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    December 9, 2015

    A Sugar Pill from Biden: How Ukraine Was Left Without Money

    Translated by Ollie Richardson for Fort Russ
    9th December, 2015

    Politikus - Valentin Katasonov

    "You deserve a spanking, but I am too soft"


    Whilst visiting Kiev on December 7-8, Joe Biden brought a promise to provide Kiev with financial assistance to the amount of $190 million. However, not everyone immediately understood that these dollars would stay where they are, and would not be given to the budget system of Ukraine. It's a carrot for the donkey, "association" money that neither Poroshenko nor Yatsenyuk will see, and citizens especially so.

    Biden's promise of aid is a tiny sugar pill issued in order to alleviate the bitter taste which will be experienced in Ukraine, through seeing the collapse of hopes that the West will Finance the new regime. We have already forgotten the enhanced financing programme of Ukraine, which was developed by the IMF and became an annex to the loan agreement of $17.5 billion, signed in the spring of this year. The numbers of the program are fascinating. Over a four-year period (2015-2018) Ukraine needs, if you believe the numbers, various external sources to cough up $40 billion. In addition to the aforementioned loan, a reduction of sovereign debt through restructuring needs to occur (15.3 billion dollars), the EU loans (2.5 billion dollars), loans to USA (2.0 billion dollars) and other loans on a bilateral basis (0.9 billion dollars). The amount of aid was planned for years. 

    In particular, this year, 2015, the European Union was to provide loans worth $1.8 billion, and the USA – $2 billion. Three weeks remain until the end of the year, but there is something inaudible about European and American loans. The International Monetary Fund, who is required to observe how the financing program of Ukraine is being executed, is also silent. In the good old days, the IMF would have raised the noise level to the whole world and not only cancelled the loan agreement, but also placed his client on the black list. Now, however, Washington requires the fund to call what is black, white. So, what is this situation in which Ukraine finds itself? First, the IMF has postponed granting the next tranche of loan to Ukraine. Let me remind you that, according to the aforementioned program of external financing, Ukraine in 2015 was supposed to get $10 billion. In fact, it has so far received two tranches of $ 6.7 billion.

    It was expected that the next tranche to Ukraine would be received in the fall, however, the IMF came to the conclusion that it was to be hinted that the tranche was to be delayed. Their grounds for refusal: the failure of the conditions of the loan. They mainly talked about the fact that Ukraine had not made progress in implementing reforms. The last claims of the IMF was the incompletion of tax reforms and the unsatisfactory parameters of the draft state budget for 2016. It is now clear that the third tranche to Ukraine will not be received in 2015. So we have the extended funding of Ukraine breaking down, including the part related to the IMF.

    Secondly, after the proposal of the Russian President to postpone the repayment of Ukrainian debt to Russia from December of the current year to the following three years (2016-2018 years), provided that the commitments of Ukraine to Russia will be guaranteed by the United States, the EU or any reputable financial institution, the U.S. said, after a delay of 3 weeks, that it is not prepared to offer this guarantee. A response wasn't received from the European Union. However, the silence of Brussels is also the answer.

    Thirdly, on the 7th December came the news from the World Bank, which, in the autumn, promised to grant Kiev a loan or a guarantee on the loan for the purchase of natural gas from Russia and its injection into gas storages of Ukraine. It was expected that the IBRD loan would be $500 million. However, the subsequent news turned out to be a shock for the Ukrainian authorities: the IBRD was not ready to provide a guarantee. The reasons given were the same: the incompleteness of the tax reforms and the shortcomings in the draft budget. Ukraine's sovereignty was lost a long time ago in all these matters.

    Fourthly, the shock effect resulted in the November statement from Brussels. As is known, from January 1st 2016, Ukraine and the European Union will begin to implement the exchange of goods within the common free trade area. Ukraine could become a transit territory through which the goods of the EU will penetrate into the Russian Federation. Moscow offered many times to negotiate with Ukraine and the EU in order to tackle all questions arising in connection with the new situation. Kiev withdrew from the negotiations. Therefore, from January 1, Moscow introduces a special regime of trade with Ukraine, which will limit the access of goods from the territory of Ukraine on the territory of the Russian Federation.

    The Ukrainian government had hoped that the EU would at least partially compensate for the inevitable losses. The damage could reach several billion dollars in annual terms, Kiev requested compensation of $600 million. However, in this case, Ukraine will get nothing. The European Commissioner for Enlargement and European Neighbourhood Policy, Johannes Hahn, responded to the request: "Let's be frank - for the first time, as was the case when we agreed about free trade zone, it was no secret that Russia might act in response after its introduction, whether we like it or not... We certainly were and still remain opposed to any actions that impede trade. But we have already provided a lot of money to Ukrainian businesses to prepare them for new export opportunities and new market conditions".

    Naturally, the EU is not a charity, but it is impossible to believe the words of the Brussels official, "we have already given a lot of money". Here are some figures for reference. The European Commission this summer gave the first payment of the program of assistance to Ukraine for entrepreneurship development. It was allocated €110 million. December 7, the media reported the second programme of the European Commission, aimed at supporting the decentralization reforms of public administration, with the expected total funding of 100 million euros.

    There was also the EU humanitarian assistance for the resettlement of "displaced persons" (100 million Euro). Additionally, there is the embezzlement of billions of dollars, incurring losses to Ukraine from the Kiev regime, beckoning the people of "Europe" into turning their back to Russia. Brussels does not remember the fact that the expanded program of funding the EU had promised the IMF to grant Ukraine in the final year loans amounts to $1.8 billion.

    What the West has done with Ukraine, in language that has become widely used, can be denoted simply as Ukraine being tossed aside. Ukrainian experts are, on this occasion, neither surprised nor angry about it. This is the method of existence in which Western civilization conducts itself. 

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