The Situation in the Ukraine. #10

Ukraine: The Plunder Continues


It has been a year since many Ukrainians came out on the Maidan, wishing to “improve life” in their own understanding, namely by integrating Ukraine into Europe. One can already make an assessment of the consequences but, to put it mildly, they are not encouraging.


First Conclusion: Maidan was very well prepared

The preparations did not begin with Victoria Nuland’s cookies but much earlier, with Kravchuk and Kuchma who generously handed out national properties to “their own people”, with Yushchenko who delivered the coup de grace both to the economy and the military, and with Yanukovych, who placed his “overseers” in all regions of the country.

Only in the last 15 years infrastructure wear and tear increased from 40% to over 80%. As a result by early 2014 Ukraine reached a pre-default stage. Gold and hard currency reserves shrank to 15 billion dollars, the country’s inability to fulfill its financial obligations increased to 65%, reaching an almost absolute record.

By comparison, the media is reporting that Russia is considered to be at 17% risk of default. Yet Ukraine’s total debt to all creditors is, by Ukrainian standards, astronomically high at $65 billion.

What did Ukrainians receive in return? The budget started delaying even the most important payments to the regions and to the population, the hryvnia already lost almost half of its value against the dollar and 42% against the euro.

The fall of Ukrainian currency is accompanied by growth of retail prices. Inflation already reached 20%.


Second Conclusion: Ukraine was subsidized by Russia during its entire independence period

This took mainly the form of lowering the price of energy.

The total level of subsidies exceeded $100 billion, and when Tymoshenko signed her “prison contract” forcing Ukraine to genuinely pay for gas, Ukraine’s budget instantly developed a “black hole” under the name of “Naftogaz” which amounts to 4-5% of the country’s GDP.

Of course, the national treasury did not empty itself out overnight, Yanukovych also made a contribution to that. However, right now the treasury is being filled by a massive currency emission by the National Bank of Ukraine which, according to Tymoshenko itself, is nearly equivalent to the entire national budget, exceeding $300 billion. Which spells a financial doom for the country.


Third Conclusion: The Plunder Continues

And it is continued by the followers of the kolomoyskiys, the poroshenkos, the yatsenyuks who came to power in the aftermath of the Maidan.

It all began with the transferring out of the country of Ukrainian gold reserves, and is continuing through profiteering on supplies to the combat zone, pumping out of petroleum needed to maintain the “Ukrnafta” oil pumping machinery, and by theft of 5 billion cubic meters of natural gas belonging to Firtash (originally purchased by a $1.4 billion credit from Gazprombank in order to preserve Ukraine’s chemical industry).

They do not shy away from direct seizure of factories belonging to their competitors. The most recent major seizure took place in Odessa, at an oil refinery.


Fourth Conclusion: “Western partners” are strenuously pretending that everything is all right

Unlimited currency emission and the de-facto freeze of hard currency markets, the banks’ inability to return deposits, the inability to fulfill budget obligations, all of that is being ignored. The International Monetary Fund does not even have, by its own mandate, the right to give money to a country in the middle of a war.

But the markets cannot be fooled. The interest rates on Ukraine’s Credit Default Swaps (CDS), Eurobond interest rates and internal currency obligations are beating all records, indicating that a default is inevitable. Business publications (The Economist, Der Welt, and others) are beginning to prepare investors for the inevitable: if Ukraine is not given, say, another 20-25 billion dollars in the nearest future (and this in addition to the IMF and EU assistance to the tune of $37 billion), Ukraine will declare bankruptcy.

The interest of a one-year Ukrainian bond increased from 10% at the beginning of 2014 to the unheard of 27% today. Analysts cannot recall another such massive jump.

The same is true for Ukraine’s default risk assessments. At the beginning it was rated at 49%, which is high enough, but during the period of greatest tensions with Russia the indicator jumped to 60%.

Minister of Defense of DPR, Eduard Basurin:

-597 Ukrainian soldiers died at the airport so far - and those are just the bodies found so far near the airport and Peski, 44 POWs, 49 tanks destroyed, 49 BMP's and BTR's - just destroyed by DPR, wounded evacuated - over 1,500 (Ukrainians).

-Large quantities of American weapons, a lot of religious literature in European languages.

- Found bodies in NATO uniform of contractors from foreign private military companies.

- Today there were 19 violations of ceasefire - 13 dead (on a Donetsk trolley). No dead among the militia.
Last night there was a massive artillery attack on Gorlovka, a daycare was destroyed, a five story house was destroyed. In many houses all windows are broken. Any point in Gorlovka is subject to shelling. A hospital was hit.

-It is difficult to see all this, after Poroshenko announces he is ready for peace talks.
Despite everything, the residents believe that we will win.

- After the destruction that happened from Hurricanes - a terrible weapon, there were no dead, I believe this is a sign that God does exist.

- People help each other, don't think for themselves. These people cannot be defeated.-

Russia has a good opportunity here. To give the impression that it's potentially interested in a restructuring of Ukrainian debt, and could be willing to wait a little long before calling in that $3 billion loan.. perhaps even extend the Ukraine's gas discount for a few more months.
That might give the Western debtors the confidence needed to agree to the IMF's new plan, and also for some new Western loans to be approved and given to the Ukraine.

IMO Russia policy in Ukraine
have been a total failure , they invested so much and allowed the coup to happen.

GarryB wrote:Personally I think sanctions on Russia are painful, but a necessary process to make Russia sanction proof and with no critical or important ties with the west.

By all means trade with them but don't become dependent on them or they will use it against you to make you do things to suit them and not suit you.

Right now it is western creditors that are going to lose money on this... I would just leave it at that.

When they can't pay... you can start making demands...

Kimppis wrote:Wait... Ukies seriously expected to advance this time so they renewed the offensive but it turns out they are getting their asses kicked like the last time? What the fuck are they thinking in Kiev? (I guess it's a little early to say but still...)

Firebird wrote:

flamming_python wrote:There was a cyborg parade in Donetsk today. Captured cyborgs that is. Mostly it was pretty civil and the Novorussian rebels kept order, but I think a few knuckles were thrown and hit home; either at this event or another one recently.

I would normally feel sorry for them and would advocate treating the enemy rank & file with honor.
However if I understood correctly, what these airport defenders have basically been doing is covering for the Ukrainian artillery firing from that location or near it - right at civilian towns and cities.
SO, sucks to be them. Hopefully after they've had their turn at some light humiliation; their families can come and pick them up.

I wouldn't treat them with honour. Its not a sport like a boxing match.
Ultimately, the region had democratically chosen not to accept a US installed Nazi junta.
Their aim was to terrorise innocent people into subjugation.

The so called "cyborgs" could have refused orders. They weren't green 18 yr old terrified conscripts (not that that would be a defence either). But they actively took up their roles to terrorise.
The "only obeying orders" line didn't wash at Nuremberg and it shouldn't wash today. If there was no comeback, I'd have tortured them before killing them.

flamming_python wrote:Rebels are driving back the Ukrainians on several axes. A general offensive.
Several settlements already liberated today and yesterday.

Rumour-mill's saying: Moscow's men are not about to halt them.

Kimppis wrote:Wait... Ukies seriously expected to advance this time so they renewed the offensive but it turns out they are getting their asses kicked like the last time? What the fuck are they thinking in Kiev? (I guess it's a little early to say but still...)

magnumcromagnon wrote:In other news Sockpuppetshivili is being accused of yet of another murder, no wonder that POS is on the run: