The Candy Clouds of the Dreamweaver do Battle with the Battering Ram of Reality

Uncle Volodya says, “The real world is where the monsters are.”

Dreamer, you’re nothing but a dreamer
Well, can you put your hands in your head? Oh no
I said, “Far out, what a day, a year, a life it is”
You know, well you know you had it comin’ to you
Now there’s not a lot I can do…

From “Dreamer”, by Supertramp

As this tumultuous year grinds to a close, I wonder what future historians will say of it? Surely it will never be seen as a year of advancement for mankind; a year of stability, an affirmation of the bonds of brotherhood which draw us closer together. Instead, it must be viewed by the dispassionate eye of objectivity as a year of upheaval, of reversals and setbacks and chaos. A year of celebration of mean-spirited goading and provocation, a year of the drawing-together of jealous alliances seeking to preserve a world order which always worked out very well for those so allied, thank you very much. A year of cynical lip service paid to the cause of peace and understanding, trumped by disinformation, propaganda and reality-shaping. If you can’t have world peace, pray enjoy yourself with the vinyl inflatable substitute, anatomically correct for your pleasure.

I’m afraid I haven’t the patience or the resources to cover the whole world for the year. But I was struck by two very disparate recent articles on the same part of the world; Ukraine. Two very different images of what is apparently the same place, depending on whether you are viewing it through rose-coloured glasses, or framed by a toilet seat.

The first, by Andrew Wrobel at Emerging Europe (where he is a founding partner), postulates that 2019 will be a critical year for Ukraine – as, no doubt, it will; I am surprised it has staggered all the way to this point. But much of the article is spent in talking of events of the past year. Let’s take a look.

According to Wrobel, the current government of Ukraine is making serious headway upon a progressive agenda. The economy is stabilizing, President Poroshenko has pushed through a series of reforms to tackle corruption, and the resumption of international ‘lending’ to Ukraine signifies international approval of its progress.

Before we go any further – is any of that true? Not according to Bloomberg, which pointed out only last August that the economy of neighbouring Poland is three times the size of Ukraine’s, although their GDP’s were virtually identical in 1992. Correct me if I’m wrong, but wasn’t “Project Ukraine” supposed to make Russia envious at seeing how the adoption of the Eurolife made Ukraine rich and at peace with itself? Weren’t Russians supposed to rise up in anger and smite the shit out of Putin because of his failure to deliver the Good Life, Ukrainian style? If so, it’s difficult to imagine the chagrin of those planners now; Russia’s per-capita GDP is four times higher than Ukraine’s, and the average wage is more than double. I’m afraid I would call that zero progress, and after four years. Quite a feat for a President, really; to step into the shoes of a disgraced scallywag, make ridiculous boastful promises, and then move the nation not one inch further ahead from what it was under the scallywag’s rule. It’s gone backward, actually – Ukraine’s gold reserves have vanished, and its foreign currency reserve is wiped out. Ukraine’s ForEx stood at around $38 Billion at the onset of the Glorious Maidan (just change the viewing period on the graph to 10 years). They never reached that high-water mark again since, and only the other day Poroshenko crowed that Ukraine’s reserves should be back up to 20 Billion…once it receives its next handout from the IMF. It all reminds me of a motivational poem I read once when I was a lad;

They said it couldn’t be done;
with a smile, he went right to it.
He tackled the job that couldn’t be done…
and couldn’t do it.

I know that flies in the face of optimism and all, but, well, it is what it is. Poroshenko has made basically no reforms at all. He has talked about reforms a lot while swaggering around in front of the UN and as a guest at other speaking venues. But most reasonable people would allow that talking about things and acknowledging a need that they be done is not the same as doing them. Poroshenko’s government has stalled through every device it can bring to bear on starting up an Anti-Corruption Court, and the successful reforms on corruption Wrobel speaks of were merely another promise to set up the subject court ‘soon’, perhaps in February. That’s a month before the presidential election, and you know the issue is going to get buried again. Poroshenko only paid lip service to agreeing to set up the court in order to get the next tranche of moola from the IMF.

Bloomberg’s reference, Mikhail Minyakov, also complains, “oligarchic clans, old and new, have recaptured the state and are successfully thwarting the implementation of reforms”. Those who believe Poroshenko is heroically battling them have apparently not noticed he is one of them, among Ukraine’s richest citizens, and he has not divested himself of any of his business assets as a result of being elected President, as he promised he would. He even owns the shipyard that builds those dinky little river patrol boats for the Navy, like the two that were captured a short while ago in the Battle Of Kerch Strait; I notice the yard has been awarded a contract to build another 20 of them.

Well, that was a lot of discussion for only a couple of lines. Let’s see what else the Dreamweaver said. Mmmm….there’s a whole paragraph on all the magic Poroshenko will work with the latest ‘loan’ from the IMF – building up Ukraine’s gold and ForEx reserves, bolstering the value of the hryvnia, curbing inflation and restoring investor confidence in Ukraine’s solvency. That’s a pretty tall order for $3.9 Billion, considering Ukraine has almost twice that amount in foreign debt maturing in 2019. I would suggest investors not get too excited. Especially since Foreign Direct Investment (FDI) in Ukraine has never again reached half the value it was under Yanukovych since he was deposed and run out of the country. And considering Ukraine’s largest investor is the nation it claims is going to invade it at any moment.

Along with claiming the ‘loan’ amounts to an international endorsement of Mr. Proshenko’s ‘progressive policies’, Wrobel reports that Poroshenko has shut down rogue banks, authorized the creation of an anti-corruption court and raised gas prices to market levels. This last is somehow considered an anti-corruption measure which wipes out kickbacks, which I suppose it might if you assume that nobody has any money left with which to pay kickbacks. He acknowledges that the higher gas prices “punished ordinary consumers”, but, well…they should feel privileged to have had a small role in moving Ukraine forward. In fact, Poroshenko fought against raising gas prices for as long as he could; not because he can’t sleep at night for worrying about the poor voters, but because he can’t sleep at night worrying that they might vote him out. But in the end, when the IMF said “No raise in gas prices, no money”, he gave up his valiant battle…for the greater good.

We’ve already discussed Poroshenko’s imaginary creation of the anti-corruption court, since there isn’t any yet. But I’m curious – which rogue banks were shut down by Poroshenko? The most corrupt – Privatbank – remains the biggest commercial bank in Ukraine, still throwing its weight about and flinging lawsuits right and left. Quite a few banks in Ukraine have shut down because of a lack of capital – which I think you will agree is sort of detrimental to a bank’s operations – but attributing that to Poroshenko would probably send the wrong message if the aim is to make him look like a progressive. Here’s an example – Platinum Bank. It went broke just about two years ago. Interestingly, it was established in 2005 by Horizon Capital Investment. If that name rings a bell, it’s probably because the head of the company at that time was Natalia Jaresko, who later – briefly – became Ukraine’s American Finance Minister. But I could not find any examples of President Poroshenko shutting down any ‘rogue banks’, implying they are flagrantly and regularly flouting banking laws. Some 98 ‘weak’ banks were closed in what passed for banking reform, all the closures attributed to the NBU, and they were assessed to share Platinum Bank’s plight; an inability on the part of the shareholders to raise capital. Not to put too fine a point on it, but Ukraine itself would be closed for the same reason, were it not for regular handouts from the IMF and World Bank.

According to Wrobel, Poroshenko plans to apply for EU membership in 2020: slick, Wrobel – I saw what you did there. Mr. Poroshenko is most unlikely to be president in 2020, unless he can creatively employ martial law to delay or suspend elections until his chances improve from the present prospect, which has a lot in common with hopeless. Back to that in a minute. But I have to say when Mr. Wrobel alluded to Poroshenko floating into the EU upon his ‘raft of reforms’, I laughed a little bit. Laughing is good for you. Thanks, Mr. Wrobel.

Just before we move on – what is it with the English-speaking press and its hair-raising allegations of Russia “massing troops on the border”? For one thing, they have only Ukraine’s word that this is happening, and as previously discussed, Ukraine has a direct fiscal interest in seeming to be always on the brink of invasion. For another, no evidence has been offered of any such massing of military forces. For yet another, that side of the border is Russia. Russian troops massing in Russia? You don’t say. When the United States is seeding battalions here, there and everywhere, including in places it is both uninvited and very, very far from the United States, nobody seems to find that alarming or aggressive. American troops massing in America does not even register on the interest meter. Yet in order to allay the world’s fears, Russian forces must move altogether to the geographical center of Russia and remain there, conducting themselves with no more apparent martial intent than planting trees and helping elderly people across the street. Otherwise, look out – invasion, coming up. Could we please not raise the global stupidity quotient (GSQ) any higher? Please?

I have to admit Mr. Wrobel has a point when he gets to the meat of his subject – Yulia Tymoshenko. As I forecast back in the early summer, when she announced her candidacy, Ms. Tymoshenko looks to be a shoo-in for the presidency, although Mr. Wrobel doubts she will have enough support to win in the first round. In what he describes as ‘her brand of slick populism’, Tymoshenko blithely promises to solve all Ukraine’s problems in record time. He is dead-on when he points out that she offers no details of how she expects to accomplish this, and it is a matter of record that her understanding of economics and the origins of money is shaky at best; during her tenure as Prime Minster she attempted to give all civil servants a massive raise that the state budget could not possibly have afforded, and it seems likely she does not grasp the concept of limits on the money supply.

But that unsupported-promises thing reminds me of something…hey, I know what it is! Petro Poroshenko. During his mostly-just-going-through-the-motions campaign, he promised, (1) That the Anti-Terrorist Operation (ATO) would last just a few hours. It lasted another four years, and the end was marked only by abandoning the name. The war goes on. (2) 1000 hryvnia per day to be paid to Ukraine’s heroic combatants in the war against the Russian-backed separatists. This never happened, not even close. (3) The sale of Roshen and his other business assets, so that he could concentrate all his energies on leading the country. In fact, he did not divest himself of any of his business assets. (4) Not to open criminal cases against journalists; nope, he was all about free speech. Until he wasn’t. (5) To bring the exchange rate of the national currency, the hryvnia, back up to 10 to the dollar. It’s been above 26 to the dollar for all of 2018, and today is 27.39. (6) All offshores will be closed. As we learned from the Panama Papers, not only were existing ones not closed, Poroshenko opened new ones with himself as the only shareholder, the most notorious being one opened as his forces were being soundly defeated at Ilovaisk. (7) Open party lists. Ha, ha. (8) Preservation of the status quo for the Russian language. (9) Find acceptable ways of cooperating with Russia. I’m afraid I can’t go any further; I’m dumbfounded by the magnitude of the betrayal of that one.

The fact of the matter is that Poroshenko has a progressive agenda like a hen can do card tricks. He can no more fix Ukraine’s problems – many of which are his own creations – than he can sing “Take On Me”. Tymoshenko can’t do it, either. Ukraine is locked into a loop of ever-increasing borrowing and begging for debt rollover until it has to declare national bankruptcy. The most optimistic forecasts notwithstanding, there is no foreseeable way for it to raise the money it needs to pay its loans plus ensure a subsistence-level standard of living for its people, not even by privatizing everything as the west is prodding it to do, and selling off all its agricultural land.

But wait! I almost forgot the other article – the one that was almost diametrically opposed to Wrobel’s rhapsody to President Porogressive. It’s this one – yes, I know Newsweek is little better than a tabloid. But it is a raving pro-American tabloid, and America is committed to a Fortress Ukraine concept which will see Ukraine become a dependable strategic outpost against Russia. Any shenanigans engaged in by Ukraine are therefore pre-forgiven because of its anti-Russian value. It is therefore remarkable that Newsweek chooses to report – in notably disapproving tones – that Ukraine is becoming steadily more radical and nationalist, and that Ukraine has made Stepan Bandera’s birthday a national holiday. Yes, although President Porogressive was a little backslidey on creating the anti-corruption court, that does not mean his legislative pen has been idle; by no means. He’s just more interested in demonstrated irritants like creating the Ukrainian Orthodox Church, and then making the former church change its name to the Russian Orthodox Church in Ukraine. And the city of Lviv – Bandera’s hometown – went one better, declaring 2019 “The Year of Bandera”. Presumably with all the attendant celebratory pageantry and paradery, bearing Bandera’s portrait reverently through the streets like a scene from King’s “Children of the Corn”.

Earlier in December, Ukraine’s State Committee on Television and Radio Broadcasting banned Swedish historian Anders Rydell’s book titled Book of Thieves . The text critically analysed the actions of Ukrainian nationalist Symon Petliura whose forces killed large numbers of Jews in the early 20th century. Petilura was later killed by a Russian-born Jew in Paris in 1929.

Torchlight parades. Chanting, praising and celebrating a Nazi ally. Book banning and martial law. Newsweek is actually sounding the alarm that Ukraine is getting nuttier by the day. Pretty much the polar opposite of McOptimismville as described by Wrobel, where Tymoshenko cannot be allowed to undo all Poroshenko’s hard work, progress and success.