Monday, March 23, 2015

Oligarchs and their "Pocket Armies" Take Over Oil Company in Kiev; Ukraine Begs for More Money; Three-Way Civil War?

Ukraine Begs for More Money

The IMF foolishly agreed to give Ukraine a four-year $40 billion bailout on March 12. Already, Ukraine's Finance Minister Begs for More Money.

Natalie Jaresko told the Financial Times in an interview that a four-year, $40bn, IMF-led bailout finalised this month — including restructuring $15bn of debt — was enough to stabilise the financial and banking system. But that was a “first step”. 

Ukraine needed billions more to restart growth, rebuild shattered infrastructure, and deal with the effects of the eastern conflict that has killed at least 6,000 people, wounded 15,000 and displaced more than a million.

“I believe strongly that the G7, and frankly speaking the broader G20, has a responsibility now to support Ukraine in a much bigger way financially,” Ms Jaresko said.
Interesting Debate

I end up hearing this burden-sharing argument between different parties. The Americans say the Europeans should do more, the Europeans say the Americans should do more. That’s an interesting debate, but no one’s paying a greater cost than the Ukrainian people,” said Jaresko.

Yes, it is an interesting debate. But missing from the debate is a Ukraine civil war that is still ongoing. Money to rebuild shattered infrastructure will do no such thing. Instead it will go for more war-mongering.

Money will also go straight into the pockets of the corrupt officials running the country and the corrupt oligarchs battling to take over the country.

Oligarch Takes Over Oil Company in Kiev

The battle over what's left of Ukraine has now reached Kiev with the takeover of oil company Ukrnafta by oligarch Igor Kolomoisky and his private army.

Please consider Poroshenko Warns Rival Over ‘Pocket Army’.
Ukraine’s President Petro Poroshenko warned on Monday that no regional governor would be allowed a “pocket army”, after armed men took up positions around an oil company in which Igor Kolomoisky, the billionaire oligarch and governor, is battling to retain control.

The stand-off threatened to escalate into a full-blown clash between the country’s wealthy president and a rival oligarch who has long been one of Ukraine’s richest men but since last year’s Ukrainian revolution has also developed a political power base.

Mr Kolomoisky accepted the role of governor of the central Dnipropetrovsk region last year as Ukraine’s new government tried to stabilise the country after the president at the time, Viktor Yanukovich, was toppled by anti-government protests. He has also funded volunteer militias fighting Russian-backed separatists in Ukraine’s east.

The billionaire has long exercised management control over Ukrnafta, an oil producer, despite owning only 42 per cent. But a law passed by Kiev’s parliament has attempted to enable the state, which owns 50 per cent of the company plus 1 share, to retake full control.

In an unusual scene, camouflage-clad guards in full military gear, some armed with assault rifles, surrounded Ukrnafta’s headquarters in central Kiev on Sunday.

Mr Kolomoisky said the men were from a private security company summoned by the company’s management, not by him. He also said they did not come from one of the volunteer military battalions that he supports.
Private "Security" Company

Here a picture of what a private security company in Ukraine looks like.



Anecdotes from Ukraine

Reader "Ellen" Writes ...
Hello Mish,

Western media seldom talks about Ukraine's inner problems. In my country, wealth divided between several groups of ultra-rich oligarchs. Some control the bank system, others the power system, and another the oil companies. Recently the battles between them have escalated. We now have armed fighters on streets of Kiev guarding national oil companies.

I don't care which oligarch wins because I know that the people of Ukraine will lose in any case. The situation now looks like Feudal Europe in early Middle Ages. Each wealthy baron strives to be a king and have own army and own land with serves.

Porochenko has support of America and EU but zero respect in Ukraine. Powerful oligarchs battle for pieces. Some think that Ukraine oil was taken under control by USA, though Porochenko. This seems logical to me.

Best regards

Ellen
Desperation Increases

Reader John whose sister lives in Lviv, Ukraine writes ...
Hello Mish

There is a lot of political wrangling going on, with the oligarchs starting to go at one another. It looks to be shaping up as Poroshenko vs Kolomoisky. Stay tuned on this as we head towards the beginning of April.

The following is from my sister.

"Right now, everyone here is worrying about the tax and utility hikes coming in April. It's gonna be devastating. I don't like beating up the government in this state of war, but they're digging themselves an even bigger hole."

"They are taxing poor working pensioners which will bring in a paltry million or so, raising utilities by almost 300% in April, and inflation up to 30% and rising. People leave (especially youngsters) as fast as possible. The OSCE is as blind as ever, as is the World Bank and IMF. I have nothing positive to report, but the war continues, with people dying and maimed every day."

[John continues] This is the absolute first time that I have ever seen or heard my sister say anything negative about the current regime or junta as we call them. What this means is the average Ukrainian is up against the wall financially and there is nothing more that the government can take from them.

Events are a recipe for yet another disaster. I do not like to speculate, but I expect that the Junta will try and pull off something to distract the masses, but by now, the people are too wise for this nonsense, and oligarchs want their say.

John
Carpetbaggers vs. Oligarchs

On December 3, I wrote Enter the Carpetbaggers: Ukraine's New Finance Minister a US Citizen, New Economy Minister from Lithuania

"Now that Ukraine's gold has been sold off, the only thing left to complete the plundering is to send in the carpetbaggers. That process is now underway. Ukraine's just-named "Finance Minister" is a US citizen, and Ukraine's new "Economy Minister" is from Lithuania. To get around legal issues associated with having foreigners in top level government positions, Ukraine made the appointees Ukrainian citizens.

Three-Way Civil War?

Kiev was happy with the oligarchs and their private armies (Igor Kolomoisky is rumored to have 10,000), as long as they were battling the separatists.

Now it seems the oligarchs have turned on their masters in Kiev. Another overthrow, this time by an oligarch, could easily be in the works.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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