Greece, Ukraine and U.S. — Advancing the Neo-Liberal Project

Bill Clinton and Paul Ryan agreeing that the privatizing Ryan budget is the way to go. Neo-liberalism in action, but you have to look behind the curtain to see it.

by Gaius Publius

I recently did a piece about Greece that implied a number of similarities to Ukraine's recent upheavals. There I said:

All of this loops the Greek story into the Ukraine story, which most people still don't realize isn't just about Putin, though that makes a convenient (and cartoonish) Us vs. The Villain cautionary tale. It's about continuing the ... yes, neo-liberal project ... deeper into eastern Europe.

I want to explain some of that here, via three concepts — the cover story, the actual story, and the Putin element in each case — with a side look at "the neo-liberal project," which both of these stories exemplify.

The Story in Greece

The CNN-ready cover story on Greece is is a story of punishing helpers or helping punishers — the audience can take the story either way, as it chooses. "Bad Greece" got itself in economic trouble and "good Europeans" — led by German and other elites — have offered a helping hand, but only if the Greek government makes painful adjustments, such as cutting pensions (their form of our Social Security) and privatizing much of their infrastructure, such as their airports and shipping facilities. Money, but with strings.

The Greeks deserve this treatment because bad (profligate, lazy) people deserve to suffer when they fall. Welfare, when given to "the wrong people," should come with thorns; bailout money, when given to "the wrong people," should come with some pain, with strings.

The actual story is that the forces of privatization on the "liberal left" in Europe have found a nation in a great deal of economic trouble, thanks in large part to looting from outside, and they're offering a "helping" hand in order to further loot the country via those privatizing strings. In the minds of the looters (we'll call them "neo-liberals" below) every government-owned operation (Athens airport, say) is a missed profit opportunity for someone rich enough to buy it, and the world would be better if everything were made private.

But airports and other revenue opportunities don't privatize themselves; they have to be pried loose from government. Corruption will pry them loose, or friends on the inside. That's how the Abu Dhabi sovereign wealth fund and others got their hands on 75 years' worth of revenue from the Chicago parking meters. They had a "friend," Mayor Richard M. Daley, on the inside willing to sell it to them on the cheap.

"Shock Doctrine"-type operations will do it also. As Naomi Klein documents in her book of the same name, the shock of Hurricane Katrina's devastation was the perfect opportunity to privatize (monetize) New Orleans' public schools.

The Putin element is that Greece, if driven from the Eurozone by the Eurozone's brutal (but "liberal") hand, might accept aid from Russia, aid with fewer strings. In anticipation, the U.S. has reportedly told the Greek president it will not allow this, with militarized regime change on offer if he considers it — as opposed to the ballot-box regime change that the Eurozone is trying to force.

The "Neo-Liberal Project"

I call the above-described form of privatization (monetization) of government-held property the "neo-liberal project." Notice that while neo-liberals share goals with big-money conservatives on the right, most of these privatizers are what we otherwise call "liberals" — like Mayor Richard Daley, for example; or the helpful people at the IMF and the European Central Bank; or Bill Clinton, who wanted to privatize Social Security in 1997, if it weren't for a certain blue dress and the woman inside it:

Had it not been for Monica's captivating smile and first inviting snap of that famous thong, President Bill Clinton would have consummated the politics of triangulation, heeding the counsel of a secret White House team and deputy treasury secretary Larry Summers. Late in 1998 or in the State of the Union message of 1999 a solemn Clinton would have told Congress and the nation that, just like welfare, Social Security was near-broke, had to be "reformed" and its immense pool of capital tendered in part to the mutual funds industry. The itinerary mapped out for Clinton by the Democratic Leadership Committee would have been complete.

We have this on the authority of high-ranking members of the Clinton Treasury who gathered in Harvard in the summer of 2001 to mull over the lessons of the 1990s. At that conclave it was revealed that on Clinton's orders a top secret White House working party had been established to study in detail the basis for a bipartisan policy on Social Security that would splice individual accounts into the program. Such was the delicacy of this exercise that meetings of the group were flagged under the innocent rubric "Special Issues" on the White House agenda. ...

The "Special Issues" secret team was set up by then-Deputy Treasury Secretary Larry Summers (later elevated to Treasury Secretary and now President of Harvard) and Gene Sperling, the head of the Council of Economic Advisers.

It's the same game, whether played from the left or the right, as the video above clearly shows. When the game is played from the right, they call it Milton Friedman conservatism. When it's played from the left, they call it neo-liberalism ("new" liberalism, like Tony Blair's "New" Labour in the U.K.; like what it was, only not).

The privatizing game is mainly played from the left, because that's where most of the players are. The Western world is mostly run by "liberals" like these. When Democrats vote for mainstream "liberals," this is what they put into office.

The Ukrainian Story

There's a parallel to Greece in the recent events in the Ukraine. The cover story is that Ukraine was ruled by "bad president Yanukovych" who was friendly to Russia; Ukraine had a revolution, an uprising; and it's now ruled by "good prime minister Yatseniuk" under acting president Turchynov. Yatseniuk wants to take Ukraine out of the Russian orbit.

In this story, the Putin element comes at the beginning. The "good Europeans" wanted to lend a helping hand to Yanukovych and his government via loans and other inducements because Ukraine was in financial trouble (sound familiar?). Putin also offered a helping hand, so two deals were on the table. The Russian-leaning ("bad") Yanukovych wanted to accept the Russian deal over the E.U. deal, but the uprising deposed him. When the new West-leaning government accepted the European offer instead, the cover story tells us that Putin got angry, invaded Crimea, and is provoking a crisis. At the moment, Ukraine is experiencing either an invasion or a civil war, depending on who you talk to.

The real story is detailed below. The bottom line is that the West's offer of help was the standard neo-liberal offer — the strings were handcuffs. Putin actually presented a better offer, but the West worked covertly to install their own people (Yatseniuk in particular) to make sure that the European deal was accepted and Putin was spurned, even though much of the country is ethnically Russian and pro-Putin. The cover story also ignores Putin's reaction to the advancing NATO encirclement of Russia, of which the Ukraine story is a part.

The ethnicity is complex. The economics are not.

Who was the provocateur in the Ukrainian uprising? The West had a huge hand in provoking (and financing) it. Here's Chris Floyd with the story. Watch for the names Pierre Omidyar, billionaire founder of eBay; the innocently named USAID, the United States Agency for International Development, the "government agency primarily responsible for administering civilian foreign aid"; and the likewise innocently named National Endowment for Democracy.

Floyd begins:

Ukraine, Omidyar and the Neo-Liberal Agenda

The Western intervention in Ukraine has now [spring, 2014] led the region to the brink of war. Political opposition to government of President Viktor Yanukovych — a corrupt and thuggish regime, but as with so many corrupt and thuggish regimes one sees these days, a democratically elected one — was funded in substantial part by organizations of or affiliated with the U.S. government, such as the National Endowment for Democracy (a longtime vehicle for Washington-friendly coups), and USAID. It also received substantial financial backing from Western oligarchs, such as billionaire Pierre Omidyar, founder of eBay and sole bankroller of the new venue for “adversarial” journalism, First Look, as Pandodaily reports.

Yanukovych sparked massive protests late last year when he turned down a financial deal from the European Union and chose a $15 billion aid package from Russia instead. The EU deal would have put cash-strapped Ukraine in a financial straitjacket, much like Greece, without actually promising any path for eventually joining the EU. There was one other stipulation in the EU’s proffered agreement that was almost never reported: it would have also forbidden Ukraine to “accept further assistance from the Russians,” as Patrick Smith notes in an important piece in Salon.com. It was a ruthless take-it-or-leave-it deal, and would have left Ukraine without any leverage, unable to parlay its unique position between East and West to its own advantage in the future, or conduct its foreign and economic policies as it saw fit. Yanukovych took the Russian deal, which would have given Ukraine cash in hand immediately and did not come with the same draconian restrictions.

It was a policy decision. It might have been the wrong policy decision; millions of Ukrainians thought so. Yanukovych, already unpopular before the deal, would have almost certainly been ousted from office by democratic means in national elections scheduled for 2015. But the outpouring of displeasure at this policy decision grew into a call for the removal of the government. Meanwhile, behind the scenes, Washington was maneuvering to put their preferred candidate, Arseniy Yatseniuk, in charge of the Ukrainian government, as a leaked tape of a conversation between Victoria Nuland, assistant secretary of state, and Geoffrey Pyatt, U.S. ambassador to Ukraine, clearly showed. It is worth noting that when Yanukovych was finally ousted from power — after the opposition reneged on an EU-brokered deal for an interim unity government and new elections in December — Arseniy Yatseniuk duly took charge of the Ukrainian government, as planned.

By all accounts, Viktor Yanukovych was an unsavoury character running an unsavoury government, backed by unsavoury oligarchs exploiting the country for their own benefit, and leaving it unnecessarily impoverished and chaotic. In this, he was not so different from his predecessors, or from many of those who have supplanted him, who also have oligarchic backing and dubious connections (see addendum below). But in any case, the idea of supporting an unconstitutional overthrow of a freely elected Ukrainian government in an uprising based squarely on the volatile linguistic and cultural fault-lines that divide the country seems an obvious recipe for chaos and strife. It was also certain to provoke a severe response from Russia. It was, in other words, a monumentally stupid line of policy[.]

The above-mentioned Victoria Nuland has a place in the Greece story as well; click and you'll see her with the Greek president, explaining how things work.

About that neo-liberal intrusion into Ukraine, Floyd quotes Patrick Smith from a piece at Salon:

“[U.S.] foreign policy cliques remain wholly committed to the spread of the neo-liberal order on a global scale, admitting of no exceptions. This is American policy in the 21st century. No one can entertain any illusion (as this columnist confesses to have done) that America’s conduct abroad stands any chance of changing of its own in response to an intelligent reading of the emerging post–Cold War order. Imposing “democracy,” the American kind, was the American story from the start, of course, and has been the mission since Wilson codified it even before he entered the White House. When the Cold War ended we began a decade of triumphalist bullying — economic warfare waged as “the Washington Consensus” — which came to the same thing.”

And:

“Instantly after Yanukovych was hounded from Kiev, seduction began its turn to betrayal. The Americans and Europeans started shuffling their feet as to what they would do for Ukrainians now that Russia has shut off the $15 billion tap. Nobody wants to pick up the bill, it turns out. Washington and the E.U. are now pushing the International Monetary Fund forward as the leader of a Western bailout. If the past is any guide, Ukrainians are now likely to get the “shock therapy” the economist Jeffrey Sachs urged in Russia, Poland and elsewhere after the Soviet Union’s collapse. Sachs subsequently (and dishonestly) denied he played any such role — understandable given the calamitous results, notably in Russia — but the prescription called for off-the-shelf neoliberalism, applied without reference to any local realities, and Ukrainians are about to get their dosage."

And regarding Pierre Omidyar:

Omidyar seems very much a part of the “neo-liberal order” which, as Patrick Smith noted above, the United States has been pushing “on a global scale, admitting of no exceptions.” So it is not surprising to see him playing a role in trying to spread this order to Ukraine, in tandem with the overt efforts and backroom machinations of the U.S. government. Omidyar is, openly, a firm adherent of the neo-liberal order — privitazing public assets for individual profit, converting charity and state aid to profitable enterprises for select investors, and working to elect or install governments that support these policies.

Billionaires helping governments help billionaires. One big happy family. Who needs left or right when everyone with real money works together?

Greece and Ukraine, the Bottom Line

So far, the U.S. has not had a direct hand in the upheaval in Greece, but it has had a hand in the upheaval in Ukraine, though unnoticed. In all other respects there are major parallels. In both cases an economically distressed country is targeted as prey (is there another word for this?) by Western elites bent on straitjacket economics ("off-the-shelf neoliberalism" is Chris Floyd's term) and a deal that comes with a price. In the case of Ukraine, there was a counteroffer (Russia's), so regime change by force was on the table early.

Will there be regime change by force in Greece? Many, like Joseph Stiglitz quoted here, think that's already being attempted via the destruction of the leftist Syriza party's credibility and policy options. If this piece at Naked Capitalism is correct, more direct intervention, with U.S. support, may be coming.

GP