Popov: “Ukraine is a country without a social future”

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July 1, 2016 – 

By Eduard Popov for Fort Russ

Translated by J. Arnoldski

On July 1st, heating and hot water in Ukraine will be two times more expensive. The increase in utilities is linked to the establishment of unified gas prices for the population and utility companies. This increase in prices for the population is planned, and the government is pursuing a consistent policy of increasing prices for housing and communal services. On April 1st, 2015 Ukraine entered a two-year period of price hikes for electricity. During this period, set to last until March 2017, the cost of lighting will rise 3.5 times. Gas prices have increased even more. In post-Maidan Ukraine, the price of natural gas has increase approximately 6 times. 

For comparison, the residents of the Lugansk People’s Republic pay 6.88 times less for gas than the residents of the neighboring towns in Ukraine. In the LPR and DPR, gas is supplied directly from Russia. Meanwhile, Kiev refuses to pay for gas for the residents of the unrecognized republics. Contrary to Kiev’s declarations of a “united Ukraine,” Donbass has been removed from the financial and social policies of the Ukrainian state. 

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The ongoing growth in tariffs for housing and communal services reflects the IMF’s demands that social spending be limited. Ukraine expects the next loan from the IMF to be in the amount of $1.7 billion, but in order to obtain such Kiev has to fulfill the entire package of IMF demands. The opposition to President Poroshenko in the Verkhovna Rada (including the Radical Party of Leg Lyashko, Yulia Tymoshenko, etc.) has stated that they are aware of a secret memorandum between the IMF and Ukraine. According to them, the agreement includes demands affecting the field of social policy. 

In addition to price hikes for housing and communal services, there is the demand that the Pension Fund of Ukraine’s debt be liquidated. Ukraine is a country with a rapidly aging population with 12.2 million people on the Pension Fund of Ukraine’s list, which means that pensioners account for 29% of the population. Such official data does not even reflect the real situation in which several million Ukrainian citizens are permanently working in Russia and other EU countries, where they increase the national wealth of those countries and don’t pay taxes to their own state, including to the Pension Fund of Ukraine. It is not surprising then that the deficit of the Pension Fund has reached 145 billion hryvnia (nearly $6 billion), something which indicates the practical bankruptcy of the organization. This data was released by the Minister of Social Policy of Ukraine, Andrey Reva, on May 23rd.

The IMF’s demands are not the only nor the main reason for price hikes. After the victory of the Euromaidan, housing and communal sector enterprises were privatized by the oligarchic structures which paid for the Euromaidan. As a result, a real monopoly on utility services was established in Ukraine. This monopoly on the market and the desire to derive maximum profits from such services are the main reason for the excessive and constant increase in tariffs. 

The IMF demands that the Ukrainian government “throw out” its social obligations to its own population, which means the final death of a socially responsible state. Currently, the cost of housing and utilities for one household often exceeds the total pensions of a married couple combined. Despite this, it has been declared that tariffs will be continually raised until mid-2017 in parallel to rises in consumer prices. This leaves millions of Ukrainian families on the brink of poverty and survival, and affects pensioners above all. In the most straightforward sense, Ukraine is a country without a social future. 

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