The IMF Loan to Ukraine Benefits Ukrainians or Banks?
|April 9, 2014||Posted by Staff under Financial, Land Disputes, War / Peace|
This excerpt of The Real News Network, Mar 22, is an interview by Essica Desvarieus of professors Jeffrey Sommers and Michael Hudson.
Essica Desvarieus: The IMF is lending the interim government in Ukraine a $15 billion IMF bailout package. The conditions include cuts to gas subsidies, pensions, public sector employment, as well as privatization of government assets.
Hudson: The UN and the World Bank put Ukraine next to Nigeria for the GINI coefficient of concentrated income. The Europeans have told the kleptocrats that run the country, we will give you a lot of IMF money, you transfer it into your banks and your bank accounts, you send it abroad to your offshore banking centers, and the Ukrainian people will owe it; you tax your people and make them pay.
Russia says that Ukraine owes $20 billion, dating back to the Soviet Union era in exchange for, in addition, to about $5 billion or $6 billion for the oil subsidies that it’s been given. Russia said it is going to charge Ukraine the normal oil price, not the subsidized price. So all the money that the IMF and the U.S. gives Russia says is immediately owed to it itself.
None of the money none of this money’s going to go to the Ukrainian economy any more than the IMF money went to the Irish economy or the Greek economy. It goes to the billionaires who run the countries and immediately send it back to the West so it’s a circular flow. It goes in and out of Ukraine in about 20 minutes.
The government has to pay the IMF loan by privatizing whatever remains in the public domain. The Westerners want to buy Ukrainian farmland. They want to buy the public utilities. They want to buy the roads. They want to buy the ports. And all of this is going to be sold at a very low price to the Westerners. It will pass into foreign ownership, just like it did in Russia and Latvia.
Many Ukrainians say they haven’t been paid for two months. In Russia in 1994, during the Yeltsin selloff, labor went ten or 12 months without being paid. You can’t pay labor and at the same time pay the IMF and pay the kleptocrats.
In Latvia, Greece, and Ireland, 20 percent of the population emigrated. Just like 20 years ago you had an influx of Polish plumbers into London, you’re now going to have millions of Ukrainian plumbers pouring into Western Europe.
Russia moved in to Sevastopol for military reasons. It couldn’t let NATO put hydrogen bombs 20 miles from Russia, because then somebody in the neocons would have said, hey, we’ll never have a better chance to blow up Russia than we have right now; let’s do it. So Russia’s decisions here are cultural and military.
Western Europe is drying up. Russia’s turning towards an economy that’s not destroying itself, towards China and other Asian economies. We’re seeing a vast shift.
Also there’s the Budapest Memorandum of 1994 that bans all foreign countries from interfering in the domestic politics of Ukraine. Russia pointed out that it was the West that had violated the Budapest memorandum; the U.S. and E.U. stated they no longer regard the legally elected head of state as a legitimate partner, unlike the new leaders appointed in the square.
Sommers: The Soviets felt that they were given assurances from the United States that NATO would not encroach upon the former Warsaw Pact nations. What does the United States do over the past two decades? They take in the Warsaw Pact, and then they move even into the former Soviet Republics themselves, the Baltic states, moving towards Georgia, and now tentatively towards Ukraine.
Ed. Notes: You see why you shouldn’t let politicians spend your money? Why you shouldn’t let bankers concentrate your savings and create your currency? Why you shouldn’t let your militaries try to “solve” problems much more complex than meets the eye while merely enriching military contractors? And why, most importantly, you should work for geonomics to create a model of economic justice that would spread worldwide?