Many of those protesting in Maidan Square in Kiev last February simply wanted a better life and a government that was concerned with bettering their condition rather than serving the interests of Ukrainian oligarchs and other well off Ukrainians.
Little did those protesters know that what they face is "shock therapy" to ensure that their economy is reformed so as to satisfy those who are owed money by the Ukraine and to make the country more attractive to EU and US capital. The conditions for receiving an IMF bailout will include slashing subsidies for heating gas, reduced pensions, and a devaluation of the currency that will make goods more expensive for the Ukrainian consumer.
The process of linking up with the IMF began within 10 days of formation of the interim government. Of course the proper cast of characters was needed. The acting Prime Minister Arseniy Yatsenyuk is the choice of the U.S. This is revealed in a leaked tape in which Victorial Nuland discuss among other things who should be the prime minister.
The choice of Yatsenyuk is discussed remarks by Vladimir Signorelli in a Forbes' magazine article by Vladimir Signorelli : “Recall the phone exchange between the Ukraine ambassador and Victoria Nuland (Assistant Secretary of State for European Affairs) that got leaked out, where she basically said ‘we want Yats in there.’ They like him because he’s pro Western,” says Vladimir Signorelli, president of boutique investment research firm Bretton Woods Research LLC in New Jersey. “Yatsenyuk is the the kind of technocrat you want if you want austerity, with the veneer of professionalism,” Signorelli said. “He’s the type of guy who can hobnob with the European elite. A Mario Monti type: unelected and willing to do the IMFs bidding,” he said. I include relevant parts of the Nuland conversation that includes seeing that "Yats" comes out on top. He did in the new government as Prime Minister.
Yatsenyuk has plenty of experience. He was Minister of the Economy from 2005 to 2008 and also chair of the parliament form 2007 to 2008. From 2003 to 2005 he was first vice-president of the National Bank of Ukraine and after the head left "Yats" was put in charge of the Bank. He wants the Ukraine to join the EU and have a visa-free regime with other EU countries. He also heads the Open Ukraine Foundation which works with artists, scholars, and community leaders to strengthen the development of Ukraine's reputation around the world. The Open Ukraine partners with the North Atlantic Treaty Organization (NATO) and the United States Department of State.
While the IMF plans promise to fight corruption there is no requirement that the billions go towards programs that provide jobs and services that would help the average Ukrainian: Nothing about upgrading the infrastructure or providing improved educational opportunities, better health care and other programs that might reduce some of Ukraine’s social pressures and make it a more viable nation.
The standard IMF measures will be directed not towards development but to reduce public spending, slash social programs, eliminate subsidies, devalue currency, raise taxes and impose more austerity if targets are not met. There is good reason why not much money will go to development. Most of the money loaned will go to pay the debts the Ukraine has already raked up. The Ukraine can expect that the IMF measures will lead to recession and contraction of the economy by about three per cent.
The IMF is impressed with the new interim government. This is not surprising since Yatsenyuk is determined to meet the IMF's terms: “The treasury is empty. We will do everything not to default. If we get the financial support from the IMF, the U.S., we will do it. I’m going to be the most unpopular prime minister in the history of my country,” he said. “But this is the only solution. I would never promise any kind of huge achievements. First and the most important issue is to stabilize the situation.”
Stabilizing the situation means chaining the Ukraine to western creditors: The rescue rope thrown to Kiev by the IMF and the European Union is in reality a ball and chain. Ukraine’s external debt, as documented by the World Bank, increased tenfold in ten years and exceeds 135 billion dollars. In interests alone, Ukraine must pay about 4.5 billion dollars a year. The new loans will only serve to increase the external debt thus obliging Kiev to “liberalize” its economy even more, by selling to corporations what remains to be privatized.
US President Barack Obama and Ukrainian Prime Minister Arseniy Yatsenyuk (L) speak during meetings in the Oval Office of the White House in Washington on March 12, 2014
Saul Loeb, AFP
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com