Month: August 2014

Peering through the fog of war

Two weeks ago I wrote in this blog that Putin will not back off, that his strategy is to place an army in Eastern Ukraine rather than build an insurgency, that he may well send thousands of Russian soldiers over the border. This is happening as I write. 27 August 2014 will go down in history as the day even the most inveterate apologists for the Kremlin’s secret war in Eastern Ukraine can no longer deny this aggression.

And this invasion comes just the day after Putin devoted his entire address to the Minsk meeting of European Union, Ukrainian and Eurasian Economic Union leaders to the question of trade, refusing to speak directly to an issue he insisted is an internal affair of Ukraine’s, the resolution of which his government can “only facilitate”, but not directly take part in. He has shown once again that one can never take the language of diplomacy literally. Putin was saying “its all about trade and economics” while in reality it is all about the boots on the ground.

If on the one side we heard the apologists of the Kremlin insisting all this is just a Ukrainian civil war without Russian state intervention, from the other side we have had yet another kind of illusory and hopeful thinking: that the Ukrainian government can win the war in the east militarily, that with just a little more firepower the separatists can be defeated. And Russia would have to accept that fact and back off. The illusion in this line of thinking is twofold: first, that for Russia the goals of the war are limited to the subordination of Ukraine; and second, that the outcome of this war will be decided by the balance of brute force on the front.

I see the current situation somewhat differently. Putin has chosen what he sees as a favourable historical conjuncture both in Ukraine and internationally to assert Russia’s claim to great power status. The successful incorporation of Ukraine into Russia’s sphere economically, diplomatically and militarily would give serious credibility to that claim not only by demonstrating Russian capacity, but also the incapacity in the camp of its Western rivals. For Putin the USA is in long term decline; the European Union is a clearing house for its member states, not a state capable of adopting and implementing a common position on war on its eastern periphery; and Russia’s time has come as a Eurasian hegemon to hold the balance of power in the centre of this continent. In Ukraine the favourable opening was provided by a crisis of the Ukrainian state elite created by the Maidan which drove out Yanukovych but proved unable to democratise the state institutions and drive out the remaining bulk of the oligarch-serving opposition parties.

The other illusion is that the war in the east will be won – or lost –by military means alone. Here we must confront some uncomfortable facts. First, Russia has overwhelming military capacity and has shown it will match and surpass every escalation in the technology and numbers of arms advanced by the Ukrainian army. Some have argued that Russia can go on fighting indefinitely, but that it cannot win outright. This may indeed be the case, but the factors working against the Russian war effort will be political: more casualties, more public concern, more protest against the war in Russian society. Political opposition in Russia to the war is muted, but slowly emerging. In the long run, I believe that the only force that can get the Russian military out of Ukraine will be a mass anti-war movement in Russia. It is imperative that all defenders of Ukraine’s right to national self determination lend their support and solidarity to the Russian antiwar protesters who are trying to launch that movement and who are being picked off and imprisoned by Putin’s regime.

The second uncomfortable fact is that the Western powers will not mount sanctions against the Russian economy that are damaging enough to cripple the Russian war effort. The European and American members of the Western alliance are variously integrated with the Russian economy through investment and trade. They cannot agree to a single set or level of sanctions. There is a limit to the level of sanctions some countries will agree to, beyond which their own big business interests will tolerate. For the same reasons and by force of various historical perceptions of Russia as neighbour, friend and enemy, the member states of NATO together will not confront Russia militarily over Ukraine. They may be all persuaded to strengthen NATO forward bases in Central Europe for the defense of their own alliance members, but military aid to Ukraine is another question altogether.

On this issue: War is not the answer, neither at its present level or an increased level. I believe a NATO military land intervention in the war would be a disaster for Ukraine because it would lead to the partition of the country into two camps, each under martial law. NATO aid may rise with the provision of more lethal equipment to the Ukrainian armed forces, increased intelligence provision, joint strategic planning. But, as many other wars where the NATO or Western “coalitions of the willing” have got involved, their involvement has increased to the point of troops entering on the ground and the emasculation of the national government whose sovereignty they claimed to be defending. Can you think of one war where Western involvement has had a beneficial impact on the outcome?

The Kyiv government is calling for military support from NATO because it cannot match Russian military power AND because it believes that the war can be won militarily if it gets more and better hardware. I disagree with the second part of this reasoning. The Ukrainian state is on the verge of insolvency. A couple of weeks ago it revised the annual state budget to impose a war levy on all wages and salaries and made a half-hearted effort to increase taxes on the lease of publicly owned natural resources by oil, gas, iron and steel producers and exporters. Ukrainian big business has responded by accelerating the removal of its capital assets abroad and increasing reliance on transfer pricing to low tax havens in order to keep their profits from being taxed. Capital flight has cancelled out whatever gains would have gone to the state budget as a result of the parliament’s revision of tax levies. Business profits from exports (60% of GDP) go up and the real income of workers comes down as a result of devaluation of the hryvnia and inflation. So much for the commitment of Ukraine’s capitalists to the war effort.

Corruption in high state office carries on as before. It goes on in the highest echelons of the armed forces. The president blames treason in the highest echelons for setbacks in the war. The children of the rich are sent abroad while working class men and women go the front. Concerns about the inadequate provision of soldiers on the front with protective clothing and munitions continue to be voiced and often go unanswered. So much for the government’s chances to forge a national solidarity of all the classes behind the war effort.

There is a difference between fighting for Ukraine’s national self determination and fighting for the present Ukrainian state. I am not prepared to support any effort that will weaken the Ukrainian state against Russia or the West. But I do believe that Ukraine’s national self determination needs a more effective defense than the one being mounted by the present state leadership. What kind of stake do Ukrainian workers, the unemployed, students, farmers and pensioners hold in that state if they see they are giving their livelihoods and their lives for a return to the status quo ante, albeit without Russian overlordship?

The elections on 26 October offer one avenue for them to alter the leadership of their state. However, the signs they will be given the chance to make a real choice between truly alternative paths for their country’s development are not auspicious: the parliament is not about to change the electoral system to provide for fully proportional representation, for open party lists and for lowering the threshold for entry of new parties into parliament and government. And that old electoral system, as I wrote two weeks ago, gave Ukraine in 2012 the dirtiest, money driven, oligarch directed election campaign in its history, a government of the rich and a cabal of parties that made Yanuovych a near-dictator.

The Russian regime will not win the war. It will face years of Ukrainian resistance and the ongoing loss of its own soldiers’ lives. It will inflame national hatreds among peoples who for decades lived together under Stalinist dictatorship and post-communist misery without tearing each other’s throats out. Russia’s current leaders will be brought down by its citizens, the first of whom are already before Russian courts or in prison for opposing this war.

As for Ukraine this war will usher in a new Maidan unless there is a radical, democratic renewal of its state leadership. And this time the soldiers will be in the thick of it.

Appeal for solidarity with workers at ArcelorMittal’s Kryvorizhstal

The Ukraine Solidarity Campaign is issuing the following appeal from the trade unions representing workers at the ArcelorMittal Kryvyi Rih, the giant plant in the Ukrainian industrial metropolis of Kryvyi Rih. Recently the miners of the city made significant gains in their dispute with the company EVRAZ.   The workers of Kryvyi Rih are setting an example to the labour movement of all Ukraine in this difficult time.

Ukraine Solidarity Campaign, a labour movement based campaign in the UK will be doing its upmost to assist them in their struggle with this corporation which is profiting from the misery of the Ukrainian workers. We appeal to all sections of the labour movement to assist.   Please republish the appeal below (translated by Olga Papash and Nick Evans) and circulate it as widely as possible.

Chris Ford , Convenor

http://www.ukrainesolidarity.co.uk

 

600 ton twin open hearth furnace at Kryvorizhstal

600 ton twin open hearth furnace at Kryvorizhstal

Appeal for Solidarity

Support the workers of Kryvorizhstal

(PJSC ‘ArcelorMittal Kryvyi Rih’)!

Our company is the world’s leading steel and mining company. It is one of the biggest assets of ArcelorMittal. Currently, it employs more than 30 thousand workers. Due to recent events in Ukraine, which led to a rapid increase in retail prices and shortages of some goods, real wages of the employees were reduced by more than a third. The living standards of workers lowered dramatically also because the tariffs for electricity, transport, and utilities increased according to the agreement with the IMF. At the same time, ArcelorMittal, which exports more than 85% of our products, has got a windfall due to the devaluation of the hryvnia exchange rate, which decreased  from 10 UAH per 1 Euro in July 2013 to 16 UAH per 1 Euro today (in April, 2014, the rate was even lower, 18 UAH per 1 Euro). Thus, the owners of ArcelorMittal will receive more than 100 million Euros of extra income this year just by reducing the actual wages of the workers, that is, by robbing them.

However, Kryvorizhstal is the largest city enterprise, and a social explosion there might lead to unpredictable consequences not only for Kryvyi Rih, but also for the entire region. In recent years, the wages at the enterprise were low, but now the situation has simply become intolerable. The workers of ArcelorMittal have been in dispute with the company management since May 2013 (Their complaint was officially registered with the National Mediation and Conciliation Service – №052-13 / 04-B from 07/05/2013). Since the beginning of this year, our trade union has repeatedly asked the administration to address the question of an immediate increase in wages.

However, our requests were ignored. On April 11, 2014, the labour collective of ArcelorMittal Kryvyi Rih held a conference and decided to launch a labour dispute after failing to reach agreement with the management. The management ignored our demands once again.  So, on May 22, the joint representative body of all trade unions of the enterprise decided to officially demand an increase in wages by at least 20% from 01.05.2014. The administration was notified with an official letter that if our demands fail, we will immediately proceed with decisive action. Unfortunately, the administration has not listened to us.

For more than a month the workers of ArcelorMittal Kryvyi Rih have been participating in mass protests. Actions of solidarity were also organized at the office in Kyiv, Ukraine, and at some government agencies. The workers and the public expect ArcelorMittal to fulfil the requirements of the labour collective. However, unlike other Kryvyi Rih companies (including Kryvyi Rih Iron Ore Works and EVRAZ Sukha Balka), the wages at ArcelorMittal Kryvyi Rih have not been increased. International solidarity and support for workers from outside Ukraine was one of the key factors that forced Evraz administration to accept the workers’ demands. The central office of ArcelorMittal is also situated in London and is definitely aware of the EVRAZ administration’s decision, but the management probably finds that what applies to Russian and Ukrainian oligarch extortions in Ukraine, does not concern the European and Indian ones.

We are writing to you with gratitude for the support of all the workers of the Kryvyi Rih region and all Ukraine, and a request to support our struggle by solidarity actions at the ArcelorMittal headquarters in London, as well as at the company’s enterprises. The situation in Ukraine is very difficult. Military action is taking place a few hundred kilometres east of Kryvyi Rih. The main reason for today’s problems is undoubtedly the social crisis caused by extortions of the voracious oligarchy. To prevent the spread of civil war throughout Ukraine, and perhaps not only Ukraine, we need to stop the oligarchic robbery and restore social justice. Only social justice may be the true guarantee of peace in Europe! Justice to the workers is the first step towards peace in Ukraine and Europe!

Chairman of the Ukrainian Independent Trade Union of Miners in Kryvyi Rih.

Yuriy Samoylov

To the General Director “ArcelorMittal Krivoi Rog” A. I. Polyakov

DEMAND

In fulfilment of section 4 of the Resolutions of the conference of the workers’ collective of Public Joint-Stock Company “ArcelorMittal Krivoy Rog” on 11.04.2014 and in accordance with the decision of the joint legislative organ, all of the trades unions of the enterprise

DEMAND:

from 01.05.2014 a raise in rates and salaries paid to the workers of the Joint-Stock Company “ArcelorMittal Krivoy Rog” by no less than 20% and to publish the corresponding order around the enterprise no later than 30.05.2014.

If this demand is not fulfilled the joint legislative organ of the trades unions will move swiftly to take more decisive actions and will undertake all measures provided for under existing legislation of Ukraine to ensure the fulfilment of this demand.

The joint legislative organ of the trades unions of the workers of the Joint-Stock Company “ArcelorMittal Krivoy Rog”:

Βranch chair, Trade Union of the Metallurgists and Miners of Ukraine (PMGU)     – Iu. V. Bobchenko

Branch chair, All-Ukrainian Union of Workers of Science, Industry and Finances (VPR NPF) – S. G. Gapon

Branch chair, Regional Trade Union of Young Workers (RPRM) – P. V. Bardashev

Branch chair, Trade Union of Industrial Workers (PRP) – E. M. Halins’kii

Branch chair, Independent Trade Union (NPPO) – S. V. Ivanchenko

Branch chair, Independent Trade Union of Miners of Ukraine (NPGU) – Yu. P. Samoilov

http://pnvf.org.ua/resheniya-konferentsii-trudovogo-kollektiva-pao-arselormittal-krivoy-rog/

Interview with Sergey Yunak, Head of the Western Donbas Miners Union, Dnipropetrovsk

Interview was taken by Mick Antoniw, Member of the National Assembly for Wales.

Mick Antoniw: What is the PRUP (Ukrainian Miners Union) trades union’s view of the current situation in eastern Ukraine?

Sergey Yunak, pictured left.

Sergey Yunak, pictured left.

Sergey Yunak: Currently our union organisation doesn’t have a joint opinion. The Donetsk and Luhansk regions are under Russian control and propaganda and they consider that their rights have been suppressed .That is not our view.  Our opinion is we believe it is an open war on the side of Russia and that this war is supported by local oligarchs or rich people and friends of Yanukovych’s family.

Mick Antoniw: One of the proposals from the Ukrainian government’s programme of reform is the decentralisation of power. What is the Unions view?

Sergey Yunak: That issue had been raised by us five years ago in Kiev and put to the government, and that is why this issue is supported widely. We consider that the decentralisation of power will strengthen local authorities.

Mick Antoniw: Has there been enough local level debate on this issue? Local discussions with trades unions, etc.?

Sergey Yunak:  That has happened especially in our region. We share in and participate in discussions about decentralisation and have explained what it means. It is important that it this debate is shared widely.

Mick Antoniw: In some UK papers it is suggested there is a threat to the Russian language.

Sergey Yunak: This is real propaganda of Russia. There is no threat to the Russian language in Ukraine. All our documents, files, negotiations are conducted in the Russian language. We perform everything in the Russian language. There is no threat at all.

Mick Antoniw: There appears to be some disunity amongst unions in Ukraine. Will recent events lead to greater solidarity across Ukraine amongst trades unions? Are there prospects of trades union candidates standing for the next parliamentary elections and are there prospects for a more united union voice in elections?

SergeyYunak:  First of all, we make all attempts to preserve our big society and our country as a great united society. As soon as the foreign countries, particularly Russia, maybe the US and maybe Europe stop interfering into our affairs everything will be ok. Our country cannot be divided, cannot be separated. That is why we are making all efforts to keep our country united. That is why our trades unions make all attempts to keep our country united, West, East and Central Ukraine, for a joined united society. There is no other way for Ukraine other than to be united.

Based on our last trades unions conference, held in Kyiv a month ago, it was shown that trades unions in all industrial areas  from the east, which are strong organisations, and the west which are not so strong, and central trades unions have the same desire to remain united. Our trades unions are united in this, we have spoken in our conferences in different languages, Russian and Ukrainian, but all trades union participants express the same desire to be united and to support our country.

Trades unions will provide their delegates and candidates to local, area, regional and central bodies for elections. We will participate and provide our candidates to all levels of authority. We will do it.

Regarding a united political voice – much will depend upon there being no interference from outside. That’s why we intend to have a strong political union and organisation which will be ready to unite all forces. Unfortunately this is not yet strong enough in Ukraine. Trades unions currently are not yet ready to accept this political way, to unite all areas properly because they are still divided into different subsidiary unions. But we are ready for the struggle.

Mick Antoniw: What is the position of the mining industry in Ukraine with regard to pay and conditions? What are the most important issues affecting the mining industry that the government needs to address?

Sergey Yunak: The main demands and requirements of the unions are still the same. We will participate in all areas and be represented at local and national level. That’s why we are not going to discuss only one issue such as wages. We are ready to participate in wider discussions about complex issues affecting the totality of living standards, and we will promote different programmes associated with redundancy, wages, welfare, closure of mines. We are ready to participate in discussions with government regarding these problems. For example, we have been working together with owners and the ministry of coal mining in Ukraine who adopted the decision to make redundant a lot of work places and reduce the salary of miners and close some mines. That’s why PRUP started a struggle for our rights and we will participate in discussions with the ministry to stop the initiatives made by the ministry of coal mining.

Mick Antoniw: The separatists present a case that they are being attacked by fascist forces and fighting against fascism, yet some of them appear to be right wing fascist groups themselves. What is the politics of the separatist movement?

Sergey Yunak: We are speaking about nationalist groups from Russia?

Mick Antoniw: Yes, and who the separatists are and what they represent.

Sergey Yunak: This is a very important issue. We know that Russian propaganda says a lot about fascism in Ukraine. How can we call our soldiers and our young people who widely participate in this war fascists? They are from eastern, western and central Ukraine. This is only Russian propaganda. We haven’t seen fascists or these bad ideas in our part of Ukraine. Many of the separatists come from Chechnya, Nagorno-Karabakh and other parts; it is not just Russia they come from.

Also, some local detachments of the Ukrainian army were released from the Eastern areas and replaced by other soldiers. They tell us that a lot of guns and detachments are not just from Russia, but Chechnya, Karabakh and different parts of the world; they are fighting for money, paid by someone. On our side we see no fascism at all. These people are, as we say, bandits.

Mick Antoniw: What impact has the rocket attack on the civilian aircraft (MH17) had on people in Ukraine?

Sergey Yunak: Ukraine does not use these missiles in this area because we don’t have them there at all. These were missile launch systems provided by Russia and brought into the areas of Luhansk and Donetsk.

Mick Antoniw: What do people think about what has happened and those responsible? It seems likely it was a separatist group that acquired these missiles from Russia. Has this affected the way people think?

Sergey Yunak: This is a very complicated issue. Firstly, Russia has its own TV channels in the Eastern Donbas and they continue to provide their own propaganda, and they, Russia, says Ukraine was involved in that event. Then they say military aircraft were close by. They try to protect and provide obstacles, to save themselves. Russia provides their own propaganda for this purpose.

 

Economics and politics of an escalating war

 

War is businessThe costs of the war are mounting

Over one thousand people have been killed, more than three thousand injured, almost a quarter of a million forced to leave their homes. The overwhelming majority of people killed, injured and displaced have been civilians playing no part in the fighting at all. There has been widespread destruction to infrastructure, enterprises, public utilities and homes. The productive economy – that which makes possible the reproduction of human society – is shrinking as a result of the simultaneous contraction of civilian industries and the expansion of the industries supplying the war. Arms and munitions are consumed only by way of their destruction.

The economic decline continues

Prime Minister Yatseniuk predicts that GDP will fall by 6% in 2014, inflation will go up by 19.5% and nominal wages will fall by 6.3%. The rate of unemployment according to the IMF will be between 10 and 15% by year end. These are conservative estimates, but they still represent a further serious decline from an already grave economic position for the great majority of Ukrainian workers, small farmers, students and pensioners. The hryvnia has already devalued by 47% against the US dollar since the start of 2014 ($1=12.2UAH). The combined impact of devaluation and inflation since the beginning of this year has cut the real income of workers by 50% and of middle class professionals by 30%.

Growth of a siege mentality

War inhibits protest against state policies: “All dissent is treason when the castle is under siege” (St Ignatius Loyola) So what will be the outlet for the inevitable social tensions and grievances generated by the economic crisis? Protest and political struggle or more war? Can there be both war and peace in Ukrainian society at the same time? Not for long. One will inevitably overwhelm the other. The “peaceful” area of Ukraine is increasingly on a war footing that will eventually make a democratic political process there unsustainable.

State budget

The revisions to the 2014 budget that were adopted by the Verkhovna Rada on 31 July were driven principally by the need to increase funding for the war effort. The main changes are as follows:

  • to increase the budget for the Anti-Terrorist Operation by 18bn UAH, which represents an increase of 28% on the original 2014 defense budget of 63bn UAH. If large scale military operations go on beyond the summer, this requirement will double;
  • to introduce a 1.5% war tax on all wages and salaries;
  • to cut public services responsible for enforcing standards of environmental protection, quality of medicines, food quality and occupational health and safety,
  • ministries will at their own discretion to lay off public sector workers without pay for up to two months in order to balance their budgets
  • to decouple the rates of public sector pay, state pensions and student stipends from index linking to the rate of inflation,
  • to freeze the minimum wage and official poverty line,
  • to reduce workers’ protection against unfair or arbitrary dismissal under the Labour Code,
  • to reduce availability of HIV-AIDS treatment,
  • to cut support for the resettlement of deported Crimean Tatars.
  • to suspend in time of martial law the law on tendering for state contracts to supply the Armed Forces of Ukraine, “other military formations”, law enforcement bodies and other institutions responsible for state security
  • to increase the rents paid by businesses for oil, gas and iron ore extracted in Ukraine and destined for sale abroad.

These changes to the state budget were pushed through the Rada at the end of a week of high political drama. First, the parliamentary deputies refused to consider an original set of revisions put to them by Yatseniuk’s government on 24 July, declaring publicly they would not support an “anti-social” budget. Svoboda and UDAR leaders then announced they were quitting the parliamentary coalition with Bat’kivshchyna that was holding up Yatseniuk’s government. Yatseniuk duly resigned, and the country waited for the government to resign in turn, the parliament to be dissolved and new general elections to be called.

This course of events, however, was unacceptable to Poroshenko, because the country would be left without funding for the war while a caretaker government waited for new elections to parliament. Poroshenko persuaded Yatseniuk -or was he colluding with him all along?- to return to the parliament and try again. When a second, renegotiated version of the revisions was published and duly adopted by the Rada on 31 July it turned out the deputies had rejected the original version because it had been unacceptable to their oligarch sponsors, not because it was “anti-social”. Though softened a little at the edges the harsh anti-social character of the revisions to the budget remained in place.

The Rada had refused to consider these July 24 revisions because – according to Minister of Financs Oleksandr Shlapak – they would have increased the rents on the extraction of oil and gas in Ukraine that is then exported to levels that were unacceptable to big business. The biggest loser of all would be Ihor Kolomoisky, governor of Dnipropetrovsk. Kolomoisky runs Ukrnafta, the majority shareholder of which is the state. It is highly profitable, and would have remained so even with the increased rents that were tabled on 24 July. But Kolomoisky did not want to be the fall guy. To make his point he closed all the petrol stations he owns in Ukraine for “stock taking”.

The July 24 revisions did not increase the rent on extracted iron ore. Its rate had been increased just recently, in March. But iron ore is one of the main businesses of Renat Akhmetov, Kolomoisky’s rival. And Akhmetov is viewed widely as a renegade oligarch who hedged his bets and secretly backed the separatist movement. Unlike Kolomoisky, Akhmetov does not control “his” province of Donetsk any more.

So the 31 July version that was voted through increased the rent of iron ore once again – at a cost to Akhmetov, Kostiantyn Zhivago (of Ferrexpo infamy) and ArcelorMittal. It also reduced the planned increase on rents of extracted and exported Ukrainian gas and oil and alternative fuels as a further concession to Kolomoisky. And these changes are to be in effect only until the end of 2014, rather than indefinitely.

Thus the battle over the revised state budget sees the oligarchs vying to relinquish the least of their super profits to finance the war effort. The Left Opposition in Kyiv concludes that “the burden of the war is being put fully on the backs of the workers while big business is quietly accumulating its profits”. http://gaslo.info/?p=5344

Western support to Kyiv

Nor should it be forgotten that the Ukrainian state is on the verge of insolvency. Without the $6bn it is has received in loans and grants from foreign governments and their multilateral institutions, it could not hope to balance its budget in 2014 and to carry on the war in the east. Thus, the Western powers are in effect financing the Kyiv government’s prosecution of the war, in addition to the intelligence, advisors, food provisions, bulletproof vests and night vision equipment they are also providing.

The IMF is prohibited by its own charter from lending to a country at war. Conveniently for the Ukrainian government the Russian government is pretending that it is not making war in Eastern Ukraine. President Poroshenko has taken a cue from Putin by not declaring war on Russia either, even as he dons military fatigues and stresses that the Kyiv government is not engaged in a civil war.

Elections in October

The Verkhovna Rada rejected Yatseniuk’s resignation as it voted in the changes to the state budget. Now all the deputies can go to the electorate and say they have taken responsibility for financing the war effort and allowed the government to carry on discharging its functions. They will now prepare for general elections.

The present parliament is widely, if not universally, regarded as unrepresentative of post-Maidan society, inadequate to the tasks the country faces, and discredited by its deputies’ association with the old regime.

So the present parliamentary deputies will seek ways to crawl under the wire into the new parliament with the least number of casualties. The election period will be reduced from 60 to 45 days. This for several reasons: officially to save money; unofficially to have elections before the beginning of the heating season – when heating costs go up. Possibly also, Kyiv is anticipating major advances on the battlefield before election day.

There is also talk in Kyiv about parliament backtracking on Poroshenko’s election promise to hold the next general elections solely on the basis of proportional representation with open party lists. Doing away with single member constituencies as well as closed party lists reduces the opportunities for the rich buying a seat in parliament, either from local power brokers in the constituencies or from the party bosses/oligarchs.

Now the talk is about staying with the mixed system of one half proportional representation chosen from closed party lists and one half majoritarian election in single member constituencies. This was the system that gave the country the dirtiest, most corrupt election since independence and a parliament in 2012 that relinquished its powers to the presidency and made Yanukovych a near dictator. This system will help retain the status quo – as difficult as that might be. It might also prevent Oleh Liashko, the right wing populist allied to UNA-UNSO, from building a big fraction in the Rada.

There is no talk at all about lowering the 5% threshold for parties to enter the parliament on a proportional representation basis. This was another one of the democratic aspirations of the Maidan being left by the wayside.

The elections will most likely be announced on 24 August, Independence Day, and be held as soon as 12 October.

Elections will not touch the old regime

The old regime is still very much alive in the ministries, regulatory bodies, courts and tax authorities that make up the carcass of the Ukrainian state. Politician – public official – private businessman: this is the holy trinity that fears disruption by the current crisis. Elections could threaten its unity if there was a radical, progressive party – a genuine Workers Party – to contest them. But it has not yet appeared, while the forces of the far right both inside and outside parliament do offer the new/old Ukrainian regime a channel to divert the anger and frustration of the lower classes away from themselves. This is a real danger of the current situation.

Poroshenko escalates war

There is no doubt in my mind that both Poroshenko and Putin want to end the war. Each, however, has his own terms, and these terms are still too far apart for either side to stop fighting now. Many people voted for Poroshenko in May in the hope and expectation that he would enter into negotiations for a peace settlement. Indeed, Poroshenko and Putin both put forward their representatives and negotiations did begin – and are still ongoing even as the fighting escalates.

However, Poroshenko set about strengthening the Ukrainian armed forces in order to apply overwhelming convential military power over what was still in May a lightly armed guerrilla force of some five thousand men with few seasoned fighters to lead them. Military victories against them would decisively strengthen Kyiv’s position in any peace negotiations. That still seems to be the objective of the Ukrainian government as it uses heavy weapons on the ground and in the air, as it orders a second call up to relieve soldiers who have been in the field for four months, and as it expands the military budget.

Putin now builds an army, not an insurgency in Eastern Ukraine

Putin responded to Poroshenko in kind. He is no longer trying to stimulate an insurgency in Eastern Ukraine, which in Putin’s original plan was to give birth to an autonomous statelet beholden to Russia. Rather, he is trying to match and surpass Ukrainian heavy weapons with Russian ones and to build an army. Russia has lots of surplus heavy weapons mothballed since the end of the Soviet Union. So, Putin is building up the equipment of a conventional army –armoured personnel carriers, tanks, vehicle mounted missile batteries. For such equipment one needs trained soldiers and specialists, hierarchical command, co-ordination and command centres – an army, not a guerrilla force. Where will this army’s soldiers and officers come from? The DNR and LNR? Hardly. Either Putin has lost his bearings or he is planning to station an army under Russian command in Eastern Ukraine.

Putin is not about to back off. He is counting on being the last man standing. As long as he keeps the border open into eastern Ukraine Russia can supply the DNR and LNR forces indefinitely, and indeed build an armed force of considerable firepower. But if it wants to use this firepower to its full potential Putin will have to bring hundreds more, if not thousands of Russian servicemen over the border into Ukraine.

Negotiations, but on whose terms?

According to the Independent on 4 August Germany and Russia are in secret talks about political settlement. The proposals on the table include: the West recognising the annexation of Crimea by Russia; Russia withdrawing from eastern Ukraine; some autonomy for eastern Ukraine; $1bn payment to Ukraine by Russia for the final lease of Sevastopol port for its fleet; and gas supplies and gas transit prices to Ukraine guaranteed by Russia. Once again, the Russians and the Germans regard the transnationally mobile oligarchs as the keys to any deal between Ukraine and Russia:

Central to the negotiations over any new gas deal with Gazprom is understood to be one of Ukraine’s wealthiest businessmen, the gas broker, Dmitry Firtash. Mr Firtash – who negotiated the first big gas deal between Ukraine and Russia between 2006 and 2009 – is now living in Vienna fighting extradition charges from the Americans. But he has close relations with the Russian and Ukrainian leaders – he supported Mr Poroschenko – and has been acting as a go-between behind the scenes at the highest levels.”

A Ukrainian government facing imminent general elections, insolvency, a deepening economic crisis, massive reconstruction costs in the east, and likely protests from various domestic quarters will have few options of its own: either to negotiate a peace with Russia that recognises the DNR and LNR as legitimate parties to further negotiations, or to carry on fighting them and the Russians.

However, Ukraine’s government can match Russia’s resources in the long run only with Western support, which will mean relinquishing more of its sovereign policy making power to Western governments and institutions. Which will in turn weaken its domestic and interstate authority.

An erosion of Ukrainian state capacity and authority may in turn force the western powers to become even more directly involved in the war in the east. And it will naturally increase the chances that the big powers – USA, Russia and Germany – will put together a “solution” of their own. Such a pessimistic scenario is brought to mind by the real forces and circumstances that have come together over the past three months.