Please note! This essay has been submitted by a student.
“Some of those living in the tents had little to lose: the peasants in between the seasons living a life not so different than the one they would have been leading back at home, in the village. For some, as we learnt in retrospect, Maidan was almost an escape from impoverished homes.” (Snyder & Zhurzhenko, 2014) At its peak, the Maidan Revolution between 2013 and 2014 involved at least 500,000 Ukrainians in both peaceful and violent demonstrations against the government of Viktor Yanukovych (Whitmore, 2013). However, beyond the sensationalised reports of nationalist violence and EU-Russia rhetoric, the Maidan Revolution is a reaction to the severe socio-economic issues that plagued Ukrainian society since 1991. To understand these issues, one must analyse the extent of social stratification and poverty in post-Soviet Ukraine. While World bank estimates placed Ukraine as one of the most equal societies (World Bank, n.d.)indicators such as the GINI index does not account for the fact that Ukraine is the most corrupt country in Europe (Klimina, 2015); Ex-president Viktor Yanukovych was found to have stolen $350 million from the state throughout his presidency. (Guy, 2014) individual in Ukraine. After accounting for the wealth accumulation of the oligarch class, Ukraine has the highest wealth inequality in the world. (Credit Suisse, 2014). At the blunt of the inequality are Ukraine’s lower and middle class. Faced with rampant unemployment and low household income, the Maidan Revolution served as an antithesis to the deeply corrupt state. Meanwhile, globalisation have also deepened the inequality through the intervention of global institutions and economic integration.
Before one can understand why Ukrainians chose to take to the streets, we must identify the social strata that comprise Ukrainian society and why such stratification are perpetuated. Using Weberian analysis, social stratification can be defined among three dimensions. Broadly speaking, these dimensions are (1) economic situation, that is income and wealth, (2) power, that is the ability to impose one’s will or get one’s way despite opposition from others and (3) social status, that is the degree to which an individual has social honour (McIntyre, 2014). All three dimensions can be distinctly observed in the oligarch class of Ukraine. These are individuals that are generally ex-Soviet nomenklatura who were able to accumulate significant assets through the disorderly phase of mass privatisation during the collapse of the Soviet Union (Tridico & Zhak, 2016). To gain a perspective of the economic and political power of these oligarchs, we limit the definition to those Ukrainians with at least $200 million USD in wealth and have businesses as their core activities. It is found that 23 out of 29 these oligarchs have been elected to the Ukrainian parliament at least once and of those, 6 has held state executive positions between 2000-2015. (Pleines, 2016) While these demonstrates that the oligarchs of Ukraine hold economic and political power, their social status is demonstrably harder to portray. However, the dynamics of the Maidan revolution shows a clear picture of the status and respect that oligarchs garner. After the ousting of Yanukovych in 2014, the subsequent elected president, Petro Poroshenko, garnered 54.7% of votes from Ukrainians. Poroshenko was a distinct member of the oligarch class: he had a net worth of US$1.3B in 2014 (Forbes, 2014) and is the owner of Roshen, one of the biggest candy manufacturers in the world (Candy Industry, 2013).
Having identified the upper strata of Ukrainian society, the task remains to define the middle and lower classes. An understanding of the economic situation of Ukrainians can be drawn from their incomes. As of 2013, 8.4% of Ukrainians below the absolute poverty line, which corresponds to “the amount of the legal subsistence level per month per person, annually approved by the Verkhovna Rada of Ukraine in the Law on State Budget of Ukraine for the relevant year”, while 24.5% live below the relative poverty line, that is defined by “the fixed (75%) share of average per capita total expenditures of the median total expenditures of a particular person who takes the medium position in the list of population ranked by average per capita expenditures calculated for one conventional person” (Osaulenko, 2016). These statistics show that there is a sizable segment of Ukrainians that are underprivileged economically and unable to, thus comprising the lower stratum based on economic dimensions. The lower stratum is further divided into rural and urban dwellers as those Ukrainians living in urban and industrial cities tend to experience better material well-being and living standards than those residing in agricultural regions (OECD, 2014). Politically, the lower strata of Ukraine were also marginalised. This is reflected in aftermath of the Maidan Revolution where 60.2% of Ukrainians took park in the post-Maidan elections, which was generally recognised as a “fair reflection of the will of the people” (Shveda & Park, 2015) Through this contemporary understanding, we can see that political will of the people were not sufficient recognised by the state prior to the Revolution, which may partially rationalise their marginalisation by the ruling class. Thus, these indicate that inequality existed in Ukraine based on multiple dimensions. Such inequality led to impoverishment and marginalisation of a significant segment of Ukrainian society, many of whom partook in the Maidan Revolution.
The internal reasons for social stratification can be attributed to corruption. A 2006 USAID report (United States Agency for International Development, 2006) indicates that Ukraine faces a high level of grand corruption, defined by Transparency International as “acts committed at a high level of government that distort policies or the central functioning of the state, enabling leaders to benefit at the expense of public good” (Transparency International, n.d.). This is supported by the Corruption Perception Index in 2013 which places Ukraine as one of the most corrupt countries in the world based on public perception (Transparency International, 2013). Corruption has a direct impact on income and wealth inequality as the oligarchs can use their high concentration of wealth and assets to lobby the corrupt government for favourable tax rates and trade policies. As aforementioned, many have even directly assumed political roles, which can be purchased with wealth (Klimina, 2015). Such influence can be observed in Ukraine’s taxation rates; tax rates for the uppermost stratum are relatively low compared to that imposed on the poorest 50 percent of households (Klimina, 2015).
The true extent of this grand corruption is demonstrated by the corruption of ex-President Viktor Yanukovych, who has embezzled estimated 5% of Ukraine’s GDP each year(cite 27,p242). In turn, these increase the wealth of oligarchs and politicians, while subjecting the lower strata to greater tax burdens, this also lower the tax revenue available for redistributive policies to the poor, thus leading to inequality. Particularly, the corruption of the Ukrainian education system serves to reproduce such trends of inequality and decreases social mobility for the lower-income stratum. Due to the corruptibility of schools and faculty staff, Ukrainians can enter college and attain acceptable grades through informal means, such as briberies and gifts (Osipian, 2007). This results in an inequitable access to education, where children with poorer parents are unable to gain access to the education system (Chr. Michelson Institute, 2006) due to their already low income and lack of ability to achieve the legal subsistence level, further lowering their opportunity and life chances. Therefore, rampant corruption in Ukraine serves to perpetuate the phenomenon of inequality while entrenching the poor in a poverty trap due to their material inability to participate in corruption. Comment by #TAN KOK XUAN#: Add personal touch
The impacts of globalisation upon inequality and poverty in Ukraine are manifested through the adverse influence of supranational entities. With the phenomenon of globalisation, we understand that nation-states become increasingly integrated with the global economy (Kirijenko, Kobzar, & Andrejchykova, 2014) and are more involved in trade than ever before, facilitated by global institutions such as the World Trade Organisation (WTO). Resultantly, they lose a significant portion of control over their national and social policies as participant states must adhere to the rules set by these institutions. Ukraine is no exception to this phenomenon as observed from their accession to the WTO in 2008. Due to the unfavourable terms accepted by the Ukrainian state, the trade liberalisation in Ukraine led to greater imports of commodities and services (Bessonova, Merschenko, & Gridchina, 2015). In turn, Ukraine saw an increase in national debt (Bessonova, Merschenko, & Gridchina, 2015) following WTO membership, which reduces the state revenue available for redistributive social policies; Government spending on social security decreased from 8.8% in 2010 to 7.7% of overall GDP in 2014 while imports increased from 51.1% to 52.1% in the same period (State Statistics Service of Ukraine, 2014).
Therefore, the lower stratum of society did not reap the benefits of global trade, and even suffered decreased social security. Furthermore, any benefits in global trade benefited mainly the metallurgical sector of Ukrainian economy (Bessonova, Merschenko, & Gridchina, 2015). This benefits the oligarch class who controls the metallurgical industries( (Sarna, 2002). Thus, this further entrenches the inequality between the lower classes and the oligarchs.Ukraine’s accession to WTO through trade liberalisation also subjected the Ukrainian economy to external shocks, mainly the 2008-2009 global financial crisis. As a result, there was a devaluation in the currency and a drop in real income of the population (Bessonova, Merschenko, & Gridchina, 2015). This affects the working class as their wealth are accumulated in terms of money and income, whereas the oligarch class are better protected due to their ownership of assets and foreign currencies. Therefore, global economic integration led to increased inequality and even instant impoverishment of the working-class during times of global economic instability.
Institutionally, globalisation may play a positive role as it reduces the rate of corruption and hence the inequality within Ukrainian society. This is achieved through the role of global regulatory bodies such as the International Monetary Fund (IMF). To illustrate, the Ukrainian government requested a USD$17.1 Billion financial aid from the IMF in 2014. This arrangement comes with the condition of the Ukrainian state adopting a IMF-backed anti-corruption framework with effects on the judiciary and tax administrations, along with improvements to social assistance programs targeting the less privileged (International Monetary Fund, 2014). Despite the institutionalised corruption within Ukraine, external pressures imposed by supranational organisations incentivise the state to adopt anti-corruption measures. In theory, such measures can decrease the wealth accumulation of the oligarchs and politicians, therefore reducing wealth inequality within the society.
The preceding paragraphs have shown that stratification occurred at a rampant scale before the onset of the Maidan Revolution. These gave rise to a rich and power-wielding upper class while impoverishing those of the lower stratum. These phenomena were engendered by institutionalised corruption that existed within Ukrainian society. Even after the Revolution, Pavlo Sheremata, the minister of economy in 2014, resigned and remarked that “the old ways were so entrenched that he had little control over his ministry” (The Economist, 25). In this sense, while globalisation might bring about certain benefits, the prevalence of corruption means that any economic benefits were only reaped by the upper stratum of Ukrainian society, mainly the oligarchs and politicians. It also means that the costs of globalisation, such as increased national debt, were primarily bore by the lower stratum of society. While regulation by supranational bodies may work in theory, it requires a commitment by both parties to achieve any long-term change, which is endangered by the socio-political turmoil in Ukraine. Thus, the Maidan Revolution can be seen as a class revolt by the marginalised classes against the entrenched politico-economic powers of the oligarchs and the corruption of the state.