Maidan

At least, that is my first instinct, taking what Terry says as read (Really Betraying a Revolution, Mon 23/5/05). Here is how I am reading it. He is saying, without being a fly on the wall during various meetings and conversations, we cannot be absolutely certain about this, but any other conclusion is difficult or impossible to draw from the available evidence:-

1. There is a conspiracy among powerful global capitalists to blackmail the Ukrainian Government into re-privatizing the Kryvorizhstal steel plant for far less than its true value. (* On the 'true value' point, see footnote below.)

2. This blackmail includes, sending round the heavies, in the form of TNK-BP, which is obliging by deliberately inflating the price of crude oil, thereby abusing its power as a monopoly supplier, in order to inflict grievous bodily harm on the Ukrainian economy.

3. The World Bank, headed by some fundamentalist neocon nutter, is going to blackmail President Yushchenko directly next month, by imposing the bargain-basement sale of the steel plant as a condition of a $1.5 billion loan which is desperately needed to combat poverty in Ukraine.

4. The effect, if not the intention, of Aslund's article (Betraying a Revolution, Wed 18/5/05) in this context, is equivalent to that of a brick that comes flying through the window with a message attached which reads, "Just a friendly reminder: it's pay day tomorrow. You'd better have the money."

5. By accusing Prime Minister Tymoshenko of betraying the Revolution by NOT selling the steel plant for far less than its true value, thereby refusing to 'do a Kuchma' in the teeth of demands with menaces, Anders is indeed guilty of breathtaking, brass-necked, diametric deception of the readers of the Washington Post. Yeah, right, thousands of Ukrainians went to the barricades to stop Ukrainian oligarchs from raping Ukrainian assets, just so that American capitalists could do the same thing instead.

Does anybody else think there should be a Duranty Prize for excellence in certain techniques of journalism?

Let me tell you a true story. While I and my fellow election observers from UCCA were touring Odessa region, visiting polling stations before the first of last year's presidential elections, we came upon a distressed man with something to show us. Following his insolence in campaigning openly for Yushchenko, he had received a stupid offer for his home and shop. After refusing to sell at the ridiculous price, someone paid him a visit and razed his home and business to the rubble that we saw before our very eyes; putting him, his wife and their two daughters aged 8 and 10 on to the street.

I supported the Revolution as much for them as for anybody else. I did not support the Revolution for an atrocity like that to become a precise metaphor and microcosm for what Western (and Eastern) capitalists are now attempting to do to the whole of Ukraine.

Dead right, Terry. Who's betraying who.

* Footnote on the concept of 'true value'. I am trying not to be too ideological about this. There may be a price, however high, at which Ukraine would be better off by selling the plant than retaining it in the public sector. Only that price would be fair and reasonable and anything less would be a rip-off. That price would take full account of the following:

(a) even in the private sector, the price of a business which is sold as a going concern, typically includes what accountants call 'goodwill'; that is, the value of the customer base in generating future revenues; i.e. current price = sum of the assets + reasonable estimate of future profits, taking account of future risks;

(b) either the buyer should commit to ensuring that sufficient profits are redistributed into renewal of plant and equipment, product and process development and marketing, and human resource development, in order to secure the long-term future of the enterprise; OR compensation for not doing so should be factored into the price of the enterprise; and

(c) nobody would pay the price as it stands so far, at least not if they were motivated purely by greed, or were institutional investors trying to maximise the value of people's pensions, etc. They would want to pay some of the future profits as dividends to themselves / their investors, and not have to pay the equivalent of all of those profits in advance. But the seller would benefit from having cash in the bank already, without having to take any future risks. Compared with future year-on-year revenues, an advance lump sum could be used (for example) to invest in 'sunrise' industries for higher returns, or in large anti-poverty schemes which achieve greater economies of scale, and sooner; and which generate greater, faster, local 'multiplier effects' (economic growth and job creation). For those reasons, a lower price than the sum of (a) and (b) above would still be reasonable.

However, the central point remains that selling the plant for far less than its true value, as above, would amount to de-facto Kuchmism in effect, even if it were undersold to appease foreign blackmailers rather than to enrich friends and family.

Now, as I said at the top, it follows logically from all this that someone should organise a consumer boycott of BP shops, service stations, etc, and raise public awareness of this scandal. At least, that is the next logical step if a boycott and public pressure could be effective.

Before I start firing on all cylinders, however, I want to make sure I get the facts right! This is quite a complicated scandal and it needs to be reduced to campaign slogans which don't distort the facts and mislead people. I want to tell it like it is, or at least like it has been alleged. Right now, I say, even without conclusive proof (though the circumstantial evidence is compelling), let's go public with the campaign anyway, and force BP and the other vultures to explain and justify.

But first, I would appreciate as much feedback as I can get on the following observations and queries:

1. They say every cloud has a silver lining, and this whole sordid business could unite the east and west of Ukraine behind the Government. The people who work in the plant have no reason (that I can see) for wanting to be owned by some foreign transnational corporation that will probably 'do a Glaser'. Tell them they can look into the future of their jobs by watching what's happening now to Manchester United.

2. People are more familiar with oil prices per barrel than per ton. What's the difference between the world market price and the 'special' Ukrainian price per barrel? (Don't ask me what the weight or capacity of a 'barrel' is!)

3. My current understanding is that privatisation in general is typically imposed as a condition of IMF loans, WTO membership and even EU membership under the new Constitution. (If the latter is true, I hope EU citizens refuse to ratify it. Constitutions are supposed to be about the functions, powers and accountability of organs of the State and the rights of the citizen; not economic policy. Even given the need for member-State economies to converge, or not be too divergent, why do they have to converge around giving non-EU sharks the right to rape EU industries.)

If I am correct, it will be difficult to prove that anything specific and untoward is going on in these bodies' dealings with Ukraine, over and above the normal and standard criteria. And maybe TNK-BP is just behaving like any monopoly supplier when it has people 'over a barrel' (so to speak). That is already bad enough but maybe nothing more sinister than that should be read into their motives? Of course, the answer to that depends on WHEN and by HOW MUCH they increased the differential over world market prices, in the prices that they charged to Ukraine.

4. However, that still raises an interesting question about Russia's continued membership of the WTO, having (I believe, rightly) re-appropriated the Russian oil that was stolen by Yukos and Yeltsin. Therefore, there is currently a glaring double standard in the Western powers' treatment of Russian oil and Ukrainian steel respectively (though I believe there are moves to expel Russia from the WTO and it's on the agenda).

5. If I understand the report right, the latest is that Poroshenko has persuaded Russian oil suppliers to supply more oil to Ukraine, thereby breaking what was becoming an effective embargo. Therefore, there should no longer be shortages. Even if that is true, however, was Tymoshenko forced to cap the oil price at a level which is still higher than the world market price / going rate? Even if she wasn't, did Poroshenko insubordinate her by negotiating a higher price in order to secure sufficient supplies?

Finally, a general suggestion. A possible reform of general privatisation (and competitive tendering) criteria might be, an independent valuation mechanism which values enterprises as going concerns rather than as candidates for slashing and burning for quick profits. If the highest price offered for the enterprise falls short of the independently-determined value, the current owner reserves the right not to sell. In addition to this, there should be a 'national security' exception. (After all, it gets used often enough to gag free speech and prevent fair trials in criminal courts.) Some self-sufficiency in food and energy is vital for any sovereign state. When states are down to their last few farms or coal mines, they should be able to block their sale to foreign concerns. If that were in the EU Constitution, it might be worth voting for. Without it, we are all at the mercy of the unacceptable face of capitalism.

Phil
phillipgiddings@aol.com