Sunday, December 21, 2008

Alliance to the West Has Brought Nothing But Suffering To Ukraine's Economy

Once more, the new year brings the prospect of freezing cold and equally freezing apartments to the heart lands of Ukraine, just like it has almost yearly since the Oranges have taken power. Of course, unlike their Western owned and funded elites, the common Ukrainian will actually have to suffer through that cold and the increased price of gas that will finally follow.

Ukraine's economy has always been linked directly to Russia, always, since the collapse of the Soviet Union. This included not only trade but joint major manufacturing and technology projects. Ukraine's steel heavy economy is a major gas hog, sucking up the resource in great quantities, as all steel works require, but before the Oranges, it could always count on Russian gas to power it ahead. As well, the people of Ukraine, going back to when all lived under the same flag, from the Tsar through the Soviets, grew used to having a winter that was at least warm in their homes, just like their Russian brothers. This continued through the first decade of post Soviet rule.

Problems with gas are nothing new, but they have gotten markably worse since the Orange extremists took over. Back in 1992 and 1994, Russia cut the gas line to Ukraine, for non-payments. In both cases the West had backed the Ukrainian regimes, who however were wise enough to retract their anti-Russian positions. Things settled out.

Of course all this ended when Kuchma was removed and the DC/Brussels owned Oranges came to power. They spared little time making it clear that they were Russia's enemies, plain and simple, as they cuddled up to their Western owners. The funny thing of all this, of course, is that their Western owners some how figured that Russia would continue to cuddle the antagonist Oranges and their economy. That is right, dear reader, the DC Marxists and their drive for World Revolution was to be done on the cheap, with Russia, the target of their destruction, written in as paying for the comfort of enemy regimes. This is as stupid as having the Israelis pay and arm the Palestinians, which is of course what the West has made them do. Russia, though, is no small middle eastern state under the Saudi financed DC thumb. Thus Russia simply said no.

The faulty strategy of Ukraine's new Orange Socialists spared no time in tanking the Ukrainian economy. Under the pro-Russian Kuchma and Yanukovich, Ukraine's GDP grew 12.5% in 2004. The Oranges came to power in 2005 and instantly implemented 1. an IMF payback policy (Yushenko) and 2. a socialist populist economic policy of increased taxes (Yushenko & Timoshenko) and a doubled minimal wage and privatization review and nationalization/redistribution policy (Timoshenko). The anarchy this caused, in the market, dropped the GDP's growth rate to 2.5%. This was also the year of the first Ukrainian Orange oil shock, as the former Gas Queen, who made her billions on rather questionable transactions she oversaw in the 1990s, and her boss Yushenko decided not to pay Russia for its gas and refused to recognize the price increase Moscow pushed forward.

And why should Moscow not have pushed the price increase which drove Ukrainian gas from $90 to $160? This is still less than half the price that Europe paid. Ukraine accepted this with some protest about unfair leverage, even though they were allowed to raise their transit fees. Though Washington and Brussels brought about their revolution, they preferred not to pay for it. By mid spring of 2005, it quickly became evident what kind of regime was really in power, when Gazprom discovered that 7.5 billion cubic meters of Russian gas, stored in Ukraine, had "disappeared".

Talks broke down in November and December of 2005 as the new prices for the following year, $230, came up. It should be noted that it was at this point, that natural gas prices were sky rocketing, just like the Oranges' anti-Russian tirades. Even then, the price demanded was still much lower than that paid by Europe in general and Ukraine was still receiving a transit fee that rather off set the over all price. Prices were so off set that Ukrainian consumers paid less for Russian gas than Russian consumers, even as their government worked over time to bring NATO on to Russia's doorstep and destroy Russia's power in the Caucus and indeed to destroy Russia herself.

When Gazprom cut supplies to Ukraine in January 2006, President Yushenko's advice to his suffering people (he, I am sure, never suffered) was to stuff straw in their windows. That winter was a record cold and Ukraine's population of 47 million suffered more than three times the number of cold deaths then Russia's 145 million. It should of course be noted that none were Orange top dogs or their mid level sociopaths. Of course his government instantly started steeling Russian gas bound for Europe and blaming it on Russia.

Thus while Italy, Germany, Hungary, Austria and France suffered, Washington, London and Brussels did their best to spread their puppets' lies and shift the blame from their own shoulders to that of Russia. What, dear reader, did you, for a second think that they cared about the Germans, Italians or French? Hardly, realpolitik means sacrificing pawns and "old" Europe is nothing more than an Anglo-Marxist pawn to be used and bled as needed.

Luckily the governments of the victim nations did care about their people and pointed their fingers directly at Kiev. This in turn pushed the Oranges back to the table and finally settled out the price and ended the blatant thefts.

Ukraine's economy improved in 2006 and 2007, reaching a GDP growth of 5%, still a far cry from the 12.5% under the pro-Russian government. Furthermore, the increase was fueled by record steel prices which in 2008 saw a 100% price increase before plummeting and taking Ukraine as a whole with it. But we will get to that in a bit.

As for Ukraine's need for gas, it only grew. The Oranges were to busy being socialists and thieves to bother taking care of their people, not much different from Washington's other puppets in Georgia. Efficiency not only did not improve it actually grew worse.

When the end of 2007 rolled by, Ukraine's $1.3 billion debt to Gazprom came up. The Oranges bulked at actually having to pay their balance. Why pay your debts when the West will back you blindly? Things settled down and appeared to be worked out, but by 5 January 2008 the debt had grown to $1.5 billion and the Oranges were once again bulking at paying. This simmered until 3 March 2008 when supplies were again cut off as Ukraine refused to pay its 2008 gas debts. Two days later supplies were returned, as the disruption had major effects on the only real exports Ukraine has: steel. Steel mills can not afford to shut down their furnaces as smelter restart costs are very high.

It is now December 2008 and once again, the Oranges have brought Ukraine to a brink. This time, however, Ukraine is in the cross hairs of the 2008 Bank Panic and is facing a major depression. Its economy is in free fall with the currency devaluating over 80% and no reserves that were not already pilfered by the Oranges. As it stands, Ukraine owes Gazprom $2.4 billion and has offered to pay only $840 million, thus leaving over $1.5 billion in debt.

So what has alliance to the West brought our Ukrainian brothers and sisters? Well besides economic difficulties, cold winters, more socialism, endless elections, cultural and religious turmoil and Georgian embarrassments? Not much and that is the best Ukraine's people can hope for in 2009, at best. They should have learned from history what happened to their ancestors whenever the West came into Ukraine and the slavs of Rus were divided. It would seem that some lessons need relearning every generation or three.


serbdude said...

A pretty good read overall. I am concerned about one thing though. We can see that Belarus is prospering quite well with their socialism. So why do you associate socialism with those other bad things? Perhaps you prefer the unsustainable development model from which even Russia today is in a crisis of its own? If belarus's market socialism can be good, then it can be good in ukraine too. There is nothing wrong with turning around flawed privatizations that robbed the country and people of their resources. These are the only two good things that happened in Ukraine. However, this was very limited and social benefits decreased, not increased, as in reality there was no increase in socialism like you want to make us believe. Going towards the west means privatizing and going away from socialism. This is one of the key things that the Orange guys are about.

Matthew Saroff said...

I have to differ slightly, if just because everyone is suffering (Ruble devalued again today).

If you look at the collapses of various Warsaw Pact and FSU economies, the severity is not due to aligning with the west, but with aligning with what is called "Anglo-Saxon Capitalism", by the French.

The finance industry driven economy is imploding, and the worst hurt at this point is NATO member Iceland, whose banks bought into the model of completely unrestricted, and basically non-sensical, capital flows and phony capital gains from things like real estate.

The Czechs, who are most assuredly western looking, are doing fairly well compared to the Latvians, who are entering 3rd world nation status rapidly, because they have a large and competent manufacturing component to their economy.

They actually make stuff of value.

For the countries that have done particularly poorly, their boom was in real estate and construction: phony gains from unreal assets.

Stanislav said...

Serbdude-- belruss is prosperring because Russia is picking up their energy tabs. Now, I disagree with the "reforms" that were carried out in Russia, those were nothing but all out thefts, but a true market system where competition is controlled and monitored for a level playing field in the internal market, by the state, is the best solution.

Please do not mistake this with Free Trade, of which, I am against and which is a solid plank of the Marxists.

The problem with turning around the flawed privatization is
1. they waited to long and the markets accepted the privatization as stable and this caused a lot of panic.
2. They did not make a specific list or targets or even industries but Timoshenko opened it up to every single privatization for review...this scared off everyone as the market was no longer even a tad bit stable.

Ukraine's socialism did increase, with government controlled minimal wages (my cousin's husband had to close his factory when he had to double his pay by government decree and could not raise prices due to market conditions...he closed the factory and fired everyone...welcome to socialism's benefits) and by setting maximum prices on commodities. This last resulted shortages.

Example: meat in Ukraine became hard to come by because the low ceiling price of meat gave farmers no incentive to cull their livestock.

The West is very socialist, the US in particular even though it denies it. In America 1 in 3 peoples works directly for the government and if one is to count how many companies work directly for the government it becomes 1 in 2 workers who works for tax dollars.