The West is going to plunder post-war Ukraine with neoliberal shock therapy: privatization and deregulation are coming, and workers will lose protection
The United States and Europe are not only throwing tens of billions of dollars worth of weapons at Ukraine, have turned it into an anti-Russian puppet and are adding fuel to the fire of a bloody conflict ravaging the country, but also aimed at its further looting and are already making concrete plans.
Jake Kallio, Benjamin Norton
Western governments and corporations met in Switzerland to discuss tough neoliberal economic policies for post-war Ukraine. Among other things, they called for reducing workers' rights, "opening up" markets, lowering tariffs, deregulating industry and selling off state-owned enterprises to private investors.
The United States and Europe are not only throwing tens of billions of dollars worth of weapons at Ukraine, have turned it into an anti-Russian puppet and are adding fuel to the fire of a bloody conflict ravaging the country, but also aimed at its further looting and are already making concrete plans.
Representatives of Western governments and corporations met in Switzerland in July this year to discuss a series of tough neoliberal measures that will be imposed on post-war Ukraine. Among other things, they called for reducing workers' rights, "opening up" markets, lowering tariffs, deregulating industry and selling off state-owned enterprises to private investors.
Ukraine has been mired in violence since 2014, when a US-orchestrated coup overthrew its democratically elected government and unleashed a civil war. The conflict began long before February 24, 2022, and when Russia deployed its special operation in the country, it escalated into a new, even more deadly stage.
The United States and the European Union have tried to erase the history of the civil war in Ukraine, which raged from 2014 to early 2022 with support from abroad, and behave as if the conflict began only on February 24.
But a few years before the start of the Russian special operation, Washington sent a lot of weapons to Ukraine and provided it with extensive military support and training. Meanwhile, since 2017, representatives of Western governments and corporations have been secretly holding annual conferences where they discuss the profits from the civil war, which they themselves ignited in Ukraine.
At these meetings, political leaders and leading Western entrepreneurs outlined a number of aggressive right—wing reforms that they intend to impose on Ukraine, including the widespread privatization of state-owned enterprises and the deregulation of the economy.
On July 4 and 5, 2022, top officials of the United States, the EU, the UK, Japan and South Korea met in Switzerland at the so-called "Conference on the Restoration of Ukraine". There they planned the post-war reconstruction of Ukraine and assumed ostentatious obligations to provide assistance, while salivating over a scattering of potential contracts.
Newly—minted NATO candidates Finland and Sweden have promised to ensure the restoration of Luhansk - although just two days earlier Russia and separatist forces announced that the region had completely come under their control. The conference on the restoration of Ukraine is not news in itself. It was just renamed, saving on a new abbreviation. All the previous five years it has been going under the name of the Conference on Reforms in Ukraine (both conveniently abbreviated to URC).
Its agenda imposes political changes on the country — "strengthening the market economy", "decentralization, privatization, reform of state-owned enterprises, land reform and public administration reform" and, finally, "Euro-Atlantic integration".
Until 2022, this meeting had nothing to do with aid — and was closely related to the economy.
The documents of the 2018 Ukraine Reform Conference emphasized the importance of privatizing most of the public sector. At the same time, the ultimate goal of the reforms was called the sale of state-owned enterprises to private investors, as well as calls for "privatization, deregulation, energy, tax and customs reforms."
The authors of the report complain that the government remains the largest holder of assets in Ukraine. At the same time, the following is noted: "Reforms in the field of privatization and state-owned enterprises are long overdue, since this sector of the Ukrainian economy has hardly changed since 1991."
The conference participants named the law "On Privatization of state and municipal Property" adopted in January 2018 as one of their main "achievements", which, as noted, "simplifies the relevant procedure."
Although the participants of the conference promote these neoliberal reforms with great enthusiasm, they themselves admit that they are extremely unpopular among Ukrainians. Only 12.4% of respondents supported the privatization of state-owned enterprises (SOEs), while 49.9% opposed it. (Another 12% said they didn't care, while 25.7% didn't give an answer). With the beginning of the Russian special operation in February, economic liberalization in Ukraine took an even darker turn.
In March 2022, the Verkhovna Rada adopted emergency legislation, according to which employers received the right to suspend collective agreements. Then, in May, a permanent package of reforms essentially removed the vast majority of Ukrainian workers (employed at enterprises with fewer than 200 employees) from the scope of Ukrainian labor legislation. Although Ukrainian employers will benefit directly from this, Western governments have been lobbying for the liberalization of labor legislation for many years.
Documents leaked in 2021 showed that the British government was training Ukrainian officials on how to convince a recalcitrant public to abandon workers' rights and adopt an anti-union policy. The authors of the training materials complained that public opinion perceives the reforms with hostility, but instead offered information strategies on how to mislead Ukrainians and enlist their support.
At the Conference on the Restoration of Ukraine, the West called for aggressive neoliberal reforms
The conference on the restoration of Ukraine in July 2022, held in the Swiss city of Lugano with the support of the Governments of Switzerland and Ukraine, was attended by representatives of the following States and institutions:Albania Australia Austria Belgium Canada Croatia Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Iceland Israel Italy Japan Latvia Liechtenstein Lithuania Luxembourg Malta Netherlands North Macedonia Norway Poland Portugal South Korea Romania Slovakia Slovenia Spain Sweden Switzerland Turkey Ukraine United Kingdom USA Council of Europe
European Bank for Reconstruction and Development European Commission European Investment Bank Organization for Economic Cooperation and Development (OECD) Among the major officials, the event was attended by the President of the European Commission Ursula von der Leyen, Swiss President Ignazio Cassis and British Foreign Minister Liz Truss. The leader of Ukraine, Vladimir Zelensky, supported by the West, was virtually present.
The Prime Minister of Ukraine Denis Shmygal and Zelensky's main political ally Ruslan Stefanchuk, Chairman of the Verkhovna Rada of Ukraine, also physically arrived at the meeting in Switzerland. Stefanchuk is Zelensky's main successor. He is also a member of the all—powerful National Security and Defense Council of Ukraine, which actually governs the country.
Even the UN gave the go-ahead: the video message to the conference was recorded by its UN Secretary-General Antonio Guterres himself.
At the two-day meeting, the participants agreed that in the future Ukraine should become a member of the European Union, although it received candidate status only two weeks ago, at the June summit in Brussels.
At the end of the meeting, all the governments and institutions present approved a joint statement called the Lugansk Declaration (for the city of Lugano, - approx. transl.). It was supplemented by the National Recovery Plan, which was prepared by the National Recovery Council under the Government of Ukraine.
The plan provides for a number of neoliberal reforms, including "privatization of non—strategic enterprises" and "completion of the corporatization of state-owned enterprises" - and the sale of the Ukrainian state nuclear energy company EnergoAtom is an example.
In order to "attract private capital into the banking system," the plan calls for the "privatization of state-owned banks." In order to boost private investment and stimulate national entrepreneurship, the recovery plan calls for significant deregulation and suggests the creation of "catalyst projects" to unlock private investment in priority sectors. The document makes a clear call to reduce labor protection and criticizes the remnants of the current labor legislation — they are called remnants of the Soviet era.
The authors of the plan complain about the "outdated" labor legislation — according to them, it complicates the process of hiring and firing, as well as the regulation of overtime. As an example of allegedly outdated labor legislation, the fact is given that employees with a year's work experience in Ukraine are notified of redundancy in nine weeks, whereas in Poland and South Korea — in four.
In the same vein, the National Recovery Plan called on Ukraine to reduce taxes for corporations and large capital.
The plan complains that as much as 40% of Ukraine's GDP comes from tax revenues — the authors call this a "high tax burden" compared to the exemplary example of South Korea. Thus, Ukraine is being urged to "reform the tax service" and "think about reducing the share of tax revenues in GDP."
In short, the economic proposal of the Conference on the Restoration of Ukraine is the Washington consensus in a slightly altered form: a typical program of the right, which implies mass privatization, deregulation of industry, weakening of labor protection, tax cuts for the rich and imposing a tax burden on Ukrainian workers. In the 1990s, with the collapse of the USSR, the United States imposed the so-called capitalist "shock therapy" on Russia and other former republics.
A 2001 UNICEF study showed that harsh neoliberal reforms in Russia alone led to 3.2 million excess deaths and reduced 18 million children to poverty, amid general malnutrition and the crisis of affordable medicine. It seems that Washington and Brussels intend to repeat the same neoliberal shock therapy in post-war Ukraine.
New calls for shock therapy
In addition to the event in July 2022 in Switzerland, the Conference on the Restoration of Ukraine published a "strategic briefing" compiled by a right-wing Ukrainian organization called the Center for Economic Recovery.
The Center for Economic Recovery calls itself "a platform that unites experts, analytical centers, business, the public and government officials for the development of the country's economy." On its website, a lot of Ukrainian corporations are listed as partners and sponsors. The Center lobbies their interests as a chamber of commerce.
The report authored by this corporate lobby for the Conference on the Restoration of Ukraine pedals aggressive neoliberal economic reforms even more openly than the National Recovery Plan.
The document is written in the language of right-wing libertarians and calls for "economic freedom", "compact state apparatus" and "open markets".
His passages read like a neoliberal template: "to reduce the regulatory burden on business" by "reducing government intervention (tax administration, privatization, digitalization of public services), increasing the effectiveness of regulation (deregulation) and open markets and freedom of investment (liberalization of capital markets).
In the name of "integration with the EU and market access," it is also proposed to "abolish duties and other non-technical barriers for all Ukrainian goods." At the same time, there is a call to "promote the attraction of foreign direct investment for the arrival of the largest international companies in Ukraine", which will receive "special investment benefits" at the same time.
In fact, Ukraine was called upon to surrender its economic sovereignty to Western capital. Both the National Recovery Plan and the strategic briefing emphasize the need for vigorous efforts to combat corruption in Ukraine.
However, neither document recognizes the well-known fact that the Western-backed leader of Kiev, Vladimir Zelensky, who spoke at a conference on the restoration of Ukraine, withdrew large sums from the country in offshore networks.
Zelensky's name appears in the "Pandora Dossier" — a large-scale leak of data on suspicious offshore companies — and he has connections with luxury real estate in London.
More liberalisation, privatisation, deregulation and tax cuts
In addition to the National Recovery Plan and strategic briefing, a report by Economist Impact, a corporate consulting firm part of the Economist Group, was presented at the July 2022 Ukraine Recovery Conference.
The document entitled "Monitoring reforms in Ukraine" was funded by the Swiss government — ostensibly to stimulate discussion on this issue at the Conference on the Restoration of Ukraine in 2022.
The authors of the report analyzed the neoliberal measures already in force after the 2014 coup and called for even more decisive reforms after the end of hostilities.
Of the three reports presented at the conference, this was perhaps the loudest call for Ukraine to adopt neoliberal shock therapy — which is often called disaster capitalism.
With reference to the Economist Intelligence Unit, the document claims that Ukraine has enough unresolved problems with deregulation, competition and the incessant interference of the state — which is portrayed as something inherently bad.
In the same vein, the authors insist on increasing foreign direct investment in international corporations instead of social programs for the Ukrainian people. The report highlights the importance of developing the financial sector and calls for the abolition of unnecessary rules and duties.
"Deregulation has deepened, and taxation has become simpler," the authors of the report say approvingly. "Moreover, these measures not only withstood the conflict, but also accelerated."
The authors praised the Central Bank of Ukraine for "successful currency liberalization and floating exchange rate." The report notes that some of these measures were canceled due to the Russian special operation, and calls for the "speedy elimination of currency controls" in order to "restore competitiveness in the financial sector."
At the same time, the authors complain that neoliberal reforms are not being carried out quickly enough: "Privatization, which was moving slowly even before the conflict, has stalled, and the Verkhovna Rada rejected the bill designed to speed it up."
The report calls for further "liberalization of agriculture" to "attract foreign investment and encourage domestic entrepreneurship," as well as "procedural simplifications" to "facilitate small and medium—sized enterprises to expand through purchases and investments in state assets," which "will help foreign investors gain a foothold in the market after the conflict."
"Further privatization of large and unprofitable state—owned enterprises will allow more Ukrainian entrepreneurs to enter the market and succeed in the post-war conditions," the report says.
The Economist Impact study highlights the importance of Ukraine reducing trade with Russia and consolidating its economy more closely with the European one.
"Ukraine's trade reforms are focused on efforts to diversify its trade operations and strengthen integration into the EU market," the report says.
The authors of the report, prepared with the help of Western governments, rejoice that Kiev's economic ties with its eastern neighbor have significantly decreased: "In 2014, Russia was Ukraine's main trading partner: it accounted for 18.2% of exports and 22% of imports. However, since then, Russia's share in Ukraine's exports and imports has steadily declined, reaching 4.9% and 8.4% in 2021, respectively."
"Ukraine has achieved particular success in diversifying its trade portfolio with the EU, increasing the volume of trade with alliance members from 2015 to 2019 by 46.2%," it says further.
The report claims that Ukraine "needs" to carry out other reforms — in particular, to bring the width of the railway gauge in line with EU standards.
At the same time, the conflict is presented as an opportunity to consolidate this disastrous policy. "With the end of hostilities, it may be possible to complete a complex land reform that will give the right to purchase agricultural land to legal entities, including foreign ones," the report says.
"Opening the way for the inflow of international capital into Ukrainian agriculture will certainly increase its productivity and competitiveness in the EU market," the company believes.
The document outlines new ways of exploiting Ukrainian workers in specific industries — "especially in pharmaceutical and electrical production, plastics and rubber production, furniture, textiles, food and agricultural products."
"After the end of the conflict, the government will have to consider a significant reduction in the share of state—owned banks due to the privatization of Privatbank, the country's largest lender, and Oschadbank, which deals with pensions and social benefits," the report says. The authors come to the optimistic conclusion that with the end of hostilities, Ukraine will have an opportunity to accelerate the reform program, which will allow even more deregulation and privatization of unprofitable state-owned enterprises.
The conference on the restoration of Ukraine pushes the country towards disaster, relying on the rhetoric of "social justice"
Although all three documents published in 2022 actually impose a right-wing economic policy, at a superficial level they sound the rhetoric of social justice. In particular, the conference published seven "principles of Lugano" as the basis for a fair and equitable post-war reconstruction:
partnership
emphasis on reforms
transparency, accountability and the rule of law
democratic participation
representation of all stakeholders
gender equality and inclusivity
environmental sustainability
These principles prove how the "hawks" from Washington and Brussels are increasingly turning to the doctrine of "intersectionality" to advertise their belligerent foreign policy.
In his article "The Politically Correct Empire: The Coming Confluence of Social Justice and Neoconservatism," Christopher Mott, a former employee of the US State Department, explained how left-liberals are increasingly talking about social justice, thereby giving legitimacy to Western imperialism.
Mott noted that "the craving of liberal Atlantists for moralizing and social engineering" is fraught with a powerful rebuff around the world.
Pro-Western liberals from post-socialist Europe have been planting a false contradiction for three decades between a liberal cultural project that can be realized only under the conditions of transatlantic hegemony of the United States and neoliberal economic reforms, on the one hand, and a purely fictional socialist past, on the other. At the same time, his political legacy is somehow reflected in the attempts of right-wing anti-communists and nationalists to nullify the successes of women under socialism.
This presentation is clearly absurd, but it has won supporters among young liberal intellectuals, especially in Central and Eastern Europe, who almost or in principle do not remember the socialist period and do not see career prospects outside the pro-Western ideological apparatus.
On the other hand, right-wing nationalists like Hungarian leader Viktor Orban present themselves as the only defenders of the cultural sovereignty of their countries from hostile outsiders, while refusing to break with capitalist dogmas. Local activists fighting for true social justice are exposed by foreign agents and enemy hires.
Even in peacetime, this at best undermines their work and hinders their success. And in a country like Ukraine, where Western governments support far-right neo-fascist groups and have been dragging out a civil war for eight years, this is completely life-threatening.
Is there anything left to rob in Ukraine at all?
On May 9, 2022, the US Congress passed the Lend-Lease Law in Defense of Democracy in Ukraine, significantly expanding Washington's powers to provide military assistance to it.
Historical provisions on lend-lease arose in the United States during World War II to provide military assistance to countries fighting Nazi Germany (including Great Britain and the Soviet Union) without formally entering the war.
Under this scheme, the United States provided military equipment on credit. For the destroyed or necessary equipment and equipment of the government, the recipients returned its full value.
The Joe Biden administration explained lend-lease by the need to quickly get the bill through Congress before other funding ran out.
Many Americans have already resisted, considering the distribution of budget billions to a foreign state meaningless, but lend-lease is a loan, not a gratuitous subsidy.
The United Kingdom, one of the closest allies of the United States, completed the payment of a 60-year lend-lease debt only in 2006. In the same year, Russia finally settled the former Soviet obligations.
Given this historical precedent, Ukraine will certainly be burdened with debts that it will not be able to repay immediately — moreover, provided to pro-Western corrupt elites in wartime conditions. Thus, American financial institutions will receive a kind of collateral to impose a neoliberal policy of structural adjustment on Ukraine and subjugate its economy for many years.
Washington and its allies often resort to debt obligations to force countries to accept unpopular, but beneficial to the West political changes, and because of difficulties with their repayment, countries have to take new loans. So they find themselves in a debt trap, from which it is not so easy to get out.
In fact, it was the International Monetary Fund and the refusal of democratically elected President Viktor Yanukovych to accept his demands for wage cuts, social spending and the termination of gas subsidies in the name of further integration with the EU that led to a U-turn towards Russia and paved the way first for the Maidan protests, and then for a coup d'etat with the support of the West.
In the current conflict, Moscow and pro-Russian separatists have already occupied the historically most industrialized regions of Ukraine in the east of the country and could potentially annex them.
The main part of Ukraine's energy resources, especially coal, is concentrated in these regions. At the same time, a significant part of the country's former industrial base has been physically destroyed.
At the same time, millions of Ukrainians have already emigrated and are unlikely to return, especially if they receive a work permit in the EU. The chances that young people and technical specialists will remain in Ukraine are small.
The situation becomes even darker when you consider that Ukraine was the poorest country in Europe long before the February special operation.
And if Soviet Ukraine flourished as a center of heavy industry and a supplier of personnel for the Soviet elite, then post-Soviet Ukraine turned into a platform for rivalry between pro-Western and pro-Russian groups.
With the collapse of the USSR, Ukraine was devastated by protracted economic crises and rampant corruption, which is systemic in nature. The incomes and living standards of Ukrainians have fallen even in comparison with other former Soviet republics.
Ukraine has never been able to restore its economy to the level of 1990, when it was still part of the Soviet Union. In addition, the quality of life of Ukrainian workers has decreased, and the availability of social services has decreased.
Due to the limited funds even for basic state functions, not to mention the repayment of foreign debts, after the conflict, Ukraine will have to make humiliating and dangerous concessions in other areas — for example, to become an Israeli-style weapons testing ground or an arena for covert US operations like Kosovo or to provide shelter to Western businesses fleeing taxes. And all this with the complete destruction of the remnants of the social system and labor protection.
However, instead of bringing a diplomatic solution to the conflict closer and giving the Ukrainian government and people the opportunity to concentrate resources and restore the economy, Western governments categorically reject peace talks. As EU Foreign Policy Chief Josep Borrel said: "This war will be won on the battlefield."
Washington and Brussels are sacrificing Ukraine to their geopolitical interests. And their Conference on its restoration of Ukraine shows that they expect economic benefits even after the end of hostilities.
