Guest Post: The IMF Goes To War In Ukraine

Tyler Durden's picture

Authored by Pepe Escobar, originally posted at OpEd News,

The IMF has approved a $17 billion loan to Ukraine. The first $3.2 billion tranche has arrived on Wednesday.

It's essential to identify the conditions attached to this Mafia-style "loan." Nothing remotely similar to reviving the Ukrainian economy is in play. The scheme is inextricably linked to the IMF's notorious, one-size-fits-all "structural adjustment" policy, known to hundreds of millions from Latin America and Southeast Asia to Southern Europe.

The regime changers in Kiev have duly complied, launching the inevitable austerity package -- from tax hikes and frozen pensions to a stiff, over 50 percent rise on the price of natural gas heating Ukrainian homes. The "Ukrainian people" won't be able to pay their utility bills this coming winter.

Predictably, the massive loan is not for the benefit of "the Ukrainian people." Kiev is essentially bankrupt. Creditors range from Western banks to Gazprom -- which is owed no less than $2.7 billion. The "loan" will pay back these creditors; not to mention that $5 billion of the total is earmarked for payments of -- what else -- previous IMF loans. It goes without saying that a lot of the funds will be duly pocketed -- Afghanistan-style -- by the current bunch of oligarchs aligned with the "Yats" government in Kiev.

The IMF has already warned that Ukraine is in recession and may need an extension of the $17 billion loan. IMF newspeak qualifies it as "a significant recalibration of the program." This will happen, according to the IMF, if Kiev loses control of Eastern and Southern Ukraine -- something already in progress.

Eastern Ukraine is the country's industrial heartland -- with the highest GDP per capita and home of key factories and mines, mostly in the Donetsk region, which happens to be largely mobilized against the neo-fascist/neo-nazi-aligned regime changers in Kiev. If the current conflagration persists, this means both industrial exports and tax revenues will go down.

So here's the IMF prescription for the oligarch bunch -- some of them actively financing Right Sector militias: As long as you're facing a popular rebellion in Eastern and Southern Ukraine, relax; you will get additional IMF cash further on down the road. Talk about a crash course in disaster capitalism.

We want you to invade

Meanwhile, the Obama administration's juvenile delinquent school of diplomacy remains on track: the plan is to entice Moscow to "invade." Benefits would be immense. Washington would destroy once and for all the emerging strategic partnership between the EU, especially Germany, and Russia, part of a more organic interaction between Europe and Asia; keep Europe perennially under America's thumb; and boost Robocop NATO after its Afghan humiliation.

Well, they are not juvenile delinquents for nothing. Yet this brilliant plan forgets a key component: enough competent troops willing to apply Kiev's designs. The regime changers dissolved the Berkut federal riot police. Big mistake -- because they are pros; they are unemployed; and now, holding a monster grudge, amply supporting Ukrainians in favor of federalization.

What the Ministry of Truth script imposed on all Western corporate media insists on labeling "pro-Russian separatists" are in fact Ukrainian federalists. They don't want to split. They don't want to join the Russian Federation. What they want is a federalized Ukraine with strong, autonomous provinces.

Meanwhile, in Pipelineistan...

Washington is actively praying that the confrontation between the EU and Russia on the gas front spirals out of control. Natural gas will amount to 25 percent of the EU's needs up to 2050. Since 2011 Russia is the number one supplier, ahead of Norway and Algeria.

The bureaucrat-infested European Commission (EC) is now concentrating its attacks on Gazprom on the South Stream pipeline -- whose construction starts in June. The EC insists that the agreements already struck between Russia and seven EU countries infringe the laws of the EU (how come they didn't find that out earlier?). The EC would like South Stream to become a "European," not a Gazprom project.

Well, that depends on a lot of serious diplomacy and the internal politics of various EU member states. For instance, Estonia and Lithuania depend 100 percent on Gazprom. Some countries, such as Italy, import over 80 percent of their energy; others, such as the UK, only 40 percent.

It's like the EC suddenly woke up from its usual torpor and decided that South Stream is a political football. Günther Oettinger, the EU's energy commissioner, has been blaring the horn of EU competition laws called "the third energy package" -- which would essentially require Gazprom to open South Stream to other suppliers. Moscow filed a complaint to the World Trade Organization (WTO).

Rigorous application of recently unearthed EU law is one thing. Facts on the ground are another. South Stream may cost up to 16 billion euros -- but it will be built, even if financed by Russia's state budget.

Moreover Gazprom, in 2014 alone, has already signed extra deals with German, Italian, Austrian and Swiss partners. Italy's ENI and France's EDF are partners from the start. Germany, Italy, Bulgaria, Hungary and Austria are deeply involved in South Stream. No wonder none of them are in favor of more sanctions on Russia.

As for any substantial move by the EU to find new supply sources, that's a process that should take years -- and should involve the best possible alternative source, Iran, assuming a nuclear deal with the P5+1 is struck this year. Another possible source, Kazakhstan, exports less than it could, and that will remain the case because of infrastructure problems.

So we're back to the Ukrainian tragedy. Moscow won't "invade." What for? The IMF's structural adjustment will devastate Ukraine more than a war; most Ukrainians may even end up begging Russia for help. Berlin won't antagonize Moscow. So Washington's rhetoric of "isolating" Russia is just revealed for what it is: juvenile delinquency.

What's left for the Empire of Chaos is to pray for chaos to keep spreading across Ukraine, thus sapping Moscow's energy. And all this because the Washington establishment is absolutely terrified of an emerging power in Eurasia. Not one, but two -- Russia and China. Worse: strategically aligned. Worse still: bent on integrating Asia and Europe. So feel free to picture a bunch of Washington angry old men hissing like juvenile delinquents: "I don't like you. I don't want to talk to you. I want you to die."


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Itchy and Scratchy's picture

Return of the N.I.N.J.A.'s!

Manthong's picture

Advice to level headed, industrious Ukranians..

To paraphrase Horace Greeley, “Go east, young man”.

It does not seem the prejudice of the west is prevalent in the east.


strannick's picture

America and England perpetuating their tired empire and keeping the Eurasian heartland from integrating and so marginalizing them with their financial schemes, with Germany and Japan as their proxy bitches.

ZerOhead's picture

I know I'm not the sharpest tool in the shed but if Russia and China are the major threats to ongoing global domination perhaps the CIA would have been wiser to create a major False Flag event between them rather than the Ukraine?

Just askin'...

tonyw's picture

I'm sure if they thought they could get away with it they would have done.

Plan is probably to destroy russia first then go for china whilst keeping eu from working out where its best interests really are.

knukles's picture

What kind of ball were you playing, Goldfinger?
A Slazenger 4, Mr Bond.
And all along I've had it in my pocket.

No, Mr. Bond.  I don't want you to talk.  I want you to die.

Wahooo's picture

Slazenger for goldfinger, eh? Wonder what kind of balls Obama favors?

BolanosGhost's picture

I would guess he plays with a Noodle.

Vampyroteuthis infernalis's picture

Moscow won't "invade." 

Disagree. Putin is waiting for the right time to insert Russia's influence. Until then, the IMF appears to be Ukraine's worst enemy next to their own gov't.

Winston Churchill's picture

Russia has made in plain from the start, they want a federalized ,independent,neutral, Ukraine.
Any other result will be caused by the US/EU axis of evil.
Even if Putin is forced to invade I expect a quick withdrawl after removing the oligarchs, and the neo nazi's from power in Kiev.The death toll will have to rise to the thousands before he does intervene.
Putin is batting (89) BRIICSaA to USA 0, right now.
He is not going to do anything that sets that back.

gatorengineer's picture

that may be reasonable and what Putin wants, but dont you think you will see a ukraine in Nato very shortly?  Also perhaps a low cost manufacturing center for the EU?

Winston Churchill's picture

Russia will go to war over NATO in Ukraine, make no mistake
over that.
Our 'leaders' are being reckless if they don't realize that this is non negotiable. That war will quickly become nuclear
because if its a choice over a wasteland ,or NATO, in Ukraine,
a wasteland it will become.NATO has no non nuclear military
options in Ukraine.

BigJim's picture

Russia's recent 'massive nuclear attack' drills do seem like they're trying to send a message.

Poundsand's picture

"next to the US imposed government"  there... fixed it for you.

Joe A's picture

Eastern Ukraine is more useful for Putin as a pawn than to be part of Russia.

StychoKiller's picture

Some jackwagon in the Ukraine wanted to align with the West and the EU -- truly, thou shouldest be extremely careful what ye wisheth for!

Cattender's picture

War is good for the Economy.. just look at how Iraq has helped us here in the u.s. (right?)

Buckaroo Banzai's picture

Well it's been good for somebody. Business inside the beltway has exploded over the last dozen years.

The rest of the country-- not so much.

Seek_Truth's picture

Biden invested in Ukraine. Now we are beginning to understand one of many reasons for the overthrow of an elected government and the installation, by coup, of a neo-Nazi regime:

Joe musta heard it was a good investment from OGolfa's handlers.

As Paul Harvey would say: "Now we know the rest of the story."

unrulian's picture

Do what must be done. Do not hesitate; show no mercy.

McMolotov's picture

What is best in life? To crush your enemies, see them driven before you, and to hear the lamentations of their women. Even better if you can use debt to get others to do the fighting.

free_lunch's picture

Your statement triggered this interview popping up by association:

10mm's picture

Iraq was an invasion.

Itchy and Scratchy's picture

Welcome to debt prison my friend. - The American Taxpayer

Sudden Debt's picture

Tyler, there's something not mentioned anywhere.

The US is going to buy rocket engines from Russia for it's space programm ignoring the sanctions.

Those engines are strategic so that means there's a open phoneline to the whitehouse and the Kremlin. The engines would never be sold by Russia if there was actually something going to happen.

My 50 cents so to speak :)

Quus Ant's picture

Makes me think of the Soviet/Nazi non-aggression pact; divy up the world while preparing for the inevitable, ultimate showdown. 

The Soviets lead 1-0, but the Nazis are back and hungry to even up the series.  Get ready for round two of this timeless grudgematch!

Matt's picture

Has there been any word regarding America halting the plutonium shipments from decommissioned Soviet nuclear weapons, going into long term storage?

Buckaroo Banzai's picture

Wait. Are you saying that this is all theater, and Putin and Obama might actually be on the same side?

Sudden Debt's picture

after my second election, I'll have more room to maneuver...

Quus Ant's picture

Were Hitler and Stalin on the same side in 1939?

Sudden Debt's picture

yep, the germans where nearly in Moskow before Stalin got to grips with the fact that H man was out to kill him.

Quus Ant's picture

Nope.  Stalin knew the score(heck, Hitler layed it out plainly in Mein Kampf), but he couldn't prevent the inevitable- he could only hope to delay it a few years and prepare.  Perhaps what Vlad has been doing the last ten years....... hmmmm...........

"War with Germany is inevitable. If comrade Molotov can manage to postpone the war for two or three years that will be our good fortune, but you yourselves must go off and take measures to raise the combat readiness of our forces"  Joseph Stalin  5th of May, 1941

free_lunch's picture

Ever heard of a thing called Hegelian Dialectic? I think you should watch this short introduction:

Assuming you watched the short introduction video, I have a question: What do East and West share* ?

The matrix we are living in is a messy chaos, it is nearly impossible to determine what is real and what is staged..
Therefore one should be careful to idolize particular players, you could end up supporting some unwanted hidden agenda.

That's why George Carlin decided to become just an observer:




*Hint: Heads of state from around the world, including Putin, as well as international bankers and IMF representatives have all publicly called for the IMF to take charge of the global economic system through its Special Drawing Rights currency program.

GreatUncle's picture

It is rather simple.

No country US,Russia, China .... UK, France, Germany ... Spain Italy ... Portugal Greece ...

or even the  most indebted Japan are allowed ot go bust  now. TBTF!

If any nation goes bust with such interconnected finance the whole global system gpes down because there is not enough real value in the world to support the central banker inflated debt. Basically Obama and Putin slag each other off for kudos with their own populations to keep power but it is a show.

It is all or nothing.

whstlblwr's picture

Putin advocates multiple reserve currencies
Vladimir Radyuhin

Russia’s President Vladimir Putin has called for creating a system of multiple reserve currencies to strengthen global financial stability and reduce dependence on the U.S. dollar.

“If we are to slash the excessive number of derivatives, enhance discipline and stabilise global finances, we should promote multiple reserve currencies,” Mr. Putin said at a summit of the Asia-Pacific Economic Cooperation (APEC) forum in Vladivostok on Saturday.

He slammed the position of the U.S. dollar as the single reserve currency of the world. “If there is only one global reserve currency, the issuing country will always be tempted to use it in its selfish interests, which in the long run harms the issuer and violates the fundamental principles of the functioning of the world financial system.”

He said the rouble has the potential of becoming a regional reserve currency in the former Soviet Union. “Rouble can claim for the role of reserve currency . “The rouble is used more and more frequently in the settlements in the former Soviet republics”.

Russia in recent years has also signed agreements with India and China to use national currencies in bilateral trade deals. At their summit in New Delhi in March, the BRICS group of Brazil, Russia, India, China and South Africa signed two accords to promote intra-BRICS trade in local currencies.

klockwerks's picture

You sir are 100% correct. I have followed this since last June and the whole mess ends up with a world wide currency revaluation.  This has all been set up by the PTB and all is set to reset any day. Watch closely as it will not be a huge news event. Interesting stuff and sad for the US. If someone wanted to take our country down so everyone was "even" this plan would be a very good start. Sad part is everyone is onboard.

knukles's picture

Most Astute, SD
Nice Catch

Bazza McKenzie's picture

Your conclusion doesn't follow.

Russia is still selling gas to Europe but can and will turn it off if real conflict starts.

Businesses keep trying to do business even when hostilities loom, because the hostilities may not occur.  If overt conflict between the US and Russia does occur, then the contracts will be aborted.

The rocket engines are not for military purposes, or in military volume, so why wouldn't Russia sell them while it is taking control of eastern Ukraine after an independence referendum there?  It is a mark of US desperation and incompetence governance that it has to buy them under these circumstances.

And I'm pretty sure that Russia taking de facto control of eastern Ukraine would amount to "something happening" in your terms, but most unlikely to have any overt US military involvement because the US knows it would get its arse kicked in that situation.

TeraByte's picture

Neither can any Western non military satellite reach the orbit without the cold war era workhorse,  Russian Proton launcher. Remarkably today´s sophisticated techniques fail to match with reliability of this sound engineering design from the sixties.

Luckhasit's picture

Russia is laughing. Not only do they expand their territory, but they also get paid the past debts of Ukraine.

In Russia, invasion invades you!

CrashisOptimistic's picture

17 Billion is the loan.

5 billion goes to past IMF loans

GAZPROM is owed about 4 billion AND it's COD as of 1 June at pre November pricing.  Is that $1 billion/month?

The people lose their govt subsidy of gas and have to fund most of that 1 billion per month, but . . . it would not seem that they can with all the austerity cuts.

Anyway 17B - 5 - 4 is 8B over 2 years?  They are going to kill all the pensioners like this.

ebworthen's picture

Juvenile narcissistic delinquency.

pods's picture

The need for energy trumps all those other reasons when stacked up.

You cannot do much without BTUs.  

So basically, the US is going to keep instigating in Ukraine, Russia is eventually going to go IMF on the EU.
Stop the attacks or YOU get no gas.

And the EU will whimper and whine right up until the pilot light goes out on the stove and the machines stop.

Just sucks that the Ukraine is in the middle.


Luckhasit's picture

Agreed.  Which is why Germany has Merkel saying one thing while it's industries are saying another.

When push comes to shove, how many people think the EU will back up the US in a real conflict with Russia?  Not no Vietnam or Korea type BS, I mean flat out war?

Looking through the annuals of history, most noticeably WW1 and WW2, we are lucky none of the wars of that scale occured on US soil.  Just imagine if something like that did?

Squid-puppets a-go-go's picture

over to you, Victoria Nuworldorder