The unfolding of the latest “revolution” in Ukraine since late 2013, and the reaction to it of leading foreign powers, is a particularly graphic indication of the impotence of the world’s rulers to confront the multiplying failures – political, economic, financial and social – that are now overwhelming the global community.
There seems little doubt that the overthrow of the Yanukovitch régime was primarily the result of chronic economic mismanagement and serial corruption and abuse of power. Such failings are of course only too familiar from the collapse of scores of governments of more or less underdeveloped states around the world over many decades. Also familiar is the complicity of Western governments in the misdeeds of the country’s leaders – even if there seem to be few precedents for the brazen flaunting of manifestly ill-gotten wealth demonstrated by Ukrainian billionaires in the UK, where one of them has recently paid over £130 mn for what is said to be the most expensive apartment in London.
But while both Western and Russian support for such kleptocracies comes as no surprise, what does seem different is the inability and / or unwillingness of the major powers, in either East or West, to take the necessary steps to restore some semblance of order and stability, such as would have been expected following the downfall of their client states in the past, particularly during the Cold War. In those days it was common to see failed rulers replaced with ones more acceptable to their own people or amenable to the dominant foreign power (whether the US, Soviet Union or former colonial master) with relatively little fuss. This was typically facilitated by easing deposed rulers into exile and providing successor régimes with financial sweeteners to help them consolidate their political support at home.
Such was broadly the practice followed for many years by the dominant Western powers towards their client states in much of Africa and Latin America – and also by the Soviet Union in respect of its satellites. Arguably it was for long largely successful in keeping the lid on geo-political disorder, albeit at the price of perpetuating the economic and social injustice afflicting the mass of the people in these regions. Where it came seriously unstuck – as in Cuba, Vietnam and, for the Soviets, in Afghanistan – this was only where internal opposition received substantial backing from the rival superpower.
How the world has changed since the 1980s
By the time the Cold War ended with the fall of the Berlin Wall in 1989 it was clear that the Soviet economic model had imploded, rendering it impossible for the Soviets to maintain their imperialist great power pretensions; hence the dissolution of the Soviet Union. Yet even as this development was being proclaimed in the West as the clear triumph of liberal capitalism it was starting to become apparent that the latter model also was coming under increasing pressure. The most obvious symptom of this was the series of financial crises, starting with the stock market “crash” of 1987, followed by successive market upheavals across the world through the 1990s – each one resolved by publicly financed bail-outs or guarantees of actually or potentially insolvent financial institutions – and culminating in the Global Financial Crisis (GFC) of 2008.
The main immediate cause of this chronic malaise was the rapid build-up of debt in both the public and private sectors which began in the 1980s, encouraged by moves to liberalise financial markets initiated in the United States and spread across the world thanks to “globalisation”. The rise in indebtedness was in fact a response to the underlying weakness of the global economy, which reflected a long-term tendency of the rate of economic growth to decline from the historically high levels recorded in the 1950–73 period. Failure to maintain relatively high growth – so vital to ensuring a healthy capitalist economy – thus posed a threat to the stability of the whole system. In this context the global build-up of debt, much of it used to finance speculative rather than productive investment, was merely masking a systemic decline that was already discernible before the Soviet collapse – albeit unanimously ignored by mainstream propaganda and media.
Emasculation of the state
The apparent hope of Western policy makers was that by extending yet more debt they could create the conditions for a self-sustaining revival of GDP growth and tax revenues, thus enabling the colossal indebtedness, particularly of the public sector, to be paid down over time. This delusion has even survived the onset of the GFC, although it is by now clear to a growing number of analysts that most of these huge debts can never be repaid and will sooner or later have to be written off. One thing not to be contemplated is that taxes should be raised, particularly on the mega-rich corporations and individuals best able to sustain the extra burden for whom, thanks to global liberalisation, taxation has by now become largely voluntary. Indeed such is the continued dominance of the Reagan-Thatcher “supply side” ideology that many political and business leaders still advocate even more cuts in already much reduced rates of direct taxation.
The net result of these ruinous tendencies over decades is that governments – even of the world’s richest countries – have been rendered progressively more unable to fulfil the basic functions of the state as their fiscal resources have shrunk. This has been reflected most obviously in the steady erosion of the welfare state over the last 30 years or more – although this trend has also owed much to the predominant ideological bias against social welfare, particularly in the US and UK. In contrast there has been no tendency to stint on spending on corporate welfare – particularly when it comes to bailing out the financial sector in a crisis. Likewise spending on defence and the “military-industrial complex”, so far from facing any cuts, has benefited from massive and often corruptly wasteful spending on the open-ended “war on terror” – including the disastrous and illegal conflicts in Afghanistan and Iraq.
Strikingly this spendthrift irresponsibility in the West, concentrating ever more wealth in fewer hands while the social fabric is allowed to decay, is largely mirrored in Russia and the rest of the ex-Soviet world, where economic and social conditions have in many cases been allowed to sink to Third World levels since the 1990s (most notably in the Central Asian republics). Both regions are likewise marked by increasing lawlessness, such that in both West and East wrongdoing by corrupt financiers and oligarchs goes largely unpunished and “whistle-blowers” and others seeking justice are marginalised or actively persecuted.
End of the road?
What the Ukraine crisis appears to show is that the limits of such fiscal profligacy, officially sponsored criminality and neglect of the public interest may now have been reached. While the US and the EC on one hand and Russia on the other are ostensibly competing to try and draw Ukraine into their respective spheres of economic and political influence, it is apparent that neither side has sufficient resources or political will to save the country from impending economic disaster. In fact there are grounds for believing that their rivalry is to some extent more apparent than real. For there is no doubt that the two sides have for the most part actively colluded with each other in the ruthless pursuit of their questionable foreign policy goals – so that, for example, Russia has been happy to have its brutal repression of Chechen and other separatists in the North Caucasus identified with the US-led “war on terror”.
On this reading the main cause of the dispute over Ukraine is that President Putin has suffered an important political setback – and loss of face – through the downfall of his client Yanukovitch, a reversal which could clearly have serious negative consequences for him at home in Russia, where he is evidently struggling to repress growing popular dissent. If this is so, and if the Western leadership does indeed covertly view Putin as more of an ally than deadly enemy in the wider geo-political game, they may well be anxious to help find him a face-saving way out of the confrontation in Ukraine. Their willingness to do so may be all the greater given their incapacity to contain Ukraine’s domestic crisis without at least tacit Russian cooperation.
In this context Russia’s obviously superior military capability on the ground may not count for much, given that a) it would face overwhelming popular opposition to any military intervention outside Crimea and b) it could not on its own mobilise the other material resources needed to make its intervention politically sustainable. Equally, however, the EU and US combined can evidently afford to offer only quite limited financial support, which would prove grossly inadequate if Russia were to withdraw its own aid to Ukraine.
It thus transpires that the leading powers involved (Russia, EU and US) are effectively incapable of acting individually to help Ukraine achieve the minimum level of financial stability to save it from economic and social collapse. Yet it may also be questioned whether, even if all three could agree on an acceptable political outcome in Ukraine, they could actually muster the resources needed to stabilise the country beyond the short term. This is not only because their own financial and economic fragility reduces their capacity to act – as shown by the inadvertently revealed British government memorandum indicating that it would contemplate no sanctions against Russia that might imperil City institutions – but because they lack the ideological or moral commitment to act in the public interest of the Ukrainian people as opposed to favouring their own dominant vested interests.
Arguably this same combination of financial and moral bankruptcy may explain the incapacity of the “international community” to address other signs of economic, social and political instability that have emerged recently in the world’s poorer, more marginalised countries and taken the world by surprise. In particular such an analysis might seem applicable to the series of upheavals since 2010 that have come to be known as the Arab Spring. The impotence of the major powers in face of these uprisings has been matched by their inability to offer a coherent explanation of their causes – although there seems little reason to doubt that a major catalyst for them has been the chronic negative impact of the GFC (particularly in Europe) on the whole Mediterranean region.
What all this surely tells us is not only that the Western liberal-capitalist economic model is now as terminally outmoded and discredited as the dead Soviet model of central planning, but that we can only expect to find a way back from the brink of global disaster if our structures of government – in both East and West – are made far more responsive to the needs and aspirations of the mass of ordinary people rather than those of corrupt and unaccountable oligarchies. Sadly, the lesson of the Ukraine crisis to date is that nothing can be expected to change this balance of forces without intensifying conflict both within and between states, with dangerously unpredictable consequences.