By Lidiya Baglayenko
Translated from Russian by J.Hawk
The new Ukrainian government has been working for a year, but the standard of living not only has not grown, but instead it fell catastrophically.
According to the experts, one of the reasons for the critical state of Ukraine’s economy was the exaggeration of the role of EU Association Agreement.
Causes and Effects
“Those Ukrainians who gave in to the’pro-European’ media propaganda were hoping that the association would result in an unheard-of economic miracle, while in reality the agreement is humiliating to Ukraine, if one is to compare it to similar agreements signed by other countries,” says Ukrainian economist and political scientist Aleksandr Dudak. “It deprives Ukraine of the remnants of its political and economic sovereignty. Europe gets everything, Ukraine gets nothing. Ukraine opens its market without obtaining access to EU markets. Ukraine did not participate in the EU division of labor and at the same time it tore up the irreplaceable economic ties with the Eurasian Union.”
“According to the agreement, Ukraine must seek EU approval to participate in any international economic unions. It has no sources of economic aid other than IMF. Even that one cannot call help, not in legal or factual sense. The loss of economic ties had already caused a catastrophic drop in manufacturing, which was only exacerbated by the escalating war on the Donbass. This in turn reduced to the drop in exports, currency inflows, the collapse of the banking system and the currency market. The National Bank of Ukraine has no means of ensuring bank stability under these conditions.”
“Therefore they are introducing inappropriate limitations on the hard currency market which paralyzed both importers and exporters. The economy is supported by external forces and is in a zombie state—the patient cannot be revived, but its death is inconvenient to the West. But the association agreement also includes political and military aspects. They specify that Ukrainian armed forces are, in essence, subordinated to European security structures, but Ukrainian European integrators forgot about that.”
On the level of Senegal
The war, the collapse of the economy, the unprecedented inflation and devaluation mean that Ukrainians are no longer poor, but rather extremely poor.
“Monthly pensions are now only $36.50, while the minimum salary is $47. Keep in mind that, for example, the World Bank sets the poverty threshold at $1.25 per day. And this is not the end, since the hryvnya can still collapse even more.”
Today the average salary in Ukraine is about the same as in Nepal and Senegal, according to Aleksandr Okhrimenko, an economist. Therefore any talk that Ukraine is about to become an EU member is pure fantasy.
Ukraine has also set an anti-record of sorts: its overdue salaries now total 2.4 billion hryvnya. In other words, it tripled in only one year.
According to the economist Vsevolod Stepanyuk, today the country has no ability to pay those salaries, except perhaps by printing money. But that would mean a complete devaluation of the currency.
“As long as the government is playing political games instead of fixing the economy, incomes will continue to drop,” continues Okhrimenko. “It appears that by the end of 2015 Ukrainians will be happy to have a job at all. Because paying jobs will become harder to find.”
This is only the beginning
According to Okhrimenko, what we see now is not the end of the crisis or even the middle, but rather only the beginning.
“Next year even $50/month will seem like a good salary. Big plants are shutting down, by the summer that process will accelerate. After them the subcontractors will shut down. This is a prime example of a “Ruin”—both banks and enterprises simply vanish, and with them the country’s economy. Talk to people who trade on the bazars, and they’ll tell you they have no buyers! Even the bazar is dying! People buy only food and used goods.”
“Under the current conditions manufacturing will only continue to decrease,” economist Andrey Martynyuk agrees. “This means that people will have to be laid off or sent on unpaid leave, and the true unemployment will reach at least 20%.”
According to an international workforce portal “Headhunter Ukraina” director Ulyana Maslova, in this “falling” market businesses are firing PR managers, internal business trainers, advertising managers and drivers. The reductions in the financial business and the media had already begun, next in line are commerce and construction tied to mortgage financing.
Only one way out?
Ukraine is turning into an agrarian country which simply does not need so many workers. It means that people who think about the future are starting to think about leaving the country, says Aleksandr Dudchak.
“Poland is long been pursuing a project aimed at attracting the loyalty among Ukrainian youth. As the old saying goes, ‘if you want to conquer an enemy, raise his children’.” That’s why the Ottomans formed elite Janissary units out of children taken from the conquered nations.”
“Young Ukrainians have more opportunities and offers to receive education in Poland, Lithuania, Slovakia, Czech Republic,” says Dudchak. “In Poland alone the quota for Ukrainians is 20 thousand seats. Many young people are forced to leave for Poland in spite of propaganda. Who will be left in Ukraine? What future does this territory have after an entire generation of the most active and talented people leaves the country? At the same time Europe is in no hurry to open its borders and introduce visa-free travel which was the ‘carrot’ for the Ukrainian ‘donkey’ which lured many to the Maidan.”
Dudchak believes that it makes no sense to hope for investors to create jobs in Ukraine. “Big money likes quiet places, and it’s going to be a long time before Ukraine will be quiet. Ukraine will attract only those ‘investors who hope to buy up land and the remnants of industry on the cheap, in the hopes for the middle- and long-term perspective. Nobody is talking about new jobs. Unemployment will continue to grow.”
J.Hawk’s Comment: There is an alternative to leaving the country, namely joining Novorossia. One of the reasons why the Kiev junta is so determined to destroy Novorossia is that it presents an alternative to the “European choice” that is not only viable but, as time goes by, becomes more and more attractive.