IMF Demands Ukraine
Commit Economic Suicide
Dec. 20, 2013 (EIRNS)In a scathing Dec. 19 report ("Press Release No. 13/531"), the International Monetary Fund lashed into Ukraine's economic policies. Their number-one demand is that it slash and phase out energy subsidies, a suicidal move which the IMF nevertheless called "essential" and "indispensable." This particular demand is repeated no less than four times in the five-page report. When Ukraine recently broke off negotiations for EU associate status, the IMF's demand for a 40% fuel-price hike for Ukrainian citizens was reportedly one of the factors which precipitated it.
Their other ukases include the demand that Ukraine terminate exchange controls and cease to support the value of its currency, stem wage and pension increases, and limit the indexation of pensions to inflation. In view of Ukraine's failure to take these steps to date, the IMF says that the magnitude of any future loans should be scaled back, and even recommends creating new procedures to terminate loan agreements before maturity, even when payments are current as Ukraine's payments are.
New York Times Moscow correspondent David M. Herszenhorn spelled out more of what the IMF meant, but didn't say explicitly, in a Dec. 19 article. He wrote,
"The report suggests that Russia's offer this week to rescue Ukraine with another $15 billion in loans and a sharp discount on natural gas prices could be far riskier than President Vladimir V. Putin has suggested....
"The bailout from Russia, which Mr. Putin described at a news conference on Thursday as a gesture toward a 'brotherly' country, comes without the requirements demanded by the IMF. That, however, could come back to haunt the Kremlin. The IMF has said that without comprehensive reforms, including some tough austerity measures, any money provided to the Ukrainian government would essentially be thrown into a black hole."
Sour grapes. But the IMF's lashing out in this way illustrates something Lyndon LaRouche said on Dec. 19. "There will be no soft negotiations."