Fairy tale is not going too well
I'mma just throw two pieces in here for starters, then we can proceed.
"The IMF has concluded that it was too optimistic when loaning Ukraine $17 billion at the end of April, and that the Ukrainian Government’s economic condition is far worse than the IMF expected, and also that the Government’s anti-corruption program is too weak to justify the planned loan-installments or “tranches” going to Ukraine. Therefore, “even providing the program of the next two tranches is open to question.”
"However, this only confirms an earlier assessment, made public on October 28, about which Reuters headlined at the time, “Ukraine unlikely to receive IMF loan tranche this year: finance minister.” And this was already “after warning in September that if Ukraine’s conflict with the separatists runs into next year, the country may need as much as $19 billion in extra aid.” Ukraine has made clear that it will continue the war, and so the additional $19 billion will also need to be paid to Ukraine in order for its war against the “separatists” to continue." (article)
"This loan demonstrates the degree to which the IMF is an arm of U.S. Cold War politics. Kiev used the loan for military expenses to attack the Eastern provinces, and the loan terms imposed the usual budget austerity, as if this would stabilize the country’s finances. Almost nothing will be received from the war-torn East, where basic infrastructure has been destroyed for power generation, water, hospitals and the civilian housing areas that bore the brunt of the attack. Nearly a million civilians are reported to have fled to Russia. Yet the IMF release announced: “The IMF praised the government’s commitment to economic reforms despite the ongoing conflict.”
"The IMF’s Articles of Agreement forbid it to make loans to countries that clearly cannot pay, prompting its economists to complain at last year’s October 2013 annual meeting in Washington that their institution was violating its rules by making bad loans “to states unable to repay their debts.” In practice, the IMF simply advances however much a government needs to bail out its bankers and bondholders, pretending that more austerity enhances the ability to pay, not worsen it. Ukraine looks like a replay of the Greek situation with an exclamation mark! One official last year called its Debt Sustainability Analysis, “‘a joke,’ a [European] commission official described it ‘a fairy tale to put children to sleep’ and a Greek finance ministry official said it was ‘scientifically ridiculous.’”" (article)
Essentially, what many people already knew, has been confirmed: the "saviors" don't give a flying poop for Ukraine. At least not for the Ukraine they're presently seeing. The IMF has concluded that they had been "too optimistic" about Ukraine's prospects of meeting their requirements for the aid. Those 17 billion dollars were not even used for economic recovery, but for war. And even that was a drop in the sea compared to what Ukraine would need to get back on its feet - provided that it delivered the much needed reform that it doesn't seem likely to do any time soon, anyway.
Kiev did get a meager 3.2 billion dollars back in May, though, and another 1.39 billion in September. That of course is a tiny amount which practically has not brought any stability to the almost-bankrupt state. And now there comes the IMF admission that Ukraine would "hardly receive a new payment", at least for the next year. The country does need at least double the size of that 17 billion aid in order to avert bankruptcy. But it has now become evident that the IMF has no intention to keep injecting money into a state as reckless as that for the time being.
There are several reasons for that. The West just doesn't have extra money it can splash on Ukraine right now. About a year ago it was estimated that the country would need well over 30 billion dollars to basically avoid getting in the situation it already is in. Thus, the IMF revelation that they had been "too optimistic", sounds ridiculous, to put it mildly. In fact the IMF experts knew full well what predicament the country's economy was in; they knew that the industrialized South-East would go broke if it scrapped its relations and trade exchange with Russia. They knew the country needed a lot more money than they were vowing to provide. And even then the payments are now getting delayed, under one pretense or another. Even if that 17 billion loan gets paid eventually, at this rate and levels of enthusiasm for reform in Kiev, Ukraine would probably get the whole amount in many years - what's more, most of it will continue to sink somewhere, or be spent for things it wasn't meant for (like war), and a significant part of it would disappear into some oligarchs' pockets, just like before.
That Ukraine's Western "saviors" don't feel like pouring cash into a black hole, is basically the main reason further crediting has been halted. The other reason was actually stated in a somewhat more diplomatic language: Ukraine is postponing the economic and anti-corruption reform. In simpler words, the new oligarchs are just like the old oligarchs, and their respective cohorts are similar. And the IMF knows very well where the money would end up.
At the time everyone was turning the other way about the armed radicals who painted the Euromaidan red, the events in Ukraine and the limits of the discourse were defined pretty one-sidedly in the media. Oddly enough, the very person who was the first to propose Ukraine's entry to NATO and bring the EU-association negotiations at an advanced stage, was turned into public enemy number one overnight, and chief obstacle to "Ukraine's European future" (whatever that's supposed to mean). No one even mentioned the tiny nuanced detail that Yanukovych only proposed that the association agreement with the EU be postponed after the IMF popped up on the stage. Essentially, Ukraine was presented with an offer at much better conditions by China and their former "sponsor", Russia - you know, the country that used to prop them up economically for years, and provide very cheap energy for them. So Ukraine had to urgently be knocked out of that orbit of influence, the regional balance being reshaped that way to the US liking (and ultimately, the Europe's detriment).
It was only then, that the radicals and armed fringe provocateurs popped up at the Euromaidan. We know the rest of the story. Everything ended with Yanukovych being deposed, fleeing the country and giving way to the new marionette government in Kiev, which in turn embraced its new mentors (or as they're now called, advisers) in the West, just like their predecessors had bowed to the masters in the East. Same old song, but with a different tune.
Then the new top oligarch, Petro Poroshenko (the "chocolate king"), suddenly turned from the "shy oligarch" as the Americans used to call him at the time he was Yanukovych's foreign minister, to a convinced "pro-European". That same oligarch whose entire business emerged and thrived due to his trade with Russia. The same one who had temporarily frozen Ukraine's negotiation process with the EU, at the time Brussels was dictating the most unfavorable conditions possible. The end-game was to "win" Western Ukraine, and open up its markets and reorientate them in a way that was most unbeneficial for Ukraine itself. At the end of the day, Ukraine was nominally "embraced" by the EU, but the new European Commission hastened to shut the doors to the EU right under Ukraine's nose - at least until 2020, which is a very long period. Then the statements of people like Barroso started, and the German foreign minister, saying that Ukraine basically couldn't be admitted to the EU any time soon because of its economic situation, because of the war, and because half of its citizens were against the EU. In other words, they all suddenly started saying the truth - but not before they had kept it from the public for quite a while - at least while they were flocking into Kiev to attest to their support for the democratic aspirations of the protesters, and their desire to see Yanukovych toppled.
At the time, the preferred narrative was almost as if Europe, the US and the IMF were competing with Russia who'd grant Ukraine a loan that would save it from bankruptcy, and thus win its allegiance. It was pretty clear that Russia had been sustaining Ukraine and providing cheap gas in order to keep it under its sphere of influence. But rather than dividing Ukraine along its natural ethnic, cultural, economic and historic lines (as indeed was the predominant mood around this forum, as well), as the Great Powers usually do, this time they opted for the "all or nothing" scenario. So they made a country that's located between Europe and Russia, and which has a 20 million Russian "minority", choose between the Russia-led Eurasian Union, and the European Union. And this, as Angela Merkel used to say a long time before the Euromaidan events, was the wrong thing to do.
Yanukovych did reject the IMF loan offer (plus some "insignificant" corporate whims of the US, including regarding the energy sphere - essentially bits of the new US strategy for energy domination; not to mention the agricultural corporations looking for a "back-door" into EU for their GMO products), mostly because he figured it was unfavorable for Ukraine and would put it in complete subordination to foreign interests. Also, he knew full well that there was no way that the IMF would keep the payments coming frequently - and last but not least important, because due to the tough IMF requirements, the economic and social situation would've inevitably deteriorated to the point of having him deposed. And let's not forget that there were presidential elections coming up in just a few months at the time - and Yanukovych could've well gone down anyway, without all this violence, bloodshed and disruption. And without the whole civil war in East Ukraine. And without Russia ever overreacting the way it did, and snatching Crimea. But clearly, the purpose was never to preserve Ukraine as a state. That was neither Europe's desire nor America's. They simply wanted to chop it off the Russian sphere no matter the consequences. There were some crucial energy infrastructure projects being planned in the region for the following years, after all. So they had to act quickly.
Bottom line is, as those who've dared to put a somewhat different argument were saying (and were duly branded anti-freedom apologists for it), nothing good is coming for Ukraine. It was yet another country that was lied to, and tricked into assuming the role of a mere pawn that's being tossed around by the bigger players. It was lied to that there was a place for it in the EU, and everything would be fine economically, because the West would see to it that it got the money it needed to survive, after it had cut its ties to the Big Bear. Well, that didn't happen. Because it was never really meant to.
So, Ukraine has practically gone broke. It had paved its own way to such an outcome when it signed the unfavorable IMF conditions that Yanukovych had refused to accept, a thing for which he was duly kicked out. Among them:
- raising the gas bills for the Ukrainian consumers by 30%;
- freezing the salaries and pensions in the public sector;
- drastic cuts in the national budget;
- slashing the energy subsidies;
...And a handful of other measures that Friedman would be extremely proud of. But the IMF has shown time and time again that it says one thing, and then does another. It virtually turns one country after another into banana republics, for years following the same "savior" scenario that it perfected in places like Africa, poverty increasing 20-30 times in the "saved" African countries as a result of that. Some might wonder why the IMF has made Kiev adopt the "shock therapy", even after it had admitted it outright that those measures had already worsened the situation in Europe-proper?
The time of cheap talk is over for Ukraine. As soon as the moment came for the commitments to be honored, Kiev's new pals in the West started backpedaling and twisting like pretzels. As per the first link in this post, turns out, of all the noble "saviors", the one that remains is the US taxpayer. But all indications show that at least officially, Washington has no intention to pour cash into the Ukrainian black hole, either. And for a reason. Now Obama has changed the tune, and is pushing for the military option, considering the prospect of sending military aid to the new oligarchs in Kiev, and further escalating the situation.
And things could've developed much more peacefully - had the smartheads in the West shown the desire to tread more delicately in the first place. As for Putin... well, he remains as predictable in his unpredictability as the tide that comes in and then goes out.
"The IMF has concluded that it was too optimistic when loaning Ukraine $17 billion at the end of April, and that the Ukrainian Government’s economic condition is far worse than the IMF expected, and also that the Government’s anti-corruption program is too weak to justify the planned loan-installments or “tranches” going to Ukraine. Therefore, “even providing the program of the next two tranches is open to question.”
"However, this only confirms an earlier assessment, made public on October 28, about which Reuters headlined at the time, “Ukraine unlikely to receive IMF loan tranche this year: finance minister.” And this was already “after warning in September that if Ukraine’s conflict with the separatists runs into next year, the country may need as much as $19 billion in extra aid.” Ukraine has made clear that it will continue the war, and so the additional $19 billion will also need to be paid to Ukraine in order for its war against the “separatists” to continue." (article)
"This loan demonstrates the degree to which the IMF is an arm of U.S. Cold War politics. Kiev used the loan for military expenses to attack the Eastern provinces, and the loan terms imposed the usual budget austerity, as if this would stabilize the country’s finances. Almost nothing will be received from the war-torn East, where basic infrastructure has been destroyed for power generation, water, hospitals and the civilian housing areas that bore the brunt of the attack. Nearly a million civilians are reported to have fled to Russia. Yet the IMF release announced: “The IMF praised the government’s commitment to economic reforms despite the ongoing conflict.”
"The IMF’s Articles of Agreement forbid it to make loans to countries that clearly cannot pay, prompting its economists to complain at last year’s October 2013 annual meeting in Washington that their institution was violating its rules by making bad loans “to states unable to repay their debts.” In practice, the IMF simply advances however much a government needs to bail out its bankers and bondholders, pretending that more austerity enhances the ability to pay, not worsen it. Ukraine looks like a replay of the Greek situation with an exclamation mark! One official last year called its Debt Sustainability Analysis, “‘a joke,’ a [European] commission official described it ‘a fairy tale to put children to sleep’ and a Greek finance ministry official said it was ‘scientifically ridiculous.’”" (article)
Essentially, what many people already knew, has been confirmed: the "saviors" don't give a flying poop for Ukraine. At least not for the Ukraine they're presently seeing. The IMF has concluded that they had been "too optimistic" about Ukraine's prospects of meeting their requirements for the aid. Those 17 billion dollars were not even used for economic recovery, but for war. And even that was a drop in the sea compared to what Ukraine would need to get back on its feet - provided that it delivered the much needed reform that it doesn't seem likely to do any time soon, anyway.
Kiev did get a meager 3.2 billion dollars back in May, though, and another 1.39 billion in September. That of course is a tiny amount which practically has not brought any stability to the almost-bankrupt state. And now there comes the IMF admission that Ukraine would "hardly receive a new payment", at least for the next year. The country does need at least double the size of that 17 billion aid in order to avert bankruptcy. But it has now become evident that the IMF has no intention to keep injecting money into a state as reckless as that for the time being.
There are several reasons for that. The West just doesn't have extra money it can splash on Ukraine right now. About a year ago it was estimated that the country would need well over 30 billion dollars to basically avoid getting in the situation it already is in. Thus, the IMF revelation that they had been "too optimistic", sounds ridiculous, to put it mildly. In fact the IMF experts knew full well what predicament the country's economy was in; they knew that the industrialized South-East would go broke if it scrapped its relations and trade exchange with Russia. They knew the country needed a lot more money than they were vowing to provide. And even then the payments are now getting delayed, under one pretense or another. Even if that 17 billion loan gets paid eventually, at this rate and levels of enthusiasm for reform in Kiev, Ukraine would probably get the whole amount in many years - what's more, most of it will continue to sink somewhere, or be spent for things it wasn't meant for (like war), and a significant part of it would disappear into some oligarchs' pockets, just like before.
That Ukraine's Western "saviors" don't feel like pouring cash into a black hole, is basically the main reason further crediting has been halted. The other reason was actually stated in a somewhat more diplomatic language: Ukraine is postponing the economic and anti-corruption reform. In simpler words, the new oligarchs are just like the old oligarchs, and their respective cohorts are similar. And the IMF knows very well where the money would end up.
At the time everyone was turning the other way about the armed radicals who painted the Euromaidan red, the events in Ukraine and the limits of the discourse were defined pretty one-sidedly in the media. Oddly enough, the very person who was the first to propose Ukraine's entry to NATO and bring the EU-association negotiations at an advanced stage, was turned into public enemy number one overnight, and chief obstacle to "Ukraine's European future" (whatever that's supposed to mean). No one even mentioned the tiny nuanced detail that Yanukovych only proposed that the association agreement with the EU be postponed after the IMF popped up on the stage. Essentially, Ukraine was presented with an offer at much better conditions by China and their former "sponsor", Russia - you know, the country that used to prop them up economically for years, and provide very cheap energy for them. So Ukraine had to urgently be knocked out of that orbit of influence, the regional balance being reshaped that way to the US liking (and ultimately, the Europe's detriment).
It was only then, that the radicals and armed fringe provocateurs popped up at the Euromaidan. We know the rest of the story. Everything ended with Yanukovych being deposed, fleeing the country and giving way to the new marionette government in Kiev, which in turn embraced its new mentors (or as they're now called, advisers) in the West, just like their predecessors had bowed to the masters in the East. Same old song, but with a different tune.
Then the new top oligarch, Petro Poroshenko (the "chocolate king"), suddenly turned from the "shy oligarch" as the Americans used to call him at the time he was Yanukovych's foreign minister, to a convinced "pro-European". That same oligarch whose entire business emerged and thrived due to his trade with Russia. The same one who had temporarily frozen Ukraine's negotiation process with the EU, at the time Brussels was dictating the most unfavorable conditions possible. The end-game was to "win" Western Ukraine, and open up its markets and reorientate them in a way that was most unbeneficial for Ukraine itself. At the end of the day, Ukraine was nominally "embraced" by the EU, but the new European Commission hastened to shut the doors to the EU right under Ukraine's nose - at least until 2020, which is a very long period. Then the statements of people like Barroso started, and the German foreign minister, saying that Ukraine basically couldn't be admitted to the EU any time soon because of its economic situation, because of the war, and because half of its citizens were against the EU. In other words, they all suddenly started saying the truth - but not before they had kept it from the public for quite a while - at least while they were flocking into Kiev to attest to their support for the democratic aspirations of the protesters, and their desire to see Yanukovych toppled.
At the time, the preferred narrative was almost as if Europe, the US and the IMF were competing with Russia who'd grant Ukraine a loan that would save it from bankruptcy, and thus win its allegiance. It was pretty clear that Russia had been sustaining Ukraine and providing cheap gas in order to keep it under its sphere of influence. But rather than dividing Ukraine along its natural ethnic, cultural, economic and historic lines (as indeed was the predominant mood around this forum, as well), as the Great Powers usually do, this time they opted for the "all or nothing" scenario. So they made a country that's located between Europe and Russia, and which has a 20 million Russian "minority", choose between the Russia-led Eurasian Union, and the European Union. And this, as Angela Merkel used to say a long time before the Euromaidan events, was the wrong thing to do.
Yanukovych did reject the IMF loan offer (plus some "insignificant" corporate whims of the US, including regarding the energy sphere - essentially bits of the new US strategy for energy domination; not to mention the agricultural corporations looking for a "back-door" into EU for their GMO products), mostly because he figured it was unfavorable for Ukraine and would put it in complete subordination to foreign interests. Also, he knew full well that there was no way that the IMF would keep the payments coming frequently - and last but not least important, because due to the tough IMF requirements, the economic and social situation would've inevitably deteriorated to the point of having him deposed. And let's not forget that there were presidential elections coming up in just a few months at the time - and Yanukovych could've well gone down anyway, without all this violence, bloodshed and disruption. And without the whole civil war in East Ukraine. And without Russia ever overreacting the way it did, and snatching Crimea. But clearly, the purpose was never to preserve Ukraine as a state. That was neither Europe's desire nor America's. They simply wanted to chop it off the Russian sphere no matter the consequences. There were some crucial energy infrastructure projects being planned in the region for the following years, after all. So they had to act quickly.
Bottom line is, as those who've dared to put a somewhat different argument were saying (and were duly branded anti-freedom apologists for it), nothing good is coming for Ukraine. It was yet another country that was lied to, and tricked into assuming the role of a mere pawn that's being tossed around by the bigger players. It was lied to that there was a place for it in the EU, and everything would be fine economically, because the West would see to it that it got the money it needed to survive, after it had cut its ties to the Big Bear. Well, that didn't happen. Because it was never really meant to.
So, Ukraine has practically gone broke. It had paved its own way to such an outcome when it signed the unfavorable IMF conditions that Yanukovych had refused to accept, a thing for which he was duly kicked out. Among them:
- raising the gas bills for the Ukrainian consumers by 30%;
- freezing the salaries and pensions in the public sector;
- drastic cuts in the national budget;
- slashing the energy subsidies;
...And a handful of other measures that Friedman would be extremely proud of. But the IMF has shown time and time again that it says one thing, and then does another. It virtually turns one country after another into banana republics, for years following the same "savior" scenario that it perfected in places like Africa, poverty increasing 20-30 times in the "saved" African countries as a result of that. Some might wonder why the IMF has made Kiev adopt the "shock therapy", even after it had admitted it outright that those measures had already worsened the situation in Europe-proper?
The time of cheap talk is over for Ukraine. As soon as the moment came for the commitments to be honored, Kiev's new pals in the West started backpedaling and twisting like pretzels. As per the first link in this post, turns out, of all the noble "saviors", the one that remains is the US taxpayer. But all indications show that at least officially, Washington has no intention to pour cash into the Ukrainian black hole, either. And for a reason. Now Obama has changed the tune, and is pushing for the military option, considering the prospect of sending military aid to the new oligarchs in Kiev, and further escalating the situation.
And things could've developed much more peacefully - had the smartheads in the West shown the desire to tread more delicately in the first place. As for Putin... well, he remains as predictable in his unpredictability as the tide that comes in and then goes out.