All these years the right wing nut jobs have been promoting the bullshit idea that the EU is communist yet here's the EU backing the Nazis in Ukraine.

What the Western-backed regime is planning for Ukrainian workers

Behind incessant rhetorical invocations of a “democratic revolution,” Ukraine’s newly-installed government of former bankers, fascists and oligarchs is preparing draconian austerity measures.

The plans being drawn up are openly described as the “Greek model,” i.e., the programme of savage cuts imposed on Greece by the International Monetary Fund (IMF) and European Union (EU) that has caused Greece’s economy to collapse by nearly 25 percent in five years and produced a massive growth in unemployment and poverty.

In the case of Ukraine, however, this social devastation is to be unleashed against a country that has already been subjected to the scorched earth economics of capitalist restoration. Even before the latest events, Ukraine was the 80th poorest country in the world based on gross domestic product per capita, behind Iraq, Tonga and Bosnia-Herzegovina.

More than one quarter of its population—11 million people—live below the official poverty line, which is set at a meagre 1,176 UAH ($127) per month. The situation is far worse than official figures indicate, however. With an average monthly wage of only 1,218 UAH ($131), or 79 US cents per hour, millions more survive barely above subsistence level.

The official unemployment rate of 7.5 percent masks large numbers of unregistered and underemployed workers. It is, moreover, held down by high emigration, with tens of thousands fleeing the country in search of jobs. The equivalent of 15 percent of Ukraine’s population has left the country, giving it one of the largest diasporas in the world. Between 1991, when the Soviet Union was dissolved, and 2010, Ukraine’s population shrank from 51.7 million to 45.9 million.

Besides migration, the population decline is a consequence of Ukraine’s contracting birth rate, which is among the lowest in the world. Tragically, the country also has the highest maternal mortality rate in Europe, part of a health crisis that has seen incidences of HIV/AIDS grow to epidemic proportions, with 57 new cases a day identified in 2012.

Poverty has played a major role in the spread of HIV/AIDS—especially in parts of the formerly heavily industrialised regions of the east and south, where conditions are already depression-like.
In poverty’s wake has come an explosion of all manner of social diseases—from drug abuse and alcoholism to prostitution, with every sixth prostitute reckoned to be a minor. This is an underestimation, as Ukraine is a major hub of human trafficking, for the purposes of both sexual exploitation and forced labour.

These conditions are a direct consequence of the counterrevolutionary role of the Stalinist bureaucracy and its betrayal of the October 1917 Revolution, which reached its climax in the destruction of the Soviet Union and the restoration of capitalism.

As a result, Ukraine has been reduced to a pawn in US and European imperialist designs on Russia. In addition to the dangers of civil war and a global military conflagration, Western-backed efforts to pull Ukraine away from Russia have caused ever greater social misery for the masses, first in the aftermath of the so-called “Orange Revolution” of 2004, and then in the wake of the 2008 global capitalist breakdown.

Between 2008 and 2009, for example, Ukraine’s GDP fell by 15.1 percent while unemployment tripled to 9.4 percent. The former Stalinist bureaucrats and mafia-oligarchs who enriched themselves by stealing former state property have continued all the while to plunder state assets and pile up even greater personal fortunes.

Much worse is to come. Ukraine’s total debt is now estimated to be around $80 billion. With its currency having depreciated by 20 percent on the dollar since the start of the year, depleting currency reserves and increasing capital flight, Ukraine’s debt will rapidly grow even larger.

The IMF and EU are said to be working on a “rescue” package of just $15 billion. Not only is most of this earmarked to cover repayments to the Western banks, it is also tied in to massive cuts in spending for pensions and fuel subsidies. Since 1998, Ukraine has been involved in various IMF “structural reform” programmes, all of which have had to be abandoned within one year because their consequences were considered too socially explosive.

It was what former Prime Minister Mykola Azarov described as the “extremely harsh conditions” of a renewed IMF loan brought forward on November 20 last year that led to the government’s decision to put off signing the EU-Ukraine Association Agreement. That decision, in turn, became the pretext for the US- and EU-sponsored protests and resulting putsch.

The Western powers now intend to seize the moment they did so much to engineer. Writing in the Financial Times in February, Anders Aslund, a former adviser to the Ukrainian government, welcomed the Western-backed coup as an opportunity to impose austerity. The crisis in Ukraine meant that a “radical reform programme should be easier to undertake… than in many countries that have faced similar crises in the past,” he wrote.

The New York Times, the mouthpiece of American imperialism, cracked the whip in an editorial published Friday under the headline “Fixing Ukraine’s Economy: The country’s leaders need to reform wrongheaded energy and exchange-rate policies.” The editorial denounced “wasteful energy subsidies” and demanded that the Western-installed puppet government get to work “raising retail gas prices for most consumers.”

An IMF mission has already been at work over the last fortnight, meeting with the minister of energy and coal and representatives of the National Bank of Ukraine and the gas distributor Naftogaz. It reports that its work is “progressing well” and that the new authorities are committed to “economic reform.”

These “reforms” include further currency devaluation, major cuts in public spending and pensions and, in particular, an end to state energy subsidises, which are a life-and-death matter in a country where temperatures can fall as low as minus 20 degrees.

The Financial Times reports, “Sixty state agencies in various EU countries have already concluded so-called twinning agreements that aim to refashion their Ukrainian counterparts in their image.”

A 10 percent collapse in GDP is publicly spoken of by economists. Prime Minister Arseniy Yatsenyuk, handpicked by Washington to replace the ousted elected president, Viktor Yanukovych, has stated baldly that he will be “the most unpopular prime minister in the history of my country.”

Sergei Taruta, the oligarch recently appointed governor of the Donbass region, gave an indication of the timeframe for implementing these measures. Describing himself as an “anti-crisis manager,” he said he would take the post only “for six months or a year,” adding, “In that time I want strong people to come into government and then I will leave them to it.”

His comments shed light on why the US and the EU powers are so willing to sign off on a government staffed by fascists and extreme-right paramilitaries. On Thursday, the Ukrainian parliament voted to establish a 60,000-strong National Guard recruited from “activists” in the anti-Russian protests and from military academies.

The force will be overseen by the new security chief, Andriy Parubiy, a founder in the early 1990s of the neo-Nazi Social-National Party of Ukraine. His deputy, Dmytro Yarosh, is the leader of the paramilitary Right Sector. It is the Ukrainian equivalent of Hitler’s storm troopers.

In addition to aiding the West in its provocations against Moscow, the main responsibility of these elements will be to carry through a social onslaught against the Ukrainian working class at the behest of international capital.

The Battle for Ukraine Was Planned in 1997 … Or Earlier

Neoconservatives planned regime change throughout the Middle East and North Africa 20 years ago. Robert Parry correctly points out that the Neocons have successfully “weathered the storm” of disdain after their Iraq war fiasco.

But the truth is that Obama has long done his best to try to implement those Neocon plans.

Similarly, ever since the Soviet Union collapsed in 1991, the U.S. has pursued a strategy of encircling Russia, just as it has with other perceived enemies like China and Iran.

In 1997, Obama’s former foreign affairs adviser, and president Jimmy Carter’s national security adviser – Zbigniew Brzezinski – wrote a book called The Grand Chessboard arguing arguing that the U.S. had to take control of Ukraine (as well as Azerbaijan, South Korea, Turkey and Iran) because they were “critically important geopolitical pivots”.

Regarding Ukraine, Brzezinski said (hat tip Chris Ernesto):

Ukraine, a new and important space on the Eurasian chessboard, is a geopolitical pivot because its very existence as an independent country helps to transform Russia. Without Ukraine, Russia ceases to be a Eurasian empire.

***

However, if Moscow regains control over Ukraine, with its 52 million people and major resources as well as access to the Black Sea, Russia automatically again regains the wherewithal to become a powerful imperial state, spanning Europe and Asia.

And now Obama is pushing us into a confrontation with Russia over Ukraine and the Crimea.

As Ernesto notes:

Late last year when Ukraine’s now-ousted president Viktor Yanukovych surprisingly canceled plans for Ukrainian integration into the European Union in favor of stronger ties with Russia, the US may have viewed Ukraine as slipping even further out of its reach.

At that point, with the pieces already in place, the US moved to support the ousting of Yanukovych, as evidenced by the leaked phone conversation between US Assistant Secretary of State Victoria Nuland [arch-Neocon Robert Kagan's wife] and US Ambassador to Ukraine Geoffrey Pyatt. When peaceful protests were not effective in unseating Yanukovych, the violence of the ultra-nationalist Svoboda party and Right Sector was embraced, if not supported by the west.

In today’s Ukraine, the US runs the risk of being affiliated with anti-Semitic neo-Nazis, a prospect it probably feels can be controlled via a friendly western media. But even if the risk is high, the US likely views it as necessary given the geopolitical importance of Ukraine, as Brzezinski mapped out in 1997.

In other words, Obama is following the same old playbook that the Neocons have been pushing for more than a decade.

As was largely expected, the first retaliation by Obama has arrived, courtesy of a just issued Executive Order by the president, in which he has blocked and frozen "all property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person" (i.e. assets) of not only the pre-coup Ukraine president Yanukovich and the Crimean leader Aksyonov, including all Russians that operate in the Russian arms industry, but most notably seven Putin aides. Not Putin himself of course - that would be too "escalatory"...

From the White House:

I, BARACK OBAMA, President of the United States of America, hereby expand the scope of the national emergency declared in Executive Order 13660 of March 6, 2014, finding that the actions and policies of the Government of the Russian Federation with respect to Ukraine -- including the recent deployment of Russian Federation military forces in the Crimea region of Ukraine -- undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and contribute to the misappropriation of its assets, and thereby constitute an unusual and extraordinary threat to the national security and foreign policy of the United States. Accordingly, I hereby order:

Section 1. (a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person (including any foreign branch) of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in...

RUSSIA MAY ASK UKRAINE TO PAY ITS $20B SHARE FOR EX-SOVIET DEBT
Pidgeon playing checkers response time.

This should come as no surprise as we warned of at least $3b in bonds that are due very soon...

the Ukraine owes $3 billion to Russia in bonds that have been issued under UK law. One of the stipulations of the bonds is that if the Ukraine's debt-to-GDP ratio should exceed 60%, the bonds will become immediately callable.

Once the Ukraine gets funding from the IMF, this is of course going to happen right away – its debt-to-GDP ratio will then most definitely exceed 60%, so the first $3 billion of any aid the Ukraine receives in the form of loans will right away flow into Russia's coffers.

Of course there may be litigation first, but as Greek bondholders have found out, all those who held bonds issued under UK law were actually paid in full, while everybody else had to accept the 'PSI' and could basically go pound sand.

As Western leaders prepare a bailout package for embattled Ukraine, they face a startling irony: Thanks to the almost bizarre structure of a bond deal between Ukraine and Russia, billions of those dollars are almost certain to go directly into the coffers of the Putin government.

As CNBC has reported, some aid money is bound to go into Russia as a result of energy trade and other economic factors. But the situation is actually much more acute than just that: An existing agreement between the two countries makes an immediate, direct transfer from Ukraine to Russia legally enforceable.

In December, Russian President Vladimir Putin agreed to lend Ukraine $15 billion. Few details were released at the time, except that Ukraine would issue bonds and Russia would buy them in installments through 2014.

The first and only installment occurred in late December, while then-Ukrainian President Viktor Yanukovych was still in charge in Kiev. The second installment was slated to happen in late February, but it never occurred, because the pro-Russian president had fled Ukraine and a new government was in place.

Russia's $3B Ukraine loan contains rare clause
CNBC

That first installment was $3 billion — in U.S. dollars, as dictated by the terms of the deal — issued on Dec. 24. It carries a lenient interest rate considering the shattered state of Ukraine's economy: a coupon of only 5 percent, payable semiannually on June 20 and Dec. 20. It is short-term debt, maturing on Dec. 20, 2015.

Startlingly, the notes are governed by U.K. law and subject to the exclusive jurisdiction of British courts. And most crucially, there is an odd clause in the bonds that has a direct impact on European and American taxpayers, as CNBC learned through a review of the bond agreement:

Paragraph 3 (b) under Covenants:

(b) Debt Ratio So long as the Notes remain outstanding the Issuer shall ensure that the volume of the total state debt and state guaranteed debt should not at any time exceed an amount equal to 60 percent of the annual nominal gross domestic product of Ukraine.

The implications of that clause are that the minute the West or the International Monetary Fund extends a large loan to Ukraine, that country will almost certainly have a debt-to-GDP that exceeds 60 percent, immediately putting the Russian loan into default. That gives Russia the right to demand immediate repayment. And because the bonds are governed by British courts — which, presumably, neither Ukraine nor Russia can manipulate — it would be extremely difficult for Ukraine to avoid making the payment, using its new bailout money.

The country and legal system where a bond is governed is of increasing interest to fixed-income investors and lenders around the world, a lesson learned during the Greek debt crisis. When a bond is issued under a country's local laws, the country's leadership can change the laws anytime. New laws can even be imposed retroactively. That's precisely what happened to the holders of Greek-law bonds during the debt crisis there. In the end, holders of Greek debt took a massive financial hit.

However, holders of the few Greek bonds that were governed under British law were and still are being paid back in full. They've made very healthy profits.

Image: Sen. Rand Paul J. Scott Applewhite / AP
Sen. Rand Paul, R-Ky., confers with an aide Wednesday, March 12, as the Senate Foreign Relations Committee drafts legislation that would show support for the people of Ukraine and send a get-tough message to Russian President Vladimir Putin for taking over the Crimea region.

That lesson wasn't lost on investors during Puerto Rico's protracted attempts to borrow billions of dollars this week. Until now, all Puerto Rican debt was issued under Puerto Rican law. But to get a $3.5 billion deal done this week (the largest junk muni bond offering in history, according to those familiar with the deal) the commonwealth had to put the new bonds under jurisdiction of the laws of New York state.

That issue is also central to the issue of Argentina's protracted debt fights with Elliott Management. Argentina's leaders have said that as a sovereign nation, the country should not be beholden to hedge funds. But because they issued their bonds under New York law, they are beholden to the courts of the United States.

In opposing loan guarantees for Ukraine during a debate Wednesday in the Senate Foreign Relations Committee, Republican Sen. Rand Paul argued that Russia would ultimately benefit. His amendment to cancel the guarantees was defeated.

Where the leaders of the west have collectively declared themselves anti democracy whilst at the same time claiming to be champions of democracy.

Here is Mr Paulson on the unfolding drama:

"When Fannie Mae and Freddie Mac started to become unglued, and you know there were $5.4tn of securities relating to Fannie and Freddie, $1.7tn outside of the US. The Chinese were the biggest external investor holding Fannie and Freddie securities, so the Chinese were very, very concerned."

Or to put it another way, the Chinese government owned $1.7tn of mortgage-backed bonds issued by Fannie Mae and Freddie Mac, and it was deeply concerned it would incur huge losses on these bonds.

Mr Paulson: "I was talking to them [Chinese ministers and officials] regularly because I didn't want them to dump the securities on the market and precipitate a bigger crisis.

"And so when I went to Congress and asked for these emergency powers [to stabilise Fannie and Freddie], and I was getting the living daylights beaten out of me by our Congress publicly, I needed to call the Chinese regularly to explain to the Central Bank, 'listen this is our political system, this is political theatre, we will get this done'. And I didn't have quite that much certainty myself but I sure did everything I could to reassure them."

In other words, China had lent so much to the US that Mr Paulson needed to do his best to persuade its government and central bank that China's investment in all this US debt would not be impaired.

Now this is where we enter the territory of a geopolitical thriller. Mr Paulson:

"Here I'm not going to name the senior person, but I was meeting with someone… This person told me that the Chinese had received a message from the Russians which was, 'Hey let's join together and sell Fannie and Freddie securities on the market.' The Chinese weren't going to do that but again, it just, it just drove home to me how vulnerable I felt until we had put Fannie and Freddie into conservatorship [the rescue plan for them, that was eventually put in place]."

For me this is pretty jaw-dropping stuff - the Chinese told Hank Paulson that the Russians were suggesting a joint pact with China to drive down the price of the debt of Fannie and Freddie, and maximize the turmoil on Wall Street - presumably with a view to maximizing the cost of the rescue for Washington and further damaging its financial health.

Paulson says this guerrilla skirmish in markets by the Russians and Chinese didn't happen.

But this kind of intelligence from China on Russian desire and willingness to embarrass the US in a financial sense may help to explain - in a small way - why President Obama shows little desire to understand Crimea as seen by Mr Putin.

And maybe if the US is being a bit more robust than the EU in wanting to impose economic and financial sanctions on Russia, that may not all be about America's much lesser dependence (negligible dependence) on Russian gas and oil.

Ukraine soldier 'killed in attack on base in Crimea'

A Ukrainian soldier has been shot and killed in an attack on a military base in Simferopol in Crimea, a military spokesman claimed. If confirmed, it would be the first death since the stand-off. Its PM called the reported attack "a war crime".

Bogdan Benyuk, Andrej Iljenko and Igor Miroshnichenko, members of Svoboda (main right-wing party) with some assistants attacking the director of the "First National Channel" (the only ukrainian state television). The reason? He transmitted the intervention of Putin to the Kremlin and the suspicion of being a "moskal" (a term with which the russians are defined by the fascists ukrainians).

Press agencies occupied by gangs, television channels in the hands of oligarchs, beatings against "non-Ukrainians" and antifascist, censorship of the channels: the right path to Democracy.

A polish friend came back today. Opted not to badger him tonight but tomorrow i will certainly be asking him what the word on the street is over there at the moment.
I have some suspicions and concerns. It would be nice if he assuages them.