On September 10, sections of the second Nord Stream 2 pipeline laid from the German shore and Danish waters were connected in a so-called above-water tie-in in the Baltic Sea. The opposing pipe strings were lifted from the seabed by the lay barge, Fortuna, and the pipe ends were cut and fitted together. The welding to connect the two lines took place on a platform located above the water on the side of the vessel. Then the connected pipeline was lowered to the seabed as one continuous string / credit: Nord Stream 2 / Axel Schmidt
Editor’s Note: This analysis originally appeared in Counterpunch.
Amid escalating tensions between U.S./NATO and Russia, all eyes are on Ukraine, but Nord Stream 2, a pipeline built to bring Russian gas under the Baltic Sea directly to Germany, is an integral part of the story.
U.S. Under Secretary for Political Affairs Victoria Nuland asserted (January 27), “If Russia invades Ukraine one way or another … we will work with Germany to ensure it (the pipeline) does not move forward.” Delayed by U.S. threats and sanctions, Nord Stream 2 highlights why countries are challenging U.S. leadership.
Since the 1960s when Europe first began importing Russian gas, Washington perceived Russian energy as a threat to U.S. leadership and Europe’s energy security. More recently, with fracking, the United States has become the world’s largest gas producer and a major exporter of LNG (liquefied natural gas). It wants to muscle in on Europe’s huge market, displacing Russian gas. With Nord Stream 2 completed and filled while it awaits German regulatory approval, the stakes are high.
Soon after pipeline construction began in 2018, the United States passed a law threatening sanctions on the Swiss ship laying the pipe. The Swiss pulled out and two Russian vessels completed the line despite sanctions. The United States threatened German contractors too, but Germany stood firm.
In 2021, with construction almost complete, German Chancellor Angela Merkel visited the White House, insisting on Nord Stream 2. U.S. President Joe Biden gave way. He wanted to mend relations with Germany—the European Union’s most powerful country.
Nord Stream 2, like its predecessor Nord Stream 1, began as a joint venture (51% Russia’s Gazprom, 49% Royal Dutch Shell as well as Austrian, French and German companies). Then Poland’s government agency responsible for monopoly regulation forced European partners to relinquish their share, creating another delay. The European companies gave up their shareholding but remained as equivalent financial investors in the pipeline.
Upon the Europeans relinquishing their shareholding, Gazprom became the sole pipeline owner. It is also the world’s largest gas supplier, with a gas pipeline monopoly in Russia. Gazprom wants to deliver its own gas via its pipeline to Europe. The EU, on the other hand, has maintained since 2009 that pipeline operators, in order to encourage market competition, cannot own the gas they carry. After construction of Nord Stream 2 began, the EU extended its rules to new marine pipelines originating abroad.
Nord Stream 2 was the only pipeline affected. While those pipelines completed prior to May 2019 were exempt, its completion was delayed by U.S. sanctions on pipelaying. Gazprom claimed discrimination and appealed. In August, a German court rejected the appeal. Gazprom then appealed to Germany’s Supreme Court.
German industrialists are desperate for Russian gas. Germany has only 17 days of gas supply in storage. Volatile short-term spot prices have compounded their woes. EU gas imports have increasingly shifted from long-term contracts with prices indexed to crude oil toward short-term deals by multiple traders in spot markets.
In 2020, spot prices were roughly half those of Gazprom’s long-term contracts. They surged as much as sevenfold in 2021, reflecting a mix of factors. On the demand side, economic revival from the pandemic boosted demand for gas in Asia as well as Europe. On the supply side, green sources of energy diminished in central Europe because of cloudy windless days. With the decommissioning of coal and nuclear power stations, utilities turned to natural gas.
European politicians blamed Russia for high gas prices, but Gazprom affirmed it was supplying the amounts stipulated in its long-term contracts. Gazprom wants long-term contracts to underpin the huge capital costs of gasfield and pipeline investments.
Russia is a petro-state. It’s the world’s single largest exporter of natural gas, and the second largest oil exporter—just behind Saudi Arabia. Pipelines and sea routes to market are vital to its economy. Russia wants to sell oil and gas in Asia and Europe, and they want to buy it. Nord Stream 2 makes commercial sense. It incurs no transit fees. The route to market is much shorter than aging pipelines via Ukraine. For its part, Ukraine depends on transit fees from gas shipped through these pipelines.
Nord Stream 2 remains controversial, bitterly opposed by Poland and Ukraine who presume it will reduce volumes and transit fees on pipelines through their countries. Germany, Austria, the Czech Republic and others want it. Germany, which carries huge weight in the EU, sees gas as a transition fuel after phasing out nuclear and coal.
Numerous hurdles during and since construction have delayed Nord Stream 2’s certification. The most recent forced its Swiss operating company to form a German subsidiary for the pipeline section in German waters. Upon eventual certification, Germany will become Europe’s main entry point for Russian gas.
The current crisis between Russia and United States/NATO has been brewing for many years. With the dissolution of the Soviet Union, NATO expanded membership to Eastern Europe. NATO facilitates U.S. leadership, keeping European countries on its side against Russia. From a Russian viewpoint, NATO is provocative and threatening.
Part of the agreement underpinning the USSR’s dissolution was Western assurance that it would not expand into Russia’s sphere of influence, a pledge NATO most recently violated by stationing troops, ships and planes along Russia’s borders. The West accuses Russia of interference in Ukraine. Russia points to a 2014 Western-inspired coup in Ukraine and legitimate grievances of Russian-speakers in the breakaway Donbass republics. I document the two narratives in my book Oil and World Politics.
In December, Russia presented draft treaties to the United States and NATO, demanding a complete overhaul of Europe’s security architecture. Russia stressed the principle of indivisible and equal security for all countries, as agreed by all 56 members of the Organization for Security and Co-operation in Europe (OSCE) at Istanbul (1999) and reaffirmed at Astana (2010). Members expressly agreed not to strengthen their security at the expense of other members’ security. The United States is a signatory.
President Putin warned that if the West continued its aggressive policies (NATO’s expansion and missile deployment in eastern Europe), Russia would take ‘military-technical’ reciprocal measures. He said, “they have pushed us to a line that we can’t cross.”
Russia’s initiative put the cat among the pigeons. A succession of high-level meetings occurred between Russia and the United States, NATO and OSCE. Washington presented written responses (January 26), seeking to narrow the debate to Ukraine and alleging the Russians were poised to invade it. Russia insisted repeatedly it would not initiate an invasion but would support Donbass if the latter were attacked.
The United States escalated tensions by repeating claims of an upcoming Russian invasion, even as Ukraine’s leaders expressed doubts. Washington threatened sanctions of unprecedented severity, including major Russian banks, high-tech goods, the SWIFT financial messaging system, and Nord Stream 2.
France and Germany balked because the sanctions would backfire on their economies. They appeared unconvinced Russia intended to attack unless provoked. A flurry of high-level bilateral discussions with Russia followed.
Significantly, representatives of France, Germany, Russia and Ukraine (Jan 26) confirmed support for the 2015 Minsk II agreement and an unconditional ceasefire. Minsk II requires Ukraine to negotiate with the two Donbass republics on autonomy within a federalized Ukraine but, thus far, no negotiations have been held.
The EU imports 40 percent of its gas from Russia. For Russia, the routes through Ukraine and Poland are unreliable, because of hostility in both countries. Ukraine has a long-term deal with Gazprom for gas transit until 2024. Ukraine earns big transit fees, roughly $2 billion USD per year, and desperately wants to keep them. For its internal market, Ukraine buys Russian gas indirectly from Poland, Romania and Slovakia.
Whatever happens with Western sanctions, Russia has a strategic new market in China. Russia’s Power of Siberia pipeline began exporting gas from east Siberia to northeast China two years ago. The two countries have agreed to build a second line, Power of Siberia 2. It will bring gas from the Yamal peninsula in the Russian Arctic to China’s northeast. That means Yamal gas will be able to flow to China as easily as to Europe.
The current situation is dangerous and could easily escalate. Nord Stream 2 is critically important but national security trumps all. Security can only be achieved if it is universal. U.S. efforts to contain Russia and maintain leadership over Europe are not working. The world has become multi-polar and Nord Stream 2 is a fulcrum at the centre of the current crisis.
John Foster, international petroleum economist, is author of Oil and World Politics: the Real Story of Today’s Conflict Zones (Lorimer Books). He held positions with the World Bank, Inter-American Development Bank, BP and Petro-Canada. His blog johnfosterwrites.com and former TF guest editor Charlotte Dennett’s FollowthePipelines.com examine new issues.
Anti-government protest in Sri Lanka on April 13 in front of the Presidential Secretariat / credit: AntanO / Wikipedia
Editor’s Note: This article was originally published by Multipolarista.
Facing a deep economic crisis and bankruptcy, Sri Lanka was rocked by large protests this July, which led to the resignation of the government.
Numerous Western political leaders and media outlets blamed this uprising on a supposed Chinese “debt trap,” echoing a deceptive narrative that has been thoroughly debunked by mainstream academics.
In reality, the vast majority of the South Asian nation’s foreign debt is owed to the West.
These structural adjustment programs clearly have not worked, given Sri Lanka’s economy has been managed by the IMF for many of the decades since it achieved independence from British colonialism in 1948.
As of 2021, a staggering 81 percent of Sri Lanka’s foreign debt was owned by U.S. and European financial institutions, as well as Western allies Japan and India.
This pales in comparison to the mere 10 percent owed to Beijing.
According to official statistics from Sri Lanka’s Department of External Resources, as of the end of April 2021, the plurality of its foreign debt is owned by Western vulture funds and banks, which have nearly half, at 47 percent.
The top holders of the Sri Lankan government’s debt, in the form of international sovereign bonds (ISBs), are the following firms:
BlackRock (U.S.)
Ashmore Group (Britain)
Allianz (Germany)
UBS (Switzerland)
HSBC (Britain)
JPMorgan Chase (U.S.)
Prudential (U.S.)
The Asian Development Bank and World Bank, which are thoroughly dominated by the United States, own 13 percent and 9 percent of Sri Lanka’s foreign debt, respectively.
Less known is that the Asian Development Bank (ADB) is, too, largely a vehicle of U.S. soft power. Neoconservative DC-based think tank the Center for Strategic and International Studies (CSIS), which is funded by Western governments, affectionately described the ADB as a “strategic asset for the United States,” and a crucial challenger to the much newer, Chinese-led Asian Infrastructure Investment Bank.
“The United States, through its membership in the ADB and with its Indo-Pacific Strategy, seeks to compete with China as a security and economic partner of choice in the region,” boasted CSIS.
Another country that has significant influence over the ADB is Japan, which similarly owns 10 percent of Sri Lanka’s foreign debt.
An additional 2 percent of Sri Lanka’s foreign debt was owed to India as of April 2021, although that number has steadily increased since. In early 2022, India was in fact the top lender to Sri Lanka, with New Delhi disbursing 550 percent more credit than Beijing between January and April.
Together, these Western firms and their allies Japan and India own 81 percent of Sri Lanka’s foreign debt – more than three-quarters of its international obligations.
By contrast, China owns just one-tenth of Sri Lanka’s foreign debt.
The overwhelming Western role in indebting Sri Lanka is made evident by a graph published by the country’s Department of External Resources, showing the foreign commitments by currency:
As of the end of 2019, less than 5 percent of Sri Lanka’s foreign debt was denominated in China’s currency the yuan (CNY). On the other hand, nearly two-thirds, 64.6 percent, was owed in U.S. dollars, along with an additional 14.4 percent in IMF special drawing rights (SDR) and more than 10 percent in the Japanese yen (JPY).
Western media reporting on the economic crisis in Sri Lanka, however, ignores these facts, giving the strong, and deeply misleading, impression that the chaos is in large part because of Beijing.
Sri Lankan Economic Crisis Driven by Neoliberal Policies, Inflation, Corruption, Covid-19 Pandemic
This July, Sri Lanka’s government was forced to resign, after hundreds of thousands of protesters stormed public buildings, setting some on fire, while also occupying the homes of the country’s leaders.
The protests were driven by skyrocketing rates of inflation, as well as rampant corruption and widespread shortages of fuel, food, and medicine – a product of the country’s inability to pay for imports.
In May, Sri Lanka defaulted on its debt. In June, it tried to negotiate another structural adjustment program with the U.S.-dominated International Monetary Fund (IMF). This would have been Sri Lanka’s 17th IMF bailout, but the talks ended without a deal.
By July, Sri Lankan Prime Minister Ranil Wickremesinghe publicly admitted that his government was “bankrupt.”
Sri Lankan President Gotabaya Rajapaksa, who spent a significant part of his life working in the United States, entered office in 2019 and immediately imposed a series of neoliberal economic policies, which included cutting taxes on corporations.
These neoliberal policies decreased government revenue. And the precarious economic situation was only exacerbated by the impact of the Covid-19 pandemic.
Facing an out-of-control 39.1 percent inflation rate in May, the Sri Lankan government did a 180 and suddenly raised taxes again, further contributing to popular discontent, which broke out in a social explosion in July.
Media Falsely Blames China for Sri Lankan Debt Default
While 81 percent of Sri Lanka’s foreign debt is owned by Western financial institutions, Japan, and India, major corporate media outlets sought to blame China for the country’s bankruptcy and subsequent protests.
The Wall Street Journal pointed the finger at Beijing in a deeply misleading article titled “China’s Lending Comes Under Fire as Sri Lankan Debt Crisis Deepens.” The newspaper noted that the crisis “opens a window for India to push back against Chinese influence in the Indian Ocean region.”
U.S. media giant the Associated Press also tried to scapegoat China, and its deceptive news wire was republished by outlets across the world, from ABC News to Saudi Arabia’s Al Arabiya.
VOA accused Beijing of “pursuing a kind of ‘debt-trap diplomacy’ meant to bring economically weak countries to their knees, dependent on China for support.”
On social media, the Western propaganda narrative surrounding the July protests in Sri Lanka was even more detached from reality.
A veteran of the Central Intelligence Agency (CIA), Defense Intelligence Agency (DIA), and National Security Agency (NSA), Derek J. Grossman, portrayed the unrest as an anti-China uprising.
“China’s window of opportunity to one day control Sri Lanka probably just closed,” he tweeted on July 9, as the government announced it was resigning.
After working for U.S. spy agencies, Grossman is today an analyst at the Pentagon’s main think tank, the RAND Corporation, where he has pushed a hawkish line against Beijing.
China’s window of opportunity to one day control Sri Lanka probably just closed. pic.twitter.com/WOLIb3SUTf
— Derek J. Grossman (@DerekJGrossman) July 9, 2022
BBC Reluctantly Admits the ‘Chinese Debt Trap’ Narrative in Sri Lanka Is False
China has funded several large infrastructure projects in Sri Lanka, building an international airport, hospitals, a convention center, a sports stadium, and most controversially a port in the southern coastal town of Hambantota.
The UK government’s BBC sent a reporter to Sri Lanka to investigate these accusations of supposed “Chinese debt traps.” But after speaking to locals, he reluctantly came to the conclusion that the narrative is false.
“The truth is that many independent experts say that we should be wary of the Chinese debt trap narrative, and we’ve found quite a lot of evidence here in Sri Lanka which contradicts it,” BBC host Ben Chu acknowledged.
He explained, “The Hambantota port, well, that was instigated by the Sri Lankans, not by the Chinese. And it can’t currently be used by Chinese military naval vessels, and actually there’s some pretty formidable barriers to that happening.”
“A lot of the projects we’ve been seeing, well, they feel more like white elephants than they do Chinese global strategic assets,” Chu added.
In our latest film from Sri Lanka, which faces financial collapse as the global Big Squeeze bites, Ben Chu examines the effect that Chinese loans and investment are having on the country:#Newsnighthttps://t.co/GBFZ1ItP0G
The British state media outlet interviewed the director of Port City Colombo’s economic commission, Saliya Wickramasuriya, who emphasized, “The Chinese government is not involved in setting the rules and regulations, so from that standpoint the government of Sri Lanka is in control, and it’s up to the government of Sri Lanka’s wish to flavor the city, the development of the city, in the way it wants to.”
“It is accurate to say that infrastructure development has boomed under Chinese investment, Chinese debt sometimes, but those are things that we’ve actually needed for a long, long time,” Wickramasuriya added.
Chu clarified that, “Importantly, it’s not debt but equity the Chinese own here.”
“So is the debt trap not all it seems?” he asked.
Mainstream U.S. Academics Debunk the ‘Chinese Debt Trap’ Myth
Mainstream Western academics have similarly investigated the claims of “Chinese debt traps,” and come to the conclusion that they do not exist.
Even a professor at Johns Hopkins University’s School of Advanced International Studies, which is notorious for its revolving door with the U.S. government and close links to spy agencies, acknowledged that “the Chinese ‘debt trap’ is a myth.”
Writing in 2021 in the de facto mouthpiece of the DC political establishment, The Atlantic magazine, scholar Deborah Brautigam stated clearly that the debt-trap narrative is “a lie, and a powerful one.”
“Our research shows that Chinese banks are willing to restructure the terms of existing loans and have never actually seized an asset from any country, much less the port of Hambantota,” Brautigam said in the article, which was co-authored by Meg Rithmire, a professor at the stridently anti-socialist Harvard Business School.
The Chinese "debt-trap" narrative is a false one which wrongfully portrays both Beijing and the developing countries it deals with, Deborah Brautigam and Meg Rithmire write: https://t.co/FagExsdeNT
Brautigam published her findings in a 2020 article for Johns Hopkins’ China Africa Research Initiative, titled “Debt Relief with Chinese Characteristics,” along with fellow researchers Kevin Acker and Yufan Huang.
They investigated Chinese loans in Sri Lanka, Iraq, Zimbabwe, Ethiopia, Angola, and the Republic of Congo, and “found no ‘asset seizures’ and, despite contract clauses requiring arbitration, no evidence of the use of courts to enforce payments, or application of penalty interest rates.”
They discovered that Beijing cancelled more than $3.4 billion and restructured or refinanced roughly $15 billion of debt in Africa between 2000 and 2019. At least 26 individual loans to African nations were renegotiated.
Western critics have attacked Beijing, claiming there is a lack of transparency surrounding its loans. Brautigam explained that “Chinese lenders prefer to address restructuring quietly, on a bilateral basis, tailoring programs to each situation.”
The researchers noted that China puts an “emphasis on ‘development sustainability’ (looking at the future contribution of the project) rather than ‘debt sustainability’ (looking at the current state of the economy) as the basis of project lending decisions.”
“Moreover, despite critics’ worries that China could seize its borrower’s assets, we do not see China attempting to take advantage of countries in debt distress,” they added.
“There were no ‘asset seizures’ in the 16 restructuring cases that we found,” the scholars continued. “We have not yet seen cases in Africa where Chinese banks or companies have sued sovereign governments or exercised the option for international arbitration standard in Chinese loan contracts.”
Benjamin Norton is founder and editor of Multipolarista.
Ukrainian President Volodymyr Zelensky awarded Right Sector commander Dmytro Kotsyubaylo the “Hero of Ukraine” commendation on December 1 / credit: Focus.ua
Editor’s Note: This article was originally published by The Grayzone.
Back in October 2019, as the war in eastern Ukraine dragged on, Ukrainian President Volodymyr Zelensky traveled to Zolote, a town situated firmly in the “gray zone” of Donbas, where over 14,000 had been killed, mostly on the pro-Russian side. There, the president encountered the hardened veterans of extreme right paramilitary units keeping up the fight against separatists just a few miles away.
Elected on a platform of de-escalation of hostilities with Russia, Zelensky was determined to enforce the so-called Steinmeier Formula conceived by then-German Foreign Minister Walter Steinmeier which called for elections in the Russian-speaking regions of Donetsk and Lugansk.
In a face-to-face confrontation with militants from the neo-Nazi Azov Battalion who had launched a campaign to sabotage the peace initiative called “No to Capitulation,” Zelensky encountered a wall of obstinacy.
With appeals for disengagement from the frontlines firmly rejected, Zelensky melted down on camera. “I’m the president of this country. I’m 41 years old. I’m not a loser. I came to you and told you: Remove the weapons,” Zelensky implored the fighters.
Once video of the stormy confrontation spread across Ukrainian social media channels, Zelensky became the target of an angry backlash.
Andriy Biletsky, the proudly fascist Azov Battalion leader who once pledged to “lead the white races of the world in a final crusade…against Semite-led Untermenschen”, vowed to bring thousands of fighters to Zolote if Zelensky pressed any further. Meanwhile, a parliamentarian from the party of former Ukrainian President Petro Poroshenko openly fantasized about Zelensky being blown to bits by a militant’s grenade.
Though Zelensky achieved a minor disengagement, the neo-Nazi paramilitaries escalated their “No Capitulation” campaign. And within months, fighting began to heat up again in Zolote, sparking a new cycle of violations of the Minsk Agreement.
By this point, Azov had been formally incorporated into the Ukrainian military and its street vigilante wing, known as the National Corps, was deployed across the country under the watch of the Ukrainian Interior Ministry, and alongside the National Police. In December 2021, Zelensky would be seen delivering a “Hero of Ukraine” award to a leader of the fascistic Right Sector in a ceremony in Ukraine’s parliament.
A full-scale conflict with Russia was approaching, and the distance between Zelensky and the extremist paramilitaries was closing fast.
This February 24, when Russian President Vladimir Putin sent troops into Ukrainian territory on a stated mission to “demilitarize and denazify” the country, U.S. media embarked on a mission of its own: to deny the power of neo-Nazi paramilitaries over the country’s military and political sphere. As the U.S. government-funded National Public Radio insisted, “Putin’s language [about denazification] is offensive and factually wrong.”
In its bid to deflect from the influence of Nazism in contemporary Ukraine, U.S. media has found its most effective PR tool in the figure of Zelensky, a former TV star and comedian from a Jewish background. It is a role the actor-turned-politician has eagerly assumed.
But as we will see, Zelensky has not only ceded ground to the neo-Nazis in his midst, he has entrusted them with a front line role in his country’s war against pro-Russian and Russian forces.
The President’s Jewishness As Western Media PR Device
Hours before President Putin’s February 24 speech declaring denazification as the goal of Russian operations, Ukrainian President Volodymyr Zelensky “asked how a people who lost eight million of its citizens fighting Nazis could support Nazism,” according to the BBC.
Raised in a non-religious Jewish family in the Soviet Union during the 1980’s, Zelensky has downplayed his heritage in the past. “The fact that I am Jewish barely makes 20 in my long list of faults,” he joked during a 2019 interview in which he declined to go into further detail about his religious background.
Today, as Russian troops bear down on cities like Mariupol, which is effectively under the control of the Azov Battalion, Zelensky is no longer ashamed to broadcast his Jewishness. “How could I be a Nazi?” he wondered aloud during a public address. For a U.S. media engaged in an all-out information war against Russia, the president’s Jewish background has become an essential public relations tool.
Watch left & right wing factions of MSM unite to declare any allegations of Nazism in Ukraine to be Russian fake news because President Zelensky is Jewish. Featuring Senators Marsha Blackburn & Mark Warner, former CIA spy Dan Hoffman & “Ukraine Whistleblower” Alexander Vindman pic.twitter.com/vruyDUoWxv
A few examples of the U.S. media’s deployment of Zelensky as a shield against allegations of rampant Nazism in Ukraine are below (see mash-up video in above tweet):
PBS NewsHour noted Putin’s comments on denazification with a qualifier: “Even though President Volodymyr Zelensky is Jewish and his great uncles died in the Holocaust.”
On Fox & Friends, former CIA officer Dan Hoffman declared that “it’s the height of hypocrisy to call the Ukrainian nation to denazify—their president is Jewish after all.”
On MSNBC, Virginia Democratic Senator Mark Warner said Putin’s “terminology, outrageous and obnoxious as it is—‘denazify’ where you’ve got frankly a Jewish president in Mr. Zelensky. This guy [Putin] is on his own kind of personal jihad to restore greater Russia.”
Republican Sen. Marsha Blackburn said on Fox Business she’s “been impressed with President Zelensky and how he has stood up. And for Putin to go out there and say ‘we’re going to denazify’ and Zelensky is Jewish.”
In an interview with CNN’s Wolf Blitzer, Gen. John Allen denounced Putin’s use of the term, “de-Nazify” while the newsman and former Israel lobbyist shook his head in disgust. In a separate interview with Blitzer, the so-called “Ukraine whistleblower” and Ukraine-born Alexander Vindman grumbled that the claim is “patently absurd, there’s really no merit… you pointed out that Volodymyr Zelensky is Jewish… the Jewish community [is] embraced. It’s central to the country and there is nothing to this Nazi narrative, this fascist narrative. It’s fabricated as a pretext.”
Behind the corporate media spin lies the complex and increasingly close relationship Zelensky’s administration has enjoyed with the neo-Nazi forces invested with key military and political posts by the Ukrainian state, and the power these open fascists have enjoyed since Washington installed a Western-aligned regime through a coup in 2014.
In fact, Zelensky’s top financial backer, the Ukrainian Jewish oligarch Igor Kolomoisky, has been a key benefactor of the neo-Nazi Azov Battalion and other extremists militias.
The Azov Battalion marches with Nazi-inspired Wolfsangel flags in Mariupol, August 2020 / credit: The Grayzone
Backed by Zelensky’s Top Financier, Neo-Nazi Militants Unleash a Wave of Intimidation
Incorporated into the Ukrainian National Guard, the Azov Battalion is considered the most ideologically zealous and militarily motivated unit fighting pro-Russian separatists in the eastern Donbass region.
With Nazi-inspired Wolfsangel insignia on the uniforms of its fighters, who have been photographed with Nazi SS symbols on their helmets, Azov “is known for its association with neo-Nazi ideology…[and] is believed to have participated in training and radicalizing U.S.-based white supremacy organizations,” according to an FBI indictment of several U.S. white nationalists that traveled to Kiev to train with Azov.
Igor Kolomoisky, a Ukrainian energy baron of Jewish heritage, has been a top funder of Azov since it was formed in 2014. He has also bankrolled private militias like the Dnipro and Aidar Battalions, and has deployed them as a personal thug squad to protect his financial interests.
In 2019, Kolomoisky emerged as the top backer of Zelensky’s presidential bid. Though Zelensky made anti-corruption the signature issue of his campaign, the Pandora Papers exposed him and members of his inner circle stashing large payments from Kolomoisky in a shadowy web of offshore accounts.
Ukrainian President Volodymyr Zelensky (center) meets with billionaire oligarch and business associate Igor Kolomoisky (second from right) on September 10, 2019 / credit: The Grayzone
When Zelensky took office in May 2019, the Azov Battalion maintained de facto control of the strategic southeastern port city of Mariupol and its surrounding villages. As Open Democracy noted, “Azov has certainly established political control of the streets in Mariupol. To maintain this control, they have to react violently, even if not officially, to any public event which diverges sufficiently from their political agenda.”
Attacks by Azov in Mariupol have included assaults on “feminists and liberals” marching on International Women’s Day among other incidents.
In March 2019, members of the Azov Battalion’s National Corps attacked the home of Viktor Medvedchuk, the leading opposition figure in Ukraine, accusing him of treason for his friendly relations with Vladimir Putin, the godfather of Medvedchuk’s daughter.
Zelensky’s administration escalated the attack on Medvedchuk, shuttering several media outlets he controlled in February 2021 with the open approval of the U.S. State Department, and jailing the opposition leader for treason three months later. Zelensky justified his actions on the grounds that he needed to “fight against the danger of Russian aggression in the information arena.”
Next, in August 2020, Azov’s National Corps opened fire on a bus containing members of Medvedchuk’s party, Patriots for Life, wounding several with rubber-coated steel bullets.
Breaking! A bus carrying supporters and members of #Ukraine‘s opposition party “Patriots For Life” was attacked by Ukrainian National Corps and Azov Battalion in the east of the country (Kharkov), unconfirmed reports that some of the passengers have been murdered. pic.twitter.com/O0hB2sqbRA
Zelensky Failed to Rein In Neo-Nazis, Wound Up Collaborating with Them
Following his failed attempt to demobilize neo-Nazi militants in the town of Zolote in October 2019, Zelensky called the fighters to the table, telling reporters “I met with veterans yesterday. Everyone was there—the National Corps, Azov, and everyone else.”
A few seats away from the Jewish president was Yehven Karas, the leader of the neo-Nazi C14 gang.
Ukrainian President Volodymyr Zelensky meets with “veterans,” including Yehven Karas (far right) and Dmytro Shatrovsky, an Azov Battalion leader (bottom left) / credit: The Grayzone
During the Maidan “Revolution of Dignity” that ousted Ukraine’s elected president in 2014, C14 activists took over Kiev’s city hall and plastered its walls with neo-Nazi insignia before taking shelter in the Canadian embassy.
As the former youth wing of the ultra-nationalist Svoboda Party, C14 appears to draw its name from the infamous 14 words of U.S. neo-Nazi leader David Lane: “We must secure the existence of our people and a future for white children.”
By offering to carry out acts of spectacular violence on behalf of anyone willing to pay, the hooligans have fostered a cozy relationship with various governing bodies and powerful elites across Ukraine.
C14 neo-Nazi gang offers to carry out violence-for-hire: “C14 works for you. Help us keep afloat, and we will help you. For regular donors, we are opening a box for wishes. Which of your enemies would you like to make life difficult for? We’ll try to do that.” / credit: KHPGA March 2018 report by Reuters stated that “C14 and Kiev’s city government recently signed an agreement allowing C14 to establish a ‘municipal guard’ to patrol the streets,” effectively giving them the sanction of the state to carry out pogroms.
As The Grayzone reported, C14 led raid to “purge” Romani from Kiev’s railway station in collaboration with the Kiev police.
The C14 Nazi terror gang signed an agreement with the Kiev municipal government to patrol its streets. This footage taken just a few months later in 2018 shows them carrying out a pogrom against a Romani camp. pic.twitter.com/9aAA86K8TQ
Not only was this activity sanctioned by the Kiev city government, the U.S. government itself saw little problem with it, hosting Bondar at an official U.S. government institution in Kiev where he bragged about the pogroms. C14 continued to receive state funding throughout 2018 for “national-patriotic education.”
Karas has claimed that the Ukrainian Security Serves would “pass on” information regarding pro-separatist rallies “not only [to] us, but also Azov, the Right Sector and so on.”
“In general, deputies of all factions, the National Guard, the Security Service of Ukraine and the Ministry of Internal Affairs work for us. You can joke like that,” Karas said.
Throughout 2019, Zelensky and his administration deepened their ties with ultra-nationalist elements across Ukraine.
Ukrainian then-Prime Minister Oleksiy Honcharuk onstage at the neo-Nazi “Veterans Strong” concert / credit: The Grayzone
After Prime Minister Attends Neo-Nazi Concert, Zelensky Honors Right Sector Leader
Just days after Zelensky’s meeting with Karas and other neo-Nazi leaders in November 2019, Oleksiy Honcharuk—then the Prime Minister and deputy head of Zelensky’s presidential office—appeared on stage at a neo-Nazi concert organized by C14 figure and accused murderer Andriy Medvedko.
Zelensky’s Minister for Veterans Affairs not only attended the concert, which featured several antisemitic metal bands, she promoted the concert on Facebook.
Also in 2019, Zelensky defended Ukrainian footballer Roman Zolzulya against Spanish fans taunting him as a “Nazi.” Zolzulya had posed beside photos of the World War II-era Nazi collaborator Stepan Bandera and openly supported the Azov Battalion. Zelensky responded to the controversy by proclaiming that all of Ukraine backed Zolzulya, describing him as “not only a cool football player but a true patriot.”
In November 2021, one of Ukraine’s most prominent ultra-nationalist militiamen, Dmytro Yarosh, announced that he had been appointed as an advisor to the Commander-in-Chief of the Armed Forces of Ukraine, Valery Zaluzhny. Yarosh is an avowed follower of the Nazi collaborator Bandera who led Right Sector from 2013 to 2015, vowing to lead the “de-Russification” of Ukraine.
Ultra-nationalist militiaman Dmytro Yarosh (right) poses with Ukraine’s Commander-in-Chief of the Armed Forces, Valery Zaluzhny / credit: Facebook
A month later, as war with Russia drew closer, Zelensky awarded Right Sector commander Dmytro Kotsyubaylo the “Hero of Ukraine” commendation. Known as “Da Vinci,” Kosyubaylo keeps a pet wolf in his frontline base, and likes to joke to visiting reporters that his fighters “feed it the bones of Russian-speaking children.”
Ukrainian President Volodymyr Zelensky awarded Right Sector commander Dmytro Kotsyubaylo the “Hero of Ukraine” commendation on December 1 / credit: Focus.ua
Ukrainian President Volodymyr Zelensky awarded Right Sector commander Dmytro Kotsyubaylo the “Hero of Ukraine” commendation on December 1 / credit: Focus.ua
Ukrainian State-Backed Neo-Nazi Leader Flaunts Influence on the Eve of War with Russia
On February 5, only days before full-scale war with Russia erupted, Yevhen Karas of the neo-Nazi C14 delivered a stem-winding public address in Kiev intended to highlight the influence his organization and others like it enjoyed over Ukrainian politics.
Watch Yevhen Karas the leader of Ukraine’s neo-Nazi terror gang C14’s speech from Kiev earlier this month. Straight from the horses’ mouth, he dispels the many narratives pushed by the left, the mainstream media and the State Department. pic.twitter.com/VWJqWPUGUp
“LGBT and foreign embassies say ‘there were not many Nazis at Maidan, maybe about 10 percent of real ideological ones,’” Karas remarked. “If not for those eight percent [of neo-Nazis] the effectiveness [of the Maidan coup] would have dropped by 90 percent.”
The 2014 Maidan “Revolution of Dignity” would have been a “gay parade” if not for the instrumental role of neo-Nazis, he proclaimed.
Karas went on to opine that the West armed Ukrainian ultra-nationalists because “we have fun killing.” He also fantasized about the balkanization of Russia, declaring that it should be broken up into “five different” countries.
Yevhen Karas of neo-Nazi group, C14, pictured delivering the Nazi salute / credit: The Grayzone
“If We Get Killed… We Died Fighting a Holy War”
When Russian forces entered Ukraine this February 24, encircling the Ukrainian military in the east and driving towards Kiev, President Zelensky announced a national mobilization that included the release of criminals from prison, among them accused murderers wanted in Russia. He also blessed the distribution of arms to average citizens, and their training by battle-hardened paramilitaries like the Azov Battalion.
With fighting underway, Azov’s National Corps gathered hundreds of ordinary civilians, including grandmothers and children, to train in public squares and warehouses from Kharviv to Kiev to Lviv.
As US media celebrated average Ukrainian citizens taking up arms against Russian troops, the ultra-nationalist Azov Battalion’s National Corps published a propaganda video of its fighters training and passing out arms to residents of Kharkiv, transforming them into combatants. pic.twitter.com/RVL1nyWkfw
On February 27, the official Twitter account of the National Guard of Ukraine posted video of “Azov Fighters” greasing their bullets with pig fat to humiliate Russian Muslim fighters from Chechnya.
Azov fighters of the National Guard greased the bullets with lard against the Kadyrov orcs👊
Бійці Азова Нацгвардії змастили кулі салом проти кадировських орків👊
A day later, the Azov Battalion’s National Corps announced that the Azov Battalion’s Kharkiv Regional Police would begin using the city’s Regional State Administration building as a defense headquarters. Footage posted to Telegram the following day shows the Azov-occupied building being hit by a Russian airstrike.
Besides authorizing the release of hardcore criminals to join the battle against Russia, Zelensky has ordered all males of fighting age to remain in the country. Azov militants have proceeded to enforce the policy by brutalizing civilians attempting to flee from the fighting around Mariupol.
According to one Greek resident in Mariupol recently interviewed by a Greek news station, “When you try to leave you run the risk of running into a patrol of the Ukrainian fascists, the Azov Battalion,” he said, adding “they would kill me and are responsible for everything.”
Footage posted online appears to show uniformed members of a fascist Ukrainian militia in Mariupol violently pulling fleeing residents out of their vehicles at gunpoint.
BREAKING 💥 Ukrainian NAZI are preventing people from leaving Mariupol and are shooting at them.
Other video filmed at checkpoints around Mariupol showed Azov fighters shooting and killing civilians attempting to flee.
On March 1, Zelensky replaced the regional administrator of Odessa with Maksym Marchenko, a former commander of the extreme right Aidar Battalion, which has been accused of an array of war crimes in the Donbass region.
Meanwhile, as a massive convoy of Russian armored vehicles bore down on Kiev, Yehven Karas of the neo-Nazi C14 posted a video on YouTube from inside a vehicle presumably transporting fighters.
“If we get killed, it’s fucking great because it means we died fighting a holy war,” Karas exclaimed. ”If we survive, it’s going to be even fucking better! That’s why I don’t see a downside to this, only upside!”
Alex Rubinstein is an independent reporter on Substack. You can subscribe to get free articles from him delivered to your inbox here. If you want to support his journalism, which is never put behind a paywall, you can give a one-time donation to him through PayPal or sustain his reporting through Patreon. He can be followed on Twitter at @RealAlexRubi.
Max Blumenthal is the editor-in-chief of The Grayzone, as well as an award-winning journalist and the author of several books, including best-selling Republican Gomorrah, Goliath, The Fifty One Day War, andThe Management of Savagery. He has produced print articles for an array of publications, many video reports, and several documentaries, including Killing Gaza. Blumenthal founded The Grayzone in 2015 to shine a journalistic light on the United States’ state of perpetual war and its dangerous domestic repercussions. He can be followed on Twitter at @MaxBlumenthal.
On left, speakers at the Ukraine Recovery Conference held July 4-5 in Lugano, Switzerland. On right, Ukrainian President Volodomyr Zelensky / credit: Multipolarista
Editor’s Note: This article originally appeared in Multipolarista.
While the United States and Europe flood Ukraine with tens of billions of dollars of weapons, using it as an anti-Russian proxy and pouring fuel on the fire of a brutal war that is devastating the country, they are also making plans to essentially plunder its post-war economy.
Representatives of Western governments and corporations met in Switzerland this July to plan a series of harsh neoliberal policies to impose on post-war Ukraine, calling to cut labor laws, “open markets,” drop tariffs, deregulate industries, and “sell state-owned enterprises to private investors.”
Ukraine has been destabilized by violence since 2014, when a U.S.-sponsored coup d’etat overthrew its democratically elected government, setting off a civil war. That conflict dragged on until February 24, 2022, when Russia invaded the country, escalating into a new, even deadlier phase of the war.
The United States and European Union have sought to erase the history of foreign-sponsored civil war in Ukraine from 2014 to early 2022, acting as though the conflict began on February 24. But Washington had sent large sums of weapons to Ukraine and provided extensive military training and support over several years before Russia invaded.
Meanwhile, starting in 2017, representatives of Western governments and corporations quietly held annual conferences in which they discussed ways to profit from the civil war they were fueling in Ukraine.
In these meetings, Western political and business leaders outlined a series of aggressive right-wing reforms they hoped to impose on Ukraine, including widespread privatization of state-owned industries and deregulation of the economy.
On July 4 and July 5, top officials from the United States, European Union, Britain, Japan, and South Korea met in Switzerland for a so-called “Ukraine Recovery Conference.” There, they planned Ukraine’s post-war reconstruction and performatively announced aid commitments—while salivating over a bonanza of potential contracts.
New NATO candidates Finland and Sweden committed to assure reconstruction in Lugansk, roughly 48 hours after Russia and separatist forces announced the region had fallen fully under their control.
But the Ukraine Recovery Conference was not new. It had been renamed to save the expense of a new acronym. In the previous five years, the group and its annual meetings were instead referred to as the “Ukraine Reform Conference” (URC).
The URC’s agenda was explicitly focused on imposing political changes on the country—namely, “strengthening the market economy“, “decentralization, privatization, reform of state-owned enterprises, land reform, state administration reform,” and “Euro-Atlantic integration.”
Before 2022, this gathering had nothing to do with aid – and a lot to do with economics.
Documents from the 2018 Ukraine Reform Conference emphasized the importance of privatizing most of Ukraine’s remaining public sector, stating that the “ultimate goal of the reform is to sell state-owned enterprises to private investors”, along with calls for more “privatization, deregulation, energy reform, tax and customs reform.”
Lamenting that the “government is Ukraine’s largest asset holder,” the report stated, “Reform in privatization and SOEs has been long awaited, as this sector of the Ukrainian economy has remained largely unchanged since 1991.”
The Ukraine Reform Conference listed as one of its “achievements” the adoption of a law in January 2018 titled “On Privatization of State and Municipal Property,” which it noted “simplifies the procedure of privatization.”
While the URC enthusiastically pushed for these neoliberal reforms, it acknowledged that they were very unpopular among actual Ukrainians. A poll found that just 12.4 percent supported privatization of state-owned enterprises (SOE), whereas 49.9 percent opposed it. (An additional 12 percent were indifferent, whereas 25.7 percent had no answer.)
Economic liberalization in Ukraine since Russia’s February invasion has been even more grim.
In March 2022, the Ukrainian parliament adopted emergency legislation allowing employers to suspend collective agreements. Then in May, it passed a permanent reform package effectively exempting the vast majority of Ukrainian workers (those at businesses with fewer than 200 employees) from Ukrainian labor law.
While the most immediate beneficiaries of these changes will be Ukrainian employers, Western governments have been lobbying to liberalize Ukraine’s labor laws for years.
Documents leaked in 2021 showed that the British government coached Ukrainian officials on how to convince a recalcitrant public to give up workers’ rights and implement anti-union policies. Training materials lamented that popular opinion towards the proposed reforms was overwhelmingly negative, but provided messaging strategies to mislead Ukrainians into supporting them.
West Calls for Aggressive Neoliberal Reforms at ‘Ukraine Recovery Conference’
The July 2022 Ukraine Recovery Conference, which was held by Lugano, Switzerland and jointly hosted by the Swiss and Ukrainian governments, featured representatives from the following states and institutions:
Albania
Australia
Austria
Belgium
Canada
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Ireland
Iceland
Israel
Italy
Japan
Latvia
Lithuania
Liechtenstein
Luxembourg
Malta
Netherlands
North Macedonia
Norway
Poland
Portugal
Republic of Korea (popularly known as South Korea)
Romania
Slovak Republic
Slovenia
Spain
Sweden
Switzerland
Türkiye (formerly known as Turkey)
Ukraine
United Kingdom
United States of America
Council of Europe
European Bank for Reconstruction and Development
European Commission
European Investment Bank
Organisation for Economic Cooperation and Development (OECD)
Among the prominent officials who attended were European Commission President Ursula Von der Leyen, Swiss President Ignazio Cassis, and UK Foreign Minister Liz Truss.
Ukraine’s Western-backed leader Volodymyr Zelensky also addressed the conference via video.
Physically present at the Switzerland meeting were Ukrainian Prime Minister Denys Shmyhal and Zelensky’s top political ally Ruslan Stefanchuk, the chairman of Ukraine’s parliament, the Verkhovna Rada.
Stefanchuk is the second-in-line for the presidency after Zelensky. He is also a member of Ukraine’s all-powerful National Security and Defense Council, which truly governs the country.
From left to right: Ukrainian Prime Minister Denys Shmyhal, Swiss President Ignazio Cassis, European Commission President Ursula Von der Leyen, and Verkhovna Rada chairman Ruslan Stefanchuk at the Ukraine Recovery Conference in Switzerland on July 4, 2022
Even the United Nations gave its imprimatur to the conference: UN Secretary-General António Guterres delivered a video statement as well.
At the two-day meeting, the attendees agreed that Ukraine should eventually be given membership in the European Union. The country had already been granted EU candidate status just two weeks before, at a June summit in Brussels.
At the conclusion of the meeting, all governments and institutions present endorsed a joint statement called the Lugano Declaration. This declaration was supplemented by a “National Recovery Plan,” which was in turn prepared by a “National Recovery Council” established by the Ukrainian government.
This plan advocated for an array of neoliberal reforms, including “privatization of non critical enterprises” and “finalization of corporatization of SOEs” (state-owned enterprises) – identifying as an example the selling off of Ukraine’s state-owned nuclear energy company EnergoAtom.
In order to “attract private capital into banking system,” the proposal likewise called for the “privatization of SOBs” (state-owned banks).
Seeking to increase “private investment and boost nationwide entrepreneurship,” the National Recovery Plan urged significant “deregulation” and proposed the creation of “‘catalyst projects’ to unlock private investment into priority sectors.”
In an explicit call for slashing labor protections, the document attacked the remaining pro-worker laws in Ukraine, some of which are a holdover of the Soviet era.
The National Recovery Plan complained of “outdated labor legislation leading to complicated hiring and firing process, regulation of overtime, etc.” As an example of this supposed “outdated labor legislation,” the Western-backed plan lamented that workers in Ukraine with one year of experience are granted a nine-week “notice period for redundancy dismissal,” compared to just four weeks in Poland and South Korea.
Neoliberal economic reforms proposed in Ukraine’s National Recovery Plan
In the same vein, the National Recovery Plan urged Ukraine to cut taxes on corporations and wealthy capitalists.
The blueprint complained that 40 percent of Ukraine’s GDP comes from tax revenue, calling this a “rather high tax burden” compared to its model example of South Korea. It thus called to “transform tax service,” and “review potential for decreasing the share of tax revenue in GDP.”
In short, the Ukraine Recovery Conference’s economic proposal was little more than a repackaged Washington Consensus: a typical right-wing program that involves implementing mass privatizations, deregulating industries, gutting labor protections, cutting taxes on the rich, and putting the burden on Ukrainian workers.
In the 1990s, following the overthrow of the Soviet Union, the United States imposed what it called capitalist “shock therapy” on Russia and other former constituent republics.
A 2001 UNICEF study found that these harsh neoliberal reforms in Russia caused 3.2 million excess deaths, and pushed 18 million children into poverty, bringing about rampant malnutrition and public health crises.
Washington and Brussels appear committed to return to this very same neoliberal shock therapy in their plans for post-war Ukraine.
More Calls for Neoliberal Shock Therapy in Post-war Ukraine
To accompany its July 2022 meeting in Switzerland, the Ukraine Recovery Conference published a “strategic briefing” compiled by a right-wing Ukrainian organization called the Center of Economic Recovery.
The Center of Economic Recovery describes itself as a “platform that unites experts, think tanks, business, the public and government officials for the development of the country’s economy.” On its website, it lists many Ukrainian corporations as its partners and funders, making it clear that it acts as lobby on their behalf, like a chamber of commerce.
The report that this corporate lobby wrote for the Ukraine Recovery Conference was even more explicit than the National Recovery Plan in its advocacy of aggressive neoliberal economic reforms.
Using right-wing libertarian language of “economic freedom,” the document urged to “reduce government size” and “open markets.”
Its proposal read as neoliberal boilerplate: “decrease the regulatory burden on businesses” by “reducing the size of the government (tax administration, privatization; digitalization of public services), improving regulatory efficiency (deregulation), and opening markets (liberalization of capital markets; investment freedom).”
In the name of “EU integration and access to markets,” it likewise proposed “removal of tariffs and non-tariff non-technical barriers for all Ukrainian goods,” while simultaneously calling to “facilitate FDI [foreign direct investment] attraction to bring the largest international companies to Ukraine,” with “special investment incentives” for foreign corporations.
It was essentially a call for Ukraine to surrender its economic sovereignty to Western capital.
Both the National Recovery Plan and the strategic briefing also heavily emphasized the need for robust anti-corruption efforts in Ukraine.
Neither document acknowledged that fact that Kiev’s Western-backed leader Volodmyr Zelensky, who spoke at the Ukraine Recovery Conference, is known to have large amounts of wealth hidden in a network of offshare accounts.
Even More Calls for Liberalization, Privatizations, Deregulation, Tax Cuts
In addition to the National Recovery Plan and the strategic briefing, the July 2022 Ukraine Recovery Conference presented a report prepared by the company Economist Impact, a corporate consulting firm that is part of The Economist Group.
This third document, titled “Ukraine Reform Tracker,” was funded by the Swiss government with the stated “aim of stimulating and supporting discussion on this matter at the 2022 Ukraine Recovery Conference.”
The Ukraine Reform Tracker analyzed the neoliberal policies already imposed in Ukraine since the U.S.-backed 2014 coup, and urged for even more aggressive neoliberal reforms to be implemented when the war ends.
Of the three reports presented at the conference, this was perhaps the most full-throated call for Ukraine to adopt neoliberal shock therapy after the war – a tactic often referred to as disaster capitalism.
Quoting the Economist Intelligence Unit (EIU), the document insisted that Ukraine has “issues in deregulation and competition that still need to be addressed, such as ongoing state intervention” – depicting state intervention in the economy as something inherently bad.
In this vein, the Ukraine Reform Tracker pushed to “increase foreign direct investments” by international corporations, not invest resources in social programs for the Ukrainian people.
The report emphasized the importance of developing the financial sector and called for “removing excessive regulations” and tariffs.
“Deregulation and tax simplification has been further deepened,” it wrote approvingly, adding, “Steps towards deregulation and the simplification of the tax system are examples of measures which not only withstood the blow of the war but have been accelerated by it.”
The Ukraine Reform Tracker praised the central bank for “successfully liberalising the currency, floating the exchange rate.” While it noted some of these policies were reversed due to the Russian invasion, the report urged “the swiftest possible elimination of currency controls,” in order to “reinstate competitiveness within the financial sector.”
The report however complained that these neoliberal reforms are not being implemented quickly enough, writing, “Privatisation— which already progressed slowly before the war—stalled, with a draft law aiming to simplify the process rejected” by the Verkhovna Rada, Ukraine’s parliament.
It called for further “liberalising agriculture” to “attract foreign investment and encourage domestic entrepreneurship,” as well as “procedural simplifications,” to “make it easier for small and medium enterprises” to “expand by purchasing and investing in state-owned assets,” thereby “making it easier for foreign investors to enter the market post-conflict.”
“Further pursuing the privatisation of large and loss-making state-owned enterprises” will “allow more Ukrainian entrepreneurs to enter the market and thrive there in the post-war context,” the report urged.
The Economist Impact study stressed the importance of Ukraine cutting its trade with Russia and instead integrating its economy with Europe.
“Ukraine’s trade reforms centre on efforts to diversify its trade operations and enhance its integration into the EU market,” it wrote.
The Western government-sponsored report boasted of significantly reducing Kiev’s economic ties to its eastern neighbor, noting: “Russia was Ukraine’s main trading partner in 2014, capturing 18.2 percent of its exports and providing 22 percent of its imports. Since then, however, Russia’s share of Ukraine’s exports and imports has decreased consistently, reaching 4.9 percent and 8.4 percent in 2021, respectively.”
“Ukraine made particular progress in diversifying its trade portfolio within the EU, raising its trade volumes with member states by 46.2 percent from 2015 to 2019,” it added.
The report added that it is “essential” that Ukraine carry out other reforms, such as modifying its railways by “aligning the rail gauges with EU standards.”
The Ukraine Recovery Conference in Lugano, Switzerland on July 5, 2022
The Ukraine Reform Tracker presented the war as an opportunity to impose even more disaster capitalist policies.
“The post-war moment may present an opportunity to complete the difficult land reform by extending the right to purchase agricultural land to legal entities, including foreign ones,” the report stated.
“Opening the path for international capital to flow into Ukrainian agriculture will likely boost productivity across the sector, increasing its competitiveness in the EU market,” it added.
The document proposed new ways for exploiting Ukrainian labor in specific industries, “especially pharmaceutical and electrical production, plastic and rubber manufacturing, furniture, textiles, and food and agricultural products.”
“Once the war is over, the government will also need to consider substantially lowering the share of stateowned banks, with the privatisation of Privatbank, the country’s largest lender, and Oshchadbank, a large processor of pensions and social payments,” it insisted.
The Ukraine Reform Tracker concluded optimistically, stating that that “post-war moment will be an opportunity for Ukraine,” and “there is likely to be significant pressure to continue and speed up the implementation of the reform agenda. Continued business reforms could allow Ukraine to further deregulate [and] privatise lossmaking SOEs.”
While Pushing Disaster Capitalism, the Ukraine Recovery Conference Exploits ‘Social Justice’ Rhetoric
While these three documents published by the 2022 Ukraine Reform Conference (URC) were vociferous calls for the imposition of right-wing economic policies, they were accompanied by superficial appeals to social justice rhetoric.
The URC released a set of seven “Lugano Principles” that it identified as the keys to a just, equitable post-war reconstruction:
partnership
reform focus
transparency, accountability, and rule of law
democratic participation
multi-stakeholder engagement
gender equality and inclusion
(environmental) sustainability
These principles demonstrate the ways that hawks in Washington and Brussels have increasingly weaponized ideas about “intersectionality” to advance their belligerent foreign policy.
In his report “Woke Imperium: The Coming Confluence Between Social Justice and Neoconservatism,” former U.S. State Department officer Christopher Mott discussed the growing use of left-liberal social-justice talking points to legitimize and enforce Western imperialism.
Mott observed that the “liberal Atlanticist tendency to push moralism and social engineering globally has immense potential to create backlash.”
Western-backed liberals in post-socialist Europe have spent three decades creating a false dichotomy between either a liberalizing cultural project that can only be realized under U.S.-led trans-Atlantic hegemony and neoliberal economic reforms, or a purely fictional socialist past whose political legacy is somehow reflected in right-wing anti-communist nationalist parties attempting to roll back advances that women had achieved under socialism.
Despite its patent absurdity, this narrative has won adherents among younger liberal intellectuals, especially in Central and Eastern Europe, who have little or no memory of the socialist period, and who face increasingly desperate career prospects outside of the Western-backed ideological apparatus.
On the other hand, right-wing nationalists like Hungary’s Viktor Orban posture as the only defenders of their countries’ cultural sovereignty against hostile outsiders, while also refusing to break from neoliberal capitalist orthodoxy.
In turn, organic local activists struggling for legitimate social justice causes find themselves portrayed as agents furthering the agendas of foreign powers.
At best, during peacetime, this undermines their work and hinders progress for their causes. In a country like Ukraine, where Western governments have supportedfar-right, neo-fascist groups and eight years dragging out a civil war, this is life-threatening.
In Ukraine, What’s Even Left to Loot?
On May 9, 2022, the U.S. Congress passed the Ukraine Democracy Defense Lend-Lease Act, greatly expanding Washington’s authority to provide military aid to Ukraine.
Lend-lease provisions originated during World War II and were used by the U.S. government to provide military aid to countries fighting Nazi Germany, including Britain and the Soviet Union, without formally entering the war.
Under this framework, the United States provides military equipment as a loan; if the equipment is not or cannot be returned, recipient governments are on the hook to pay back the full cost.
The Joe Biden administration explained its use of lend-lease by the need to quickly move the bill through Congress before other funding ran out.
While many North Americans protested what they saw as a pointless giveaway of tens of billions of taxpayer dollars to a foreign country, lend-lease provisions are loans, not grants.
Britain, one of the United States’ closest allies, only finished paying back its 60-year-old lend-lease debt in 2006. Russia settled its former Soviet obligations the same year.
Given this historical precedent, Ukraine will likely be saddled with debts it can’t readily pay back—debts extended to corrupt Western-backed elites under wartime duress. This means U.S. financial institutions will have further collateral to impose neoliberal structural adjustment policies on Ukraine, subordinating its economy for years to come.
Washington and its allies have a long history of instrumentalizing debt to force countries to accept unpopular pro-Western policy changes, and difficulties of repayment often compel countries to accept even more debt, leading to debt trap cycles that are extremely difficult to escape.
It was in fact the International Monetary Fund, and specifically the refusal of Ukraine’s democratically elected President Viktor Yanukovych to accept IMF demands that he cut wages, slash social spending, and end gas subsidies in order to integrate with the EU, which led him to turn instead to Russia for an alternative economic agreement, thus setting the stage for the Western-backed “Euromaidan protests” and eventually the 2014 coup.
Meanwhile, in the current war, Moscow and Russian-backed separatist fighters are occupying and may annex what were historically the most industrialized regions of Ukraine, located in the east.
At the same time, much of what remained of the country’s pre-war industrial base has been physically destroyed by the war. And these same regions hold much of Ukraine’s energy resources, notably coal.
Millions of Ukrainians have already emigrated and are unlikely to return, especially if they are able to access work visas in the EU. Young and educated people with technical skills are the least likely to stay.
The situation is even bleaker when one considers that, well before Russia’s February invasion, Ukraine was already the poorest country in Europe.
While Soviet Ukraine had thrived as a center of the USSR’s heavy industry, and a source for much of Soviet political leadership, post-Soviet Ukraine has been a playground for rival elites supported by the West or by Russia.
Post-Soviet Ukraine has been devastated by persistent economic crises and rampant and systematic corruption. It has consistently had smaller incomes and a lower standard of living even compared to neighboring post-socialist countries, including Russia.
Ukraine has not been able to restore the size of the economy it had in 1990, when it was still part of the Soviet Union. And looking beyond raw GDP data, the quality of life for many Ukrainian workers and their access to social services has significantly declined.
With limited financial means to provide for basic state functions, much less to repay foreign debts, a post-war Ukraine could be forced to accept humiliating and dangerous concessions in other spheres—serving, say, as an Israel-style trying ground for weapons testing, or hosting Kosovo-style black sites for U.S. covert operations, or providing Western businesses a Chile-style no-regulation environment for tax evasion and criminal activities—all while gutting what little remains of its domestic welfare state and labor protections.
Yet instead of advocating for a diplomatic solution to the war, which could help the Ukrainian government and people concentrate their resources on economic recovery, Western governments have adamantly opposed proposed peace talks, insisting, in the words of EU foreign policy chief Josep Borrell, “This war will be won on the battlefield.”
Washington and Brussels are sacrificing Ukraine for their geopolitical interests. And their Ukraine Recovery Conference shows they expect to keep benefiting economically even after the war ends.
1. This war will be won on the battlefield. Additional €500 million from the #EPF are underway. Weapon deliveries will be tailored to Ukrainian needs. pic.twitter.com/Jgr61t9FfW
— Josep Borrell Fontelles (@JosepBorrellF) April 9, 2022
