April is the Cruelest Month: the Coming Austerity Measures and Elections in Ukraine

Photo Credit: REUTERS/Anatolii Stepanov
Photo Credit: REUTERS/Anatolii Stepanov

The International Monetary Fund has offered Ukraine a two-year bailout package of $18 billion in return for steep economic reforms. The long-term goal of the bailout package is to stabilize a Ukrainian economy that is running up expenses and moving toward a debt default. It is hoped that economic stability in Ukraine will lead to the political stability that can then ease Ukraine’s transition to democracy, and more importantly, away from Russia. By opening up to the IMF deal, Ukraine will signal to nations like the US and Japan that they are committed to restructuring their economy and are open to investment. For example, the United States Congress is working on a bill for $1 billion in aid to Ukraine as well as economic sanctions against Russia. The European Union has put $15 billion on the table. It total, Ukraine is in position to receive around $27 billion in aid.

The downside to these deals is that the enforced austerity measures will likely hurt the average Ukrainian citizen by increasing gas prices by 50% and inflating the currency, the hryvnia, by somewhere between 12% and 14%. Therefore, we may see the cost of living rise while the purchasing power of the hryvnia plummets. Ukraine’s interim Prime Minster Arseniy P. Yatsenyuk explained that there would be a minimum-wage freeze and an increase in taxes for Ukraine’s largest companies. All of this spells out hard times for Ukraine in the coming years. But consider the result if Ukraine were not to accept the austerity measures. As The New York Times reported, Yatsenyuk “told the Parliament on Thursday that the country was ‘on the brink of economic and financial bankruptcy’ and that gross domestic product could drop 10 percent this year unless urgent steps were taken in conjunction with the fund.” With such instability, Ukraine’s interim government would not have the time or the legitimacy to set up the proper institutions before the planned election in May.

Photo Credit: Genya Savilov/AFP/Getty Images
Photo Credit: Genya Savilov/AFP/Getty Images

The top candidates for the election include former Prime Minister Yulia V. Tymoshenko, billionaire businessman Petro Poroshenko, and Parliamentary leader as well as former professional boxer Vitali V. Klitscho. Tymoshenko, who was born in the industrial and Russian-leaning eastern Ukraine, has support from the western and central provinces. However, it is Poroshenko and Klitscho who lead in the polls. No matter the result in May, the next president of Ukraine is set to face a difficult transition in all aspects of society. Somehow, he or she must ease the pains of economic liberalization, consolidate political factions, and reign in nationalist as well as pro-Russian sentiments. International aid may help, but the real battle for Ukrainian independence must be fought from within. It is a fight to defeat the legacy of authoritarianism; a fight that Ukraine desperately needs to win.

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Dark Clouds Hanging Over the Black Sea

Putin’s admiration for the Olympic flame

The Olympics have always been about stories and narratives. Athletes in sports, both obscure and relevant, represent their countries and play out the story of their nation, whether it be powerhouse nations raking in the medals or the simple story of the Jamaican bobsled team. The ability to host the event is also a story of the rise of a nation and the ability to show either one’s might or newfound brilliance on the world stage. Back in October 2013, we looked at how the story of the Sochi Olympic games were unfolding at that time. With the Winter Olympics beginning shortly, it was time revisit our intrepid heroes and villains.

One view of the Olympics has been as a giant vanity project, allowing Vladimir Putin and the Kremlin to evict Russian citizens from their homes, crack down on NGOs, gay rights activists, and roughly anybody that disagrees with the egregious cost of these games. To this list, it has recently been added that athletes will not be allowed to speak their mind, such as their displeasure at the anti-gay propaganda laws in Russia. OIC chair Thomas Bach has already stated that, though there is freedom of speech, athletes that speak their mind around the Olympic events will face punishment. The head of the Russian Olympics, Dmitry Chernyshenko, even contradicted this, saying that the athletes would only be able to express themselves at a venue far from the Olympic venues.

Skyrocketing construction costs for the Winter Olympics in Sochi

Censorship is not the only issue plaguing the Olympics. Despite seven years to prepare, and the assurances that 97% of the venues and hotels are prepared, there have been a large amount of pictures and tweets from journalists showing half finished rooms. One hotel didn’t have a reception area while another hotel wasn’t even completed. Considering that these games cost $51 billion, $11 billion more than the Beijing Olympics, the amount of corruption and ineptitude is starting to show more and more over the media. One road has cost $8.6 million, more than the whole Winter Olympics in Vancouver in 2010. This raises the question of whether or not these games are worth it. Supposedly, the infrastructure will stay and benefit the residents of Sochi, along with increased tourism. However, Allen Sanderson and Samantha Edds explored the question of whether Olympics have an economic impact, which they found that there is no evidence to support that.

A last branch in this narrative is a concern for the security of the event. IOC chair Thomas Bach has emphasized that these games will be safe. This mostly has to do with the massive amount of security surrounding Sochi. Roughly 40,000 security forces have been sent to the region around Sochi to prevent atrocities from happening. They have also erected a “Ring of Steel” around Sochi, with checkpoints and anti-aircraft batteries, to aid in this security. Part of the paranoia surrounding the events is that terrorist leaders in Dagestan and Chechnya located only 400 miles away, such as Doku Umarov, have already stated that they are going to target the Olympic games. The other cause for concern is the bombing in December 2013 in Volgograd, something that is considered to be a decoy to drag resources away from Sochi and make it more vulnerable. The Russians have gone so far as to contract out 400 unarmed Cossacks for the duration of the Olympics.

Security around the Winter Olympics in Sochi

Despite the lack of attendance by some world leaders, the world’s games at the Olympics will continue. One of the questions that will be asked is how much all this negative press hangs over the Olympics. What will be the effects of this event after the torch has been extinguished? This is a tale with many twists and turns, with more anti-heroes than heroes. At the least, everybody will be watching Sochi to see how the story unfolds.

Phoenix Rising in the Euromaidan?

360 degrees of a protest at the Euromaidan.

From various recent photos, it could be presumed that Ukraine is consuming itself into a fiery maelstrom. However, the seeds for these protests lie in the recent past, starting with the Orange Revolution. In 2004, Viktor Yanukovich (show in red for clarity) was running against Viktor Yushchenko (shown in orange) for the presidency of Ukraine. Bizarrely, even before polls had started, Yushchenko had been poisoned with dioxin, leaving him pockmarked and scarred. This was very suspect considering that Yanukovich had a history of criminal activity through assault, battery, and robbery. The exit polls gave Yushchenko a margin of victory of 11% while the official results declared Yanukovich the victor by 3%, sparking massive protests in the street. After many months, threats of secession from the pro-Russia East of the country, and a re-run of the polls, Yushchenko won by 8 points and finally took office as the president of Ukraine. The political intrigue did not end with the Orange Revolution. Viktor Yanukovich was elected president in 2010, beating the populist opposition figure Yulia Tymoshenko, one of the leaders of the Orange Revolution, which the international community observed as free and fair. Shortly thereafter, Tymoshenko was arrested and convicted to seven years in prison and fined $190 million for supposedly signing a disadvantageous contract with Russia for natural gas when she was prime minister. There were more protests, though smaller in nature and mostly only Tymoshenko supporters.

The effects of the dioxin poisoning on Viktor Yushchenko.

Within this politically charged atmosphere, there was always a geopolitical divide between pro-Europe factions and pro-Russia factions. With the return of Vladimir Putin to the presidency in Russia, there has been a revival in the idea of a Eurasian Union. Having already lowered tariffs and customs duties, Russia, Kazakhstan, and Belarus aim to create an economic union similar to the European Union. Key to this Eurasian Union is Ukraine, as it is one of the biggest markets from the former Soviet Union. Russia is the destination for a quarter of Ukrainian exports. One of the main worries for Ukrainians is that a Eurasian Union will lead to a political union dominated by the Russia, as Putin has been seeking closer ties with the former states of the Soviet Union.

Through this whole background, Ukraine was slowly inching towards European integration. Under Yulia Tymoshenko, a EU-Ukraine Association Agenda was agreed upon in 2009. Yanukovich continued closer ties with the EU through negotiations to lift visa requirements and establish a free trade agreement with the EU. However, November 2013, the Ukrainian government decided to suspend agreement talks, sparking the largest protests in Kiev since the Orange Revolution. Shortly thereafter, Ukraine and Russia signed a treaty where Russia would buy $15 billion in Ukrainian bonds and supply natural gas at a reduced rate. This is widely considered to not only keep Ukraine in the Russian sphere of influence, but also to keep alive the dreams of the Eurasian Union. Russia has even tried to influence the Ukrainian economy by banning the import of Ukrainian chocolate.

Protesters in Kiev battle with police on the streets.

This has not set well with the Ukrainian people, especially those around Kiev. They have set up protests in Independence Square, now known as the Euromaidan, camping out there since November 2013. Protesters have barricaded themselves in government buildings, including the ministry of justice and Kiev city hall. The Ukrainian government passed a series of harsher restrictions on protests, known by protesters as the “dictatorship laws”, by a show of hands. These laws include such flagrant violations of civil rights and protests, such as trial in absentia and a blanket amnesty against those who commit crimes against the protesters, like the security and law enforcement officers. The law with the most far-reaching consequences is the law requiring non-governmental organizations accepting foreign funding to register as “foreign agents”, modeled on a similar law passed in Russia.

The Ukrainian parliament votes for restrictions on protest with a show of hands.

In Russia, the “foreign agents law” has been used to crack down on civil society organizations. The Golos Foundation, a civil society organization that helps monitor elections, has been fined $10,000, even after they stopped receiving funding from foreign sources. Amnesty International, Transparency international, charities, non-orthodox churches, and even a french language school have been raided by the Russian security forces trying to weed out “foreign agents”. The nature of the law has been to “stigmatize and discredit NGOs engaged in human rights, election monitoring, and other critical work”. In essence, the law has been used to stymie dissent from organizations promoting community-wide discourse. There is the fear that Yanukovich, with his his criminal history and suspected involvement with vote-rigging, could clamp down on civil society and harass organizations in a similar manner as they have in Russia. Luckily, the Ukrainian parliament repealed the anti-protest laws with near unanimity. However, as it’s shown in the past, the Russian bear is always waiting in the wings.

Russian Actions against Greenpeace International Part of a Familiar Trend

Last week, the CGP blog commented on the state of the CSO sector in Russia amidst the oncoming 2014 Winter Olympic Games in the country. The highly controversial interactions between the environmental group Greenpeace International and the Russian government in the past weeks align with the past grievances we reported on:

A Russian coastguard official points a knife at a Greenpeace International activist who tried to scale an oil platform owned by state-owned energy giant Gazprom (Source: Denis Sinyakov/Greenpeace).

30 people from 18 countries detained on the Greenpeace International ship “Arctic Sunrise” are awaiting trial on piracy charges and face up to 15 years in prison if convicted related to a September 18th  incident in which some of the activists tried to scale an oil rig in the Pechora Sea owned by the national oil-giant Gazprom. The activists may spend up to two months in pre-trial detention in a Murmansk jail awaiting the decision of Russian prosecutors. Greenpeace International director Kumi Naidoo called the seizure of the vessel and the arrest of its crew the worst “assault” on the environmental activist organization since one of its ships was bombed in 1985. The detained activists are reportedly being kept in “solitary confinement for 23 hours a day,” while others are held in “extremely cold cells.” Russian officials have called the protest “pure provocation” and an “encroachment on the sovereignty” of Russia.

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Putin’s Russia and the IOC’s Olympic Charter: A Golden Chance to Enforce Human Right Principles

The Kremlin is doing itself no favors in attracting negative attention and enflaming external critics in its preparations to host the 2014 Olympic and Paralympic Winter Games in Sochi. The appearance of democratic institutions, pseudo-elections, and elements of press freedom have created a democratic façade that has long masked the Putin authoritarian model.  But with all eyes now on the host country, a sporting event that was supposed showcase a modern and dynamic Russia has drawn international attention to the injustices of its crony capitalist system and provides an unforeseen opportunity for the International Olympic Committee (IOC) to meaningfully enforce the human rights principles embodied by the Olympic games.

At a price tag of over $50 billion, the Sochi 2014 Games will be the most expensive in history. The transformation of Sochi from a secluded winter resort on the Black Sea to an Olympic host city and premier winter sports destination also comes with dire social costs at the expense of migrant workers, an already tabooed population. Over 16,000 migrant workers from Central Asia, Ukraine, and Turkey are earning between $1.80-$2.60 an hour working on corrupt pet projects. Sochi residents have been forcefully evicted from their homes as Olympic venues are erected in their back yards.

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Just Another BRICS in the Wall

In 2001, Goldman Sachs analyst Jim O’Neill coined the term BRIC to loosely align a group of rapidly growing emerging economies in Brazil, Russia, India and China. In 2010 this group was expanded to also include South Africa, forming the acronym BRICS.

The economic clout and influence of BRICS nations is staggering. Collectively, the five BRICS nations account for 42% of world population, 20% of output, and nearly all of current growth in the global economy.’ And they are looking to capitalize on this collective influence. During the most recent BRICS summit, these countries met in South Africa to begin the unprecedented steps toward establishing BRICS institutions. Out of this, the measure that has garnered the most attention is their plan to form a new international Development Bank to rival the Western dominated IMF and World Bank. Funded by BRICS nations, the aim is to deliver infrastructure and aid to developing markets by bypassing traditional Western structures.

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A Growing Gazpro(m)blem

Russian energy giant Gazprom has a growing problem.  One of the most profitable corporations in the world sits in the cross hairs of a burgeoning shale gas boom that threatens its monopoly over European gas markets and Russian preeminence in energy geopolitics.  The advance of technology, economic success of natural gas development in the US and estimates of untapped gas reserves in Europe and elsewhere, could revolutionize the politics, and power, of energy.  Traditional energy politics has been dominated by a few exporters in oil rich countries (Saudi Arabia, Russia) and a host of import-dependent consumer nations. Suddenly, most EU countries have some degree of domestic shale gas reserves, and if allowed for commercial development, will increase global oil and gas supplies, diversify national energy policies, decrease the value of energy as a commodity, and thus reduce the influence of energy geopolitics.

“Right now, the only thing keeping the shale gas revolution from hitting Europe as it has in the US is technology: the shale reserves in Europe are on land that is more inaccessible, there is a lack of necessary infrastructure and fracking equipment, and protests against the environmental impact of fracking are more serious. But the biggest problem is Gazprom.” 

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