Ukrainians Get IMF’s Bitter Medicine

Exclusive: Though lacking legitimacy from national elections, Ukraine’s coup regime has approved a harsh IMF austerity plan that hits Ukraine’s “99 percent” the hardest and asks little from the country’s “1 percent,” including the corrupt “oligarchs,” reports Robert Parry.

By Robert Parry

It’s a safe bet that most of the Ukrainians who flooded Maidan Square in Kiev in February did not do so because they wanted the International Monetary Fund to make their lives even more miserable by slashing subsidies for heat, gutting pensions and devaluing the currency to make everyday goods more expensive.

But thanks to the U.S.-backed coup that ousted elected President Viktor Yanukovych and replaced him with a regime including far-right parties, super-rich “oligarchs” and technocrats with little sympathy for the suffering of average people, that’s exactly what happened. Although lacking legitimacy that would come from national elections, the coup regime pushed through the demands of the Washington-based IMF.

Ukraine's acting Prime Minister Arseniy Yatsenyuk. (Photo credit: Ybilyk)

Ukraine’s acting Prime Minister Arseniy Yatsenyuk. (Photo credit: Ybilyk)

The process began just 10 days after the violent Feb. 22 coup that forced Yanukovych to flee for his life. IMF officials landed in Kiev on March 4 to hammer out a deal that acting Prime Minister Arseniy Yatsenyuk, himself a chilly bank technocrat, has acknowledged is “very unpopular, very difficult, very tough.”

What is also striking about the IMF plan is that it puts virtually all the pain on average Ukrainians. There is nothing in the economic “reform” package that extracts some of the ill-gotten gains from Ukraine’s ten or so “oligarchs,” the multimillionaires and even billionaires who largely plundered Ukraine’s wealth after the collapse of the Soviet Union in 1991.

There is no plan for demanding that these “oligarchs” kick in some percentage of their net worth to help their own country. Instead, hard-pressed citizens of the United States and Europe are expected to carry the financial load.

The U.S. Congress voted by large bipartisan majorities to have the American taxpayers provide $1 billion in aid to Ukraine’s coup regime. Further, the IMF predicts that its $18 billion in loan guarantees could generate up to $27 billion from the international community over the next two years.

Though the IMF plan includes some promises about fighting corruption, there is no requirement that the West’s billions of dollars will go toward government programs that might actually strengthen Ukraine and help the average Ukrainian by putting the jobless to work. Nothing about upgrading the infrastructure or providing improved educational opportunities, better health care and other programs that might reduce some of Ukraine’s social pressures and make it a more viable nation.

For instance, investing in roads and rail could make Ukraine a more attractive investment opportunity for agricultural corporations eying the country’s rich soil which historically has made it the breadbasket for much of Central and Eastern Europe.

Cookie-Cutter Approach

Instead, the IMF has applied its usual cookie-cutter approach toward a troubled nation: reduce public spending, slash social programs, eliminate energy subsidies, devalue the currency, raise taxes, impose triggers for more austerity if inflation rises, etc.

Some economists project that the cumulative impact of the IMF “macroeconomic reforms” could result in a 3 percent contraction of Ukraine’s already depressed economy, which fell into a severe recession after the Wall Street crash of 2008 and has been inching along at almost zero growth the past two years. But Yatsenyuk warned parliament that the drop in the GDP could be more like 10 percent if corrective actions were not taken.

But those actions will inflict more hardship on the Ukrainian people — their “99 percent” — while giving Ukraine’s “1 percent” pretty much a pass. Yet, beyond fairness, there’s also the question of the legitimacy of the coup regime taking on new debt obligations without the consent of the Ukrainian people.

After the violent ouster of elected President Yanukovych on Feb. 22 — after he rejected the IMF’s terms — the post-coup parliament cobbled together a new government which involved handing out four ministries to far-right parties whose armed neo-Nazi militias had spearheaded the coup.

Yatsenyuk was the personal choice of U.S. Assistant Secretary of State for European Affairs Victoria Nuland to lead the new regime. Weeks before the coup, Nuland was caught discussing with U.S. Ambassador to Ukraine Geoffrey Pyatt who should serve in a new government. Nuland said in a phone call to Pyatt that was intercepted and posted online that “Yats is the guy” — and he was installed as prime minister once Yanukovych was gone. [See’s “What Neocons Want from Ukraine Crisis.”]

Ukraine’s parliament has set a presidential election for May 25, and protesters in the Maidan also sought quick parliamentary elections. But Western diplomats have been urging a delay in the parliamentary balloting as well as postponement of the most onerous IMF provisions until after the May 25 vote. That way the election will have come and gone before the beleaguered Ukrainians truly understand how painful the IMF austerity will be.

As the New York Times reported, “Senior Western officials said on [March 26] that the loans from the United States and from the I.M.F. would be structured to get the government through its first few months without undue political upheaval, putting off some of the more difficult changes until after the May election. The West has also chosen not to press for early parliamentary elections, one senior official said, because ‘the priority now is stabilization in Kiev and de-escalation with Moscow.’”

Given such bleak economic prospects — and evidence of Western manipulation of the political process — is it any wonder that more than 90 percent of the voters in Crimea opted to leave Ukraine and rejoin Russia?

Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s. You can buy his new book, America’s Stolen Narrative, either in print here or as an e-book (from Amazon and For a limited time, you also can order Robert Parry’s trilogy on the Bush Family and its connections to various right-wing operatives for only $34. The trilogy includes America’s Stolen Narrative. For details on this offer, click here.

14 comments for “Ukrainians Get IMF’s Bitter Medicine

  1. 0jr
    April 14, 2014 at 19:11

    I just read and saw an acusation by the russians that the jews in charge stole and or gave billions $ in gold to amerika not including all the gold artifacts in the museums that were essentially stolen from the Hungarians that was worth multi billions. I will follow up When I find it and remember.PS with that gold they don’t need money from the imf that will bankrupt the country and put them into perpetual debt

  2. Anna
    April 10, 2014 at 23:53

    A senior member of the Ministry of Finance (of the overthrown Kiev govt) reported that within days, the US had removed all of Ukraine’s sovereign gold.

    There are, I’m sure, many reasons the banksters want to push countries into accepting their loans, but if what he said is true, surely the biggest is that they can steal gold in the name of “holding collateral.”

    Since the loans and interest are inevitably too large for especially a destabilized populace and their government to repay, “austerity” is imposed, meaning the infrastructure suffers mightily – education, healthcare, transportation, etc.

    This leaves the door wide open for multi-national corporations to swoop in and privatize what should remain under the public’s control. Education is one of the biggest plums, since they can brainwash and numb everyone into compliance.

    The current push by the “Save the Children” foundation for early childhood education is more of that BS, by the way. In the UK, they even have the temerity to call it “early intervention.”

  3. Michael E
    April 5, 2014 at 21:07

    I don’t think you’ll find this story on the BBC or other national media places, only anti Russian stories to be found there.

  4. Michael E
    April 4, 2014 at 12:15

    Nothing new here, people are stupid and the poor always pay the most. When are we going to wake up and get rid of the rich?

  5. Guest
    April 4, 2014 at 05:44

    I’m afraid Western media coverage won’t be as sympathetic the next time the protestors take to the streets.

  6. Paul G.
    April 3, 2014 at 05:45

    Crimeans will be chuckling at their Western neighbors foolishness. With Kiev drinking the IMF Kool Aid, there will be all the more impetus for the Eastern section to secede.

    So the Presidential candidates are Tymoshenko and one of the oligarchs known as the “Chocolate King”. In country like the Ukraine that means they are running to become the personal recipients of some of that money, and their constituents get to pay it back-if ever. This would constitute the mother of all sub prime loans.

  7. JayHobeSound
    April 3, 2014 at 02:32

    Mission Accomplished: Another sovereign state’s economy destabilised and its society divided and disrupted. How would Americans like it if foreign countries started pulling the same dishonorable and indefensible schemes in the U.S.?

  8. Doug
    April 3, 2014 at 00:31

    If the U.S. of A, and Canada are so concerned about democracy, international law and human rights, why would they not insist on putting the question to the people of The Ukraine in the upcoming elections, whether they want to ally with the EU, or with Russia and divide the country as near as possible to where the majority vote splits the territory, each going their separate ways. Do all this without the interference of the infamous NGOs of foreign nations meddling in other peoples elections. A tall order!

    Admittedly, it would be hard to overcome the $5 Billion US already spent by US in an effort to sway opinion against the Russians. Even at that, I suspect that the West would not trust the Ukrainian voters to make the “right” choice.

    • Cass Dean
      April 6, 2014 at 22:51

      The $5 billion Victoria Nuland bragged about to the Press Club dinner was “so far.” That was in November. A few pricey events ensured. We’re probably up to $7.5 by now, wouldn’t you think?

      Oh, yeah. Plus the $1 billion being kicked around by Congress. What’s that about? A beard?

  9. Enrique Ferro
    April 2, 2014 at 22:08

    Small wonder Crimea ran away and most of the South-eastern regions are striving to get rid of the chaotic and sold-out rule of the Nationalist and Nazis ruling in Kiev after a violent seizure of power. If such a disaster continues even Galicia in the utmost Western Ukraine will demand to become a Russian region!

  10. F. G. Sanford
    April 2, 2014 at 18:58

    I too think they will take to the streets again. It probably won’t happen until next spring. There will be six months of bewildered agony followed by a twenty below Ukrainian winter. Without subsidized gas, it will be too cold to hit the streets, and this time, NED won’t be offering fifty euros a day for paid protestors. A fresh crop of Ukrainian streetwalkers, their most lucrative export, will be migrating to attractive Western European cities before winter sets in. Hey – I’m not being sexist or racist. It’s just that the only growth industries during forced austerity are black marketing and human trafficking. That’s one of the IMF’s dirty little secrets. Then there’s the clandestine foreign aid program which consists of troop deployments – after all, soldiers spend money…and there will be plenty of black marketing and prostitution. That angers the local population as they observe their children’s career opportunities with dismay. Compliance with the new economic reality won’t be hard to enforce, at first, anyway. There are all those thugs running around with hatchets and bats, which are useful under such circumstances. As food becomes outrageously expensive, they’ll wonder what happened to Victoria Nuland and her big bag of cookies.

    The thugs will be plagued by the nagging doubt that they aren’t getting their fair share of the loot. They will logically assume that they are being screwed by those…well, if you’re watching European satellite TV, you’ll see them basking in victory and hanging posters with Adolf Hitler’s picture. They’ll assume those…well, “international bankers” are to blame. Those are the same bankers that were blamed when Germany had 10% unemployment and the rallying cry was that “democracy can’t solve our problems”. I wonder what will happen when the IMF bankers actually try to collect?

    Between 1945 and the fall of the Soviet Union, Western backed Ukrainians participated in some interesting activities. By some accounts, those insurgents (today, we’d call them terrorists) were good at what they did. Estimates of their successful campaign include up to 30,000 assassinations. That’s another product they may export to Western Europe.

    Nope, Ukrainians don’t get mad. They get…even. But I don’t expect to see Victoria or John McCain among the cheerleaders next time around.

  11. Roch
    April 2, 2014 at 16:40

    Well are we supposed to feel bad when these people dumped their DEMOCRATICALLY ELECTED leader president. What did they expect. Lesson learned. Now get back in the streets and START OVER and go back to what you had –you are on the short list for being Ireland, Portugal, Spain or Greece!

    • Lynne Gillooly
      April 2, 2014 at 17:53

      We need to stay out of other country’s governments…period
      It seems more like the people of Ukraine were mislead by “outside countries” to protest the elected Prime Minister without knowing the details. (sounds familiar)
      Now they are stuck with an IMF Puppet leader that will impose neoliberal austerity policies on the people while the oligarchs, there and abroad , reap the profits.

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