Tag: Ukraine

The 24th of February, 2022 marked the beginning of the full-scale Russian invasion of Ukraine. This is a disturbing continuation of NATO-Russian tensions in the 21st century – previously we have seen the Russo-Georgian War in 2008, the 2014 Euromaidan protests and the Revolution of Dignity, the subsequent annexation of Crimea and the occupation of Donetsk and Luhansk.

Even though I’m speaking from a Eastern European NATO country, I would like us not get sunk into the simplified mainstream narrative that NATO is “good” and Russia is “bad”. Statements that the war is caused by one “mad man” (Vladimir Putin) fulfilling personal ambitions are perhaps telling, but such psychologizations are no explanations. As painful as it is, we are dealing with human behavior and human behavior always happens because of material/physical reasons.

We cannot allow ourselves to consider the current events as a mere unfortunate sequence of events but rather we should see them as unavoidable given the socio-economic condition of western and Russian societies. I’ll try to demonstrate why.

Brief preliminaries

From the leftist point of view all wars are a disaster. The tragedy first and foremost is experienced by the people of Ukraine, both lives and cities being turned into rubble. Beyond the direct effects, any prospects for peace, equality or “green” politics fade away.

While the active belligerents in the war are Russia and Ukraine, the conflict may be seen as the collision of interests of two major blocks of capital – Russian and Western. I believe the economic dimension bears the most clarity on the situation, after all:

War is a racket.

Smedley Butler (1935)

Let’s take a closer look at the warring sides:

Russia

I would like to visit some comments from Thomas Piketty and Naomi Klein regarding Russia’s socio-economic and political condition. One will find that the country is in a rather miserable state – the political dimension is under the hands of a oligarchic dictatorship, huge resources are spent on militarisation and the security apparatus while Russian society experiences deep income/wealth inequalities, rampant alcoholism, an HIV epidemic etc.

Let’s begin with Piketty’s analysis of the inequality situation in Russia:

Today, the postcommunist societies of Russia, China, and to a certain extent Eastern Europe (despite their different historical trajectories) have become hypercapitalism’s staunchest allies. (p. 13)

The world’s largest fortunes have grown since 1980 at even faster rates than the world’s top incomes <..> Great fortunes grew extremely rapidly in all parts of the world: among the leading beneficiaries were Russian oligarchs, Mexican magnates, Chinese billionaires, Indonesian financiers, Saudi investors, Indian industrialists, European rentiers, and wealthy Americans. In the period 1980–2018, large fortunes grew at rates three to four times the growth rate of the global economy. Such phenomenal growth cannot continue indefinitely, unless one is prepared to believe that nearly all global wealth is destined to end up in the hands of billionaires. Nevertheless, the gap between top fortunes and the rest continued to grow even in the decade after the financial crisis of 2008 at virtually the same rate as in the two previous decades, which suggests that we may not yet have seen the end of a massive change in the structure of the world’s wealth. (p. 26)

After three-quarters of a century as a country that had abolished private property, Russia now stood out as the home of the new oligarchs of offshore wealth—that is, wealth held in opaque entities with headquarters in foreign tax havens: in the game of global tax evasion, Russia became a world leader. More generally, postcommunism in its Russian, Chinese, and East European variants has today become hypercapitalism’s best ally. It has also inspired a new kind of disillusionment, a pervasive doubt about the very possibility of a just economy, which encourages identitarian disengagement. (p. 419)

In contrast to the Soviet Union, a “society of petty thieves,” postcommunist Russia is a society of oligarchs engaged in grand larceny of public assets. (p. 431)

Thus, in less than ten years, from 1990 to 2000, postcommunist Russia went from being a country that had reduced monetary inequality to one of the lowest levels ever observed to being one of the most inegalitarian countries in the world.

The rapidity of postcommunist Russia’s transition from equality to inequality between 1990 and 2000—a transition without precedent anywhere else in the world according to the historical data in the WID.world database—attests to the uniqueness of Russia’s strategy for managing the transition from communism to capitalism. Whereas other communist countries such as China privatized in stages and preserved important elements of state control and a mixed economy (a gradualist strategy that one also finds in one form or another in Eastern Europe), Russia chose to inflict on itself the famous “shock therapy,” whose goal was to privatize nearly all public assets within a few years’ time by means of a “voucher” system (1991–1995). The idea was that Russian citizens would be given vouchers entitling them to become shareholders in a firm of their choosing. In practice, in a context of hyperinflation (prices rose by more than 2,500 percent in 1992) that left many workers and retirees with very low real incomes and forced thousands of the elderly and unemployed to sell their personal effects on the streets of Moscow while the government offered large blocks of stock on generous terms to selected individuals, what had to happen did happen. Many Russian firms, especially in the energy sector, soon fell into the hands of small groups of cunning shareholders who contrived to gain control of the vouchers of millions of Russians; within a short period of time these people became the country’s new “oligarchs.”

According to the classifications published by Forbes, Russia thus became within a few years the world leader in billionaires of all categories. In 1990, Russia quite logically had no billionaires, because all property was publicly owned. By the 2000s, the total wealth of Russian billionaires listed in Forbes amounted to 30–40 percent of the country’s national income, three or four times the level observed in the United States, Germany, France, and China. Also according to Forbes, the vast majority of these billionaires live in Russia, and they have done particularly well since Vladimir Putin came to power in the early 2000s. Note, moreover, that these figures do not include all the Russians who have accumulated not billions but merely tens or hundreds of millions of dollars; these Russians are far more numerous and more significant in macroeconomic terms. (p. 432)

Thomas Piketty (2020) – Capital And Ideology

Since the dissolution of the Soviet Union, Russia has experienced spectacular leaps of privatisation, where the well-known stratum of oligarchs appeared. Naomi Klein furthers these points speaking about events in the 1990s and notices how western interests were implicated:

In Russia, the referendum was widely seen as a propaganda exercise, and a failed one at that. The reality was that Yeltsin and Washington were still stuck with a parliament that had the constitutional right to do what it was doing: slowing down the shock therapy transformation. An intense pressure campaign began. Lawrence Summers, then U.S. Treasury undersecretary, warned that “the momentum for Russian reform must be reinvigorated and intensified to ensure sustained multilateral support.” The IMF got the message, and an unnamed official leaked to the press that a promised $1.5 billion loan was being rescinded because the IMF was “unhappy with Russia’s backtracking on reforms.” Pyotr Aven, the former Yeltsin minister, said, “The maniacal obsession of the IMF with budgetary and monetary policy, and its absolutely superficial and formal attitude to everything else . . . played not a small role in what happened. (p. 226)

A clear signal from Washington or the EU could have forced Yeltsin to engage in serious negotiations with the parliamentarians, but he received only encouragement. Finally, on the morning of October 4, 1993, Yeltsin fulfilled his long-prescribed destiny and became Russia’s very own Pinochet, unleashing a series of violent events with unmistakable echoes of the coup in Chile exactly twenty years earlier. In what was the third traumatic shock inflicted by Yeltsin on the Russian people, he ordered a reluctant army to storm the Russian White House, setting it on fire and leaving charred the very building he had built his reputation defending just two years earlier. Communism may have collapsed without the firing of a single shot, but Chicago-style capitalism, it turned out, required a great deal of gunfire to defend itself: Yeltsin called in five thousand soldiers, dozens of tanks and armored personnel carriers, helicopters and elite shock troops armed with automatic machine guns—all to defend Russia’s new capitalist economy from the grave threat of democracy. (p. 228)

But Russia wasn’t a repeat of Chile —it was Chile in reverse order: Pinochet staged a coup, dissolved the institutions of democracy and then imposed shock therapy; Yeltsin imposed shock therapy in a democracy, then could defend it only by dissolving democracy and staging a coup. Both scenarios earned enthusiastic support from the West. (p. 229)

When it was no longer possible to hide the failures of Russia’s shock therapy program, the spin turned to Russia’s “culture of corruption,” as well as speculation that Russians “aren’t ready” for genuine democracy because of their long history of authoritarianism. Washington’s think- tank economists hastily disavowed the Frankenstein economy they helped create in Russia, deriding it as “mafia capitalism”—supposedly a phenomenon peculiar to the Russian character. (p. 240)

Naomi Klein (2007) – The Shock Doctrine

All in all, Russia is a deeply unequal society – firstly politically but most importantly economically. Such unequal concentration of power never bodes well for citizens in the country and abroad.

Ukraine

Ukraine’s socio-economic fate following the fall of the Soviet Union was comparable to Russia. As is often the case for smaller countries, Ukraine with the rest of Eastern Europe is often discussed in the sphere of it’s dominating neighbor – Russia. The “Borderland” (literally Ukraine) is historically a heavily disputed and conflict ridden land. The local vocabulary attests to this:

To conclude our rapid schedule of the differences between the two peoples [Ukrainians and Russians], let us note that there has always been a certain animosity between them, as is often the case between Northerners and Southerners, and this has led them to give each other rather pejorative names like Katsapy (Russians) and sometimes Moscaly (Muscovites), and Khakly (Ukrainians).

Alexandre Skirda (2004, p. 9) – Nestor Makhno: Anarchy’s Cossack

Speaking more widely about nationalism in the 19th century:

A different sort of nationalism arose alongside and in opposition to this old variant, propagated from above both by old monarchies and by newer capitalist rulers. So Bismarck embraced a form of German nationalism; the Russian tsars tried to ‘Russify’ their Finnish, Ukrainian, Polish, and Turkic speaking subjects; the French upper classes attempted to direct people’s energies towards ‘revenge’ against Germany and enthusiasm for the conquest of North Africa and Indochina; and Britain’s rulers proclaimed their mission to ‘rule the waves’ and ‘civilise the natives’.

Chris Harman (1999, p. 400) – A Peoples History of the World

Returning to the economic aspect:

In some cases, such as the territories of the ex-Soviet Union and those countries in central Europe that submitted to neoliberal ‘shock therapy’, there have been catastrophic losses. During the 1990s, Russian per capita income declined at the rate of 3.5 per cent annually. A large proportion of the population fell into poverty, and male life expectancy declined by five years as a result. Ukraine’s experience was similar. Only Poland, which flouted IMF advice, showed any marked improvement.

David Harvey (2005, p. 153) – A Brief History of Neoliberalism

The background for conflict between Russian and Ukraine is economic and military divergence. Since at least 2014, Ukraine has been shifting towards the west and NATO. Without de jure joining, John Mearsheimer would even go so far as saying that de facto Ukraine was already a NATO member as there were military exercises in Ukraine with NATO troops prior to the 2022 war. Another interesting point made by Mearsheimer is regarding Ukraine as a border state. What if Canada or Mexico would make a perfectly legal agreement with China to bring weapons to US borders? Would it be taken lightly? The same can be applied in Ukraine and Russia.

Speaking about specific reasons for the current war, the following may be singled out:

• Russian naval base in Sevastopol, Crimea. As mentioned above, Ukraine was closing in on NATO membership. For Russia, having a naval base in a NATO country would be hardly possible.
• Oil reserves in Crimea and the Black Sea.
• Ukraine’s steppes and the famous black soil (chernozem) – Ukraine is a significant producer and exporter of wheat and other food products.
• Coal mines in the Donbas region.
• Shale gas reserves in the Donbas region.
• Forests in the territory of Ukraine.
• Nuclear power plants – among them – Zaporizhzhia which is the most powerful in Europe.
• Oil pipeline control.

The boiling point

To put the 21st century tensions into context, we may look back at the geopolitical situation a hundred years ago. Basically, the income and wealth inequalities – first of all in the Gulf Region, South Africa, Russia, the USA – are approaching the ones on the eve of World War I. The period called Belle Epoque (1870-1914) was marked by extreme levels of wealth concenration:

It was World War I that spelled the end of the so-called Belle Époque (1880–1914), which was belle only when compared with the explosion of violence that followed. In fact, it was belle primarily for those who owned property, especially if they were white males. If we do not radically transform the present economic system to make it less inegalitarian, more equitable, and more sustainable, xenophobic “populism” could well triumph at the ballot box and initiate changes that will destroy the global, hypercapitalist, digital economy that has dominated the world since 1990.

Thomas Piketty (2020, p. 9) – Capital And Ideology

One may note that before the Great War the Balkan region was called the geopolitical boiling pot – most famously depicted in the cartoon:

It would be naive to think that political and social issues in the Belle Epoque were not affected by wealth inequality. Given this context, imperialism, militarisation, nationalism and war seem inevitable.

In a similar vein, the western border region of Russia can be denoted as the the boiling point of our times. The current societal tensions and the Russian invasion of Ukraine should be understood as a consequence of income/wealth and power inequality. Even without Putin, the course of events would arguably be similar – as the Ukrainian presidential adviser Oleksiy Arestovych claims.

What does the future hold?

Turning our attention to future prospects, they should appear quite grim. In the context of vigorous spread of nationalistic rhetoric, increased military spending (e.g. 100 billion euro in Germany), widening public support in Finland and Sweden joining NATO, progressive political decisions, the ecological course and wealth redistribution does not seem upcoming.

Once again – behavior happens for a reason, including aggresive behavior. As I attempt to lay out in this post, conditions are ripe for that type of behavior. The times are worrying and without addressing fundamental economic problems we are speeding towards an abyss.