Posts Tagged ‘World Bank’


An impressive fraud even by the standards of City Hall Odessa

October 19, 2016

Unusually before a reader sallies forth into this entry, your author would recommend reading yesterday’s entry which by pure coincidence is very relevant to this one.

Particular attention is drawn to Mr Dubov, his control over Lithuanian company UAB Naster, and the patrons and puppets surrounding him – “It must therefore be clear to a reader why Invest Group have decided to circumvent the local system and appeal directly and publicly to the Prosecutor General when faced with yet another corporate raid by Mr Dubov (via a shell company called UAB Naster registered in Lithuania if Mr Lutsenko needs a place to start and work back from).”


“As any occultist will say “As above, so below”.  If Ms Tymoshenko, Alexander Yanukovych and Mr Turchynov (among others) have all been (and perhaps still are) the “above” – then who and what constitutes the “below”?  Corporate raiding is a “dark art” in Ukraine after all.

If persistent and informed whispers are in any way accurate, then the exact construction of that local protection is divided between the political and the legal.  It would perhaps, if whispers be true, compromise politically of Messrs Krotyk, Kmyrenko, Shyvalov, Shamilov, Deide, Lutsenko (I), and Ms Syslova and Kuzel, whilst influencing the legal would be Mr Babenko, Mr Mazark with the SBU, the police and prosecutors by Mr Podolev, and Mrs Podoleva the courts.”

It is also to be hoped that among the readers of this entry, those from the World Bank and EBRD are among them and have pause for thought by the end of the entry.  If not, perhaps the usual diplomatic IPs will bring this entry to their notice.

At the beginning of the year, Lithuanian company UAB Naster (Mr Dubov) acquired via a City Hall auction (a reader will note the deliberate absence of the word “won”) a parcel of land known locally as “The Edge” and the large building thereon for UAH 11.5 million.

On 19th October, City Hall agreed to buy “The Edge” (back) from UAB Naster (Mr Dubov) for UAH 185 million – more than 16 times what Naster (Mr Dubov) paid for it just over 7 months ago.


Clearly neither land nor building thereon, despite some refurbishment, has appreciated 16 times during that extremely short time frame.

City Hall has bought “The Edge” or “Development of the Elites” as UAB Naster has reframed/renamed it as the location to now centralise all City Hall departments.  City Hall considered no other options for relocation.  A long standing (and necessary) plan to centralise will be achieved – via what is in all likelihood an equally long standing prima facie criminal conspiracy.

The concept of placing all City Hall departments and services under on (fraudulently expensive) roof is of course not in question.  It is a good and necessary development for both City Hall and the local constituency when it comes to functionality and usability.

Indeed a proud (and in all probability now richer) Mayor Trukhanov stated “to concentrate all structural units of the city council in one building – it is a normal European practice.”   Quite – except that normal European practice doesn’t involve a Mayor renowned for organised criminality and mafia connections having his City Hall buy a property from a renowned corporate raider and criminal associate who bought the very same asset only a few months ago from City Hall at 1/16th of the price.

City Hall would have a reader to understand that the World Bank and EBRD will now finance equipping this asset acquired via criminal conspiracy and fraud.  After all by the time kick backs, and tributes are all divided horizontally and vertically from the grotesque spread on this nefarious deal, there probably isn’t the money left in the City budget to equip its newly acquired premises.

Further, whilst the centralising of all City Hall departments within “European City Hall”, along with the creation of an integral one-stop-administrative shop probably saves a small fortune in heating and maintenance costs across a sizable number of soon to be vacated city owned properties in the centre, a reader will question what will actually happen to those City owned premises?

This perversely impressive brazen fraud and criminal conspiracy simply cannot stop now when further and obvious opportunity still presents itself.  Cynically whilst the least attractive vacated City Hall real estate may be leased/rented, the reader will probably, and no doubt rightly with the passage of time, arrive at the conclusion that those involved in this blatant fraud will sell the prime centrally vacated property on the cheap to each other and then trumpet “gains to the City budget”.

Undoubtedly there will be no repercussions.  President Poroshenko has no real alternatives to Mayor Trukhanov (who will remain reasonably loyal as long as he can run amok criminally) so the Presidential Administration in no hurry to remove him, and clearly as yesterday’s entry makes plain, Mr Dubov has patronage (and puppets) too.

Irrespective of the $ figures actually involved, the sheer brazenness of this fraud and criminal conspiracy is impressive – even for Odessa which is well accustomed to such shenanigans.


Populist political guns aim at Gontareva (and the NBU)

October 17, 2016

With Ukraine no longer being dependent upon the IMF, and with international debts to be serviced more than manageable in 2017, it is perhaps no surprise that the current head of the National Bank of Ukraine (NBU) is now a legitimate political target when it comes to taking a scalp from the President.


Thus, during the week 6 – 10 October at a meeting of the IMF and World Bank in Washington DC, a brochure was circulated with the clear intention of undermining Ms Gontareva as head of the National Bank of Ukraine.

Behind the brochure sits Sergei Taruta – Verkhovna Rada parliamentarian, businessman and oligarch.

To be entirely blunt, having only recently met with senior people within these institutions in Ukraine, if the intention was to undermine Ms Gontareva (and/or the NBU policies) then it was sure to find little if any traction at the meeting of these international institutional lenders.

Whilst neither institution support specific politicians or institutional appointees (like Ms Gontareva), instead supporting State institutions and internal processes, quite clearly both fully recognise what they consider to be very positive change within the NBU under her leadership.  It seems unlikely that there would be any private conversation that would encourage her removal from office until the changes she has brought are far more consolidated and (perhaps) irreversible.


It is therefore difficult to believe that Sergei Taruta could seriously expect that a brochure clearly designed to undermine the head of the NBU would find traction among the IMF and WB elite in Washington DC.

If he did then he has a truly woeful understanding of the relationship between the current NBU management and that of the IMF and WB in Ukraine.

Needless to say, the brochure brought with it no result at the IMF and WB gathering in DC that was in any way helpful for Mr Taruta – perhaps the opposite.

Nevertheless on 14th October Mr Taruta decided to pursue to resignation of Ms Gontareva through the machinery of the Verkhovna Rada, declaring on his intentions on his Facebook page together with accusations of incompetence and corruption.

That same day the NBU website questioned the allegations, the framing of his claims, and the motivations of Mr Taruta.  Indeed the NBU requested that such machinations be scrutinised by the Ukrainian law enforcement entities.

A reader will now rightly note the true audience – that of the Ukrainian constituency.

Not to be left on the periphery, on 17th October, the ever populist Yulia Tymoshenko pushed Batkivshchyna to the fore as a rallying point for Verkhovna Rada Deputies to coalesce around to force the removal of Ms Gontareva.  Ms Tymoshenko’s main charge being that Ms Gontareva is in charge of the destruction of the State at the behest of President Poroshenko.

Her secondary charge, and clearly she has noted the real reason for Sergei Taruta’s attack on the NBU, was that the free-floating (more or less) of the Ukrainian currency has caused all those with foreign currency loans to struggle and/or default as the currency weakened significantly when finding its true market value.

Thus Mr Taruta’s attempt to attract struggling SME’s and entrepreneurs to the Taruta political sphere is now duly challenged by Ms Tymoshenko’s act – whilst both simultaneously attempt to remove a presidential appointed (Verkhovna Rada approved) scalp who is now fair play having completed many of the most unpopular IMF reforms.

Perhaps Ms Gontaerva is incompetent and/or corrupt as Mr Taruta claims.  Perhaps she is President Poroshenko’s tool for the destruction of the State as Ms Tymoshenko orates.  If so however, neither Ms Tymoshenko nor Mr Taruta have the moral high ground nor are particularly concerned about it considering the company they keep and the activities of those within their orbit – both business and political.

It is far more likely that they both simply see the IMF as now expendable and thus Ms Gontareva as no longer essential/untouchable – and therefore she is nothing more than a possible scalp for a populist “win”.

If they managed to remove her, would State policy change?  Probably not.



The gathering reform storm of 2017 – Ukraine

October 6, 2016

Many Ukrainian eyes are focused on 2017 and what external events will mean for the nation.

How will US policy change when a new president sits in the Oval Office?  What of the elections in France and Germany?  How much of a distraction will BREXIT be when it is eventually triggered?

All good questions – and as stated a few days ago “….. unless the Ukrainian leadership really start making strides (rather than tip-toe) with real and effective reforms US patience will expire sometime in 2017, just as the European patience will.  Real support will ultimately be reduced to little more than that surrounding territorial integrity and sovereignty.”

That statement fails to include Ukraine meeting its obligations to international institutions.  There are agreements with the IMF, World Bank, EIB and EBRD that will either be met – or broken.  This in turn will have a major impact upon FDI if (or possibly when) these agreements go unfulfilled.

To keep a watchful eye upon the external, currently” friendly” influences that will effect Ukraine in 2017 is understandable, but there are some extremely prickly and difficult issues internally that have the ability to magnify or reduce the thus far (surprisingly robust) goodwill of the international community (minus Russia) which seem destined to once again radically and negatively effect Ukrainian standing among its “friends”.


In short there is a reform (or distinct lack of) storm brewing that is going to hit Ukraine in early 2017 and which when it does, the feckless domestic politicians will be once again at its core.  The issues are vividly clear, yet as normal, preparation, professionalism and policy are entirely absent.

Before looking at 2017 however, 2016 has yet to run its reform course.  The next tranche of IMF money, about $1.3 billion, is due in November.  For this tranche to be forthcoming there are but a few obligations to meet.

Clearly insuring reform progression thus far does not reverse is necessary.  The irreversibility of what has been done thus far is highly questionable.  What reforms, if any, can be claimed as being irreversible and consolidated?  Some may be close, but which are truly over the line?  The NBU has done a very good job, but a change of leadership and/or policy could undo almost all that has been done.  NABU is under direct assault by the PGO and Attorney General.  The new national police for the most part is refusing to buckle to corruption despite the police service remaining only half reformed and far from ethical as an institution.  The military are now a capable fighting force, yet its leadership remains poor and con tinuing corruption is as corrosive as the war of exhaustion with Russia in the occupied east.

Nevertheless, aside from holding the reform line that has be advanced thus far,  to meet the requirements for the next IMF tranche NABU should be given the right to wire tapping.  The list of SOEs for privatisation in 2017 completed (notwithstanding the November 2016 second attempt to sell Odessa Port Side – and the equally robust attempts to prevent its sale by vested interests.)  The e-declarations of politicians and relevant public office holders are to be filed in their entirety.  A “fair” budget for 2017 is to have been submitted.

All this to be accomplished by the end of this month so the IMF can give a timely nod of approval for November’s $1.3 billion.

Thus far, “fair” or otherwise, the budget has been submitted for consultation within the Verkhovna Rada.  The outcome of those consultations and the guaranteed subsequent amendments remain to be assessed by the IMF.  The budget however, is possibly the least problematic of the IMF requirements.

An independent NABU logically should not require the SBU to carry out wiretaps on its behalf.  The more people that know that “Mr X” is subject to a wiretap, the more chance there is that “Mr X” will find out.  Having to use a third party brings with it an unnecessary potential for leaks and/or tip-offs.  It should therefore not require stating that a nefarious elite and feckless parliament do not want a self-sufficient NABU that is far more difficult to infiltrate, influence or preempt.

The e-declaration fiasco remains just that.  The  declaration system still fails to meet the legislative framework requirements.  The e-declaration legislation itself also requires some amendment – just not the amendments to remove criminal liability that so many politicians want to see.

The sheer scale of opposition to the e-declaration reform is naked to the observing eye when considering it took EU conditionality to get the e-declaration law passed initially, and then months later it requires IMF  conditionality to actually get e-declarations completed by those who are required to do so (by the end of October).

At the time of writing about 1600 e-declarations have been submitted.  Of those only one of that number is of a parliamentarian (Mikhail Gavriluk).  None of the other 400+ MPs have yet filed.  Not a single member of the Cabinet has either.  About a dozen of the 300 NABU detectives have filed, and only two of the four NAPC members charged with policing e-declarations have done so.  Even if all e-declarations are submitted by the end of October, as stated long ago, court challenges are inevitable when the system still fails to meet the legislative framework it operates within.

In March the blog forecast that by the autumn Ukraine would not need external financing (although it would continue to accept it gratefully), but that it should nevertheless earnestly complete its obligations for reasons of external confidence in the nation’s governance.  Naturally the usual issues of fecklessness loom large, for when it is clear to the political class that there is no impending and immediate fiscal doom, the will to complete prickly reform legislation evaporates – which is where Ukraine finds itself today.

Reform orientated legislation has more or less stopped and requires resuscitation.  In fact it requires steroids if Ukraine is to meets its reform obligations to the IMF (let alone others) for 2017.

There are issues with compiling a list of SOEs ready for privatisation, liquidisation or remaining State owned.  There are at least 20 outstanding audits from those commissioned.

If the next few weeks in meeting the November 2016 and the $1.3 billion IMF tranche requirements appears optimistic, then meeting the obligations for the scheduled February 2017 tranche of $2 billion is perhaps as remote as riding a unicorn naked through the centre of Kyiv without once being snapped by a smartphone.

Despite the reform orientated legislative work completed in the energy sphere, the Ukrainian energy market remains entirely impenetrable, thus looking to 2017 the privatisation of Centrenergo is perhaps the only realistic chance of breaking into this market if it be sold to a foreign investor.  As such, the sale of Odessa Port Side in November has to be seen as a fair and transparent process by all onlookers.

Whatever the case, there is no way the list of SOEs for privatising, liquidisation or remaining State owned will be completed (and made publicly accessible upon the Ministry of Economic Development) by the year end.  Even if the only list of those SOEs identified for liquidisation is completed by then, there is simply little interest within the Verkhovna Rada to kill off such entities.  Gathering 226 votes for an exercise where none have any interests close to the New Year break is somewhat unlikely.  Auditors will not be rushed either.

Likewise “supervisory boards” such as that Naftogaz currently has (and which seems to be working well) for another 10 major SOEs is very unlikely to be achieved prior to 2017 as planned.  There is really no political will to do it – and a good deal of vested interests that will obstruct it.

Thus this reform requirement will roll over into 2017.

Fecklessness, lobbying/nefarious acts, and legislative short-comings aside – now to ever-present populism.

There two obligatory reforms by year end 2016 that seem simply beyond reach, will thus roll over into 2017, and yet are still unlikely to get through the Verkhovna Rada to facilitate the $2 billion February IMF tranche – thus finally breaking the IMF agreement and dealing a critical blow to “friendly” transatlantic assistance beyond issues of Ukrainian sovereignty and territorial integrity.

The first is the long-standing issue of pension reform that almost every government has stated it will tackle – but hasn’t.  Pensions from the age of 50 are simply unsustainable, and to be blunt most people continue to work way past being 50 because the pensions do not sustain them.

It is a policy that has to be addressed, but one that when push comes to shove, and despite a decade of rhetoric regarding the necessity of raising the pension age, every Ukrainian leadership succumbs to populism.

Nevertheless it simply has to be raised.

It is foolish to believe that any attempt to raise it significantly in one go will ever get through the Verkhovna Rada.  A system, for example, of raising the retirement age by 1 year every 2 years over 20 years (or a variation therefore) may stand a chance – however slim.  A system of greater contributions equating to greater pensions may also find some traction – but enough?  The populists however (Ms Tymoshenko, Mr Lyashko etc) will always seize upon pension reform for short term politicking and pre-election electioneering rather than looking at long-term policy necessities.

There are also existing process issues relating to checking the authenticity of claimants – something aggravated by the large number of internally displaced people.

Most difficult of all however, is the issue of land reform.  Ukraine has obligated itself to creating legislation regarding agricultural land reform by the end of October 2016.  That simply is not going to happen.  As of the time of writing the blog cannot even find a draft law registered regarding the issue.

It may be that the IMF will allow this sensitive/populist issue to roll over into 2017 and allocate the November 2016 tranche if all other conditions are met.  It will not issue the $2 billion tranche in February 2017 without this issue being tackled however.

Ms Tymoshenko is already noisily calling for the current moratorium upon the sale of agricultural land to be extended to 2022.  The Radicals being equally as populist will enthusiastically support her.

The sly oligarchy or slightly less mega-rich will look to provide/create agri-loan businesses with formidable foreclosure clauses to assume agricultural land of those farmers they lend to should the sale of agricultural land be permitted.  Huge ranges of State land will be swiftly leased through cronyism prior to any right to buy.  The farmers must be given more time to save the capital to buy the land they current lease and farm.  All such reasons will be presented not to create an agricultural land market.  Those farmers that do own their land will be tricked out of it by the unscrupulous, or simply coerced into selling it for a pittance – by continuing to stop them being able to sell the land they currently own, we are saving them from themselves (rather than infringing upon their rights to sell their own property).

There will be some societal “buy in” for some of that rhetoric, but that rhetoric can perhaps be employed to create safeguards within any laws creating a land market – if anybody actually drafts a law to create a land market that will be fair, regulated, and if necessary contain legislative restraints.  (Perhaps Ms Tymoshenko would like to draft a law that explains how a land market will be created after her 2022 moratorium expires?)

If it proves simply impossible (as is likely) to find the political will not only to lift the current moratorium but also prevent its extension, then perhaps legislation creating a fair land leasing market  is an alternative?

If the land cannot be bought and sold in a (regulated) free market environment, then create a transparent free market where leases for the land can be.  Some imagination might be required, but there is surely some way to create a land market that brings about transparent and fair benefits to all and around which Ukraine and its “friends” can agree as constituting positive market driven reform.

Although it is possible to continue with examples that are going to lead to a reform storm in 2017, it is perhaps unnecessary insofar as highlighting how swiftly matters are going to come to a head and when a probable breach of IMF conditionality occurs – with undoubted repercussions with a newly installed US Administration and immediately prior to both French and German electioneering.

Indeed it may also become the catalyst for the long anticipated early Verhovna Rada elections in Ukraine (which are unlikely to bring about a reformist critical mass as current election laws stand).

* * * * *

A note to regular readers – For the next few days your author will be in Poland locked behind closed doors with a dozen sages and otherwise insightful boffins from across the region.  Although undoubtedly returning far wiser, the normal rambling and low-brow blog entries will continue upon return.


Yatseniuk resigns as Prime Minister (cue Groisman)

April 10, 2016

Entirely unsurprisingly, Prime Minister Yatseniuk announced his resignation from the post on Sunday 10th April – on cue.

As this blog tweeted last week:


On 7th April the blog received confirmation from those same people behind the Odessa curtain that Prime Minister Yatseniuk would resign (officially) on 12th April.  He has now announced that intention.


Absolutely no surprise to quite a few, for it has been a fairly poorly kept secret.

For those pondering his replacement, it will be the current Verkhovna Rada Speaker and President Poroshenko prodigy, Volodymyr Groisman – 100%.  It has been his future role for at least the past 3 weeks, despite any rumours surrounding Natalie Jaresko.

For those that do not closely follow Ukrainian politics, effectively Ms Jaresko ruled herself out when stating she would only lead a technocratic government – for there will be snowballs in hell before a purely technocratic government leads Ukraine.

Ergo between the lines that statement not only ruled herself out of the PM race, but also makes it particularly difficult to continue as Finance Minister in a Cabinet of Ministers that is anything other than technocratic.  If she would only lead a technocratic government, why would she remain part of a government that clearly will not be?  The Ivy League lecture circuit awaits perhaps?

Indeed the composition of the new Cabinet of Ministers is also known – at least to this blog (and probably quite a few others – barring last minute changes that could derail the whole thing of course).  Unfortunately readers will have to wait for its official unveiling, or leaking elsewhere, for that composition was conveyed in the strictest of confidences.

Nevertheless, almost all was settled by 7th April – settled other than the issue of sorting out money among the odious shenanigans behind the curtain that is.  That issue is now almost entirely settled too.  Hence Prime Minister Yatseniuk announcing his resignation per the Grey Cardinal script(ure).


Volodymyr Groisman will become (the second Jewish) Prime Minister of Ukraine very, very soon.  (For the sake of interest, Ukraine’s oldest serving MP Yukhym Zvyahilsky was the first Jewish PM).  He is actually very competent.  A good listener, a good negotiator and generally a fairly decent man.  His main drawback is being seen as the President’s prodigy.  That said, because of that perception, lack of reforms henceforth will clearly be laid at the presidential door, with little wiggle room to explain failure.

The new perception

The new perception

Needless to say, Mr Groisman and his new Cabinet will enjoy some Verkhovna Rada support – initially.  Ukraine will need to make the most of this support and spurt along the reform path before the dysfunctional norm returns within the walls of the Verkhovna Rada.

Ms Tymoshenko is clearly already in electioneering mode and will not hold off with her populist political flapdoodle for very long.  Nevertheless, she will tone down the rhetoric briefly for the sake of political appearances.

Assuredly Prime Minister Groisman and Cabinet will have a minimum of 6 months before they can face a vote of no confidence.  His Cabinet may last 12 months – seeing Ukraine through to the other side of the Brexit referendum, US elections, and perhaps it may last long enough to get beyond ballots in Germany and France too.  If so that would be a good result.  However, it seems very unlikely that his time as PM or the new Cabinet will last until the end of this full parliamentary term.

Ergo, it is hoped that there are clear priorities for what will be a limited window of reformist opportunity.  Undoubtedly Prime Minster Groisman (when he takes office), his new Cabinet (when announced) the new (slim) majority coalition, and “external supporters” of Ukraine have priorities that align fairly well – if not exactly.

Mr Groisman’s challenge is to get civil society back on board, continue a good relationship with “external supporters”, and get as much reform accomplished as is practicable (and sensible) within 12 months (if he, his Cabinet and a new coalition lasts that long).

There will probably be a fair bit of “good news” emitting from Ukraine after several weeks of “bad news” in the immediate months ahead.  The road will however remain long, winding and bumpy.  There will still be backward steps occasionally.  Early elections still remain highly likely at the time of writing.  Nevertheless, progress there will (once again) be.

All eyes will now be upon who is in the new Cabinet of Ministers (expect those of this blog for reasons stated above).

The appointment that this blog is looking at is that of the next Prosecutor General, for reform within the PGO in parallel to PM Groisman and a new Cabinet moving things along, may just prolong the lifespan of both and mitigate against early elections.

The question is whether President Poroshenko will nominate a Prosecutor General that will serve both the public and assist his prodigy as Prime Minister – rather than another chained, loyal, Presidential dog.

(As for Arseney Yatseniuk, having been allowed to leave head held high, he can rehabilitate and reinvent himself concentrating on policy without having to defend vested interests.  A squeeze on Kolomoisky and Akhmetov to follow?)


Hryvnia to pass devaluation peak in 2013 – World Bank

January 17, 2013


The Hryvnia will devaluate in 2013 to UAH 8.70/$1 from UAH 8.00/$1 in 1012, the World Bank has predicted.

The World Bank said in its latest Global Economic Prospects published late on Tuesday that in 2014 the hryvnia exchange rate will start strengthening: in 2014 it will reach UAH 8.60/$1 and in 2015 it will total UAH 8.40/$1.

The World Bank upgraded the growth of Ukraine’s exports in 2012 from 1.5% under the forecast made in July 2012 to 2%, while for 2013 the indicator was downgraded from 5.7% to 3%, and in 2014 – from 5.2% to 5%. The bank said that growth in the country’s exports in 2015 would accelerate to 7%.

According to the prospects, imports in 2012 shrank by 4.5%, while earlier it was anticipated that imports would grow by 4.3%. The forecast for imports in 2013 was upgraded to 2% from 1.9%, and in 2014 it was downgraded from 4.4% to 3.1%. The World Bank said that in 2015, the growth of Ukrainian imports would accelerate to 5%.

Well, nothing to say about this other than – we’ll see.


Nobody at the World Bank get the memo about Ukraine?

February 19, 2012

You will recall my ruminations of a few days ago relating to the USA putting pressure on Ukraine via the IMF? –  Yes you do, I wrote of Ukrainian red lines as far as Tymoshenko is concerned whether you are the EU, USA or IMF.

You will remember I informed you of Mrs Rodham Clinton’s chap, Philip Gordon, whilst in Kyiv, telling Ukraine that regardless of raising the price of gas for Ukrainians as the IMF wants, the US will still not support further IMF assistance whilst Tymoshenko is in jail.

As you will know being regular readers, I fully support the IMF insistence on raising gas prices quite simply because Naftogaz Ukraine cannot continue to make $500 million losses each and every month and be bailed out by the government.  That $6 billion used to bail out Naftogaz each year could be used for much needed infrastructure or teachers, doctors, nurses pay rises etc.

You will recall Kyiv’s reaction to Mr Gordon’s threat was to remove its 2 year in job main negotiator with the IMF to other duties and Irina Akimova stating Ukraine will carry on without IMF money without any possibility of default.  As yet Ukraine has not even bothered to replace its IMF negotiating point-man and I suspect won’t this year.

A concerted effort by the US to use financial soft power to influence Kyiv?  Well if so, it seems that even if  Christine Lagarde at the IMF got the memo from the US State Department, the World Bank didn’t.  Something of a surprise considering the World Bank is (at least for now and as per tradition) run by an American.

It seems Robert Zoellick’s (current, until May when he leaves) empire will continue to support Ukraine.  Maybe he got the memo but simply binned it feeling he is subject to a coup to remove him early and therefore is rather resentful for lack of US support at his early demise.

Maybe he simply doesn’t think the internal politics and judicial system of Ukraine are a place where the World Bank needs to be sucked into.

It could be that he thinks tradition will be broken and his replacement will not be American.  If he happens to be replaced by a Chinaman, with the Chinese who are quite active in Ukraine, any decision he may have made not to support Ukraine could very well be quickly overturned and his tenure as head of the World Bank further soiled by accusations of over-politicising the World Bank.

Quite possibly he simply recognises that the red lines around the Tymoshenko issue drawn by Kyiv will not move regardless of external pressure and decided 46 million people should not suffer because of it.

Maybe as the EU continues to fund its programmes in Ukraine he sees no reason why the World Bank shouldn’t.

Whatever, the World Bank has announced it will continue to support Ukraine just two days after a US State Department mandarin added on the demand for Tymoshenko’s release to the existing IMF demand for gas price hikes for future IMF assistance.

So how much is the World Bank FDI into Ukraine each year?

Well between it and the  International Finance Corporation (IFC) if totals about $1 billion per annum.  Not a massive amount but 50% of what Ukraine has to repay the IMF this year or equivalent to two months government subsidies to Naftogaz Ukraine.

Of course Ukraine cannot use that money directly to do either thing, but a bit of jiggery-pokery with the accounts and it can amount to the same thing.  After some accounting magic, WB and IFC cash will certainly help Ukraine’s massive foreign loan repayments this year.

Anyway, it appears that whilst the IMF is happy to play ball with regard to the US State Department over Ms Tymoshenko, the World Bank will continue regardless.

You simply can’t beat coordinated international action!


Corruption – The Puppet Masters

October 27, 2011

Anybody who has put deals together in Ukraine involving commodities either domestically or for import/export will have come across smoke and mirrors, shell companies, umbrella companies, kick-backs, rebates to seemingly uninvolved foreign registered companies, intermediaries and business associates closely connected to decision makers etc.

The bigger the numbers involved, the further up the slippery pole the puppet masters sit.

Only this morning I had an inquiry from a corporation external to Ukraine seeking a rolling commodity contract and requesting introduction to a person of influence.  Introduction duly made of course.  Does that make me an intermediary or an advocate for their cause?  One man’s lobbying is another man’s advocacy after all.  The difference is transparency.

That is not to single Ukraine out from the rest of the international community of course.  Personal relationships count for a great deal, particularly the higher up the greasy pole you climb.  Whilst I no longer climb any poles or even hang from them, just like any alumni system, getting access or being accessed yourself never completely disappears.  Such is the web of patronage or loyalty within certain  movements in any society, Ukrainian or otherwise.

Anyway, for those of you who really want an insight into the shenanigans of legal manipulation, corruption and smoke and mirrors at the highest levels, this report from the World Bank called Puppet Masters is extremely accurate and terribly interesting, albeit giving the clueless a clue regarding how to go about it.

A long and somewhat technical read in places, it certainly does not miss the mark.

In most cases around the globe, it can be metaphorically stated that the fish rots from the head down, although that is not necessarily always the case.  Occasionally the fish maybe rotting unbeknown to the head of the fish.

The question therefore arises, if the police who police the police are corrupt, who polices the police police?

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