Tuesday, December 17, 2013

Russia will rescue the Ukraine. Yet again. (UPDATED)

President Putin announced that Russia will buy the equivalent of 15 billion US dollars worth of Ukrainian government bonds and that it will slash the price of Russian gas sold to the Ukraine from $400  to $268.5 per 1,000 cubic meters.  The most amazing part of that offer is that it is made "unconditionally".  In other words - Russia will single-handedly prevent the Ukrainian economy from collapsing and declaring a default.

Well, that is huge money indeed, and I hope it will prove worth it.  Russia could have easily set its own list of demands (the EU is making any aid conditional on a very long list of demands similar to the ones imposed on Greece recently and upon the liberation of Timoshenko) but Putin decided to literally bail out the Ukraine on principle.

I guess that this makes it possible for Yanukovich to challenge the Eurobureaucrats and their fans on the Maidan square to make their own best offer and let the Ukrainian people compare.  The problem with that is that is that everybody knows that the EU has no money at all, no "best offer" of any kind other than vague promises of a paradisaical prosperity in the distant future.  So its money vs promises and gas vs hot air.  Everybody know that and it is obvious that the Eurocrowd will respond "asymmetrically".  I personally see no other choice for the so-called "opposition" that to escalate the conflict in the hope of making in violent.  


They know they cannot win in the polls.  They know that they cannot win by brining money to the table.  They know that they cannot rescue the economy.  Therefore their only chance is to trigger a violent confrontation and overthrow the government.

Can they topple Yanukovich?

My sense is that yes, not because they are particularly strong, but because Yanukovich is particularly inept and weak.

I hope that I am wrong.

In the meantime, its the Russian people who are paying for the rescue of their Ukrainian "brothers".  Again.  As in so many times in history.  Will they get a "duzhe diakuiu" this time?

I am not holding my breath.

The Saker

UPDATE:  Here are some reactions which came out of the Ukraine after the news was announced:

Prime Minister Azarov: Russia saved the Ukrainian economy from declaring a default which the government would have had to do in January 2014.

Oleg Tsiagnibok: Categorically rejects the deal as bad for the Ukraine.
Vladimir Klichko: Wants to know the "hidden" part of the deal.
Arsenii Iatseniuk: Likes the new gas price but that's it.

All three still have declared that their objective (resignation of the President and government, new elections, signature of a deal with the EU) are unchanged by the deal with Russia.