At the end of my second blog on democracy and oligarchy in Ukraine, I came to a gloomy conclusion that there would be no real effort to curb the power of the oligarchs, and that it will be the common Ukrainians who will have to bear the costs of reforms. All this came to pass even faster than I expected.
The International Monetary Fund (IMF) bailout of Ukraine, which was announced last week, will result in an already very low living standards in Ukraine crashing even lower.
The Ukrainian government has already increased the price that the population pays for gas by 50 percent (and further increases may occur down the road). This raises the specter of thousands of people unable to pay for heating their apartments during the coming winter. These are likely to be the old folks whose only source of income is a state pension. Pensions will be cut drastically, perhaps halved, because the IMF requires the government to balance its books. Many state employees will be fired, and the salaries of the rest reduced.
So popular immiseration in Ukraine is set to deepen dramatically. What about the other end of the wealth scale? Things there look very grim, too.
A unifying message of the Maidan uprising in Ukraine was that people had it enough with the oligarchic rulers of Ukraine. One of the leaders of Maidan, the retired boxer Vitaly Klichko, has been a vocal critic of the corrupt Ukrainian politics. Klichko, is not your common Ukrainian (with an estimated wealth of $65 million), but he is small potatoes, compared to real oligarchs (with fortunes of at least $1 billion).
But the latest news is that Klichko decided to step down as a presidential candidate. Although there are other candidates, it is generally acknowledged that the race now is between just two individuals, Petro Poroshenko and Yulia Tymoshenko. I have already written about Tymoshenko, who made a huge fortune (estimated at $1 billion) from murky gas-trading deals during the chaotic 1990s. Poroshenko, on the other hand, made his fortune in the confectionery industry.
Not anybody who is super wealthy is an “oligarch,” of course. The sources of true oligarchic power must include both a huge fortune and the access to the highest levels of political power. Both Tymoshenko and Poroshenko fit this definition perfectly, since both have been in and out of government, occupying a variety of posts. Since 1999 Tymoshenko has been the Deputy Prime Minister for Fuel and Energy and Prime Minister (twice). Poroshenko hasn’t climbed quite as high as that, but he occupied the two next most powerful posts in the government: Minister for Foreign Affairs and Minister of Trade and Economic Development. Just as Kevin Philips wrote, political power begets economic power, and economic power begets more political power. At least, that’s how it works in oligarch-dominated countries.
It’s highly ironic that when the corrupt Yanukovich fell, crowds of Ukrainians flocked to marvel at his palatial residence.
The problem is that the next Ukrainian president is likely to be even more of an oligarch than Yanukovich (who must be a very wealthy man, but unlikely to be in the same league as Poroshenko and Tymoshenko).
As the French say, plus ça change, plus c’est la même chose (or, less elegantly in English: the more it changes, the more it’s the same thing). Are we going to see another insurrection, this time against Poroshenko (or Tymoshenko, whoever wins the elections)? If so, at least we will get to see the interiors of their palaces…