The Global Class War Is Getting Really Ugly

The economic war declared on Russia by the US and its NATO client-states is, on the surface, payback for Vladimir Putin's attack on Ukraine. But this intra-global war of oligarchs is at its very essence a war of rich against poor. It's all about which oligarchy gets to extract the natural resources of one of the poorest nations on earth.

The 2014 US-backed coup against Ukraine's democratically elected president, Victor Yanukovich. was a victory not just for NATO, but for the International Monetary Fund (IMF), whose historical core purpose is to "open up" distressed nation-states for looting ("investment") by multinational corporations. Yanukovich had to go, because he was reneging on his agreement to impose austerity on his constituents as the price for borrowing money from the global financial system. Even worse as far as "the West" was concerned, he thought that he could get a better financial deal from Putin.

 Among the conditions that the IMF had imposed upon Ukraine for loaning it billions of dollars was raising the retirement age of Ukrainians to 60. This may sound like a reasonable demand, until you consider that Ukraine ranks a dismal 99th in the world in terms of life expectancy, and that at the time of the coup, the average Ukrainian male would be dead by the age of 67. Raising the retirement age was tantamount to a massively cruel cut in benefits.

Even so, one year after the coup, the Ukrainian government was still balking at "reforming" its pension program and raising the retirement age. It already had complied with such  IMF loan conditions as drastically increasing domestic gas prices to consumers and reducing energy subsidies.

As economist Michael Hudson noted in 2014, the US-backed coup's ensuing austerity policies, administered by the US and the IMF, would not only turn Ukraine into another Greece or Spain, they'd make Ukraine (already being even poorer than Greece and Spain) "a lot more miserable":

 German Finance Minister Wolfgang Schaeuble told the press last month, with all the sensitivity of a Cliven Bundy or Los Angeles Clippers’ owner Donald Sterling, that Greece could serve as a model for Ukraine. This is like saying that the United States’ Great Depression could serve as a model for Ukraine.

But we don’t have to look to Greece or Spain to see the risks of signing on to a program of fiscal austerity and “reforms” run by the IMF and its European directors at this time. Ukraine has had its own experience not that long ago: in just 4 years from 1992-1996, Ukraine lost half of its GDP as the IMF and friends took the wrecking ball to both the Russian and Ukrainian economies . Ukraine’s economy didn’t start growing again until the 2000’s. For comparison, the worst years of the U.S. Great Depression (1929-1934) saw a real GDP loss of 36 percent.

Enter then-Vice President Joe Biden, the Obama administration's designated "point-man" for Ukraine, who brayed a year later that the austerity-driven Obama administration itself could also serve as an inspiration for Ukraine. 

 Much, actually over-much, has been made of Biden's putative task of "rooting out corruption" and punishing the "bad" oligarchs who had been looting Ukraine's treasury since the fall of the Soviet Union. (His son Hunter's own lucrative gig with a newly privatized energy sector in Ukraine was brushed off as working for a "good oligarch" who allegedly did not have a corrupt bone in his whole body.)

But when Biden showed up to give a hectoring speech to the Ukrainian Rada, or parliament, right before Christmas 2015, it was not only to inveigh against the ongoing corruption, it was also to demand that ordinary Ukrainians continue to bear the brunt of both the corruption and the predatory IMF debt.

Once Biden got through all the preliminaries, moving to soften up the the assembled politicians with the carrot of more financial aid, and the obligatory flattery for their allegiance to democracy, freedom, and human rights, he finally went full hit man and wielded his big stick: 

Yesterday I announced almost $190 million in new American assistance to help Ukraine fight corruption, strengthen the rule of law, implement critical reform, bolster civil society, advance energy security.  That brings our total of direct aid to almost $760 million in direct assistance, in addition to loan guarantees since this crisis broke out.  And that is not the end of what we're prepared to do if you keep moving. 

But for Ukraine to continue to make progress and to keep the support of the international community you have to do more, as well.  The big part of moving forward with your IMF program -- it requires difficult reforms.  And they are difficult.  Let me say parenthetically here, all the experts from our State Department and all the think tanks, and they come and tell you, that you know what you should do is you should deal with pensions.  You should deal with -- as if it’s easy to do.  Hell, we're having trouble in America dealing with it.  We're having trouble.  To vote to raise the pension age is to write your political obituary in many places. 

Don't misunderstand that those of us who serve in other democratic institutions don't understand how hard the conditions are, how difficult it is to cast some of the votes to meet the obligations committed to under the IMF.  It requires sacrifices that might not be politically expedient or popular.  But they're critical to putting Ukraine on the path to a future that is economically secure.  And I urge you to stay the course as hard as it is.  Ukraine needs a budget that’s consistent with your IMF commitments.

Anything else will jeopardize Ukraine’s hard-won progress and drive down support for Ukraine from the international community, which is always tenuous.  It’s always tenuous.  We keep pushing that support.

Whenever neoliberal politicians inflict their pain on the masses, they love to insist that it hurts them as much as it hurts you. They are altruistic enough to risk their own careers for you! After all somebody has to save you from yourselves.  And so with the class war, as with any kind of  war, they appeal to your patriotism, asking that you "share the sacrifice" with the rich, who are being ever so politely asked to pay a bit more in taxes. You then will feel so much better about waiting a few more years to collect your Social Security, just so long as Jeff Bezos and Elon Musk also have to pay reasonable capital gains taxes. Of course, despite all of this neoliberal posturing and gaslighting, the oligarchs eventually come out as the only winners. There are always a few useful idiots or bad cops like Joe Manchin or Mitch McConnell around to willingly take the blame.

So when Biden was so delicately urging Ukraine to raise its retirement age, or risk "losing the support of the international community," he was also implicitly bragging about the ultimately failed "Grand Bargain" with Republicans that he and Obama had pursued to raise both the Social Security and Medicare eligibility ages in the United States, thereby imposing a massive cut in lifetime benefits. Biden tried to paint his administration as a role model for the Rada, having been so politically courageous in its own pursuit of austerity for the masses of people. 

It was not for nothing that Obama had a plaque on his Oval Office desk reading "Hard Things Are Hard." 

To make the hard things less painful, the impending doom less noticeable or more akin to the proverbial frog boiling to death at a low temperature, Ukraine politicians have tried to salvage their own careers by raising the retirement age in six-month increments until 2025, while at the same time gradually increasing the work requirement years for people to qualify for a pension. 

Meanwhile, the Ukrainians are fleeing their country by the millions, and their current president is begging the "international community" for fighter jets, ammo and bulletproof vests. And Joe Biden's domestic approval rating and positive media coverage have gotten just the boost that you might expect. Because hard things and hard people are hard!

Meanwhile, the mainstream media is deep in the throes of one of its periodic fever dreams. This current one is even more intense and xenophobic than the pandemic of paranoia and jingoism that we witnessed after 9/11. As The Guardian newspaper, for just one example of the war hysteria afflicting us these days, gushed in its Sunday edition:

 Just as Biden’s empathy was seen as ideal for meeting the moment of the coronavirus pandemic, and just as his record of bipartisanship was thought to be well suited to healing America’s divisions, so his storied foreign policy experience and faith in multinational institutions appear to bode well for this test.

That is certainly the view of Democrats who believe that Biden, who at 79 lived every moment of the cold war, including its gnawing dread of nuclear annihilation, has risen to the occasion. Last month he authorised $350m of military equipment – the biggest such package in US history – to bolster Ukraine’s courageous fighters who have exceeded all expectations.

Who needs an adequate pension, and freedom from poverty, and cancellation of onerous IMF debt when you can be pawned in their game as a courageous freedom fighter?