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Ukraine regime change: A bad deal for the working class

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While much of the western media has focused on the political jostling between U.S., E.U., and Russia, there's been little coverage on the economic consequences of the current crisis for ordinary Ukrainians as well as those in Europe and the United States.

The interim government in Ukraine is currently negotiating a $15 billion IMF-bailout package. After the referendum that resulted in return of Crimea to Russia, the U.S. and E.U. have imposed sanctions in form of visa bans and asset freezes on some Russian and Ukrainian politicians. Below is a summary of what this means for the ordinary people in Ukraine, the E.U., and the U.S.

Ukraine

Following agreement signed with E.U. by the new unelected government in Kiev promising "economic reforms", Russia announced that Ukraine owes $20 billion, dating back to the Soviet era, in addition to $6 billion for the oil subsidies that it has been given. Russia said that Ukraine will no longer receive the lower subsidized price. So any money loaned by the IMF and the U.S. will be immediately owed to Russia. Once these subsidies for gas, education, and other necessities are taken away, life will become much more painful for the average Ukrainian.

Whether Russia or the kleptocrats now running Ukraine get the IMF money, one thing is clear -- none will go to the Ukrainian economy. The objective of IMF loans have always been to deindustrialize their target economy by privatizing whatever remains in the public domain. In case of Ukraine that means factories, prime grain-producing farmlands, public utilities, roads, and ports will be transferred to foreign ownership. As the new government won't be able to pay both its labor force and the Western banks, an already struggling working class will be forced to accept lower wages and cuts to pensions.

European Union

The right-wing party now in charge in Kiev has threatened Russia with not allowing it access to pipelines that carry Russian oil and gas to Europe via Ukrainian territory. This is not as much of a threat to Russia as it is  to Europe, as without energy resources European industry will suffer.  Russia has completed its pipeline to the Pacific Ocean and is shifting its trade towards China and other Shanghai Cooperation Organisation group as well as BRICS countries. So Europe has effectively supported a coup in Ukraine that goes against its own interests. Russia, on the other hand, will come out unscathed or perhaps even gain by turning east.

United States

The US will initially see a benefit to its energy industry if the crisis persists by exporting liquefied natural gas to Europe. But that will also lead to higher natural-gas prices for the American consumer, exacerbating an already struggling working class and as a consequence further undermining the competitiveness of American manufacturing. 

The U.S.-E.U. hatched regime change in Ukraine only benefits a very small minority on both sides of the Atlantic and is a lose-lose for the working masses in Ukraine, European Union, and the United States. 


 

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Daniel M Pourkesali is an Engineer with an Aerospace company in Northern Virginia specializing in development and manufacturing of flight dynamics, engineering and control systems.
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