Ukraine crisis takes its toll on country’s oligarchs | beyondbrics

Ukraine’s billionaires are losing their cash, especially those with significant assets in the Donbas, an area that has become a battlefield between pro-Russian rebels and units loyal to Kiev. According to Forbes’ 2015 billionaires list, Rinat Akhmetov, Ukraine’s richest man, has lost as much as $5.8bn over the past year.

The mining, steel-making, energy and heavy engineering units of Akhmetov’s SCM Group have been forced to halt operations or reduce their capacity in territories controlled by separatists or near the front line. The Group’s media, telecommunications and banking businesses are also feeling the effects of the rebellion.

On Friday, SCM’s power generator and coal producer DTEK posted a full-year net loss of 19bn hryvnia ($850m) in 2014, after a net profit of 3bn hryvnia in the previous year. “Military operations and difficult macroeconomic situation in Ukraine have resulted in a significant decrease in the net profit of DTEK’s companies,” Piotr Fokow, finance director, said in a statement.

DTEK’s mines and power plants have been damaged by shelling, by pro-Kiev forces and by pro-Russian separatists; they have experienced power blackouts and other logistical problems.

Two of DTEK’s producers of anthracite, Rovenkianthracite and Sverdlovanthracite, have been running at between a quarter and a third of capacity, mainly due to the destruction of railway infrastructure. In peacetime, they produce up to 40,000 tonnes of coal a day; now, they are managing just 8,000 tonnes.

Complete story at - Ukraine crisis takes its toll on country’s oligarchs | beyondbrics

Ukraine needs more bailout financing – Ukraine finance minister

Ukraine needs more bailout financing than currently promised to help jump-start the embattled nation’s economy, Finance Minister Natalie Jaresko said Monday in an interview with The Wall Street Journal.

"The package that we have is going to stabilize the financial banking system, but it’s not enough to seriously restart growth and promote growth," Jaresko said after meetings with U.S. Treasury Secretary Jacob Lew.

The newspaper said that in meetings with senior U.S. Treasury, State Department and White House officials and lawmakers, Jaresko this week is making the case that backing Ukraine will pay geopolitical dividends.

"If, for whatever reason, one of our partners is not willing to come up with, or not able to come up with defensive military support, then provide us with financial support," Jaresko said.

But aside from promising to guarantee $2 billion of new Ukraine debt and working with the World Bank, Europe and other international lenders to provide support, U.S. officials haven’t indicated they are prepared to cough up any more cash, the newspaper said.

"Right now the coalition seems to be unified," the finance minister said.

Complete story at - Ukraine needs more bailout financing – Ukraine finance minister

Yatsenyuk: One Quarter of Economy Lost, Hundreds of Companies Closed / Russian peacekeeper

Ukrainian Prime Minister Arseniy Yatsenyuk said Tuesday his country has lost 25 percent of its economy because of the conflict in Donbass, hundreds of businesses have been closed.

"We have lost a quarter of the Ukrainian economy. Because of the war…hundreds of companies have been closed, but we were able to collect more taxes than last year," Yatsenyuk said at a meeting with governors. The International Monetary Fund (IMF) approved $17.5-billion financial aid for Ukraine. In exchange for money Kiev committed to implementing deep political, social and financial reforms.
Yatsenyuk said Ukraine needs a new constitution, the main provisions of which should be approved in a referendum: "The will of the people, expressed through a referendum, should define Ukraine’s new constitution." Yatsenyuk said the new constitution would give the Ukrainian regions more powers, and would introduce a European legal system. Earlier in March, Ukrainian President Petro Poroshenko signed a decree to set up a commission to amend the country’s constitution.

Complete story at - Yatsenyuk: One Quarter of Economy Lost, Hundreds of Companies Closed / Russian peacekeeper

Ukraine, land of plenty, now running on empty - Taipei Times

A Soviet tank mounted on a plinth outside a primary school attests to the last time the central Ukrainian town of Kagarlyk saw war up close. The tank is a leftover from the Soviet force that routed Nazi troops from Ukraine during World War II.

More than 70 years later, tanks have again been churning up the rich black soil of Ukraine as the country’s pro-Western government battles a pro-Russian insurgency. Seen on television from the comfort of a sitting room in Kagarlyk, a depressed town about 600km west of the frontline, the fighting that rumbles on at a low level despite a month-old truce seems remote. However, Ukrainians across the country are paying a high price for the conflict in the industrial Donbass region, which accounts for nearly 10 percent of national output.

Maria Polyvaniuk, a 27-year-old mother of two who lives in a drab Soviet-era apartment block, has watched aghast as the nation’s currency nosedived in the past year, triggering astronomical increases in the prices of imported food, clothes and other essentials. “Before, if we had something to celebrate, like a birthday, we could go to a cafe. We also ate more meat and fish,” says Polyvaniuk, a slight figure with wispy hair, describing life for a family of four on her electrician husband’s monthly salary of 2,000 hryvni in pre-war Ukraine. That salary was equivalent to US$250 a year ago, but just US$87 today.

“Nowadays, we cook mostly simple food, like soup and rice. As for clothes, we buy less and wait for sales,” she says.

Complete story at - Ukraine, land of plenty, now running on empty - Taipei Times

Why Ukraine Is a Mess and How It Got There | Johnson's Russia List

In Ukraine, the crisis is messy, the solutions elusive and the outlook bleak.

That is the view of Eugene Rumer, a senior associate and director of the Russia and Eurasia program at the Carnegie Endowment for International Peace.

Rumer spoke at The Heritage Foundation recently about his new book, “Conflict in Ukraine: The Unwinding of the Post-Cold War Order,” which chronicles the unfolding crisis in Ukraine “up until the first Minsk talk” of last September, which he called a “good place to stop” because the violence and movements had hit a stalemate.

“The purpose was not to offer a blow by blow,” he said, but to take a look at factors that led to the crisis.

First was the story of Ukraine itself.

“The history [of Ukraine] … [is one] that lacks a traditional statehood,” Rumer said. The country “does not have a living memory [of statehood].”

This hurt in two ways, he said. First, because of the historical conflicts, almost all of Ukraine’s neighbors have a claim against what is now Ukrainian territory, including Russia.

Second, Ukraine’s foray into self-government stumbled along lines predictable for a country with little history of self-governance. After the breakup of the Soviet Union, he said, an oligarchy rose in Ukraine, similar to the one in Russia. Once in charge, the oligarchs “fixed the political system” to ensure their own success.

Complete story at - Why Ukraine Is a Mess and How It Got There | Johnson's Russia List

Ukraine SITREP Thursday March 12th, 2015 | The Vineyard of the Saker

The main development in the Ukraine is the sharp increase in the number of visible signs of the economic collapse taking place. Prices are sky-rocketing, more and more salaries are simply unpaid, shortages are becoming more frequent and as a direct result, so are social protests. The interesting thing is that these protests are not limited to the eastern Ukraine, but are also taking place in western regions of the country. These protests includes strikes and street protests. The IMF has agreed to $17.5bn in loans to Ukraine but that will clearly not be sufficient, if only because whatever money is not stolen will be used for war. The situation is now so dire that the Ukraine purchases gas from Russia only for a couple of days in advance.

The situation is also sharply deteriorating along the line of contact where the junta forces have resumed sporadic shelling all along the frontline. It is becoming evident that the junta forces have not withdrawn their heavy weapons. DNR Foreign Minister Alexander Kofman has declared yesterday that he expected a full scale junta attack within the next two weeks. Needless to say, such an attack has exactly zero chance of success, but if it is executed in response to a false flag atrocity somewhere near the line of contact it will at least serve to distract the public from the economic disaster taking place in all of the Ukraine.

Since the Hrivna is in free fall and since Kiev has stopped paying pensions and bank operations in the Donbass, the two Novorussian republics have now switched to a multi-currency system in which the Hrivna, the Ruble, the Dollar and the Euro are all legal tender.

As was easily predicted, the Minsk 2 Agreement has now basically stalled because the junta is apparently unable (or unwilling) to withdraw its heavy weapons or engage in constitutional reforms. As a direct result of this, Russia and Novorussia are now the legal “owners” of the border between the two countries.

US military aid is slowly coming in, and officially it is limited to non-lethal aid. As I said many times, no amount of military aid will make any real difference in the military balance between the junta and Novorussia.

Complete story at - Ukraine SITREP Thursday March 12th, 2015 | The Vineyard of the Saker

"An entire generation of Ukrainians will answer for the Maidan" - Fort Russ

By Vasiliy Muravitskiy

Translated from Russian by J.Hawk

The IMF is deciding: shall we continue this country’s and this government’s agony, or shall we end it at once? Looks like they have decided to continue it.

Deputy Chair of the European Commission Kristalina Georgiyeva acknowledged on Monday that Ukraine will need $40 billion over the next several years, far more than creditors are planning to lend to Ukraine. Kiev preferred not to notice this statement, but another EU official openly announced that the process of reconstituting Ukraine will be “a job for a whole generation.”

Poroshenko himself recently noted that 35% of Ukraine’s industry that still existed in 2013 no longer operates. 10% of this industry was simply destroyed—in other words, every tenth factory, mine, plant. Yatsenyuk’s Cabinet of Ministers officially predicts annual inflation of 40% in 2015. If that’s the official estimate, what will it be in real life?

Yatsenyuk’s swaggering notwithstanding, there is little hope for an IMF tranche. IMF gave Ukraine only $4.6 billion out of $7.4 billion promised in 2014. This in a situation where Kiev was making regular debt servicing payments. In other words, IMF is lending just enough money to let a little oxygen into the lungs.

Today, the sum total of Ukraine’s politics is this: will the IMF give a new tranche or not. And how much. And that’s it.

Complete story at - "An entire generation of Ukrainians will answer for the Maidan" - Fort Russ

Ukraine: A Moment of Truth Approaches - Fort Russ

Of the four options listing, 1 & 3 have already been eliminated. Apparently this time it's true. Ukraine has gotten the IMF loan. Unlike this author, I believe the war will restart, probably sooner than later. Because even if Kiev has come to it's senses on resuming the war, I certainly don't see Kiev's Nazis going along with that for too long.

By J.Hawk

While it's difficult to separate truth from deception when it comes to ascertaining the real positions on the Ukraine crisis that have been adopted by the leaders of Ukraine, EU, and the US, we'll soon have an opportunity to observe their real preferences, and the relative balance of power in that complicated relationship.

Ukraine is about to experience two events (or two non-events, depending on how things shake out). One of them is an IMF credit of up to $17 billion (and change). The other is the resumption of fighting on the Donbass. Given these two binary events, we have the following four combinations, and associated implications:

1. Ukraine does not get an IMF credit (or it gets a minimalistic one, sufficient to stave off a default but not much else), and Ukraine does not go to war. That would be a sign that US and EU have written off the "Ukraine project" as both unprofitable and risky, and that Kiev has acquiesced in that decision. It would also mean that an improvement in the Russia-Ukraine relationship is just around the corner, including the final settlement of the status of the Crimea and the Donbass. In my view, it is not a likely scenario.

2. Ukraine gets an IMF credit and does not go to war. This variant would indicate that the doves, both in the EU, US, and Ukraine, have prevailed. The "Ukraine project" is still on the agenda, but the interested parties are taking pains not to escalate the situation for fear of losing everything. In my view, this is the most likely scenario.

3. Ukraine gets no IMF credit and goes to war. If we see this outcome, it would imply a rather major breach between the US and the EU or an attempt by the Anglo-Saxon EU/NATO members to establish their dominance over their respective institutions. EU leaders don't want to see Ukraine go to war. US leaders want to see EU pay for Ukraine. If the EU is unwilling to pay, the US/British/Kiev hawks might be tempted to use war to escalate the situation to such an extent that the more dovish French and German leaders have no choice but to jump on the bandwagon. If we see weapons and trainers go to Ukraine, it will mean a definite weakening of Merkel's and Hollande's position within both EU and NATO, as it does not seem likely the two will dare chart a policy independent of Washington and London. An alternative explanation of this scenario is that it's a variation on scenario number 1, except that Kiev does not want to acquiesce to it, and tries to escalate the situation in order to force the West to assist it.

4. Ukraine gets an IMF credit and goes to war. This could either mean that Kiev broke faith with the EU (rather unlikely, considering how important that support is). It could also mean that the hardliners in the West have prevailed and have decided to finance and arm Ukraine for the sole purpose of weakening Russia. This would make it the advanced version of scenario 3, in that the Anglo-Saxon powers are now calling the shots and the influence of France, Germany, and pretty much every other EU/NATO member has been nullified. I view this scenario as relatively unlikely.

Got alternative explanations? Anything I missed? Feel free to post in the comments.

Complete story at - Ukraine: A Moment of Truth Approaches - Fort Russ

Ukrainian Junta Defeated - while the people face social and economic collapse

“This is a city of the dead! For six days we haven’t eaten or drunk, we’ve been going crazy,” “This is genocide against the people, it’s just killing. Six days they’ve been killing us. My hands are shaking. The Ukrainians don’t let us through their side, you can’t escape there. We’re like prisoners to them, as if we’re to blame for something.”

Exodus from the city of Uglegorsk

The EU attempt to try and stave off military defeat for the Ukrainian Junta has failed ignominiously. The battle for the Debalcevo cauldron has reached its climax with the defeat of the Ukrainian Armed Forces (AFU) at the hands of the Novorossian Armed Forces (NAF). According to information coming from militias of Novorossia the AFU losses are huge. As of 19 February the Junta has lost 1,200-1,500 men killed and over 500 have been taken as prisoners. To compound matters the Ukrainian army has abandoned most of its artillery and armour and large amounts of ammunition dealing a huge blow to the war mongers in Kiev and their masters in Washington. This latest military catastrophe for the Kiev Junta is explained away by the capitalist media as the consequence of Russia's continuing military incursion into Ukraine.

The Russian blogger Colonel Cassad has noted the military significance of this victory for the militias of Novorossia,''Regardless of how much of the enemy force will be able to break out of the encirclement, the NAF captured a major transport hub of the Novorossia (which will greatly simplify the NAF logistics) and defeated a large military group of the enemy, which allows us to state that a major operational success was achieved.''

The Minsk ceasefire talks were a desperate attempt by the leaders of the EU to try and stave off a military defeat for the AFU after it lost control of Donetsk airport and then became enveloped in the Debalcevo cauldron. It is worth recalling that the previous ceasefire in September was prompted by the crushing defeats suffered by the Ukrainian army.

The EU has recently announced further sanctions against 19 individuals and eight battalions of the Novorossian Armed Forces (NAF). To compound matters the EU leaders have stated that Russia will face even further sanctions if the ceasefire fails. This taken together with the accords of the recent Minsk ceasefire, which put responsibility for enforcing the ceasefire solely upon Russia, reveals how the EU ''peace initiative'' was not meant to bring peace to Ukraine but merely to give the Ukrainian army a breathing space to avoid catastrophic defeat.

The irony of the situation is that during the Minsk talks Poroshenko could have negotiated the peaceful withdrawal of their forces out of the Debalcevo cauldron. However, Poroshenko was being pushed by the war party in his government and his American backers to maintain the suicidal position of no retreat. It would appear that once the remains of the Debalcevo cauldron are mopped up by the NAF then a ceasefire of sorts may settle over the front lines on both sides.

Complete story at - Ukrainian Junta Defeated - while the people face social and economic collapse

Ukraine unofficially has 272 percent inflation - The Washington Post

Hyperinflation is always and everywhere a political phenomenon.

It happens after wars or revolutions, when governments have to print the money they need because there's not much of an economy left to tax—which brings us to Ukraine. It had a revolution, it has a war now, and it's all but broke. Inflation is officially 28.5 percent, but, according to Johns Hopkins professor Steve Hanke, it's really more like 272 percent. And that's only going to get worse as long as Ukraine's currency does.

It's hard to overstate how challenged Ukraine is. Its economy has actually shrunk since communism ended in 1991. Or since 1992. Or even 1993. That's because communism never really did end. Ukraine just traded party bosses for oligarchs. Sure, it privatized companies and introduced markets, but Ukraine didn't shed its Soviet-era corruption or inefficiency. There was barely any rule of law, tax rates had to be jacked up to make up for all the wink-wink, nod-nod tax evasion, and, as a result, even more of the economy entered the shadows. The IMF estimates that Ukraine's underground—and non-tax-paying—economy is as much as 50 percent of GDP.

Now Ukraine's not-so-cold war with Russia is destroying the little that's left. It's not just that Ukraine has lost the factories in the rebel-held east that make up a quarter of its industrial capacity. It's that it can't afford to fight a war against what is still its biggest trading partner—Russia. The only way for Ukraine to pay its bills is to dip into its reserves. But those have dwindled down to $6.42 billion, only enough for a little more than a month of imports. (Three months worth is considered the absolute least you can get by with). So Ukraine has done what all countries do when they've run out of money: go to the IMF. It's announced a $17.5 billion bailout in return for tough reforms, including cutting energy subsidies for households. But even that won't be enough to stop Ukraine from defaulting on its debt—or, if you're feeling more polite, restructuring its bonds. Those have already fallen to less than 50 cents on the dollar in anticipation of the nonpayment to come.

In short, Ukraine doesn't have any foreign currency and doesn't have the ability to earn any more. And that means there's nothing left to support the value of its currency, the hryvnia—so it doesn't have much anymore. Ukraine had been pegging it at 8 per dollar before the war began, but was then forced to let it slide down to 16 per dollar, where it tried to re-peg the hryvnia. This failed. Ukraine didn't have the dollars to prop up its currency for very long, and when it belatedly admitted this, the hryvnia collapsed. Then it collapsed some more after the latest peace deal fell apart. So Ukraine's central bank has done the only thing it could do: everything. It made its capital controls even stricter, banned currency trading, then reversed the ban on currency trading but begun intervening directly. It's worked a little. Well, at least the hryvnia has rebounded from a low of 33.5 to now 27.2 per dollar. But that, as you can see above, is still a 70 percent fall from the start of 2014.

Complete story at - Ukraine unofficially has 272 percent inflation - The Washington Post

For Ukraine, the Battle to Bolster a Crashing Economy Is as Dire as Combat in the East | RAND

by Olena Bogdan

Ukraine's fight to control its destiny is underway not only on its eastern battlefields but also in the halls of its parliament and in those of global financial institutions. The struggle to keep the former Soviet state afloat economically has been daunting, as the nation's parliament has fallen into disarray and failed to enact major economic reforms.

The country's gross domestic product fell by an estimated negative 8.2 percent by 2014's end. Government reserves have fallen to $7.5 billion, the equivalent of less than two months of imports. Ukraine's economic woes could get worse: If Western creditors, and the International Monetary Fund in particular, do not approve a recently negotiated $17.5 billion package, the nation will be deemed to be in default.

Ukrainian lawmakers could help improve the economic situation, particularly by dealing better with the national budget. But their recent deliberations inspired little public confidence.

The parliament launched its consideration of the 2015 budget at the end of 2014, laboring until 4 a.m. Dec. 29 to barely approve it — 233 of 450 of them voting in favor. The nationally televised discussions had lasted two weeks, and, at one point, lawmakers said the budget had undergone so many changes they needed a timeout so amendments could be incorporated into a plan that all could see. Rather than waiting, lawmakers jumped ahead in their deliberations.

The budget was published Jan. 1 to meet a legal deadline. But Ukrainian leaders quickly termed the budget provisional and said it would be subject to revisions as soon as January. A number of amendments were passed earlier last week (March 2).

That left a handful of top Ukrainian negotiators with the tricky task of persuading international lenders at a critical moment to provide billions of dollars more in aid without evidence the country would undertake reforms needed to enable it to repay the debt.

Complete story at - For Ukraine, the Battle to Bolster a Crashing Economy Is as Dire as Combat in the East | RAND

Ukraine's Economy Is Worse Than It Looks - Bloomberg View

The world's worst-performing currency this year, the Ukrainian hryvnia, has bounced back 47 percent since last week's precipitous plunge. It's tempting to conclude Ukraine has pulled back from the brink of financial disaster. In reality, the Ukrainian central bank and government are just sweeping their problems under the rug to make them less obvious to the International Monetary Fund as it prepares a decision on a rescue package for the country on March 11. After the IMF money arrives, Ukraine will probably resume its previous monetary policy -- the most disastrous and Soviet-like pursued anywhere in Europe since the early 1990s.

This chart of the hryvnia's exchange rate to the U.S. dollar may look depressingly like a dead bird lying on its back, but, in theory, it shows progress in recent days:


BLOOMBERG

The hryvnia has now approached the 21.7 per U.S. dollar level stipulated by the IMF program. That would be great if it weren't just the meaningless official exchange rate. Though the hryvna was officially floated last month, it is propped up by Wednesday's refinancing rate hike to 30 percent from 19.5 percent and by currency controls. These include a ban on foreign exchange sales of more than 3,000 hryvnias to individuals and on foreign currency deposit payouts of more than 15,000 hryvnias, limits on currency purchases by banks for their own accounts, a requirement that exporters sell 75 percent of their foreign receipts for hryvnias and the ceaseless harassment of importers trying to make payments outside Ukraine.

These draconian measures might seem reasonable given that Ukraine's international reserves at the end of February were down to $5.6 billion, the lowest level since June 2003. There's also the fact that the National Bank of Ukraine spends about $1 billion per month despite all the present restrictions, half on debt servicing and half on interventions to prop up the hryvna's official rate. With the coffers running empty, National Bank governor Valeria Gontareva had to do something to convince the IMF that Ukraine would be able to repay it.

The problem is that the harsh foreign exchange regulation, which makes it nearly impossible to travel abroad or conduct cross-border business, and the interest rate, which pretty much precludes domestic investment through bank funding, are driving much of the economy into the shadow sector. Ukraine has long had one of the biggest shadow economies in the world. Before last year's "revolution of dignity," the IMF estimated it at about 50 percent of output, and it is probably bigger now, because private citizens' foreign exchange transactions have moved almost entirely to the black market, and the corporate ones have gone offshore.

Complete story at - Ukraine's Economy Is Worse Than It Looks - Bloomberg View

Ukraine businesses battered by conflict, poor economy - Anadolu Agency

'Practically every business of every kind is suffering,' Kiev businessmen tell The Anadolu Agency

By Andrew Jay Rosenbaum

ANKARA

Businessmen in Kiev say it's becoming tougher to make a living in Ukraine amid the country's economic strife and ongoing conflict in the east.

Maksym Gapchuk, the chief financial officer at an Austrian insurance group in the Ukrainian capital of Kiev, told The Anadolu Agency: "Practically every business, of every kind, is suffering.

"Every business is affected by the devalued hryvnia, and also by the overall decline in demand."

“Overall, businesses are losing money, and there seems to be no end to losses," complained Sergiy Shchukin, who runs a leisure and travel business in the city.

And they are not alone.

- Bank protest

About 30 people demonstrated outside the National Bank of Ukraine's headquarters on Instytutska Street on Feb. 13 in protest against the devaluation of the hryvnia as the currency reached an all-time low of 26 against the U.S. dollar.

Gapchuk said: "The biggest slide for the hryvnia happened in January. The hryvnia exchange rate to the dollar fell to 35.

"For some businesses where the share of import positions was more than 50 percent, businesses stopped being profitable at a rate of 20 to the dollar."

Currently at 24 to the dollar, the amount of hryvnia people need to buy food in Kiev is formidable with food price inflation at just over 30 percent in January, according to U.S. Department of Agriculture statistics.

And with additional costs being added to consumer purchases through devaluation, the Ukrainian government is now taxing imports at between five and 10 percent.

Complete story at - Ukraine businesses battered by conflict, poor economy Anadolu Agency

Cracks in Ukrainian economy surface beyond Kiev's cloak of calm - Nation World - DesertDispatch.com - Barstow, CA

By Bloomberg News
Posted Mar. 3, 2015 at 6:00 AM

KIEV, Ukraine — Ukrainians are seeing signs the economy is cracking under the weight of war and the risk of default.

While restaurants and cafes are bustling and shelves are full in Kiev, a city of 3 million, a recession stretching into a second year is igniting angst about the return of the disarray unleashed by the Soviet Union's collapse in 1991. Especially outside the capital, that era of food shortages, hyperinflation and mass unemployment doesn't seem so far away.

"My business is about to close and there are many more like it," said Valentyna Lozova, a 65-year-old accountant in Kiev. "Salaries aren't rising, inflation is galloping and the hryvnia's in freefall. I'm afraid of the future."

It's becoming harder for Ukrainians, mindful of the thousands who've died in an 11-month insurgency near the nation's border with Russia, to put a brave face on their economic woes. With much of the country's industrial base in ruins and a looming debt restructuring, the effect may be felt for years. The economy is set to plunge 12 percent in 2014-15 and the inflation rate jumped to 28.5 percent in January, the world's second-highest behind Venezuela.

As the economy deteriorated, the hryvnia has sunk 62 percent in the past year, the most in the world, while benchmark government debt due 2017 trades at 43 cents on the dollar, data compiled by Bloomberg showed. The currency collapse has sparked panic in some towns.

"I see people every day in supermarkets buying sacks of flour and cereals as prices grow," said Iryna Lebiga, a 31- year-old mother of three who's struggling to find a buyer for her unprofitable sheep farm in Poltava, a 350-kilometer (220- mile) drive east of Kiev. "People don't have money. Someone approached us last year but my husband thought he offered too little. Now, nobody offers even half of that."

Complete story at - Cracks in Ukrainian economy surface beyond Kiev's cloak of calm - Nation World - DesertDispatch.com - Barstow, CA

Police beating people protesting currency collapse in Kiev

Notes: If Yanukovich did this: bad. When the junta does it? No Problem! 

A year after Euro-Maidan, Ukraine coming apart at the seams | New Eastern Outlook

It has been a year since protestors descended on Kiev’s Independence Square calling for the ouster of President Victor Yanukovich. Though the movement consisted of both liberal pro-European elements and rightwing quasi-fascist groups, most international media chose to frame the events of Maidan in a way that misleadingly obscured the role of the latter.

While reports indicate that pro-Western intelligentsia and activists are leaving their country in droves, the situation in Ukraine today cannot be properly understood without fully appreciating the role of quasi-fascist paramilitaries and their private-sector backers, who now exert tremendous influence on the leadership in Kiev and the political climate in Ukraine more generally.

Though the crisis in Ukraine remains a domestic conflict between the majority of citizens in the west who favor ties with Brussels and those in east who seek autonomy, independence or ascension into the Russian Federation, the growing internationalization of the conflict risks an irreversible escalation.

The recent Nato exercises in the Estonian frontier town of Narva that saw a parade of military hardware laden with American flags some 300 yards from Russia’s border, prompting counter-exercises from Moscow, is indicative of the increasingly provocative measures being taken. As the neo-conservative faction in Washington essentially steers the Obama administration’s policy, the idea of a Cold War-style stand-off between Russia and Nato grows ever more plausible.

Deepening Financial Crisis

The Ukrainian economy is bleeding out and rapidly approaching insolvency. The national currency, the hryvnia, has depreciated 68 percent in the past 12 months. Reports from Kiev indicate an ongoing disagreement between the central bank, which has tightened controls on capital movement to suppress capital flight, and Ukrainian Prime Minister Arseniy Yatsenyuk, who reportedly opposed capital control measures.

The central bank lifted restrictions on capital movements on Yatsenyuk’s orders, sparking a further free-fall of the hryvnia, making it the world’s worst performing currency, according to Bloomberg. Ukrainian bonds have become the worst performing among 58 nations on Bloomberg’s Emerging Market Sovereign Bond Index, having plunged by 25 percent this year.


First appeared: http://journal-neo.org/2015/03/02/a-year-after-euro-maidan-ukraine-coming-apart-at-the-seams/

Complete story at - A year after Euro-Maidan, Ukraine coming apart at the seams | New Eastern Outlook

At the finish line of deindustrialization: how Ukraine loses its industry | The Vineyard of the Saker

By Ivan Lizan

Translated by Eugene

Ukraine’s refusal to cooperate with Russia in the military, scientific and technical fields has already begun to bear fruit. Naturally, this Kiev’s policy forced the citizens of Ukraine to eat only one (poisonous) kind of “fruit”: unemployment, poverty and deindustrialization.

Thanks to the West and Kiev for this

The goal of this break in cooperation, initiated by the Western curators of Kiev – while talking heads in the government only announced Washington’s decision, wrapped in the slogan “Not a single spare part for the occupier!” – was actually the disruption of the state defense order of the Russian Federation.

“Geniuses” of the Ukrainian political thought expressed the intention to force Moscow’s capitulation by refusing to cooperate and to export components. For example, the Ukrainian political “giant” Yuri Lutsenko suggested to use the Yuzhmash plant as a means to blackmail Russia. The argument was truly “deadly”, but, as turned out, not for Russia: “… all Russian nuclear missiles can be serviced only by our Yuzhmash. Without this service, the whole world will sing la-la-la-la” [reference to the obscene ditty “Putin huilo la-la-la-la” popular among anti-Russian Ukrs] – Lutsenko repeated in mid-July last year.

However, the negative effect of breaking the bonds is almost always mutual and is not immediate. Because, all of a sudden, it turned out that the mastodon of Ukrainian engineering – the backbone of Ukrainian rocket-building – Yuzhmash found itself between life and death. Yet, Russian companies still keep working, for reasons still unclear to Kiev.

How the flagship of rocket-building dies

The plant had problems before. They were not critical, but accumulated from year to year.

Americans were first to refuse cooperation with Yuzhmash because of the exploded Anthares rocket. Formally, the Americans are going to work for about a year on finalizing the technical solution for their rocket, so Yuzhmash will be left without US orders during this time. In reality, if Washington decides to renew the cooperation, they will not find anyone to talk with, as by that time the company will be reduced to just a pile of equipment.

The final nail in the plant’s coffin was the refusal of the Russian Federation to procure launch vehicles Zenit; they will be replaced with [Russian made] Angara.

Complete story at - At the finish line of deindustrialization: how Ukraine loses its industry | The Vineyard of the Saker

Alarming Currency Devaluation Provokes Consumer Panic in Ukraine / Sputnik International

The rapid devaluation of Ukraine's currency has provoked a "consumer panic" in the country, adding fuel to the fire of the ongoing political and economic crisis.

Ekaterina Blinova – The rapid devaluation of the hryvnia has triggered a panic amongst Ukrainian consumers, prompting people to "storm" supermarkets and pharmacies.

The Ukrainian currency has already lost 70 percent of its value, triggering a "consumer panic" in the country. Ukrainians are stockpiling food and medicine, scouring the shelves for sugar, cooking oil, flour, canned products, cakes and frozen chickens. Most of these products have already disappeared from Ukrainian stores.

Local media outlets depict a gloomy picture of people standing in queues for hours, cursing and jostling each other. The panic has emerged in the last few days in Kiev and other cities of the country: cheap products such as coffee, tea and sunflower oil have vanished from the shelves due to consumer hysteria.

Ukrainian stores have already introduced rationing of basic products in order to reduce the negative impact caused by the nationwide panic. Restrictions have been introduced for goods like cooking oil, flour and sugar; with retailers allowed to sell only two bottles of oil and three to five kilograms of flour and sugar per person.

Complete story at - Alarming Currency Devaluation Provokes Consumer Panic in Ukraine / Sputnik International

Things Will Get Much Worse before They Get Better for Ukraine Economy - Russia Insider

NOTE: This article is two days old, but the stated exchange rates are history. The official exchange rate is now 32.5:1 while rates on the black market range from 38 - 45. Another story about this soon.

A recent note by Ukraine-based investment firm Concorde Capital paints a worrying picture for the near future of Ukraine’s struggling economy.

Currency weakness, inflation levels, as well as contractions in industry and manufacturing output have all worsened in 2015, following already poor figures in the final months of 2014.

Since the beginning of the year, the hryvnia’s official rate has fallen against the dollar by more than 1.5 times, or by UAH9.79, to UAH26.05 per dollar.



An inflation forecast of 26% – up from an initial 13.1% – means that a nominal GDP increase of 20% on year will still see the overall economy of Ukraine shrink by 7% in real terms this year.

Complete story at - Things Will Get Much Worse before They Get Better for Ukraine Economy - Russia Insider

Ukrainian Households Face 264% Spike in Utilities Rates on Gas / Sputnik International

Amid an uneasy ceasefire, a spiraling currency, pension cuts, the re-introduction of the military draft, and faltering public services, now ordinary Ukrainians are likely to see their utility costs skyrocket.

IMF officials and the Ukrainian government have been negotiating proposals that would substantially raise gas and heating tariffs for Ukrainian households, as part of the IMF's agreement to provide Ukraine with a new $17.5 billion rescue plan. The plan is conditioned on Ukraine making a number of changes to its national budget, in areas including price subsidies, pensions, tariffs, and the tax code.
"The package of documents includes not only amendments to the 2015 state budget, but also a change in tax laws. It also includes an increase in gas tariffs by 264 percent and an increase of 64 percent on tariffs for heating," a National Bank of Ukraine official participating in the IMF-NBU meeting told the Ukrainian newspaper Vesti. The official added that the NBU "has little doubt that the MPs will vote for the necessary package of measures."

According to Alexandr Klimenko, the former Minister of Revenue and Duties, the proposed changes, which will be voted on at a special session of the Verkhovna Rada on February 25, leaves little money to assist ordinary Ukrainians in coping with the rising rates. "For those counting on subsidies, let's use simple arithmetic: Subsidies to Naftogaz in 2014 comprised about 100 billion hryvnia ($3.8 billion US); in 2015, they will be reduced to 30 billion hryvnia ($1.15 billion); the difference will be covered by an increase in tariffs. At the same time, subsidies for low-income families in 2015 will amount to only 12.5 billion hryvnia ($479 million). The difference in the amount of 57.5 billion hrynvia ($2.2 billion) will theoretically now be covered out of the pockets of Ukrainians."

Complete story at - Ukrainian Households Face 264% Spike in Utilities Rates on Gas / Sputnik International