Ukraine is heading to court in London after being sued by the Russian Finance Ministry. Ukraine has defaulted on their $3 billion (US) debt to Russia which needed to be paid by December 20 2015. The Russian Finance Ministry has suggested that Moscow is still willing to work with Kiev to solve the problem and have suggested restructuring in the past where the debt could be repaid by paying $1 billion per year over 3 years. Kiev has decided not to repay the debt and will fight the law suit in court.
Back in April 2014 the International Monetary Fund (IMF) approved a 2 year $17 billion standby arrangement for Ukraine with $3.19 billion due for immediate release. This money was to be used for;
‘(i) maintaining a flexible exchange rate to restore competitiveness; (ii) stabilizing the financial system; (iii) gradually reducing the unaffordable fiscal deficit; (iv) eliminating losses in the energy sector, while enhancing social safety nets; and (v) decisively breaking with problematic past governance practices’.
(i) and (ii) work by putting money straight into the financial market which just revalue’s the stocks.
Then in August 2014 the IMF released $1.39 billion to Ukraine even though the IMF states that; “The program remains highly challenging and continues to hinge crucially on the assumption that the conflict will subside in the coming months.”
Then in February 2015 Ukraine’s President Poroshenko visited an arms show in the United Arab Emirates where he is reported to have signed about 20 contracts for the supply of weapons to Ukraine.
Then in October 2015 Sputnik reports that the US gave $7.5 million to Ukraine for Humanitarian aid. The assistance to Ukraine from the US alone is now $69 million.
Then in March 2015 Sputnik reports that US vice President Joe Biden held talks with Ukraine’s President Poroshenko on supplying arms to Ukraine. This from Sputniks report;
“Earlier, Ukrainian Finance Minister Natalie Jaresko said that Kiev was planning to spend $3.8 billion from the IMF $15- billion aid package to buy military equipment, according to Germany’s Deutsche Wirtschafts Nachricten magazine. Most of the contracts will go to US concerns, like Technologies Network Corporation.”
Then in December 2015 the IMF reformed its policy on non-toleration of arrears to official creditors. So that means Greece were not allowed to restructure their debt due to the funds policy rules but now they reform this rule to allow more money to Ukraine. Let’s not forget the IMF is a private institution based in Washington.
The Russian President Vladimir Putin has now suspended the free trade agreement with Ukraine that was signed in October 2011. The suspension newly signed into law starts on January 1 2016. To retaliate against the debt law suit and the suspension of the free trade agreement President Poroshenko has increased transit fees for Russia’s Gazprom gas pipelines running through Ukraine to Europe. Russia will in turn carry on building the Nordstream II pipeline which bypasses Ukraine and enters directly into Germany.
The question remains was the loan from the IMF, and the humanitarian aid from the US government being used to purchase weapons?? If we look at the state Ukraine is in now even after all the loans and aid it has been given one would certainly think that Ukraine’s President is not using the money for the correct purposes. Ukraine borrows from the US (imf) then gives the money back to the US through weapons purchases and then the innocent citizens of Ukraine have to pay back the loans through austerity and reforms. This also happens to many countries. IE; borrow millions and purchase vaccines from big pharmaceutical companies then tell the citizens they are free but the citizens have to pay back the money.