“I see no reasons for panic!”
By Aleksandr Okhrimenko
Translated from Russian by J.Hawk
Currently the average salary in Ukraine in dollars is
approximately the same as in Nepal or Senegal. Which is why any talk of Ukraine
becoming an EU member are pure fantasy.
As we know, Ukraine had made a “European choice”, and now
the Ukrainian government is promising that the standard of living will be like
in the EU. They are constantly saying that, any minute now, Ukraine will apply
to join the EU. While nobody even mentions the fact that Ukraine signed the EU
Association Agreement. Even though it is generally considered that Maidan
happened because the “malevolent” Yanukovich temporarily delayed its signing.
We no longer have a “malevolent” government, and we do have the Association
Agreement, but the situation is downright strange: the standard of living not
only reached the European level, it dropped catastrophically.
Bulgaria’s average salary is around 33 euro, it’s the lowest
salary in the EU. In Romania it’s 370 euro. Though in Moldova, which also wants
to join, it’s around 180 euro. But in Ukraine it’s lower still, around 130
euro, or around 150 dollars. No CIS country has average salaries this low. It
was generally believed that the lowest CIS salaries are in the Central Asia, in
countries like Tadjikistan or Kirgizstan. But Ukraine’s salaries are actually
lower, since the average salary in Tadjikistan is around 180 dollars. In
Uzbekistan it’s around 360 dollars, and in Kazakhstan over 600 dollars.
The reason for the critical condition of Ukraine’s economy
is the Maidan, which categorically demanded the Association Agreement, hoping
it would lead to an unheard-of economic miracle. Although in reality this
agreement is little more than an inter-governmental treaty which simply
regulates certain business and trade contacts, but in and of itself it is not
capable of causing miracles, or even economic growth, if the country’s own
economy is not working. As it happens, we do have a problem with Ukraine’s
economy. Mainly because of the destruction of the banking system and the
currency market by the National Bank of Ukraine acting in accordance with IMF
requests. Instead of stabilizing the hryvnya, ensuring stable conditions for
the banks by supporting them, the NatBank is doing exactly the opposite. As a
result the hryvnya devaluation got out of control, businesses are going
bankrupt on a massive scale because the banks are under temporary NatBank control. The
endless limits and prohibitions on the currency market have de-facto blocked
the importers and exporters from performing their activities, and there is now
an active black market for currency. Salaries under these conditions cannot
grow, rather the opposite, since both unemployment and salary non-payments are on the
increase. Everything suggests Ukraine will soon suffer both hyperinflation and
hyperdevaluation, as in the ‘90s, and will have to carry out currency reform to
replace the hryvnya with a new monetary unit.
All Ukrainians understand that as long as the Yatsenyuk
government and the NatBank continue playing political games instead of worrying
about Ukraine’s economy, the drop in Ukrainian incomes will continue. We can
expect that by the end of 2015 the average salary will fall under 100 dollars,
and the most important issue for Ukrainians will not be the choice of work, but
having any work at all. Because it will be harder and harder to find paying
jobs. All of that can destroy Ukraine’s economy to its foundations, and the
people responsible for it will write in their memoirs that they tried to carry
out reforms, but did not know how so nothing they tried worked. They will
likely forget to mention that before the Maidan the average salary in Ukraine
was around 440 dollars. But for some reason everyone thought that was bad,
while the current salaries represent the European choice.
J.Hawk’s Comment: This too is the consequence of the war. The instability of the situation on the Donbass means Ukraine is a very unattractive place in which to invest, or to even provide with assistance, since the likelihood of credits being repaid is low. At some point economic expectations become a self-fulfilling prophecy, and Ukraine may well have passed the point of no return.
While on the one hand this makes Ukraine a country economically incapable of waging a war, at the same time the fact its leadership may have nothing left to lose just might push it to do something truly desperate. Like a new round of fighting, accompanied with a martial law and everything that implies.