It’s been a long time since I mentioned the IMF and Ukraine. Basically because it is has been a long time since the IMF lent any money to Ukraine. More than 12 months in fact.
The reason being Ukraine’s reluctance to put up gas prices again for domestic and commercial users. Now, you can understand Ukraine’s reluctance if there is still the very unlikely chance it can reduce the ridiculously high gas prices from Russia.
In an election year, those in power do not particularly want to raise gas prices yet again, having already done so to appease the IMF after coming to office (as well as other unpopular things like raising the pension age on IMF insistence), if such IMF demanded rises can be negated by a sensible gas price from Russia.
To be fair to the IMF both reforms are definitely needed and to be fair to the current government it has made steps in the right direction as far as is politically possible with elections on the horizon.
Nevertheless, there has been no further IMF lending to Ukraine for more than a year now. This week, Ukraine has made the first repayment to the IMF relating to loans made before the lines of credit were suspended. A “tick in the box” you would think as far as IMF/Ukraine relations go.
Not necessarily so however. This week on of Mrs Rodham-Clinton’s minions was in Kyiv telling Ukraine that aside from raising the gas prices to end users in Ukraine, this would still probably not be enough to allow for further IMF lending.
In short, the USA would not support further IMF lending to Ukraine whilst Ms Tymoshenko remains in jail. Whether the USA has missed the red line over Ms Tymoshenko that has become apparent to the EU as far as dealings with Ukraine goes, or whether the minion thought the USA and IMF had more clout with Ukraine than the EU, I am not sure.
It should be understood that as far as Ukraine goes, there are no real US interests that complicate the US value system. It is often the “interests” verses the “values/morality” that give nations that perception of duplicity when it comes to foreign policy.
A contemporary example is the US continuing to arm the Bahrain regime whilst condemning the Syrian regime despite both failing in their responsibility to protect their own citizens. The US is not alone in this, every nation’s foreign policy works on an “interests” verses “values” based model and sometimes national interests trump morality/values or vice versa.
In the case of the IMF, which is going cap in hand to its members asking for more money, in particular China, such duplicity again presents itself.
How can the IMF go begging at the Chinese door, when China has more political prisoners and human rights issues than Ukraine and then refuse to give what is in effect Chinese money to Ukraine because Ms Tymoshenko is in jail? What ever happened to targeted sanctions so the general population doesn’t suffer? Who suffers the most from the absence of IMF lending, the oligarchy or the average man, woman and child?
Should it be influenced by the US in dealing with Ukraine anyway? The US is no stranger to human rights issues at the moment. As far as I am aware, it is still running Gitmo and is still under EU investigation for “Black Sites” across the EU relating to renditioned and subsequently tortured prisoners who are still to see anything remotely resembling a trial.
Can or should the IMF, an international funding organisation, be involved in internal processes of a Sovereign nation outside of all things monetary, fiscal and budgetary?
What would be the US position if Italy ask for an IMF loan? There isn’t one single democratically elected official in the Italian government and neither is there a date set to replace the technocrats running Italy. Could every citizen of Italy be classed as a political prisoner as they have no idea when democracy will be returned?
So, what has been the Ukrainian reaction to such overt fiscal threats of blackmail by the US via the IMF over its internal judicial processes? If it has not crumbled to EU pressure, will it crumble to US/IMF pressure?
Well, read into this what you will – Andrei Klyuev, Ukraine’s lead negotiator with the IMF over the past few years has been moved from that position in the past few days to head up the PoR parliamentary reelection campaign. Nobody as been appointed as his replacement.
One of the IMF”s biggest complaints when dealing with the Tymoshenko government was that officials changed regularly and were therefore always playing catch-up. That was until Ms Tymoshenko pulled the plug on IMF negotiations as they were insisting on pension reform and gas price increases just prior to her failed Presidential bid.
As Ukraine seems quite happy to put the DCFTA and AA with the EU on the shelf after it is initialed shortly, rather than cede internal sovereignty over Ms Tymoshenko, is that likely to be the same with the IMF and US regardless of the consequences?
Prima facie, it is starting to look that way and personally I really don’t see Ukraine bothering with the IMF again this year either now the US has threatened to use it as a political and policy lever against Kyiv.
It is starting to look as though the only wriggle room, should the current opposition fail to win the next election and free Tymoshenko, is that Tymoshenko is found guilty of the UESU/Somolli financial shenanigans, using in part no doubt the very same evidence used in the US courts that jailed her business partner for 9 years, and then the subsequent quashing of her current conviction which is deemed “political”.
This way, she is not imprisoned for “political crimes” such as misuse of office but genuinely criminal crimes such as money laundering, tax evasion, theft and fraud as her business partner was in the US.
As much of the US evidence to convict Lazarenko and provide his 9 year jail sentence names Tymoshenko and her UESU and Somolli companies. Will the US condemn any verdict using much of the same evidence? Will it then be much more amenable to IMF involvement with Ukraine (assuming Ukraine raises the gas prices to customers or Russia reduces gas prices to a sustainable level without the need for price hikes)?
Will Ukraine simply stick determinedly to the red line it has drawn around Tymoshenko regardless, EU, DCFTA, AA, USA and IMF be damned?
The answers, one suspects, relate to Tymoshenko’s trial relating the UESU and the international reaction to any result as well as how honest the October elections will prove to be in October.
As it stands today, it appears Ukraine is prepared to withstand all pressure over the Tymoshenko issue from what ever direction it comes, including those threats by the US to influence the IMF and take whatever hardships come with that stance.
Time will tell – 24 hours is a long time in politics they say but that red line drawn by the Ukrainian authorities over the issue looks to be getting firmer rather than softer the more external public pressure is applied.