Bill Black: The Kamikaze Economics of Forcing Austerity on the Ukraine

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Originally published at New Economic Perspectives

We all understand why Russia is waging economic war on the Ukraine, but why is Obama doing so?  The New York Times’ web site has posted a remarkable Reuters story (dated April 5, 2014) entitled “Ukraine PM Says Will Stick to Austerity Despite Moscow Pressure.”

The Kiev government will stick to unpopular austerity measures ‘as the price of independence’ as Russia steps up pressure on Ukraine to destabilise it, including by raising the price of gas, Prime Minister Arseny Yatseniuk told Reuters.


“Unpopular austerity measures” are, of course, among the best things Ukraine can do to aid Russia’s effort to “destabilize” the Ukraine.  Indeed, Yatseniuk admits this point later in the article.

The subtext of Russia’s message to Ukraine’s Russian-speaking population, he said, was that they would enjoy higher living standards in Russia, with higher wages and better pensions and without the austerity that the Kiev government was now offering

‘They’re saying: if you go to Russia, you’ll be happy, smiling, and not living in a Western hell,’ he said.

‘They (the Russians) are trying to compensate (for the Western sanctions). But we can pay the price of independence,’ he said, with financial support from the West.

So, our strategy is to play into Putin’s hands by inflicting austerity and turning the Ukraine into “a Western hell.”  Not to worry says our man in Kiev, because he’s sure that ten million ethnically-Russian citizens of Ukraine will gladly “pay the price of independence” to live in “a Western hell.”  That strategy seems suicidal.  Indeed, Yatseiuk emphasizes that he knows the strategy he is following is suicidal.

 [Yatseiuk] has called himself the leader of a ‘kamikaze’ government, doomed by unpopular austerity measures it must take, but he said Ukraine would stick to the measures, which include doubling gas prices for domestic consumers from May 1 and holding down state pensions and salaries against a background of a 3 percent contraction of the economy and double-digit inflation.

IMF support – a $14-18 billion financial lifeline in return for tough economic reforms – would be a “tremendous step forward”, he said.

‘We will regain trust and credibility from foreign investors. This is the roadmap for Ukraine,’ he added.

The Kiev government has said that without the IMF-mandated austerity measures, the economy could shrink by up to 10 percent this year.

Six Crazy Degrees of Austerity

The Reuters article presents a stream of incoherent odes to the supposed benefits of financial and political suicide (kamikaze economics and politics).  It was at this juncture in reading the article that I began to have a sick suspicion about Yatseiuk’s ideological dogmas and likely background.  Sure enough, the article soon confirmed my worst fears:  “Yatseniuk [is] a former economy minister, lawyer, and economist by education.”  Another theoclassical economics acolyte is eager to sacrifice his economy and his fellow-citizens on the altar of austerity.

The rush to austerity is not a product primarily of Yatseiuk’s ideology, but of the EU’s worship of austerity.  The IMF serves as the EU’s “leg breaker” for the Ukraine.  The EU is making clear that it will only provide aid if the IMF is in place to extort the Ukraine to inflict austerity on an economy that is already in recession.

This is crazy on multiple dimensions.  First, the Ukraine defines the concept of “political instability.”  Playing into Putin’s hands by inflicting austerity on the Ukraine and producing “hell” is ludicrous.

Second, the Ukraine is in a severe recession.  Austerity makes recessions worse.  The Ukraine should be spending material amounts of money (from its perspective; tiny amounts from our perspective – or compared to the cost of a military conflict) dealing with Ukraine’s acute problems.

Third, the Ukraine has an inflation problem not because of excessive demand (demand is grossly inadequate) but because Russia has dramatically increased the cost of energy.  Austerity is not the answer to this variant of cost-push inflation.

Fourth, the Ukraine has a tiny economy and small debts (relative to the West).  The EU and the U.S. can easily pay off Ukraine’s debts (or if they prefer any debt owed to non-Russian entities) and replace it with very low interest rate debt in the Ukraine’s own currency with interest payments deferred for a decade.  Ukraine has made the double mistake of trying to peg its currency to the dollar and to borrow in foreign currencies.  The U.S. and EU could solve these problems, going forward, by giving the Ukraine a fresh start.  This would speed the Ukraine’s economic recovery and remove one of the potential sources of an economic shock that could harm the EU and U.S. economic recoveries.

Fifth, the Obama administration purports to oppose the eurozone’s austerity policies.  The case against inflicting austerity on the Ukraine is even stronger.  Obama is under enormous criticism from Republicans for failing to take more decisive actions to support the Ukraine.  The Ukraine offers the administration the perfect opportunity to do the right thing economically and politically, to demonstrate his leadership, and to force the Republicans to admit that austerity is a destructive policy that the U.S. needs to prevent by forceful action.

Sixth, instead, austerity dogma trumps – simultaneously – good economics, good domestic politics in the U.S. and the Ukraine, and U.S. national security.  That’s how insanely powerful the failed dogma of austerity has become.  The CEOs who run the banks that loan money to the Ukraine are more powerful than the Pentagon and our State Department.


The Ukraine faces severe problems beyond Russia and its energy dependence on Russia.  It has an enormous informal business sector because it is so difficult to start a legitimate business.  Ecuador recently adopted a law, and new technology, to make it radically faster to start a legitimate small business.  This is great for entrepreneurs, growth, reduced corruption, and collecting taxes.  It is a radical reform that people of all political stripes can support.  Similarly, ant-fraud and corruption efforts can save the Ukraine billions of dollars and spur growth.  President Obama could develop an aid, stimulus, debt relief, and reform package for the Ukraine based on ideas like this that would that have broad appeal and help the working class and entrepreneurs.  It would also be good for peace and security without being hostile to anyone.  Instead, we are committing kamikaze capitalism that is so crazy that it should be criminal.

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  1. Jackrabbit

    AFAICT, the thinking is that Ukraine can frack enough gas to satisfy its energy needs. (A similar promise was made about Iraq: that oil sales would pay for reconstruction – but that didn’t pan out.) But how long will it take to get close to self-sufficiency? And will Putin/Russia not interfere before Ukraine develops these resources?

  2. Phil

    Yatseniuk will be amply rewarded and no doubt come out of this a multi-millionaire, or more.

    1. notexactlyhuman

      If the whole lot of the freshly appointed numbskulls don’t all get shot or beaten or burned at the stake first. Read a few days ago that they’re confiscating all civilians’ guns already. The revolution ain’t over yet, methinks.

    2. Klassy

      Yeah, I was thinking he’s not really a Kamikaze. He’s making sacrifices; they’re just not sacrifices of himself.

      1. allcoppedout

        Even the Kamikaze were lambs to the slaughter. Some were chained in as an expression of their free will and more than a few disappeared, like anarchists (sensibly) voting in a holiday before going over the top day. One can imagine Fromm talking to Kamikaze about the chains of illusion, the smarter ones just saying ‘Pass the bolt-cutters Erich’. On the spot though.

        1. nobody

          “Off Okinawa kamikaze dived on the American fleet; they would become a legend. They were likelier material for it obviously than the special units who exposed their prisoners to the bitter frost of Manchuria and then to hot water so as to see how fast flesh separates from the bone.

          “One would have to read their last letters to learn that the kamikaze weren’t all volunteers, nor were they all swashbuckling samurai. Before drinking his last cup of saké Ryoji Uebara had written: ‘I have always thought that Japan must live free in order to live eternally. It may seem idiotic to say that today, under a totalitarian regime. We kamikaze pilots are machines, we have nothing to say, except to beg our compatriots to make Japan the great country of our dreams. In the plane I am a machine, a bit of magnetized metal that will plaster itself against an aircraft carrier. But once on the ground I am a human being with feelings and passions. Please excuse these disorganized thoughts. I’m leaving you a rather melancholy picture, but in the depths of my heart I am happy. I have spoken frankly, forgive me’.”

  3. Ben Johannson

    The Russian government painted itself into a corner with its 2012 Military Doctrine, which formalized responsibility for the fate of ethnic Russians living outside the Federation. Forces in the West want a war, but they can’t just launch an attack. So they’ll engineer a situation in which right-wing forces will become increasingly powerful, culminating in a pogrom against Russians still living in Ukraine. This will then trigger a military response from the Russians, giving cover for the U.S. (intervening of course to “help” preserve Ukrainian sovereignty) to really turn the screws.

    1. allcoppedout

      The USSR invaded Afghanistan in 1926, seizing a river island. They gave it back though.

    2. Banger

      There are forces in Washington that want, if not war, a strategy of tension and there are forces in Washington that want stability not crises. These two forces I’ve loosely described as neoconservatives and realists are in conflict which is why U.S. foreign policy tends to zid and zag. The world-stage is a place of conflict but so is Washington itself with many forces competing for power and money.

      1. Brick

        There also seem to be forces focussed on Euorpe and others on Asia. The European ones seemed to think that Russia is an Asian power and Russia with Ukraine would be a European power and empire. They didn’t want that, so there was a lot of focus on getting Ukraine to join “the West”. This has now likely caused a complete failure of US foreign policy in Asia. How can you “contain” China if the biggest oil producer is on their side, who can supply them with all their resource needs by land? An oil producer who happens to be allied with the biggest democracy worldwide, who also happens to be China’s neighbor.

        1. OpenThePodBayDoorsHAL

          I think it’s much simpler than all that. Our basketballer-in-chief has gobs of egg on his face from Syria, ObombaCare, everywhere really. This is about his pathetic approval ratings. The two complete ingenues Susan Rice and Samantha Powers, utterly drunk with power and self-righteousness, informed by their good Berkeley-ite intentions but without the first clue about how the real world works, are leading the boss into another ill-conceived “activist” stance. Like the fiasco in Libya, where Rice coined that wonderful term “humanitarian bombing” this episode is a complete misreading of the realities on the ground. Lurch Kerry waits eagerly in the wings, badly needing a win, or at least a non-failure, for his own brand. Ukraine owes $35 billion just to keep the lights on, most of it to Russia. The spectacle of Repugnicants railing in Congress about the urgent need to poke Putin in the eye completes the farce. The money they are desperate to raise will go straight to Putiin himself. And the worst losers? Why the Ukrainian people, of course, who will see their pensions cut in half so the Crystal can continue to flow at receptions for bankers in Frankfurt, Paris, and London.

          1. NotTimothyGeithner

            Even without our 21st century narcissus, the senators and congressmen would go nuts. Can you imagine if people start connecting military spending/cronyism/the inability to respond? Voters, even the most deranged imperialists might start to demand whole sale change.

    3. PaulW

      For a decade and a half we’ve seen that NATO is not afraid to pick a fight with anyone who can’t fight back. You really think they want to take on Russia? You think the western public will tolerate significant casualties? Rather, I think they want a cold war to derail peace efforts in the Middle East and get back on track with attacking Syria and Iran(two lightweight opponents NATO thinks it can handle). Or, they want an financial war in order to blame the economic collapse on Russia, not western politicians and bankers.

      I’m sure Russia does not want to have to go into eastern and southern Ukraine to protect Russians but they will if forced to. Count on western politicians to do lots of huffing and puffing but NATO will not intervene militarily. Classic bullies do not gang up on anyone who can fight back.

    4. Abe, NYC

      Russia doesn’t paint itself into a corner by passing legislation. It’s more or less an absolute monarchy where laws are passed, repealed, and enforced as the situation warrants. The only thing that matters is not losing face, but the might of Russia’s propaganda machine has surpassed not only that of the Soviet Union, but even the United States. The Crimea adventure showed that the Russian elite can shape the public opinion any way it wants; it would only take a major economic crisis or a bloody war to shake that power, and they have already rallied their subjects round the flag as a preventive measure.

      From that perspective, it looks unlikely that Russia will invade mainland Ukraine. Russia has always treated Ukraine as a younger brother (who recently went astray), and Russians and Ukrainians killing each other on a large scale will not go down well Russian public, while efforts to suppress the news are certain to undermine the propaganda machine. But then, a couple of months ago it looked unlikely that Russia would annex Crimea.

  4. allcoppedout

    I find it very difficult to disagree with Bill Black – and I don’t. Plain sense is tough to deconstruct without a mess of metaphor blather that unseats everything you turn it on, including itself. Afghanistan had a king before 1930 who wanted to try democratic, improve agriculture and develop local industry stuff. We soon got rid of this dangerous modernising revolutionary as he was backed by the Soviets, How well the country has done since …

    I don’t know why we can’t get a collective grasp on the imperialism of money. The evidence is clear. The evidence of science is “clear” yet the vast majority of people on the planet don’t ‘see’ this evidence like scientists. Looking at Brownian motion, you are essentially looking at the path to modern chemistry, physics and the route to the stars (and/or more dismal conclusions on the heat death of the universe). This is not what ordinary Mary ‘sees’. Indeed, hand on heart, how many at NC have even seen Brownian motion?

    What we lack is a grasp of “clear evidence”, less in the sense of science (though dismal standards here should be improved) and more in terms of ordinary world-views and why we want to influence them. The dominant form in this is dire focus group and spin populist politics (advertising?) – and probably, on our side, hope the populace will go mob, run towards the clubs and bullets and revolution will triumph (though it never does as the kleptos push some kind of default button).

    I’m not suggesting we are this crude, We seem to be missing analysis of action and its control beyond positivist levers. Black appeals to me, perhaps, because I feel part of his economic policy would entail my size nines through doors in the City and Wall Street. Much as I see people like him, Kelton, Keen, Harvey, Hudson and Piketty as putting the right thought experiments forward on the economic state of play, I once joined the Labour Party to vote for what turned out to be Bliar. I am suspicious of the promises and my own incompetence. I also once handed out mosquito nets. They were either nicked or converted to protein capture (fly-burgers), My suspicion is we need to accept closer to the ground control than economics, We aren’t putting enough emphasis on structuring economic freedom. Whatever economics we choose, we seem to default to the Nazi finance model of handing out the money to Hugh’s kleptocracy. There is no system of transparent accounting for other than klepto-policies to work in.

    1. Banger

      Evidence, proof of facts and so on are, increasingly, irrelevant. I can give you point by point proof that what most people believe about most of the great issues of our time and, in particular, history is mainly false. That includes the intellectual class that holds on to orthodoxy more fanatically than the average person. These people will directly deny clear easily provable facts because it violates their mythological frameworks. I’ve hear this out of very intelligent people with graduate degrees from the most elite universities in the world: “even if it’s true I can’t believe it.” I found the admission refreshing–but nevertheless it begs the question: wtf happened to the Enlightenment project?

      The fact is, I believe, that PR/advertising/”education”/media are all practicing the black arts. The craze some years back with Harry Potter indicated to me then, as it does now, that subconsciously people believe they are in the midst of battling wizards and I think it is true. Our only recourse, allcoppedout, is to to practice magic ourselves–hopefully a less costly yet more potent variety.

      1. montanamaven

        The Arachdruid latest essay is on bad thinking and the use of “credos”.

        a remarkably large number of Americans, including the leaders of our country and the movers and shakers of our public opinion, are so inept at the elementary skills of thinking that they can’t tell the difference between mouthing a platitude and having a clue.

        I suppose this shouldn’t surprise me as much as it does. For decades now, American public life has been dominated by thoughtstoppers of this kind—short, emotionally charged declarative sentences, some of them trivial, some of them incoherent, none of them relevant and all of them offered up as sound bites by politicians, pundits, and ordinary Americans alike, as though they meant something and proved something. The redoubtable H.L. Mencken, writing at a time when such things were not quite as universal in the American mass mind than they have become since then, called them “credos.” It was an inspired borrowing from the Latin credo, “I believe,” but its relevance extends far beyond the religious sphere.

        1. JTFaraday

          “What makes a revival of the skills of thinking particularly tempting just now is that the bar is set so low.”

          Well, thank goodness. In which case, “we’ll think of something!” :p

      2. digi_owl

        What happened was that it was usurped by industrialization.

        It does not produce free thinkers, it produces biomachines programmed for specific tasks. Only by jumping of that threadmill and living on the margins do one have the time and reserve energy to actually dive into the material.

        And the devil was firmly uncorked when science delved into the workings of the mind. This then unearthed a mass of techniques to get past the rational and appeal directly to the emotions and instincts. Tuning “products” to talk directly to the ape lurking within. Initial attempts were crude, fear, lust, anger and so on. But now they have it refined to the point that they can mix and match the exact response they want, as long as they don’t give people the respite to contemplate what is going on (much less exchange notes).

  5. arby

    Ukraine’s economic problems, it would appear from available evidence, derive from a oligarchy stuffing its pockets and from a professional class willingly helping them do it. Whether with Russia or the West, the oligarchs and their enablers would continue to crush the aspirations of the national populace as well as their living standards. One can see how austerity ensures payment to the rentiers and flow to the professional class and so it has its beneficiaries and it’s enablers. O tempora! O mores!

    1. Brindle

      The phrase “inflicting austerity is so true. The bottom line about austerity is about power. It is about grinding the populace, making them feel the pain. Austerity is used to condition citizenry to the “reality” that “there is no alternative” (TINA).

  6. allcoppedout

    The oligarchs should be facing an international criminal court. Nuremberg has facilities, one understands.

  7. rkka

    “Ukraine’s economic problems, it would appear from available evidence, derive from a oligarchy stuffing its pockets and from a professional class willingly helping them do it. ”


    Ukraine looks now like Russia would look now if Putin hadn’t thrown tax fraud Khodorkovsky in jail after a fair trial.

    Russian oligarchs now pay their taxes and keep out of politics. Ukrainian oligarchs simply loot, and nothing the EU or IMF will do will stop them.

    1. Banger

      This is one reason Putin has been demonized by the Western media. He personally is the main threat to the West and its trajectory of a universal imperial order. The trend has moved from central state authority to a diffusion of power towards a feudal corporatist order. The idea here is that money rather than military might buys you power over others. The state acts as an enabler and transmitter of corporate power and international bureaucracies and the ongoing attempt to create a “free trade” regime all are very specifically aimed at creating tangible power for large multi-national corporations.

      Putin believes in a strong central state acting in the interest of his subjects not just to protect borders and keep order but to preserve and enhance culture–thus his favorable view of the Orthodox Church and traditional values. He understands, correctly, that there is something rotten in modernist values that tend to fragment society into the culture of narcissism–without which the West would not so easily impose increasingly tight and authoritarian controls of people who are, increasingly, so morally weak that courage and other virtues are out of the question. Mind you, I don’t agree with Putin nor do I think the way forward is the way back–I think we need to break through, in the West, the culture of narcissism and embrace the Modernist project even more by truly embracing the facts before us rather than the myths the magicians of information war are throwing at us to control us. Cultural conservatives are right that morality is a requirement for a convivial life but their morality is a dead-end–we cannot develop and prosper as human beings by going back to fear-based religion and the repression of people who have won, at great expense, their right to be dignified members of society. But we cannot linger in the emergent feudal world dominated by hungry predators who are capable of eating us alive, literally.

      Putin serves, I think, as a temporary block to the triumphalist advance of the corporate state/Deep State and, despite his obvious faults, deserves our respect. In terms of the Ukrainian crisis he had to do what he did. His next moves will be determined by the West which now, as I see it, lies confused and moving in contradictory directions at the same time.

      1. PaulW

        Bravo! Well written!

        As a traditionalist/conservative I have no problem with standing still or trying to go backwards. It may not be the way to advance civilisation but I can’t help but think has the West stopped at 1960 and remained there we’d all be better off today. Not realistic, granted. However today we face the fate of descending into a new feudal Dark Age of corporate domination. Putin’s traditionalism is the only other option around. And I do not see the west producing any leaders to offer a third option any time soon.

        1. Banger

          It is natural to want to return to a more simple, and, in many ways less toxic time. However our current situation is untenable no matter what your political and cultural tendencies are. I will tell you what I admire about true conservatives: and that is the understanding that a healthy society requires a virtuous populace. I believe this can come through reaching for expanded consciousness and a morality that Aldous Huxley comes from the “perennial philosophy” common to most great religious/spiritual traditions. I differ from conservatives in that I don’t believe any one tradition possesses the full truth as Christians tend to believe.

          1. OpenThePodBayDoorsHAL

            I think a healthy society demands first of all not a virtuous populace but rather a virtuous elite. They all need to look up the word “civic”. Instead of showing one tiny concern for the great country they inherited, they’ve treated it just as a huge trough to feed at, to extract the maximum rents possible, then get out of Dodge with their gains and leave the empty hulk behind. They strip mine everything, labor, health care, foreign policy, certainly finance. Contrast with a place like Singapore or South Korea, where the Fathers got together and said infrastructure and investment were critical, not just for themselves, but for the future of their nations.

      2. gw

        the modernist project.. yes.. this is in line with the ‘iconoclast’ zizek {less than nothing is a massive tome of modernist thought!} and his ‘return to hegel’… it’s the first time I’ve seen you write about modernity, though I’ve thought you were leaning in that direction because you write about morality in the kantian(duty)/aristotelian(virtue) sense quite a bit..
        the failures of the left… etc… well.. it’s difficult to articulate modernity (nowadays)because the’left’ gave up on that and went into ‘movement’/identity politics as a tactic/truth procedure 50 years ago… running on the fumes of imagined affluence ever since… many of my republican/conservative friends/acquaintances seem to have a better idea of this dichotomy than the obama mamas(and husbands)… [actually thinking/struggling to survive so …NOT reading blogs and watching cable tv]

        the emotionalism of identity politics has consumed the energy that was available to be expended on justice… thus, we (arrogant assumption) are rudderless…
        well, that’s a lot of prattle.. but i want to thank you for your input to this blog…

  8. tgs

    Black is correct in saying that austerity will make Ukraine’s problems worse. He is not correct in assuming that Obama and his ilk in the EU ‘want to help’. What they desperately want is to absorb Ukraine’s assets into the global neo-liberal system and load Ukraine down with further debt. The Ukrainian people are secondary – they will have to be managed. To that end we will see the development of a militarized police/security force with weapons happily supplied from the ‘west’ – on credit.

    1. Bill Black

      I tried to make it clear that I didn’t think the West really wanted to help — “revealed preferences.” But so many Western leaders are so ignorant of economics that it is hard to know their true motives. I typically
      focus on their actions rather than trying to divine their intentions.


      1. allcoppedout

        The one’s I’ve met know so little biology I’m amazed they know how to breathe.

        1. NotTimothyGeithner

          Diane Feinstein has recently become concerned about domestic drones after she saw one by her house. She then said she had no idea they could do that. I can’t even imagine what she must have thought.

      2. sglover

        Dr. Black — good article, astute analysis, but please, it’s “Ukraine”, not “the Ukraine”. What you’re doing is close to referring to Russia as the Soviet Union.

  9. Thor's Hammer

    Bill Black’s article suffers from a limitation of perspective. It is an article about the failure of austerity overlaid on the situation in Ukraine, and as such it ignores the role that European/US clandestine operations have played in overthrowing the process of democracy in that country. No mention is made of the NATO encirclement of Russia and the threat posed by eventual placement of NATO nuclear armed missiles in Ukraine targeted at Russia. No mention of the western deception in promising not to incorporate former Warsaw block countries into a military alliance. No mention of how the Ukraine came to be separated from the Soviet Union— essentially given away by Kruschev — a Ukrainian by birth. And no mention of the fact that Ukraine is historically and geographically within the sphere of influence of Russia and no damn business of the USA.

    In all the discussion and propaganda around the situation in the Ukraine — gas pipelines, Putin’s negotiating skill or ruthlessness, Obama & Kerry’s incompetence, Western support of neo-Nazis, IMF schemes for rent extraction—— a critical fact is never mentioned. The Ukraine is the world’s third largest producer of food grains– corn and wheat. In case you haven’t bought a $5 loaf of bread recently perhaps you are not aware that food, and grains in particular are the new gold, inflating in price at a rate that will soon impact the very survival of people all over the world. As the US mines the soils of the Midwest and sucks the Ogalla Aquifer dry trying to produce more and more corn to burn in our SUVs, do you really think that the US and Canada do not have an interest in poisoning the breadbasket of their nearest competitor by sowing austerity and political instability?

    1. montanamaven

      I agree. I am a great admirer of Prof. Black especially his contributions during the 1980s Savings and Loan debacle. His criticism of our oligarchs and his call for them to be in prison is righteous. But I was dismayed to see him start out his article with the sentence

      We all understand why Russia is waging economic war on the Ukraine, but why is Obama doing so?

      Oh, I don’t think “we all have an understanding…” You do. But, as you say, Prof. Black gets his facts about Ukraine wrong. My meager understanding; Russia or Gazprom had a contract with Ukraine that basically sold them cheap gas for security of the ships in the Black Sea and had offered a 33% discount in their latest aid package. Since the coup against the elected although corrupt (like our legislators) Ukraine government, Russia is doing a redo of their deal. For one thing, they now have the port in Crimea, so they don’t need the former deal. Hey, it’s business or “bidness” as Molly Ivins used to say. Well, that’s my understanding. Even if I’m wrong, using phrases like “waging economic war” is not helpful.
      I’ve noticed this more and more in this whole Ukraine story. A progressive writer will write an informative piece, but start out with a statement that is false or prejudicial. Like The Nation article by Paul Rosenberg called “Collaboration: America’s Dirty Little Ukraine Secret”. The interview itself about the history of Nazis in Ukraine is valuable although it’s just one part of the history of the region–a region that lost millions of non Nazi people to famine and war, but Rosenberg starts out with the sentence,

      it’s hard for Americans not to see Vladimir Putin as the big villain.

      Is that true? and why use the word “villain?”
      Anybody else notice this?

      1. Park Nihrs

        Yes – must be establishing bona fides with less well informed (less disillusioned) readers to pull them in. Imagine trying to tell some complex truth as an NPR reporter!
        see comments today at
        Comments are way more insightful than the NPR story, but there’s some really poorly informed “intelligent well-read” NPR listener comments within the thread. It is harder for an old time liberal (I was one) to fully grasp the duplicity of FUKUS governments, than for a camel to pass through the Bosporus Straits.

    2. ToivoS

      “Ukraine is the world’s third largest producer of food grains– corn and wheat.”

      Simply incorrect. Maybe 15th.

    3. Fiver


      Exactly. Smash and grab asset stripping courtesy of IMF disaster capitalist regime followed by years of intense economic strains, dragging down Russia. Ukrainians meanwhile flip out completely when it becomes clear what Nuland’s stooge Yats has done to them.

  10. PaulW

    Forgive me for stumbling over the opening of this piece but “Russia is waging economic war on Ukraine”!!! Since when is asking market value for energy and expecting repayment of debts economic war? The bias against Russia is extraordinary, even among writers trying to be objective.

  11. James Simmons

    Bill Black’s prescription is correct. However, he proposes a US/Euro bailout of the Ukrainian economy using US taxpayer’s money. He knows the American public would not tolerate this. So typical US posturing is the likely outcome.

  12. Gareth

    The last thing Russia wants is a destabilized Ukraine. They have put forward explicit proposals for constitutional reform in the Ukraine that would create a federation, guaranteeing the rights all ethnic groups in the country and countering the centralized power of the oligarchs to continue looting the economy. Ukraine would be a neutral country, allied to neither NATO or Russia, trading with both the EU and the Russian Federation. The US however, badly wants Ukraine in NATO so as to position American troops and missiles near the Russian border, and as entry point to expand US influence in Central Asia. If our Dear Leaders continue to push forward with this agenda then you will see the secession of eastern and southern Ukraine into Russia. Ethnic Russians, many of who are dual citizens, will not put up with a government that outlaws their language and includes neo-nazis in positions of power inside the government.
    The US has declared as a policy, the ‘Right to Protect’ (R2P) people who are under various types of threats, real or concocted, as a reason for the use military force around the world. The Russians now feel fully justified in invoking the same R2P policy if they perceive Russians in the Ukraine to be under threat. What’s good for the goose is good for the gander.

    1. SYnoia

      Which make the Afghanistan adventure not a anti-terrorist mission but the other side of a pincer movement with Russia as the nut.

  13. Dennis Redmond

    Folks, some facts.

    1. Ukraine had a genuine democratic revolution against a thuggish, gangster President who was ripping off the country. (

    2. Putinism is the rule of thuggish siloviki and corrupt plutocrats, who have one goal – stealing Russia’s energy-rents (about $200 billion each year) to line their own pockets, and to indulge in revanchist ethno-Russian imperialism abroad. Russia is run by a thuggish neoliberalism combining the worst aspects of Wall Street theft, corrupt banks, sleaze and wholesale violations of human rights.

    3. The bailout is primarily an attempt to break Ukraine’s dependence on imported Russian energy. The gas subsidy system is an ecological nightmare, and subsidies of about $5 billion per year (IEA estimate) were being plundered by Yanukovych’s stooges. The new government is instituting a tax rebate system, to help lower-income citizens pay their energy bills.

    4. Ukraine’s revolution is most similar to Argentina’s revolution in 2001. It needs our support and critical solidarity.

    1. Banger

      Well, sadly your facts are dead wrong. Ukraine was a constitutional democracy that was overthrown by a mob (impeachment was in their constitution). The last elections were legitimate. I believe the U.S. government is pretty bad, allowing thugish Wall Street oligarchs to get away with massive crimes that nearly upended the world economy yet I don’t favor massing in the streets of Washington and overthrowing the government. Whatever the former Ukrainian Prez was guilty of it pales in comparison to the sins of the USG in the past decade or two.

      Ukraine represents one of a score of government overthrown using similar techniques by the USG, once it used the CIA and other contractors and, in the mix today, are also the NED and other semi-official entities. This project is fueled by fanatical followers of the American Exceptionalism delusion and led by, what we thought was a discredited movement, i.e., the neoconservatives.

      Compare Russia under Putin with the U.S. under Bush and Obama–which country has the most toxic oligarchs? Which country has been waging war all over the globe against non-existent and trumped up “threats” (e.g. Saddam) that resulted in millions of people dead, wounded, or driven from their homes? Certainly Putin has his Chechnia which he inherited from the U.S. puppet Yeltsin–which the U.S. encouraged, btw tut-tutting all the way.

    2. ToivoS

      You have been soundly trounced by others so I will just refer to your pathetic point 4. The thugs that overthrew the legally elected Yanukovich government were fascists and neonazis. They most definitely do not deserve our support but deserve our condemnation.

  14. Chris S.

    Are people aware that Stalin forced austerity measures on the Ukraine in the 1930s
    The Holodomor (Ukrainian: Голодомор, “Extermination by hunger” or “Hunger-extermination”; derived from ‘Морити голодом’, “Killing by Starvation”) starved several million people to death, intentionally.

    It was a situation much like the one in North Korea in the 1990s, (Ireland in the 1840s / China in the late 1950s, early 1960s)

    Stalin did it to punish the Ukraine for resisting his forced collectivization campaign. It served as one of the models for Hitler’s Holocaust, the other one being the Armenian Genocide.

    This shows the peril of letting madmen get away with murder.

    1. ToivoS

      There is no doubt that a major famine killed many hundreds of thousands of Ukrainians in 1932. But there is no evidence that it was intentional. Criminal negligence on the part of the CP officials that forced the farmers into collective farms for sure but there is no evidence of intent to cause the famine.

      1. polak

        Not true. here is what my ancestors told me:
        Soviet army was dispatched into the “republic of Ukraine” in the fall just before the harvest with orders to burn the fields of wheat.
        The following winter millions of Ukrainian farmers (burlaks) died from hunger and cold.

  15. allcoppedout

    I concur with Banger in all comments above. In the world of BBC glove-puppets, ‘Sooty’s Magic Wand’ used to fix everything. Sooty’s mate Sweep played Sancho Panza and under total idiocy understood what mattered. Jake the Snake appeared for while, giving libidinal-comedic interest. At the same time we had Captain Pugwash (pugwash was allegedly South Sea pidgin for blowjob), with Seaman Staines, Cabin-hand Jim and Master Bates. In the sands of time I don’t know if I’m recalling the actual programme content or that of playground banter. We probably thought a pugwash a device for blowing up balloons. It was sadly Master Mate and Tom the Cabin Boy.

    I mention this because many undergraduates don’t get stuff like South Park or The Simpsons, let alone genuinely tough analysis. The often miss visual jokes completely or what is going on when Rule Britannia is played behind a speech. I used to use an film called ‘Beer’ (also known as ‘The Selling of America’) – – this clip comes after you have seen the totally different reality. Older audiences would be laughing from the start, the 18+ groups hapless. Who laughs at what is not the point.

    We might think those us who agree with Bill have a different set of paradigmatic assumptions than the neo-crapified. I suspect we are missing something much simpler and universal. Sadly, Banger, my copy of Sooty’s wand was liquorice and I ate it instead of saving the world.

  16. Eureka Springs

    IMF is war. 20th century neo-barbarism. The Kamikaze analogy falls short… it’s not a lone attack here it’s all out warfare on/from multiple fronts. All much more cowardly than a kamikaze pilot as well.

    I wish we who know better had a mechanism available to inform/warn Ukrainians. Send in a few million pamphlets and books like the Shock Doctrine, etc. No doubt we would quickly be deemed terrorists for attempting to do so. And you tubes of the fascists burning books would pop up quickly. But that would require an sincere anti-war organization in the US…. which there is not even one I can think of.

    Also I am puzzled, after what they suffered in the 90’s why is Russia is still a member of the IMF.

  17. SubjectivObject

    “Fifth, the Obama administration purports to oppose the eurozone’s austerity policies. The case against inflicting austerity on the Ukraine is even stronger. Obama is under enormous criticism from Republicans for failing to take more decisive actions to support the Ukraine. The Ukraine offers the administration the perfect opportunity to do the right thing economically and politically, to demonstrate his leadership, and to force the Republicans to admit that austerity is a destructive policy that the U.S. needs to prevent by forceful action.”

    What am I missing here? The Obama administration in a long continuum of action/inaction fully supports, aids, and abets the bankster rentier class. Any administration language to the contrary is practiced misdirection. If #5 is merely intended to browbeat Obama, so be it and good luck with that. This watcher is convinced that any action by the Western power structure is all about extraction. Extraction of resources, extraction of capital, extraction of wealth, extraction of power, extraction of interest, extraction of health, extraction of well being, extraction only and ad infinitum. The vampire of US financial, corporate, and political leadership has long sucked dry the image of American Exceptionalism. Let’s on the other side only call it what it is and get on with the internal war of works needed to remove it.

  18. Abe, NYC

    The Ukraine offers the administration the perfect opportunity to do the right thing economically and politically, to demonstrate his leadership, and to force the Republicans to admit that austerity is a destructive policy that the U.S. needs to prevent by forceful action.

    That’s the thing. At this moment, Ukrainians are hostages of the situation. They don’t even have a proper government until the May election, and they cannot kick the European Commission in the teeth (wish they could) after they shed blood to stay in Europe. Maybe the situation will change after the election, but at this stage real help can only come from the US: Ukrainians are too weak to achieve anything unilaterally, and their negotiating position is desperate.

    1. notexactlyhuman

      Meanwhile, their unelected government makes decision after decision that will deepen their enslavement.

    2. OIFVet

      “at this stage real help can only come from the US”

      Fear not, US help is coming. We will destroy Ukraine in order to save it – and make a buck while creeping closer to Russia’s borders.

  19. Abe, NYC

    Third, the Ukraine has an inflation problem not because of excessive demand (demand is grossly inadequate) but because Russia has dramatically increased the cost of energy.

    I disagree. The gas price hike was announced days ago and is not even in effect yet. The inflation in Ukraine is more similar to the 1990s story: a flight from national currency caused by expectation of severe economic contraction pushing up import prices, which quickly propagates through the economy.

    The problem, in my opinion, is that the dynamics of inflation in a relatively small economy such as Ukraine’s are quite different from US or Russia. The default of 1998, which triggered a massive bout of inflation and collapse in exchange rate, did wonders for Russia in large part because import substitution industries sprang up. But I don’t think Ukraine is big enough for that to happen. In the meantime, as people buy dollars with their savings, positive feedback kicks in and the currency spirals down.

    I suppose if your industries are competitive and there is healthy foreign demand, you can pull yourself out of the spiral. But Ukraine’s industry has been heavily dependent on Russia and that link is being cut, while foreign demand is precious now. So Ukraine’s situation is real bad. It needs all the help it can get, and it seems all it gets is demands for austerity.

  20. Procopius

    I hope I’m not off-topic by saying this, but I haven’t been able to figure out why Paul Krugman has been praising the IMF recently. I agree with him that they have a decent research department, which has been churning out some pretty good studies debunking the expansionary austerity lie. So what? The management’s policies haven’t changed one bit. They’re still imposing extreme counterproductive austerity policies on their victims. They’re still the ECB’s leg-breakers, as somebody commented above. I generally agree with PK’s opinions (well, he doesn’t seem to grasp MMT), but he seems completely blind to this disconnect.

    1. NotTimothyGeithner

      Krugman might be a friendlier priest, but he is still a priest from the priestly class in service to his religion, neoliberal economics. Let’s not forget, the NYT hired him as a fairly right wing economist who was relatively supportive of reagan era policies. I know he opposed the Iraq war, but being right about iraq’s negative outcomes is on par with predicting where the sun will rise.

  21. Chauncey Gardiner

    In a clinical sense, geopolitical policies are almost always undertaken for more than one reason. Although they are almost certainly part of the equation, I believe policy actions regarding Ukraine are not limited to direct sovereign debtor considerations, Shock Doctrine, and implementation of sociopathic austerity measures similar to those undertaken in the nations of Southern Europe and Ireland. The amounts involved are simply too immaterial and Ukraine is too poor IMO.

    In addition to Russian success in forestalling direct military action in Syria, backdoor Black Sea access, and nervousness regarding Russian expansionism into the former Eastern Bloc, I have specifically wondered how much of this is being driven by an oblique attack on the Putin regime for the attempted disintermediation of the $USD as the global reserve currency used for crude oil and natural gas purchases?

    1. NotTimothyGeithner

      Ignoring the protests and coup aspect, I think the DC response is largely driven by a perverse American exceptionalism. Our elites either are terrified of being seen as weak rulers of the empire or are such believers in their own pomposity that they can’t fathom a world which functions beyond their control.

      I suspect the petrodollar has never entered the thoughts of the bulk of decision makers or they would have been clever enough to take better care of the empire.

  22. backwardsevolution

    “Ukraine will never see one dollar of the IMF money. What the IMF is going to do is to substitute Ukrainian indebtedness to the IMF for Ukrainian indebtedness to Western banks. The IMF will hand over the money to the Western banks, and the Western banks will reduce Ukraine’s indebtedness by the amount of IMF money. Instead of being indebted to the banks, Ukraine will now be indebted to the IMF.

    Now the looting can begin. The IMF loan brings new conditions and imposes austerity on the Ukrainian people so that the Ukraine government can gather up the money with which to repay the IMF. The IMF conditions that will be imposed on the struggling Ukraine population will consist of severe reductions in old-age pensions, in government services, in government employment, and in subsidies for basic consumer purchases such as natural gas. Already low living standards will plummet. In addition, Ukrainian public assets and Ukrainian owned private industries will have to be sold off to Western purchasers.”

  23. backwardsevolution

    From above article:

    “Despite unequivocal evidence of one country after another being looted by the West, governments of indebted countries continue to sign up for IMF programs. Why do governments of countries continue to agree to the foreign looting of their populations? The only answer is that THEY ARE PAID. The corruption that is descending upon Ukraine will make the former regime look honest.”

  24. Jesper

    Russia hasn’t changed much in the past 10 years, Russians are used to what currently is.
    The US has changed a lot, Americans have had falling living standards and diminished rule of law for years now.

    Which country-leaders has the biggest need for an external distraction, US or Russia?

    1. NotTimothyGeithner

      10 years ago was the aftermath of the Yeltsin era. The oligarchs who didn’t want to play ball have been neutered. Moscow is much safer. Russia isn’t an international arms bizarre for random thugs.

      Its definitely quirky, but Russia has dramatically improved from the post-Yeltsin era. The last 15 years have been significant. I know U.S. propaganda went full blast during Sochi, but the country was a disaster in 1999. Today, regions of Europe want to live under Putin instead of joining the EU.

  25. washunate

    “President Obama could develop an aid, stimulus, debt relief, and reform package for the Ukraine based on ideas like this that would that have broad appeal and help the working class and entrepreneurs…”

    Sure, and the President could promote universal health insurance and universal unemployment insurance and investment in wind and solar power and rebuilding our passenger rail network and fixing our sewer systems and repairing schools and ending the drug war and closing hundreds of military bases and stopping unconstitutional spying and prosecuting financial fraud and prisoner abuse…

    What seems to be missing from this kind of economic analysis is that our leaders have goals other than “helping the working class and entrepreneurs”.

  26. Robert

    Read the Protocols of Zion. Conspiracy and anti-Semitic knee jerking aside, what it says will happen has happened in large measure and is continuing to unfold. It fits the facts. And lets face it pro-zionist factions in the US do have a tremendous influence in banking, government (neocons) and the media. Like it or not. And recall that Zionism is one thing, and Jews and Judaism quite another. Zionists are the worst enemies of Jews. Read Israel Shahak.

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