In mid-December 2014, just as the United States, Canada and the European Union announced a series of new sanctions against Russia, Ukraine received US$350 million in military aid, in addition to the billion dollars already approved by the American Congress in March of the same year.
The fact that Western governments are getting more involved in the Ukrainian conflict proves that they have confidence in the ministerial cabinet appointed by the new government in December 2014. This new government is unique: three of the most important ministries are assigned to people born abroad, who were granted Ukrainian citizenship just hours before their appointment.
The Ministry of Finance is assigned to Natalie Jaresko, a US-born and educated businesswoman who has worked since the mid-1990s in Ukraine, where she oversaw a private equity fund set up by the US government to invest in the country.Ms. Jaresko is also the CEO of Horizon Capital, an investment company that manages a number of Western investments in Ukraine.
As surprising as it may seem, this appointment is more akin to a Western stranglehold on the Ukrainian economy.The Oakland Institute details this takeover, particularly in the agricultural sector in two reports:The Corporate Takeover of Ukrainian AgricultureandWalking on the West Side: The World Bank and the IMF in the Ukraine Conflict.
One of the major factors in the crisis that led to the deadly protests and ultimately to the dismissal of President Viktor Yanukovich in February 2014 was his refusal to sign an Association Agreement with the European Union (EU), which aimed to develop trade and to integrate the EU – in addition to this agreement the International Monetary Fund (IMF) granted Ukraine a loan of 17 billion dollars.
After the departure of the president and the installation of the new pro-Western government, the IMF launched a program of reforms, conditioning this loan, in order to increase private investment in Ukraine.
The package of measures includes a reform of public water and energy management services and, more importantly, it tries to address the high cost of investments and business activities, which the World Bank identifies as " the structural root" of the current economic crisis in Ukraine.
The Ukrainian agricultural sector has been the first target of private foreign investment, and it is obviously considered by the IMF and the World Bank as the priority sector for reform.Both institutions praise the new government's willingness to follow their advice.
For example, the roadmap provided to Ukraine for reform – largely inspired by foreign experiences – facilitates the acquisition of agricultural land, eases regulations and controls on agro-food factories, and reduces corporate taxes and the rights of customs.
The stakes surrounding Ukraine's vast agricultural sector are immense: the world's third-largest corn exporter and fifth-largest wheat exporter, Ukraine is known for its huge expanses of rich black soil, and boasts more than 32 million hectares of arable and fertile land - equivalent to one third of arable land in the European Union.
Strategies to control the country's agricultural system were a key element in the battle between East and West last year, in what was their biggest clash since the Cold War.
The presence of foreign companies in Ukrainian agriculture is growing rapidly, with more than 1.6 million hectares of farms recently transferred to foreign companies.Monsanto,Cargilland DuPont have had a presence in Ukraine for some time, but their investments have increased significantly in recent years.
Cargillnormally sells pesticides, seeds and fertilisers, but has recently expanded its agricultural investments to include grain storage, animal feed and has also acquired shares in the country's largest agricultural company, UkrLandFarming.
Similarly, while Monsanto had been present in Ukraine for years, the company has doubled its workforce in the past three years.In March 2014, just weeks after President Yanukovich was ousted, the company invested $140 million to build a new seed factory in the country.
DuPont has also expanded its investments and announced in June 2013 that it would also invest in a new seed factory in the country.
Western corporations have not only taken control of profitable food processing plants and farms, they have also undertaken vertical integration of the agricultural sector and extended their control over infrastructure and transport.
For example,Cargillnow owns at least four grain elevators and two sunflower seed processing plants used for oil production.In December 2013, the company acquired "25% + 1 share" in a grain terminal with a capacity of 3.5 million tons per year, located in Novorossisk, a port on the Black Sea.
All aspects of the agricultural supply chain – from the production of seeds and other inputs to the actual shipping of goods out of the country – are therefore increasingly controlled by Western companies.
European institutions and the US government actively encouraged this expansion.It started with pressure to change the government, when President Yanukovych was seen as pro-Russian.Then it went further in February 2014, with the launch of a reform agenda for investment and development, as US Secretary of Commerce Penny Pritzker highlighted when she met with Prime Minister Arsenly Yatsenyuk in October 2014.
The European Union and the United States are walking hand in hand in this takeover of Ukrainian agriculture.Although Ukraine prohibits the production of genetically modified crops, the association agreement between Ukraine and the European Union, at the origin of the dispute which fired Yanukovych, includes a clause (article 404) which commits the two parties to cooperate to "extend the use of biotechnologies" in the country.
This clause is surprising to say the least, given that the majority of European consumers reject genetically modified crops.This should be seen as a breach to introduceGMOsinto Europe, an opportunity that the big agro-seed companies like Monsanto are constantly calling for.
Opening up Ukraine to GMO cultivation would go against the wishes of European citizens, and it is not certain that this change will benefit Ukrainians.
Moreover, it is also unclear how Ukrainians will benefit from this wave of foreign investment in their agriculture, nor what impact these investments will have on the 7 million local farmers.
Once they are no longer obsessed with the conflict in the "pro-Russian" eastern region of their country, Ukrainians may wonder what remains of their ability to control the food supply and manage economy for their own benefit.
As far as American and European citizens are concerned, will they ever react to the headlines and the rhetoric they are given about Russian aggression and human rights violations, and question the involvement of their respective governments in the Ukrainian conflict?
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