Saturday, May 3, 2014

Neoliberalism and the tragedy in Ukraine

The chaos in Ukraine is almost totally the fault of the USA and its crazy economic ideas.  When the Soviet Union collapsed in 1991, we rushed in with some "elite" help to "restructure" their economy.  Unlike the 1940s when American expertise showed up in post-war Japan and Germany with actual help, the neoliberals who went to Russia subscribed to the same economic madness that had turned USA from a towering industrial power into the rust belt.  What they brought Russia (and Ukraine) was not only deindustrialization but the other manifestations of Predator Class economics such as financialization, debt, and rampant corruption.  USA taxpayers actually funded this advice from hell.  The Harvard Institute for International Development (HIID) got the main contract.  It was so corrupt it was shut down in 2000 by a thoroughly embarrassed Harvard.

Unfortunately, neoliberal corruption did more than shame Harvard—it lead to the early deaths of millions of citizens of the former Soviet Union.  Putin stopped the downward spiral in Russia but nothing has arrested the plunging fortunes in Ukraine.  Of course, Russia's stabilized economy has more to do with $100+ / barrel for oil than anything Putin has pulled off.  There's still WAY too much corruption in Russia.  Without oil, Russia would probably be at least as miserable as Ukraine.  But the difference is so stark, the folks in Crimea voted at 95% levels to get out of the economic nightmare that is Ukraine.  There were other issues in Crimea, of course, but the economy was the trump card.

Putin is a long way from being a saint—or even Olaf Palme.  But compared to the rest of the 20th-century Russian leaders, he's remarkably enlightened.  Of course, this is not a high bar—Nicholas II, Stalin, Brezhnev anyone?  After the brutality of WW II, there aren't a lot of pacifists left in Russia.  You try to explain to people who absorbed a real Nazi invasion that you don't need to be tough and cruel once in a while.  The wild-west chaos that came with neoliberalism needed a tough guy to restore the peace.  It is telling that Putin is now wildly popular at home.  My guess is that most of the criticism he faces these days is from people who want him to be even tougher.

Smoke and Mirrors: The Roots of Russian Revanchism

Chris Floyd | May 2, 2014

The Shock Doctrine vultures are coming home to roost. The intensifying crisis in Ukraine is one of the many malign, long-reverberating consequences of the West's decision to bludgeon Russia when it was reeling from the crack-up of the Soviet Union. Instead of giving the country breathing space, helping it find its way from the shattered socialist past toward its own new forms of civic life and economic organization, the West rushed to impose a brutal "market fundamentalism": the now-familiar horror show of "austerity," privatization, ruinous debt, plunging life expectancy, and rising infant mortality -- the pitiless devouring of the common good by crony capitalism.

This dish was served up by willing Russian stooges -- dazed patsies like Boris Yeltsin and the wild-eyed market zealots, converts to "Chicago School" economics, who filled his first government and tried, in the space of a few months, to transform a land that had never known capitalism (except in a few slivers of the economy, for a few decades, a century before) into the wet dream of Margaret Thatcher and Milton Friedman. The country was turned over to gangsters and hucksters, and to murky operators in the bowels of the security apparat. These were adherents of a different "Chicago School" -- the school of Al Capone.

I lived in Moscow when the Shock Doctrine was reaching its full fury. Murder was rampant: high-flying businessmen were gunned down on the steps of the metro, reporters investigating corruption were blown up in their newspaper offices. Used car salesmen became nation-straddling oligarchs; nuclear engineers and factory managers became drivers and janitors for Western-owned businesses. Ordinary people in threadbare clothes lined the streets and train stations, hawking their few private possessions and family mementos for ever-more worthless rubles. Homeless children -- the besprizorniki -- roamed the city, in packs or alone, abandoned, dirty, feral, scared. Drunks killed by rotgut turned up in the snow beneath gleaming billboards for Revlon and Marlboro. Casinos proliferated, while local bakeries and health clinics disappeared.

Meanwhile, in the Kremlin, the jihad of the market extremists raged on. With the encouragement of Western governments and the assistance of Western privateers and consultants, the government "auctioned" off a trillion dollars’ worth of public assets to oligarchs and insiders -- for $5 billion. Much of this money -- up to $350 billion from 1992-2001 -- was stripped from the country in capital flight and parked safely and profitably in Western financial firms. It was the greatest fire sale in human history.

The death toll of the first 10 years of "demokratsia" in Russia is astounding: an in-depth study published in the British Medical Journal found that "an extra 2.5 million to 3 million Russian adults died in middle age in the period 1992-2001 than would have been expected based on 1991 mortality rates." Up to 3 million unnecessary deaths -- as many as were killed in the Vietnam War.

It's no wonder that while I was there, in the mid-1990s, the general public had already come to regard "demokratsia" as a dirty word, synonymous with the endemic corruption, ruin and violence that the Western-backed elites had visited upon the country. This cynicism was confirmed by the election of 1996 -- my last hurrah in Moscow -- when a half-dead Yeltsin, supported vigorously by the West, miraculously overcame a 2 percent popularity rating to win "re-election." The price of this pyrrhic victory was the final surrender of the state to the oligarchs and security apparatchiks who, along with their American campaign operatives, had engineered the outcome. Flush with victory, they proceeded to push the country into yet another major crash in 1998, when life expectancy rates plummeted to the lowest levels since the famine years of the 1930s.


The conflict in Ukraine has many causes -- not least the meddling of American apparatchiks and oligarchs to engineer the overthrow of the elected government and destabilize the region. But if Western governments find themselves puzzled by the motives and moves of the Russian regime that now vexes them, they need only look in the mirror, and it will all become clear. more

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