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Workers lose, creditors win in Ukraine war

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No matter how or when the horrific war in Ukraine ends, one thing is certain: the working class will lose.

Before 2022, foreign creditors and Ukrainian elites were already attempting to gut labor protections, slash social spending, and privatize land and the public sector.

The Russian invasion last year helped make their job easier.

Before February 2022, Ukraine was already in more than $20 billion in debt and paying more on its repayments to the IMF than it spends on education, according to the opendemocracy.net news service.

In response to creditors’ demands, the Zelenskyy government was already proposing numerous policies that would make life much worse for the Ukrainian working class. They proposed cutting the minimum wage, ending the role of government in collective bargaining, privatizing its vast state agricultural land, and selling off publicly owned businesses to name a few measures.

These so-called “structural adjustment” policies are hardly new for debtor countries which have had their own domestic policies dictated to them by the creditors as a condition for the loan for decades.

To survive the invasion, Ukraine has piled tens of billions of dollars in even more debt for weapons and emergency loans. It has borrowed $18 billion more from the EU that will also come with such neoliberal reforms that seek to undo decades old protections for workers and the public.

Using coded language, the European Commission is extremely blunt about the conditions of the loan.

“The Ukrainian government will have to complement the financial support with sectoral and institutional reforms, including anti-corruption and judicial reforms, respect of the rule of law, good governance, and modernisation of the national and local institutions. We will check that these reforms have been effectively put in place when paying out the installments.”

The key phrase here is “modernisation of the national and local institutions,” which is a way of saying budget cuts, deregulation and privatization.

The creditor countries, which have organized as the so-called “Ukraine Recovery Conference,” have a willing partner in the Zelenskyy government. The plan is to make Ukraine more welcoming to foreign investors and corporations who want to be able to hire and fire workers at will and pay them whatever they want rather than what the law requires.

Zelenskyy’s advisor Alexander Rodnyansky outlined the plan to The Guardian and conceded that “We’re going to try to emulate a more liberal approach.” “Liberal” means something different in the rest of the world, closer to “liber-tarian” in the U.S.

According to economist Michael Roberts, the Ukrainians demonstrated their plan last year when the government banned strikes and suspended enforcement of CBAs and exempted workers in firms with fewer than 200 workers from all labor laws.

Ukraine is rich in arable farm land with about one-third of all the farmland in Europe. This is why the sale of land to foreign investors has long been banned. If the creditors have their way and the rule is reversed, one of Ukraine’s primary sources of publicly owned wealth will be lost.

The problem, according to Roberts, is that a tiny minority of the Ukrainian population supports these so-called market friendly “reforms.” But during a war representative democracy is put on ice.

Certainly, the U.S. government will also have strings attached to the $29.9 billion in military and about another $25 billion in other forms of assistance already extended to Ukraine. What often gets left out of the story is most of it is a loan that will need to be repaid.

It seems prudent for Ukraine to take aid from whoever offers it. The country is under attack and partial occupation by Russia, many thousands have been killed, millions displaced, much of the electrical grid destroyed, its crop exports blocked and the economy in free fall.

But this aid isn’t a type of solidarity with no expectation of reciprocation. It’s blatant war profiteering and an ideological drive to further exploit the Ukrainian working class after the guns go silent, which they must soon.

With nearly $565 billion in infrastructure already destroyed and reconstruction already estimated to cost $750 billion, Ukraine will only fall ever deeper into debt. According to the World Bank, its entire GDP, or total economic output, was only $200 billion in 2021.

Whatever the outcome of the war, after the fighting ends it will be necessary for workers to organize against creditors using the war to squeeze the population for repayment and the Zelenskyy government from opening the country to investors.

When we say we support the Ukrainians in their struggle against this illegal war started by Russia we should also support the workers who are dying now from bombs and will be the victims of debt carnage after the war ends.

Robert Ovetz is editor of “Workers' Inquiry and Global Class Struggle,” and the author of “When Workers Shot Back,” and the new book “We the Elites: Why the US Constitution Serves the Few.” Follow him at @OvetzRobert

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