Ukraine Currency Crashes After Senior EU Official Says "The Ukrainians Are Manipulating Us"

The much discussed tumble in the Russian ruble (or as Japan would call it "mission accomplished" if its was the Yen instead of the Ruble) may have stabilized somewhat, and judging by the Russian central bank's response to no longer intervene in the FX corridor-setting market on a daily basis, Russia is hardly too concerned by the impact to the economy as a result of the beating its currency has taken, but where Putin may have brushed off the "speculative" attack on its currency for the time being, things for Russia's western adversary, the Ukraine - the country whose economy is in a state of near terminal collapse and which unlike Russia doesn't have massive raw materials to fall back on - are just starting to go bump in the night.

As has been the case for nearly a year, the Ukraine has been on life support by its "western allies" ever since the Victoria Nuland/US State Department/CIA catalyzed coup early in the year. The problem is that those same "allies" now look like they have had enough of their "alliance" and are about to pull the "blank check" rug.

According to Reuters, nearly a year on from the first "EuroMaidan" protests that would topple the pro-Moscow president who had spurned an EU trade deal, some in Brussels are disillusioned by the experience of helping Ukraine. EU generosity in waiving import duties and funding gas supplies from Russia may be being abused, they say.

Corruption in Ukraine? Unpossible. But wait, it gets better:

Some in Ukraine's elite may be colluding with Russia, even as fighting in the east has begun to escalate again.

If true, this will be the biggest stunt a Russian leader has pulled since Khruschev banging on the desk in the UN with his shoe.

And the punchline:

"The Ukrainians are manipulating the EU," a senior EU official involved in negotiations told Reuters, saying the bloc was "waking up" to a need to better defend its own interests.

You mean those poor European taxpayers, raped for years to bail out insolvent Eurozone nations because, you know, "political capital", are now directly and indirectly funding Putin's extravagant habits?

Brilliant.

"There may be, in certain sections of the Ukrainian government, an interest in colluding with the Russians and instrumentalizing to a certain extent the EU," he added.

 

Such views are dismissed as "absolute nonsense" by Ukraine's ambassador to the EU, Kostiantyn Yelisieiev. He condemned talk of secret deals between Kiev and Moscow to exploit Western fears for profit as part of "Russian propaganda" and said he had full confidence in continued cooperation with the European Union.

 

In public, there is solid EU support for the newly elected president and parliament in the face of Russian hostility – a position new European Commission President Jean-Claude Juncker will stress when he visits Kiev, perhaps as early as this month.

 

And there is unanimous, personal admiration among officials and diplomats for ordinary Ukrainians' courage on the streets, and a will to help them consolidate democracy and prosperity.

 

Yet in private, endemic post-Soviet corruption, the power of business "oligarchs" and suspicions of lingering Ukrainian collaboration with supposed enemies in Moscow lead some in Brussels to question the future of current levels of EU backing.

 

"Maybe people fell for this 'poor little Ukraine' line," one EU diplomat said. "But they're not so naive. They're waking up."

Well, if they indeed are, it also means any future IMF, or US aid, to the Ukraine is over. And here comes the bailouter's remorse:

Amid some regret at the way the EU's drive to conclude its Association Agreement with Ukraine ended up provoking conflict with Russia, there is sympathy in Brussels for Poroshenko, the confectionery magnate and long-time minister elected to succeed the ousted, Moscow-backed Viktor Yanukovich six months ago.

 

"You can't blame him for playing a weak hand as best he can in his own national interests," one EU diplomat said of the man who was feted as guest of honor at an EU summit in June.

 

At the same time, there is a concern not to write blank cheques to Ukraine at a time of austerity at home.

Which may explain why the Ukraine economy just entered the endspiel part judging by what happened to its currency overnight.