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Why the West Doesn't Care Whether Ukraine Pays Back Loans

Western creditors stand to gain control of the country's natural resources through loans used as bait

This article originally appeared at Thick Toast

You go to the bank, wanting a loan. You’ll probably get one, if you have collateral. If you don’t, you probably won’t.

<figcaption>Nothing comes free from the West</figcaption>
Nothing comes free from the West

Now, imagine for a moment, that your collateral is worth 9 trillion dollars. However, you don’t have a job. You have no income. In fact, you’re a drunkard. You’re also a kleptomaniac, and steal at every opportunity you have. You are also, in fact, broke — not only broke, you owe a billions of dollars that you have a track record of not paying. Chances are 100% that you will default on your loan, because even though you have collateral that is worth 9 trillion dollars, when it comes to liquidity you have no money.

Would you be surprised if I told you that the bank will still give you a loan, for tens of billions of dollars? Why would they? Because you have 9 trillion dollars worth of collateral, silly! If you have collateral worth at least 9,000,000,000,000, and the bank gives you 40 billion (or 40,000,000,000), then the bank can leverage your 9 trillion dollars worth of collateral for 1/225th of its capital investment. In other words, the bank either gets their loan back, with interest, OR they get to leverage your 9 trillion dollars collateral at fire-sale prices, picking it up for pennies-on-the-dollar for resale. The bank cannot lose. In fact, they would much rather that you default on your loan, as there is far more to be gained on the leverage of 9 trillion dollars, than they stand to make if you pay back your loan with interest.

Such is the case with Ukraine. Here is a breakdown of what Ukraine has to offer in terms of natural resources (oil, coal):

Ukraine Natural Resources for Plundering

Adding these figures together, you can see that Ukraine has natural resources that are worth in the neighborhood of approximately 9 trillion dollars.

Non-Beneficial Policies and Privatization of National Assets

The total above, representing around 9 trillion dollars, does not even begin to address how much money is available to be pillaged from Ukraine. Part of the recent IMF loans demanded that Ukraine open its doors and warmly embrace Monsanto. Ukraine’s largest trading partner used to be Russia, but Russia won’t accept Monsanto products. A growing list of countries won’t allow Monsanto GMO foods. This severely limits the number of places that Ukraine can sell it’s grain to, and is obviously harmful to Ukraine’s economy … but it’s great for Monsanto’s bottom line.

Lets talk about the privatization of national assets.

Soros’s and Obama’s plan was to privatize as much of the Ukrainian Government as possible in a fire-sale of its assets, such as the valuable gas fields in the Yuzivska region in Ukraine’s southeast (where the civil war now is), so that Soros and the other investors would be able to get their money back, with interest. Furthermore, inasmuch as only Soros and other insiders would be in on this fire sale, those same people would also be the bidders; and thus Ukraine’s assets would be sold to them at prices far lower than their actual worth as economic investments for the future.

I think it’s fair to ask, that if so many billions of dollars are there to be made by the IMF and Soros in cleaning up the ashes after Ukraine burns to the ground, whether Soros, the IMF, and the US wanted Ukraine to fail in the first place?

IMF Violates Its Own Charter

Ron Paul is quoted as saying that the IMF move to extend a bailout to Kiev only serves the US foreign policy agenda and does nothing to save Ukraine from economic meltdown.

A responsible financial institution would not extend a new loan of between 17 and 40 billion dollars to a borrower already struggling to pay back an existing multi-billion dollar loan. This new loan may not make much economic sense, but propping up the existing Ukrainian government serves the foreign policy agenda of the US,” Paul wrote in an opinion piece for the Ron Paul Institute.

Furthermore, the IMF is not supposed to loan money to a country which is at war.

IMF lending is barred for a member state in civil war or at war with another member state, or for military purposes, according to Article I of the Fund’s 1944-45 Articles of Agreement.

Why is the IMF bending its rules in order to lend Ukraine money? Because 9 trillion dollars is a lot of money.

National Asset Naftogaz To Be Dissolved

Yesterday, former Ukraine Prime Minister Yulia Tymoshenko has moved to dissolve Naftgaz.

Parliament member and former Ukrainian Prime Minister Yulia Tymoshenko has called to abolish the country’s national oil and gas company Naftogaz, claiming it breeds corruption.

Of course Naftgaz has corruption, Ukraine is the world’s number one kleptocracy state, corruption everywhere is the status quo. However, also realize that Naftgaz is owned by the government, which holds 50% plus one share of the stock of Naftgaz.

Why dissolve Naftgaz, if it is owned by the government, why not just reform it? The answer is not surprising, Naftgaz is most likely to be privatized and sold to the bidders, with a bid that acquires this national asset for pennies on the dollar. Naftogaz is an asset which is owned by the people of the Ukraine. Giving it to private companies at pennies on the dollar is not in their best interest, as they will certainly be paying more for their gas after the transition.

This sort of privatization is the wholesale destruction of the Ukraine economy, selling off pieces to vulture capitalists (who destroyed Ukraine in the first place, and are now feeding off its corpse). They are gutting whatever wealth the people own and racking them up with billions of dollars in debt — which will never be repaid, and so will make Ukraine vulnerable to the further plundering of its 9 trillion dollars of natural resources.

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