NEO – Kiev Commits Energy Hari Kiri

…  by  F. William Engdahl,   … with New Eastern Outlook, Moscow

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[ Editor’s note: With the fighting dying down from the peak levels of the Donetsk airport and Debaltsevo cauldron disasters for Kiev, attention has shifted away from Ukraine’s financial death spiral.

The intricate economic consequence are hard for the general public to follow when they are being assaulted by a massive “chaos theory” campaign designed to diffuse any effective resistance to the international mobsters.

Brother Engdahl gives us a quick review of the throat hold the IMF has on the post-Kiev coup Ukrainians, many of whom have still not grasped that the EU integration carrot was a mirage.

They are destined to become indentured servants, a template example that “they” have put on display for their new form of world conquest, the dual punch of color revolutions and regime change.

The loans being pumped into Ukraine, with no feasible chance of repayment at first seemed like a dumb move by the Western vultures, in terms of why would they risk these loan defaults by making them bigger and having another banking crisis. But stupid they are not.

The money and destruction blown away on the stupid war just seemed to make a small chance of turning the country around into zero. Then we began to see that that was the whole point, to crash the economy to create fire sale conditions for the non-taxpaying multinationals moving in to pick the bones and perform an overseer role on what will be the West’s Ukraine plantation.

We view the Donbass War justification as the West wanting to have the collateral of the energy resources and industrial output to have more available to be forced to be sold off to collateralize the IMF loans. Their plan does not seem to work without those assets in the fight column.

And never mentioned is the plan to default on the Russian commercial loans and nationalize their assets so they can be offered to “new owners”. Can you say George Soros? Of course the right conditions have to be created to justify this.

Hence we saw the desperate attempt to frame Russia with the MH-17 murders, and even the silly claims of the endless Russian invasions, all of which have been debunked.

But we saw no embarrassment from the top Western leaders over learning they have been fed bogus Intel, a dead give-away that the leaders were in on the scam from the beginning.

Their actions are a crime against their own citizens because they are justifying wanton aggression through diplomatic, economic and military terror… which conflicts just a little bit with spreading freedom and democracy throughout the world. Does anyone remember that propaganda theme?

Worst in all of this is the anemic domestic political opposition in the respective Western countries involved. The chaos theory warfare is working as planned. People cannot focus an effective opposition when they are constantly overwhelmed from multiple directions on their own livelihoods and futures.

You see, “we are all Ukrainians to them”, and to that you can add West Bankers and Gazans. At least they show some resistance, but what have we done? And by that I don’t me you personally, but the civic organizations, the unions, churches, veterans orgs, and academic world in joining forces to take on the real Axis of Evil.

What we are seeing is a huge failure of what are called democratic institutions. Their total submission in the face of such obvious threats leads to only one conclusion… that they have been compromised. We have already been converted into Ukrainians, but not as harshly, as we have more to steal, and it will take more time to get it all… Jim W. Dean ]

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–  First published  …  April 2, 2015  –

What the insane Washington-orchestrated civil war in Ukraine has not yet destroyed in Ukraine over the past year, now the conditions demanded by the US Treasury-controlled International Monetary Fund will.

On March 13, Kiev received the first $5 billion tranche of a $17.5 billion three-year IMF loan. It desperately needs the cash to avoid insolvency.

However, in typical IMF policy, the aim of the money is to act as a poisoned “carrot” to force the victim country to undertake draconian “reforms” whose only effect will be to open the doors to foreign banks and multinationals to further rape and plunder what’s left of their economy.

Now Kiev is about to commit energy Hari-Kiri to please the IMF and the US-imposed American-born Finance Minister, Natalie Ann Jaresko.

Before the US coup d’état on February 22, 2014 in Kiev, ousting a democratically-elected President Viktor Yanukovich with the aid of CIA snipers, self-styled neo-nazi Pravy Sektor gangsters and George Soros’ Ukrainian NGO, Ukraine’s president had opted to join the Russia-led Eurasian Economic Union.

In return Ukrain would get generous financial loans from Moscow and a huge cut — over 30% — in the price the country must pay to Russia’s Gazprom to import natural gas. Yanukovich stressed at the time that he wanted to continue a dialogue on closer association with the EU as well.

For the neo-conservative war faction in the Obama Administration that was a no-no! Washington wanted to destroy Russia and Putin, and the way to do that, as the ridiculous neo-conservatives such as CIA’s John Brennan or Victoria Nuland at the State Department or Joe Biden or Senator John McCain saw it, was to create a pro-NATO coup in Kiev, after a similar US Color Revolution in 2004 failed to achieve the goal.

Since Washington placed its hand-picked marionettes into power in Kiev — including as Prime Minister alleged senior Scientologist Arseniy Yatsenyuk, “Yats” as Nuland affectionately calls him, and a billionaire Poroshenko as President and three US-picked foreign nationals as top ministers, including Natalie Jaresko, an American ex-State Department senior official, as Finance Minister — their economy has been in a free-fall.

The Washington Post reported a current hyperinflation of 272%. The decision by Nuland’s Washington gang to push Kiev to go to war over protests in eastern Ukraine’s energy-rich Donbass in March 2014 rather than creative diplomacy succeeded in severing the heart of Ukraine’s industrial economy from Kiev. The war cost untold billions the government doesn’t have.

Now IMF’s ice-cold Managing Director, former JP Morgan Chase banker Christine Lagarde, announced on February 12 Ukraine’s new, $17.5 billion bailout package, claiming it would be a “turning point for Ukraine.” She knew. Kiev got the first tranche of $5 billion in February.

Like the Sicilian Mafia, the IMF gives a kind of “protection.” Its loans have strings, called the Washington Consensus or IMF conditionalities. They never vary. That’s because the US Treasury in fact controls IMF policy.

The conditions are invariably that a country getting “loans” must open its economy, privatize state assets, slash health and education and public jobs and balance the state budget, something the USA has failed to do for decades. Foreign multinationals are then free to rape what is left. It’s a modern version of “outsourced imperialism” made to look technocratic and politically neutral. It isn’t.

The $17.5 billion is to come over the next 3 years with only $5 billion in 2015. But Ukraine needs to find about $25 billion this year to finance its large current-account deficit and to repay foreign creditors. Foreign-exchange reserves are only $12 billion. Additionally, the IMF demands “reform” of Ukraine’s energy sector including drastic increases in natural gas prices.

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Energy hari-kiri

Now, on top of the war against their fellow countrymen cutting off coal supplies to Ukraine industry from the eastern Donbass, the IMF has nailed its demand for “energy reform” on the door of the Kiev parliament.

To meet IMF loan demands, the government has imposed exorbitant taxes on local oil and gas producers and is forcing them to sell their output to the government-owned monopoly. Kiev’s new tax rates are mindboggling.

The government has just imposed a royalty which taxes output sales not just profits. And the royalty tax rates are 70% for state-owned oil and gas production companies; 55% on wells under 5,000 meters depth, and 35% on wells over 5,000 meters.

That will have the effect of killing domestic Ukraine oil and gas production and development at a time Washington is telling Kiev to become free from oil and gas from Russia.

The other major source of Ukrainian power generation – anthracite coal – is no longer accessible, as most of the mines are in the country’s east, in the Donetsk Basin (Donbass).

The new taxes come as part of the IMF demands to Kiev will bring a dramatic immediate rise in the price of natural gas to industry and households. Naftogaz, the state-owned gas giant must end its annual $4 billion deficit, some 6% of GDP, by imposing a 300% rise in gas prices.

So one year later, with the EU pleading poverty, Ukraine’s government will force a whole new wave of bankruptcies and unemployment owing to soaring gas costs.

To cap the catastrophic EU and Washington destruction of Ukraine’s remaining economy, half of Ukraine’s energy is produced at its Soviet-built power stations. The uranium fuel for these is supplied by ROSATOM, the Russian state nuclear energy company.

To end that dependency, last year Washington pushed Kiev to buy its nuclear reactor fuel instead from Westinghouse Corporation, today actually owned by Japan’s Toshiba, hardly a confidence-inspiring fact after the Japan Fukushima nuclear disaster.

In December, 2014, Westinghouse announced it extended an agreement to supply two Soviet-era nuclear plants with fuel until 2020. There is a little problem with trying to substitute US-made fuel rods for Russian.

According to a statement by the International Union of Veterans of Nuclear Energy and Industry (IUVNEI), use of US-produced fuel for Soviet reactors is not compatible with their design and violates the security requirements. It could lead to disasters comparable with what happened in Chernobyl.

They issued the following statement last April, 2014, “Nuclear fuel produced by the US firm Westinghouse does not meet the technical requirements of Soviet-era reactors, and using it could cause an accident on the scale of the Chernobyl disaster, which took place on the 26th April 1986.”

IUVNEI consists of more than 15,000 nuclear industry veterans from Armenia, Bulgaria, Hungary, Finland, the Czech Republic, Russia, Slovakia and Ukraine. It was founded in 2010.

A US-imposed 300% natural gas price rise, a punitive new tax on domestic oil and gas production, a Washington-driven war that has either destroyed the coal mines in the east of Ukraine or put them off limits. creating widespread electricity blackouts. Loveless warmakers like McCain or Nuland, far away in Washington, obviously do not care what happens to the Ukrainian population or economy. Ukrainians deserve better than this.

F. William Engdahl is a strategic risk consultant and lecturer, holding a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook”.

Jim W. Dean

Jim W. Dean was an active editor on VT from 2010-2022.  He was involved in operations, development, and writing, plus an active schedule of TV and radio interviews.

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