IMF loans

IMF: Ukraine must now steal $1.5 Billion+ from Russia to buy weapons

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Originally from Deutsche Wirtschafts Nachrichten
March 24, 2015
Posted on Global Research

IMF: Ukraine will not pay back [part of] its debts to Russia

German Economic News  |  Published: 03/24/15 00:25 clock [Translation, and interspersed notes, by Eric Zuesse.]

In December, a multi-billion-dollar loan [variously stated as $3-$3.5 billion] to Ukraine comes due, which Ukraine had received from Russia. The IMF has provided a new debt plan, however, dictating that existing loans to Ukraine that have an expiration-date are to be subjected to a haircut. Thus, the resource gap of the country totaling $40 billion is to be reduced.

Since the crisis, Ukraine has received several loans from the IMF and the EU [and the U.S.]. These loans must be repaid in a few years from now. However, the financial situation of the country remains vulnerable. Over the next four years overdue loans totaling $15 billion need to be paid [they’re mostly loans from Russia]. Only three billion of them are an old loan Russia that has to be paid in December of this year. The IMF might prevent it [from being repaid in full, even though it has seniority over the new loans that are coming from the West].

The IMF has developed a program for Ukraine, under which the current financial hole is to be filled in the amount $40 billion. The due debts [the senior debt] are part of the plan, and will be restructured, according to the IMF. Exactly how it is to happen, the IMF does not explain. Experts say that the IMF believes that Russia should participate in a haircut. The Financial Times reports [“Bailout projections indicate Ukraine will not repay Russia debt” 5:21 PM, 22 March 2015] that the IMF requires that Russia’s $3.5 billion bond issue be included in the restructuring. Charles Blitzer, a former IMF employee, has informed the FT of this.

However, Blitzer is uncertain how large the haircut will be. ”It is up to the Ukrainian authorities to determine the extent and nature of the debt restructuring,” he said. [In other words: the IMF will grant Ukraine the right to determine how much of that $3-3.5B will be repaid to Russia. The Kyiv Post puts it this way: “Kyiv does not intend to fully repay a $3 billion bond owed to Russia this year according to official projections underpinning Ukraine’s new international bailout, say credit experts.”] Government sources close to the matter estimate that there will be a planned debt reduction of 50 percent. ”But creditors would rather try to agree on a term extension,” said Blitzer.

Whether all international creditors will accept a haircut, and if so, to what extent, is not yet clear. Last week, Russian Finance Minister Anton Siluanow said that Russia still expects that the $3.5B debt will be repaid this December in full. And Franklin Templeton [Funds], the largest bondholder of Ukraine, has brought in Blackstone legal help for debt negotiations.

Last week, the Ukrainian Finance Minister [the American] Natalija Jaresko told the WSJ that so far pledged loans to Ukraine [$40B] will not be enough to bring Ukraine back onto its feet. ”The package will stabilize the banking system, but it is not enough to seriously re-stimulate growth,” said Jaresko. ”I need more support.” She said that no nation currently pays more to protect the entire world from a nuclear power [Russia] than does Ukraine, and that, “if our partners, for whatever reason, are not able to assist us with defensive military means, then they should provide us more financial assistance [so that we can buy the weapons against Russia ourselves].”

This past Friday, the Ukrainian central bank had to explain why three of Ukraine’s banks were being declared insolvent. The VAB Bank, Astra Bank and the City Commerce Bank are now deprived of their licenses. At the same time, Ukraine is already planning an expansion of military resources. In sum, for the year of 2015, a total of $3.8 billion will be spent on armaments. [This by a country that cannot even pay its bondholders, when all of the new Ukrainian bonds are actually paying only for Ukraine’s war against the residents of its own former Donbass region.]

Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity, and of Feudalism, Fascism, Libertarianism and Economics.

http://www.globalresearch.ca/imf-ukraine-must-now-steal-1-5-billion-from-russia-to-buy-weapons/5438508

IMF loans to Ukraine: deadly “economic medicine” aimed at total destabilization

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A clear overview of the consequences of the IMF loans and economic program approved by Yatsenyuk and Poroshenko.

From Global Research, February 17, 2015
By Ernst Wolff

On February 12, Christine Lagarde, Managing Director of the International Monetary Fund, announced that the IMF had reached an agreement with the Ukrainian government on a new economic reform program. Ms Lagarde’s statement, made in Brussels, came only minutes after peace negotiations between the heads of the German, French, Russian und Ukrainian governments in Minsk, Belarus, had ended. The timing was no coincidence. Washington had been left out of the negotiations and now reacted by sending its most powerful financial organization to the forefront in order to deliver a clear message to the world: that the US will not loosen its grip on the Ukraine, if not by sending weapons, then at least economically and financially.

Mme Lagarde’s assertions that the program “would support immediate economic stabilization“ and spell “a turning point for the Ukraine“ are as far removed from reality as the main stream media’s depiction of the IMF as an aid organization helping a drowning country to survive in times of trouble. Not a single cent of the loans will go to the Ukrainian working people. Instead, the money will be used to prop up the Yatseniuk government which is totally subservient to US interests, and enable it to service the debts incurred by its predecessors in the aftermath of the financial crisis of 2008, to pay off most of its military expenses of around $ 250 million per month for the continuation of a war against its own population and to fill at least some holes in the state budget which are due to the country’s ongoing economic deterioration.

The loans will be based on the terms of an economic program for Ukraine for 2015 – 2020, passed by the Kiev parliament in December 2014, and are tied to harsh conditions laid down in a letter of intent, signed by prime minister Yatseniuk and president Poroshenko in August 2014. Some of the measures have already been implemented, others will follow. Among those already in force is the flexible exchange rate regime which has not only led to a 67% devaluation of the hrivna, lowering the average monthly wage of Ukrainian workers to less than $ 60, but has also opened the doors for international currency speculators who have already made millions by indebting themselves in hrivnia and repaying their debts in euros and dollars.

The rate of inflation, running at 25 % in 2014 and expected to rise even higher in 2015, and a hike in gas prices by 50 % in May 2014 made survival almost impossible for the weakest 20 % of the population who already lived below the poverty line in 2013. Among the measures still to come are the layoff of 10 % of the country’s public employees and the partial privatization of health care and education. The retirement age for women is to be raised by 10 years, that for men by 5 years, most benefits for old age pensioners are to be abolished, the pharmaceuticals market is to be deregulated. Retirement pensions will be frozen, and there will be no more free lunches for school children and patients in hospitals. Benefits for victims of the 1986 nuclear disaster in Chernobyl are to be cut, and the boundaries of the officially designated radioactive hazard zone will be revised. The country’s monthly minimum wage is to remain at 1,218.00 hrivna ($ 46 at the current rate of exchange) until at least November 2015.

None of these measures will serve to “improve the living standards for the Ukrainian people“, as cynically predicted by Ms Lagarde. Nor will they “restore robust growth“ in an economy which is teetering on the verge of collapse, with a central bank left with only $ 6 billion in currency reserves and incapable of raising new fundi

ng in foreign exchange auctions. However, they will contribute to an intensification of the suffering of the Ukrainian people, deepen the social divide of a country already torn apart by a bloody civil war and lead to its complete disintegration, nurturing separatist movements and thus creating perfect conditions for a future of violence and despair.

In pursuing this strategy, the IMF is totally in line with the geopolitical policies pursued by Wall Street and the government in Washington. Both are in deep trouble, with the US torn apart by ever-increasing social inequality threatening to explode in massive social unrest, while its rulers are drowning in debt and losing control over the world financial system. Having dominated global markets for seven decades, the United States’ economic decline and a shift in global power are ringing in the end of the US dollar as the world’s reserve currency and thereby heralding the end of the US’s status as the world’s super power.

In a reckless attempt to stop this unstoppable process, Wall Street and the White House are waging an extremely aggressive campaign against Russia and China who have dared to complete an energy deal outside the petro-dollar and whom the US fear to be preparing a new, possibly gold-backed, currency that might replace the US dollar as the world’s reserve currency. To prevent this from happening and to gain control of the vast natural riches of Russia which promise enormous profits, Wall Street and the White House are pursuing a strategy of regime change in Moscow, undertaking everything possible to replace the Russian government by one that is as subservient to US interests as that of Ukrainian premier Yatseniuk and his investment banker cronies in Kiev. One of the means to this end is the integration of Ukraine into NATO in order to step up the military threat against Russia. However, as the EU – and Germany in particular – do not seem to be willing to join forces in an all-out war against Russia (not out of humanitarian considerations, but because of their dependency on Russian gas and oil and their anticipation of a new monetary world order no longer dominated by the US) and as the majority of Americans, despite a massive media campaign demonizing Vladimir Putin, are unwilling to support a war that would cost more money and more lives than any war in the past and could end up in a nuclear catastrophe, the US government’s and the IMF’s main purpose in Ukraine is to deepen and widen the already existing economic, social and ethnic conflicts. By doing so, they hope to force Vladimir Putin into a long-lasting and costly war that will weaken his position at home and eventually pave the way for the installation of new rulers in Moscow.

Looking at Ukraine as a part of the present geopolitical struggle, one can see that the IMF’s  new loans to Ukraine, announced by Christine Lagarde, are anything but a “turning point“ signalling the country’s stabilization. They will lead to unspeakable human suffering and contribute to the trail of blood which Ms Lagarde and the IMF are so used to leaving behind after intervening under the pretext of “helping“ countries in times of trouble.

Ernst Wolff is a freelance journalist and the author of the book “Pillaging the World. The History and Politics of the IMF”, published by Tectum Verlag, Germany.

http://www.globalresearch.ca/imf-loans-to-ukraine-deadly-economic-medicine-aimed-at-total-destabilization/5431677