Ukraine’s Armed Forces Are Degrading While Its Economic Elite Grows Richer

Dmitri Kovalevich, Orinoco Tribune, Mar 22, 2024 —

March 2024 marks the beginning of the third year of war provoked by the member countries of the NATO military alliance and their Ukraine proxy against Russia. The past number of months have seen a slow and steady retreat by Ukraine’s armed forces. Its defense lines supposedly established along the front lines east and south of the Dnieper River in past months were either not adequately constructed or were not built at all.

Missing and stolen defense fortifications
People’s deputy in the Ukraine legislature Serhiy Rakhmanin wrote on March 6 that Ukrainian authorities cannot decide who should finance the construction of defensive fortifications: the central government, local authorities, or specific military units? In reality, there are too few funding sources to pay for fortifications and too few support workers to build them.

People’s deputy Oleksandr Dubynskyy, a former associate of current president Volodymyr Zelensky, wrote on Telegram on March 5 that fortifications have only now begun to be built in front lie areas, citing the example of the Sumy region. The city of Sumy (pop. 275,000) is app. 200 km north and west of Kharkiv, Ukraine’s second-largest city. Kharkiv is located less than 50 km from the Russian border.

Dubynskyy writes that although Zelensky gave an order as early as February 1, 2023 to construct new fortification lines in the defense-contested eastern regions of coup Ukraine, that was more than one year ago and it was all a show. Everything was said and done on television in order to convince the Ukraine population and Western allies that the defensive works were being carried out. He writes, “During the past year, fortifications were being built only on the airwaves of the president’s daily ‘telethon’ broadcast [situation update]. Similarly, hundreds of enemy airplanes, thousands of enemy tanks and hundreds of thousands of enemy infantry were being destroyed. It is therefore entirely unclear how Russia could attack anywhere on the eastern front. If the enemy were watching the ‘telethon’, they would have abandoned their positions a long time ago and taken flight.”

Another deputy from Zelensky’s party, Maryana Bezuglaya, wrote last month in the self-described ‘anti-corruption’ media outlet Antikor that there were almost no fortifications constructed in and around the cities of Severodonetsk, Lysychansk, Bakhmut and or Avdeevka recently lost to Russian forces by Ukraine. She notes wryly that such fortification did exist there, but only on paper. “The generals did not plan or control events, although, of course, the official reports say otherwise.”

According to Bezuglaya, if any fortifications were built, it was for the purpose of pleasing superiors, not particularly for military needs. She writes that in the city of Bakhmut, taken by Russian forces in May 2023, pillboxes were placed at “the western entrance to the city, so that the bosses could see them.” But, as she explained, the Russians forces that eventually recaptured the city did so from the east.

‘Fortification projects’ cited by military and political officials in Ukraine have often seen their funding disappear into private hands.

How to squeeze more money out of Ukrainians for war
The head of the legislature (‘Rada’) committee on finance, tax and customs policy, Danylo Hetmantsev, announced in early March that Ukraine plans to introduce an additional military tax (levy) on entrepreneurs. The Cabinet of Ministers of Ukraine says it needs some 44 billion hryvnias (US$1.5 billion) of additional revenues to patch a large hole in their budget.

Ukrainian economist Oleksiy Kushch writes that additional funds could be found by introducing a tax on the owners of large tracts of land and special taxes on luxury items such as yachts and mansions. According to him, additional royalties on mining are also possible, primarily on the mining of iron ore. In his opinion, it would be possible to collect some 100 billion hryvnias from such sources; in other words, twice what financial officials in the Ukraine government say they are seeking. But the Ukrainian elite will never go for this.

The economist summarizes, “My gut reaction tells me that government officials will instead create additional taxes on everyone, for example, a special levy on salaries in the amount of five percent. This was already done in 2015 when they introduced a military levy of 1.5 percent on everyone instead of taxing the economic gains of the elites who rode the wave of the Maidan protests.”

In Kusch’s opinion, additional fees and taxes by the Ukraine government will only strengthen the trend seeing more and more Ukrainians withdraw from the country’s official economy into its shadow economy. Real revenues for the government budget are unlikely to increase significantly. He jokes, “It’s like trying to shear a pig; there is a lot of squealing that goes on, but not a lot of wool is produced.”

Danylo Hetmantsev stated in February that more than half of the Ukrainian economy operates in the shadows.

Ironically, five years ago, Zelesnky and his ‘Servant of the People’ political machine presented themselves to the Ukraine electorate as being libertarians, supporting tax cuts or even tax abolition. But once the state apparatus was in their hands, their tune changed.

The plight of the internally displaced
At the request of Western creditors, beginning in March, the Ukrainian state will continue to reduce already meager, monthly benefits paid to internally displaced persons (IDPs). Benefit payments are currently set at US$26 equivalent per month.

Earlier, the minister of social policy claimed that the reduction of social benefits was necessary to ‘motivate’ recipients to look for work.

A report on the Ukrainian Telegram channel ZeRada explains, “It’s a strange policy, of course, to deprive benefit payments to IDPs as a means to incentivize them to find employment when, at the same time, no new jobs are being created and the authorities themselves are causing an increase in the flow of refugees from Ukraine to other countries.”

ZeRada, which is published by several writers in Ukraine, explains there are some 4.9 million internally displaced people in Ukraine but only some 2.5 million receive benefits.

Military conscription woes
Ukrainian officials are urgently seeking funds to strengthen the country’s military conscription program. Economist Oleh Pendzin claims that an additional UAH 0.5 trillion (US$131 billion) is needed to run the conscription program. “The issue is that we don’t have the funds for the additional conscription being talked about. Much more money is needed to reach the stated goal of an additional 450,000 personnel.”

He writes further, “The prime minister says his government is preparing a bill providing for employers to pay a retainment tax (‘reservation fee’) to retain employees who would otherwise be taken by conscription. This would apply to all tax-paying enterprises. The president is supporting this, and so the question is not ‘if’ but ‘when’. Any outstanding questions concern the amounts to be paid and the conditions,” says Pendzin.

However, the problem with any plans to increase military conscription is the diminishing number of people who are willing or available to serve in the armed forces. Ukraine soldiers are already claiming that people who are visibly ill are being drafted into the army.

In early March, Ukrainian journalist and serviceman Stanislav Aseyev frankly described to the U.S.-funded Radio Sovoboda (Radio Liberty’) the growing problems in the AFU training centers that he witnessed in two Ukraine military units in the Donetsk region. He wrote that new recruits have included “epileptics, ex-prisoners, deserters, and a lot of random people with no relation to any particular brigade, waiting to be assigned”. He gave an account of a homeless man who had been conscripted. “At the enlistment office, they offered him a ‘winter in warmth’, gave him a bath and some clothing bought in a second-hand shop, and delivered him to our camp in the forest. But they forgot to wash his legs, which were oozing with sores. The man was taken to hospital after his arrival and then returned the next day ‘fully fit’ for duty.

Aseyev claims he saw no motivated servicemen in the units he witnessed. In combat conditions, personnel scatter, arms, and equipment is abandoned, including that supplied by the West. He said he received the impression that most of the people being conscripted are from “the hinterlands of different regions, not the urban centers there”. He also said the ‘elite’ units he witnessed were those known to expound neo-Nazi ideology, such as the ‘Azov’ and ‘Carpathian Sich’ brigades.

A sharp rise in luxury cars as a sign of elite enrichment
The flow of Western aid may not be helping soldiers in the trenches very much, but the smuggling and illegal sale of military supplies have enriched many times over the Ukrainian elites close to Zelensky. The Strana media outlet in Ukraine recently reported that the year 2023 saw record sales of luxury foreign cars in Ukraine. Some luxury brands entered the ‘top 10’ of best-selling cars. This had never happened in peacetime Ukraine. Sales of Tesla electric vehicles have increased tenfold compared to 2021.

Strana notes that at the Ukrainian-Polish border, the sight of truckloads of Mercedes and BMWs lined up to enter Ukraine frankly surprises the Poles who are watching. They wonder aloud who can buy such expensive vehicles in a country at war. Strana asked the same question in its report and found several explanations. The main explanation, it writes, is the “emergence of a new category of applicants to buy luxury cars,” namely, “people whose well-being has increased significantly since the beginning of the war”.

The publication cites a man who drove a modest Volkswagen prior to the war. “Then he got into the flow of new money appearing and decided to upgrade his car. He bought a Range Rover, many of which are newly appearing on Ukraine roads.”

“According to the employees of one car dealership in Kiev, expensive cars are mainly being bought by law enforcement officers. In addition, the country has a number of people newly enriched by the war. That includes people profiting from corrupt schemes to supply the army. One luxury watch dealer explained that his sales during the past year broke all-time records.”

A new but ‘wrong’ Maidan protest movement
To keep the flow of Western aid flowing, it is important for the Ukrainian elite to hold on to power. In late February, the Intelligence Committee of the Office of the President issued a statement warning about plans for a new ‘Maidan’ uprising, this one to question Zelensky’s electoral legitimacy. His five-year term limit expires at the end of March and scheduled elections to coincide with the end of the term have been canceled.

Zelensky’s office is now warning that protests and an uprising are being prepared by the ‘Russians’ to take place in March-May 2024. Its Intelligence Committee alleges in its statement that the main directions and goals of the ‘Russians’ in their planned campaign is “disrupting Ukrainian mobilization, spreading disinformation about Ukraine’s ability to win a military victory, and creating and spreading fake news about ‘Ukraine fatigue’ among our partners and allies in the world.”

It is ironic that a warning of “fake news of Ukraine fatigue” being spread among Ukraine’s Western partners should be issued. The ‘partners’ can surely see matters with their own eyes and require no reminder.

The Intelligence Committee report is reviving a story concocted by Zelensky’s predecessor Petro Poroshenko in 2016. That was termed by Poroshenko et al as the ‘Shatin Plan‘. This public relations exercise some eight years ago was an attempt by Poroshenko to discredit his then-political rivals, including a rumored candidacy by Zelensky.

Any real political opposition in Ukraine has been completely suppressed and silenced first by Poroshenko, then followed by Zelensky. This leaves on the formal, political terrain little more than a competition between two competing cliques as led by Zelensky and Poroshenko. The Poroshenko clique presents itself as ‘the opposition’ in Ukraine. The latest warnings over ‘Russian disruption tactics’ are in large part a move by the Zelensky regime to block a return to the presidency by Poroshenko.

No surveys of the real attitudes of Ukrainians are available. Those surveys that have been published cannot be trusted at all because few people will tell pollsters they truly think, fearing arrest or rushed conscription. Several surveys by sociologists, for what they are worth, have shown that most Ukrainians ‘trust’ Zelensky, consider the country to be moving in the right direction, and believe that Russia will be defeated.

Ukrainian political scientist Mykhailo Chaplyga writes in Telegram that the Intelligence Committee’s statement shows weakness and fear in the Office of the President. “Firstly, such statements are inherently useless. Secondly, they only increase suspicion; this latest statement stems from weakness and fear. The foreign press will ignore it because it sounds like something produced by a kindergarten class. Opposition politicians will clearly see it as a sign of panic and weakness. ”

The ‘Legitimate‘ Telegram channel in Ukraine writes, “The declared ‘crisis’ over accusations that the Kremlin is preparing ‘Maidan’ style protests is a blatant hatchet job by functionaries from the Office of the President. Another Maidan, like the past one, could only be organized only by Western clientele. The messaging by the Office of the President is an attempt to stigmatize all protests in advance in order to disperse them more easily.”

Notable, here, is that Ukrainian authorities recently celebrated the tenth anniversary of the Maidan coup, which brought the current anti-Russia and pro-Western elite to power. But any new Maidan, any new wave of protests, is perceived as something terrible and is declared in advance to be ‘pro-Russian’. This is part of the vast effort to prolong and perpetuate the widespread corruption and profiting taking place from the war, all thanks to the Western aid that is fueling it.

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Dmitri Kovalevich is the special correspondent in Ukraine for Al Mayadeen English. He writes situation reports regarding the political, economic, and military situation of the country and the conflict.