Poroshenko Makes Battle of Donetsk Airport Precondition for New $50 Billion Bailout – Ukrainians Repelled in the Battle of Davos

Yves here. The machinations over the next round of funding in Ukraine are wild. No one, particularly the US,  wants to fund Ukraine and debt default looks likely, yet  Ukrainian President Petro Poroshenko is demanding a huge amount of additional funds.  Soros is trying to end run the IMF, albeit with not much success so far.

By John Helmer, the longest continuously serving foreign correspondent in Russia, and the only western journalist to direct his own bureau independent of single national or commercial ties. Helmer has also been a professor of political science, and an advisor to government heads in Greece, the United States, and Asia. He is the first and only member of a US presidential administration (Jimmy Carter) to establish himself in Russia. Originally published at Dances with Bears

Troika Poroshenko

Ukrainian President Petro Poroshenko has told the International Monetary Fund (IMF) that his government cannot raise bilateral financing from the European Union (EU) or the NATO allies, and now requires $50 billion, triple the $17 billion agreed with the IMF last April.

At a meeting on Wednesday in Davos, Switzerland, with an IMF delegation headed by managing director Christine Lagarde (lead image), Poroshenko, his finance minister, Natalie Jaresko (2nd from left) and National Bank of Ukraine Governor Valeriya Gontareva (1st left), also disclosed that Kiev will default on repayment of its sovereign bonds unless there is an immediate agreement from the US-based Franklin Templeton group and other bondholders to accept a moratorium on their coupon payments and postponement of bond maturities for several years.

Lagarde announced that the terms of the current IMF staff mission in Kiev, which arrived on January 8 under former Bulgarian finance official Nikolai Gueorguiev, should now be revised.

Gueorguiev had been planning to return to Washington on January 29. His technical report estimating the Ukrainian government’s cashflow, liabilities, repayment shortfall, and solvency was due to be submitted to the IMF board in early February; it must now be redrafted. “We will consult with the IMF Executive Board on the authorities’ request,” the IMF quoted Lagarde as saying. “Following the Executive Board’s agreement to proceed, the Fund mission currently in Kyiv would begin [sic] discussing the policy program underpinning the authorities’ request.” IMF sources admit that Gueorguiev will be staying in Kiev into February. Gueorguiev refuses to respond to emailed questions.

In mid-December the IMF admitted its money for Ukraine under the Stand-By Arrangement (SBA) of last May had been suspended until “technical discussions” were followed by “policy discussions”. Altogether, converting IMF Special Drawing Rights (SDRs) into US dollars, about $6 billion in three tranches have been withheld since last July. Last month, Ukrainian Prime Minister Arseny Yatseniuk called for an unconditional cash grant of $15 billion. This was not accepted in the discussions conducted by Gueorguiev, according to Fund insiders. For the full story, read this.

In December, William Murray, Lagarde’s spokesman, insisted that if Ukraine wanted extra money without conditions, it had to get it from “the donor community”. Lagarde and Poroshenko have now agreed to reopen “policy discussions” on who the donors might be.

rada poroshenkoSources close to the IMF board in Washington reveal fresh dismay at the loss of Poroshenko’s power to meet the IMF’s loan conditions. The sources say this is indicated by Poroshenko’s appointment last week of Stepan Kubiv (right foreground). He is now in charge of promoting the IMF loan conditions through the Verkhovna Rada. Kubiv, whose controversial career as a banker in western Ukraine, was ended by

Polish banking authorities, headed the National Bank of Ukraine between the ouster of President Victor Yanukovich last February, and the election of Poroshenko at the end of May. Kubiv’s record can be read here.

Gontareva was Poroshenko’s replacement for Kubiv. Pictured wearing fur cuffs at the meeting with Lagarde, Gontareva has been under attack in the Ukrainian press and parliament for incompetent handling of the foreign exchange rate, which has sunk in black market trading to 20UAH to the US dollar. The official rate on December 1 was 15.06. Since then Gontareva has been under pressure from several factions of the Verkhovna Rada to resign. With the stress now physically visible, Gontareva has told parliament the hryvnia will continue to fall until the IMF agrees to triple the bailout. A Kiev district court has ordered prosecutors to investigate Gontareva’s currency interventions for alleged corruption.

In London Neil Buckley, a Financial Times reporter, claims Lagarde has said: “I will propose to support it”, meaning the triple bailout. According to the IMF, Lagarde supports taking the proposal to the Fund board, no more. Buckley has tweeted the advice that “bondholders shd be flexible”, and that the triple bailout will “help fend off Russia’s attempts to create financial havoc.”

Jaresko has issued her own communique, claiming the $50 billion “Extended Fund Facility” (EFF) is “for the next four years , which will allow Ukraine to return to economic growth , to restore an adequate level of foreign exchange reserves and to ensure economic and financial stability in the future.” She acknowledged the Finance Ministry is “consulting with the owners of Ukrainian sovereign debt to improve medium-term fiscal stability. As soon as arrangements could [sic] be achieved with the IMF , the Ukrainian government will take further steps in consultations with its creditors.”

Until today Jaresko has insisted the government in Kiev would not default on its bonds. She is now making the triple bailout a precondition for a deal with bondholders. After meeting Lagarde, Jaresko claimed foggily: “The markets expect this step. They should be welcomed to accept it.” Jaresko’s record can be followed here.

Nathan-SheetsThe senior US official in charge of saving Ukraine from financial collapse, Nathan Sheets (right), a Treasury undersecretary, on his visit to Kiev last week, described US terms as more stringent than the State Department and White House have been broadcasting. According to Sheets, the US will hold on to its loan guarantee for Ukraine of $1 billion until Poroshenko can meet the IMF conditions. The Treasury is promising another $1 billion in loan guarantee by year’s end if the Ukrainians can demonstrate good behaviour while on parole. “As part of the international effort, the United States intends to provide a $1 billion loan guarantee to the Government of Ukraine in the first half of 2015, provided Ukraine remains on-track with the reform program it has agreed with the International Monetary Fund (IMF). If Ukraine continues making concrete progress on its reform agenda and if conditions warrant, the U.S. Administration will be willing, working with Congress, to provide an additional $1 billion loan guarantee in late 2015″.

The day before he met with Sheets, the Ukrainian Minister of Economic Development Aivaras Abromavicius (below right) reported that he had asked George Soros (left) for advice on tripling the bailout. Soros told him to get the money from the EU and avoid the IMF.

Abromavicius-Soros

 

Soros has called for intensifying the war with Russia and removing the IMF’s reform and repayability conditions for the bailout. “Since Ukraine has had a poor track record with previous IMF programs, the official lenders insisted that Ukraine should receive assistance only as a reward for clear evidence of deep structural reform, not as an inducement to undertake these reforms… This perspective needs to be altered.”

Soros told Kiev to sidestep the IMF terms and conditions. He is proposing to raise “ the large unused borrowing capacity of the EU itself and find other unorthodox sources to be able to offer Ukraine a larger financial package than the one currently contemplated.” Soros counts $64.3 billion of unused EU funds available for the Ukrainians to spend. “[They] are currently limited to EU member states but could be used to support Ukraine by modifying their respective regulations by a qualified majority upon a proposal by the European Commission.” An IMF rubber-stamp should be preserved, according to the Soros plan: “[the Fund] would remain in charge of actual disbursements, so there would be no loss of control.”

Soros has also proposed avoiding a bond default by asking the mostly American bondholders to accept a stretch-out of their paper maturities in exchange for higher interest rates and larger coupon payments to be covered by the extra cash he thinks the EU should stump up.

Instead of defaulting on the $3 billion bond the Ukraine owes for repayment to Russia this year, Soros says the Kremlin should be given an ultimatum – either accept rescheduling, or if not, the bond contract should be repudiated. “Russia may be willing to reschedule the payments by Ukraine on the bond voluntarily in order to earn favorable points for an eventual relaxation of the sanctions against it. Alternatively, the bond may be classified as government-to-government debt, restructured by the group of nations officially called the Paris Club, in order to insulate the rest of Ukrainian bonds from their cross-default provisions.”

davosIn Kiev on January 15 Poroshenko and Soros agreed to discuss his plan once more in Davos. Sources in Davos claim Soros was represented at today’s meeting of Ukrainian and IMF officials, sitting on the Ukrainian side. Accompanying Lagarde were Gilles Bauche, a veteran French Treasury operative, and Gerry Rice, head of Communications at the IMF. Lagarde’s office refuses to identify the figure with the military crewcut in the foreground (right).

So far, the European governments are unwilling to support the Soros proposals. They are insisting the terms for a bailout must be negotiated with the IMF, and voted by the board. The Polish Prime Minister, Ewa Kopacz – just four months into her term, with an election due in October — has just announced a Polish government loan of €100 million to Ukraine. The small print restricts the payout to instalments of no larger than €10 million per annum over a decade, with performance conditions besides. The announcement is unpopular with Polish voters.

polish blogThe Polish blog says: “ We have no money to save the Polish coal industry. 100 million Euro for Ukraine? No problem!”

Russian sources believe Poroshenko and Yatseniuk have calculated that the escalation of fighting along the line of contact in eastern Ukraine, and at Donetsk, would improve their international bargaining position, win or lose. The loss has proved more severe than expected.

After two weeks of silence from the State Department during the arms buildup on both sides of the line, the Department briefer announced yesterday that the Russians were to blame. “There has been… an increase in separatist violence, including renewed attacks on the Donetsk airport in recent days, and separatist seizures of more territory. We’ve also seen reports that two tactical battalions – Russian tactical – Russia has moved two tactical battalions into Ukraine. I don’t have additional information or independent confirmation of that.”

The defeat of the Ukrainian Army at Donetsk airport has come after days of artillery bombardment, aerial bombing, and an attempted breakthrough by the Army’s 93rd Mechanized Brigade to recover the New Terminal which was lost on Saturday.

sh

 

Colonel Oleg Mikats, the brigade commander, has been captured (below left, before; after, right front). His unit, which has a nominal strength of 3,000, has been destroyed. A large stock of US arms, ammunition and explosives has been captured from the Ukrainian Army and displayed on Novorussian media.

dnr

 

The Novorussian media are predicting that if the Ukrainian Air force continues to bomb civilian targets in Donetsk and Lugansk from bombers, the “Novorussian air force” will rise to stop them. The Special Monitoring Mission (SMM) of the Organization for Security and Cooperation in Europe (OSCE), has been unable to report on the airport battle.

From Donetsk city the latest SMM report says it “observed substantial damage of civilian infrastructure in “DPR”-controlled Donetsk city and surroundings as a result of recent intensified shelling over the last 48 hours. In the DPR-controlled districts of Kyivski (8 km north-west of Donetsk), Kirovskyi (7 km south-west of Donetsk), Petroveski (9 km south-west of Donetsk) and Voroshilovski (1 km north of Donetsk) the SMM observed damage to civilian buildings caused by recent shelling. The SMM also observed a crater with remnants of what appeared to be a (Uragan) multiple launch rocket system that had resulted in damage to a number of buildings… Damage to civilian infrastructure due to what appeared to be Smerch multiple rocket launchers (300mm) and Grad (122mm) rocket strikes was observed by the SMM. Most of the damage consisted of broken windows, felled trees and downed power lines.”

Before the defeat, the Financial Times described the battle for Donetsk airport as strategic. “Losing it would be a crushing blow to Ukrainian morale”, the newspaper has declared. In his plan, Soros says, the military operations demonstrate that “Europe needs to wake up and recognize that it is under attack from Russia.”

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108 comments

    1. OIFVet

      There is a reason why I’ve been harping on about Soros. His “philanthropy” is nothing more than a supporting effort for the neocolonial policies of the West, a way to finance neolibcon propaganda and recruit local compradors, who then sell off their countries to corporate and financier vultures like…Soros.

      1. PWW

        Soros is angling for a way to short something and profit from the misery of others.

        Also, one cannot believe anything the US government says anymore. You can’t actually trust them to tell you the sky is blue.

    2. Jim Haygood

      ‘Gontareva has told parliament the hryvnia will continue to fall until the IMF agrees to triple the bailout.’

      Soros breaks the Bank of Ukraine.

      ‘Give us $50 billion, or we’ll shoot this puppy.’

    3. NotTimothyGeithner

      Money, yes men, age, naked greed, and constant criticism from gop propaganda probably lead to a a person losing their mind. After a time, a target probably just assumes all criticism is the same. Personally, I know jack about Soros except he is a lizard person from Rigel VII (snark), so I tend to zone out when Soros’ name comes up.

      Despite his funding of issues, I might like the guy is still a naked capitalist. Who knows what his exposure is?

    4. Llewelyn Moss

      Isn’t it time for Soros to retire and try to spend a few of his billions before he kicks the bait bucket? Is the real purpose of life to die with the most loot? It gets to the point when the term “Morbidly Rich” is not just a cute phrase.

    5. Justaprol

      That’s a good question. Why is he so deeply invested (both financially and morally) in these hideous, Hobbsian “regime change” and population suppression , neo-colonial polices? – and make no mistake, he’s one of the foremost drivers of them. He actively and vigorously lobbies for them.. Seems strange and disturbing to me. His motives are murky. The only answer I can come up with is that finance capitalism really is the ultra reactionary force that Marxist economists and cultural critics always warned us of. It reigns supreme in the capitalist order today. A 20th century Marxist theorist (Dimitrov) held that Fascism itself is nothing more or less than the rule of finance capital. It certainly is looking that way to me. Soros is merely obeying the powerful logic inherent in who he is and what he does (a Brahmin of the finance sector) and the end results are predictable.

      1. Rosario

        You have nailed it. Been saying that for a while now. This stuff was pretty clearly understood 150 years ago. Discrediting and dismissing Marxism has worked so well that economists are having to relearn the many inevitable formulations of Capitalism that Marx had warned us about. Finance Capitalism is the end stage, the direct management of Capital and Capital alone through debt instruments, a rentiers dream. Why invest in anything when one can tap into a direct stream of profit?

      2. wbgonne

        Outstanding comment. Can you recommend anything that Dimitrov wrote, hopefully something intelligible to a layman?

  1. Jim Haygood

    ‘The defeat of the Ukrainian Army at Donetsk airport has come after an attempted breakthrough by the Army’s 93rd Mechanized Brigade to recover the New Terminal which was lost on Saturday.’

    Yah, the Ukies attempted to invade through the baggage claim, disguising themselves in pet carriers. But the dastardly Russian rebels threw the conveyor belt into reverse.

    How’re you gonna win a military victory, when your advisers are the NATO clown posse who just lost a 14-year quagmire in Afghanistan?

    Chief of staff and Commander of the Ukrainian armed forces Viktor Muzhenko will take part in a meeting of the NATO Military Committee while visiting the NATO headquarters in Brussels on January 21-22.

    Apart from this, the Ukrainian delegation is expected to attend a number of working meetings to address practical aspects of military cooperation, in particular, with the heads of the NATO and EU military committees, members of the Allied Command Operations, the commander of the NATO Special Operations Forces (SOF), and the defense ministers of the alliance’s member-states and partners, he said.

    http://en.interfax.com.ua/news/general/245839.html

    None of this toy-soldiers silliness is going to win the Ukies a $50 billion EFF (Extended Fubar Facility).

    1. Carolinian

      George Orwell–only off by thirty years.

      So now we have it. Russia occupied Germany, the Ukraine liberated Auschwitz and soon we will be told that Stalin ordered the Holocaust, bombed Dresden and dropped nuclear devices on Japan. Then just call Putin the New Stalin and, voilà! We will be back to the good old “western civilization” against the “Asiatic Mongol hordes of Russia”.

      http://vineyardsaker.blogspot.com/2015/01/oh-how-much-these-poles-hate-russia.html

      Given the civilizational necessity of defeating Russia the Europoodles and the IMF (which includes us, does it not?) may yet pony up.

      1. cwaltz

        Oh yes, the IMF most definitely includes us. As a matter of fact the funding commitment is based on the country’s economic size as compared to other global economies. Guess who has the controlling portion of shares of the IMF? Yep, the US.

        1. wbgonne

          So, are the neoliberals getting hoist on their own petards? Unable to escape the boondoggle they manufactured? But then, according to the (excellent) article, the U.S. is balking at forking over more dough. So are the neolibs cutting their losses? I can’t tell. The picture looks confused but maybe I’m missing something.

    2. Yves Smith Post author

      I forget which site I saw it on, probably Vineyard of the Saker, but the author (a guest post type) said the airport was a ridiculous object from a military standpoint (as in low value) and would also be very hard to take over (well fortified) and the Ukrainians were sure to lose. Looks like that call was correct.

  2. c1ue

    Does anyone seriously think the Ukraine isn’t on a path towards failed state?
    Another victory for democracy!

    1. Brindle

      Obama has quite a history of creating or enabling failed states during his stewardship: Honduras, Syria, Libya Ukraine, Mexico, Afghanistan, Yemen—just off the top of my head.

    2. pdlane

      Re: “Does anyone seriously think the Ukraine isn’t on a path towards failed state?”
      Past tense… Ukraine has been a failed state for years.

  3. Rosario

    This model was perfected in Africa. Unfortunately for the privileged of the European world they have bled that continent dry. As with Africa’s “elected” heads of state, Poroshenko is performing his role beautifully. The tragedy of all this is how well it works.

  4. ambrit

    That $50 billion figure just jumps out at you. Why so much? Are the Ukie Gangstas asking for the moon in order to ‘settle’ for less? How many people living in the Donbas region? $50 billion might be enough to pay all the Russophiles sufficient to get them to move to Russia proper and start anew. (These are neo-con Capitalists for Keynes sake. Don’t they understand the proper uses of money?)
    On a more serious note, does anyone know what percentage of the Ukraines’ budget disappeared ‘down the rabbit hole’ on the neos’ watch? Multiply this $50 billion by that percentage and you get some eye opening ‘service charges.’

    1. Yonatan

      All the money given so far has just disappeared. Ukraine owes China $3 billion in grain from a deal established well before the coup. Russia has a $3 billion loan with a clause allowing for immediate repayment in full should Ukraine’s debt exceed 60% of GDP (which happened months ago). Gazprom has issued Ukraine a bill for $2.4 billion for the next tranche of gas to be supplied. The deal allows for price renegotiation, which give Ukraine’s murderous acts isn’t going to allow for good will. So there is close to $10 billion before we add in the costs for US weapons, US military advisers, PMC advisers, oligarch’s private armies, and general looting by oligarchs.

      I think the EU has loaned/given 500 million euro supposedly for rebuilding infrastructure in the east. That probably was expended on Yatsenyuk’s infamous border wall/fence. I know a lot of money is disappearing through the classic pricing scam (buy cheap cr*p, sell as best quality, top price) for military equipment during war. I think Kolomoisky was involved in some deal supplying bullet proof vests and also the supply of fuel for the military.

      Ukraine is a bottomless pit of corruption – probably on a TBTF scale. How about them fully accounting for all the money given already before any further loans/gifts are even considered?

      1. Vatch

        Yonatan, I agree with you about this:

        How about them fully accounting for all the money given already before any further loans/gifts are even considered?

        The change of government last winter was supposed to be an improvement, and I think it was (but maybe I’m wrong). Certainly they should account for the money that was loaned or donated since Yanukovych was removed from office.

        1. OIFVet

          “The change of government”? Nice, PG-rated Newspeak euphemism for a coup d’etat. As far as improvements, I am sure Ukrainians are thrilled about the general improvement in welfare brought by a civil war and IMF-imposed austerity. The top 1% them, in any case. That’s why no accounting will ever be given, we don’t want to expose our freedom- loving Ukie oligarchs and political elites as the democracy-washed thieving clones of Yanukovych that they really are. Didn’t Porky serve in Yanukovych’s government at one point? A Ukie version of hope and change, complete with a military quagmire, rewriting of history, and a heaping serving of fascist eugenics applied to them subhuman Moskals. Just ask our man Yats.

          1. Vatch

            Things got worse because of war, not because of the government, which was triggered by Russia’s seizure of Crimea.

            1. OIFVet

              There would have been no war had there been no violent coup using the muscle of a bunch of goose-stepping Bandera-lovers. Throw in the Banderites murder of ethnic Russians in Odessa, that sure won the easterners over. They can add two and two, unlike sophisticated western liberuls.

              As for Crimea, it wasn’t ceized, it voted to join Russia as is their human and legal right. Something they wouldn’t have done had not the coup been instigated by our libcons.

              And what, prey tell, is the difference between corrupt oligarchs affiliated with Russia, and corrupt oligarchs affiliated with the US? Is it that we are, ummm, exceptional, thus making our corrupt proxies an authomatic improvement over their predecessors? Cause frankly that’s the only possible “improvement” brought about by “the change of government”, and that’s only from the western POV and that of the local comprador elites.

              Ukraine: where the coup government shelling hospitals and schools is considered an improvement.

              1. Vatch

                The Maidan uprising was nonviolent, until Yanukovych’s thugs got into the act starting in December, 2013.

                The Crimean referendum (more than 96% in favor of joining Russia) was a farce almost worthy of North Korea.

                Regarding corrupt oligarchs: you’re drifting. I oppose corrupt oligarchs everywhere. That’s one of the reasons I agree with Yonatan’s support for a full accounting of how the money that was loaned or given to Ukraine was spent.

                1. OIFVet

                  Yanukovych’s thugs?? Obama’s thugs forcefully evicted Occupy but he wasn’t violently overthrown, much less agree to early elections like Yanukovych did. Then there is the question of whose thugs did what, as the tape of Pyat and Ashton reveals that the violence was likely instigated by Maidanites themselves. Which would account for the junta’s refusal to investigate what happened.
                  Crimea: so apparently its overwhelmingly Russian population voting to join Russia is a farce because they voted in a way the West in general an Vatch in particular disapprove of? OK then.
                  And last, what kind of principled person opposes oligarchs yet considers a coup by them legitimate and an “improvement”? Couldn’t they have waited for a few months for the early elections?

                  1. Vatch

                    I don’t think that what happened in Ukraine was a coup by the oligarchs. The Ukrainian people wanted Yanukovych out. If he hadn’t escalated the tension starting in December, 2013, he probably would have remained in office until the election.

                    The tape to which you refer is about the sniper shootings a couple of months after Yanukovych’s thugs began the violence.

                    As for Obama’s thugs, you’re drifting again. I’m no supporter of Obama.

                    1. OIFVet

                      The people wanted, the people got. After all, Nuland wanted Yats because that’s what the people wanted, right? And don’t play coy, you know exactly what the point is about Obama and Occupy. It’s just that it doesn’t fit your fairy tale narrative of the noble Ukie Olehs overthrowing a tyrant. They didn’t. It was oligarchs who overthrew him, and now they are running rampant with their own fascist militias while the Ukie Olehs are even worse off now that they are drafted and thrown into the meat grinder so that Porky et al. can demonstrate their fealty and Russophobia to Washington. Again, how is that an effing improvement?

                    2. James Levy

                      They had a deal for early elections. He was on his way out. Suddenly, that deal was revoked and the elected government (no matter how crappy) overthrown. Please try to explain away why that happened and how Russia should have responded to that action.

                    3. Vatch

                      I’m not playing coy about anything. You have a persistence tendency to shift the discussion to other topics, and I’m not going to be sucked in by that with your irrelevant references to the shameful want that Occupy Wallstreet was treated.

                      War makes things worse. Putin started this by militarily seizing Crimea in February, 2014, and by holding a farcical fraudulent referendum in March. That angered many Ukrainians and the Ukrainian government, and it inspired the Donbas Ukrainians to rebel. Both sides became more radicalized. There would be no war in Ukraine right now if Putin hadn’t become greedy. He already had access to Crimea for the Russian navy, but that wasn’t enough for him. If this hadn’t happened, there would still be severe problems, but the scale of those problems would be nowhere near what exists now.

                    4. zapster

                      They were very close to elections anyway. They didn’t want him out bad enough to invite Nazi terrorists in to take him out. The original, *real* protesters that there were there before Nuland’s thugs showed up have made *public statements* to that effect. Many Ukrainians are even now in sympathy with NR, and in fact, secession sentiment is growing all over Ukraine because of the fact that the Banderas are running a terror campaign all over it, with slaughter of civilians, kidnapping of teenage girls and women, and numerous dead bodies appearing in the woods. And these are *not* in rebel-held cities, but *Ukrainian* ones. This was NOT what the original protesters signed on for. This was a US regime-change operation, following the now extremely well-known pattern used all over the world for decades now. Badly bungled this time, and therefore even easier to spot.

                      And I notice you omit any mention of how the *Crimeans* felt about that so called “invasion” which never happened. That, also, is readily available in hundreds of videos, blog posts, etc. There was no “invasion.” The Russian soldiers legally stationed on the bases in Crimea simply did what they were asked to do–protect the people’s referendum. Nobody in their right mind would tolerate what Kiev did to them. They resisted an illegal coup. Heck, nobody in their right mind would have taken the IMF’s insane offer, either. Yanukovich was set up. He couldn’t have taken it without losing his job anyway. It was draconian even by past IMF standards. And, of course, the IMF continues to put Poroshenko in an impossible position. He’s being asked to destroy the lives of Ukrainians to pay for loans that will never help them in any way, pushed to prosecute a war they can’t hope to win, with people by now so rebellious that they’re fleeing to Russia whether they’re Russian or not.

                      This thing is the biggest f*up the US has perpetrated yet, aided and abetted by warring oligarchs and a clan of Nazi hillbillies that have evidently been festering in the Carpathians since WWII. Whoever writes this screenplay is gonna make out like a bandit.

                    5. OIFVet

                      Me shifting topics? I am making a point how ridiculous the propaganda is in holding Yanukovych to a higher standard than our own effed up system. And you know that so that’s why I said you are playing coy. For all your incessant posting about the need to vote, you support a coup that violently overthrew the elected government of a country, a government elected in what outside monitors proclaimed to be the most free elections held in Ukraine, EVAH, and a government that had already agreed to early elections. And then you have to also claim that the freely conducted referendum in Crimea was a a sham. So elections in the US=good, elections and referendum in Ukraine and Crimea=no good. We needs us a jackbooted rabble to effect a “change of government” with arms rather than with ballots. Are you a hypocrite or what?!

                2. Jackrabbit

                  We’ve been through this many times, Vatch.

                  – If it was just Yanukovych’s thugs, why has there not been any investigation?

                  – An Agreement for new elections and Amnesty was reached to quell the crisis but was torn up (within 48 hours) leading Yanukovych to flee the country. Yanukovych had made a deal rather than take a hard line. That demoralised the security services and meant that he couldn’t rely on them when he needed them.

                  – The Crimean election was boycotted by groups that knew they were going to lose. They intended to make the result look suspicious.

                  1. Vatch

                    Yes, we’ve been over this before; you just haven’t convinced me.

                    The violence started out as just being perpetrated by Yanukovych’s thugs, and it escalated from there. There was violence on both sides. I don’t know whether there has been any investigation or not. If there hasn’t, I don’t know why.

                    The security services were demoralized because an agreement was torn up, so Yanukovych had to flee? That seems extremely lame.

                    The official turnout of the Crimean referendum was 83%. According to that figure, there was very little boycotting. I just don’t believe the result. I guess we disagree.

                    1. OIFVet

                      “That seems extremely lame.” It’s only what NYT reported that Jackrabbit refers to: http://www.nytimes.com/2015/01/04/world/europe/ukraine-leader-was-defeated-even-before-he-was-ousted.html?_r=0.

                      “Along with many other commanders, he believed that a tough response to protesters by Mr. Yanukovych in November or December could easily have cleared Kiev’s Independence Square, known as Maidan, the epicenter of the pro-European protest movement.

                      By February, however, it was too late.

                      The atmosphere was changing” in the elite police units, Mr. Khodakovsky said. “Everybody understood the government was not going to take decisive action. We understood that all the crimes we were going to commit clearing the square, in the last breath of the old government, would all be blamed on us.”

                      So first we have something (“tough response would have cleared the protesters”) that contradicts your assertion about Yanukovych escalating in late 2013, and then we have confirmation of Jackrabbit’s assertion about the plummeting morale of the security forces (after all he did read the article LOL). You gonna call the unofficial neolibcon propaganda arm liars or sumpthing’?

                      “I just don’t believe the result.” Compare the average salaries and pensions in Banderastan to those in Russia then, while not forgetting the rather strong feelings ethnic Russians have at the very mention of “Mother Russia”. Ought to clear up any confusion, at least in minds free of lifelong russophobia. These are feelings much deeper then empty-headed USian chest thumping and “USA! USA!” cheerleading.

                    2. sid_finster

                      There has been no investigation, in fact evidence was immediately destroyed after the junta took power, and know full well why.

                    3. sid_finster

                      I lived in Ukraine for many years. I speak Russian and can read, write and understand Ukrainian well enough to practice law in that language.

                      No one that I know from Crimea was anything less that ecstatic over being annexed by Russia. Moreover, the NYT (no friend of Russia or Putin)tried and could not find anyone opposed to annexation, either. In fact, 3/4 of the Ukrainian soldiers stationed there immediately signed up to join the Russian army.

                  2. hunkerdown

                    Yet we have scared, superstitious peasants over here approvingly and smarmily claiming that not voting doesn’t change anything…

                3. Veri

                  German ARD television has done a more in-depth investigation about who shot who at Maidan. A BBC news crew filmed sniper fire from Hotel Ukraine where the Banderistas where shooting Maidan protestors in the back. :The Ukr Coup Gov’t refuses to do any meaningful investigation and simply blame Poroshenko.

                  https://www.youtube.com/watch?v=xuJfXX0eYLY

                  You’re fantasy of Berkut/Yanukovych shooting protesters is?

                  DEAD. DEAD. DEAD!

                  Banderista thugs and killers shot Maidan protestors in the back. How typical.

              2. OIFVet

                Hey Vatch, meet the children of Donbass. Tell them what an improvement the “change of government” is and why this “change just had to be effected by force rather than through early elections. Vladislav, 13 years of age: “I lost my father and grandfather. They drove into our yard and then two shells fell. A shock wave hit the car, killing both of them instantly. I know the date exactly: August 14, 5:30 pm. I don’t understand politics. I only know that just recently, we all went together to the sea, swam and rode on a boat. Now all this will never happen again. Ever.”

                Nikita, 7 years of age: “Then we ate cake,” Nikita said. “It wasn’t a real cake, though – mum put jam over bread and said that this is a cake for the [birthday] celebration.”

                And on it goes. Because “Glory to the heroes, and to the heroes glory.” The “heroes” being those who shell the Moskal children, of course. Effing cowardly, murdering Banderite scum.

            2. EoinW

              Let me get this straight: Quebec’s announces a separatist referendum. Canada’s military attacks Quebec. But the blame for the violence is on France?

              1. Vatch

                If France first annexed a portion of Canada without the permission of the Canadian government, and if France also encouraged the Quebec separatists, then yes, France would be at least partly responsible the the events that followed. France did not do anything like that. Russia did.

                1. sid_finster

                  The difference is that the vast majority of the citizens of Crimea wanted to be annexed, just as the vast majority of the citizens of the eastern parts of Ukraine wish for something similar.

                  Kiev’s crimes in recent months have done nothing to further endear them to anyone not a rabid nationalist. And yes, in Ukraine, nationalist is a code word for Nazi.

        2. Vatch

          I have a question for OIFVet and Jackrabbit. Do you agree with Yonatan and me that there should be a full accounting of the funds that have been provided to the Ukrainians? That’s the topic of this thread.

          1. OIFVet

            The topic can change, as it did when you decided to whitewash the coup with the innocuous-sounding “change of government” Newspeak. But to answer your question: DUH!!!. Of course I want full accounting. But what we want and what we will get are always two completely different things. You will get this full accounting by the Ukies when they decide to conduct a full investigation of the Maidan shootings and when the Fed opens its books for a full audit. IOW, don’t hold your breath waiting for the Ukies to give you an accounting report certified by an independent authority.

  5. DJG

    Can anyone (besides The Onion) explain what U.S. interest is at stake here and why the U.S. should be involved at any level? This is a sinkhole.

    On a lighter note, at least the Greeks keep trying to pay. Somehow, the Ukrainians haven’t got that message.

    1. NotTimothyGeithner

      Permawar is always an issue. This probably started as a small group of neocons in the anything goes environment of D.C. As for Team O, they are still passed at how Putin stopped them from really screwing up in Syria (more so than they have) and Putin not taking a victory lap really rubbed salt in the wound. When the opportunity came for revenge, team O jumped at the chance. In the mean time the GOP and Democrats out to build a profile wanted to jump on Obama for being soft, escalating t he situation. Don’t forget the importance of defense contractors to this.

      As for a real-politik reason for the U.S. as a collective unit as opposed to smaller interests not letting a crisis go to waste, this country has a serious inferiority complex and constantly needs to have a kind of battle to justify our collective mental insecurity. Just look at the outrage over Tom Brady’s balls. Brady is a California kid playing America’s game in Massachusetts, communist heaven. Remember the book “Patriot Reign” about Belichick’s second year as a Pats head coach was written by a young black reprter with glorious dreadlocks given total access to Bill’s operation. Can you imagine how sports journalists who lament “thug culture” are still mad about that? Its a pretty neat read by the way. The videos of Manning messing with the balls were hailed as an example of his brilliance just a few years ago by the press of the heartland for American royalty. Americans need Putin, or all we would have is outrage over who has the biggest balls.

      Or discussions about when Adam Sandler stopped being funny despite the obvious answer which he was never funny his fans were just younger. We need these external threats.

      1. Left in Wisconsin

        Agreed on Adam Sandler.

        I’m not sure reality isn’t even scarier. It isn’t just MIC calling for permawar. Is it just me or have others noticed a ramping up of war fever among the regular people? Bitterness moving in a not good direction. You can’t watch tv for 3 minutes without a paid ad, PSA or local news celeb pitching the awesomeness of the troops and our thankfulness to them for saving our freedoms. And OMG does it play well in the trenches.

        Plus of course the political class is willing to pitch anything for votes. But I’m not sure I trust my man Scott Walker to say no when he’s told we need, we’ve run out of other options, to send the bombers off to Ukraine or Iran. But not to worry it’s all good.

        1. NotTimothyGeithner

          I think the calls for perma-war who are facing propaganda and rallying around their team in the case of the Obots especially are part of the inferiority complex. They know they are insignificant bugs, but instead of looking at the real enemy, they look for an outside boogey men and if a few poor kids from West Virginia die who cares? Some dumb ass white coal miner who abandoned Team Blue for Reagan?

          I expect Larry Willmore of the Nightly Show to be attacked by Obots in the near future for pointing out Obama’s awesome burns of the GOP to be a sign Obama doesn’t care. Its all because the Obots self worth is wrapped up in an untarnished image of Obama. They lack self worth and will lash out Wilmore as a “second rate has been unfit to polish Colbert’s turds.” They need to defend Obama from critics to avoid an actual look at Obama because they suffer from the inferiority complex endemic to this country.

          1. hunkerdown

            Isn’t that what American Exceptionalism is? A giant inferiority complex playing itself out through paranoid delusions and narcissistic personality disorder?

            (Well, it’s not a “disorder” if it’s part of the prevailing culture, according to WHO. Isn’t that convenient.)

      2. Brindle

        In “Gone Girl” lead character Amy Dunne nails the terrible Adam Sandler movies in her great “cool girls” rant:
        ” I drank canned beer watching Adam Sandler movies.

        1. NotTimothyGeithner

          Wow, I may need to watch this movie, but clearly, this alone would be grounds for divorce.

    2. Northeaster

      You didn’t read the latest NDAA Bill that passed? Tsk-Tsk. It’s in there, money for military expansion in both NATO and The Middle East expansion.

      Anyway, if anyone wants to watch the Ukraine get destroyed in near real time, just go to LiveLeaks.

      1. Llewelyn Moss

        NDAA, was that part of the November Cromnibus Spending Bill? I know they troweled a cool half $Trillion into Cromnibus for the Military Slush Fund without batting an eye lash.

    3. Generalfeldmarschall von Hindenburg

      Depends on who is defining US interests. Apparently, all non subservient regional powers are threats to US interests. It’s not enough to be capitalist. One must also genuflect toward American “leadership” like Germany and UK constantly do. Even the Romans didn’t demand this level of obeisance.

      1. NotTimothyGeithner

        As far as the Romans go, the Liberation Front of Judea or was it the Judea Liberation Front noted that the Romans built roads, schools, hospitals, and so forth and even made it safe for people to walk the streets at night.

      2. gordon

        Every Russian asset has to be owned by a shell company financed out of New York. Every Russian bank has to be affiliated to a NY bank. Every dividend cheque has to have a US zip code. Russian taxes must be charged but at a very low rate (even though they will be evaded) so that US tax is avoided. Russian standard of living and especially the educational level must be reduced (skilled labour will be imported by shell companies aforesaid). There must be no Russian armed forces. Russian political parties will be run out of K Street. Any other parties are terrorists.

    4. PWW

      Can anyone (besides The Onion) explain what U.S. interest is at stake here and why the U.S. should be involved at any level? This is a sinkhole.

      Simple.

      The MIC and the surveillance state needs to justify military outlays. Massive military hardware purchases, expensive advisors and “contractors” to “help” the Ukraine. Why help the Ukraine? To put into power people who will pillage the Ukraine on the behalf of outside financial interests. The third party brokers (government officials) are rewarded for their service after leaving office by those that are made to profit from the decisions, hence, the “revolving door.” Either in military contractors, “think tanks”, or the banks themselves. Condolezza Rice cannot ever offer up any value for DropBox, but she was given a job to signal to others who follow her in government service. The message is clear: “we’ll take care of you by using our connections to make sure you get a cushy golden parachute.”

      I guess you can sum it all up in the famous words Deep Throat told Woodward and Bernstein: “Follow the money.”

      In the case of Ukraine, its been an obvious desire of the USA to encircle Russia. Not surprised Russians are nervous given how many times they’ve been invaded from the West in the last 200 years. How many Americans know the USA had 18,000 troops in Russia in the 1920s?

  6. 6th-generation Texan

    Apparently the Colin Powell doctrine of “You break, you own it!” is no longer U.S. policy (if it ever really was).

    Does anybody have a clue what the actual neocon objectives were going into this monumental clusterfuck? The Afghanistan disaster exposed the vaunted “greatest military power on earth” as the proverbial paper tiger, and the Libya fiasco did likewise for NATO. Some suppose that the warmongering neocon morons wanted to draw Russia into a real shooting war with NATO; does anyone with a single firing synapse actually believe that the incompetent Western military could have lasted more than a few days/weeks against a credible first-world military power? Las Vegas wouldn’t even give odds on that happening given the track record of the last coupla decades….

    1. NotTimothyGeithner

      The neocons are a racist outfit. It may not be black and white like the colonial enterprises of the 19th century, but in Rome’s hey day, there was a sense of a civilized world and non-civilized world. It’s just come back as the scars of chattel slavery fade. Even Hitler had a rationale for an alliance with Japan despite Americans thinking of the Japanese as gold fish farmers doing an impression of a European power.

      Anyone outside the empire should be in awe of the Empire. This is partially the thought process. Dont forget the jokes about how backwards Russians were in the hey day of the Soviet Union.

    2. zapster

      Russia’s influence in Germany and EU in general was growing. Germany gets 40% of it’s gas from Russia. This is seen in DC as a threat to US hegemony. People were starting to *like* Putin.

      Of course, after America blows the most blatant coup attempt in history, everybody likes Putin even more now..

    3. EoinW

      The only one to listen to Powell was Putin. Which explains why he doesn’t want to own broken down Ukraine.

  7. plantman

    It sounds like most of the NC readers are struck by the delusional desperation of this Ukraine gambit which appears to be spinning out of control as we speak.

    From the article: “Russian sources believe Poroshenko and Yatseniuk have calculated that the escalation of fighting along the line of contact in eastern Ukraine, and at Donetsk, would improve their international bargaining position, win or lose. The loss has proved more severe than expected.”

    Is Soros actually exhorting these inexperienced maniacs to prosecute the battle with the rebels to ensure the repayment of loans and the opening up of the east to fracking etc??

    And what about the bondholders. Do they really they their chances of getting their money back will improve by tripling the amount of the loans?

    This is the wackiest deal I’ve ever seen! Soros is losing it.

    1. zapster

      Yeah, that’s what strikes me, too. There’s some sort of psychological hangup going on there, it seems, because it makes absolutely no sense from a financial, or really even a political pov. Unless State has simply “hired” Soros to push it’s agenda.

    2. EoinW

      Maybe it’s time to label Soros another neocon? Given the man’s wealth and not needing to make more money, is it not possible his motives are non-economical. From the neo con perspective, it’s a win/win situation. Either Russia sits quietly and loses face while the Novorussians are exterminated, or Russia is forced to intervene and the neocons will have the Cold(hot?) War they desire.

      Hopefully Russia can stay out while the novorussians win the war and the Ukraine collapses economically.

      I guess we see the West in its true colours. Take extra EU funds, that aren’t being given to Greeks so they can afford prescription medicine, and use it to kill Russian speaking Ukrainians. This is exactly what we’ve become – a cancer on the rest of the world. Bring on OUR economic collapse and the sooner the better!

  8. Synoia

    I have a question, because I’m confused:

    Apparently the US Federal Reserve can create dollars by crediting an account at the Fed. Theoretically it should also debit some other account.

    I read the Irish Reserve Bank was busy creating Euros, and the ECB only wanted to be notified — If so why don’t the Greeks do this to solve their Euro problem?

    and

    What is to stop Ukraine’s Reserve Bank crediting some Ukraine Reserve Bank Account account with $50 Billion?

    1. NotTimothyGeithner

      Because the Ukraine is on part with Disney World. World trade can be routed around Kiev. You need dollars in New York, Los Angeles, Chicago, and so forth. Mexico and Canada like dollars for this reason. Our arms industry needs dollars to pay workers and taxes. They want payments in dollars not Poroshenko chocolate. The U.S. doesn’t have limited options in trade. An embargo by Canada would amount to the Blue Jays having excuse for their past overpaid plays not making the playoffs once again.

      The Ukraine could do what you proposed, but who would take their money then?

      1. zapster

        And Ukraine has so badly trashed it’s productivity that they can’t survive on their own. It bombed it’s own coal mines, shut down it’s own factories, and is killing it’s own people. Huge numbers of non-russian men have walked off jobs and fled to Russia to avoid being turned into hamburger on the front. You can’t print money if your economy can’t grow for structural reasons. Waging a war on your own people at the behest of a foreign power qualifies.

        1. Synoia

          I didn’t write “print their own currency” or create some of their currency (deposit) in a bank account. I wrote, or intended to write, create a dollar balance in their reserve bank.

          1. NotTimothyGeithner

            The Ukraine isn’t the U.S. Those dollars would be deemed counterfeit by banks, insurers, shipping concerns, and so forth. The U.S. would have to say Ukraine can make our dollars. If Porshenko can print his own dollars, how soon before every MBA demands the same right? The activity of the MIC in the Ukraine is okay with Wall Street whoever as long as they expect to gain, but letting Poroshenko print U.S. dollars puts him in charge.

          2. cwaltz

            It seems that Ireland got permission from ECB- the European version of the Fed- to print. I don’t think the Ukrainians are going to get the same permission particularly if they can get us, through the IMF, to fund the jacked up mess. Hooray for our interference and attempts to install our lackeys!

            As Yves says, no one is anxious in today’s economic climate to throw money at Ukraine. Not the EU(who wants the IMF to fund), not the US(who has controlling interests of the IMF) and certainly not Russia now that they’ve lost control of broad swaths of the country and essentially has nothing to gain from keeping it “stable.”

      2. Synoia

        It would be payment in Dollars. It would not be Ukraine’s currency. There is no provenance on money, it is fungible (one dollar is as good as another).

        1. jonf

          If you are suggesting that Ukraine create dollars, whether by printing or computer, that would be illegal and counterfeit. The US could loan money to Ukraine but the chances of getting it paid back seems slim.

        2. zapster

          It would be payment in Dollars. It would not be Ukraine’s currency. There is no provenance on money, it is fungible (one dollar is as good as another).

          Well, not if they’re not produced by the US Treasury. Then it’s counterfeiting.
          What the Federal Reserve does is add money to reserve accounts denominated in dollars and debits the Treasury account where dollars essentially originate (ignoring all the machinations of open market ops for brevity.) It doesn’t add them randomly to the accounts of foreign nations, however, nor permit them to create their own greenbacks. The Ukraine likely does have an account at the Fed, but it’s pretty empty now it seems, because he’s running around with his begging bowl out.

        3. ambrit

          Just tell that to any of the thousands of world financiers (writ small,) who hold bundles of pre-War Iraqi counterfeit USD hundreds. (If you want a real hum dinger of a CT flame war to break out, bring this up at any prepper/survivalist blog site.)

  9. Ford Prefect

    Interestingly, the US Army is going to train (probably already is) the Ukie National Guard, which most here will recall is composed almost entirely of volunteers from Pravyi Sektor (fascist party) and Svoboda (old-school Ukie Nazi party). No mention of the NG’s composition in this article, oddly enough.

    Anyone know how the WH intends to rationalize the fact it’s directly aiding genuine Nazis, whose ancestors herded Jews and Poles for Hitler’s SS back in the day? It’s about freedom, right?

    1. James Levy

      The mainstream narrative is now so entrenched that your question would simply produce bewilderment or annoyance on the part of the vast majority of Americans and a sizeable hunk of Europeans. The Russians are evil expansionist; the West are interested in freedom and the self-determination of the Ukrainian people. It’s that simple–black hats, white hats. The details have been ignored, suppressed, or cherry-picked “to fit the policy.” This generates ire around here, but you would be just as successful battering down a brick wall with your skull as you will be displace that narrative with the more complex (and vastly less self-serving) reality of what’s going on over there.

    1. ambrit

      Do you mean because of the quote by Fermi about Teller, that Teller was the only monomaniac he knew with multiple monomanias? This would apply to Soros also. Those Hungarians, what a bunch.

  10. plantman

    Ford prefect says: “Interestingly, the US Army is going to train… the Ukie National Guard”.
    Hope they turn out better than the afghan national guard or the “moderate” jihadis in Syria who are doing such a bang-up job beating assad.

    NOT.

    1. PWW

      How many years and how many billions did the Pentagon spend training the Iraqi forces who subsequently either joined ISIS or ran away once they heard gunshots? Not to mention the clusterf**k that is Afghanistan.

      Yeah, let’s entrust these same bozos to “fix” the Ukraine.

  11. Jackrabbit

    They’ll find a way.

    1) More Austerity. Its for the children!

    2) Pension Funds invests in a Private Equity or Hedge Fund that is headquartered in a dubious overseas jurisdiction whose only asset are “Peace Bonds” backed by Ukrainian cow farts and guaranteed by US Govt until one day before Maturity. Imagine the diversification benefits!

    3) NASA’s $200 Billion, multi-year Mission to Mars just got more expensive: the new launchpad for this multi-nation effort is in Ukraine.

    4) Dragi’s QE. “Whatever it takes” and “hasn’t been defeated yet!” A perfect match.

    5) All of the above in equal measure ($12.5 billion each)

    =
    =
    =
    H O P

  12. Linda/Chicago

    I remember reading a couple of years ago that Soros got absolutely screwed in some major deals in Russia by the oligarchs, the worst, he said, in his life. So, this may be personal for him. How Putin fits into this, I don’t know.

    1. jo6pac

      Now he unhappy about big loses coming and who cares if the Ukraine citizens freeze to death as long he comes out with $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
      http://www.sott.net/article/291267-As-Ukraine-is-defaulting-Soros-wants-the-EU-to-pay-for-his-long-term-investment

      Soros lost his money under Yeltsin who was controlled by western banksters at the time so Soros was burned by his so-called bankster friends and not Putin
      http://www.nytimes.com/1998/08/27/business/international-business-soros-s-quantum-fund-losses-in-russia-put-at-2-billion.html

      Putin didn’t take over Russia until 1999
      http://en.wikipedia.org/wiki/Vladimir_Putin

      http://en.wikipedia.org/wiki/Boris_Yeltsin

      Looks like Soros wants his own bailout, just saying.

      1. hunkerdown

        You’d think it would be cheaper for Russia to throw him a billion dollars as good and valuable consideration for a perpetual non-disparagement agreement — or pull the “No, but if you hum it” dioxin-in-the-soup trick again.

    2. zapster

      ROFL. That would explain it. Someone needs to point out to him that there were no “deals” with Russia before the Harvard boys went in and taught them how to swindle like Real Americans (TM).

  13. Percy

    “Wild” is inadequate for this. Forget about expanding the Ukraine financial package. DOA as we like to say in Washington. If Soros wants to play, he can help by buying up the damned bonds and amending their terms. Gontareva sounds like a criminal, worthy of being replaced at once by someone satisfactory to Lagarde. As for what the IMF charitably calls “the donor community,” we should immediately make two things clear: (i) we are not part of any such community, and (ii) no further loan guarantees will be forthcoming from us until Poroshenko steps away from the bar and sleeps it off.

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