The IMF Just Entered The Cold War, Forgives Ukraine's Debt To Russia

Tyler Durden's picture

Authored by Michael Hudson, originally posted by The Saker, author of The Essential Saker: from the trenches of the emerging multipolar world,

On December 8, the IMF’s Chief Spokesman Gerry Rice sent a note saying:

“The IMF’s Executive Board met today and agreed to change the current policy on non-toleration of arrears to official creditors. We will provide details on the scope and rationale for this policy change in the next day or so.”

Since 1947 when it really started operations, the World Bank has acted as a branch of the U.S. Defense Department, from its first major chairman John J. McCloy through Robert McNamara to Robert Zoellick and neocon Paul Wolfowitz. From the outset, it has promoted U.S. exports – especially farm exports – by steering Third World countries to produce plantation crops rather than feeding their own populations. (They are to import U.S. grain.) But it has felt obliged to wrap its U.S. export promotion and support for the dollar area in an ostensibly internationalist rhetoric, as if what’s good for the United States is good for the world.

The IMF has now been drawn into the U.S. Cold War orbit. On Tuesday it made a radical decision to dismantle the condition that had integrated the global financial system for the past half century. In the past, it has been able to take the lead in organizing bailout packages for governments by getting other creditor nations – headed by the United States, Germany and Japan – to participate. The creditor leverage that the IMF has used is that if a nation is in financial arrears to any government, it cannot qualify for an IMF loan – and hence, for packages involving other governments.

This has been the system by which the dollarized global financial system has worked for half a century. The beneficiaries have been creditors in US dollars.

But on Tuesday, the IMF joined the New Cold War. It has been lending money to Ukraine despite the Fund’s rules blocking it from lending to countries with no visible chance of paying (the “No More Argentinas” rule from 2001). When IMF head Christine Lagarde made the last IMF loan to Ukraine in the spring, she expressed the hope that there would be peace. But President Porochenko immediately announced that he would use the proceeds to step up his nation’s civil war with the Russian-speaking population in the East – the Donbass.

That is the region where most IMF exports have been made – mainly to Russia. This market is now lost for the foreseeable future. It may be a long break, because the country is run by the U.S.-backed junta put in place after the right-wing coup of winter 2014. Ukraine has refused to pay not only private-sector bondholders, but the Russian Government as well.

This should have blocked Ukraine from receiving further IMF aid. Refusal to pay for Ukrainian military belligerence in its New Cold War against Russia would have been a major step forcing peace, and also forcing a clean-up of the country’s endemic corruption.

Instead, the IMF is backing Ukrainian policy, its kleptocracy and its Right Sector leading the attacks that recently cut off Crimea’s electricity. The only condition on which the IMF insists is continued austerity. Ukraine’s currency, the hryvnia, has fallen by a third this years, pensions have been slashed (largely as a result of being inflated away), while corruption continues unabated.

Despite this the IMF announced its intention to extend new loans to finance Ukraine’s dependency and payoffs to the oligarchs who are in control of its parliament and justice departments to block any real cleanup of corruption.

For over half a year there was a semi-public discussion with U.S. Treasury advisors and Cold Warriors about how to stiff Russia on the $3 billion owed by Ukraine to Russia’s Sovereign Wealth Fund. There was some talk of declaring this an “odious debt,” but it was decided that this ploy might backfire against U.S. supported dictatorships.

In the end, the IMF simply lent Ukraine the money.

By doing so, it announced its new policy: “We only enforce debts owed in US dollars to US allies.” This means that what was simmering as a Cold War against Russia has now turned into a full-blown division of the world into the Dollar Bloc (with its satellite Euro and other pro-U.S. currencies) and the BRICS or other countries not in the U.S. financial and military orbit.

What should Russia do? For that matter, what should China and other BRICS countries do? The IMF and U.S. neocons have sent the world a message: you don’t have to honor debts to countries outside of the dollar area and its satellites.

Why then should these non-dollarized countries remain in the IMF – or the World Bank, for that matter. The IMF move effectively splits the global system in half,between the BRICS and the US-European neoliberalized financial system.

Should Russia withdraw from the IMF? Should other countries?

The mirror-image response would be for the new Asian Development Bank to announce that countries that joined the ruble-yuan area did not have to pay US dollar or euro-denominated debts. That is implicitly where the IMF’s break is leading.

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cossack55's picture

And what is the IMFs grid coordinates?

ThanksChump's picture

Russia will deal with this the same way any utility vendor would do.


I feel sorry for the pacifist Ukrainians who will freeze, but they had plenty of time to flee.

thesonandheir's picture

Winter is coming said Lord Vladimir Stark.

tmosley's picture

My God how could they be so stupid!? This will lead DIRECTLY to Russian and China (and others) dumping ALL of their US debt onto a market whose size has just been slashed by what, half? Nevermind the fact that the remaining half isn't buying.

This looks like the death knell of the dollar. That currency has only been propped by the international system, and the IMF just destroyed that, like a petulant child knocking over the game board in anger.

insanelysane's picture

"Should Russia leave the IMF."

The IMF just threw them out.

BlindMonkey's picture

I have done a quick search to see what the IMF loan portfolio looks like.  I cannot find any hard numbers for how much is outstanding.  I am wondering how much blowback risk this has.  Venezuela, Brazil, South Africa, Iraq, Syria, <fill in the blank>stan, etc.  could leave their debt to the IMF in the dirt and take future loans from the new BRICS bank.


This may be just as stupid as Turkey shooting down the Su-24.

BKbroiler's picture

god, what bunch of Russki propaganda. Journalist rule #1: You can't just put something you belive in quotes and attribute it to someone else, someone has to actually say it.  

hedgeless_horseman's picture



You can't just put something you belive in quotes and attribute it to someone else, someone has to actually say it. 


"In war, truth is the first casualty." - Tyler Durden

BKbroiler's picture

I've witnessed the various waves of obsessions on this site through the years, but this Russophilism is really getting out of hand.  Extreme views are represented as facts, and anyone who disagrees is a shill or a nazi, or Victoria Nuland.  The only thing scarier than nationalism is foreign nationalism.

Manthong's picture

The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is rapidly fadin’
And the first one now will later be last
For the times they are a-changin’

-Bob Dylan

hedgeless_horseman's picture




Five to one, baby
One in five
No one here gets out alive, now
You get yours, baby
I'll get mine
Gonna make it, baby
If we try

The old get old
And the young get stronger
May take a week
And it may take longer
They got the guns
But we got the numbers
Gonna win, yeah
We're takin' over
Come on!


Your ballroom days are over, baby
Night is drawing near
Shadows of the evening crawl across the years
Ya walk across the floor with a flower in your hand
Trying to tell me no one understands
Trade in your hours for a handful dimes
Gonna' make it, baby, in our prime


-The Doors

y3maxx's picture

...New Reality is...

USSA, IMF, European community.....declaring they are now broke & bankrupt.

...This is the monetary Archduke moment...

W W #3 has been unofficially declared.

mtl4's picture

Everyone knows the IMF is just a puppet of the US so absolutely no surprise they threw out all the Asian countries in an attampt to continue to revive the cold war.

Supernova Born's picture

Outrageous financial terms imposed on militarily-sophisticated warrior culture in a time of tremendous global financial stress.

So apropos LaGuarde is a Frenchie.

Joe Trader's picture

That's fine if they cut supplies to Ukraine - there's a new LNG port that opened in the Baltic, now accepting Qatari NATGAS & Saudi crude oil as we speak :)

Supernova Born's picture

Nuland wears a Maidanform girdle over her one decended testicle.

Strengthens the will.

coinhead's picture
coinhead (not verified) Supernova Born Dec 9, 2015 12:11 PM

This again just highlights teh need for an apolitical transfer of payment system that cannot be manipulated by one party at their convenience.  Blockchain and P2P is teh future, get used to it.

Manthong's picture

“a new LNG port that opened in the Baltic,” 

OK.. around the Arabian Peninsula, up the Suez Canal, across the entire Med, up to the North Sea and then into the Baltic.. way better and cheaper than a pipeline across friendly territory.

F’n psychopaths.. and they need to have this as their official honorific..

I suggest the abbreviation Psyp.

Psyp. Juncker

Psyp. Obama

Psyp. Dimon

Psyp. Blankfein

Psyp. Cameron 

Psyp. Draghi

And it’s gender neutral...

Psyp. Nuland

Psyp. Lagarde

Psyp. Yellen

Psyp. Powers

Psyp. H Clinton

Psyp. W. Clinton

Etc  etc  etc.


Bunghole's picture

It's a long way from Riga on the Baltic to Kiev.

Is the LNG going to ge transported to Kiev on the backs of unicorns?

tonyw's picture

Yes, with the aid of the Texas communist party :-)

But seriously LNG is a lot more expensive than piped gas so how will Ukraine pay for this gas?

And how many ships per week will they need?

The ships generally go where tehy can get the highest price so I can't see that being Ukraine.

Manthong's picture

Some large actor in that area really needs to be slipping arms to W. Ukraine opposition.. they have got to be there somewhere.  They should take out those nutbag Right Sector idiots and then challenge Kiev. I would be willing to bet at least half of the Uke military would flip and help take out the western puppets that have wrecked the country.

Freezing and starving can be a pretty good motivator towards action,


knukles's picture

So lemme get this right.
The US has been neutered by and large, by Pootie in the ME, where now Pootie's influence runs from Iran, through Iraq into Syria and Lebanon. 
Nice, Barry.  Mission Accomplished.  He said that's what he wanted to do when he was stumping in 2007, FFS!

And with respect to the Petro-Dollar, it's only enforceable if everybody's in the system so in order to stiff the Rooskies with $US2 or 3 billion to write off, it also drives everybody outside the Dollar System into the Asian whatevernewbank it is.

Nice Barry, Mission Accomplished!!!!!!   Kudos!   Achieving established goals.  You should be proud!  Betcha Mooch and the Ghost of Sal Alinsky are!

Disclosure:  Methinks we oughta get out of all foreign entanglements and that institutions like the World Bank, IMF, BIS, etc., are Neo-Con, NWO organizations which man would be better without, just so there are no lingering doubts.

Nice Job, Barry. 
Mission Accomplished

Including all the new wars .....

NWO says Order through Chaos

Barry's a success!!!!!!!!

Manthong's picture

From what I understand, the IMF and World Bank are US contrivances designed to extort money and resources from developing nations.

I think the jig is up for them.

First, a lot of third world and EM types are hip to the scheme and don’t want to go there.

Second, it seems that China is just about everywhere nowadays and willing to lend a helping hand without the onerous intrusions of the western Hydra.

Third, much of what the IMF, World Bank and big western banks have done in the last few years seems to be a blast horn that screams for smart people to stay away.


Stainless Steel Rat's picture
Stainless Steel Rat (not verified) Manthong Dec 9, 2015 2:58 PM

This is a pretty feeble "spite check".  Nothing left now but more pigeon moves...

Son of Loki's picture

Don't lend money to folks you know ain;t payin gback.


Corollary; Don't sell stuff to folks whom you know ain't paying back.


Looks like Barry just broke another level of trust.


"Change you can believe in."

o r c k's picture

Hey friend, can you spare some "change"?

Tyler Durderian's picture
Tyler Durderian (not verified) o r c k Dec 9, 2015 6:12 PM

Ucraine will pay by laying down for old loose balls Uncle Sam and please him and his zio masters:

Tarzan's picture

Curious a story about the IMF, the Dollar, debt, and oligarchs, with no mention of Central Banks or the BIS?

I'd think 3 Billion for Crimea is a steal for Putin, no?

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) Tarzan Dec 9, 2015 2:54 PM

Crimea voted themselves out of the Ukraine before the provisional coup tried to stick it in their dunbass.  And why not?  They wouldn't have been allowed to vote in the next election either.

False_Profit's picture

"Since 1947 when it really started operations, the World Bank has acted as a branch of the U.S. Defense Department"

this statement is bassackward...the us defense dept is a branch of the fedres, imf, world bank, etc.

surely zhers are more intelligent than to let that get by them...

nothing at this level happens by chance, this is all planned.  

has anyone stopped to think what will happen to us if war does break out, and the ussa can't get any imports from china?  we are not set up like we were in wwii, we have been gutted by these same bankers who have positioned china as the new superpower...

ask your friends if they want to play golf for money, with the only caveat being that whatever their score is at the end of the game, your score is 9 less...what?  no one wants to play a game where the score is pegged to the other score?  you think china is the brainchild that is keeping their currency pegged to the frn$ without the world bankers implicit assistance?

the citizens of the world are continuing to be played by the bankers who are in it for complete power...

Gott mit uns...

Squid-puppets a-go-go's picture

when over 90% voted to go back to russia, how is that theft?

what does it take for you to accept a mandate? 98% ? 100% ?

RevIdahoSpud3's picture

"what does it take for you to accept a mandate? 98% ? 100% ?"

Some precinct's voted 110% for Obama in the last election. That is a mandate? LOL

Archie1954's picture

That's just American elections. Not all nations are so juniour and incompetent at running elections.

JohninMK's picture

I have not seen that IMF loan to Ukraine announced anywhere.

Has anyone on here?

Russia is still saying it is probably heading towards the courts in London to sue Ukraine for the $3B. Ukraine is saying it will counter attack.

Not likely if anyone had given the money to Ukraine to pay off Moscow.

The IMF haven't paid Ukraine the money due Q3 yet either.

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) JohninMK Dec 9, 2015 8:16 PM

That's the thing with these pigeon chessboard moves, there is the mainstream media all along trumpeting: "The pigeon is winning!" #winning

False_Profit's picture

maybe the lawsuit can take place this winter, and russia can shut off the gas for a day or two during the proceedings...

Mr.BlingBling's picture

Driving a ship loaded with 'kilotons' of LNG through the ME.  That doesn't sound like something I'd like to pilot on that particular route.

HowdyDoody's picture

I'm sure Russia would be prepared to lease out some of its icebreakers to make a passage through the Baltic during winter. For a fee, a very, very, big fee.


Lurk Skywatcher's picture

"This again just highlights teh need for an apolitical transfer of payment system that cannot be manipulated by one party at their convenience."

Obviously you didn't read the article, have not been paying attention for the last 112 years, and are only here to shill for electrons. Payment systems need to be maniplutable or they are worthless to TPTB.

coinhead's picture
coinhead (not verified) Lurk Skywatcher Dec 9, 2015 2:15 PM

"Payment systems need to be maniplutable or they are worthless to TPTB."

Who gives a flying fuck about TPTB?  Did you miss my entire point?  TPTB are largely irrelevant and becoming more so with each passing day. 

FixItAgainTony's picture

The Australian franchise of TPTB is about to become very relevant to your boy, Craig Wright.

Never One Roach's picture

Speaking of Australia:


Australian dollar could fall to US50cents: economists

Squid-puppets a-go-go's picture

whaddya mean 'speaking of' when u post a 3 month old article?


El Viejo's picture

Ignore the coming train wreck. Argue over the seat.

sam i am's picture

@Joe Trader:   "Qatari NATGAS & Saudi crude oil as we speak :)"

·         Qatar and Saudi's natgas is 3-5 times higher than Russia's


·         the Baltics now pay for what they don't take per their rush agreement with Saudis'.


For the EU to pay for gas 3-5 times more means to destroy their economies and de-industrialization.

LOL indeed

gun4A's picture

Yea, the only problem is that Qatari natgas is 2 times more expensive ...

cheech_wizard's picture

Hey, that LNG tanker developed a hull leak and sank.

Standard Disclaimer: Must have struck one of those guyots/seamounts in the Mediterranean...


conscious being's picture

An LNG tanker is a massive floating bomb.

11b40's picture

The terminals don't float, but they are massively expensive and extremely dangerous.