The $160 Billion cost: Why Ukraine’s Viktor Yanukovych spurned EU’s offer, on 20 Nov. 2013

Why didn’t Yanukovich tell the Ukrainian people? Why did he keep this information hidden?

By Eric Zuesse
March 27, 2015
Global Research

“Burying the lede” is a way that ‘news’ professionals hide or “bury” things while ‘reporting’ on them; and the biggest example of this in modern times occurred when Germany’s Spiegel (Mirror) magazine headlined its cover-story on 24 November 2014, ”Summit of Failure: How the EU Lost Russia over Ukraine.” On the magazine’s front cover, it was instead bannered as “Kalte Krieger — Geschichte einer Machtprobe: Wie Merkel und Putin Europa an den Rand des Abgrunds brachten” which translates as: ”Cold Warrior — History of a Showdown: How Merkel and Putin brought Europe to the Edge of the Abyss.” This was a very lengthy report, 7,000 words, but the historically blockbuster revelation in it, which the global press has ignored, and/or themselves buried by similarly mentioning it without headlining it or leading with it (nor even linking to it), was this (which would have been a fair headline for that news report, since it’s 99% of that news-report’s real value): “EU’s Offer to Ukraine Would Have Cost Ukraine $160B.” (I hope that the headline that I used above is even better, however.)

And, so: now you know why, on 20 November 2013, Yanukovych turned that offer down — and the rest was history (the “Maidan” demonstrations, and all the rest, producing the Ukrainian civil war, and the new and much hotter version of the old Cold War, including all of those economic sanctions against Russia, and the resulting boom in nuclear weapons on both sides, and the thousands of corpses in the eastern Donbass region of what used to be Ukraine).

This blockbuster revelation was in merely a brief, 231-word passage within the 7,000-word article, and nothing further was said about it than these mere 231 words.

Here it is (as given in Spiegel’s online English edition of the article’s second half — and the article’s first half was here, but it contains nothing of this blockbuster revelation):

Kiev, Presidential Palace

Nov. 19, 2013

At Barroso’s behest, Füle traveled to Kiev once again to meet with Yanukovych – and the Ukrainian president got straight to the point. In talks with Putin, Yanukovych told Füle, the Russian president explained just how deeply the Russian and Ukrainian economies are interconnected. “I was really surprised to learn about it,” Yanukovych said. … “There are the costs that our experts have calculated,” Yanukovych replied. ”What experts?” Füle demanded to know. The Ukrainian president described to his bewildered guest the size of the losses allegedly threatening Ukraine should it sign the agreement with the EU.

Later, the number $160 billion found its way into the press, more than 50 times greater than the $3 billion calculated by the German advisory group. The total came from a study conducted by the Institute for Economics and Forecasting at the National Academy of Sciences of Ukraine and it was a number that Yanukovych would refer to from then on.

“Stefan, if we sign, will you help us?” Yanukovych asked. Füle was speechless. ”Sorry, we aren’t the IMF. Where do these numbers come from?” he finally demanded. “I am hearing them for the first time.” “They are secret numbers,” Yanukovych replied. “Can you imagine what would happen if our people were to learn of these numbers, were they to find out what convergence with the EU would cost our country?”

Though that was a poorly-written passage, it does clearly state why Yanukovych couldn’t possibly have accepted the offer. The passage makes no connection between, on the one hand, “the Russian president explained just how deeply the Russian and Ukrainian economies are interconnected. ‘I was really surprised to learn about it,’ Yanukovych said,” and, on the other, “‘There are the costs that our experts have calculated,’ Yanukovych replied.

Did Putin’s statement cause Yanukovych to request this new analysis from Ukraine’s National Academy of Sciences? We just don’t know. The reporters didn’t say. Maybe they didn’t even wonder about that. All that the article tells us is: the latter scientific institution calculated that if the EU’s offer were to be accepted, the cost to Ukraine would be $160B.

Why, then, was this blockbuster news-item buried, so that virtually no one noticed it? Perhaps the key passage to provide a hint to explain this burying (which hint appears in the article’s first half) was “Berlin continued to focus its efforts on Tymoshenko [whom the Ukrainian government had imprisoned on a corruption conviction, but Merkel — like Obama — was insisting that she be freed from prison], it failed to recognize the real danger: The Russian Federation’s power play.” The only actual “power play” that the article describes from Russia was “the Russian president explained just how deeply the Russian and Ukrainian economies are interconnected. ‘I was really surprised to learn about it,’ Yanukovych said.” Apparently, Putin’s “danger,” his merely “explaining” that, was, to the writers of the Spiegel ‘news’ report, a “power play.” The anti-Russian slant is blatant there.

In other words: This article’s writers, evidently, needed to find a way to present a negative view of Russia, and especially of Putin. Therefore, focusing their story and presentation around this particular blockbuster revelation (which went in the contrary direction) was out of the question for them — and especially for their employer.

So: now you know why Yanukovych, the very next day after his learning about the $160B price tag of the EU’s offer, turned it down, and also why this revelation is still news, more than a year later — just as it was news to me until I happened upon it only today.

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/the-160-billion-cost-why-ukraines-viktor-yanukovych-spurned-eus-offer-on-20-nov-2013/5439125

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Oleg Tsarev: Five conclusions on Ukraine as the plunder continues

End of the life cycle of the project “Ukraine is not Russia”
Конец жизненного цикла проекта «Украина не Россия»

by Oleg Tsarev, Chairman of Novorossiya Parliament, for vz.ru
December 19, 2014

——————————————————————————

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%.

Fifth Conclusion: Ukraine has no money

The currency reserves of the National Bank of Ukraine are microscopic, and almost entirely consist of securities which nobody else wants (there are rumors that $6 billion of currency reserves were traded for shares in Lehman Brothers which went bankrupt in 2008), the exporters are not selling their hard currency since they themselves are struggling, and importers cannot obtain hard currency even for critical purchases.

At the same time Kolomoyskiy is supplying substandard body armor at their weight in gold and is increasing the capital of his own Privat Bank, while at the same time reducing tax obligations to the state.

Ukraine is bragging that it increased exports this year, forgetting to add that it accomplished that feat by exporting the last of its grain reserves. As to what will happen in the spring and how the people of Ukraine will be fed, it does not seem to concern the government.

No Coal for Power Plants and None in Sight

The Donbass coal cannot be purchased for ideological reasons since, according to Yatsenyuk himself, that would be “financing terrorists.” The entire energy sector of Ukraine is sustained by supplies of nuclear fuel from Russian Rosatom (which represents nearly 50% of energy production in Ukraine).

The winter is coming, yet ‘the provision of heating of the population’ (as Klitchko famously said before) is still under question.

The efforts of the new Ukrainian ruling elite include not only the attempts to hurt Russia and the owners of Ukrainian Eurobonds (half of the total of $17.5 billion is owned by the US-based Templeton Fund), but also their own citizens, otherwise the Ukrainian “bust-out” might fail.

They are even attempting to cut off the untamed Donbass from the Ukrainian financial system and close government offices and banks in the Donetsk and Lugansk Republics. That is to say, to abandon to their fate more than 4 million of our citizens by claiming that Donbass is not making budget contributions. And those are the policies which, in their view, are supposed to revive Ukraine’s economy.

Kiev is accelerating its own collapse

Donetsk alone fulfilled 89.2% of its budget contributions in 10 months. Yet now the retirees are being told that their pensions are not being paid by Kiev since June because allegedly Donbass has not been making transfers to the national budget. This despite the fact that since January Donetsk alone transferred 5.519 billion hryvnia, of which 4.746 billion went into the national pension fund.

One should also add that Donbass represents almost a third of Ukraine’s industry, nearly all of its coal, and a fourth of its exports.

Only one conclusion can be made on the basis of the above: a crisis is coming, and it will take many forms.

  1. The paralysis of the budget and the banking system. Default before individual depositors (which already took place as far as the inhabitants of Crimea and Donbass are concerned). Multi-month delays in the payment of salaries, pensions, benefits. The seizure of industries belonging to the competition (mainly Firtash, Akhmetov, the Yanukovych group). Plunder of the remnants of state property. The ultimate bankruptcy of Naftogaz.

But the key element of the process of the collapse of the economy is the default by the state before its own people, which can take place not only in the form of direct failure to fulfill social obligations but also through hyperinflation. This would represent a total war, aimed against one’s own country.

  1. Possibly (in parallel or slightly later) a chaotic external default, which may be triggered by the collapse of the IMF program (the next tranche was delayed until Kiev satisfies at least some of IMF’s conditions). Once that happens, Ukraine’s Gas Transit System will be snapped up for pennies (that system is only needed as long as an agreement with Gazprom exists), alongside other remaining “gems”.
  2. A total war against Novorossia (or Russia) is possible as a consequence, or an attempt to delay a complete economic collapse and chaos. After all, one can never blame the Maidan for anything. But will the people fall for it?

***

Right now Ukraine needs an injection of at least 100-120 billion dollars, which could prevent a sharp economic collapse. In the absence of such an injection the country’s GDP is likely to drop by 50%, implying the collapse of the country’s whole economy.

The final destination on this path is a catastrophe and complete bankruptcy, which would be an unprecedented trial not only for the people of Ukraine, but also for Russia, Europe, and the entire world. But the crisis can no longer be stopped; one could still try to switch course to a pro-Russian, Anti-Maidan one, but that is out of the question for those who have inspired the Maidan.

And therefore a collapse is not to be avoided.

 

Translated for FortRuss.blogspot.com

http://fortruss.blogspot.com/2014/12/ukraine-plunder-continues.html — translation — Ukraine: The Plunder Continues
http://www.vz.ru/opinions/2014/12/19/721135.html?google_editors_picks=true

 

Washington seeks an excuse to wage a nuclear war on Russia “We’re close to the precipice. Will the public remain silent?”

Posted on Global Research, December 17, 2014
By Eric Zuesse
http://www.globalresearch.ca/washington-seeks-an-excuse-to-wage-a-nuclear-war-on-russia-were-close-to-the-precipice-will-the-public-remain-silent/5420283

The world is more nervous about the drift toward nuclear war between the U.S. and Russia than at any time since 1962’s Cuban Missile Crisis. When French President Francois Hollande urgently side-tracked his return-flight from a diplomatic mission recently, in order to meet with Russian President Vladimir Putin at Moscow’s Vnukovo Airport, at a private room that had been scoured ahead of time to eliminate any possible bugging devices, there was speculation as to what had caused Hollande’s sudden detour, and there were even rumors of a possible cause being an American “false-flag” event in the works to be blamed on Russia as a pretext for going to war against Russia, just as Russia had been falsely blamed for the Ukrainian military’s downing of Malaysia’s airliner MH17 onJuly 17th. All that was publicly released about the two-hour meeting were platitudes, hardly anything that would have justified side-tracking Hollande’s flight so as to surprise intelligence agencies and be able to meet the Russian leader in an untapped room.

The level of fear is certainly rising on both sides. On the U.S. side, the CBS News Poll in summer 2007 found 6% of Americans calling Russia an “enemy”; seven years later, that same figure was 22%. However, what is not rumor nor fear, but proven fact, by Obama’s own actions as will be documented here, is that he wants a war against Russia and is trying hard to get Europe (including Hollande) onboard with this goal in order to win it; and that America’s Republican Party want this at least as much as he does, though the American public do not. Continue reading