Russian and where all Russians who were born and educated there can read Ukrainian, the printed media is over 80% Russian-language. Particularly curious is that this situation seems to be totally unrelated to considerations of profit. Three big media conglomerates, for instance, (the Dutch-based Telegraaf media group, and the Kyiv-based KP Media and Segodnya Multimedia) publish a total of 28 newspapers and journals. Of these, only two are Ukrainian-language products. Among these products are three mass-circulation four-page Russian-language daily newspapers that are distributed free in hundreds of thousands of copies in at least four major cities. Why in a country where everyone can read Ukrainian do companies distribute, for free, Russian-language publications? Russian-language publications in Ukraine, simply by virtue of being in Russian, perpetuate the rationalization for being able to read in Russian, and thus they maintain a channel for Russia's Kremlin- dominated politicized media to influence opinion in a country Puitn still thinks must be under his control. But that having been said, Russian-language materials produced in Ukraine need not necessarily be anti-Ukrainian and pro-Russian and to placate Ukrainian concerns, the issue could be empirically examined by a rigorous content analysis. Yet, oddly enough, after seventeen years of independence no-one has done such an analysis, and even worse, no-one is even engaged in such a project.

Another important unresearched issue concerns Ukraine's oligarchs. What appears to be the case is that very few of Ukraine's wealthy are Ukrainian-speakers, or that they run their organizations in Ukrainian, or that they are in the least concerned about the lack of Ukrainian- language products on the market, or that they sponsor Ukrainian national culture. On the one hand, Rinat Akhmetov, not only Ukraine's but Europe's richest man now purportedly supports President Yushchenko and, implicitly, his initiatives concerning issues of national significance to this newly independent country. On the other hand, not only does Akhmetov not seem to finance even one Ukrainian-language publication, but his holdings include a Russian-language newspaper (Segodnya) that regularly publishes the Ukrainophobic rantings of the Russian extremist-nationalist Oles Buzina. How many "Ukrainian" oligarchs can stand alongside someone like Viktor Pinchuk who generously provides grants and stipends for students in Ukraine, and most recently established a multi-million dollar fund to enable Ukrainian students to study in the best European and North American Universities? How many "Ukrainian" oligarchs own Ukrainian-language media enterprises? How many of them use their wealth and influence to encourage their European and American counterparts to produce Ukrainian-language products? If indeed there is no national Ukrainian capitalist class, the implications would be profound, as it would mean that today, just like 100 years ago, the divide between rich and poor is enforced by a divide between poor Ukrainian-speakers and rich non-Ukrainians. If this is indeed so, it would mean, that the national and social questions in Ukraine are not "resolved" despite independence.

In a recent international bestseller , journalist Naomi Klein analyzed how, throughout the world since the 1970s private corporations, with the collusion of governments, have used disasters to rid territories of local inhabitants and re-make their former "unprofitable" homes and neighbourhoods into "profitable" shopping-malls and hotels. Exploiting the initial shock of political and or natural disasters, corporate agents and their lawyers strip away laws protecting national economies, the environment, and health standards; they steal state-assets and eliminate social programs, full-time skilled jobs and unions. The redistributed incomes produce polarized societies with a few more wealthy, many more poor and less in the middle-class than previously. This scenario is visible in South-Ossetia, where the only group poised to win from the misery are Russia's oligarch's and their corrupt local agents.

The "capitalism" Klein describes is not that of the Keynesian mixed-economy sort that Ukrainians imagined they would have in 1991, that brought with it skilled full-time jobs, good wages, fair corporate taxation, social services and union rights wherever it was established. It is a variant of the "new" capitalism that has been emerging in the world since the 80s and is most often identified with Milton Friedman and "neo-liberalism." This is a throw-back to the vicious capitalism of the early industrial revolution. It is a semi-criminal kind of activity dominated by unelected corporation managers, bankers and money-traders who consider laws passed by elected governments protecting public assets, health, the environment, social services and regulating international capital flows, as restrictions on their right to make profit. These people then direct their untaxed profits only to a small group of shareholders and to off-shore accounts and in their wake they leave behind them Zimbabwes, Zaires, and most recently, George Bush's America . The majority of jobs that remain in countries where this new old- capitalism is established are part-time, unskilled, non-union, low-paid, with no pensions or health-care. What benefits it does bring are skewed in favour of the very rich.

While Ukraine, for the moment seems to have been spared the horrors of "disaster capitalism" it is getting its share of the Dickensian-Friedman version. One of the people involved in this "new" capitalism, as Klein points-out, was a former US ambassador to Ukraine . Halliburton, meanwhile, that made billions in profits from its activities in Iraq which critics regard as nothing short of criminal, is a member of the US-Ukraine Business Council. Another member of this important group is the Cargill Corporation which, in pursuit of monopoly and ever higher profits, during the last decades has used government subsidies, that is taxpayers' money, to systematically dispossess farmers and destroy the environment with monoculture plantations. In general this involves replacing the production of staple crops with luxury crops for export. Most recently, the men who run this organization are destroying the Brazilian rain-forest with their soybean plantations - of which some are worked by de facto slave labour

Nonetheless, Ukrainians and all those concerned with Ukraine's fate do not seem to be concerned about this and have not set-about studying how American Friedman neo-liberal corporate criminality is supposed to secure Ukraine from its imperial master and bring it into the EU faster if it polarizes and pauperizes the population. Will the Ukrainian society this "new capitalism" is making resemble the shape of an egg or a pear? If the latter, then Ukraine's future is dim. Without EU legislation nothing will stop corporate conglomerates from behaving in Ukraine just as they do in Africa or Latin America. Is anyone so naïve as to think it is in the EU's interests to have a third-world style basket-case on its eastern border No one should forget that, for the moment, the EU, with the exception of Britain, is among those fortunate parts of the world where advocates of neo-liberal "new-capitalism" still face strong resistance. Nor does anyone ask why the US-Ukraine Business Council apparently has no criteria of membership. Why, beside Cargill and Halliburton does it include companies with dubious links like Vanco? Why has the USUBC has not issued any formal statement condemning illegal corporate "raiding" and destruction of public or citizens' assets in Ukraine? What will stop such organizations from behaving in Ukraine exactly as they do in Africa or Latin America? Why does it condone its members running their businesses in Ukraine in Russian?

Political loyalties in Ukraine are not determined by language-use. Russian-speakers in Kyiv, as is well-known, overwhelmingly supported the national-democratic Orange Revolution. Russian-speakers are within the majority of the population which supports Lytvyn, Yushchenko, Tymoshenko, Kostenko and Lutsenko - all national-democrats in the broad sense of the term. To consider these people as some-kind of kleptocratic fascists, as do today's Stalinists, is simply ludicrous and reflects their nostalgia for the Russian- dominated USSR. Although polls tells us that urban Russian-speaking Russians are more likely to be pro-Russian anti-Ukrainian and anti-EU, than rural/small town Ukrainian-speaking Ukrainians, the majority of Russian-speakers accept independent Ukraine as their country. It is also the case that whereas there are well-organized extremist-nationalist pro-Russian fringe-groups supported directly or indirectly by the Kremlin in Ukraine, there is no compatibly influential extremist Ukrainian nationalist group. In so far as such a group once did exist (UNA-UNSO) it has since disintegrated. One of its leaders, Dmytro Korchynsky, formed a group called Bratsvo, which he now runs under the auspices the Kremlin and Russian nationalist extremists under Alexander Dugin. Another group based in Kharkiv that uses variants of Ukrainian national symbols and extremist-nationalist rhetoric, is also in fact, pro-Russian. Set up by Ukraine's pro-Russian Party of Regions hardliners, presumably with the participation of the city's mayor Dobkin, the "Patriots of Ukraine" are a Kremlin "black-ops" project aimed at discrediting Ukrainian national ideas and independence in the EU.[1] Alongside these two pro-Russian front-groups, are of course, the openly pro-Kremlin, anti-Orange, anti-Ukrainian organizations like the Communist Party, the Russian Orthodox Church in Ukraine, The Russian Block and Vitrenko's Block - all considered part of the Russian "Fifth Column" in their country by national-democrats, yet who enjoy all the benefits of the democracy brought by Ukraine's Orange Revolution. The clearest evidence of their work is visible in the Crimea.

In light of these considerations, the question arises: how is the dissatisfaction and anger generated by the social dislocation, poverty and polarization that Russifying neo-liberal capitalism has brought to Ukraine, supposed to prepare the country for entry into the EU? Regrettably, this is a question no one seems to be studying.

Stephen Velychenko is a Research Fellow at the Chair of Ukrainian Studies (University of Toronto) and Visiting Professor at the Kyiv Mohyla Academy. This article was first published by the Ukrainian Centre for Independent Political Research.


[1] Although Ukraine and Russia in 1992 signed an agreement that forbade either side using their civilian intelligence agencies against the other, the agreement made no mention of Russian Military Intelligence (GRU), which remains active throughout former USSR territories.