by Francis Lee for the Saker Blog

Victor Yanukovich was elected President of the Ukraine in 2010 narrowly defeating Yulia Timoshenko with 49% of votes cast to Timoshenko’s 45%. The Ukrainian Presidential term of office lasts for five years. Yanukovich’s Party, the Party of the Regions, together with its coalition partner the Communist Party of the Ukraine, also had a majority in the Ukrainian Parliament, with Mykola Azarov as Prime Minister. The membership of the EU was perhaps one of the more salient issues of the time and was the trigger for the ensuing upheavals.

Negotiations for Ukraine’s initial stage of eventual membership of the EU – the so-called Association Agreement – had been dragging on since 2011, but both Yanukovich and Azarov were favourably disposed to an eventual positive outcome, although the Communist part of the coalition were not.

This did not go down at all well in Moscow and Azarov attempted to assuage Russian misgivings by urging Russia ‘’to accept the reality of Ukraine signing the EU agreement’’. The commitment of Yanukovich was eventually tested to destruction since he was being pulled in two directions, by Russia on the one hand and by the EU on the other. For their part, the Russians offered the Ukraine a $15 billion loan, a discount on gas prices, and membership of the Customs Union of Russia, Kazakhstan, and Belarus. But the EU was having none of it. President of the European Commission Jose Manuel Barroso stated that the EU will not tolerate ‘a veto of a third country’ (Russia) in their negotiations on closer integration with Ukraine. This being the case Yanukovich was forced into a choice which would be certain to alienate and anger one of the powerful interested parties on its borders.

Negotiations continued on into 2013. Yanukovich was invited to sign the Association Agreement, but there were a number of conditions. The most significant of these were those concerning an IMF loan. But anything involving the IMF should have set the alarm bells ringing with regard to the intentions of western institutions vis-à-vis the future of the Ukraine. The conditionality clauses were very much in the tradition of the IMF. Their ‘Structural Adjustment Programmes’ had always been the scourge of the developing world and this offer pact was enough to scupper the EU deal. Prime Minister Azarov at the time stating that ‘’the issue which blocked the signature of the EU deal were the conditions proposed by the IMF loan being negotiated at the same time as the budget cuts and 40% increase in gas prices’’. This for a country already verging on bankruptcy. In store for the Ukraine was the usual neoliberal austerity package. Compliments of the IMF’s Structural Adjustment Policies (SAPs) this would involve the following set of prescriptions:

1. Balance of payments deficit reductions through currency devaluation = SAP

2. Budget deficit reduction through higher taxes and lower government spending, aka austerity = SAP

3. Restructuring foreign debts

4. Monetary policy to finance government deficits (loans from central bank – with strings) = SAP

5. Raising food prices to cut the burden of subsidies = SAP

6. Raising the price of public services = SAP

7. Cutting wages = SAP

8. Reducing domestic credit = SAP

9. ‘Reforming’ pensions = SAP. Marvelous word ‘Reforming’

10. Deregulation of labour market. = SAP aka smashing labour unions

Longer-term ‘structural adjustment’ policies usually include:

1. Liberalization of markets to guarantee a price mechanism = SAP

2. Privatization, or divestiture, of all or part of state-owned enterprises = SAP

3. Creating new financial institutions. Hedge Funds, Shadow Banks, Private Equity = SAP

4. Improving governance and fighting corruption – ?

5. Enhancing the rights of foreign investors vis-à-vis national laws = SAP

6. Focusing economic output on direct export and resource extraction = SAP. That is to say, the creation of a peripheral economy a raw material exporter.

7. Increasing the stability of investment (by supplementing foreign direct investment with the opening of domestic stock markets). Financialization of the host economy = SAP

Just what the doctor ordered, no! These policies have been tried everywhere and have failed abysmally. Little wonder Yanukovich took the Russian offer instead.

However, what seemed like a straightforward business decision was greeted with howls of anguish and gnashing of teeth as the Europhiles in Independence Square felt that their future had been taken from them. This was indeed to happen in due course (see below) but this was the outcome of accepting rather than rejecting the IMF package.


Immediately these facts became known the mass protest in Kiev took place and was on the world’s TV screens, with demonstrators waiving Ukrainian and EU flags. (Where they got these EU flags is a mystery to this day.) This seemed to be a mass popular protest and the demonstrators were to set up camps in Independence Square. But the carnival atmosphere was not to last. Ultra-nationalist groups (inveterate fascists) in the shape of Right Sector and Svoboda (1) began to emerge from the shadows and appear among the genuine moderate majority and joined in pitched battles with the Berkut (riot Police) on a daily basis which the opposition forces finally won. This was, according to the Guardian ‘newspaper’ a victory for democracy and peoples’ power. Well it might have started like this but it transmuted into something very different. Nobody should be in any doubt about the political complexion of these ultra-nationalist groups who went on to hold 6 portfolios in the new ‘government’ based in Kiev. Nor should anyone be in any doubt about both the overt and covert roles played by both the US and EU officials in the formation of the future interim government.

Throughout this period the EU and high-ranking US officials were openly engaged in Ukraine’s internal affairs. The US Ambassador, Geoffrey Pyatt, and the US Assistant Secretary of State for European and Eurasian Affairs, Victoria Nuland, were strolling around Independence Square reassuring the protestors that America stood behind them. Also basking in the political sunlight were US NGOs (such as the National Endowment for Democracy – NED – directly funded by the US Government) and (USAID). Also involved was the US Human Rights Watch (HRW) and not forgetting of course the ubiquitous Mr. Soros. Identified as GS in the leaked Open Society Foundation (OSF) documents, others involved in the Ukrainian coup in the planning, were the already named, US Ambassador Geoffrey Pyatt, along with the following: David Meale (Economic Counsellor to Pyatt, Lenny Benardo (Open Society Foundation – OSF) Yevhen Bystry (Executive Director International Renaissance Foundation – IRF) Oleksandr Sushko (Board Chair, IRF) Ivan Krastev (Chairman Centre for Liberal Studies, a Soros and US government-influenced operation in Sofia, Bulgaria) and Deff Barton (Director, US Agency for International Development AID – USAID – Ukraine). USAID is a conduit for the CIA.

Even right-wing thinkers such as George Freidman at Stratfor described these events as being ‘the most blatant coup in history.’

The new ‘government’ in Kiev was represented by a hotch-potch of oligarchs Kolomoiski, Akhmetof, Pinchuk, Poroshenko, et al, and petty fuhrers including Parubiy, Yarosh, Biletsky, from the Western Ukraine with their violent armed squadristi units terrorizing their opponents. The ultra-right Svoboda Party had a presence in the Ukrainian parliament (Rada). It is a neo-nazi, ultra-right, anti-Semitic, Russo phobic party with its base of support in the western Ukraine. The most important governmental post was handed to its fuhrer Andriy Parubiy who was appointed as Secretary of the Security and National Defence Committee, which supervised the defence ministry and the armed forces. The Parubiy appointment to such an important post should, alone, be cause for international outrage. He led the masked Right-Sector thugs who battled riot police in the Maidan in Kiev.

Like Svoboda, Right-Sector led by their own tin-pot fuhrer Dmitry Yarosh is an openly fascist, anti-semitic and anti-Russian organization. Most of the snipers and bomb-throwers in the crowds were connected with this group. Right Sector members had been participating in military training camps for the last 2 years or more in preparation for street activity of the kind witnessed in the Ukraine during the events in Independence Square in 2013-14. The Right Sector as can be seen by the appointment of Parubiy, is not in a position to control major appointments to the provisional government but he has succeeded in achieving his long-term goal of legalizing discrimination against Russians.

This discrimination took the forms of mass murder in the southern Black Sea port of Odessa when pro-Yanukovich supporters were attacked by fascist mobs and chased into a nearby building, a trade union HQ. The building was then set on fire and its exits blocked, the unfortunate people trapped inside were either burnt to death or, jumped out of the windows only to be clubbed to death when they landed. The practices of the political heirs of Bandera had apparently not been forgotten by the present generation. There is a video of the incident, but frankly, it was so horrific that I could only watch it once. These barbarians were described by Luke Harding of the Guardian as being ‘’an eccentric group of people with unpleasant right-wing views.’’ Yes, they were really nice chaps who got a little carried away! One week later with the open support of Washington and its European allies, the regime installed by Washington and Berlin in February’s fascist-led putsch then began extending its reign of terror against all popular resistance in Ukraine. That was the significance of the events in the major eastern Ukrainian sea-port city of Mariupol less than a week after the Odessa outrage.

After tanks, armoured personnel carriers and heavily armed troops were unleashed on unarmed civilians in the city, the Kiev regime claimed to have killed some 20 people. The Obama administration immediately blamed the violent repression on “pro-Russian separatists.’’

Poroshenko, ex-Finance Minister in Yanukovich’s government, was elected as President on 29 May and duly announced that “My first presidential trip will be to Donbass where armed pro-Russian rebels had declared the separatist Donetsk and Lugansk People’s Republics and control a large part of the region.’’ This was the beginning of the Anti-Terrorist Operation the ATO. However, things didn’t quite work out as planned. After 2 heavy defeats at Iloviask and Debaltsevo the Ukie army was stopped in its tracks and the situation has remained static to this day.

In the meantime the Ukraine has become the poorest nation in the whole of Europe. The economic and social ramifications of the 2014 coup were such that that the full weight of the neo-liberal economic policies were foisted on the Ukraine, courtesy of the IMF. This was already apparent in the early 80s, but the trend accelerated after the coup. The standard IMF/WTO Structural Adjustment Policies (SAPs) – see above – a package of ‘reforms’ and ‘fiscal consolidation’ (I just love these IMF euphemisms) consisted of cuts in government expenditure, accompanied by extensive liberalisation of product and labour markets, together with abandonment of exchange rate control and capital flows.

These policies along with political instability have had, among other things, a disastrous effect on population growth. Ukraine’s population was 52 million in 1992 and the decline started in that year. By 2016, this figure had fallen to 42.5 million, its 1960 figure, and was accelerated since the coup of 2014. The current Fertility rate stands at 1.3. Any figure less than 2 will mean a shrinking population. The death rate has also increased, along with mass migration with some 2 million Ukrainian guest workers decamping to Russia and Poland in search of work. This is a slow-motion demographic calamity.

This notwithstanding the largesse handed out by the Western powers through the instrumentality of the IMF as pointed out by Michael Hudson. ‘’The IMF in fact broke four of its rules by lending to Ukraine: These included (i) Not to lend to a country that has no visible means to pay back the loan (the “No More Argentinas” rule, adopted after the IMF’s disastrous 2001 loan to that country). (ii) Not to lend to a country that repudiates its debt to official creditors (the rule originally intended to enforce payment to U.S.-based institutions). (iii) Not to lend to a country at war – and indeed, destroying its export capacity and hence its balance-of-payments ability to pay back the loan. Finally (iv), not to lend to a country unlikely to impose the IMF’s austerity ‘conditionalities.’ Ukraine did agree to override democratic opposition and cut back pensions, but its junta proved too unstable to impose the austerity terms on which the IMF insisted.’’

Nothing better illustrated the monumental stupidity of a nation which subordinated economic common-sense to anti-Russian gestures and rhetorical bluster; this was visibly illustrated in the trade deal involving the import of European gas and South African coal to the exclusion of Russian gas and Donbass coal. In both cases, however, Ukraine was simply buying the same goods from Donbass and Russia but resold at a significantly higher price by South Africa and Europe simply acting as middle-men at a huge cost to the Ukrainian tax-payer. (2)

All of which illustrates the intractable political and economic debacle unfolding and goes some way to explaining the present impasse of a backward movement into under-development. Ukraine is becoming deindustrialised – not unlike the fate of many post-soviet nations – its trade with the Eurasian Economic Union (EEU) Russia-Belarus-Kazakhstan-Kyrgyzstan severed. This was formerly an exceptionally large and important export-import market, imports consisting of energy commodities coming from the EEU, and exports to the EEU consisting of Ukraine’s advanced industries in the east situated in Donetsk, Lugansk, Kharkov, Dnepropetrovsk, Zhaporizyha and Nikolayev oblasts. These exports consisting of machinery, equipment, aircraft, vessels, nuclear reactors and boilers, railway, tramway rolling stocks and inorganic chemicals.

‘’ … The machinery industry alone had an annual revenue of nearly US$20 billion and was responsible for employing 600,000 people in the southern and eastern oblasts. Not only would trade disruptions in the EEU devastate the southern and eastern economies, they would also lead to the deindustrialisation of the Ukraine, and this process has already started.’’ (3)

Ukraine is now the poorest country in Europe. And once the process of deindustrialisation starts, charting a way back will be exceedingly difficult, even with the best will in the world and with the necessary manpower, skills, and expertise to carry out such a transformation. Moreover, this imbecility is compounded by military expenditures including the costs of an army of 250,000 that is doing nothing other than getting drunk and occasionally shelling towns and villages – against International Law it might be added – on the front line in the Donbass. Ukraine’s defence expenditure stands at 3.7% of GDP compared with NATO’s 2% and most NATO countries don’t even reach 2%. For the poorest country in Europe this is frankly bizarre. If you wanted to run a country and its economy into the ground this is the way to do it.

It has been suggested that nothing short of a huge ‘Marshall Plan’ to reconfigure Ukraine’s economic composition, requiring massive investment if it is to replace its post-Soviet industry – which seems especially now that the industry heartlands of the Donbass have been severed from the Ukraine. Unsurprisingly, however, no-one is rushing to pick up the tab for this new ‘Marshall Plan’. Certainly not the EU, and even less so the Americans, who simply wanted yet another east European state (qua protectorate) to serve as a military base aimed at confronting Russia.

But now we may dispose of the customary patter of freedom and democracy together with the rest of the pseudo-rhetoric emanating from the usual sources. Fact: the entire Ukrainian imbroglio was essentially a matter of geopolitical realpolitik with the exalted rhetorical baggage being mere camouflage. US geopolitical strategy being predicated upon a hegemonic project to establish a system of dominance over the entire world. This desired outcome was nothing if not ambitious and is a common feature of all historically crackpot utopian schemes. This explains the US’s concurrent wars in the middle-east, the South China Sea, and in Europe – EUROCOM – with Ukraine as the spearhead. The object was initially to occupy western Europe through NATO and the EU, then spread this to eastern Europe, resulting in a de facto occupation and vassalisation of the European continent, with the role of the EU playing second string to its masters hegemonic requirements. This was the tawdry reality behind the initial euphoria of the short-lived settlement of 1991.

‘’It is pure hypocrisy to argue that the EU is now little more than an extended trading bloc after the Lisbon Treaty. It was institutionally now a core part of the Atlantic Security bloc (NATO) and had thus become geopolitical’’ (4)

In broader terms the Ukraine episode was part of a more general offensive against Putin in particular and Russia in general, and both were subjected to unrelenting demonization. With regard to Putin the venom was such that he was held personally responsible for the Skripal poisonings. That is to say a foreign head of a powerful state was accused of attempted murder of its citizens who resided in another state, the UK. Such unproven allegations between states seem unprecedented and alien to any type of mutual respect and diplomacy. For months the West has been demonizing Putin, it has almost become a national sport, with figures such as the Prince of Wales and Hilary Clinton comparing him with Hitler, oblivious to the fact that Putin had lost members of his own family during USSR’s Great Patriot war against Hitler’s legions. Such is the intellectual prowess, or more likely the lack of it, among the leading spokespersons of the West who combine ignorance in equal measure to arrogance. What set this crisis in motion were the recklessly provocative moves to absorb the Ukraine into the EU. Moreover, if the West’s offhand dismissal of Russia’s power concerns and the continued demonization of Putin continued, then Russia could well shift into a Cold War mode which would be a self-fulfilling prophecy come true.

Thus the contemporary decline of diplomacy reflects the didactic character of the liberal international order, which presumes that Russia is somehow an illegitimate interlocutor and parvenu and therefore its views can be discounted.

Coming full circle, the US relations with other states – particularly Russia and China – are best summarized in the Wolfowitz doctrine which bears repeating. As follows:

‘’Our first objective is to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly by the Soviet Union. This is a dominant consideration underlying the new regional defence strategy and requires that we endeavour to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to generate global power.’’ (5)

Thus peaceful coexistence has never really been part of the US foreign policy, only world domination. Episodes like Ukraine, Syria and the middle-east, the South China Sea, Africa and Afghanistan, Hong Kong, Taiwan and not to mention Latin America are all part of the playbook and have all followed a similar if not exact patterns of regime change and/or being dragooned into one-sided relationships, military, commercial or otherwise.

Whoever becomes the next US American President will not in any way mean a departure from the above geopolitical policies. If anything such policies will be even more rigorously pursued.


(1) These fascist militias had for some time been made ready for civil conflict against the Ukraine’s elected authorities. In 2012 I was travelling with my wife from Donetsk to a holiday resort in the Khmelnytskyi Oblast in the Western Ukraine. The train stopped at Dnipropetrovsk a major city half-way between. The train was boarded by a large group of young men; they looked like an amateur football team. My wife got talking to them and they described themselves as students. The strange thing was that there were no women or girls among them. Perhaps there were no female students in Ukraine; this seemed unlikely. Then the coin dropped: Right Sector had its main training camp at Dnipropetrovsk and these ‘students’ were going back to the west for the summer vacation. Two years later they were in all probability engaged in ‘political activities’ in Independence Square.



(4) Richard Sakwa – Frontline Ukraine – p.255)

(5) Paul Wolfowitz -Defence Planning Guidance for the 1994–99 fiscal years (dated February 18, 1992) published by US Under Secretary of Défense for Policy Paul Wolfowitz and his deputy Scooter Libby. Not intended for public release, it was leaked to the New York Times on March 7, 1992,  and sparked a public controversy about U.S. foreign and defence policy. The document was widely criticized as imperialist, as the document outlined a policy of unilateralism and pre-emptive military action to suppress potential threats from other nations and prevent ‘’dictatorships’’ from rising to superpower status.

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