Exclusive: With corruption rampant and living standards falling, Ukraine may become the next failed state that “benefited” from a neoconservative-driven “regime change,” though the blame will always be placed elsewhere in this case, on the demonized Russian President Putin, writes Robert Parry.

By Robert Parry

Nearly two years since U.S. officials helped foment a coup in Ukraine partly justified by corruption allegations the country continues to wallow in graft and cronyism as the living standards for average Ukrainians plummet, according to economic data and polls of public attitudes.

Even the neocon-oriented Wall Street Journal took note of the worsening corruption in a Jan. 1, 2016 article observing that “most Ukrainians say the revolution’s promise to replace rule by thieves with the rule of law has fallen short and the government acknowledges that there is still much to be done.”

Actually, the numbers suggest something even worse. More and more Ukrainians rate corruption as a major problem facing the nation, including a majority of 53 percent last September, up from 48 percent last June and 28 percent in September 2014, according to polls by International Foundation for Electoral Systems.

Meanwhile, Ukraine’s GDP has fallen in every quarter since the Feb. 22, 2014 putsch that overthrew elected President Viktor Yanukovych. Since then, the average Ukrainian also has faced economic “reforms” to slash pensions, energy subsidies and other social programs, as demanded by the International Monetary Fund.

In other words, the hard lives of most Ukrainians have gotten significantly harder while the elites continue to skim off whatever cream is left, including access to billions of dollars in the West’s foreign assistance that is keeping the economy afloat.

Part of the problem appears to be that people supposedly responsible for the corruption fight are themselves dogged by allegations of corruption. The Journal cited Ukrainian lawmaker Volodymyr Parasyuk who claimed to be so outraged by graft that he expressed his fury “by kicking in the face an official he says owns luxury properties worth much more than a state salary could provide.”

However, the Journal also noted that “parliament is the site of frequent mass brawls [and] it is hard to untangle all the overlapping corruption allegations and squabbling over who is to blame. Mr. Parasyuk himself was named this week as receiving money from an organized crime suspect, a claim he denies.”

Then, there is the case of Finance Minister Natalie Jaresko, who is regarded by top American columnists as the face of Ukraine’s reform. Indeed, a Wall Street Journal op-ed last month by Stephen Sestanovich, a senior fellow at the Council on Foreign Relations, hailed Jaresko as “a tough reformer” whose painful plans include imposing a 20 percent “flat tax” on Ukrainians (a favorite nostrum of the American Right which despises a progressive tax structure that charges the rich at a higher rate).

Sestanovich noted that hedge-fund billionaire George Soros, who has made a fortune by speculating in foreign currencies, has endorsed Jaresko’s plan but that it is opposed by some key parliamentarians who favor a “populist” alternative that Sestanovich says “will cut rates, explode the deficit, and kiss IMF money good-bye.”

Yet, Jaresko is hardly a paragon of reform. Prior to getting instant Ukrainian citizenship and becoming Finance Minister in December 2014, she was a former U.S. diplomat who had been entrusted to run a $150 million U.S.-taxpayer-funded program to help jump-start an investment economy in Ukraine and Moldova.

Jaresko’s compensation was capped at $150,000 a year, a salary that many Americans would envy, but it was not enough for her. So, she engaged in a variety of maneuvers to evade the cap and enrich herself by claiming millions of dollars in bonuses and fees.

Ultimately, Jaresko was collecting more than $2 million a year after she shifted management of the Western NIS Enterprise Fund (WNISEF) to her own private company, Horizon Capital, and arranged to get lucrative bonuses when selling off investments, even as the overall WNISEF fund was losing money, according to official records.

For instance, Jaresko collected $1.77 million in bonuses in 2013, according to WNISEF’s latest available filing with the Internal Revenue Service. In her financial disclosure forms with the Ukrainian government, she reported earning $2.66 million in 2013 and $2.05 million in 2014, thus amassing a sizeable personal fortune while investing U.S. taxpayers’ money supposedly to benefit the Ukrainian people.

It didn’t matter that WNISEF continued to hemorrhage money, shrinking from its original $150 million to $89.8 million in the 2013 tax year, according to the IRS filing. WNISEF reported that the bonuses to Jaresko and other corporate officers were based on “successful” exits from some investments even if the overall fund was losing money. [See Consortiumnews.com’s “ How Ukraine’s Finance Minister Got Rich .”]

Though Jaresko’s enrichment schemes are documented by IRS and other official filings, the mainstream U.S. media has turned a blind eye to this history, all the better to pretend that Ukraine’s “reform” process is in good hands. (It also turns out that Jaresko did not comply with Ukrainian law that permits only single citizenship; she has kept her U.S. passport exploiting a loophole that gives her two years to show that she has renounced her U.S. citizenship.)

Propaganda over Reality

Yet, as good as propaganda can be especially when the U.S. government and mainstream media are moving in lockstep reality is not always easily managed. Ukraine’s continuing and some say worsening corruption prompted last month’s trip to Ukraine by Vice President Joe Biden who gave a combination lecture and pep talk to Ukraine’s parliament.

Of course, Biden has his own Ukraine cronyism problem because three months after the U.S.-backed overthrow of the Yanukovych government Ukraine’s largest private gas firm, Burisma Holdings, appointed his son, Hunter Biden, to its board of directors.

Burisma a shadowy Cyprus-based company also lined up well-connected lobbyists, some with ties to Secretary of State John Kerry, including Kerry’s former Senate chief of staff David Leiter, according to lobbying disclosures.

As Time magazine reported , “Leiter’s involvement in the firm rounds out a power-packed team of politically-connected Americans that also includes a second new board member, Devon Archer, a Democratic bundler and former adviser to John Kerry’s 2004 presidential campaign. Both Archer and Hunter Biden have worked as business partners with Kerry’s son-in-law, Christopher Heinz, the founding partner of Rosemont Capital, a private-equity company.”

According to investigative journalism inside Ukraine, the ownership of Burisma has been traced to Privat Bank, which is controlled by the thuggish billionaire oligarch Ihor Kolomoysky, who was appointed by the U.S.-backed “reform” regime to be governor of Dnipropetrovsk Oblast, a south-central province of Ukraine (though Kolomoisky was eventually ousted from that post in a power struggle over control of UkrTransNafta, Ukraine’s state-owned oil pipeline operator).

In his December speech , Biden lauded the sacrifice of the 100 or so protesters who died during the Maidan clashes in February 2014, referring to them by their laudatory name “The Heavenly Hundred.” But Biden made no heavenly references to the estimated 10,000 people, mostly ethnic Russians, who have been slaughtered in the U.S.-encouraged “Anti-Terror Operation” waged by the coup regime against eastern Ukrainians who objected to the violent ouster of President Yanukovych, who had won large majorities in those areas.

Apparently, heaven is not as eager to welcome ethnic Russian victims of U.S.-inspired political violence. Nor did Biden take note that some of the Heavenly Hundred were street fighters for neo-Nazi and other far-right nationalist organizations.

But after making his sugary references to The Heavenly Hundred Biden delivered his bitter medicine, an appeal for the parliament to continue implementing IMF “reforms,” including demands that old people work longer into their old age.

Biden said, “For Ukraine to continue to make progress and to keep the support of the international community you have to do more, as well. The big part of moving forward with your IMF program — it requires difficult reforms. And they are difficult.

“Let me say parenthetically here, all the experts from our State Department and all the think tanks, and they come and tell you, that you know what you should do is you should deal with pensions. You should deal with — as if it’s easy to do. Hell, we’re having trouble in America dealing with it. We’re having trouble. To vote to raise the pension age is to write your political obituary in many places.

“Don’t misunderstand that those of us who serve in other democratic institutions don’t understand how hard the conditions are, how difficult it is to cast some of the votes to meet the obligations committed to under the IMF. It requires sacrifices that might not be politically expedient or popular. But they’re critical to putting Ukraine on the path to a future that is economically secure. And I urge you to stay the course as hard as it is. Ukraine needs a budget that’s consistent with your IMF commitments.”

Eroding Support

But more and more Ukrainians appear to see through the charade in Kiev, as the poll numbers on the corruption crisis soar. Meanwhile, European officials seem to be growing impatient with the Ukraine crisis which has added to the drag on the Continent’s economies because the Obama administration strong-armed the E.U. into painful economic sanctions against Russia, which had come to the defense of the embattled ethnic Russians in the east.

“Many E.U. officials are fed up with Ukraine,” said one Western official quoted by the Journal, which added that “accusations of graft by anticorruption activists, journalists and diplomats have followed to the new government.”

The Journal said those implicated include some early U.S. favorites, such as Prime Minister Arseniy Yatsenyuk, “whose ratings have plummeted to single digits amid allegations in the media and among anticorruption activists of his associates’ corrupt dealings. Mr. Yatsenyuk has denied any involvement in corruption and his associates, one of whom resigned from parliament over the controversy this month, deny wrongdoing.”

The controversy over Yatsenyuk’s alleged cronyism led to an embarrassing moment in December 2015 when an anti-Yatsenyuk lawmaker approached the podium with a bouquet of roses, which the slightly built Yatsenyuk accepted only to have the lawmaker lift him up and try to carry him from the podium.

In many ways, the Ukraine crisis represents just another failure of neocon-driven “regime change,” which has also spread chaos across the Middle East and northern Africa. But the neocons appear to have even a bigger target in their sites, another “regime change” in Moscow, with Ukraine just a preliminary move. Of course, that scheme could put in play nuclear war.

Taking Aim

The Ukraine “regime change” took shape in 2013 after Russian President Putin and President Barack Obama collaborated to tamp down crises in Syria and Iran, two other prime targets for neocon “regime changes.” American neocons were furious that those hopes were dashed. Ukraine became Putin’s payback.

In fall 2013, the neocons took aim at Ukraine, recognizing its extreme sensitivity to Russia which had seen previous invasions, including by the Nazis in World War II, pass through the plains of Ukraine and into Russia. Carl Gershman, neocon president of the U.S.-funded National Endowment for Democracy, cited Ukraine as the “biggest prize” and a key step toward unseating Putin in Moscow. [See Consortiumnews.com’s “ What the Neocons Want from Ukraine Crisis. ”]

Initially, the hope was that Yanukovych would lead Ukraine into an economic collaboration with Europe while cutting ties to Russia. But Yanukovych received a warning from top Ukrainian economists that a hasty split with neighboring Russia would cost the country a staggering $160 billion in lost income.

So, Yanukovych sought to slow down the process, prompting angry protests especially from western Ukrainians who descended on Maidan square. Though initially peaceful, neo-Nazi and other nationalist militias soon infiltrated the protests and began ratcheting up the violence, including burning police with Molotov cocktails.

Meanwhile, U.S.-funded non-governmental organizations, such as the Organized Crime and Corruption Reporting Project (which receives money from USAID and hedge-fund billionaire George Soros’s Open Society), hammered away at alleged corruption in the Yanukovych government.

In December 2013, Nuland reminded Ukrainian business leaders that the United States had invested $5 billion in their “European aspirations,” and in an intercepted phone call in early February 2014 she discussed with U.S. Ambassador Geoffrey Pyatt who Ukraine’s new leaders would be.

“Yats is the guy,” Nuland said of Arseniy Yatsenyuk, as she also disparaged a less aggressive approach by the European Union with the pithy phrase: “Fuck the E.U.” (Nuland, a former aide to ex-Vice President Dick Cheney, is the wife of arch-neoconservative ideologue Robert Kagan.)

Sen. John McCain also urged on the protests, telling one group of right-wing Ukrainian nationalists that they had America’s backing. And, the West’s mainstream media fell in love with the Maidan protesters as innocent white hats and thus blamed the worsening violence on Yanukovych. [See Consortiumnews.com’s “ NYT Still Pretends No Coup in Ukraine. ”]

Urging Restraint

In Biden’s December 2015 speech to the parliament, he confirmed that he personally pressed on President Yanukovych the need to avoid violence. “I was literally on the phone with your former President urging restraint,” Biden said.

However, on Feb. 20, 2014, mysterious snipers apparently from buildings controlled by the far right fired on and killed policemen as well as some protesters. The bloodshed sparked other violent clashes as armed rioters battled with retreating police.

Although the dead included some dozen police officers, the violence was blamed on Yanukovych, who insisted that he had ordered the police not to use lethal force in line with Biden’s appeal. But the State Department and the West’s mainstream media made Yanukovych the black-hatted villain.

The next day, Feb. 21, Yanukovych signed an accord negotiated and guaranteed by three European nations to accept reduced powers and early elections so he could be voted out of office if that was the public’s will. However, as police withdrew from the Maidan, the rioters, led by neo-Nazi militias called sotins, stormed government buildings on Feb. 22, forcing Yanukovych and other officials to flee for their lives.

In the West’s mainstream media, these developments were widely hailed as a noble “revolution” and with lumps in their throats many journalists averted their misty eyes from the key role played by unsavory neo-Nazis, so as not to dampen the happy narrative (although BBC was among the few MSM outlets that touched on this inconvenient reality ).

Ever since, the major U.S. news media has stayed fully on board, ignoring evidence that what happened was a U.S.-sponsored coup. The MSM simply explains all the trouble as a case of naked “Russian aggression.

There were kudos, too, when “reformer” Natalie Jaresko was made Finance Minister along with other foreign “technocrats.” There was no attention paid to evidence about the dark underside of the Ukrainian “revolution of dignity,” as Biden called it.

Though the neo-Nazis sometimes even teamed up with Islamic jihadists were the tip of the spear slashing through eastern Ukraine, their existence was either buried deep inside stories or dismissed as “Russian propaganda.”

That was, in effect, American propaganda and, as clever as it was, it could only control reality for so long.

Even though the fuller truth about Ukraine has never reached the American people, there comes a point when even the best propagandists have to start modifying their rosy depictions. Ukraine appears to have reached that moment.