Blog : One of the Dark Places of the Earth

by Ed Zwirn on March 15th, 2014

"And this also," said Marlow suddenly, "has been one of the dark places of the earth."

Map of UkraineThis line from Joseph Conrad's Heart of Darkness came to me one sunny May afternoon 19 years ago as I sat at an outdoor cafe near Kiev's Maidan Nezhalezhnosti (Ukrainian for Independence Square), smoking a Cuban cigar and sipping on an espresso coffee laced with cognac. I was there with my then-wife (a Ukrainian citizen of Russian ethnicity) entertaining my friends, a married couple who had flown in from California.

Bill and Janet had picked an excellent time to visit, at least from a party perspective. It was May 1995, and Ukraine's capital had been engaged in one intoxicating shindig that commenced with May Day, the May 1 Workers' holiday. Next on the calendar was Victory Day (May 9), which marked the 50th anniversary of the German surrender and so was being celebrated with particular gusto this time around. Days later came the visit of U.S. President Bill Clinton and first lady Hilary.

The day before sitting in the square, I had been present as the U.S. leader and his wife paid their solemn respects, dressed in black, at Babi Yar, the Kiev ravine into which the Nazi occupying army in September 1941 herded the city's Jewish population, shooting 30,000 of them to death within three days. By year's end, more than 100,000 Jews, 10,000 Ukrainian nationalists, Soviet prisoners of war and gypsies had been exterminated there.

But the Babi Yar atrocity was unfortunately only the latest in a series of mass murders to have been committed in Ukraine over the prior several years. In 1932-1933, Soviet leader Joseph Stalin, leery of Ukraine's nationalism and relatively prosperous and independent peasant farmers, decided to subjugate these people by confiscating all the food they produced and treating them as traitorous criminals if they tried to eat any of it themselves or save it for their families.

Watchtowers with armed guards were set up throughout the countryside to enforce these new rules. The Holodymyr (hunger), which remained a secret to the world because the Soviet Union kept exporting grain throughout the period, may have been history's first documented artificial famine. As a result, some 3.3 million Soviet citizens, mostly Ukrainians, were starved to death by their own government, Timothy Snyder writes in his book Bloodlands, Europe Between Hitler and Stalin.

In addition, 300,000 more Ukrainian residents (mostly Poles and Ukrainians) were shot by their government in 1937 and 1938 as part of the so-called Great Purge in which Stalin consolidated his power and which saw the killing of an overall 700,000 throughout the USSR, Snyder writes. It is perhaps understandable in this light why many Ukrainians greeted the Germans as liberators (naively, as it tragically turned out) when they marched in three years later.
During World War II, 4.2 million Russians, Belarusians and Ukrainians were starved to death by German occupiers in 1941-1945. At the same time, 5.4 million Jews in the area were shot or gassed by the Germans. On the other side, the Soviets sent about 2.5 million of their people, the bulk of them Ukrainian, into Gulags. Between 1941 and 1943, the deaths of 516,841 Gulag inmates were recorded.

As I've witnessed the more recent bloodshed at the Maidan, for which my own sole personal recollections are more idyllic, the reference to writer Joseph Conrad, one of the greatest authors to have ever appeared in English literature, is relevant for another reason: He grew up there.

Born in 1857 in a city about 100 miles from Kiev, the author who eventually anglicized his name to Conrad eventually fled what had then been part of the Russian Empire after his parents became implicated in a suspected Polish nationalist plot. The city was known as Berdichev in Russian and was at that time the home of the Empire's second-largest Jewish settlement.

In the heart of Kiev lived Solomon Rabinowitz (pen name Sholom Alecheim), who wrote in Yiddush about Tevye the Dairyman, stories which eventually hit the musical stage in the form of Fiddler on the Roof. Not far away was Nikolai Gogol, who wrote drama, poetry and fiction in Russian. And of course there were Ukrainian writers like Taras Shevchenko, who is considered by many to be the literary embodiment of Ukrainian nationalism.

Desktop globeSuch is the diversity - at once a blessing and a curse - of the place on the globe currently causing the most fear here at home. Financial markets in the U.S. rightly took a dive the at end of the past week in large part because of the danger of the situation. It may not be a probability, but there is a possibility that war may break out after the Russians win this Sunday's referendum in the Crimean peninsula. Even the most optimistic scenarios could entail massive economic disruption, particularly as industrial enterprises like German chemical companies shut down due to disruption of their supplies of Russian natural gas.

As pointed out in a previous installment of this investment blog, the stakes here are high, both in terms of money and lives, and it would be tempting to conclude that, because of this, cooler heads will prevail. And so they probably will. But investors are right to conclude that darker possibilities exist, especially in a place where so many people have so many scores to settle. There are unfortunately many "dark places" in this world.

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