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System failure – both East and West

The Russia-Ukraine conflict is ostensibly over the status of Crimea, which Moscow today annexed after a military-supervised, one-sided referendum process. It also expresses in a dramatic way how the old world order is breaking apart at the seams, bringing nationalism and other horrors in its wake.

Even during the boom years that lasted from the end of the 20th century to 2007, the nation-state form that owes its shape to a mid-17th century treaty on sovereignty was under great strain from changes in the world economy.

Transnational corporations, financial system and global communications networks are no respecters of borders or the state institutions that reside within them. As a result, there has been a qualitative change in the way state power is exercised. In the advanced economies, the state not only defends local capital but also promotes international capitalism.

Inward investment is a prize to be sought while tax and labour conditions are adjusted downwards as an enticement. As is well recorded, the consequences include extreme inequality and a vulnerable workforce. Among other results of a manic drive to accumulate profits and wealth are problems of a global scale such as climate change which are immune to action on a local or even national basis. They require a transnational response in the interests of humanity as a whole. This is beyond capitalism’s capacity, as we know to our cost.

While Britain and the United States have evolved into market states, sidelining and subordinating parliamentary democracy in the process, history compelled countries of the former Soviet Union like Russia and Ukraine to take a different route. The restoration of capitalism in Russia in 1991, following a failed Stalinist-led coup, and the declaration of independence by Ukraine after the demise of the Soviet Union, led to theft of economic resources on an unprecedented scale.

State assets were stripped and handed over to individuals who immediately became billionaire oligarchs. They dominated politics, exported large parts of their wealth to London and other Western capitals and generally ruled the roost. The Russian and Ukrainian states became endemically corrupt in mafia-style fashion.

In former KGB officer Vladimir Putin, the oligarchs found their man. He used Russian nationalism to his advantage to smash Chechnya into submission, intimidate his opponents and built an authoritarian state to suppress dissent. The uprising in Ukraine against his protégé Yanukovych, driven by an as yet unfulfilled desire for a law-governed, democratic state, was viewed as a threat to his regime.

There’s been only one point of view allowed – that of the Kremlin, itself contaminated by untruths. Dissident TV journalists have been removed. Leaving aside all the scare stories about a “fascist” take-over in Kiev – in fact, the oligarchs around former prime minister Tymoshenko are firmly in control – and the non-existent threat to ethnic Russians in eastern Ukraine, the Kremlin simply had to discredit the Maidan movement. If people can remove illegitimate governments by force in a neighbouring country, the precedent would be set, the Kremlin calculated.

So in Crimea, an autonomous region of Ukraine and guaranteed by an international treaty, a destabilisation process was launched. Power was seized by men with violent criminal connections under the auspices of the Russian military. Moscow called the bluff of the United States and Nato, which has itself broken international law on numerous occasions in Iraq, Libya, Afghanistan to name a few countries. Putin cleverly used their hypocrisy to justify the seizure of Crimea.

Now Putin is threatening the dismemberment of Ukraine itself along ethnic lines, recalling what happened in Yugoslavia after that federation broke apart. If you want to find an ultra-nationalist, just look to Moscow today, both in the parliament and outside in Red Square where Putin has strutted his stuff. Unlike the nationalists in Kiev, the Russian leader has tanks to reinforce his patriotism.

At the heart of all this is the growing economic crisis in Russia and, in particular, bankrupt Ukraine and the failure of the Western economies to escape from recession. With China facing a financial meltdown because of its unsustainable banking debt, the international order has never been more fragile.

Both the Ukrainians and ordinary Russians are caught in a trap not of their making. In Moscow, the snare is up made up of oligarchs, authoritarian leaders and reactionary nationalism. In Ukraine, another variety of oligarchs, petty nationalists and European Union and US capitalists are vying for influence and power.
Ultimately, they have to unite against their common enemies and strive for a new, democratic system that puts power firmly in the hands of working people. In that struggle, they can counter both rabid nationalism and move beyond the failure of the old capitalist order, east and west.

Paul Feldman
Communications editor
18 March 2014

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