¥uan and Waterloo of Petro$ (Part 1/2)

October 29, 2014

yuan logoOngoing western sanctions due Ukraine are pushing China and Russia to close cooperation – the great Eurasian axis is already in motion. Despite the headlines in mainstream western media related to civil war in Ukraine the primary war is being fought monetarily. The Russia-China Strategic Partnership (RCSP) is truly global in scope, having come to encompass the entire world to varying degrees. The Ukraine War might be the U.S. Dollar Waterloo event.

As the Americans and their allies are trying to squeeze Russia and Iran with a combination of economic sanctions and political isolation, alternative poles of power are emerging that soon may present a serious challenge to the U.S.-dominated world that emerged from the end of the Cold War.

The Russian response to ongoing western sanctions has been launching a counter-strategy that could bring the cost boomeranging right back to Washington. Namely, the formation of a potential non-dollar trading block among major players in the global energy markets including Iran and China.

 

The end of the Petrodollar

(In 1971 Richard Nixon was forced to close the gold window taking the U.S. off the gold standard and setting into motion a massive devaluation of the U.S. dollar.In an effort to prop up the value of the dollar Nixon negotiated a deal with Saudi Arabia that in exchange for arms and protection they would denominate all future oil sales in U.S. dollars. )

For decades, virtually all oil and natural gas around the world has been bought and sold for U.S. dollars. Since World War II, America’s geopolitical supremacy has rested not only on military might, but also on the dollar’s standing as the world’s leading transactional and reserve currency.

Last year Russia produced about 10.5 million bbls. of oil per day and exported 70% of it. That amounts to nearly 2.6 billion barrels with a value of nearly $250 billion at world market prices. It also exported the equivalent of nearly 1 million barrels per day of natural gas with a market value of upwards of US$50 billion. The truth is that Russia is the largest exporter of natural gas and the second largest exporter of oil in the world. If Russia starts asking for payment in currencies other than the U.S. dollar, that will essentially end the monopoly of the petrodollar.

China just overtook the US as the world’s largest economy. The US national debt is now past €17 trillion. China – their biggest creditor – has been cutting on US debt holdings and hoarding gold on the side to be prepared for the possible collapse of the dollar. The US federal government ran an estimated budget deficit of $486 billion, or 2.8 per cent of GDP, in fiscal year 2014. By contrast, Russia just posted a federal budget surplus of 2 per cent of GDP.

russia-balance-of-trade
Russia recorded a trade surplus of 15700 USD Million in September of 2014. Balance of Trade in Russia averaged 8925.26 USD Million from 1997 until 2014, reaching an all time high of 20356 USD Million in January of 2012 and a record low of -185 USD Million in February of 1998. (Source: Trading Economics )

dollar collapseWhen U.S. politicians started plan economic sanctions on Russia, they probably never even imagined that there might be serious consequences for the United States. But now the Russian media is reporting that the Russian Ministry of Finance is getting ready to pull the trigger on a “de-dollarization” plan. For decades, virtually all oil and natural gas around the world has been bought and sold for U.S. dollars. As I will explain below, this has been a massive advantage for the U.S. economy. In recent years, there have been rumblings by nations such as Russia and China about the need to change to a new system, but nobody has really had a big reason to upset the status quo. However, that has now changed. The struggle over Ukraine has caused Russia to completely reevaluate the financial relationship that it has with the United States.

The largest natural gas producer on the planet, Gazprom, has signed agreements with some of their biggest customers to switch payments for natural gas from U.S. dollars to euros. If other nations start following suit – start trading a lot of oil and natural gas for currencies other than the U.S.$ – that will be a massive blow for the petrodollar, and it could end up dramatically changing the global economic landscape.

Moscow, allied with the BRICS, is actively working to bypass the US dollar. The core point is that Russia is not alone. Besides the BRICS also the G-77, the Non-Aligned Movement (NAM), the whole Global South is critical to U.S. led bullying and would like to have other alternative in international relations. This past summer, the BRICS countries created an alternative to the largely U.S.-controlled World Bank and International Monetary Fund (IMF), and the Shanghai Cooperation Organization (SCO) added 1.6 billion people to its rolls.

G-7 vs E-7

Back in 1971, it was necessary to assure that the dollar would retain its position in world trade as the world’s premiere currency, in spite of the fact that it was no longer backed by anything. The U.S. reached an agreement with Saudi Arabia that, in trade for arms and protection, the Saudis would denominate all future oil sales, worldwide, in dollars. The other OPEC countries fell into line, and the “petrodollar” was assured.

Now the Sino-Russian cooperation is challenging the Americans, and there are many countries that would be happy to join them in dethroning the US dollar as the world’s reserve currency. The historic gas deal between Russia and China is very bad news for the petrodollar – it might be start of the “de-Americanised” world.

 

Yuan replacing the Petrodollar

petrodollarOn April 24th 2014 the Russian government organized a special “de-dollarization meeting” dedicated to finding a solution for getting rid of the US dollar in Russian export operations. Top level experts from the energy sector, banks and governmental agencies were summoned and a number of measures were proposed as a response for American sanctions against Russia.

Over the last few weeks there has been a significant interest in the market from large Russian corporations to start using various products in renminbi and other Asian currencies, and to set up accounts in Asian locations,” Pavel Teplukhin, head of Deutsche Bank in Russia, told the Financial Times, The renminbi is the official currency of the People’s Republic of China. literally means “people’s currency”. The yuan is the basic unit of the renminbi, but is also used to refer to the Chinese currency generally, especially in international contexts.

Moving the yuan towards internationalisation involves three distinct phases: turning the Chinese currency into a) a trading currency, b) an investment currency, and c) a reserve currency.

Some recent developments:

  • Chinese credit rating agency Dagong has downgraded U.S. debt from A to A- and has indicated that further downgrades are possible.
  • China has just entered into a very large currency swap agreement with the eurozone that is considered a huge step toward establishing the yuan as a major world currency.
  • Back in June 2014, China signed a major currency swap agreement with the United Kingdom. This was another very important step toward internationalizing the yuan.
  • China currently owns about 1.3 trillion dollars of U.S. debt, and this enormous exposure to U.S. debt is starting to become a major political issue within China.
  • Mei Xinyu, Commerce Minister adviser to the Chinese government, warned (on Oct 2014) China may decide to completely stop buying U.S. Treasury bonds.

China is the largest producer of gold in the world, and it has also been importing an absolutely massive amount of gold from other nations and in addition China plans to buy another 5,000 tons of gold.) There are many that are convinced that China eventually plans to back the yuan with gold and try to make it the number one alternative to the U.S. dollar.

If China does decide to back the yuan with gold and no longer use the U.S. dollar in international trade, it will have devastating effects on the U.S. economy. If other nations stopped using the dollar to trade with one another, the value of the dollar would plummet dramatically. One could claim that the entire way of life in U.S. depends on the U.S.$ being the primary reserve currency of the world. (Source: The Economic Collapse )

eu-china trade map

The dollar does not just predominate in China’s trade with the United States, but with other countries as well. The first steps towards the internationalisation of the yuan emerged in 2008-2009. At that time, businesses and companies were allowed to use the yuan in trade with Hong Kong (Xianggang), Macau, and ASEAN countries. In 2012, every Chinese company with a licence for export and import transactions was able to use the yuan. An active transition to foreign trade settlements in yuan is happening alongside an increase in the use of the national currencies of China’s trading partners. This is being facilitated by the signing of bilateral currency swaps between the People’s Bank of China (PBC) and the central banks of China’s trading partners. To date, the PBC has signed more than 20 currency swap agreements. At the end of 2013-beginning of 2014, the yuan overtook the euro in terms of the amount of payments used for international trade, and took second place after the US dollar. According to the People’s Bank of China (PBC) , there was more than 1.3 trillion yuan overseas at the end of 2013, which is equivalent to approximately US $250 billion. In fact, this money is forming an offshore yuan market. At present, the yuan can be directly converted with the US dollar, the Japanese yen, the Australian dollar, the Russian rouble, the Malaysian ringgit, and the New Zealand dollar. The latest such agreement was signed between China and New Zealand in March 2014. (Source: Strategic Culture Foundation )

 

My conclusion

In my conclusion the era when the IMF, World Bank, and U.S. Treasury could essentially dictate international finances and intimidate or crush opponents with sanctions, pressure and threads are drawing to a close – the BRICS and the Shanghai Cooperation Organization are two nails in that coffin. These independent poles (BRICS, SCO, USAN) are developing fast and it remains to see what their ultimate impact on international politics will be – my scenario is that the impact will be a drastic shift from U.S. dominance to more balanced juxtaposition of U.S. and Eurasia.

the end of dollar

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Some Geostrategic Aspects in Russia vs. U.S. Relationship

October 13, 2014

An abstract of my discourse in Helsinki 11th Oct 2014

Some Geostrategic Aspects in Russia vs.U.S. Relationship by Ari RUSILA

It is not about ideology, democracy nor respect for borders – It is about money and global power.”

(AR viewpoint to issue)

U.S. Military involvement map


Seeking For The Ukrainian Left

October 1, 2014

While trying to keep myself updated about Ukraine conflict in the middle of polarized one or another side exaggerated informationflow I finally found an interview which looks to be from local grassroots, a balanced analysis based reasonable arguments advocating a view of leftist organization about issues of Ukraine conflict. However as Ukraine’s situation is on a new level of hybrid warfare, a theatre of mediawar with constant disinformation from all sides, I have tried to study a bit the background of the leftist situation in Ukraine.

The ovarall situation in Ukraine has polarized dramatically. The first troops, which Kiev regime sent to East, refused to shoot people they considered fellow countrymen & women. Kiev, by all reports (outside the Corporate Media) changed the composition of the troops, recruiting Rightist volunteers, who seem to have no problem shooting down Russian speaking Ukrainians. In Donbass area as well in wider “Novorossiya” the public attitude against “Kiev Junta” has increased as Kiev government offensive by land troops, air force and artillery has terrorized civilian population.

borotba logo

The interview in question ( “Our struggle is for a socialist Ukraine as part of the struggle for a socialist world” on the end of this article) was made by Peter Mikhailenko and the interviewee was Dimitry Kolesnik who is the editor of the Ukrainian left wing website Liva and a leading activist in the Marxist organization Borotba.

Borotba

So that no one has any illusions, I want to say that the entire industry in the city will be nationalized. We cannot leave the industrial potential of the city in the hands of unscrupulous businessmen.” (Vyacheslav Ponomarev, the people’s mayor of Slavyansk)

The Association Borotba – “Struggle” – is a revolutionary Marxist–Leninist and anti-fascist organization operating in Odessa and Kharkiv, Ukraine. It has close ties to the Left Front in Russia. The Left Front is a united front encompassing a range of far-left political organizations in Russia, as well as other countries of the former Soviet Union. The task of the Left Front declares ensure unity among all who stand for socialism, democracy and internationalism, and coordination of left-wing opposition forces.

The Association Borotba was established in May 2011 after the merger of a part of the “Organization of Marxists” (Ukraine), the “Leninist Communist Youth Union of Ukraine”, “All-Ukrainian Union of Workers”, the “Youth Association Che Guevara”, and the “Youth against capitalism” movement, with some individual leftist activists also joining.

When in 2012 the first fraction of the far-right party Svoboda entered parliament supported by a number of oligarchic groups, including some close to President Yanukovych, Borotba was the first and the only political force which then predicted that, with the development of the socio-economic crisis, the oligarchy would put ultra-right ideology and organization at its service. That time Borotba published the report, “Ukrainian oligarchy is preparing a ‘creeping’ fascist coup.”

Borotba has condemned what they considered a “Western-backed” and “fascist” February 2014 coup in Kiev and called for a socialist revolution in Ukraine against the government of “ultra-nationalists and Nazis”. Borotba’s analysis of the composition of the so-called “revolutionary” government that took power on 22 February 2014 stated that far-right nationalists received too much power and control over important ministries and agencies including defense, anti-corruption and national security, education, agriculture and the environment, as well as the office of the prosecutor general. (Source e.g: WikipediA )

anti nazi caricature

On May Day Borotba members staged a rally in Kovalska Street in Odessa.The following day, Borotba member Andrey Brazhevsky was beaten to death by a far-right mob after jumping from the third floor of the burning Trade Union Building during the 2 May 2014 Odessa clashes. Following the Odessa Trade Union building massacre and other attacks on Borotba’s members and offices, Borotba was forced underground. (Source WikipediA )

According LiveLeak in the cities of the southeast, there were mass arrests of Antimaidan supporters. The Security Service of Ukraine now searches and arrests Borotba members, their informationmaterials are classified as “separatist” propaganda. Under these conditions, cells of Union Borotba and other left-wing, anti-fascist organizations operate semi-underground. The organization is now able to work only on the network principle — as a network of small, autonomous groups that direct agitation, propaganda and organization, as well as protect themselves from attacks by neofascist combatants.

Criticism

On March 3, 2014, several liberal and anarchist organizations in Ukraine, including the “Autonomous Workers Union”, the “Direct Action” Independent Student Union and the “Left Opposition socialist organization”, criticized Borotba for alleged cooperation with conservative pro-Russian groups in Ukraine and allegedly spreading “overt lies and fact manipulations, deceiving foreign leftists and antifascists”.

autonomous workers union loge

The split between anarchists and Borotba/AntiMaidan groups seems to be fundamental. When AntiMaidan attacked the Maidan in the city of Kharkiv, its imagined enemy were not the anarchists, but NATO, EU or Western-Ukrainian fascists. However anarchists ended up fighting side by side with liberals and fascists. Borotba and the Russian Left Front claim that they are attempting to do the same things as the anarchists did at Maidan, that is, direct protest towards social demands. The anarchists regard The Communist Party of the Russian Federation, Borotba and the Russian Left Front as part of Soviet chauvinist camp.

In a rebuttal, Borotba rejected the accusations as “hypocritical” and “irrelevant” and stated e.g:

We are not the part of the movement that has nothing common with left and antifascist stance. Thus, we are and have always been a leftwing and antifascist organization. We condemn ex-regime of Yanukovich and the new far-right government as well. We condemn Russian and Western interference in Ukrainian affairs as well as militarist patriotic intoxication induced by new power…We firmly follow internationalist antifascist and class line as our basic stance. We are against both Russian and Ukrainian nationalisms that are being used now only for dividing working class and further plundering of the country. We do not back Russian nationalist organizations as well as Ukrainian ones. All the smear campaign of our organization led by far-right groups and caught up by some admittedly ‘left’ groups will not stop us to organize anti-fascists resistance. (Source: WikipediA )

German leftists seeking for an explanation

Very good description about left wing oraganizations and movements in Ukraine before 2014 can be found from German leftist analysis Die «neue» linke Bewegung in der Ukraine by Vladimir Korobov (Rosa-Luxemburg-Stiftung, April 2013 ). The European Left has different views about situation in Ukraine as well about different leftist organizations there. A debatte related to Ukraine in European Left Summer University gives good description about this: Ukraine dominates discussion at Party of the European Left’s summer university .

The regional coordination office of the German federal Die Linke party distanced itself from Borotba after serious accusations levelled by Ukrainian anarchists. However after studying more closely the background and accusations against Borotba the earlier cooperation has been restored. From Borotba’s point of view The Autonomous Worker’s Union is small sect pretending to be anarchists being invisible in Ukraine but active on international scene. A quote from Sergei Kirichuk/Borotba:Regarding the accusation against us: We are not a “pro-Russian” organization, we are fighting for the rights of the working class, youth and women. Neither Russian nor Ukrainian nationalism is acceptable for us. Our ideology is proletarian internationalism. So we hate oligarchs of Russia and Ukraine. Our partner in Russia is the Left Front, many of their activists are in prisons now and we are showing our solidarity with them. (Source: „They hate us because we are communists“ Interview with Sergei Kirichuk by Andrej Hunko, Germany’s Die Linke. )

die linke logoAndrej Hunko, who is also member of European Parliament, has followed closely different leftist fractions and movements in Ukraine since 2012. His article Zur ukrainischen Linken und der Kampagne gegen „Borotba“ on 09. July 2014 describes how weak Ukrainian left and Communists are splitted between Maidan and Antimaidan supporters:

Die (schwache) ukrainische Linke jenseits der Kommunistischen Partei ist gegenwärtig im Verhältnis zu den Maidan-Protesten und der folgenden Entwicklung in der Ukraine gespalten. Während ein Teil der Linken, insbesondere die „Linke Opposition“, sich positiv auf den Umsturz bezieht und versucht im Rahmen der nachfolgenden Entwicklungen soziale Positionen zu formulieren, bezieht insbesondere „Borotba“ eine grundlegend ablehnende Position zum Maidan. Ebenso wie ein Teil der Linken versucht hatte, auf dem Maidan linke Forderungen aufzustellen, war ein anderer Teil bei den Anti-Maidan-Protesten, insbesondere in Charkov und Odessa, mit linken Positionen vertreten.

Related to campaign (of the “Autonomous Workers Union” and the “Direct Action”) against Borotba Mr. Hunko supports Borotba’s position as follows:

Seit einigen Wochen gibt es in Deutschland eine Kampagne gegen die linke ukrainische Organisation „Borotba“ (Der Kampf), in der unterstellt wird, diese kooperiere mit russischen Neo-Nazis, ja sogar, dass es eine Kooperation der LINKEN mit russischen Neonazis gäbe. Das ist falsch. Die Absicht ist offenbar, eine kritische Position zur Ukraine in die Nähe des russischen Nationalismus zu rücken. Weder gibt es irgendeine Kooperation der LINKEN mit russischen Neo-Nazis oder sonstigen Rechten, noch habe ich irgendwelche Hinweise, dass es diese von Seiten Borotba gibt. Im Gegenteil kooperiert Borotba mit der russischen Linksfront und hat diese gegen Repression unterstützt.

Minsk Declaration

Borotba is also part of the Minsk Declaration(Left forces from Ukraine, Russia and Belarus held a two-day antiwar conference near Minsk on June 7-8.2014). The conference brought together activists of the new left which has grown up in recent years in the three countries, and their main groupings; the Russian Socialist Movement (RSD), the Left Front and the United Communist Party (which has no connection to Putin’s tame “official opposition”, Gennady Zyuganov’s KPRF) in Russia, the Left Opposition and the group Borotba [Struggle] in Ukraine. It was hosted by the Belarussian journal Prasvet. Following some quotes from their joint statement:

We, the participants of the meeting of left and Marxist groups and organizations from Belarus, Russia, and Ukraine, believe that the civil war in Ukraine must cease – we see this as a primary task. The military conflict that followed the victory of the neo-liberals and nationalists in the ‘Euromaidan’ actions in Kiev has claimed hundreds of lives and contributed to an unprecedented growth of chauvinism and xenophobia in Ukrainian and Russian society.

We express our solidarity to all participants of the Ukrainian left-wing movements that are fighting against war, nationalism and xenophobia. We consider it necessary to provide them all possible information, political and material support. We oppose the pressure, pogroms and reprisals by all participants of the conflict. We oppose the massacres, torture and abductions of Ukrainian leftists, anti-fascists and all Ukrainian citizens, regardless of their political views. We oppose political persecutions in the Crimea region as well.

We demand from Russia, the EU and the U.S. to completely stop interfering in the Ukrainian conflict and cease support to any one side.

We demand an end to the chauvinist campaigns in Ukrainian and Russian media. Their use of hate speech is one of the main instigators of war.

We demand the adoption of a new Constitution of Ukraine, elections of the authorities of Donetsk and Luhansk regions, and a right to self-determination and self-government for Donbass and all the regions of Ukraine.

 

In my opinion left wing approach could be the internal solution for Ukraine conflict; from my perspective Ukraine needs nationalization instead of nationalism as such a programme could respond same time to economic crisis and ease ethnic tensions. If working class and entrepreneurs of small and middle size companies could join forces against the wealthy parasites and political elite and return the loot to the people by nationalizing it would be possible to finance the reconstruction of Ukraine on the basis of a democratically planned socialist economy.

After above described background I hereby recommend following interview which in my opinion exellent represents Ukrainian leftist postion in context of Ukrainian conflict:

marxist ITN logo

Our struggle is for a socialist Ukraine as part of the struggle for a socialist world”

Written by Dmitry Kolesnik; editor of Liva.com.ua and member of Borotba Thursday, 25 September 2014

Dimitry Kolesnik (DK) is the editor of the Ukrainian left wing website Liva and a leading activist in the Marxist organization Borotba. He attended the World Congress of the International Marxist Tendency in August 2014 in Greece, where he was interviewed by Peter Mikhailenko(PM).

PM: Could you describe the formation Borotba, and the website Liva.com.ua, the most popular left website in Ukraine?

DK: First of all, thank you comrades for your invitation and for your support with the campaign of Solidarity with Anti-fascist resistance in Ukraine.

Borotba is a radical left wing Marxist organization. It was formed in 2011 from a split of the “Organization of Marxists”, former KPU youth members, the youth organization “Che Guevara” along with some individual activists including anarchists and environmentalists. Its aim is the struggle for a socialist Ukraine, with the understanding that the struggle for a socialist Ukraine should be connected with the struggle for a socialist world in general.

Also three years ago, the website “Liva” was created, a left wing website. This involved Borotba and other left-wing activists. We have many aspects we try to cover; including economic, social, politics interviews with various left activists and other well-known people. We translate many articles from modern left thinkers, especially Marxist thinkers and articles that cover current of events from a left-wing perspective.

PM: What do you think triggered the Maidan movement?

DK: Euromaidan started the day after the former president Yanukovich delayed the signing of the free-trade agreement with the EU, which was linked to IMF loans with conditions for imposing austerity measures. The day after, protests started by some layers of society, especially in Western Ukraine, where many people move to Western countries to take on precarious jobs. The media never mentions that the EU association agreement had nothing to do with mobility for Ukrainians in the EU or joining the EU. It was merely a free trade agreement, the kind which was signed with Tunisia, Egypt or Turkey, and many other countries that never joined the EU.

I want to emphasize that some Western-funded NGOs played the main role in organizing the movement. Many of their workers and activists prepared for the protests beforehand. Another important part were the far-right and neo-nazi groups. And just a year ago the Western media was often criticizing these groups; now, suddenly, they seem to be hardly noticing them and are whitewashing them, their participation in the new government along with the austerity measures has been covered by an abstract rhetoric about some “European values”.

Some layers of society were deceived by this rhetoric; others were indignant that the government of Yanukovich was responsible for the fall in living standards.

PM: What was Borotba’s attitude towards the former president Yanukovich?

DK: Borotba was critical towards the Yanukovich regime. We understood and predicted in many articles that his politics were rather dangerous. The corruption with the move to liberal capitalism was something evident in his rule. We had organized many anti-government protests during the years of his regime. So we never backed him; we were anti-government last year and we are anti-government this year.

PM: How did Borotba see the Euromaidan movement? The media clearly played a large role in promoting it. What would you say about its character?

DK: There has been a sociological study recently on the Euromaidan movement that was published even in Ukrainian media like UNIAN. The far-right made up about 25%. The others were either moderate right, like supporters of the Batkyvshina or UDAR parties – these were parties not in coalition with the Yanukovich government. A large part were middle class business owners, who were protesting what they called “creeping nationalization” and corruption because the government had raised taxes on them. Those businessmen who participated in Madian among them were either from Kiev or Western Ukraine (70% of the protestors). In fact, we see how the far-right were seen by the other protestors as heroes and their tactics and slogans were tolerated, and they saw this movement as a chance to impose their agenda.

PM: On what basis did the anti-Maidan movement start? How did the anti-Maidan movement go from anti-government protests to armed rebellion?

DK: Anti-Maidan and current rebel forces are connected. Anti-Maidan was a protest in a park near Maidan, composed mainly of supporters of Yanukovich and his government, because it really had some social base. After the victory of Maidan, the Anti-Maidan camp was destroyed and some days after that, there was a witch-hunt of anti-Maidan protesters. Many of them managed to reach their cities, mostly in south-eastern Ukraine, and began to organize protests at home.

Soon after the victory of Maidan, the far-right organized raids on other cities, toppling Soviet-era statues. This prompted some people to organize 24-hour watches around the statues. And as such, rallies around Lenin monuments served as a base for organizing a new protest movement composed of forces opposing Maidan.

These forces contained supporters of the former government, different left-wing activists, communists (due to the rabid anti-communism of Maidan), some ethnic minorities (mostly Russian but also Romanians, Hungarians, Ruthenians, Greeks…). The attempts to impose a nationalist agenda on a multi-ethnic country inevitably caused the uprising of those minorities. There were also many social-racist statements made by Maidan activists towards industrial workers, especially from Donbass, causing their participation in the rebellion.

PM: There has been a lot of talk in the media calling this rebellion a “Russian invasion”, and there has been a lot of criticism of the leadership of the breakaway republics of Donetsk and Lugansk. How would you characterize the leadership of these republics?

DK: We are speaking about [Donetsk Peoples Republic] DNR and [Luhansk Peoples Republic] LNR as the protest movements in Kharkiv; Odessa and Zaporizhia had different characters. From the leadership of Donbass, we saw the general progressive demands of the people – which in Donbas are characterized by pro-soviet sentiments – and have over the past years developed a specific “Soviet nationality”. Many of those who are characterized as “pro-Russian” actually have pro-soviet sentiments.

As for the leaders, some of them are very conservative, some are Russian nationalists, some are pro-Soviet demanding nationalizations, some were supported by local businessmen who were soon ousted. What we first saw were local deputies who made initiatives to resist Kiev policies. Some like Gubarev entered the local administration building when the crowd stormed it. What I can say about the leadership of the Donbass rebels is that they are there more for their military experience than representing the will of the Donbass people. After the war is stopped, this has a chance of changing. There should be actions held in the regions, because now, the DNR and LNR are various military units that wage war against the government in such conditions that make it impossible to create any kind of real autonomy or republic or federal state.

We recently published an article in Borotba that stated that the leadership should heed the voices of the rank and file rebels or they will be defeated. There were no such no left-wing militants who were able lead the movement when it started. The rebellion can be effective only when it is not connected to one or another national ethic, but to the lower classes in general.

PM: How would you characterize the nature of the current Kiev government and their policies?

DK: We characterize the new government as a coalition of neo-liberals and far-righters. Ukraine has become an outright oligarchic republic, with a semi-dictatorship, where the far right operates with impunity and is used as a tool. The far right gangs are used as tool by the oligarchs to push through their agendas.

We now see that all of the major Ukrainian oligarchs are on the side of the Kiev regime. There were oligarchs appointed as governors in many regions in Ukraine. In such regions as Dnipropetrovsk for example – where Kolomoiskyi was appointed governor – he has funded far-right groups to suppress opponents in his region, and then sent them to suppress the rebellion in Donbas. Effectively he has created a dictatorial fiefdom in the region.

In terms of economics, we immediately saw the escalation of neo-liberal processes, such as the IMF loans. They came with austerity measures attached as a condition, such as freezing of wages, removing subsidies for gas along with other subsidies, rising prices and cuts to social spending. It has recently been announced by Prime Minister Yatsenyuk that the country will undergo the strongest wave of privatization since independence including 38 state mines and many other large industries.

The “Orange revolution” in 2004 and the Euromaidan contained many of the same activists, and we saw after both events the devaluation of the Ukranian currency. The US was constantly pressing Yanukovich to “free” the Ukrainian currency, and what it means is the increase of the real amount of foreign debt.

PM: What are the Russian, US and EU interests in Ukraine?

DK: Those three forces that are present make this, not a conflict of the West against Russia, but a three sided conflict because the US interests and those of the EU are often in conflict. The interest of the EU is the opening of the Ukrainian market for their goods, because the EU is facing an economic crisis and high unemployment. So a new market means some more jobs for the EU. However, Ukraine is one of the poorest post-Soviet countries, so they are not such good buyers of EU goods.

The US interests are a kind of covert war against Russia, moving military bases closer to Russia. And certainly Russia has economic interests connected to its gas, because the majority of Russian state profits come from gas exporting, particularly to EU. Most of these pipelines go through Ukraine, so, by putting a government hostile to Russia in Kiev, the US is simultaneously undermining Russia and the EU. Russia would be left without a large amount of export profits and the EU would be forced to buy gas somewhere else. We have already read that the US is getting ready to export shale gas to EU, in an article in Guardian by Naomi Klein entitled something like “Why US companies are licking their lips over the Ukrainian crisis”. Shale gas from overseas will be more expensive, so here we see an attempt by the US to enlarge their export profits. Also, such companies as Shell and Chevron have started to extract shale gas through fracking in Ukraine as well, and we know that the son of Joe Biden was appointed to the board of a Ukrainian gas company. In the city of Slavyansk, a city with considerable shale gas potential, we saw fracking equipment being brought in immediately after the rebels were forced to flee the city.

As for Russia, they are interested in having a “friendly” neighbour and an ally in the political sphere, in preserving their naval base in Crimea and their customs union, through which they are trying to attract Ukraine and other post-soviet countries into their own sphere of economic influence.

PM: In what way is Russia supporting the rebels and what are their interests in this rebellion?

DK: First of all, we have to understand that Russia is not only Putin, but in fact, the interests of a number of oligarch clans; and Putin as any president or national leader, is the voice of those that put him in power. There are also tensions inside the Russian government. Some of them are seeking some kind of peaceful agreement with the US and EU, and others are more belligerent.

Russian policy toward the rebels is not always completely logical. Russia actually denounced the Ukrainian government and their attacks on the rebels. Officially Russia does support them, and there are also many volunteers among the rebels, although it has to be said that Russian nationalists have been fighting on both sides of the conflict.

The rebels are supported by initiatives of some Russian businessmen, but Russia remains very suspicious of the rebels, mainly because a significant part of them are pro-socialist and pro-soviet oriented. They demand nationalization…they can be a threat to Russia because such sentiment can easily spread among the Russian population and can resonate among Russian workers in Russia.

PM: So would you say that there is significant anti-oligarch sentiments among the rebels?

DK: Yes, as I said all of the Ukrainian oligarchs are on the side of the Kiev government. Because of such sentiments, Putin’s government cannot elaborate a clear position towards the rebels, as there are still tensions within the government itself, and it is not clear how radicalized they will be an example to the Russian people.

PM: What are the perspectives for the Kiev government going forward? Will they be able to consolidate their power, given the austerity measures, the rebellion and the mothers’ and wives’ movement against mobilization?

DK: The prospects for the Kiev government are rather gloomy for several reasons. Firstly, it does not have the support of a majority of the country. This is why the overthrow of the former government was needed as the forces that came to power could not do remove it by democratic means. We had elections scheduled for the beginning of 2015, but the opposition to Yanukovich understood that they needed his overthrow to come to power. They can rely mostly on far-right gangs that suppress any kind of opposition to the government including that coming from the mothers’ and wives’ anti-war movement. This is why these gangs are armed and funded, because without them, the government would not stay in power. If they were not so important, then they would be disarmed, as they serve as a justification for Russian propaganda.

Secondly, it is rather risky to maintain a policy of austerity measures, social cuts, devaluation of currency, price hikes, oppression of minorities, attacks on communists, leftists. We know that such a policy is risky for any government because it will inevitably meet resistance from various layers of society. The Ukrainian budget is empty as has been recently announced by the Prime Minister. The Russian market for Ukrainian good is closed meaning the absence of the main source of profit.

Moreover, the current Ukrainian government is also not homogeneous. Apart from the far-right groups and parties like the Radical Party of Oleg Lyashko, Svoboda and Right Sector, there are tensions among the oligarchs themselves. Last week we saw tensions and mutual accusations among the supporters of and media outlets linked to Poroshenko and Kolomoiskyi. Even if the south-east rebels are defeated, we will see the next stage of conflict among the so-called oligarch “winners”.

We have seen protests and social uprisings all over Ukraine. We have seen protests of fired workers and doctors against social cuts. At the same time, we have seen the soldiers’ wives’ and mothers’ protests, who simply do not want them to be killed. We recently heard a mother in Chernivtsi say on television that “we were not the ones who started Maidan, let those that did go to the war”.

Also, because the budget is almost empty, Ukraine has to rely on American and Western support for the war, which could lead to protests in those countries. They will have to ask why their budget is being diverted to a civil war in Ukraine.

The state is even forcing its soldiers to buy medicine with their own money.

PM: Describe the increase of censorship by the current government and the persecution of their opponents such as Borotba? What are the perspectives for Borortba and how could people from outside Ukraine help the cause in Ukraine?

DK: Borotba as well as all other oppositional forces have faced repression as well as a kind of far-right terror… this included the Communist Party and other kinds of “left” groups and organizations. The Borotba office in Kiev was raided by far-right thugs. Borotba activists were attacked and beaten at Euromaidan. Due to the strong anti-communist sentiments and the impunity for the far-right gangs roaming the streets, any kind of left or communist activist can be attacked, beaten, arrested or murdered.

After the raids on the offices in Kiev, Borotba had to move its main offices to Kharkiv and participated in the protests there, with many workers and youth joining these movements. This lead to attacks by state security forces; there were searches of Borotba offices, attacks on Borotba members by far-right thugs during the rallies. Denis Levin was almost kidnapped at a rally in Kharkov by men in black from the neo-nazi Social National Assembly, but some people at the rally managed to release him. There were attacks on other activists and many of them had to move underground. At the Odessa massacre on May 2nd, Andrey Brazhevsky from Borotba and a communist youth member were among those killed. Many of the protesters who survived the massacre were put into prison.

Borotba activists who managed to escape their arrests have fled, although some activists have remained. Borotba is now preparing for the next wave of protests. Comrades in exile are organizing political schools for political refugees. In Ukraine, in the conditions of illegality, it is very hard to develop the work.

We are very thankful for any kind of support. We would like to see protests against fascist terror and persecution of left groups in Ukraine. The Ukrainian government actually depends very much on Western countries, and protests in those countries can go towards helping the stopping of the bombing of Donbas and the persecution of left activists. We would also like to see the solidarity movement disrupt the wall of lies by the Ukrainian media by telling the people in the West the truth. The mainstream media is all corporate media and have the same interests as western corporations. There are some flashes of truth in BBC or Al-Jazeera, but these are only flashes.

We also need help in the political education of those refugees and even some comrades that under are threat may need to be evacuated from Ukraine. But I emphasize that the main aspect is the enlargement of the campaign of anti-fascist solidarity in order to put pressure on Western governments.

PM: On behalf of the IMT [International Marxist Tendency, AR], I would like to thank you for attending our congress and raising the understanding of the situation in Ukraine among all of the comrades here. What message would you send to the comrades of the IMT?

DK: I am very thankful to the comrades from the IMT involved in the anti-fascist solidarity campaign. It was rather useful for me to be at the congress of IMT not only to talk about the situation in Ukraine, but also to learn from various countries around the world, not only about their situation, but also the prospects of left-Marxist groups in those countries. I found that on Ukraine and many other questions in the world perspectives that were discussed and the current state in the development of capitalism, our positions mostly coincide.

We wish for the comrades from the IMT to be prepared in advance for the turbulence that will come around the world; to raise the political consciousness of workers and lower classes in those countries so they are not diverted into nationalist and fascist direction. I would like the comrades from the IMT to be prepared for developments like the ones in Ukraine, but the comrades from the IMT and all of us need to work hard on this. We understand that this is not an easy task, but I once again thank the comrades for all of their work so far.

PM: Thank you very much Dmitri.

EU mask

Earlier about Ukraine 2014 conflict:

And earlier about Ukraine:

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