Wolf Richter: Aid For The Ukraine “Will Be Stolen” – Former Ukrainian Minister Of Economy

Yves here. A tongue-in-cheek article in the Financial Times, Putin putting Europe in its place, written from Putin’s viewpoint, concluded:

“As to your plans for emergency economic aid for Ukraine, this is an excellent plan. They could use the money and I’d rather not shell out myself. Incidentally, to save time why not make the cheques payable to Gazprom?”

Wolf’s article suggests the energy payments are the only funds that might wind up being used as intended. The level of corruption in the Ukraine makes Greece look as clean as the driven snow.

By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Testosterone Pit.

Secretary of State John Kerry jaunted to Kiev on Tuesday and offered the newly installed Ukrainian government $1 billion in aid. EU Energy Commissioner Guenther Oettinger announced the same day that the EU would help the Ukraine pay its gas bill of about $2 billion, owed Russian state-controlled Gazprom. On Wednesday, the rest of the EU aid package was announced: €11 billion, contingent on the Ukraine’s inking a deal with the IMF and implementing tough reforms. The IMF is still working on its own aid package.

As always, it’s about preventing a default during which bondholders and lenders, including numerous Western banks, hedge funds, and other speculators, would finally feel the teeth of a free market and be forced to take losses, big losses, perhaps big enough to sink a lender or two, which would be a welcome sign of housecleaning by market forces. But that won’t be allowed to happen. Instead, taxpayers in other countries will be shanghaied into bailing out these bondholders and lenders, but indirectly, under the guise of bailing out the Ukrainian people.

The new Ukrainian government, after discovering googly-eyed that there was nothing left in the treasury, that everything had already been pilfered or had otherwise evaporated, and that in fact there was nothing left to pilfer, had begged for €25 billion in aid, spread over two years.

“In order to be saved, the Ukrainian economy doesn’t need 35 billion dollars or even 135 billion dollars,” retorted the former Ukrainian Economy Minister Bogdan Danilishin on his Facebook page. His comments were picked up by Valentin Mândrăşescu, editor of The Voice of Russia’s Reality Check and occasional Testosterone Pit contributor [see his spectacular article… Russia’s Plan For The BRICS To Dismantle The Dollar System].

And that aid money? It won’t do any good, Danilishin wrote. “It will be stolen anyway.”

His alternative to throwing a ton of money at the Ukrainian government?

They just need to check and evaluate all privatization deals made during the last years. All that which has been bought for a reduced price or illegally must be nationalized, or the difference must be paid to the state budget. All taxes that oligarchs have been exempt from for the last three years must be paid.

He should know. He’d worked for former Prime Minister Yulia Tymoshenko from 2007 to 2010. In October 2010, he was arrested in the Czech Republic after the then new government had put him on Interpol’s wanted list for failing to show up for questioning by the Ukrainian police, which accused him of abuse of office. He later obtained political asylum in the Czech Republic, along with Olexander Tymoshenko, the husband of Yulia Tymoshenko who was rotting in a Ukrainian hoosegow (released recently by the new government). Everyone accuses everyone of corruption.

But Danilishin’s idea that aid cannot save the Ukrainian economy because the money will simply be siphoned off by pandemic corruption, and that instead the state should go after the oligarchs who plundered the country? It “can’t be implemented because the ‘revolution’ in Kiev has been partially sponsored by the oligarchs who will not let the state become stronger,” Mândrăşescu explained.

The new government might go after a few oligarchs who ended up on the wrong side of the fence. But those who’d backed the uprising directly or indirectly and who are now backing the new government would be able to hang on to their property, their ill-gotten wealth, and their tax privileges.

Transparency International ranked the Ukraine as one of the most corrupt countries on earth, in 144th place out of the 175 countries on its Corruption Perception Index, an honor it shares with five other cesspools of corruption of the same rank, including Nigeria.

And the reforms that the EU and the IMF will doubtlessly demand and upon which the aid money will be made contingent? “There will be no reforms,” Mândrăşescu wrote. “Western aid will indeed be stolen, and it won’t help the country’s economy.”

That’s what taxpayers in other countries can look forward to.

So Speaker of the House John Boehner said it was “time to stand up to Putin” and drew his own red line. NATO met. The UN Security Council met. EU Foreign Ministers met. Sanctions, that’s the common denominator. But it’s complicated. Read…. “Targeted” Sanctions, A Triumph For Russian Isolationists

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34 comments

  1. J Hatch

    Well, look how much Wall Street stole during the crisis. Of course its going to be swiped, and a lot of European, American & Hong Kong Banks will be there to help them steal it. Undoubtedly, nation building contractors with great success records, ala Halliburton, will be swilling down too. Win, win, win all around, for every oligarch, Russian, Ukrainian, or American.

  2. Arnold Lockshin

    Here’s how our friends in Kiev operate:
    Conversation of EU foreign affairs chief Catherine Ashton and
    Estonian foreign minister Urmas Paet:

    Paet: “All the evidence shows that people who were killed by snipers from both
    sides, policemen and people from the streets, that they were the same snipers killing people from both sides. … Some photos that showed it is the same handwriting, the same type of bullets, and it is really disturbing that now the new coalition they don’t want to investigate what exactly happened. So there is now stronger and stronger understanding that behind the snipers, it was not Yanukovych, but it was somebody from the new coalition.”
    Arnold Lockshin, political exile from the US living in Moscow

    1. paul

      Nice to see the new labour functionary was on top of this complex situation:

      Ashton replies: “I think we do want to investigate. I didn’t pick that up, that’s interesting. Gosh,”

  3. The Dork of Cork

    Watched Van Rompuy greet the new Ukranian PM and as usual it was beyond creepy.

    Here its some file footage of a previous visit.

    http://www.youtube.com/watch?v=RbeMycbiZnY

    We are all now aware that the heart of darkness lies within this demonic construct.
    Its aim is no less then the total atomization & destruction of humanity.

    Once again we will be called on to save the sovereignty of a non place ( see Belgium in a previous era) which will more then likely lead to total war.
    These satanist wish to further expand the European entreport – therefore further increasing the rate of capital destruction in this finite world.
    (Obviously if Euro expansion continues to Russia the worlds resources will run out within a generation.)

    @Yves
    I would like you to speak in plain language.
    Who is behind this dark construct which scouring all of our lands ?

    Is it a bunch of Jesuits ?
    A Talmudic elite ?
    Masons ?

    All 3 or is it indeed a bunch of Martians. ?
    What we do know for a fact is that the concentration of power seems to be focused in a very small apex with the zombie masons below giving the construct structural stability.
    We really need to know this before we can react in a coherent manner.
    Given your closeness to people in financial capitals perhaps you can put a face on this.

    1. Steve Jones

      Easy answer. It’s human beings acting in their own short-term self-interests. As always.

      1. The Dork of Cork

        @Steve
        Perhaps humans but the apparatus is far too structured to be a ad hoc event……. besides.the capital claims are now absurdly concentrated.
        This is the real smoking gun of a few bad men at the top of the food chain.

  4. j gibbs

    My first thought is that America’s retired generation living on cat food thanks to Bernanke could have used Kerry’s billion. I suppose the idea is to give the Ukraine creditors a chance to unload their bonds before the aid money disappears. Or perhaps the aid money just goes to today’s bondholders and new bondholders supply the dough which then disappears?

    One thing is certain, when the IMF gets through with this non-country, anybody who has a choice will be living somewhere else, and five people will own everything left standing there, and the land under it, which means the other hundred million will wish they were living in Eighteenth Century Manchester.

    1. Banger

      Ukraine “fell” because Kerry/Nuland/Kagan bribed the oligarchs to get rid of the legit elected President, well, and they phrased in a way that it was an offer they could not refuse. I would guess, though it was more carrot than stick. The same thing won’t work with Putin who, at any rate, has to play his role in increasing spending on “security.”

  5. Dennis Redmond

    Folks, please don’t fall for the lies of the Putinites, a.k.a. Russo-imperial thugs. The Ukrainian uprising was, first and foremost, an uprising against the biggest thief of all: former President Yanukovych, who stole billions. Andrew Bowen has the gory details: http://www.interpretermag.com/how-yanukovych-pillaged-ukraine/. The fearless citizen journalists of Ukraine helped to unravel Yanukovych’s shady business dealings, starting here: http://www.yanukovychleaks.org/

    As for what’s really going in Ukraine? Don’t listen to me, listen to Dr. Komarovsky: https://www.youtube.com/watch?v=0FpDiA4o22s (click on the English captions to read the subtitles, it’s been translated).

    1. NotTimothyGeithner

      The issue isn’t the lies of Putin. I don’t care about the Crimea or even Ukraine for that matter. George Keenan, the creator of the containment strategy during the Cold War, rightfully predicted the outcome of NATO expansion which served no real purpose except to antagonize the Russians who have reacted accordingly.

      The problem is these American empire dolts who need to be tossed from office and face ridicule at every opportunity. John Kerry has been an advocate of military invasions which have slaughtered people in Afghanistan, Iraq, Pakistan, North and Central Africa (those guns we gave the Libyan tribes made their way around). It is the height of absurdity when John Kerry tried to use “shame” against the Russians. They no longer care, and if we aren’t going to behave as a country, then explain why Putin grabbing the Crimea affects my interests because right now it doesn’t. It does reveal that MIC military supremacy is a myth than a fact which can only be a good thing at this point.

      If you want support against Putin, its time to clean house here. That means the U.S. SecState can’t be meeting with monsters like Tony Blair to give you an idea of how they need to behave or they need to be acting directly in this country’s interests not the interests of criminal oil companies.

      1. binky bear

        Kennan. George Kennan, architect of the policy of containment of communism, has a policy institute, etc.

      2. readerOfTeaLeaves

        IMVHO, Wolf Richter is a gift to the human race.
        And comments like this one: “The problem is these American empire dolts who need to be tossed from office and face ridicule at every opportunity…. suggest he has some damn smart readers.

        There are still, in US government (and banks, and IMF) people who have a messianic belief in ‘American exceptionalism’, who use ‘free markets’ as their camouflage for unending stupidity. They need to be tossed from office, as well as government sinecures, and ridiculed. The sooner, the better.

        Their illusions of grandeur and World Domination are leading us to ruin. But I suppose that it’s easier to bellow about Ukraine than actually pass a functioning transportation budget through Congress that would address America’s outdated infrastructure and falling bridges.**

        ** I was six miles south of that bridge on I-5 in Skagit Valley, Washington last year at the moment it collapsed, and it’s really made quite clear that all the idiocy in D.C. – including foreign policy delusions – is incredibly costly.

        My own state has collapsing bridges on major commercial routes between the US and Canada, while these idiots in D.C. want to hand over billions to get swindled in the Ukraine… WTF?!! Putin must be laughing his ass off at our stupidity.

        James Howard Kunstler refers to John Kerry as ‘a brain in search of a haircut’, and it’s hard to argue with a description like that in view of Richter’s post here.

    2. MaroonBulldog

      Yanukovych was the current kleptocrat from the Ukrainian East, being turned out of office by the once-and-future kleptocrats from the Ukrainian West. I guess you can say it was an “uprising,” but so was Mussolini’s March on Rome. However, that comparison is not entirely fair, to Mussolini. From all accounts, the West Ukrainian fascists have more in common with Hitler than will Mussolini.

      1. John Brown


        From all accounts, the West Ukrainian fascists have more in common with Hitler than will Mussolini.

        You mean, by Russian propaganda accounts, right? Remember, mainstream Russian media (including all TV channels) are government-controlled. Basing your opinion on that is equivalent to believing Soviet propaganda. Do you have any facts that support your opinion?

        1. Synopticist

          People who read NC are not the sort of guys who get taken in by state propaganda, from whatever TV station.
          It’s no secret there are plenty of fascists within the Ukrainian Right Sector, which is now in government. Go find proof yourself.

    3. Fiver

      And when Ukraine’s independence is globalized into the turf as raw material for someone else to process, and the corruption is updated with some lawyers and systems guys, and a big PR budget, then in a downturn Ukraine finds itself Greeced, you will of course support a violent uprising, throw gasoline bombs on ordinary police, trash the entire public space, make an agreement with the legitimate President only to make an armed charge into it the next morning, knowing all the while your own dubious and/or unsavory leaders had made all manner of pledges, commitments, promises, plus so much hysterical hyperbole as certain to provoke a crisis?

      I thought not.

  6. The Dork of Cork

    @Dennis
    Absolute nonsense.
    The Anglos are using the Eastern European hatred of the Russians against them.

    You must try to think in multi -dimensions and to ask simple questions such as who benefits ???
    http://www.youtube.com/watch?v=TpQzYywTiO4

    The Poles will be caught in yet another pincer movement.
    Its almost painful to watch.
    A group of people who believe in the Rocky IV version of history.

    Watch for further inept and inexplicable behavior from the State department.
    They obviously have been told from somewhere to do stupid.

  7. Jackrabbit

    Yves, I was just thinking along these lines last night(!) Ukraine is likely to be a money-pit.

    I was thinking that aid will go to Russia (which can raise energy prices at will) and for western arms and western banks (which are already owed a substantial sum, apparently). But I hadn’t considered the corruption also.

    To neo-cons its all good. They advance their agenda with OPM (Other Peoples Money). What could go wrong?/snark

    1. Jackrabbit

      PS I am as much for self-determination and democracy as anyone. But unless there is a quick and dramatic change in US and EU, that OPM is likely to come from greater austerity and/or increased burden on our children and grandchildren – not from wealthy, empire-building neo-cons.

      And there are other risks beside the potential financial cost.

      When historians look back to this time, I think they will dub it: The Age of the Clusterf*ck

  8. BondsOfSteel

    Hmm. Maybe we should send them billions in compact florescent bulbs and wind turbines instead. Reducing their gas bill is the same as reducing global carbon emissions….

    It doesn’t matter if the bulbs get stolen as long as they get used.

  9. MaroonBulldog

    $1 billion in foreign aid to the Ukraine will be only stolen. Because it’s meant to be. Because it’s a bribe or payoff to someone, not disinterested altruism intended to do general good. The politician who extends the aid has already figured out whose fingers those stolen dollars will pass through and finally end up in as they cycle their way back to in the U.S, where they will actually buy something. That’s always been the point of extending foreign aid. Nothing new here.

  10. Synopticist

    “Transparency International ranked the Ukraine as one of the most corrupt countries on earth, in 144th place out of the 175 countries on its Corruption Perception Index, an honor it shares with five other cesspools of corruption of the same rank, including Nigeria.”

    Wow. I knew it was corrupt, but I didn’t realise it was THAT bad.

    This whole thing stinks worse everyday. There were elections scheduled for next year, couldn’t they have waited? Now we’ll end up on the hook for their bad loans as well, which the Russians were about to pay. Just so the R2P crowd and the neo-con holdouts could punish Putin for blocking the the US in Syria.

    1. readerOfTeaLeaves

      Just so the R2P crowd and the neo-con holdouts could punish Putin for blocking the the US in Syria.
      All the best sources that I can find time to scour come to this very conclusion.
      The pettiness and juvenile egoism of these people is embarrassing. Also, dangerous.

  11. Chauncey Gardiner

    A second listen to the infamous “Eff the EU!” recording here (presumably courtesy of the NSA’s Russian counterpart, but could be someone else): http://www.economicpolicyjournal.com/2014/03/an-important-second-listen-to-f-k-eu.html

    Setting aside Asst Secretary Nuland’s poorly chosen comment and her personal style, and keeping in mind that this conversation occurred over a month ago, I was struck by the quavering voice of the U.S. ambassador to Ukraine.

    Like so many other people today, the governance and current situation in which the people of Ukraine find themselves seem very sad to me. The behavior of Russia’s Putin admin, USG reps, and Bundesbank-ECB-IMF remind me of organized crime families in Coppola’s film “The Godfather”. Wonder why? … Why are relatively effective, relatively noncorrupt governments that serve the majority of those governed so difficult to come by almost everywhere?

    Based on very limited reading I have been able to devote to this subject, I do not find Yatsniuk objectionable. Although talk is cheap, he at least positions himself as supportive of meaningful structural reforms that would appear to be beneficial to the Ukrainian people. However, I am also mindful that all this is occurring against a backdrop where the overriding short term interest of those in the West seems to be in preventing a debt default… any default. Again, it is important to ask Why this is so? Is the global financial system really that fragile?

    I appreciate Synopticist’s comment above and especially his last sentence.

    I hope Danilishin’s suggestions mentioned in the post are implemented.

    1. Banger

      I always recommend that people watch the Godfather to understand the way politics actually works. It isn’t just Italians that pursue power and money and are willing to kill many people to do so. The essence of the USG changed gradually. The Godfather and a few other movies portray the way power operates and has always operated. I always recommend Thucydides and Livy as two guys who like to tell the truth they described politics as it is without all the pious BS that Americans seem to hunger for. We have had brief periods of fairly benign rule but that period is long gone.

      1. j gibbs

        I think it began changing in 1791, when they pushed through the Constitution and Hamilton’s financial scheme to enrich speculators in Revolutionary war debt, while taxing alcohol produced by farmers to service the resulting bonded debt. It has been all down hill from there.

  12. Banger

    This situation is one big pile of stinking excrement with wall-to-wall lies on all sides. At least Putin isn’t as obnoxious as Kerry who I’m glad I didn’t vote for (sorry, I just couldn’t).

    1. Synopticist

      I expect wall-to-wall lies from the Russians, but I thought we were smarter than that.

      The only heartening thing is reading the comments on the MSM articles about the Ukraine. People are starting to see through the BS. Same as Syria.

  13. Thor's Hammer

    Is Putin a Russian nationalist or simply chief thug? Did Obama facilitate the largest theft of wealth in the history of the world from the underclasses of the USA, or did he merely continue the policies of George bush? Small minded humans play games while the fruits of “progress” destroy the biosphere that is our only home.

    So what is at stake in this game? For Russia it is the loss of the Ukraine as a buffer against the Western alliance of IMF banksters and militarists, an eventual NATO chain of missiles on very short launch triggers aimed against the heartland, the curtailment of its natural gas pipeline system to its primary markets, and the loss of its only all-season naval access to the Middle East and beyond.

    For the USA it is a setback in the plan to encircle the Bear with a ring of “defensive” missiles and checkmate Russian power, another failure (like the one in Syria) to break their monopoly on natural gas supplies to Europe, no return on the 5 billion dollars invested in destabilization, and the loss of a back door pathway to channel aid into the bankster laundromat.

    1. Chauncey Gardiner

      Re: … “Small minded humans play games while the fruits of “progress” destroy the biosphere that is our only home.”

      Thank you for this, Thor. Your well considered second and third paragraphs seem irrelevant when considered in this context.

    2. Fiver

      Mr. Thor,

      Good points. I would like to toss in Ukraine as an asset in itself once it’s been pole-axed by the IMF – remember the Chevron sign at Ms Nuland’s speech to the Press Club. Chevron and Exxon Mobil are already in. Other resources as well. More importantly, Ukraine is a major food-producer. And of course, a lot of the industry in the East of Ukraine is directed to Russian markets, military in particular. Ukraine in a mess hardly makes it worthless. In that sense, I’m inclined to believe Putin’s already lost, i.e., at best he keeps de minimus.

      But it’s also Putin’s allies that are in peril – Iran, Syria, Hezbollah. Putin knows he can’t go to war, same as Obama. But the entire dynamic has shifted. US and Israel win big time. I’m half-inclined to think it was a trap and Putin tripped it – by moving, he destroyed, in PR-world, his legitimacy, and everybody in the West lives in PR-world. This is the most reckless stunt the neocons have pulled yet, and they’ve mostly won. I fear they are mad, and will not stop until they go too far and either Russia or China panics, or the entire globe eventually erupts. Suicide by hate.

      1. readerOfTeaLeaves

        This is the most reckless stunt the neocons have pulled yet, and they’ve mostly won. I fear they are mad, and will not stop until they go too far and either Russia or China panics, or the entire globe eventually erupts. Suicide by hate.

        I doubt any of us actually knows whether Putin thinks he can, or can’t, go to war. To assume that he doesn’t think he can go to war strikes me as sheer stupidity. (Sorry to be so frank.)

        Have you never read about the events leading up to WWI in 1914?! The Germans thought they’d win the war within six weeks. Four years and too much trench warfare later, the world as they knew it was over.

        Assuming that you can predict how things will play out is a very dicey proposition, and the neocons excel at this kind of stupidity.

        The US neocons and R2P types need to be turfed out of government and throughly discredited.

  14. kimsarah

    Sorry, but the banks and our leaders have only themselves to blame if good-hearted souls like me are a tad cynical at anything that comes out of their mouths. Remember Hank Paulson.
    This too looks like a rat and smells like one. Big transfers of money will be involved, as well as the grand push for worldwide fracking, which has already started.
    The good thing is, many more eyes will be watching this time.

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