By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Originally published at New Economic Perspectives
We all understand why Russia is waging economic war on the Ukraine, but why is Obama doing so? The New York Times’ web site has posted a remarkable Reuters story (dated April 5, 2014) entitled “Ukraine PM Says Will Stick to Austerity Despite Moscow Pressure.”
The Kiev government will stick to unpopular austerity measures ‘as the price of independence’ as Russia steps up pressure on Ukraine to destabilise it, including by raising the price of gas, Prime Minister Arseny Yatseniuk told Reuters.
“Unpopular austerity measures” are, of course, among the best things Ukraine can do to aid Russia’s effort to “destabilize” the Ukraine. Indeed, Yatseniuk admits this point later in the article.
The subtext of Russia’s message to Ukraine’s Russian-speaking population, he said, was that they would enjoy higher living standards in Russia, with higher wages and better pensions and without the austerity that the Kiev government was now offering
‘They’re saying: if you go to Russia, you’ll be happy, smiling, and not living in a Western hell,’ he said.
‘They (the Russians) are trying to compensate (for the Western sanctions). But we can pay the price of independence,’ he said, with financial support from the West.
So, our strategy is to play into Putin’s hands by inflicting austerity and turning the Ukraine into “a Western hell.” Not to worry says our man in Kiev, because he’s sure that ten million ethnically-Russian citizens of Ukraine will gladly “pay the price of independence” to live in “a Western hell.” That strategy seems suicidal. Indeed, Yatseiuk emphasizes that he knows the strategy he is following is suicidal.
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