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Integration of the ex-USSR into world capitalism

Copyright: Iskra Research; 17 Mar 1992

An article in the March 12th London Financial Times, titled Ukraine sets out to woo foreign investors, tells of a new law passed by the Ukrainian parliament the day before, which was designed to attract foreign business interests into the country.

"…Foreign investments, defined as ventures with a foreign stake of at least 20 per cent or with a foreign capital contribution of at least $100,000, are granted a five-year tax holiday and thereafter pay only 50 per cent of local taxes."

"…Nationalization of foreign enterprises is forbidden and existing foreign ventures are protected for 10 years from any changes to the legislation."

"Foreigners are permitted full ownership of enterprises except as yet undefined strategic sectors. They may also use locally earned currency to bid for property when it is privatized later this year.

"Profits may be fully repatriated, but are subject to a 15 per cent tax. Goods imported for the use of foreign enterprises or their personnel are exempt from customs and tariffs and the products of foreign enterprises may be exported without export licenses or duties."


This law overnight turns Ukraine into a giant free trade zone for any world capitalist. In their eagerness to serve foreign capitalists, the petty-bourgeois ex-Stalinists like Kravchuk together with the ex-dissidents like Chornovyl have embarked on the wholesale destruction of the gigantic industries built up over the past 74 years. Indeed, this law provides foreign enterprises with definite advantages over their Ukrainian competitors and guarantees a wholesale bankruptcy of both heavy and light industries.

A recent deal concluded between Ukraine and Austria about exchanging Ukrainian electricity for Austrian power generation and pollution control equipment assumes a collapse in Ukrainian electric power consumption (FT, March 16, page 3). Consumption of electricity is, of course, directly proportional to cultural and social levels of any society.

March 11th Financial Times told of the impending bankruptcy of the shipbuilding plant in Mykolayiv on the Black Sea. That plant used to build aircraft carriers for the Soviet navy. Carrier number 7 is almost finished but now the Soviet Navy is no longer and the carrier is being offered to any buyer, who will pay almost any amount of hard currency. Carrier # 8, which was in an earlier stage of construction, has already been sold for scrap. The shipyard as well as the thousands of its workers are also up for scrap.

The transformation of the republics of the former Soviet Union into dependencies of the various imperialist interests is not limited to Ukraine, of course. In another part of this international business paper, there is a story about Azerbaijan entitled Azerbaijan expects to climb oil reserve league. It interviews a Mr. Valekh Alekserov, "the deputy chairman of Azeroil, the state concern grouping all the republic's oil-related industries."

Because the Georgian President Ayaz Mutalibov was forced to resign last week the FT reporter expressed Western doubts about the government's stability. "However, Mr Alekserov dismissed such fears, saying that 'the government here did not interfere with us and will not interfere with us. They know that they cannot develop any policy which runs against the interests of oil production here. Everyone here understands that they must act in this way if we want to co-operate with other countries and with foreign companies'". (FT, March 12, 1992).

What becomes absolutely clear is that all the various petty-bourgeois cliques who now hold power throughout the former USSR have absolutely no perspective of an independent development for their respective republics. The gangsters who control the republican and regional governments throughout the huge region are frantically attempting to sell anything they could get their hands on for any amount of dollars, yen or D-marks. Their deal making is so myopic as to shock the more serious Western bankers and industrialists. Business pages of bourgeois newspapers and journals repeatedly run stories about the "frontier" atmosphere of these businesses, about their lack of common foresight and planning, the lawlessness of the various deals, etc. A particularly clear example is the metals extraction industry, where Soviet fire sales of all their accumulated stocks are forcing Western companies out of business.

One could contrast the attitudes of these post-Soviet capitalists with the perspectives of the Russian bourgeoisie under the Tzar. Then, Russian bourgeoisie attempted to carve out a place for itself in the world-wide competition for colonies and markets. It staked out objectives (Poland, Finland, Persia, the Dardanelles, etc.) and fought for these against its other imperialist competitors. On the other hand, today's ephemeral "democrats" of every national and ethnic hue slavishly appeal for Western protection and bribes. These petty-bourgeois know that they have no future, they must make their nest eggs today.

Capitalist integration

The collapse of the Soviet Union by no means implies a failure of Marxism. Real Marxists never asserted that socialism or communism could be build in an isolated backward country. Indeed, socialist construction is only possible as a world-wide measure. The states and economies of the former USSR as well as of the other East European states and China must be integrated into the world economy. The major reason for the collapse of these misplanned economies was their utopian and reactionary attempt to isolate and insulate their autarchies, the constant need to "reinvent the wheel", the inability to utilize a world wide division of labor.

However, capitalist integration is leading to a wholesale destruction of the productive forces of these regions. The GNP of these nations have fallen by anywhere from 10 to 30% in the last two years. Even in the case of the GDR, where West Germany had provided many billions of dollars in investment and social benefits, the results have been horrendous. Whole industries have collapsed, millions of workers are unemployed or involved in temporary make-work schemes, social and cultural conditions have deteriorated. And Germany is only now joining in the world-wide recession. The conditions are going to get worse.

The other states are in much worse condition. Theoretically, it is impossible to conceive that the advanced capitalist countries, which are themselves fighting hard for world markets, will allow a revival and a reconstruction of the Hungarian or the Czech economy, i.e. creating new competitors for themselves. And actual statistics show that Eastern Europe is experiencing a flight of capital instead of any overall capitalization. Although definite figures are difficult to gather, The Financial Times estimated in January that excluding the former GDR and USSR, in 1991 capital flows out of Eastern Europe exceeded inward investments by three billion dollars.

The role of nationalism

One needs a certain sense of the absurd to observe the developments throughout East Europe and Asia. Former "Communist" jailers are uniting with their erswhile "dissident" victims in setting up new armies and police forces. Ex Great Russian bullies like Kravchuk and Shevarnadze pursue the same policies of separatism as the former nationalist martyrs like Chornovyl. Yesterday's persecutors of religion are today pushing it on the people in place of bread and jobs.

Nationalist flag waving is only very slightly obscuring the total subservience of these mafias before US, German or French interests. Indeed, while Yeltsin attempts to bully Ukraine and Kazakhstan, he is himself acting the role of a lap dog of the US State Department and is attempting to barter away some islands to the Japanese.

The balkanization of the USSR has a definite social basis. How else would these former and future dictators justify the maintenance of huge armies and police forces, how else could they impose IMF-recommended shock therapies, how else could they suppress the huge and highly cohesive Soviet working class?

The main enemy of the Ukrainian workers is Kravchuk and the Ukrainian nationalists. The main enemy of Russian workers is Yeltsin and the "democrats". The same goes for all the republics within the former USSR and the workers of Eastern Europe. The mass abstentions of Polish workers in the last election are a clear indicator of the alienation that they feel for the various bourgeois leaders, including the leaders of Solidarity.

Marxism and the Fourth International

The way forward for the workers and peasants of the USSR and Eastern Europe lies in the revival of the basic program of Marxism and socialism: Workers of the world, unite! The Fourth International had always fought against the Stalinist bureaucracies and is today continuing the struggle to mobilize workers against the restoration of capitalism and for the world socialist revolution.