Political economy of the Russian-Ukrainian conflict

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The Russian-Ukrainian conflict is now in its sixth month. The world media has been saturated with reports of this conflict. Loud claims to protect democracy and uphold the rules-based international order have succeeded in silencing the majority in the Western world.

“When everyone thinks the same way, no one really thinks.”

What is intriguing is the dogged stubbornness of American and European leaders. Despite spending an estimated US$8 billion, and counting and driving the world towards the nuclear cliff, the combined West is unwilling to consider dialogue or a diplomatic solution.

Why? What’s at stake?

Why is the combined West so keen on a total and unrestricted approach and resorted to retaliatory measures such as the theft of sovereign assets, international reserves and massive and illegal unilateral sanctions? The answer to this question requires articulations on the economic dimensions.

For a long time, Ukraine has been a valuable partner (possession?) for both the United States of America and the European Union. During the Cold War, CIA records ranked Soviet-era Ukraine second only to mother Russia as “the most economically important component of the former Soviet Union.”

In an interview with CNN interviewer Farid Zakaria, billionaire George Soros admitted to establishing a foundation in Ukraine even before Ukraine became independent from Russia. This foundation has been operating ever since and has played a vital role in various “events”. These include the Maidan event that overthrew the democratically elected Yanukovych government in 2014 or the fire in Odessa where a right-wing mob burned 31 prisoners alive in the building of the “House of Trade Unions”.

Famed US Secretary of State Victoria Nuland, “f**CK the EU”, said on her third trip in five weeks to Ukraine: “Since Ukraine’s independence in 1991, the United States has… Invested more than $5 billion to help Ukraine with needs and other goals.”

It won’t be a bad dartboard to say that the “other goals” could be Ukraine’s integration into the US-EU based international order.

Agriculture has been the most attractive sector of the Ukrainian economy. Ukraine has 32 million hectares of arable land with rich and fertile black soil (the variety “Chernozem” has a high content of organic matter), a wide variety of climatic zones and favorable temperature and humidity regimes . With such a rare natural symphony, Ukraine has a comparative advantage in cereal production whose production costs are estimated to be around 50% lower than those of European producers.

Ukraine is capable of producing a range of crops, including grains and oilseeds. Ukraine’s annual production of 64 million tons of grain and seeds. Ukraine is the world’s largest producer of barley, wheat and sunflower oil. In addition, Ukraine’s proximity to large and growing neighboring markets – the European Union – and access to deep-water Black Sea ports provide direct access to world markets and to giant grain importers from Middle East and North Africa.

No wonder, since the fall of the USSR, economic interests have converged on Ukraine. The three agribusiness giants Monsanto, Cargill and Dupont were the first to enter this market.

Cargill began by selling pesticides, seeds and fertilizers; rapidly expanding by investing in grain storage and animal nutrition and buying stakes in the country’s agribusiness giant, UkrLandFarming. Similarly, Monsanto and DuPont recently invested in a new seed factory.

More and more foreign companies are moving into Ukraine’s agricultural sector. It is estimated that more than 1.6 million hectares of agricultural land have been transferred to foreign companies for agricultural purposes in recent years.

As Frédéric Mousseau, Policy Director at the Oakland Institute, put it succinctly, “the country’s control maneuvers [Ukraine’s] agricultural system is a central factor in the struggle that took place last year in the greatest East-West confrontation since the Cold War.”

The stubborn support of the Ukrainian regime at the cost of huge losses due to death and destruction is out of this intense struggle and competition from American and European agribusiness multinationals.

US and EU political leaders know well that stealing Ukrainian agricultural wealth would require a flexible ruling class and a supportive political architecture. In his absence, there would only be a pie in the sky.

After the Maidan massacre in 2014, after President Yanukovych fled, a new US-sponsored government was formed. Three of his most important ministries were granted to foreign-born people who received Ukrainian citizenship just hours, yes, you read that right, just hours before their appointment. This kind of capitulation is unprecedented in the history of international relations.

The key finance ministry portfolio went to Natalie Jaresko, an American-born, educated businesswoman who had worked in Ukraine since the mid-1990s, overseeing a private equity fund set up by the U.S. government to invest in the country.

Now was the time for political reforms. The Washington Consensus provided the ready guide. Globalization has ensured a favorable trade and investment regime so that more Transnational Corporations (TNCs) can set up shops, take over ongoing businesses and vertically integrate them into their global empire. TNCs could then outsource part of their income without paying taxes thanks to a transfer pricing mechanism.

The team crafted reforms to maneuver for complete control of the country’s agricultural system, to facilitate the acquisition of farmland by creating land markets, reducing food and plant regulations and management, and reducing taxes. on companies and customs duties. In addition, a moratorium on the sale of land and the creation of land markets has been put in place so that farmers can sell the plot of land and move to cities.

Financialization has ensured access to banking services for average citizens. On the advice of a team of experts, the Ukrainian government has set up land banks and laws on the moratorium on the sale of land have been relaxed. Now some 800,000 small farmers could sell their farmland and move to the city, where they needed services like housing that banks planned to mortgage for. Farmers in the new town needed credit to buy furniture for new homes and car purchases. Additionally, credit/debit cards and electronic payment services were planned to create another source of revenue through card fees and credit interest.

This political package is called the Washington Consensus, the recipe for continued prosperity in the western world by draining third world resources. Therefore, as with other political imperatives, drawing Ukraine into this network is an essential goal of the combined West.

However, what was unexpected and troubling for the combined West was not just the likely loss of a market, but the equally likely emergence of a competing international order that might be relatively more beneficial to the non-Western world. . Realizing this possibility, many non-Western countries have decided to play the game of waiting and watching.

The ruling elite of the Combined West sees this as an existential threat to their hegemony. Now, any risk is worth the safety of their citizens or the survival of the planet.

(The author wishes to express his gratitude for the theme of the holiday and the details of this article to the Institute of Oakland, USA, which in 2015 documented the takeover of the agricultural sector as reported in their two reports – ‘The Corporate Takeover of Ukrainian Agriculture’ and ‘Walking on the West Side: The World Bank and the IMF in the Ukraine Conflict.)


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