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US corporations in the wings for post-war Ukraine

by Ben Norton
The IMF granted large loans to the invaded country and enforces the so-called neoliberal "Washington Consensus"[1]. In a major privatization campaign, the Ukrainian government is selling off state assets. U.S. corporations such as ExxonMobil, Chevron and Halliburton participate in negotiations to take over the oil and gas industry of the Eastern European country.
U.S. corporations in the wings for post-war Ukraine
by Ben Norton

IMF and oil companies are already negotiating privatization and investment-friendly conditions with Ukraine.
Protests against the IMF's austerity policy: After the war also in Ukraine, as here in Argentina in 2022

[This article posted on 5/7/2023 is translated from the German on the Internet, US-Konzerne in den Startlöchern für die Nachkriegs-Ukraine - infosperber.]

Countrywide privatization campaign.

The IMF granted large loans to the invaded country and enforces the so-called neoliberal "Washington Consensus"[1]. In a major privatization campaign, the Ukrainian government is selling off state assets. U.S. corporations such as ExxonMobil, Chevron and Halliburton participate in negotiations to take over the oil and gas industry of the Eastern European country. Kiev wants to increase production to replace energy imports from Russia.

Recently, President Volodymyr Selensky sent a friendly video message to a U.S. business lobby group, thanking companies such as BlackRock, JP Morgan, Goldman Sachs, and Starlink and promising other "big deals."

In September, Selensky also symbolically opened the New York Stock Exchange via video and announced that his country was "open for business." Ukraine, he said, was offering U.S. companies more than $400 billion for "public-private partnerships, privatizations, and private companies."

The Ukrainian government used the war as an excuse to impose some of the most anti-worker laws in the world. The director of the Kiev-based nongovernmental organization Labor Initiatives warned of a "major attack on labor rights in Ukraine" and wrote in a German government-sponsored journal that "the war must not be used as a justification for the disenfranchisement of workers."

While China advocated peace talks and Brazil's President Lula da Silva supported Beijing's efforts, the West vehemently rejected all attempts at diplomatic negotiations. Instead, the West helped escalate NATO's proxy war against Russia by sending fighter jets and tanks to Ukraine.

Ukrainian state energy company Naftogaz is courting the Halliburton corporation, which already profited from the Iraq war

Ukrainian officials now treat their country like a for-profit company and frequently travel to the United States in search of lucrative business opportunities. In April of this year, the CEO of Ukraine's state-owned energy company Naftogaz, Oleksiy Chernyshov, flew to Washington DC to meet with U.S. political and business representatives. As reported by the Financial Times, Chernyshov met with representatives of ExxonMobil and Halliburton, having already had a similar meeting with Chevron in January. The newspaper reported, "The negotiations with major oil and gas companies are part of a strategic push to boost natural gas production. This could help replace Russian supplies to Europe in coming years, according to Ukrainian officials."

Halliburton is also the world's largest provider of fracking services and hydraulic fracturing, a controversial form of gas extraction that is so environmentally damaging it has been banned in the United Kingdom.

In response to the Financial Times report, former Greek finance minister and economics professor Yanis Varoufakis tweeted, "And here we have it. Exxon, Halliburton & Cheveron are now taking over Ukrainian oil and gas fields after Iraq. They plan to introduce fracking on a large scale - a clear and immediate threat to Ukrainian agriculture."

Yanis Varoufakis criticizes fracking plans

Chernyshov, the chief executive of Ukrainian state energy company Naftogaz, told the Financial Times:

"We want them [Halliburton] to dramatically expand their presence. We definitely want them there - present on the ground ... We will welcome them ... We can do joint gas production and conclude a PSA agreement [production sharing agreement]. They can get a license and produce themselves. We will support that."

In November, Joe Rainey, president of Halliburton and responsible for the Eastern Hemisphere, traveled to Ukraine to meet with Chernyshov. Naftogaz published a press release on its website boasting,

"strengthening its strategic cooperation with the American company Halliburton, one of the world's largest providers of oilfield services, in order to develop the full potential of Ukrainian oilfields."

For his part, Chernyshov stated:

"Your support and visit to Kyiv are a strong signal to the entire market and the world ... I am grateful to the U.S. government, the American people and to you personally for your comprehensive support to Ukraine. We appreciate it very much. Our cooperation is extremely important, and we are doing our best to improve and expand it."

Halliburton has been virtually synonymous with corruption in the United States since the 2000s. Mostly, it involved large government contracts. In 2017, the company was fined $29.2 million by the U.S. Securities and Exchange Commission. It had violated the Foreign Corrupt Practices Act with highly profitable contracts for oilfield services in Angola.

Vice President Dick Cheney, who served under former President George W. Bush, had worked for years as Halliburton's chairman and CEO. Cheney, a hardliner among the neoconservatives, was one of the main architects of the U.S. invasion of Iraq in 2003 in violation of international law, the same year Halliburton got a deal that National Public Radio NPR called a "'sweetheart' deal in Iraq." NPR informed then as follows:

"Oil services company Halliburton is under intense scrutiny for its multibillion-dollar contracts with the U.S. military in Iraq. Critics in Congress want to know if the company is gold-plating contracts, that is, driving up costs and pocketing the difference. Other critics charge that Halliburton appears to have become another branch of the U.S. military, while the company's former chief executive, Dick Cheney, is now vice president. In the first of a three-part NPR series on the complex relationship between the defense contractor and the federal government, NPR's John Burnett examines the scope of Halliburton subsidiary Kellogg, Brown & Root, better known as KBR,'s contracts in Iraq. America's war on terrorism has made KBR a lot of money. Since Sept. 11, 2001, the company has set up base camps in more than 60 locations throughout the Middle East and South Asia. Under its agreement with the Pentagon - known as the 'logcap' contract - KBR is the preferred company to provide troops in Iraq with everything from portable toilets to Internet cafes."

A decade later, the International Business Times reported that Halliburton subsidiary KBR had won more Iraq-related contracts than any other private company in the first decade of the war.

The newspaper wrote:

"The company [KBR] was awarded $39.5 billion worth of Iraq-related contracts over the past decade, with many of those contracts awarded to competing companies without competitive bidding. For example, a 2010 contract extension worth $568 million to provide shelter, meals, water, and sanitation for soldiers; a contract that led to a Justice Department lawsuit alleging kickbacks."

Ukraine interested in natural gas deposits off Crimea

The Financial Times reported that the Ukrainian government wants to drill for natural gas in the Black Sea off Crimea. However, Kiev cannot access this gas.

Crimea was annexed by Russia in 2014 after a referendum in which 97 percent of participants voted in favor of annexation to the Russian Federation in a turnout of 83 percent. Western governments disputed the vote. But a poll by the U.S.-based Pew Research found that 91 percent of Crimean residents thought the referendum was free and fair. 88 percent of Crimean residents wanted Ukraine to recognize the result.

Despite Crimean residents' overwhelming support for incorporation into the Russian Federation, Ukraine and its NATO backers insist on retaking the region. Not only because of its valuable offshore gas reserves, but also because of its great geostrategic importance to Russia.

Russia has only one warm-water naval base, the Sevastopol base in Crimea. This is the most important base of the Russian Black Sea Fleet. Without it, the sea would be virtually controlled by NATO. For Moscow, this is a vested security concern that is not motivated by economic ulterior motives. Even the U.S. military-backed think tank RAND Corporation acknowledged this, publishing a report in April 2022 titled "Russia Does Not Seem to Be After Ukraine's Gas Reserves."

RAND wrote:

"Ukraine does indeed have the second-largest known natural gas reserves in Europe, nearly 80 percent of which are located east of the Dnipro River. However, these deposits represent less than 3 percent of Russia's total natural gas reserves. And while Ukraine could theoretically have significant shale gas reserves, they remain largely unexplored. Russia currently has neither experience nor technologies for shale gas production."

Naftogaz CEO meets U.S. ambassador involved in 2014 coup

During his trip to Washington in April this year, Naftogaz CEO Chernyshov met not only with company executives, but also with high-ranking government officials, such as former U.S. Ambassador to Ukraine Geoffrey Pyatt. The latter represented Washington in Kiev during the violent U.S.-backed coup in 2014, which overthrew Ukraine's democratically elected, geopolitically neutral government and installed a pro-Western regime.

An infamous leaked phone conversation by top State Department official Victoria Nuland revealed that U.S. officials were deciding at the time who would lead the Ukrainian government after the coup. The phone call with Nuland involved none other than Pyatt.

Today, Pyatt is U.S. Assistant Secretary of State for Energy Resources and also coordinates cooperation between the G7 and Ukraine. In a press release about Chernyshov's meeting with Pyatt, Naftogaz proudly wrote that it was "working to attract American companies - their technologies, know-how, and investments - so as to increase production in Ukraine."

For his part, Chernyshov said, "We discussed a number of issues. From Ukraine's new role in Europe's energy security system to the implementation of corporate governance reform."

Naftogaz participates in IMF structural adjustment program

During his trip to Washington, Naftogaz CEO Chernyshov also met with representatives of the International Monetary Fund (IMF). This is a U.S.-dominated financial institution known for imposing neoliberal economic policies on indebted countries.

In March of this year, the IMF decided to grant Ukraine a $15.6 billion loan. Never before had the IMF provided funding to a country at war. A reporter for the U.S. semi-governmental media outlet NPR acknowledged that the IMF had to make a "rule change" that was "obviously politically motivated."

IMF credit

Ben Norten fears that Ukraine can only service the IMF loan with neoliberal austerity policies. © B.N.

Naftogaz stated in a press release that "successful and consistent cooperation with the IMF is crucial for Ukraine's resilience during the war." Using racist rhetoric that called Russia "uncivilized," Chernyshov stated:

"Cooperation with the IMF is crucial for the stability of our country in times of war. The fact that we have a loan program is a signal to the civilized world that the country is moving in the right direction. Ukraine has made its civilizational choice. Naftogaz has fulfilled its part of the conditions for our country to receive the IMF program. This proves that we are a reliable partner. Naftogaz will not let the country down."

Naftogaz's press release did not disclose what those "conditions" were, but a February IMF press release made clear that they included neoliberal reforms. The IMF reported that the talks with the Ukrainian authorities.

"the medium-term macroeconomic framework, fiscal policy, the financing mix, financial sector policies, and governance"

concerned. Regarding the IMF's conditions, the media release said:

"In particular, reform initiatives to boost private sector productivity and competitiveness need to be advanced to lay the foundation for robust post-war growth against the backdrop of progress toward EU accession."

Reforms to "boost private sector productivity and competitiveness" are a euphemistic way of saying that Ukraine needs to press ahead with privatizing state-owned industries and divesting public assets.

In its statement, the IMF stressed, "The private sector is also expected to contribute to the reconstruction effort." The Fund also commented favorably on "draft tax laws aimed at raising revenues," calling for "shoring up tax revenues" and "creating fiscal space for war-related repairs." It goes on to say, "Efforts to expand issuance in the domestic bond market should be pursued to ensure a stable financing mix and eliminate reliance on monetary financing."

In short, the IMF's conditions for Ukraine are a typical reflection of the Washington Consensus[1]: Neoliberal austerity measures increase the burden on Ukrainian workers. And while their living standards fall and they have fewer and fewer rights, U.S. corporations are offered profitable opportunities to buy up public assets.


This post appeared on Geopoliticaleconomy.



[1] According to Wikipedia: The structural adjustment programs should be understood as the implementation of the Washington Consensus, which was the political program of the hegemonic economic policy forces in the United States at the time, organized in the IMF, the World Bank, the U.S. Treasury, and the numerous Washington think tanks. Since the rise of liberal-conservative politicians (Reaganomics, Thatcherism), the hegemonic economic policy ideas mainly included ideas such as supply-side policies, free trade, and export-oriented economic policies.

None. Ben Norton is an investigative journalist and analyst. He is the founder and editor of Geopolitical Economy Report and lives in Latin America.
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