We should confidently expect Russia to continue to be active in the Ukraine, and to continually ‘foment’ referendums etc allowing Russia to absorb more territory.
Underneath all this is Ukraine’s debt.
Here you will see that Ukraine owes Gazprom some $2.2 billion. But that’s not all.
Here Al Jazeera quotes Vladimir Putin: Ukraine owes some $17 billion in discounts and a potential additional $18.4 billion in some sort of fine. On top of that, Russia purchased some $3 billion worth of Ukraine government bonds, which also need to be repaid, eventually.
After the acquisition of the Crimean Peninsula, sanctions against Russia started. The American Interest has a page here that claims Russia has, privately and publicly, loaned some Trillion Dollars to the EU. It won’t be easy to escape this level of financial involvement.
Sanctions re Russian exports were discussed. However, Germany gets some 50% (I’ve also seen an estimate of 40%) of its energy from Russia, some of it via the Ukraine. This Forbes page says the US could fill this gap in a few years – assuming their supply of natural gas can be increased, liquified, and shipped – all of which require additional facilities.
Here you will read that the UK could indeed punish Moscow, but only if it were willing to take a hit in its own financial profits.
Meanwhile, the IMF has promised some $14 to $18 billion, but is waffling and not actually delivering anything. Amazingly enough, criticism of this procrastination came from Canada’s former foreign affairs minister Lloyd Axworthy. (I’ll get to the irony of Canada having anything to say later.)
Meanwhile, the USA has generously offered to guarantee a loan of $1 billion. Not much against the larger size of the actual need.Here you will read Vladimir Putin’s response to this: ‘ludicrous.’
Back to Canada’s magnificent involvement. Here you will find CBC News explaining that we are offering $220 million. That’s $0.22 billion. It does seem to be a gift rather than a loan guarantee, but we Canadians can never be sure what our federal government is really doing, eh?
Getting solid numbers on Ukraine’s problem is, well, problematic. Wikipedia (as usual an excellent reference) says three things: Ukraine needs $17 billion in 2014 alone; Ukraine is in recession; economic indicators are betting Ukraine’s probability of default in the next five years is 50%.
Now for the most amazing part of all this muddle. The IMF says that cash it provides to Ukraine will not be used to pay of Russian debt. At least not the early cash.
And, part of the price of IMF assistance will be, austerity in Ukraine. Already being in recession isn’t enough, eh?
Now for the dumb questions.
- Does anyone seriously believe that sanctions will stop Putin in his tracks?
- Does anyone seriously believe that the IMF etc will provide enough to bail Ukraine out?
- Does anyone seriously believe that austerity is a cure-all of country recessions?
- If you were in ‘power’ in this situation (Christine Lagarde’s position, for example), what would you think was the right thing to do?
- Is this the same as the most human, humane thing to do?
Are these dumb questions?