Tomasz + 1,608 August 31, 2021 (edited) I would say this article is extremely interesting and written by veteran Forbes contributor Kenneth Rapoza last week. Really good one I must say. Due to the oligarchic nature of the Ukrainian economy, a topic is raised, which is called a hiden skeleton of these relations after 2014, i.e. the famous case of Hunter Biden's relations with the Burisma company, and as it turns out, not only with Burisma because also with Jelena Baturina (better known as the widow of the long-standing mayor of Moscow, Yuri Luzkov and the richest woman in Russia for many years). In my opinion, it is somewhat reminiscent of a relationship between two people - first infatuation in 2014 and, over time, mutual disappointment leading to separation today. It is also worth emphasizing to what extent the personal interests of members of the American elite in Ukraine influence American policy in Ukraine. The articles show that they have rather quite a negative impact. https://www.forbes.com/sites/kenrapoza/2021/08/22/low-expectations-for-ukraine-tv-star-president-zelenskys-meet-with-biden/?sh=629f0c74ad31 Quote If you remember when Ukraine was the reason for a second impeachment of Donald Trump, then you have probably heard of Volodymyr Zelensky, the country’s TV-star-turned-President. The comedian is an interesting story in itself: the 43 year old was the lead actor in a popular political satirical TV series – Servant of the People — which was about a high school teacher whose anti-corruption political views motivate the people to convince him to run for office. He then is elected president. So is Zelensky in real life. Every Ukraine watcher thought – this is a milestone moment. A TV show about an ordinary man who hates his country’s corruption then becomes the leader of a real country where real people feel exactly the same. Such has been Ukrainian life since the fall of the Soviet Union. Every elected president promised, but disappointed. Sadly, Zelensky is no exception. With their former rulers, the Russians, taking over a chunk of the country’s Eastern industrial flank, the Donbas, and the Black Sea seaside Crimean peninsula in 2014, Ukraine has since turned towards the West for help. They got some International Monetary Fund loans and some anti-tank weaponry from the Trump administration to fight against Moscow-supported militias in the Donbass region, but overall, the Ukraine story has been more promises and five-star hotel lounge banter from diplomats and political leaders about inviting Ukraine into the European fold. Zelensky will be in Washington August 31st. The meeting was scheduled during the most dead week in the capital’s political calendar. Zelensky will be meeting with a president who once tried to interfere with Ukraine’s own corrupt officials. It’s all a tangled web, and hard to tell the players without a program, but Zelensky is likely to charm Washington into continued financial support, and perhaps some lip service, but Ukraine is basically on her own. Zelensky is not happy about the West’s unfulfilled promises, The Washington Post reported. The best example of this is the Biden administration’s reversal of sanctions against Nord Stream II, long seen as Gazprom’s run around Ukraine for gas shipments into Europe. Nord Stream II sits right along side an existing pipeline, call it Nord Stream I if you like. This almost surely cuts Ukraine’s share as a gas transit into Russia and denies it $2 billion annual revenue, close to 1.33% of GDP. Ukraine needs to prove its foreign investors and local producers that they can eventually just replace Gazprom themselves and be a real alternative. For now, there is little serious corporate investment flowing into Ukraine energy. The U.S. isn’t really present other than via the multilaterals, namely the IMF. Or diplomatically, via the State Department. During the last years, FDI stocks in Ukraine have declined, as Russian investors have withdrawn much of the assets they previously held there. However, according to UNCTAD's World Investment Report 2020, FDI inflows stood at a $3,1 billion in 2019, compared with $13 billion in the neighboring Poland. The volume of investment was 2% of GDP compared with 7.55% in Poland, based on proprietary data from CEIC, a global economic data intelligence firm. FDI stock in Ukraine was about $49 billion in 2019, but that was down from $53 billion in 2010. Investments were mainly made in manufacturing, wholesale and retail trade, mining, financial services, and real estate and most of it came from Ukraine/Russia offshore operations in Cyprus, then from companies in the Netherlands, Switzerland, Germany, and the United Kingdom. Between the pandemic and the recent Afghanistan headlines, the Ukrainian leader’s trip to DC is unlikely to rehash the bad ole days when the country was being heralded as the poor victim of the bad man in the White House. If Biden is not impeached over Afghanistan (highly unlikely), he certainly won’t be impeached over Ukraine. Ukraine Fatigue: Just Give Merkel and Putin their Pipeline, Already There was a time, in the late Obama and Trump years, when Ukraine was the star of Europe. It was a big, freedom loving country being beat up by Russia, NATO and the United States’ old enemy. Kiev, the nation’s capital, picked a side – it wasn’t Moscow’s. Nord Stream II changed that. Even if Zelensky had said, “yes, Trump bullied us” – it wasn’t going to be rewarded by the new Administration because, quite frankly, the commercial interests involved in Nord Stream II were too big. And Germany, France and the U.K. were involved. Let alone, Russia, whom the U.S. would like to convince to leave Syria and distance from China, but that’s for another day. Ukraine’s star has fallen. Its vociferous opposition to allowing Nord Stream II was rebuffed. The closest they came to stopping it was Trump-era sanctions, with a strong pushback from Angela Merkel’s Germany. Alina Polyakova, president and CEO of the Center for European Policy Analysis, writing in Politico last month, said about the lifting of pipeline sanctions that, “if Trump did this, everyone would go nuts.” She couldn’t be more right. If you’re the president of Ukraine, and you want to develop and move away from Russia, you’ve got the pushy Russians on one side, and the rugged American individuals on the other. But then those rugged Americans said, just give Merkel and Putin their pipeline already. And Kiev’s interests in Washington – and vice versa – waivered. This couple is going their separate ways, too. Ukraine won’t be sent packing with much in the way of parting gifts, despite the need for the U.S. to rebuild credibility after the recent Afghanistan exit. Skeletons in the Closet The reason for the distancing between Kiev and Washington, with dire implications for foreign investment, may be buried in some laptop hard-drives. Although we were told it was “Russian disinformation”, the Hunter Biden laptop fiasco during the late 2020 election cycle, showed how well plugged in the Biden family was into top leaders in Kiev. The New York Times NYT +0.5% did a piece in 2019 that disclosed the role of then-Vice President Biden in Ukraine’s ongoing saga of corruption, despite framing it as merely a Trump administration conspiracy. The article — for subscribers only — claimed that the VEEP’s trip to Kiev in December 2015 was indeed dedicated to warn then-president Petro Poroshenko that the U.S. would withhold some $1 billion in loans if Ukraine’s leaders did not fire the country’s top prosecutor at the time, Viktor Shokin. Shokin was reportedly dealing with corruption issues at Ukrainian energy company Burisma, and Hunter was on their board. A Senate Intelligence Committee report on this subject matter also showed numerous encounters between the former VP, Hunter and Ukraine. It appears that during the heyday of Ukraine-U.S. relations, the Obama administration was influenced by private interests in Ukraine that overshadowed U.S. national interests to really help the country out; and Hunter Biden, as we all now know, was at least smack dab in the middle of that as a man with no experience in oil and gas on the board of a gas company. Even Russia hawk and now the Under Secretary of State Victoria Nuland worried that the Burisma ties would trip Washington up in Kiev. As did Amos Hochstein, also of the State Department, and his colleague George Kent. This is all based on the final report here from the Senate. In that report, the Senate says Hunter Biden also had financial dealings with Elena Baturina, the allegedly corrupt wife of the late mayor of Moscow, Yuri Luzhkov, himself a man with a history of corruption charges. It was so bad, that then-president Dmitry Medvedev sacked him because he was such a totally bad look for the Kremlin. “It is astonishing to me that the Senate document, a valuable official document, is barely mentioned now,” said a Ukrainian politician who could not be quoted on the record. “This all made it harder to tackle corruption in Kiev.” From the Senate report linked to above: Page 5 of Senate Committee on Homeland Security and Senate Finance Committee report titled "Hunter ... [+] SCREEN GRAB VIA NIMBUS CAPTURE The Senate report concludes that: “What the Chairman discovered during the course of this investigation is that the Obama administration knew that Hunter Biden’s position on Burisma’s board was problematic and did interfere in the efficient execution of policy with respect to Ukraine.” The U.S. political press have dismissed this report as a partisan attack against Biden, while never dismissing similar attacks against ex-President Trump for undergoing similar a partisan attack regarding Ukraine. The Obama/Biden administration did tolerate Russian actions for their takeover of Crimea during the height of the Ukraine-Russia split during the Euromaidan protest that led to the ouster of President Viktor Yanukovych. The Russia sanctions did not get teeth until the warfare in Donbas. But beyond IMF support, there was little else done to support those in Ukraine who wanted to make a go of it there, to really build a post-Soviet state. The Trump policy became much firmer. The same Ukrainian political leader told me that, “(Trump) did not close his eyes on the corruption in Ukraine, and he provided us with strategic support, including weapons. This was impossible during the Obama years, and it is impossible again now. In other words, the open criticism of Ukrainian corruption by Trump is replace by a blind eye on corruption and the undermining of the U.S. role in the region by Joe Biden.” Given all that is on President Biden’s plate right now, Zelensky will likely go home with nothing but assurances of friendship and support against Russian aggression. Ukraine desperately needs more foreign corporations to put money to work there. Especially in the energy sector. But if the place remains as corrupt and dysfunctional as Zelensky’s old show, Servant of the People, only not as funny, then American companies will lose interest. The U.S. is lukewarm, at best, on Ukraine. Less than five years ago, she was the oppressed little darling on the Black Sea. Now, it’s something like a skeleton in the closet. On the Verge of Bankruptcy? The most recent U.S. credit rating for Ukraine is Fitch’s B rating of August 6. According to the National Bank of Ukraine, payments on the foreign currency public debt due in 2021 and 2022 will exceed $17 billion, which is 11.2% of GDP. That’s in dollars and euros. The currency is strengthening over the last month, so this is helpful. Still, the country owes $10 billion this year to foreign investors, coming due now and in the fall. Every third dollar of the budget goes to banks, and the IMF. Along with those payments, Kiev needs more loans to finance its own government. In April, they issued $1.25 billion in Eurobonds. Last month, they issued another $500 million. The country’s debt is over 65% of GDP, which for an emerging market is already a red alert. For a frontier market like Ukraine with weak capital markets and low liquidity, it is even worse. Ukraine is at the risk of becoming the Argentina of the former Soviet Union, with the steaks and the soccer champions. Energy companies there, which had a tough time in 2019 when energy traders lost money and left the state with the tab, are particularly vulnerable. But it is unlikely these will become distressed assets. Surely, the Russians and Chinese are looking at them should they fall and Ukraine needs quick cash. The fossil fuels that turn the lights on could become problematic in a worst-case scenario without a growing economy. The last thing Zelensky wants is his real-life episode of Servant of the People is to face a season of a Euromaidan-type uprising. No one wants this for Ukraine. It’s a fragile political time there. The feeling of being abandoned by the White House puts Zelensky in a bind, with Moscow able to say, “with friends like those…” Some good news: the economy is forecast to do well. It may be Zelensky’s only saving grace, providing the Ukrainian government can prove their country is not a money pit, and crony capitalist disaster waiting to happen. Such is the task for the people of Ukraine...and it’s Servant of the People, regardless of what comes from his Washington visit. Edited August 31, 2021 by Tomasz Quote Share this post Link to post Share on other sites
Tomasz + 1,608 August 31, 2021 (edited) 15 minutes ago, Tomasz said: please delete this post Edited August 31, 2021 by Tomasz Quote Share this post Link to post Share on other sites
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