IMF to Fund Ukraine Wars?
Ukraine is bankrupt. It accepted an $18 Billion IMF
Bailout in March, allegedly with strict conditions.
Do those conditions allow war funding?
I have to ask because Ukraine's
President Warns of ‘Constant Military Threat’ along with more military
spending and a military parade.
Ukraine’s pro-western president announced $3bn in
additional defence spending on Sunday as he warned the war-torn country faced
a “constant military threat” for the foreseeable future.
Petro Poroshenko flexed his might by holding a military parade during
commemorations of the former Soviet republic’s 23rd year of independence.
Things are going so well for Ukraine's military that it
needs to come up with $3 billion when it is flat broke.
Ukraine Conflict Draining Economy, Hampering Reforms
Ukraine' prime minister Arseny Yatseniuk noted last Wednesday that Ukraine
Conflict Draining Economy, Hampering Reforms.
Ukraine's conflict with separatist rebels is draining the
economy by the day and hampering efforts to implement reforms as required by
an IMF bailout programme, Prime Minister Arseny Yatseniuk said on Wednesday.
According to the terms of a $17 billion International Monetary Fund loan
package, Ukraine must implement set reforms, but the country, which is
virtually bankrupt and running wide external deficits, has had to divert
substantial funds in its fight to contain the pro-Russia insurgency.
The economy contracted by 4.7 percent in the second quarter compared with the
same period last year. With industrial output plummeting 12 percent in July,
the economic outlook for the third quarter is not promising.
In June, Yatseniuk asked the IMF, which decides on the disbursement of the
second tranche of $1.4 billion on Aug 29., to take into account the extra
financial burden of fighting the insurgency.
Military Spending Math
Ukraine wants to spend $3 billion out of a $1.4 billion tranche. How exactly
does that work?
While pondering that question, please note that Ukraine's currency plunged to
a fresh new low today.
7,000 Trapped Ukrainian Forces
On Sunday, I reported Rebels
Launch Counteroffensive: 4,000 Ukrainian Forces Trapped. That may have
been an understatement.
Please consider a translation from Komsomolskaia Pravda "Donetsk
On the Offensive" by Jacob Dreizin, a US citizen who speaks Russian
and reads Ukrainian.
Meanwhile, the intensiveness of the Ukrainian forces'
advance had somewhat diminished. And immediately, the militia went over
to a counterattack. Large units of the National Guard got caught. Within the
encirclement are 8th Army Corps headquarters, the 28th and 30th Mechanized
Brigades, as well as the 95th Airmobile Brigade of the Ukrainian armed forces.
And with them, the Aidar, Donbass, and Shakhtersk [Ukrainian volunteer
militia] battalions. All in all, around 5000 men and more than 300 pieces of
equipment, including tanks, "Grad" and "Uragan" launchers
are trapped.
Another roughly 2000 National Guardsmen from Azov and Dnepr (battalions) have
found themselves boxed up in the vicinity of Olenovskoe.
Equipment seized during the counterattack [perhaps in reference to the past
few weeks of successful operations] includes 2 tank battalions, 3 MLRS batteries,
2 self-propelled howitzer batteries, 3 towed artillery batteries, and 8
mortar batteries.
The militia's strategic aim is an exit to the Sea of Azov, after which the
blockade of the Donetsk Peoples' Republic will be definitively lifted. The
preparation for this "maritime campaign" was going on for a long
time. Even when Slaviansk was still holding out, militia recon teams were
destroying border posts on the shore.
Which Side is In Trouble?
If these reports are accurate, not only are the western media reports of
"rebels on the run" blatantly inaccurate, but rather it is the
Ukrainian forces that are in serious trouble.
By the way, you may wish to click on the previous link to see shelling of
hospitals and civilian areas by Ukrainian forces.
This is not how you win the hearts and minds of the citizens of Donetsk.
March to the Sea
Finally, please consider a map of the area around the Sea
of Azov.
"The Sea of Azov, a northern extension of the Black Sea, is located
on the southern coastlines of Russia and Ukraine. Though somewhat difficult
to navigate because of its shallowness, significant levels of freight and
passenger traffic do flow through the port cities of Berdyans'k, Mariupol,
Taganrog and Yeysk."
If the rebels can capture and maintain a corridor between Donetsk and
Mariupol, this war is not ending any time soon.
Let me ask again: Which side is in trouble? If the above reports are even
close to being accurate, the answer is Ukraine.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
