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Biden pledges Ukraine additional $335mn in military assistance

RT | April 1, 2016

The US has promised Kiev an additional $335 million in security aid to help Ukraine boost its military strength. Washington also made it clear to the Ukrainian president that to unlock the next tranche of IMF money, Kiev should push ahead with political reforms.

US Vice President Joe Biden held a luncheon with Ukrainian President Petro Poroshenko, who is currently visiting Washington as part of a nuclear summit comprising more than 50 world leaders. Poroshenko seized the rare opportunity to touch base with Obama administration officials.

According to an official statement on Poroshenko’s website, Biden has indicated Washington’s readiness to provide Kiev with additional $335 million in security assistance, which would be used to reform Ukraine’s Armed Forces, National Guard and border control.

Last year, the House Armed Forces Committee suggested providing some $300 million aid on the Ukrainian government and offered to “provide appropriate security assistance and intelligence support, including training, equipment, and logistics support, supplies and services, to military and other security forces.”

At the same time, Kiev also heavily relies on a financial assistance from the International Monetary Fund (IMF). Having received $6.7 billion from the fund’s $17.5 billion bailout package in 2015, the third tranche has now been stalled.

Plagued by corruption and deep political crisis, Kiev has been failing to fulfill reforms to unlock the next tranche of the loans worth $1.7 billion. To secure its lenders’ confidence, Ukraine must implement reforms and made scant progress in stamping out corruption.

Meeting with Poroshenko Thursday, Biden reminded that Kiev would not receive international economic assistance unless it forms a new government, “oriented on reforms and cooperation with the IMF,” Poroshenko’s office said.

For his part, Poroshenko responded that setting up “an effective anti-corruption system” was his government’s priority.

Ukraine’s corruption was one of the main topics of Biden’s trip to Kiev in December 2015.

“Corruption siphons off resources. We know this. You know this,” he told Ukrainian MPs, saying that “corruption eats Ukraine like cancer.” At the time, he assured Kiev of the Washington’s support and announced allocation of additional $190 million from the US budget to help conduct structural reforms in Ukraine and fight corruption in the first place.

While in Washington, Poroshenko also tried to lure more investment to his country’s economy while meeting with US Secretary of Commerce Penny Pritzker.

Read more:

Obama signs NDAA, approving $800 million aid to ‘moderate’ Syrians, Kiev

April 1, 2016 Posted by | Corruption, Militarism | , , , , , , | Leave a comment

Portugal’s President Won’t Allow Leftists to Form a Government

teleSUR – October 23, 2015

Portuguese President Anibal Cavaco Silva said he will not allow a coalition of leftist parties to form a government despite the fact that they won an outright majority in parliamentary elections held earlier this month.

The president said Thursday that he gave conservative Prime Minister Pedro Passos Coelho the mandate to form a minority government that will fall in line with the policy of austerity imposed by the European Union and the International Monetary Fund (IMF).

“In 40 years of democracy, no government in Portugal has ever depended on the support of anti-European forces, that is to say forces that campaigned to abrogate the Lisbon Treaty, the Fiscal Compact, the Growth and Stability Pact, as well as to dismantle monetary union and take Portugal out of the euro, in addition to wanting the dissolution of NATO,” said President Cavaco Silva.

He argued that it was too risky to let the Left Bloc or the Communists come close to power, saying the country’s right wing would protect austerity measures the left had threatened to overturn.

The decision outraged Left Bloc leader Antonio Costa, who called the president’s action a “grave mistake” that threatened the country’s stability. “It is unacceptable to usurp the exclusive powers of parliament,” he said. “The Socialists will not take lessons from professor Cavaco Silva on the defense of our democracy.”

Parties in the Left Bloc ran an anti-austerity campaign than won them more than 50 percent of the vote in the Oct. 4 elections. Coelho’s coalition won only 38 percent of the vote, not enough to form a single-party government. That prompted the leftist parties to form a coalition, allowing it to gain an outright majority that would, in theory, permit it to form a government.

Cavaco Silva said it was now up to lawmakers in parliament to decide on the new government’s program, which must be presented in 10 days. If it is rejected in parliament, the government will collapse. The three-party leftist coalition vowed to reject the program as they, after all, control the legislative body, holding 122 seats out of 230.

“I give this government a week or a week and a half,” said Left Bloc lawmaker Filipe Soares. “The president will have to take the responsibility for the instability that will be created by this decision.”

Critics portrayed the president’s move as an assault on democracy.

“Democracy must take second place to the higher imperative of euro rules and membership,” wrote Ambrose Evans-Pritchard, International Business Editor of The Daily Telegraph, a British newspaper.

Portugal returned to democracy in 1974 after nearly 50 years of authoritarianism.

October 24, 2015 Posted by | Civil Liberties, Economics, Militarism | , , , , | 1 Comment

Ukrainian Finance Minister: $40 Bln in Assistance Not Enough

Sputnik – 11.10.2015

Finance Minister Natalia Yaresko considers a $40 billion assistance program from the IMF not enough to guarantee Ukraine’s economic stability in the long-term.

In an interview with the Financial Times, Yaresko called for the United States, the EU and other loaners to double financial assistance to the conflict-torn state in 2016.

“Ukraine did everything possible to show its international partners that we do our best and that we are able to live up to our promises,” she explained. “I think it means that international partners should unanimously support us.”

Kiev’s government has won praise from the IMF and sponsors such as the US for making significant progress in implementing economic reforms, although the fund still expects the Ukrainian economy to contract 11 percent this year.

Still, Yaresko said the government needs more financial aid from the international community “to help finance infrastructure and other investment and demonstrate progress to its own citizens.”

Yaresko also announced that Kiev is not going to offer any special conditions to Russia over a $3 billion debt expected to be repaid by December 2015. The Finance Minister insisted on restructuring the debt under the terms of an agreement reached with other creditors in summer.

A four-year $17.5-billion assistance package to Ukraine was approved by the IMF on March 11 in an effort to put the country’s ailing economy on the path of recovery. The overall external financial aid package to Kiev amounts to about $40 billion, to be administered over the next four years and comprising loans from the International Monetary Fund, the United States and the European Union among others.

This year Ukraine already received $6,7 billion from 10 billion allocated for 2015.

October 11, 2015 Posted by | Corruption, Economics | , , , , , | 2 Comments

The Occupation of Greece: a Financial Coup D’état

By Binoy Kampmark | CounterPunch | July 14, 2015

“This has nothing to do with economics. It has nothing to do with putting Greece back on the rails towards recovery.”

— Yanis Varoufakis, Jul 13, 2015

Alexis Tsipras, along with his crew of negotiators, had done much with little. His Syriza government had been fighting a war of attrition with creditors and, with the hectoring Yanis Varoufakis, parried them for weeks. But the European credit system does, however, demand more than its pound of flesh. It demands those who do not play by the rules – and these rules are of the most dubious import – surrender their sovereignty.

On Tuesday, Tsipras faces an internal revolt after making a three year deal with Eurozone leaders that would see the accumulation of more debt – another 86 billion euro bailout – to service an already crippling burden. It also sees greater involvement of the International Monetary Fund, the grand bugbear of austerity finance.

Instead of exiting a system weakened by its own internal contradictions and failings, Greece is to partake in another mistake wrapped in the rhetoric of pro-European kitsch. In what is tantamount to placing a gun to the head of Greece’s sovereignty, parliamentarians will have till Wednesday to finalise what effectively amounts to a suicide pact.

The accord effectively sees the German-led Eurozone group demand control of Greek finances without the provision of debt relief or even a vague sense of genuine debt restructuring. This is a creditor’s vision on steroids, absurdly ambitious and destructive.

Varoufakis saw it coming, calling it “worse” than any other deals placed on the table before. “I trust and hope that our government will insist on debt restructuring, but I can’t see how German finance minister [Wolfgang Schäuble] is ever going to sign up to this. If he does, it will be a miracle” (New Statesman, Jul 13).

Independent Greek leader Panos Kammenos had made his opposition to another round of austerity concessions crystal clear and unimpeachable. “In a parliamentary democracy there are rules and we uphold them.” Energy Minister Panagiotis Lafazanis and Deputy Labor Minister Dimitris Stratoulis have both expressed public opposition to the measures and risk the sack. Given the calculations in store, Tsipras will have to rely on the pro-European opposition parties, who were resoundingly beaten in the referendum.

The entire arrangement reeks of a seizure of sovereignty, the use of debt bondage and creditor supervision instead of the customary weapons associated with a military invasion. Further to the usual barbarities of savaging the local economy, be it increases in value added taxes, cutting pensions and the placing of automatic spending constraints, a jumbo sale of 50 billion euros worth of public assets is being forced upon Greece. Greece, in other words, is effectively being told to sell itself into private hands.

Money obtained from that sequestration of assets is to be placed in a trust fund that will be beyond government hands, another absurdly dangerous measure that will remind Greek citizens where their referendum voice has gone. Tsipras could only say that the agreement had “averted the plan for financial strangulation.” In truth, the Eurozone leaders had rounded up on him in a feast of vengeful savagery, instigating moves that will further cause a constriction in the economy.

Merkel’s austerity fanatics have not covered themselves in glory. They have supervised a sickly vision of capture and control, using austerity as their weapon of choice. Merkel has herself been asked to compare the brutal agreement being demanded of Greece to Germany’s own Versailles Treaty of 1919, where indebtedness and bondage took centre stage in a punitive arrangement. “I won’t take part in historical comparisons, especially when I didn’t make them myself.” Sleepwalking in history can prove to be a dangerous habit.

European Commission President Jean-Claude Juncker, forgetting his own reservations about the legitimacy of the Troika’s demands, threw up the customary straw man in the argument. Grexit was to be avoided at the cost of Greek sovereignty. “The agreement was laborious, but it has been concluded. There is no Grexit.”

Astonishingly, he suggested that the compromise had seen “no winners and no losers. I don’t think the Greek people have been humiliated, nor that the other Europeans have lost face. It is a typical European arrangement.”

This, says Varoufakis, is precisely the problem. The Troika was insincere from the start, refusing to genuinely deal with the crisis while offering inconceivably crushing terms. Bad faith was their game; illegitimacy was their spirit. (Varoufakis repeatedly noted throughout negotiations that the Eurogroup has no legal standing, yet possesses enormous power over individual Europeans.) “The other side insisted on a ‘comprehensive agreement’, which meant they wanted to talk about everything. My interpretation is that when you want to talk about everything, you don’t want to talk about anything.”

The next chapter in this poorly minted odyssey, one of tragic proportions, is whether the Greek parliament gives its approval to the accord. The Germans will take their turn on Friday, with Merkel having to butter MPs up with a needlessly punitive arrangement that is nothing more than economic sadism. Should the package pass in these parliaments, we would have seen a financial coup d’état in the making, and one that weakens all parties. Now that promises to be an all too typical European arrangement.

Dr. Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. Email: bkampmark@gmail.com

July 14, 2015 Posted by | Economics | , , , | Leave a comment

Ukraine Puts 345 State Firms Up For Sale

Sputnik – 10.07.2015

Ukrainian Economic Development Minister Aivaras Abromavicius clarified exactly how many state companies would be offered up for sale to US and European investors at the upcoming Ukrainian-American investment conference in Washington D.C on Monday, stating that 345 state-run firms would be put on offer to the highest bidder.

Speaking before reporters on Thursday, Abromavicius noted that the 345 firms offered for sale “will be included in the first wave of privatizations,” which he earlier confirmed would begin in the fourth quarter of this year.

Kiev’s effort is ostensibly aimed at raising billions of dollars for the country’s cash-strapped budget, as the economy, hit by a decline in trade with Russia, financial panic, and civil war, lies in tatters and on the verge of default.

Companies on the docket include the electricity generation firm Tsentrenergo and six of its regional distributors, gas transportation companies, the Odessa Port Plant, mining operations and agricultural holdings, which together are projected to bring 17 billion hryvnia (about $790 million) into the country’s coffers.

Earlier this year, Ukrainian officials held similar conferences in Washington, Berlin and Paris. As late as last month, Prime Minister Arseniy Yatsenyuk met with Ukrainian-Americans in Washington, telling them that his government wants “to see American owners on the territory of Ukraine,” stating that “they will bring not only investment, but also new standards, new ways of managing the companies, and a new investment culture.”

But with the IMF (conservatively) projecting a 9 percent decline in Ukraine’s GDP in 2015, with inflation hitting nearly 50 percent and the country approaching debt levels amounting to 100 percent of GDP, analysts warn that the present may be the worst possible time for Kiev to sell off its large, state-owned firms. The country’s economic decline, political instability and the war in the east have hit property values hard, which means that Kiev is unlikely to collect significant sums for the large, valuable, strategic assets offered up for sale.

Analysts also suggest that Western investors will have little appetite for the purchase of the unwieldy, heavily-indebted state firms, many operating at a loss since the collapse of the Soviet Union, noting that the most profitable companies were already bought up in crooked schemes by the country’s oligarchs a long time ago. In this connection, AFP recently reported that Rada MPs connected with the country’s oligarchic clans are likely to use their influence to prevent the sale of the profitable state assets under oligarchs’ influence. Moreover, Frankfurter Allgemeine Zeitung columnist Konrad Schuller recently poured cold water on the entire privatization initiative, noting that in an environment of speedy, murky, clan-dominated privatization, Western investors will have no time to assess whether the state companies offered up for sale are truly lucrative or not.

Furthermore, while Yatsenyuk recently announced that over 150 major investors have already RSVP’d to attend the Washington conference, he has already been hit by dissension from within his own cabinet, with officials from the Energy Ministry and the State Property Fund challenging the pace and scale of privatization.

In April of this year, Ukraine agreed to an International Monetary Fund-monitored austerity program, which called for the shedding of 24,000 government jobs, higher taxes, privatization of state assets and the withdrawal of subsidies on utilities in exchange for a total of about $40 billion in IMF-led foreign assistance over the coming four years.

July 10, 2015 Posted by | Corruption, Economics | , , , , | Leave a comment

More than 60% of Greeks say ‘No’ in crucial bailout referendum – early results

RT | July 5, 2015

About 60 percent of Greeks have voted “No” in Sunday’s referendum on the bailout deal and austerity measures, reported the Interior Ministry after almost 30 percent of the vote had been counted.

About 9.9 million Greeks were eligible to take part in the vote, which was labeled #Greferendum on social media.

The “No” victory has been predicted by several opinion polls, including GPO, Metron Analysis and MRB, whose polls were released after the end of the voting.

Before the results were announced, the parliamentary spokesman for the ruling Syriza party, Nikos Filis, told Greek television that “No’”s prevalence in these polls indicated that Greek government can now make a deal with the Troika of international creditors.

“I think this is guidance for the government… to move forward quickly to seek a deal and normalise the banking system,” he said.

In the meantime, Greek government spokesman Gabriel Sakellaridis told state TV that Athens is planning to resume the talks with the Troika.

“The negotiations which will start must be concluded very soon, even after 48 hours,” Sakellaridis said, “We will undertake every effort to seal it soon.”

Proponents of the “Yes” vote argued that a “No” vote may lead to Greece’s exit from the Eurozone, and potentially the EU.

The talks between Greece and the Troika of international creditors – the EU, the European Central Bank and the International Monetary Fund – have stalled since June, after the Eurogroup declined to prolong a financial aid program for Greece or delay payments on earlier debts.

Greece, which has been in crisis since 2009, was supposed to make an IMF loan payment of €1.6 billion by June 30 but failed to do so. It is required to make another major payment of €3.5 billion to the ECB on July 20.

July 5, 2015 Posted by | Economics | , , , | 2 Comments

Tsipras and the Vampires

By Boris Kagarlitsky | CounterPunch | July 2, 2015

For five years now Europe has been troubled by the problem of the Greek debt. It all began with a relatively modest sum estimated at 15-20 billion euros, though at the time coping even with this debt seemed beyond the country’s capacity. Instead of simply writing off the debt, the “Troika” consisting of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) offered Greece a program of economic assistance in exchange for carrying out “urgent reforms”.

The results of this program, and of the help it provided, speak for themselves. Greece’s economy contracted by 27 per cent, and the debt rose to 320 billion, despite a partial write-off. From an original 60 per cent of GDP, the debt thus reached 175 per cent. Meanwhile, neither the Troika nor the previous Greek government acknowledged the obvious failure. The Troika not only insisted on continuing and even radicalising its clearly pointless actions, but also proposed treating the economic ills of other eurozone countries (Italy, Spain and Portugal) on the basis of the Greek model.

The actions of the Troika seem far less absurd if we reflect that the billions of euros intended to “save Greece” never reached that ill-fated country but were deposited immediately in German and French banks. Under the pretext of servicing the Greek debt a huge financial pyramid was created, analogous to a Ponzi scheme or to the MMM and GKO pyramids in 1990s Russia, but on a much greater scale. Meanwhile, part of the money that finished up in the banks was sucked directly out of Greece, while a further part came from the pockets of West European taxpayers. For decisions made effectively in Berlin and Brussels, with the approval of Paris, the citizens of other Eurozone countries were forced to pay. The victims included even the inhabitants of Spain and Italy, as well as of countries such as Austria and Finland that had no relation whatever to the events concerned. A sort of all-European pipeline was constructed, and used to siphon off state funds for the benefit of German and French financial capital.

With the coming to power of the left-wing government formed by the SYRIZA party and headed by Alexis Tsipras, hopes arose in Greece that the endless series of large and small economic, social and moral catastrophes which the country had suffered since 2008 would finally come to an end. Even if the situation did not improve, things would at least proceed differently. SYRIZA had been elected with a clear mandate to end the policies of economic austerity, to put a stop to the privatisation and commercialisation of the public sector, and above all, to give Greeks back their self-respect by conducting tough, principled negotiations with the creditors who in recent years had behaved toward the country as though they were an occupation administration. SYRIZA, moreover, was considered in Europe to be pro-Russian; during the election campaign representatives of the party had repeatedly voiced disagreement with EU policy toward Russia, criticising the imposition of sanctions and condemning the new political order imposed in Ukraine following the political overturn of February 2014.

The first agreements concluded by the new Greek government with its creditors showed, however, that in practice everything was turning out quite differently. The representatives of Athens made heated declarations, and then, after securing only minimal amendments, proceeded to sign the next agreement dictated by the creditors. In part, this inconsistency resulted from the contradictions of the mandate obtained by Tsipras and his colleagues. They had promised to put an end to the economic austerity that was killing demand and production. But they also pledged to keep the country within the Eurozone and the EU, stressing that a default on foreign debts had to be avoided. This way of formulating the question handed Greeks over to the mercy of their creditors.

To pay off the debts is simply impossible.

Moreover, a re-launching of the economy is technically inconceivable unless the harsh rules imposed by the ECB are rejected, along with its insistence on a dramatic increase in competitiveness unaided by a lowering of the exchange rate. Since it has been understood from the outset that the ECB will not agree to sharply lower the euro exchange rate solely in order to save Greece, it is clear that in technical terms there is not the slightest chance of a successful exit from the dilemma without Greece quitting the Eurozone and returning to the drachma. The only real question has been whether this exit will be planned, organised and prepared in advance, or whether it will be chaotic and disastrous. The situation is very similar to the one in Argentina in 2001, when after a default the peso had to be decoupled from the dollar if economic growth was to resume.

Nevertheless, even discussing this sole realistic scenario, let alone making preparations to carry it out, has been banned; if such a course were followed, the German and French banks would stand to suffer, along with the reputations of the EU leaders. So long as the Greek government accepts these conditions, it is in the situation of a doctor who undertakes to treat a cancer sufferer without infringing on the “lawful interests” of the tumour and without placing obstacles in the way of its growth. Or, it is like a person who negotiates with vampires on how much of his or her blood they will drink. In each case, the prior interests recognised are those of the vampires.

For the sake of fairness, it should be acknowledged that to a certain degree the contradictions of SYRIZA’s position reflect those of Greek society itself. On the one hand, many Greeks are outraged and want changes, while on the other, people are afraid to risk their middle-class comforts, even though these comforts are diminishing by the day. So long as substantial numbers of the population still have savings in euros, these people are paralysed by fear that their money will be lost or devalued. It is one thing to attend demonstrations demanding that the creditors “respect the country”, and quite another to be ready, right now, to accept particular sacrifices and risks for the sake of one’s own future. It is true that there is no other way out, but both the authorities and society need to think and talk about this openly. Through making statements that try to satisfy everyone, the Tsipras government has instead driven itself into a trap.

The problem is not so much that drastic and humiliating conditions have repeatedly been imposed on Greece by its creditors, as that these agreements are not solving the dilemma but exacerbating it. The debt crisis is worsening, and the sum owed is increasing – both in absolute terms and in relation to the size of the economy as the latter shrinks under the impact of the crisis. Consequently, any new agreement simply assumes that a new crisis will arise after a few months. Each time, this new crisis is more destructive.

While lacking the resolve to answer the EU leaders with an emphatic “no”, Alexis Tsipras and his finance minister, the economist Giannis Varoufakis (an import from the University of Texas), cannot fail to understand that agreeing with the Troika will also turn out disastrously for them. Before their eyes, just such a capitulation only two years ago transformed the powerful social democratic party PASOK from the country’s leading political force into an outsider.

Tsipras has sought to manoeuvre, doing his best to please everyone. He has reassured the creditors, indulged the petty-bourgeois illusions of voters, and delivered radical speeches to meetings of left activists. While promising everyone the maximum possible, his government in practice has tried to sabotage some of the agreements signed with the Troika, particularly in cases where the signatures were affixed by earlier administrations. But the ministers have lacked the courage even to suggest that these agreements might be abrogated, or that the government might openly refuse to carry out their stipulations. A notable example of the Greek government’s diplomatic approach is the position it has taken on the question of sanctions against Russia. Under the rules of the EU, Greece could simply block these sanctions in the summer of 2015. This demand was raised by members of the SYRIZA party itself, when they voted en bloc in the European Parliament against anti-Russian resolutions. But in the heat of the next round of negotiations between the Troika and the Greeks, at a time when Tsipras himself was in St Petersburg explaining to Russian colleagues the prospects for the development of special relations with Athens, his representatives in the EU gave their backing to the sanctions. Addressing the public, Greek diplomats then stated that they had fought like lions on behalf of Russian interests, and that it was only because of their persistence and principled character that the sanctions had been extended for a mere six months, instead of twelve months as the Germans had demanded.

Tsipras’s policy of compromise can be explained in part by a desire to win time in expectation of the elections in Spain, where the left coalition headed by the Podemos party had a serious chance of success. Spain is a far more influential country than Greece, with a far stronger economy, but is suffering from a very similar if less severe crisis. If Podemos were to come to power, Athens would be able to escape from its international isolation. In addition, the Left Bloc in Portugal has a definite chance of success. In other words, an opportunity has appeared to establish an international coalition of Mediterranean countries opposing Berlin and Brussels. But among the public in Spain and Portugal, Tsipras’s own actions and his evident weakness have raised questions about the advisability of placing trust in the left alternative, thus weakening the hopes of the left in those countries.

Within the European left milieu, sympathy nevertheless remains for SYRIZA as a party that finds itself in extremely difficult circumstances. Against the background of many years of setbacks for the European left, Tsipras’s initial successes inspired hopes which people are reluctant to abandon. The SYRIZA leader’s principle, of first making radical speeches and then of giving way to the superior forces of his opponents, seemed to be justified. Not only in other parts of Europe but in Greece as well, the popularity of Tsipras’s government increased. People not only refrained from condemning him, but pitied him as the hostage of vampires against which he was time and again proving powerless.

To fool pseudo-lefts and provincial petty bourgeois is not particularly difficult, but financial vampires do not fall for such tricks. The sabotage aroused righteous indignation in the creditors, who steadily increased the pressure. The agreements which the Greeks signed with the creditors after SYRIZA came to office were no better than those endorsed by the previous government, and had the same results.

In June, when the next round of payments fell due, there turned out to be no money in the budget.

A further restructuring of the debt was essential. In exchange, the Troika demanded the acceptance of a new “reform package”, by comparison with which all the preceding austerity measures seemed mere warm-up exercises. At one and the same time wages and pensions would have to be cut, taxes would need to be raised, and all concessions would have to be stripped from tourism, which amid the destruction of industry and the decline of agriculture remained the only relatively stable sector of the economy. The country would sink inevitably into a new spiral of recession. For SYRIZA, this would mean not only abandoning all its election promises, but also submitting to public humiliation, with the obvious prospect of defeat at the next elections. This, indeed, was what the creditors were seeking.

On June 22 Greece effectively capitulated. The government agreed to extract more revenue from the Value Added Tax, raising it to 0.93 per cent of GDP, and to increase taxes on shipping companies (in other words, to make trips between Greek islands and the mainland more expensive). A cut to pensions was also promised, though the Athens authorities asked to be allowed to introduce the changes involved over time rather than immediately.

The only point on which the Greek negotiators demurred, in order to save face, was a demand that the Value Added Tax be raised to 1 per cent of GDP. In other words, the extent of their resistance was a whole 0.07 per cent. The Greek side meanwhile agreed that company tax should be levied at the rate of 28 per cent, instead of 29 per cent as it had initially suggested to the Troika. The Greeks also asked to be allowed to keep defence spending at its former level; this matched the general requirements of the NATO bloc, of which Greece is part.

The game, it might have seemed, was over. The world financial press celebrated, and prices rose on the share markets. In Athens, there was even a demonstration by members of right-wing parties supporting the creditors. Well-dressed citizens gathered in the central Syntagma Square, calling for pensions to be reduced. True, there were not many of these demonstrators, only about 1500, but the television managed to make the picture so impressive that even the well-known American commentator Paul Craig Roberts, a sharp critic of the policy of the financial institutions, expressed puzzlement at the way Greeks had apparently been brainwashed to the point of agreeing to their own country’s humiliation.

Then the unexpected happened. German representatives declared their dissatisfaction at the speed with which the European Commission welcomed the new offers from Athens. Under pressure from Berlin, Tsipras’s offers were rejected. The Greeks had surrendered, but as it turned out, the Germans were not taking prisoners.

The Eurocrats not only refused to agree to the symbolic concessions needed by Tsipras and Varoufakis if they were to save face, but like gangsters with a client who is behind in paying protection money, began making new demands. With its back to the wall, the Greek government suddenly displayed a courage born of despair. Tsipras delivered a fiery speech to the people, and called a referendum. Greeks would decide for themselves whether to agree to the demands of the creditors. The last PASOK prime minister, George Papandreou, had planned to do something generally similar, but the creditors applied pressure to him, and he renounced his attempt. The upshot was that Papandreou lost his reputation, his job as premier, and even his position at the head of his own party. Knowing the fate of his predecessor, Tsipras showed more consistency. A further inducement for him was the fact that even before the eurocrats had rejected the “compromise” he had offered, a revolt had broken out in the SYRIZA ranks, and it was clear that if the agreement with the Troika was to get through parliament, it would only be with the votes of the rightists.

This time, the deputies of the conservative New Democracy party tried to block the vote on the referendum. But eventually they returned to the chamber, and the resolution was adopted. On July 5 Greeks are to decide on whether or not to agree to the conditions of the financial vampires.

It is significant that the Troika characterised the use by the Greeks of this democratic procedure as a rejection of the agreement. Troika representatives then called off the talks and declared that “aid” to Greece would cease from June 30. This means that regardless of the outcome of the referendum, a technical default from July 1 is inevitable, and this in turn will lead almost automatically to Greece’s exit from the eurozone and return to the drachma.

The chance that the supporters of austerity would win the referendum, illusory in any case, has now vanished completely.

What was bound to occur has now actually happened, just as in Argentina in 2001, where all political forces tried desperately to avoid a default and exit from the dollar zone (the Argentinian peso was tied to the US dollar), but where this occurred anyway. In both Argentina and Russia, financial collapse was followed by a few dramatic and chaotic months, after which an economic recovery began. The situation in Greece is somewhat more complex, but in Greece as well the shift to an inevitably devalued drachma opens a range of possibilities. Cheap resorts will attract the tourists who are now in critically short supply (Russian tourism alone in Greece has shrunk this year by 70 per cent). New prospects will open up for tourism and shipbuilding. Relations with Russia could also be placed on a more solid footing.

The situation has turned out to the benefit of Greece, but despite the actions of the country’s present leaders rather than because of them. It should, though, be recognised that Tsipras, even if he dragged out his decision until the very last moment, has nevertheless shown that he has a better claim to the role of national leader than his predecessors. The Greeks were forced to bend, but they were not broken.

What, though, can have motivated the Berlin leaders, when they refused to accept the Greek capitulation? It is possible, of course, that the German leaders simply made a mistake. The situation ran out of control because each side failed to anticipate the reaction of the other. The Greeks overestimated the rationalism of the Germans, and the Germans, the opportunism of the Greeks. The more acute a crisis becomes, the more mistakes are made; this is the general logic of the historical process. It is not excluded that the leaders in Berlin misjudged the likely results of the talks between Russia and Greece, and hoped that the Russians would supply Tsipras with money that the Greeks could use to pay off the creditors. But Tsipras left St Petersburg without having received any money, though with an agreement to build a gas pipeline that for technical reasons will be impossible to implement before 2018 (it should be noted that the Russian gas corporation Gazprom then and there announced that gas transit through Ukraine would continue after 2019, placing the profitability of the highly expensive Greco-Turkish pipeline in question).

Nor can the possibility be excluded that Berlin consciously provoked the crisis.

German analysts may have calculated that the debt bubble would burst in any case, and have decided to deflate it themselves, without waiting for events to develop spontaneously. Even if agreement had been reached on the conditions set down by the Troika, new crises would not only be “predictable with mathematical certainty” (as Varoufakis stated), but much more importantly, the proportion of the funds pumped by the German banks out of Greece would diminish with every new cycle, while the share coming from the German taxpayer would increase. In other words, political risk would be added to the risk that the debt pyramid would crumble. Members of the public in northern Europe are beginning to grasp that under the pretext of “saving Greece”, they themselves are being robbed by “their own” side. Even if northern Europeans fail to understand this, they will still mount resistance, out of reluctance to part with their money. It is also worth noting the publication of the sadly notorious Charlie Hebdo issue that came out with the headline “Drown the Greek to save Europe”.

So – was it evil intent, or a collective miscalculation?

These two explanations, though logically counterposed, may in reality serve to reinforce one another. There was a degree of ill-intent, but there were also miscalculations on both sides. We may recall that it was in precisely this fashion that war broke out in 1914. All the various parties had prepared for a war, had planned it and wanted it, but events nevertheless unfolded in a fashion completely different from what they had counted on. Control over the situation had been lost.

It appears that the same happened this time. Even if the Troika intended something along the lines of “drowning the Greek”, things will now proceed in a way distinctly different from what they anticipated. The referendum called by Tsipras is sharply altering the psychological landscape not just in Athens, but throughout Europe. Willingly or otherwise, SYRIZA has raised the banner of resistance. For the other crisis-wracked countries of the eurozone, this will provide a signal that the financial vampires of the EU are not all-powerful. The vampires themselves will be forced to undertake even harsher measures, in an effort to halt the growing collapse of the neoliberal regime installed in the EU by the Maastricht and Lisbon talks. As history teaches us, such measures ultimately serve only to exacerbate a crisis, provoking more and more active resistance. This is now occurring in the countries of the European “centre” – Italy, France, and even Austria and Germany. In the present situation, however, no other road remains open to the ruling groups in Berlin and Brussels. And before the light appears at the end of the tunnel, we are bound to plunge still further into the depths of the crisis.

All of our countries will feel the direct effects, including Russia.

Translation: Renfrey Clarke.

Boris Kagarlitsky is the director of the Institute of Globalization Studies.

July 2, 2015 Posted by | Economics | , , , , , , | Leave a comment

IMF announces new $17.5bn bailout package for Ukraine

RT | February 12, 2015

The International Monetary Fund announced a new $17.5 billion lifeline for Ukraine, which would bring the total bailout package to $40 billion. The new sum would be a four-year program.

Lagarde will propose the $17.5 billion expansion program to the IMF by the end of the month.

“The program is not yet approved by the governing council. I hope to offer it for approval by the end of February,” she said Thursday.

“This new four-year arrangement would support immediate economic stabilization in Ukraine as well as a set of bold policy reforms aimed at restoring robust growth over the medium term and improving living standards for the Ukrainian people,” Lagarde said in a statement.

In return Ukraine will have to present a “program of deep economic reforms,” which includes the whole economy and a plan to transform Naftogaz, Ukraine’s state oil and gas company.

“It’s a large program, it’s a longer-term program than the previous one, which was a traditional SBA [Stand-By Arrangement] for two years,” the IMF chief said.

“It’s ambitious, it’s not without risk, but we believe it is a realistic set of macroeconomic framework, ambitious reforms, but reforms the authorities feel confident they can deliver,” Lagarde said.

IMF head Christine Lagarde didn’t answer the question as to whether the four-year international bailout program for Ukraine included credits from Russia.

“The sum includes funds from the IMF and the EU, and also bilateral and multilateral loans.”

Earlier this month, the US promised Ukraine as much as $2 billion in loan guarantees, while the EU said it would disburse €1.8 billion ($2.1 billion).

Boon to Ukraine’s economy

Ukraine’s Prime Minister Arseny Yatsenyuk stressed that the new bailout program would open sources for Ukraine to get help from other international organizations and partners, making the total sum thus $25 billion.

He confirmed the commitment to reforms that will stabilize Ukraine’s economy and finance. The country’s game plan includes fighting corruption, settling the energy sector, as well as cutting and optimizing state expenditure and increasing investment to 3 percent of the GDP, Yatsenyuk explained.

“Stabilization of the banking system and the exchange rate are also the goals of the program,” Yatsenyuk said.

“Recovery in confidence in Ukraine through the adoption of the 4–year program will be a major factor in the stabilization of the exchange rate, and an objective and strong banking system of Ukraine that will give the opportunity for Ukraine’s economy to develop,” he added.

Yatsenyuk said the government is also going to provide extensive assistance to low-income households. By the end of the year he expects it to include income indexation linked to the level of price rises. He also said the IMF program will provide $500 million for low-income families to help pay for increased energy bills.

READ MORE: IMF gives green light for $17 bn Ukraine aid package

February 12, 2015 Posted by | Economics | , , , , | 1 Comment

IMF Policies Blamed for Rapid Ebola Spread in West Africa

teleSUR | December 23, 2014

Strict public spending cuts imposed by the International Monetary Fund (IMF) on Guinea, Liberia and Sierra Leone may have contributed to the rapid spread of Ebola in these countries, according to Cambridge University researchers.

“A major reason why the Ebola outbreak spread so rapidly was the weakness of healthcare systems in the region,” said Cambridge sociologist Alexander Kentikelenis, lead author of the study that appeared in the latest issue of medical journal The Lancet.

“Policies advocated by the IMF have contributed to underfunded, insufficiently staffed and poorly prepared health systems in the countries with Ebola outbreaks,” added Kentikelenis.

The first cases of the deadly virus were discovered in Guinea earlier this year, but quickly spread to neighboring Liberia and Sierra Leone. The three countries have been the worst affected by the epidemic, both in terms of lives lost and the damages to their already fragile economies.

According to the researchers, all three countries have been receiving aid from the IMF since the 1990s. However, the lending came with what the IMF calls “conditionalities” that required all three governments “to adopt policies that favor short-term economic objectives over investment in health and education,” reads the report.

Kentikelenis told the BBC that IMF imposed government spending cuts and caps on wages meant countries could not hire health staff and pay them adequately. He also added that the IMF emphasizes and supports decentralized health care systems, which made it harder to mobilize a coordinated response to the virus outbreak.

The IMF denied all accusations in a press release, and called them “factual inaccuracies.”

As of Dec. 21, at least 7,580 people have died from Ebola in six countries: Liberia, Guinea, Sierra Leone, Nigeria, the United States and Mali, making it the worse outbreak of the virus since it was first identified in 1976 in what is now the Democratic Republic of the Congo.

December 25, 2014 Posted by | Economics | , , | 2 Comments

Aid to Ukraine Is a Bad Deal For All

By Ron Paul | March 30, 2014

Last week Congress overwhelmingly passed a bill approving a billion dollars in aid to Ukraine and more sanctions on Russia. The bill will likely receive the president’s signature within days. If you think this is the last time US citizens will have their money sent to Ukraine, you should think again. This is only the beginning.

This $1 billion for Ukraine is a rip-off for the America taxpayer, but it is also a bad deal for Ukrainians. Not a single needy Ukrainian will see a penny of this money, as it will be used to bail out international banks who hold Ukrainian government debt. According to the terms of the International Monetary Fund (IMF)-designed plan for Ukraine, life is about to get much more difficult for average Ukrainians. The government will freeze some wage increases, significantly raise taxes, and increase energy prices by a considerable margin.

But the bankers will get paid and the IMF will get control over the Ukrainian economy.

The bill also authorizes more US taxpayer money for government-funded “democracy promotion” NGOs, and more money to broadcast US government propaganda into Ukraine via Radio Free Europe and Voice of America. It also includes some saber-rattling, directing the US Secretary of State to “provide enhanced security cooperation with Central and Eastern European NATO member states.”

The US has been “promoting democracy” in Ukraine for more than ten years now, but it doesn’t seem to have done much good. Recently a democratically-elected government was overthrown by violent protestors. That is the opposite of democracy, where governments are changed by free and fair elections. What is shocking is that the US government and its NGOs were on the side of the protestors! If we really cared about democracy we would not have taken either side, as it is none of our business.

Washington does not want to talk about its own actions that led to the coup, instead focusing on attacking the Russian reaction to US-instigated unrest next door to them. So the new bill passed by Congress will expand sanctions against Russia for its role in backing a referendum in Crimea, where most of the population voted to join Russia. The US, which has participated in the forced change of borders in Serbia and elsewhere, suddenly declares that international borders cannot be challenged in Ukraine.

Of course, those who disagree with me and others like me who are less than gung-ho about sanctions, manipulating elections, and sending our troops overseas are criticized as somehow being unpatriotic. It happened before when so many of us were opposed to the Iraq war, the US attack on Libya, and elsewhere. And it is happening again to those of us not eager to get in another cold — or hot — war with Russia over a small peninsula that means absolutely nothing to the US or its security.

I would argue that real patriotism is defending this country and making sure that our freedoms are not undermined here. Unfortunately, while so many are focused on freedoms in Crimea and Ukraine, the US Congress is set to pass an NSA “reform” bill that will force private companies to retain our personal data and make it even easier for the NSA to spy on the rest of us. We need to refocus our priorities toward promoting liberty in the United States!

March 30, 2014 Posted by | Civil Liberties, Full Spectrum Dominance, Progressive Hypocrite | , , , , , , | Leave a comment

Ukraine parliament passes austerity bill required by IMF

RT | March 28, 2014

The Ukrainian parliament has adopted an anti-crisis bill proposed by the IMF to secure an international financial aid package. Ordinary Ukrainians will have to tighten their belts to help the coup-installed government keep the collapsing economy afloat.

It took two readings of the bill for 246 MPs out of 321 registered to approve the austerity measures outlined in the legislation dubbed “On prevention of financial catastrophe and creation of prerequisites for economic growth.”

Ahead of the vote, Ukrainian self-imposed Prime Minister Arseny Yatsenyuk told the Parliament that it had “no other choice but to accept the IMF offer,” as country fiscal gap in 2014 is projected to reach $26 billion. Ukraine’s Finance Ministry says it needs $35 billion over the next two years to avoid default.

“The country is on the edge of economic and financial bankruptcy,” Yatsenyuk said. “This package of laws is very unpopular, very difficult, very tough. Reforms that should have been done in the past 20 years.”

It is ordinary Ukrainians who will suffer the most under the new austerity measures as the floating national currency is likely to push up inflation, while spike in domestic gas prices will impact every household. Under the IMF conditions Kiev has to cut the budget deficit, increase retail energy tariffs, and shift to a flexible exchange rate.

The state-owned energy company Naftogaz already said that it will increase household gas prices by 50 percent starting May 1, while utility companies will see a 40 percent rise as of July. According to estimates, this year Ukraine’s economy will contract by 3 percent while inflation will rise to 14 percent. The government is not planning to raise minimum wages in response to inflation.

The law adopted on Thursday, in particular, introduces a permanent application of the basic rate of corporate income tax at 18 percent and VAT at 20 percent, according to RBC-Ukraine. The government will also cancel the VAT refund for grain exporters.

The bill also introduces a 15 percent tax rate on pension payments if they exceed 10 thousand hryvnas (about $900). This tax, however, won’t really hurt an ordinary Ukrainian pensioner since an average pension in Ukraine is $160 – which may be further cut by 50% for those still working.

A progressive personal income taxation scale has also been installed to charge individuals 15, 17, 20 and 25 percent depending on their earnings. Those persons who make over 1 million hryvnas will be charged 25 percent income tax.

Car enthusiasts will also suffer as taxes on new cars and motorcycles with engine capacity exceeding 0.5 liters will also be doubled. Those who shop online and use overseas retailers will now see lowering of the limit on tax-free imports from 300 to 150 euros.

Excise taxes on alcohol and tobacco will also go up. In 2014 spirits price will see a 39 percent increase, while tobacco products will see a rise of 31.5 percent. Beer lovers will suffer the most with a 42.5 percent rise.

The legislation also reduces the total number of personnel in law enforcement agencies. Almost 80,000 people will be dismissed in the Ministry of Internal Affairs, Security Service, the Office of the State Guard, and the prosecutor’s office.

The International Monetary Fund has agreed to throw Ukraine’s sinking economy a lifeline provided the country adopts severe austerity measures. According to a preliminary agreement announced by the IMF, it would provide Kiev between $14 and $18 billion in loans over the next two years. Pending final approval by the IMF’s board, Ukraine could get their hands on the first installment as early as April.

“The mission has reached a staff-level agreement with the authorities of Ukraine on an economic reform program that can be supported by a two-year Stand-By Arrangement (SBA) with the IMF,” the Fund said in a press release.

A successful deal with the IMF is expected to unleash further $10 billion in loans from other international partners, including the EU and the US. The World Bank is also considering the possibility of providing Ukraine with $1 to $3 billion. Canada, Japan and Poland are also contemplating financial aid.

“The financial support from the broader international community that the program will unlock amounts to US$27 billion over the next two years. Of this, assistance from the IMF will range between US$14-18 billion, with the precise amount to be determined once reforms are in place,” the IMF said.

In Washington, both the Senate and House of Representatives passed a bill on Thursday to provide a $1 billion loan guarantee aid to Ukraine. In addition the Senate bill includes $50 million for democracy building and $100 million for enhanced security cooperation.

“This significant support will help stabilise the economy and meet the needs of Ukrainian people over the long term because it provides the prospect for true growth,” US President Barack Obama said in Rome.

Despite the promised injection of cash into Ukraine, Nikolay Gueorguiev, IMF Mission Chief for Ukraine said that “Nonetheless, the economic outlook remains difficult, with the economy falling back into recession,” he said cited by Kyivpost. “With no current market access, large foreign debt repayments loom in 2014-2015.”

March 28, 2014 Posted by | Economics | , , , , , | Leave a comment

Pensions in Ukraine to be halved – sequestration draft

RT | March 6, 2014

The self-proclaimed government in Kiev is reportedly planning to cut pensions by 50 percent as part of unprecedented austerity measures to save Ukraine from default. With an “empty treasury”, reduction of payments might take place in March.

According to the draft document obtained by Kommersant-Ukraine, social payments will be the first to be reduced.

“The Finance Ministry has prepared a plan for optimizing budget expenditures, which implies budget sequestration is to be in force before the end of March. For this purpose, in particular, it has been proposed to reduce capital costs, eliminate tax schemes and preferences and to cut social benefits, for example, 50 percent of pensions to working pensioners,” Kommersant-Ukraine reported.

Ukraine’s Ministry of Social Policy reported on December 1, 2013, that an average pension in Ukraine is $160.
Right after the formation, the self-proclaimed government in Kiev announced that the “treasury is empty”.

Ukraine’s new prime minister, Arseny Yatsenyuk, promised the government would do its best to avoid a default, adding that he expects an EU/IMF economic stabilization package soon. The plan has been formulated in record time, with the government’s strategy ratified in the Ukrainian parliament on February 27, and the document being sent for evaluation to the Ministry of Economic Development and Trade on March 3.

The European Commission offered Ukraine an 11 billion euro loan if Kiev agrees a deal with the IMF, European Commission President Jose Barroso announced on Wednesday. As a rule, help from financial organizations such as the IMF or the World Bank normally includes drastic austerity measures.

Accepting IMF money will mean many sacrifices for Ukraine’s economy, which are likely to include increased gas bills, frozen government salaries, and all around budget cuts.

The government in Kiev has already announced sequestration plans from $6.8 to $8.4 billion in 2014.

March 6, 2014 Posted by | Economics | , , , , | Leave a comment