An interview with WBEZ on the one-sided view of economic reform.
Both the U.S. and the E.U. have pledged aid packages to help Ukraine’s new government stabilize the country’s economy. The IMF also has a team on the ground in Ukraine, currently analyzing the country’s debt crisis. They expect to make recommendations for reforms that are required for Ukraine to secure an IMF loan. But, not everyone agrees that austerity and cuts in wages and government subsidies are good for Ukraine. Michael Hudson, professor of economics at the University of Missouri-Kansas City and author of The Bubble and Beyond, weighs in on the debate.
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Russia, Crimea and the Consequences of NATO Policy
Russia’s incursion (invasion if you prefer) into Crimea, with prospects for movement into Eastern Ukraine, is the culmination of US/NATO policy since 1991.
The unraveling of the USSR and its Soviet bloc (the Warsaw Pact) dismantled the largest empire in modern history. Even more striking, it was the most peaceful dissolution of a major empire in history. The fact that an empire stretching over a dozen time zones that included hundreds of ethnic groups with concrete historical and contemporary grievances with each other broke up without a bloodbath is nothing short of a miraculous – and a reflection of the destruction of spirit and even of economic understanding that marked the distortions of Stalinism, neither capitalist nor socialist but a bureaucratic collectivism whose final stage proved to be kleptocracy.
Part of the reason that this went off with such little violence was due to the mutual desire of President George H.W. Bush and Mikhail Gorbachev to end the Cold War’s threat of Mutually Assured Destruction (MAD). Gorbachev for his part recognized that the Warsaw Pact nations needed to be let go, in order to free resources to build up a more middle class consumer economy. Demilitarization was to be achieved by disarmament, all the more remarkable in view of the largest human losses suffered in world history from military invasion had occurred just two generations earlier. Germany became the focus, pending its reunification in1990. It had invaded its neighbors every generation or so since the Franco-Prussian War of 1870. In World War II it laid waste to the USSR and left 25 million of its people dead. Other East European nations, including Romania (and, along with victims of Stalinist oppression, e.g., the Baltics and Ukrainians, welcomed the Nazis and fought against Russia). The NATO alliance thus remained the main threat that had held the Soviet Union together
So Russia had vital security concerns that could only be met by assurances that NATO would not move into the Warsaw Pact states, where so much Soviet blood had been shed in World War II. President George H. W. Bush (#41) made assurances that if the Soviets were to dissolve the Warsaw Pact, Russia must be assured that the NATO would not fill the vacuum. But his successor, Bill Clinton, broke this promise by quickly taking the former Warsaw Pact states into NATO, and then moved into territory formerly occupied and incorporated into the USSR with the Baltics.
It should have been foreseen – and probably was inevitable – that these new entrants wanted NATO, given their own experience with Soviet occupation. But the eagerness of a triumphalist United States to surround Russia militarily rather than disarm led Russian leaders to feel betrayed by the US breaking its word.
Russia today has watched covert attempts from the US State Department to the National Endowment for Democracy and other NGOs to break up their country as part of what is becoming a triumphalist global pattern. This threatens to remake their “near abroad” into a neoliberal periphery. Today’s confrontation has taken on an existential character for Russia since it saw NATO’s moves toward Georgia as cutting too close to the bone. The prospects of NATO assimilating Ukraine (Kiev) represents a seizure of Russia’s “heart”: the very ancestral home where Russia was founded and on which it repelled the fascist invasion in the Great Patriotic War–as it had a millennium earlier against the German Crusading Knights pledged to exterminate the Russian-Greek Orthodox population.
Most Russians never forgave Gorbachev for the deal he made with NATO. Russian diplomats have stated clearly that Ukraine is a line that cannot be crossed regarding potential NATO expansion. It is as if foreign agents worked in Texas to mobilize a violent ethnic minority to rejoin Mexico and then place a hostile military alliance on the US border.
The Crimea has been part of Russia for three hundred years. It is populated overwhelmingly by Russian speakers, who watch with alarm the rightwing nationalist violence in Kiev, all the more as many of its leaders are establishing symbolic and outright ideological ties with the old German Nazis. Viktor Yanunkovych was as much a crook as Ukraine’s previous kleptocratic leaders who wielded political power to rob the state and its public domain, neoliberal style. The Crimean population has reason to fear that their elected President was illegally deposed not for his kleptocracy, but as part of a regional and ethnic identity politics of the sort that the Americans are sponsoring throughout the world, from the Shite/Sunni split to similar splits in countries they seek to control. The only protection available is from Russia. That is the gift that Obama has given Putin, making him a defender of Ukraine rather than the aggressor.
Khrushchev’s drinking bout in 1954 when he turned Crimea over to Ukraine has caused a massive hangover. The West’s response to cure it with neoliberalism and NATO is not helping.
Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) and Trade, Development and Foreign Debt: A History of Theories of Polarization v. Convergence in the World Economy. His book summarizing his economic theories, The Bubble and Beyond, is now available. His latest book is Finance Capitalism and Its Discontents. He can be reached via his website, firstname.lastname@example.org.
Jeffrey Sommers is an associate professor of political economy at the University of Wisconsin-Milwaukee, and is visiting faculty at the Stockholm School of Economics in Riga. He is co-editor of the forthcoming book The Contradictions of Austerity. In addition to CounterPunch he also publishes in The Financial Times, The Guardian, TruthOut and routinely appears as an expert on global television programs. He can be reached at: Jeffrey.email@example.com.