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Vol. 73/No. 10      March 16, 2009

Ukraine gov’t verges on collapse amid crisis
(front page)
The impact of the worldwide contraction in capitalist production continued to sweep across Eastern Europe with the economy in Ukraine on the verge of collapse as the month of March opened. Industrial output declined 34 percent in January, steel production plunged by 46 percent, and the country’s currency, the hryvnia, declined by more than 40 percent against the U.S. dollar. If the government steps down, it will be the third in Europe in three months. The government in Iceland resigned January 26 and the Latvian government collapsed February 20.

Truckers parked 200 tractor-trailers outside Kiev, the capital, for several weeks, threatening to block the roads if the government failed to address their high debts, which they attribute to the fall of the hryvnia. They withdrew the vehicles February 27 after the government said it would take up their demands.

Twenty-six-year-old trucker Viktor Zarichnyuk told the New York Times, “The government is to blame for all of this.” He said, “We want the government and the national bank to agree that the money allocated by the International Monetary Fund, at least part of it, should go to regular people.”

A crowd of retired workers gathered outside the Rodovid Bank February 27, which was close to failing. The bank limited customers’ withdrawals to no more than $35 a day. Dmitri Havrilkiv, a retired crane operator, said, “The government has to be replaced. They just can’t handle it!”

Several dozen protesters set up a tent city in Kiev’s central square to demand the government step down. Twenty-nine-year-old Vasily Kirilyuk, an unemployed plumber, held a sign saying “Get rid of them all.” He told the Times, “There will be a revolt. And people will come because they are just fed up.”

In 2004, massive mobilizations of working people, dubbed the “Orange Revolution,” negated a rigged presidential election and brought to power Viktor Yushchenko, viewed as much more friendly to the United States than to Russia. Today, a poll shows 57 percent of the population wants him out of office.

Ukraine declared independence from the Soviet Union in 1991. The government instituted capitalist market reforms and eventually saw sustained economic growth of about 7 percent a year from 2000 to 2007. Workers’ incomes rose.

But by the middle of 2008, the worldwide capitalist economic crisis began to have its effects. There was a sharp drop in demand for steel, which is 40 percent of Ukraine’s exports. Foreign investment contracted.

Ukrainian working people are bearing the brunt of the crisis. With municipal governments unable to pay basic service bills, many have gone without heat or water for days at a time. Thousands have been laid off in the steel mills.

The March 2 Kyiv Post reported that Russian president Dmitri Medvedev is threatening to put Ukraine on a “prepay” gas plan if it fails to pay its bill by March 7.

EU leaders have rejected a request from the government of Hungary for some $228 billion in loans for Ukraine and other eastern European countries. The International Monetary Fund canceled payment of a $16.4 billion loan to Ukraine in February, charging that Kiev had failed to cut the national budget enough.  
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