Anti-population budget devours the safety net as Ukraine nears the economic abyss

January 1, 2015
Anatoly Shariy
Translated from Russian by J. Hawk
Posted on Fort Russ

When discussing last week’s actions by Ukraine’s Cabinet of Ministers, one naturally has to mention the budget. However, the budget has been adopted, so it is too late to really discuss it. It’s like talking about a death sentence once it has been carried out. You can argue it was an unacceptable mistake a hundred times, but cannot reverse it.

On the night of December 23, the government of Ukraine proposed to the Verkhovna Rada the so-called “budget packet”, which included about 50 legislative projects which would make radical changes to many legal codes of Ukraine, including concerning the budget, taxation, customs, and others.
The harsh, and in some places an openly anti-population budget caused not only discussion and disagreement, but also open resistance by the majority of people’s deputies. And we are not even talking about members of the opposition, but the governing parties.
What the government has proposed is an increase (and this during a raging crisis) of the tax burden, the introduction of new taxes on “little Ukrainians”, while at the same time radically cutting budget expenses, including the elimination of practically the entire “welfare state.”
The increase in excise taxes, the refusal to compensate grain traders for the VAT tax, the legalization of gambling, the introduction of estate tax, of housing tax, of retirement income tax, the complete elimination of all tax benefits and discounts to teachers, instructors, the disabled, children with birth defects, Chernobyl victims, and veterans of the Maidan.
Consequently on December 26 the Budget Committee of the Verkhovna Rada received over 300 amendments. In the view of the people’s deputies, such a budget could not be adopted.
But two days later they adopted it anyway. By a hand vote, after a reading of Yatsenyuk’s promises to lighten the impact of the budget in the course of its implementation, the budget for the entire year was adopted.
Incidentally, many of these radical changes were introduced by Yatsenyuk after his “consultations with international financial organizations.”
And there is a lot to consult about.
Ukraine’s foreign debt as of December 1, 2014, reached 1 trillion 33 billion 898 million 479 thousand hryvnia. The rapid devaluation of the hryvnia means the debt has become unmanageable.
Yatsenyuk’s government has been asking the West for money since March, and it has not been especially choosy when it comes to creditors. We’ll take any money, from anyone, on any conditions.
As a result Ukraine’s foreign debt has increased by 3.833 billion USD and its growth is not about to stop. The declarations that Ukraine cannot survive 2015 without another 15 billion USD merely confirms it.
The Cabinet of Ministers is also entering the New year with huge salary arrears. It is increasingly difficult to dismiss the discontent as the product of “Kremlin-paid provocateurs”, because the level of arrears is so huge.
As of December 1, the arrears had reached its 2003 level. The arrears in education were 192.2 million hryvnia, health care—184.4 million, science—123 million, and in art—18 million. To be sure, one can assume that 60% of the arrears concern territory no longer controlled by Kiev, where the Ukrainian government, in its infinite wisdom, had stopped paying salaries altogether.
But what about wage arrears on the wholly controlled regions, such as the Kiev region (124.3 million), the Kharkov region (123.7 million), the Dnepropetrovsk region (101.5 million), or the Lvov region (73 million)?
And the wage arrears are showing an interesting dynamic. In Kiev the arrears increased over the course of 2014 by a factor of three, on the Donbass by 9 times, but in the Dnepropetrovsk region by a factor of 14.5? What is the reason for that? Is the war an excuse on which everything is blamed?
Will the situation improve? No doubt it will, but not in Ukraine. And the Cabinet of Ministers itself is confirming it.
On December 22 the government adopted resolution no. 709, which amends the resolution no. 404 adopted on August 27, 2014.
On that date the wise Arseniy Yatsenyuk adopted forecast of Ukraine’s socioeconomic development for 2015. They adopted two scenarios: a pessimistic one and an optimistic one.
We wrote about them earlier, while noting at the time such forecasts are not worth the paper they are written on. And, by way of confirmation, the Cabinet of Ministers has “corrected” its own predictions.
Thus the best-case scenario GDP growth was supposed to be +0.3%, while the worst case scenario was +0.2%. Now the worst case scenario is -4.3%, while the BEST is -2.0%.
The optimistic inflation estimate in August was 10.9%, and the pessimistic one—13%. Now the optimistic estimate predicts inflation of 17.2%, while the pessimistic estimate predicts 17.9%.
This really speaks volumes, doesn’t it?
These numbers are clearly rigged and are entirely meaningless. They mean nothing at all, they are taken out of thin air.
And, even though the December forecast is actually the more realistic one, it won’t make things better for Ukrainians. If anything, it will only get worse.
Happy New Year!
Translator’s Note: 

What Shariy hints at but does not fully explain is that such forecasts are important when determining Ukraine’s eligibility for foreign loans, by both public (IMF, EU, US) and private lenders. But to secure loans and credits, and to secure them on non-usurious terms, one has to create the impression Ukraine is not doing all that badly, so as to persuade the creditors Ukraine is capable of actually repaying! Which creates a tremendous incentive for the Ukrainian government to “gild the lily”, so to speak. Consequently, even the pessimistic scenarios from December are actually wildly optimistic, because it’s hard to see exactly what the sources of growth for Ukraine’s economy are going to be. Ukraine has lost the bulk of its Russian markets (both due to the Russian government sanctions and the ruble devaluation, both of which are components of Russia’s import substitution strategy), while at the same time failing to secure European or US markets for its products. Yatsenyuk even went as far as boasting about the drop in Russian trade by half as his accomplishment. As to the Western creditors, they are facing the unenviable choice of letting Ukraine default now or continue propping it up, though even the $15 billion that Yatsenyuk is asking for is no guarantee Ukraine will not default later. And this while Greece is once again teetering on the brink of default and exiting the Eurozone.

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National Guard takes over Odessa in an “Anti-Terror Sweep”

Posted on Fort Russ, January 3, 2015
Vajag_2007 – Live Journal
Translated from Russian by Kristina Rus

A large number of well-equipped, armed men on “Kraz” trucks arrived to Odessa train station.
According to the publication “Dumskaya”[1], at least two columns entered the city: from Tairov and through the village Kotovsky.

As explained by the press service of the Odessa police, “gunners which scared the citizens are soldiers of the National Guard, who will participate in the anti-terrorist crime-prevention sweep of the city.”

“They will patrol the streets together with the police, special battalion (former “Berkut”), the state security service, police and other security forces,” – said the head of the Department Vladimir Shablienko.

As reported by “Politnavigator”[2] earlier the Odessa Police HQ announced the beginning of the anti-terrorist operation. During their duty police officers will stop and check suspicious persons, inspect personal belongings – informed the Odessa police.

A few days ago, the Deputy of the Verkhovna Rada Alexey Goncharenko from “Poroshenko Block” said that Kyiv has retained control of Odessa only due to the position of pro-Ukrainian forces, which on May 2 did not allow the pro-Russian citizens to stage a “Russian spring”.

“Odessa was the first city that gave resistance to the separatists. On May 2nd in Odessa, when an attempt was made to disperse a pro-Ukrainian march and seize the Odessa administration building, it was stopped not by police, not by the SBU, not by the national guard, but by ordinary Odessans, which came to the city centre. And this is very important,” – said Goncharenko.

In October 2014 the President of Ukraine Petro Poroshenko denied the opportunity of militia’s advance in the direction of Odessa. According to him, Odessa in the Western and Russian media is now called “a banderite city”.[3]

Translator’s Note:

“Democracy” was one of the main goals declared by the Maidan movement, which promised a better future for Ukrainians. Not only the leaders of Maidan toppled a democratically elected president, but also marginalized, silenced, murdered and prosecuted a large part of Ukrainian population, just for their political beliefs – not wanting to sell out the country to the Western handlers and instead wanting to maintain the close ties with Russia, which were built over centuries, and not wanting to worship a war-criminal Stepan Bandera who inspired a brutal mass murder of 100’s of thousands men, woman and children, because they weren’t Ukrainian in the Volyn Massacre. Instead of an all-inclusive dialog and political process the opposition to the new government is dealt with by force. It is no surprise that force is the only tool that the opposition is left to resort to in the absence of a political solution. The question remains, what has changed recently which led to such a radical response by the Ukrainian government? The answer could range from an increase of a threat to the authorities on the ground to a general intensification of a crack down across the potential “hot spots” in South-Eastern Ukraine due to an influx of nationalist military commanders in the Ukrainian government, who successfully advocated for an increase in the funding for the military as of January 1, 2015 on the backs of the vulnerable sectors of the population.

Original post




Saker: End of 2014 report and a look at what 2015 might bring

By any measure 2014 has been a truly historic year which saw huge, I would say, even tectonic developments. This year ends in very high instability, and the future looks hard to guess. I don’t think that anybody can confidently predict what might happen next year. So what I propose to do today is something far more modest. I want to look into some of the key events of 2014 and think of them as vectors with a specific direction and magnitude. I want to look in which direction a number of key actors (countries) “moved” this year and with what degree of intensity. Then I want to see whether it is likely that they will change course or determination. Then adding up all the “vectors” of these key actors (countries) I want to make a calculation and see what resulting vector we will obtain for the next year. Considering the large number of “unknown unknowns” (to quote Rumsfeld) this exercise will not result in any kind of real prediction, but my hope is that it will prove a useful analytical reference.

The main event and the main actors
A comprehensive analysis of 2014 should include most major countries on the planet, but this would be too complicated and, ultimately, useless. I think that it is indisputable that the main event of 2014 has been the war in the Ukraine. This crisis not only overshadowed the still ongoing Anglo-Zionist attack on Syria, but it pitted the world’s only two nuclear superpowers (Russia and the USA) directly against each other. And while some faraway countries did have a minor impact on the Ukrainian crisis, especially the BRICS, I don’t think that a detailed discussion of South African or Brazilian politics would contribute much. There is a short list of key actors whose role warrants a full analysis. They are:

  1. The USA
  2. The Ukrainian Junta
  3. The Novorussians (DNR+LNR)
  4. Russia
  5. The EU
  6. NATO
  7. China

I submit that these seven actors account for 99.99% of the events in the Ukraine and that an analysis of the stance of each one of them is crucial.  So let’s take them one by one:

1 – The USA

Of all the actors in this crisis, the USA is by far the most consistent and coherent one.  Zbigniew Brzezinski, Hillary Clinton and Victoria Nuland were very clear about US objectives in the Ukraine:

Zbigniew Brzezinski: Without Ukraine Russia ceases to be empire, while with Ukraine – bought off first and subdued afterwards, it automatically turns into empire…(…)  the new world order under the hegemony of the United States is created against Russia and on the fragments of Russia. Ukraine is the Western outpost to prevent the recreation of the Soviet Union.

Hillary Clinton: There is a move to re-Sovietise the region (…) It’s not going to be called that. It’s going to be called a customs union, it will be called Eurasian Union and all of that, (…) But let’s make no mistake about it. We know what the goal is and we are trying to figure out effective ways to slow down or prevent it.

Victoria Nuland: F**k the EU!

Between the three, these senior US “deep-staters” have clearly and unambiguously defined the primary goal of the USA: to take control of the Ukraine to prevent Russia from becoming a new Soviet Union, regardless of what the EU might have to say about that.  Of course, there were other secondary goals which I listed in June of this year (see here):

As a reminder, what were the US goals in the Ukraine: (in no particular order) [Editor: I’ve substituted Saker’s colors for words]

  1. Sever the ties between Russia and the Ukraine [Still possible ]
  2. Put a russophobic NATO puppet regime in power in Kiev [Still possible ]
  3. Boot the Russians out of Crimea [Failed ]
  4. Turn Crimea into a unsinkable US/NATO aircraft carrier [Failed ]
  5. Create a Cold War v2 in Europe [Compromised ]
  6. Further devastate the EU economies [Still possible ]
  7. Secure the EU’s status as “US protectorate/colony” [Still possible ]
  8. Castrate once and for all EU foreign policies [Still possible ]
  9. Politically isolate Russia [Failed ]
  10. Maintain the worldwide dominance of the US dollar [Compromised ]
  11. Justify huge military/security budgets [Achieved ]

I have color-coded these objectives into the following categories:
Achieved – black 
Still possible – too early to call – blue
Compromised – pink
Failed – red

Current “score card”: 1 “achieved”, 5 “possible, 2 “compromised” and 3 “failed”.

Here is how I would re-score the same goals at the end of the year:

  1. Sever the ties between Russia and the Ukraine [Achieved ]
  2. Put a russophobic NATO puppet regime in power in Kiev [Achieved ]
  3. Boot the Russians out of Crimea [Failed ]
  4. Turn Crimea into a unsinkable US/NATO aircraft carrier [Failed ]
  5. Create a Cold War v2 in Europe [Still possible ]
  6. Further devastate the EU economies [Achieved ]
  7. Secure the EU’s status as “US protectorate/colony” [Achieved ]
  8. Castrate once and for all EU foreign policies [Achieved ]
  9. Politically isolate Russia [Failed ]
  10. Maintain the worldwide dominance of the US dollar [Compromised ]
  11. Justify huge military/security budgets [Achieved ]

New score card: 6 “achieved”, 1 “possible”, 1 “compromised” and 3 “failed”

At first glance, this is a clear success for the USA: from 1 achieved to 6 with the same number of “failed” is very good for such a short period of time.  However, a closer look will reveal something crucial: all the successes of the USA were achieved at the expense of the EU and none against Russia.  Not only that, but the USA has failed in its main goal: to prevent Russia from becoming a superpower, primarily because the US policy was based on a hugely mistaken assumption: that Russia needed the Ukraine to become a superpower again.  This monumental miscalculation also resulted in another very bad fact for the USA: the dollar is still very much threatened, more so than a year ago in fact.

This is so important that I will repeat it again: the AngloZionist Empire predicated its entire Ukrainian strategy on a completely wrong assumption: that Russia “needed” the Ukraine.  Russia does not, and she knows that.  As we shall see later, a lot of the key events of this year are a direct result of this huge miscalculation.

The US is now facing a paradox: “victory” in the Ukraine, “victory” in Europe, but failure to stop a rapidly rising Russia.  Worse, these “victories” came at a very high price which included creating tensions inside the EU, threatening the future of the US shale gas industry, alienating many countries at the UN, being deeply involved with a Nazi regime, becoming the prime suspect in the shooting down of MH17 and paying the costs for an artificially low price of gold.  But the single worst consequence of the US foreign policy in the Ukraine has been the establishment of a joint Russian-Chinese strategic alliance clearly directed against the United States (more about that later). Continue reading