Friday, March 3, 2017

The IMF Should Be Worried On What Is Happening In Ukraine Right Now

Leonid Bershidsky, Bloomberg: What the IMF Doesn't Know About Ukraine

The conflict between Ukraine and Russia entered a new phase on Wednesday. The separatist, pro-Russian "people's republics" of eastern Ukraine announced they were taking over Ukrainian oligarchs' assets on their territory. Few people outside Ukraine know that throughout the three-year hostilities, these factories and mines paid Ukrainian taxes, and their output was counted toward Ukraine's gross domestic product. If the takeover stands, Ukraine won't see the predicted economic growth.

Unlike the military action and its geopolitical consequences, the economic side of the conflict in eastern Ukraine has never received much attention. It was assumed that Ukraine simply lost the industry of the separatist-controlled parts of the Donetsk and Luhansk regions. The October 2016 International Monetary Fund report on the state of the IMF's $17.5 billion rescue program for Ukraine had a chart showing the eastern regions as a slice taken out of Ukraine's economic pie.

Read more ....

WNU Editor: Leonid Bershidsky is correct .... the economic side of the conflict in eastern Ukraine has never received much attention. And there is good reason for it .... Ukraine needs tens of billions to just stay afloat .... and that does not include the tens of billions that will be necessary to fix the country's infrastructure when the war is finally over. And we are talking big infrastructure projects .... from moth-balling old nuclear reactors to rebuilding their entire civil infrastructure (roads, water, sewage, etc.). In the past Russia provided a lot of aid .... but those days are long gone .... so the expectation is for the West to step in .... but to no one's surprise they are not stepping up at all. So all eyes are on the IMF to make up some of this shortfall .... but their conditions for providing these loans are no longer holding .... especially if the rebel regions in the eastern part oft he country start nationalising the industries that are there .... which I predict they will do so in the coming weeks.  It is also true that over 2 million Ukrainians now work in Russia .... some of my own relatives included. A good part of Ukraine's economy is dependent on these remittances from Russia .... and yes .... any restrictions on these remittances will be incredibly damaging to families in Ukraine who are dependent on these monies. That is why I have said in the past that Russia's real leverage over Ukraine is the economy. If Russia was serious about crippling Ukraine .... forget about supporting the rebellion in the east .... all that they will have to do is put a stop to these money transfers coupled with a few other trade restrictions .... the economic impact would be immediate, and within a few weeks I would not be surprised if the Maiden protests were back. Fortunately .... such a strategy is not a Kremlin priority .... but later .... who knows.


Jay Farquharson said...

Could be very interesting.

Argentina's People "Nationalized", ( Worker's Coop's), are the most profitable, economically stable and most innovative sector of the Argentine economy.

Are the DPR and LPR going to the "nationalizations" over to the workers, or will it be a repeat of the Russian 90's?

War News Updates Editor said...

It's hard to say Jay. It's in the interest for the DPR and LPR to have these industries running efficiently .... but corruption has always been a problem. I give it a 50-50 chance, and that is because no one in Moscow is interested in running and/or be responsible for these companies, and as for the leadership in these regions .... they do not want to confront 75,000 angry workers who so happen to also be their neighbours.

Stephen Davenport said...

Yeah, lets just go ahead and let the Russkies jgo ahead and take over the Ukraine because they deserve it, sheesh your Putin Fanboy BS is getting old.

Jay Farquharson said...

Trump's fine with it, why arn't you?

B.Poster said...

Didn't Trump say Russia had to give back Crimea to Ukraine? Who knows what he meant.

Crimea is Russian, was Russian until Stalin gave it to Ukraine, Ukraine is not gdtting it back. Like it, don't like it, doesn't matter.

I don't think Russia wants Ukraine. They don't want to bear the costs of managing it. Some idiots in the American government decided we needed to insert ourselves in this mess. We never should have inserted ourselves into the Ukrainian mess.

Jay Farquharson said...

Trump's said Crimea is Russia.

Trump's also said Crimea is not Russia.

For everything Trump has ever said, alt-Trump has said the opposite.


Anonymous said...

Since he became he has pussied out on a lot of things including Crimes. I was fooled of his toughness before he was elected but very dissapointed in his later cowardness (Crimea, Flynn etc etc)

Jay Farquharson said...


The Trump Travelling Magic Tour will have another Miracle Cure Show up tomorrow.

Sign up once again, give him $25, $50, $100 and all will be well again.


Andrew Jackson said...

Canaidia is a Potemkin country filled with poltroons