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Showdown in Ukraine: Putin’s Quest for Ports, Oil, Pipelines and Gas

Showdown in Ukraine: Putin’s Quest for Ports, Oil, Pipelines and Gas.

By Claude Salhani | Tue, 25 March 2014 22:44 | 6

Yes, Russia is guilty of meddling in Ukraine, but then again so are the United States and the European Union. The major difference is that far less was said and much less reported by the international media over the Americans’ and Europeans’ interference than of Russia’s actions and the reactions it caused.

Where Russia is involved many in the West believe that one only needs to scratch the surface to see traces of the old Soviet Union begin to resurface. After all, Russian President Vladimir Putin is a former KGB officer. The truth is much more complicated than that: or perhaps somewhat simpler.

The Cold War that divided the East and West maybe over but the old rivalry still lingers. The rivalry between the West and Russia is no longer one over diverging political philosophies, but purely over resources – and the capitalistic gains they produce from mainly oil, gas and pipelines.

The West and in particular the United States seems to be suffering from collective memory disorder and have forgotten all the mud they slapped onto Putin’s face during the past 15 or so years. Or at least they expected him to forget and forgive.

Related Article: Ukraine – Full Circle to the EU Integration Issue

But then again Russian troops did move in to grab control of Crimea, taking over the territory from the Ukrainians. You can counter that argument by pointing to the US and NATO, who not only interfered, but swallowed former Soviet domains bringing them into the North Atlantic alliance, pushing NATO closer to Russia’s borders.

Yes, Russia needs access to warm water ports for its Black Sea fleet and many analysts also believe that this is a major issue of concern for Moscow, which it is. But the plot, as they say, thickens.

There is also another reason for Putin’s intervention in Ukraine and that has to do with Russia elbowing for dominance of the very lucrative and strategically important “energy corridors.”
That is very likely to be the major reason why Putin is willing to risk going to war with the West over Crimea, the pipelines that traverses the Caucasus and the oil and natural gas these pipelines carry westwards to Europe.

Given the geography of the region there are only so many lanes where the pipelines can be laid; and most of them transit through Ukraine. Others travel across Azerbaijan and Turkey. Most of Western Europe’s gas and much of Eastern Europe’s gas travels through Ukraine.

If Russia has vested interest in “recolonizing” Ukraine, the United States on the other hand has its own interests in Ukraine and other former Soviet areas.

What is going on today is nothing short of a race for control of what’s going to dominate the energy markets over the next two or three decades: the energy corridors from Central Asia, the Caucuses and through Russia and Ukraine.

As stated in a report published by the Woodrow Wilson International Center for Scholars, “the proclamation of independence, the adoption of state symbols and a national anthem, the establishment of armed forces and even the presence on Ukrainian territory of nuclear missiles—all important elements of independent statehood—amount little if another power, Russia, controls access to fuel without which Ukraine cannot survive economically.

Related Article: This Week in Energy: How Would LNG Get to Ukraine?

That same report denotes that “Ukraine’s strategic location between the main energy producers (Russia and the Caspian Sea area) and consumers in the Eurasian region, its large transit network, and its available underground gas storage capacities,” make the country “a potentially crucial player in European energy transit” – a position that will “grow as Western European demands for Russian and Caspian gas and oil continue to increase.”

Ukraine’s dependence on Russian energy imports has had “negative implications for US strategy in the region.”

As long as Russia controls the flow of oil and gas it has the upper hand. Russia’s Gazprom currently controls almost a fifth of the world’s gas reserves.

More than half of Ukraine’s and nearly 30% of Europe’s gas comes from Russia.  Moscow wants to try and keep things going its way; Washington and Brussels find it in their interests to try and alter that by creating multiple channels for central Asian and Caspian oil to flow westwards.
Ukraine today finds itself in the center of the new East-West dispute.

Ironically, the very assets that make Ukraine an important player in the new geopolitical game being played out between Washington and Moscow is also its greatest disadvantage.

By Claude Salhani of Oilprice.com

Two Steps Forward, One Step Back — Paul Craig Roberts – PaulCraigRoberts.org

Two Steps Forward, One Step Back — Paul Craig Roberts – PaulCraigRoberts.org.

Two Steps Forward, One Step Back

Paul Craig Roberts

Washington’s plan to seize Ukraine and to evict Russia from its Black Sea naval base has come amiss. But as Lenin said, “two steps forward, one step back.”

Do you remember all the tough talk coming from John Kerry, the White House Fool, Hilary Clinton, and the lickspittle Merkel about the harsh sanctions that would “badly damage” the Russian economy unless Russia prevented the referendum vote in Crimea? Well, it was all bullshit, more hot air from the White House sock puppet and the lickspittle German chancellor who is a disgrace to the German nation. As the Russians kept telling John Kerry, sanctions on Russia would destroy Europe and do little damage to Russia.

I wish the Russians had kept this to themselves. I was looking forward to the Washington morons destroying NATO by closing down the European economy.

Of course, after pretending that they were macho tough guys, something that Washington’s presstitute media could hype as sanctions had to be imposed, so Washington came up with sanctions, not on Russia, but on eleven individuals: the deposed Ukrainian president, an advisor to the deposed president, 2 Crimean officials, and 7 Russians.

The choice of the officials is an utter mystery. The seven Russians are a Putin aid, a Putin adviser, four members of the Russian parliament (Duma) and a deputy prime minister. What any of these people had to do with the referendum in Crimea, no one knows.

Moreover, the sanctions only apply to foreign bank accounts that these 11 individuals might have outside Russia. Most likely, that means only the deposed Ukrainian president, if we are to believe all the propaganda about him. Other reports say that the sanctions are only for the next six months.

If the Washington and EU criminals steal any money from these persons, the Russian central bank can replenish their stolen accounts.

The people who decided that Crimea would disassociate from Ukraine and return to Russia were the people themselves. Under the wording of Obama’s stupid sanctions, his sanctions should apply to the Crimean people who voted to disassociate from the US stooge government in Kiev.

Additionally, Obama’s sanctions apply to himself and to his regime and to its NATO puppets as it was the West that overthrew the elected government of Ukraine, not Russia or Crimea. The Americans, of course, never apply law to themselves.

In other words, the sanctions are totally meaningless. Yet, the White House Fool declared: “If Russia continues to interfere in Ukraine, we stand ready to impose further sanctions.”

Obama’s hypocrisy makes a person want to puke. It is the White House Fool who is interfering in Ukraine. It was Washington that financed and organized the overthrow of the elected Ukraine government, using well organized and well armed neo-nazis to intimidate the unarmed police and ruling party, thus clearing the way for Washington to set up an unelected government of its well-paid stooges.

What the incompetent White House Fool overlooked is that southern and eastern Ukraine are Russian, not Ukrainian, so the fool’s coup has caused Crimea to depart and is causing widespread protests in eastern Ukraine against Washington’s stooge unelected government in Kiev. Washington’s stooge Kiev government has appointed unelected Ukrainian multibillionaire oligarchs, who have their own private security forces, as mayors of the Russian cities to put down the protests. If the oligarchs use violence against the Russian people, the likely result will be that the Russian Army will take control of eastern Ukraine, which in every essential way is Russian.

If eastern Ukraine returns to Russia, Washington will be left with the ultra-nationalists of western Ukraine, people who fought for Hitler during World War 2. The EU doesn’t want ultra-nationalists as the EU is busy stamping out nationalism and the sovereignty of European countries. Nevertheless, Washington will have gained a strategic advantage over Moscow, as Washington can place anti-ballistic missile and other military bases on western Ukraine’s border with Russia, thus completing Washington’s encirclement of Russia with hostile military and missile bases.

Russia will neutralize the US bases by targeting them with Iskander missiles, which cannot be intercepted by ABMs.

All that the White House Fool will have achieved is to further make clear to Russia, and to China, that Washington has both on its target list, because both are in the way of Washington’s world hegemony.

One can only wonder why Putin doesn’t preempt the coming US military attack on Russia by destroying NATO economically without firing a shot. All Putin needs to do is to cut Europe off from energy. It would take Washington three years to create the capability to deliver US natural gas, achieved by fracking’s destruction of US water supplies, to Europe. By that time NATO governments would likely have been overthrown by mass unemployment and economic suffering. Putin could also seize all foreign assets in Russia and rapidly complete the arrangements with China, India, Brazil, and South Africa to abandon the use of the US dollar in international settlements.

The US dollar as world reserve currency is the source of American imperialism. The five countries that comprise the BRICS have half of the world’s population. They can conduct their economic affairs without the dollar.

The world needs to understand that the neoconservative US government is the Third Reich on steroids. It is a malevolent force with no sense of justice or respect for truth, law, or human life. Just ask the residents of Iraq, Afghanistan, Libya, Syria, Palestine, Pakistan, Yemen, Somalia, Lebanon, Honduras, Venezuela, Cuba, Iran. Even the deluded western Ukrainians will soon catch on.

Obama himself declared that the US is “the exceptional nation.” This is the neoconservatives version of Hitler’s declaration that the German nation was exceptional and, therefore, above all others. The only difference between Washington and National Socialist Germany is that Washington has a far more powerful police state and nuclear weapons.

The hubris and arrogance that arises from Washington’s belief that it is the government of the “indispensable and exceptional nation” means Washington has no respect for any other country, nor for law whether its own or international. Washington can invade countries without cause, a war crime. Washington can kidnap and torture people, a crime under US and International law. Washington can ignore the self-determination of peoples, such as Crimeans. Who are mere Crimeans to vote on their own future without Washington’s consent, without Washington determining the outcome? Washington declares the Crimean people’s self-determination “illegitimate and illegal,” and refuses to recognize self-determination, while pretending to be the home of “freedom and democracy.”

No government in human history can come close to the hypocrisy and malevolence of Washington. Armed with nuclear weapons and a military doctrine of pre-emptive nuclear first strike, Washington alone stands as the threat to life on earth.

Ukraine Hikes Tensions Again, Says Russian Army Concentrated Near East Border For “Quick Invasion” | Zero Hedge

Ukraine Hikes Tensions Again, Says Russian Army Concentrated Near East Border For “Quick Invasion” | Zero Hedge.

On the heels of reports that:

  • *UKRAINE WON’T RECOGNIZE CRIMEA JOINING RUSSIA: INTERFAX

The Eastern Ukraine Kharkiv region’s governor Baluta warns:

  • *RUSSIAN ARMY CONCENTRATED NEAR ROADS FOR QUICK INVASION: BALUTA
  • *RUSSIA BOOSTS ARMY PRESENCE AT UKRAINE BORDER: KHARKIV GOVERNOR

And all of this after Putin confirmed that West’s sanctions are “irresponsible and aggressive and we will respond properly.”

Via Interfax:

Ukraine will not recognize the Autonomous Republic of Crimea’s and Sevastopol’s accession to the Russian Federation, nor will it recognize independence of the self-proclaimed Republic of Crimea, the Ukrainian Foreign Ministry said.

“We do not recognize and will never recognize either Crimea’s so-called independence or the so-called agreement on its accession to the Russian Federation,” Ukrainian Foreign Ministry spokesman Yevhen Perebyinis said at a news conference on Tuesday.

Ukraine Hikes Tensions Again, Says Russian Army Concentrated Near East Border For "Quick Invasion" | Zero Hedge

Ukraine Hikes Tensions Again, Says Russian Army Concentrated Near East Border For “Quick Invasion” | Zero Hedge.

On the heels of reports that:

  • *UKRAINE WON’T RECOGNIZE CRIMEA JOINING RUSSIA: INTERFAX

The Eastern Ukraine Kharkiv region’s governor Baluta warns:

  • *RUSSIAN ARMY CONCENTRATED NEAR ROADS FOR QUICK INVASION: BALUTA
  • *RUSSIA BOOSTS ARMY PRESENCE AT UKRAINE BORDER: KHARKIV GOVERNOR

And all of this after Putin confirmed that West’s sanctions are “irresponsible and aggressive and we will respond properly.”

Via Interfax:

Ukraine will not recognize the Autonomous Republic of Crimea’s and Sevastopol’s accession to the Russian Federation, nor will it recognize independence of the self-proclaimed Republic of Crimea, the Ukrainian Foreign Ministry said.

“We do not recognize and will never recognize either Crimea’s so-called independence or the so-called agreement on its accession to the Russian Federation,” Ukrainian Foreign Ministry spokesman Yevhen Perebyinis said at a news conference on Tuesday.

John McCain Calls For A ‘Fundamental Reassessment’ Of U.S. Relations With Russia

John McCain Calls For A ‘Fundamental Reassessment’ Of U.S. Relations With Russia.

Posted: 03/16/2014 10:24 am EDT Updated: 03/16/2014 1:59 pm EDT


Sen. John McCain (R-Ariz.) predicted that Russia would hold onto Crimea and called for a “fundamental reassessment” of America’s relationship with Russian President Vladimir Putin on Sunday.

McCain, who had recently returned from a trip to Ukraine, said Sunday’s referendum in Crimea on whether to split from Ukraine was “a bogus thing,” comparing it to the plebiscites held in the days of Hitler and Stalin. “It’s a done deal,” he said.

He supported economic sanctions as an important step in the U.S. response to Russia’s actions.

“Russia is a gas station masquerading as a country,” McCain told Candy Crowley on CNN’s “State of the Union.” “It’s kleptocracy, it’s corruption, it’s a nation that’s really only dependent upon oil and gas for their economy.”

But he also said that wider action was necessary.

The U.S. has to “have a fundamental reassessment of our relationship with Vladimir Putin,” he said. “No more reset buttons, no more ‘Tell Vladimir I’ll be more flexible.’ Treat him for what he is. That does not mean the reignition of the Cold War. But it does mean treating him in the way that we understand an individual who believes in restoring the old Russian empire.”

John McCain Calls For A 'Fundamental Reassessment' Of U.S. Relations With Russia

John McCain Calls For A ‘Fundamental Reassessment’ Of U.S. Relations With Russia.

Posted: 03/16/2014 10:24 am EDT Updated: 03/16/2014 1:59 pm EDT


Sen. John McCain (R-Ariz.) predicted that Russia would hold onto Crimea and called for a “fundamental reassessment” of America’s relationship with Russian President Vladimir Putin on Sunday.

McCain, who had recently returned from a trip to Ukraine, said Sunday’s referendum in Crimea on whether to split from Ukraine was “a bogus thing,” comparing it to the plebiscites held in the days of Hitler and Stalin. “It’s a done deal,” he said.

He supported economic sanctions as an important step in the U.S. response to Russia’s actions.

“Russia is a gas station masquerading as a country,” McCain told Candy Crowley on CNN’s “State of the Union.” “It’s kleptocracy, it’s corruption, it’s a nation that’s really only dependent upon oil and gas for their economy.”

But he also said that wider action was necessary.

The U.S. has to “have a fundamental reassessment of our relationship with Vladimir Putin,” he said. “No more reset buttons, no more ‘Tell Vladimir I’ll be more flexible.’ Treat him for what he is. That does not mean the reignition of the Cold War. But it does mean treating him in the way that we understand an individual who believes in restoring the old Russian empire.”

With 79% Turnout, Exit Polls Confirm 93% Of Voters Back Crimea Joining Russia; White House Rejects Results | Zero Hedge

With 79% Turnout, Exit Polls Confirm 93% Of Voters Back Crimea Joining Russia; White House Rejects Results | Zero Hedge.

With a voter turnout (79.09%) that exceeded every US Presidential election since 1900, the people of Crimea have spoken:

  • *CRIMEA JOINING RUSSIA BACKED BY 93% OF VOTERS: EXIT POLL
  • *U.K. FOREIGN SECRETARY: U.K. WON’T RECOGNIZE CRIMEAN REFERENDUM

Ukraine’s leaders have called up 20,000 men for a newly-created National Guard as despite the so-called “truce” Russian APCs and Tanks are rolling. Pro-Russian supporters are burning books in Donetsk after storming anti-Russian buildings. The White House is already out rejecting the vote (before the final results are released).

Voter Turnout (by region):

As exit polls confirm overhwleming support for Crimea to join Russia…

  • Exit poll by Crimea-based Republican Institute for Political and Sociological Studies released by Kryminform news service.
  • 93% of voters back joining Russia: exit poll

Exit poll: ????? 93% ??????? ????? ????????????? ?? ????????????? ? ??

— ??? ??????? (@riabreakingnews) March 16, 2014

Despite the so-called truce, Russian APC and Tanks are moving…

Pro-Russian supporters are burning books in Donetsk

And Kharkiv is dominated by Pro-Russia supporters carry this huge Russian flag…

White House Statement:

Carney on Crimea referendum: “Russia’s actions are dangerous and destabilizing” pic.twitter.com/pfAmgxLTRG

— Zeke Miller (@ZekeJMiller) March 16, 2014

The US is rejecting the vote:

The U.S. is rejecting the vote in Crimea even before the results are released.

The White House says Sunday’s referendum on succession is contrary to Ukraine’s constitution.

The U.S. says the world won’t recognize the results of a vote held under what it says are “threats of violence and intimidation from a Russian military intervention that violates international law.”

A written statement from the White House calls Russia’s actions in Ukraine “dangerous and destabilizing.”

The U.S. is urging other nations to “take concrete steps to impose costs” against Russia.

Secession was expected to be approved overwhelmingly.

And so is the UK:

  • *U.K. FOREIGN SECRETARY: U.K. WON’T RECOGNIZE CRIMEAN REFERENDUM
  • *U.K.’S HAGUE SAYS CRIMEAN REFERENDUM UNCONSTITUTIONAL
  • *U.K.’S HAGUE SAYS THERE SHOULD BE CONSEQUENCES FOR RUSSIA
  • *HAGUE: `UNACCEPTABLE’ FOR RUSSIA TO TAKE MORE ACTION IN UKRAINE

And The EU:

  • *EU REITERATES CRIMEAN REFERENDUM IS ILLEGAL, ILLEGITIMATE
  • *EU SAYS IT WON’T RECOGNISE OUTCOME OF CRIMEAN REFERENDUM
  • *EU TO DECIDE ON ADDITIONAL MEASURES AGAINST RUSSIA TOMORROW

And the French:

  • *FABIUS SAYS CRIMEA REFERENDUM ILLEGAL, AGAINST UKRAINE CONST.
  • *FABIUS SAYS RUSSIA HAS RESPONBILITIES AS UN SEC. COUNCIL MEMBER
  • *FABIUS SAYS RUSSIA MUST RESPECT UKRAINE TERRITORIAL INTEGRITY

Now it’s up to Putin… to weigh these potential “costs” against his gains…

With 79% Turnout, Exit Polls Confirm 93% Of Voters Back Crimea Joining Russia; White House Rejects Results | Zero Hedge

With 79% Turnout, Exit Polls Confirm 93% Of Voters Back Crimea Joining Russia; White House Rejects Results | Zero Hedge.

With a voter turnout (79.09%) that exceeded every US Presidential election since 1900, the people of Crimea have spoken:

  • *CRIMEA JOINING RUSSIA BACKED BY 93% OF VOTERS: EXIT POLL
  • *U.K. FOREIGN SECRETARY: U.K. WON’T RECOGNIZE CRIMEAN REFERENDUM

Ukraine’s leaders have called up 20,000 men for a newly-created National Guard as despite the so-called “truce” Russian APCs and Tanks are rolling. Pro-Russian supporters are burning books in Donetsk after storming anti-Russian buildings. The White House is already out rejecting the vote (before the final results are released).

Voter Turnout (by region):

As exit polls confirm overhwleming support for Crimea to join Russia…

  • Exit poll by Crimea-based Republican Institute for Political and Sociological Studies released by Kryminform news service.
  • 93% of voters back joining Russia: exit poll

Exit poll: ????? 93% ??????? ????? ????????????? ?? ????????????? ? ??

— ??? ??????? (@riabreakingnews) March 16, 2014

Despite the so-called truce, Russian APC and Tanks are moving…

Pro-Russian supporters are burning books in Donetsk

And Kharkiv is dominated by Pro-Russia supporters carry this huge Russian flag…

White House Statement:

Carney on Crimea referendum: “Russia’s actions are dangerous and destabilizing” pic.twitter.com/pfAmgxLTRG

— Zeke Miller (@ZekeJMiller) March 16, 2014

The US is rejecting the vote:

The U.S. is rejecting the vote in Crimea even before the results are released.

The White House says Sunday’s referendum on succession is contrary to Ukraine’s constitution.

The U.S. says the world won’t recognize the results of a vote held under what it says are “threats of violence and intimidation from a Russian military intervention that violates international law.”

A written statement from the White House calls Russia’s actions in Ukraine “dangerous and destabilizing.”

The U.S. is urging other nations to “take concrete steps to impose costs” against Russia.

Secession was expected to be approved overwhelmingly.

And so is the UK:

  • *U.K. FOREIGN SECRETARY: U.K. WON’T RECOGNIZE CRIMEAN REFERENDUM
  • *U.K.’S HAGUE SAYS CRIMEAN REFERENDUM UNCONSTITUTIONAL
  • *U.K.’S HAGUE SAYS THERE SHOULD BE CONSEQUENCES FOR RUSSIA
  • *HAGUE: `UNACCEPTABLE’ FOR RUSSIA TO TAKE MORE ACTION IN UKRAINE

And The EU:

  • *EU REITERATES CRIMEAN REFERENDUM IS ILLEGAL, ILLEGITIMATE
  • *EU SAYS IT WON’T RECOGNISE OUTCOME OF CRIMEAN REFERENDUM
  • *EU TO DECIDE ON ADDITIONAL MEASURES AGAINST RUSSIA TOMORROW

And the French:

  • *FABIUS SAYS CRIMEA REFERENDUM ILLEGAL, AGAINST UKRAINE CONST.
  • *FABIUS SAYS RUSSIA HAS RESPONBILITIES AS UN SEC. COUNCIL MEMBER
  • *FABIUS SAYS RUSSIA MUST RESPECT UKRAINE TERRITORIAL INTEGRITY

Now it’s up to Putin… to weigh these potential “costs” against his gains…

Ukraine/Crimea – the Map That Explains Everything |

Ukraine/Crimea – the Map That Explains Everything |.

March 11, 2014 | Author 

What the Economy Needs

We want to briefly comment on the suggestions that the Ukraine – this is to say the government of the Ukraine – allegedlyneeds to “borrow at least $35 billion”. This has been reported in terms such as these:

“The political crisis has cost Ukraine economically as the country is facing a possible debt default. Ukraine needs approximately $35 billion in aid to improve its economy, according to the country’s finance ministry.”

The last thing a country needs to “improve its economy” is a giant loan to its government. Government equals waste, even if it isn’t prone to stealing, which we suspect the new administration in Kiev definitely is. Why should it be any different from the previous ‘Orange Revolution’ government? It’s the same people, only fortified by a bunch of extreme right-wing nationalists this time, who incidentally hold a number of important portfolios, including everything relating to police, defense, national security and even the post of prosecutor general. Germany’s news magazine Der Spiegel, which is largely sympathetic to the new government, reports this most recent tidbit from Kiev:

“They [the Maidan activits, ed.] are afraid that the political profiteering of recent years will carry on, just with different beneficiaries.

[…]

Their concern appears to be justified. Last Monday, a high-ranking officer from Ukraine’s customs administration contacted a newspaper to inform editors of a new deal pertaining to the “internal” allocation of unexpected customs revenues. No longer would confiscated money and valuables be given to Yanukovych’s Party of Regions as they had been previously. Rather, they would go to the Fatherland alliance. Timoshenko, the man said, had personally approved the deal. Furthermore, the Communist Party, he said, had been handed the leadership of the customs administration so that it would support Timoshenko in the future.”

(emphasis added)

Just as we suspected a short while ago: meet the new boss, same as the old boss! The US and EU governments have done their tax payers no favors by opening up this new black hole to throw money into. They should have let Russia lend the $15 billion it was prepared to lend to the Ukraine, then their new arch-enemy Putin would be stuck with the bill.

As Ludwig von Mises pointed out:

Investment and lending abroad are only possible if the receiving nations are unconditionally and sincerely committed to the principle of private property and do not plan to expropriate the foreign capitalists at a later date. It was such expropriations that destroyed the international capital market [this was published in 1949 and the destruction of the international capital market Mises refers to has since been largely rescinded, ed.]

Intergovernmental loans are no substitute for the functioning of an international capital market. If they are granted on business terms, they presuppose no less than private loans the full acknowledgment of property rights. If they are granted, as is usually the case, as virtual subsidies without any regard for payment of principal and interest, they impose restrictions upon the debtor nation’s sovereignty. In fact such “loans” are for the most part the price paid for military assistance in coming wars. Such military considerations already played an important role in the years in which the European powers prepared the great wars of our age. The outstanding example was provided by the huge sums which the French capitalists, pressed hard by the Government of the Third Republic, lent to Imperial Russia. The Czars used the capital borrowed for armaments, not for an improvement of the Russian apparatus of production. They did not invest it; they consumed a great part of it.”

(emphasis added)

The problem with the Ukraine is precisely that it has so far not adequately protected the property rights of foreign investors. It is all dependent on political whim, and thus far, it has made no difference whether the Western or Eastern Ukrainian parties were in charge. Moreover, as Mises correctly points out, intergovernmental loans are for the most part wasted on consumption and are frequently used for the purchase of war materiel. The economies of the nations concerned cannot possibly be improved this way.

Unless the country develops reliable institutions and rids itself of graft (which is tantamount to the entire political caste resigning – perhaps introducing a lottocracy would help), it will remain an economic backwater, no matter how much money is thrown at its government.

The Conflict Explained by a Single Map

As the title to this post promises, here is a map of the Ukraine that explains best why the EU tried to get its foot into the door and why the US government egged on by the usual suspect neo-con circles financed the revolution. It also explains in one stroke why Russia believes that its vital strategic interests are under threat from the Russo-phobe ultra-nationalists now in charge in Kiev and their Western backers, and why it decided to grab the Crimea (and with it the all-important Sevastopol port) while it still could.

Mind, this does not alter the fact that Putin’s moves are legally highly dubious. The excuse that he is merely following Yanukovich’s invitation is really quite lame, although it is quite funny as well. Western countries usually don’t wait to be invited before they bomb everything to hell in all sorts of places, and their pretexts are usually no less lame. At least the Russians haven’t come charging in guns blazing, a difference that is noteworthy. Anyway, we merely want to explain motives, not debate the legal and moral fine points. Clearly, the people of the Ukraine remain way down on everybody’s list of priorities anyway, all the sappy pronouncements to the contrary notwithstanding. And here it is – the map that explains everything:


_73340564_ukraine_gas_pipelines_624_v3

Pipelines and gas fields in the Ukraine, or the map that explains everything (source:BBC)


Obviously, no additional comments are required.


Ukraine/Crimea – the Map That Explains Everything |

Ukraine/Crimea – the Map That Explains Everything |.

March 11, 2014 | Author 

What the Economy Needs

We want to briefly comment on the suggestions that the Ukraine – this is to say the government of the Ukraine – allegedlyneeds to “borrow at least $35 billion”. This has been reported in terms such as these:

“The political crisis has cost Ukraine economically as the country is facing a possible debt default. Ukraine needs approximately $35 billion in aid to improve its economy, according to the country’s finance ministry.”

The last thing a country needs to “improve its economy” is a giant loan to its government. Government equals waste, even if it isn’t prone to stealing, which we suspect the new administration in Kiev definitely is. Why should it be any different from the previous ‘Orange Revolution’ government? It’s the same people, only fortified by a bunch of extreme right-wing nationalists this time, who incidentally hold a number of important portfolios, including everything relating to police, defense, national security and even the post of prosecutor general. Germany’s news magazine Der Spiegel, which is largely sympathetic to the new government, reports this most recent tidbit from Kiev:

“They [the Maidan activits, ed.] are afraid that the political profiteering of recent years will carry on, just with different beneficiaries.

[…]

Their concern appears to be justified. Last Monday, a high-ranking officer from Ukraine’s customs administration contacted a newspaper to inform editors of a new deal pertaining to the “internal” allocation of unexpected customs revenues. No longer would confiscated money and valuables be given to Yanukovych’s Party of Regions as they had been previously. Rather, they would go to the Fatherland alliance. Timoshenko, the man said, had personally approved the deal. Furthermore, the Communist Party, he said, had been handed the leadership of the customs administration so that it would support Timoshenko in the future.”

(emphasis added)

Just as we suspected a short while ago: meet the new boss, same as the old boss! The US and EU governments have done their tax payers no favors by opening up this new black hole to throw money into. They should have let Russia lend the $15 billion it was prepared to lend to the Ukraine, then their new arch-enemy Putin would be stuck with the bill.

As Ludwig von Mises pointed out:

Investment and lending abroad are only possible if the receiving nations are unconditionally and sincerely committed to the principle of private property and do not plan to expropriate the foreign capitalists at a later date. It was such expropriations that destroyed the international capital market [this was published in 1949 and the destruction of the international capital market Mises refers to has since been largely rescinded, ed.]

Intergovernmental loans are no substitute for the functioning of an international capital market. If they are granted on business terms, they presuppose no less than private loans the full acknowledgment of property rights. If they are granted, as is usually the case, as virtual subsidies without any regard for payment of principal and interest, they impose restrictions upon the debtor nation’s sovereignty. In fact such “loans” are for the most part the price paid for military assistance in coming wars. Such military considerations already played an important role in the years in which the European powers prepared the great wars of our age. The outstanding example was provided by the huge sums which the French capitalists, pressed hard by the Government of the Third Republic, lent to Imperial Russia. The Czars used the capital borrowed for armaments, not for an improvement of the Russian apparatus of production. They did not invest it; they consumed a great part of it.”

(emphasis added)

The problem with the Ukraine is precisely that it has so far not adequately protected the property rights of foreign investors. It is all dependent on political whim, and thus far, it has made no difference whether the Western or Eastern Ukrainian parties were in charge. Moreover, as Mises correctly points out, intergovernmental loans are for the most part wasted on consumption and are frequently used for the purchase of war materiel. The economies of the nations concerned cannot possibly be improved this way.

Unless the country develops reliable institutions and rids itself of graft (which is tantamount to the entire political caste resigning – perhaps introducing a lottocracy would help), it will remain an economic backwater, no matter how much money is thrown at its government.

The Conflict Explained by a Single Map

As the title to this post promises, here is a map of the Ukraine that explains best why the EU tried to get its foot into the door and why the US government egged on by the usual suspect neo-con circles financed the revolution. It also explains in one stroke why Russia believes that its vital strategic interests are under threat from the Russo-phobe ultra-nationalists now in charge in Kiev and their Western backers, and why it decided to grab the Crimea (and with it the all-important Sevastopol port) while it still could.

Mind, this does not alter the fact that Putin’s moves are legally highly dubious. The excuse that he is merely following Yanukovich’s invitation is really quite lame, although it is quite funny as well. Western countries usually don’t wait to be invited before they bomb everything to hell in all sorts of places, and their pretexts are usually no less lame. At least the Russians haven’t come charging in guns blazing, a difference that is noteworthy. Anyway, we merely want to explain motives, not debate the legal and moral fine points. Clearly, the people of the Ukraine remain way down on everybody’s list of priorities anyway, all the sappy pronouncements to the contrary notwithstanding. And here it is – the map that explains everything:


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Pipelines and gas fields in the Ukraine, or the map that explains everything (source:BBC)


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