EU Offers Conditional "Aid" For Ukraine's "Catastrophic, Pre-Default" Economic State

Tyler Durden's picture

"There is no money in Ukraine's Treasury account," exclaimed 'Interim President' Oleksandr Turchynov to the Ukrainian parliament; adding that the Ukraine economy is in a "catastrophic state."

  • *THERE ARE PROBLEMS WITH BANKING SYSTEM AND HRYVNIA: TURCHYNOV
  • *PROBLEMS WITH PENSION FUND ARE "COLOSSAL": TURCHYNOV
  • *UKRAINE'S ECONOMY IS IN A `PRE-DEFAULT' SITUATION: TURCHYNOV

Hardly surprising given the months of protest; but with Russia 'conditionally' postponing its EUR2bn 'loan', the Europeans are riding to the nation's aid with promises of EUR20bn (if Ukrainian authorities meet certain conditions). But, as the map below shows, a great deal of the nation's wealth lies in the eastern (pro-Russia) region.

 

  • *NEW UKRAINE GOVT'S PRIORITY IS TO RETURN TO EU PATH: TURCHYNOV
  • *RUSSIA SHOULD RECOGNIZE UKRAINE'S EUROPEAN CHOICE: TURCHYNOV

 

Russia is on hold but the Europeans are willing... conditionally...

The European Commission has said it is ready to conclude a trade deal with and offer aid to Ukraine once a new government is in place in Kiev, Reuters reported Feb. 23. An EU official added that the European bloc could give the country more than 20 billion euros (some $27 billion) if Ukrainian authorities meet certain conditions, The Wall Street Journal reported. According to the official, this figure is a conservative estimate of the potential assistance Ukraine could receive from EU members. Russia is currently holding out on economic aid to Ukraine as it waits to see how the country's political crisis plays out.

But as a reminder, a great deal of the nation's wealth resides in non-pro-Europe eastern Ukraine...

The Economic Consequences of Ukrainian Federalism (via Stratfor)

For a country like Ukraine, the appeal of federalism, which divides authority between the central government and its constituent regions, is undeniable. Located in Europe's borderlands, Ukraine has been contested by its neighbors for centuries, a competition that has left it internally divided along linguistic, cultural and religious lines. Broadly speaking, Ukraine is divided between the east and the west, with eastern Ukraine favoring Russia and western Ukraine favoring Europe. Ukraine's regions are also distinct economically. The country's industrial base is located in the east. The east's close proximity to Russia creates strong cross-border trade that enriches regional economies. According to Ukraine's government statistics service, manufacturing contributes at least three times more than agriculture to the country's gross domestic product. Thus, eastern regions generally have higher per capita GDP rates. In 2011, the per capita GDP in the eastern region of Dnipropetrovsk, the country's most important industrial center, was 42,068 Ukrainian hryvnia ($4,748), while it was only 20,490 hryvnia ($2,312) in Lviv region, which is one of western Ukraine's industrial centers.

Seven of Ukraine's 10 largest private companies by revenue are either headquartered or maintain the majority of their operations in eastern Ukraine. These firms are owned by some of Ukraine's wealthiest and most influential individuals. Three of these 10 corporations -- mining and steel company Metinvest, energy firm DTEK and its subsidiary Donetskstal -- are based in the eastern industrial city of Donetsk and are owned by Ukraine's wealthiest man, Rinat Akhmetov. Interpipe, the company that controls 10 percent of the world market share of railway wheels and more than 11 percent of the world market share of manganese ferroalloys, is based in Dnipropetrovsk and belongs to businessman and politician Victor Pinchuk.

The country's most important businessmen are embedded in the east, where their businesses make disproportionately high contributions to the Ukrainian economy and national budget. Westerners staunchly oppose federalism because they believe it would threaten their economic and security interests. Others believe it could dissolve Ukraine as a country, leaving the west weak and defenseless against the Russia-backed east. Whether or not these concerns are misplaced, federalism would in fact benefit eastern regions disproportionately by giving them more control over state revenue, aggravating the socioeconomic tensions between the regions.

 

However, the Ukrainians are keeping their options open...

  • *`WE ARE READY TO HAVE A DIALOG WITH RUSSIA:' TURCHYNOV
  • *UKRAINE TIES WITH RUSSIA SHOULD BE ON EQUAL FOOTING: TURCHYNOV

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resurger's picture

"a great deal of the nation's wealth resides in non-pro-Europe eastern Ukraine..."

Must be liberated by the Euro.

Cult_of_Reason's picture

Ukraine should default.

Force Russian banks to take $30+ billion loses. It will ignite Russian financial crisis and Kiev-like riots in Moscow. (Ousted Ukraine President Yanukovich's residence is open to anyone. I wonder what Putin's residence looks like.)

Then Ukrainians can start building new democratic Ukraine.

BaBaBouy's picture

Well, Well, Well... WHAT A Surprise...

The FIATS And The GOLD...       A-L-L   G-O-N-E ...

Skateboarder's picture

You were expecting them to leave it untouched so Yanu won't be pissed when he gets home?

BaBaBouy's picture

OK, So Lets Make A Deal...

EU Gets The Lazy Shitty Iphoned & Chernobyled Western Half, And Russia Gets The Prize High GDP Eastern Half...

Cult_of_Reason's picture

You sound like Kremlin bots. Are you?

It is not that easy for Putin to invade and take control over Crimea as Kremlin bots and paid bloggers suggest.

42% of Crimea are Ukrainians and Muslim Tatars and the majority of ethnic Russians don't want Putin to invade Crimea.

Early elections and punishment to officials for separatism have been demanded in the Crimea

 http://maidantranslations.wordpress.com/2014/02/23/early-elections-and-punishment-to-officials-for-separatism-have-been-demanded-in-the-crimea/

"Rally in Simferopol Crimea. Pro-Maydan." (Note EU flags)

https://twitter.com/Annie_Yalta/status/437596151605641217

Rally of Crimean Tatars in Simferopol. (Note EU and Ukrainian flags) https://twitter.com/PaulSonne/status/437554811287134208

"In Crimea, the protesters demanding the dissolution of Crimean parliament and the dissolution of autonomy, and the demolition of the monument to Lenin." (Note EU flags)

https://twitter.com/radiosvoboda/status/437626178182979584/photo/1

(Note EU flags)

https://twitter.com/Kateryna_Kruk/status/437651883126431744

Crimean PM not at all secessionist today: "We should prevent any outbreaks (of pro-Russia) radicalism in Crimea"

(Video in Russian) http://www.youtube.com/watch?v=ljjDxFcPyR0

SafelyGraze's picture

"There is no money in Ukraine's Treasury account,"

..  which is perfectly okay

and is actually the first step toward prosperity

hugs,
jakloo

 

TahoeBilly2012's picture

Victoria Nuland, real last name Nudelman,,,,yea, that's right, she is Tribe. 

BKbroiler's picture

For all the little bites Putin has taken out of Obama's ass in the last year, O got him back pretty damn good.  Not only did he take his baby, but he did it durig his grand celebration of pompousness.  Now Russia has to look like a warmonger for trying to get back control of a region that holds one of it's most strategic ports, and one that it has always held de-facto control of.  Lesson here:  Ukrainians are not Syrians.

Son of Loki's picture

I suspect much of that money has been snucked out is being used to buy RE in NYC and Florida.

11b40's picture

Ukranians may not be Syrians, but they are 1.) broke, 2.) facing FAR superior forces, 3.) geographically convenient, 4.) much of the population lean toward Russia, and 5.) of those who prefer to look toward EU, how many actually want to be destroyed.

Ukraine is similar to Syria in that is is not a homgeneous country.

Putin has not lost any points in the chess match that I see yet, he still has plenty of pawns on the table, most of the leverage, AND the will to act.

Ukraine is in a very bad place, and the usual cast of Internationalist characters just may cause the country to be laid to waste.  Just watch. 

oncefired's picture

Next move: Turn off the Nat Gas - Check!

Berspankme's picture

Fun to speculate Putin's next move but nobody really knows what lies ahead other than it will probably be messy. And if Obama and Barroso get ass raped, it's a bonus

Truthseeker2's picture

Classic Example of of “Problem ~ Reaction ~ Solution”  At Work

http://stateofthenation2012.com/?p=3733

UKRAINE: Another CIA-Coordinated Color Revolution In Progress
silvermail's picture

"You sound like Kremlin bots".

You sound like WH bots.

You give some links from Twitter as a confirmation of your erroneous opinion? It's very funny. Your the last link (in Russian) is a big confuse. In this video, there is nothing against Russia, not one word. On the contrary, they say that the radical opposition has broken the law and therefore to blame more than the legitimate authority.
Ask please your bosses, they must replace the link and distributed to all the WH trolls (like you) other, "more right" links. LOL

silvermail's picture

Police returned from Kiev to Crimea - Sevastopol. People came with flowers, to meet the police as a heroes!

http://www.youtube.com/watch?v=W4W2PwP0FBQ#t=138

HardAssets's picture

The crowd is yelling 'Thank you' in Russian

Hohlick's picture

Maaaan.... please.

Look, this is Sevastopol yesterday, Defenders Day (former Soviet Army Day) http://sevastopolis.com/uploads/images/z/7110_cam14.jpg

Any questions about flags?

DeadFred's picture

Chernobyl is in the most prosperous region, therefore logic tells you that radiation is good for the economy. Soon San Francisco and Seattle will be booming... Did I miss something here?

logicalman's picture

In that case, Fukushima should take 1st place, but hey, at least they are sharing.

 

Joenobody12's picture

A local fish company here in Seattle sent seven species of Salmon , caught in Washington and Alaska, to a lab to test and two came back with cesium contamination. They said it is OK since banana got more radioactivity ( in the form of potasium 40 ). Anyone know how the body metabolize potassium versus cesium ? Even one particle of cesium ingested will be enough to enhance mutatioin as it radiates 24/7 in your body. I refuse to eat anymore fish from Washington and Alaska. I still eat local shrimp and crab. I am trying to locate fish from the East coast or the GOM but it is so damn hard.

Meawhile instead of dealing with the worsen Fukushima problem, the Abe government has refused to return the plutonium stock pile to the Us despite the repeated request of the Obama adminstration. In addition, it is accelarating its uranium enrichment program. Unlike Gemrnay which acknowlege its WWll crime sin, Japan is changing its school textbook and whitewashed its WWll crime. It is busy building its military and changing its constitution so it can wage war again. What a fucked up evil country.

Leraconteur's picture

Nah, give Ivankiv Raion to Belarus and let Russia and Belarus deal with it. Most of the radiation went to the NW in Belarus and the rest of Europe.

Buck Johnson's picture

Your exactly correct, and I think the EU and the US overplayed their hand.  All the money is gone and they need money (that 27 billion isn't enough), and you can bet your last dollar Russia isn't going to give them one red cent.  If the EU and US want them, let them deal with that shit hole.

Unpopular Truth's picture

In theory, only.

In practice, there is the gas line. So I very much doubt the Russians will let the Ukraine go, with or without any Ukrainians left alive.

Cult_of_Reason's picture

I'm suspecting this too -- Putin will announce Ukraine bailout. He must bailout Russian banks and oligarchs.

disabledvet's picture

the opposite can happen too actually.

According to that map "all the money is in Kiev" actually.
And I believe the industrial center...Kharkov...is in the North not the East.

I do agree this is a very "fluid" situation.
I think pretty much everyone agrees that "Ukraine" should remain a unitary State.

Obviously default is an inevitability.
Too bad they gave up their nukes.

Then again...

Cult_of_Reason's picture

Russia’s oligarchy is alive and well. Russian oligarchs and bankers are in control of the state and economy. It is hard to imagine Putin will not bailout Russian banks.

silvermail's picture

"I'm suspecting this too -- Putin will announce Ukraine bailout. He must bailout Russian banks and oligarchs."

- I'm suspecting this too -- that now in Ukraine there will be full freedom.

- And I'm suspecting that the first full freedom in Ukraine - it will be freedom from all Ukraine gold reserves!

- I'm suspecting that, it is one of the main conditions under which the EU is ready to give Ukraine a little of freshly printed colored papers.


Hello EU
"western values", Goodbye our Gold reserves! LOL

yatikto's picture

Any gas that doesn't get thru Ukraine is now EU's problem.  I assure you that it will get thru.

Urban Redneck's picture

1) Washington Convention

2) Creditanstalt part Deux - or perhaps you haven't been watching (central) EU banks exposure since they made asses of themselves in Hungary

agent default's picture

Then Russia will just bail out its banks ($30B is not that much), and raise gas prices to Europe to make up for the loss. 

Problem->Solution.

NoWayJose's picture

If Russia handles it correctly, the Fed will bail out he EU which will bail out the 'new' West Ukraine nation which will bail out the Russian banks!

disabledvet's picture

again..."they have rail lines."

and that sure looks like an awfully big river running right down through the middle of the country there too.

"build a huge port in the South...start exporting."

HardAssets's picture

Yep $30B isn't much. The Fed prints more than double that every freakin' month to prop up the banks.

earleflorida's picture

Russia's 'Black Majik Woman?' picks ups Vlad's mystical sticks???

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

11b40's picture

You mean force Russia to repatriate their money in the form of Ukraine territory?

silvermail's picture

"Force Russian banks to take $30+ billion loses. It will ignite Russian financial crisis and Kiev-like riots in Moscow."

Dear
Cult_of_Reason,

if you think that the loss of 30 billion will lead Russia to a crisis, then, you are think only on the half of your brain.

Joenobody12's picture

I think he was thinking with his whole brain already, plus his feet. 

MillionDollarBoner_'s picture

"a great deal of the nation's wealth resides in non-pro-Europe eastern Ukraine..."

 

People forget their history so easily. Hitler's generals sacrificed the cream of their remaining armour at a little old place called Kursk, site of the largest tank battle in history and a stone's throw from Kharkiv.  

Much blood has been spilled over centuries for control of the Crimea...

Invinciblehandaxe's picture

just take the jew money already

the debt is your best friend

next come the industries and agriculture

monsanto and chevron

will be the two most spelled words in

liberated ukraine

HyBrasilian's picture

Rothschilds [& tribe]... 2 the rescue!

fockewulf190's picture

When Putin starts sending pallets of Russian passports to the eastern Ukraine, then you know the T80´s won´t be far behind.  The "have to protect our felllow Russian citizens" ploy worked during the  Russo-Georgian conflict. 

 

Volkodav's picture

Only T72 and older worked well enough there...

Leraconteur's picture

That's the post-1994 business model.

Unpopular Truth's picture

what is it that the jews have done to you? This hatred diminishes us all.

HyBrasilian's picture

http://www.usdebtclock.org/

~~~

Oh but... I'm SURE that ALL of that 'BORROWED' money was agreed upon by the 'MAJORITY' of 'DEMOCRACY'...

 

Excuse me for a minute... I have to go out into the FIELDS to WORK TO REPAY all that 'money' that was lent to me [with interest ~ & out of THIN AIR]... without my consent...

mendolover's picture

Wow.  No offense but you have alot of catching up to do.

edit - this comment was meant for Unpopular Truth.  Sorry Tahoe!

TahoeBilly2012's picture

I don't consider it hatred. First off, it is a small percentage of them and the Neocons aren't all Tribe, just that a large percentage are. The want total world domination. It is written. Exposing the plan for what it is is both fair and needed if our Republic is to survive.

logicalman's picture

If a group of people are fucking you over, it's only logical that you will at least dislike them.

Look around, it may help you understand.