July 28, 2014

By: Kelly Diamond, Publisher

ukraine EUAdmittedly, I have felt rather lost when it comes to understanding what has been happening in the Ukraine. It seems there are those who have been able to follow it closely from the very beginning, but I, for the life of me, have not been able to get a handle on it. I have pieces. Pieces, which by themselves have different implications than if placed in the context of a larger picture.

Here’s what I’ve managed to gather so far:

The EU is playing a bit of a tug of war match with Russia for the Ukraine. It seems there is a similar rift between East and West Ukraine as there might’ve been in East and West Germany. If there is one country who can attest to the costs of forced unification, it’s Germany. They are still paying it off to this day. Then there are the separatists who oppose all of this.

Meanwhile, a considerable amount of money is being dumped into trying to manage all this. From what is being reported, something in the neighborhood of $130 million per month just to keep it at the levels they are at now. Like I said, I’m not terribly well versed on all that is happening in Ukraine, but I know one thing: fighting these types of civil and moral wars is where economies ultimately go to die. The countless billions the United States pours into its War on Terror, War on Drugs, and War on the Border combined is lost in a black hole forever. There is no return on investment in wars like this.

Despite the fact that the EU is offering a sizable sum of money to help the Ukraine out (not for any real humanitarian ends, mind you), Russia is also poised to offer some help. Russia was rejected because they were outbid. $17 Billion from the IMF alone, plus another billion from the US! So Russia was sent home with its $15 Billion offer. Ukraine, to put it lightly – and quite frankly to understate their situation entirely – is unstable. So unstable, in fact, that before the first check is even cut on this bailout, another bailout is already being discussed! The bailout was based on certain conditions and assumptions that are no longer true, as Ukraine has yet to demonstrate that it can gain control of their situation well enough, or in time, for the first bailout. Quick estimations have resulted in serious discussions about a second bailout as the current trends are not indicative of solvency.

Then I found this from Zbigniev Brzezinski’s “Grand Chessboard”:

“Ukraine, a new and important space on the Eurasian chessboard, is a geopolitical pivot because its very existence as an independent country helps to transform Russia. Without Ukraine, Russia ceases to be a Eurasian empire.”

“However, if Moscow regains control over Ukraine, with its 52 million people and major resources as well as access to the Black Sea, Russia automatically again regains the wherewithal to become a powerful imperial state, spanning Europe and Asia.”

Here’s a shocker: some Podunk country in Eastern Europe that at one point was relatively unknown to most of the West is all of a sudden on the map with its riots. While individuals are calling for its freedom and sovereignty, governments are calling for its annexation because why? Natural resources and/or access to natural resources.

Russia needs the Ukraine to access the Black Sea, as well as for its industry and natural resources. It also would like a portal out of the growing and expanding NATO net that is encircling Russia now. The EU doesn’t want Russia to have that kind of access because they see Russia as a threat. Neither side pulling the rope gives a rat’s ass about Ukraine or its people.

Perhaps I’m naïve, or maybe not seeing the whole picture, but what I see here is both countries in campaign mode. Right now, the promises and the money are flowing from both sides. I hate to see what awaits that country after all is said and done.

This discussion of a second bailout is disheartening as well when you consider who’s holding this whole EU thing together in the first place. The EU is running on fumes and imagination, with Germany being the only country even in a position to use the word “prosperity”. Is Germany really expected to shoulder this ordeal or another huge bailout?

Austerity measures can only go so far, since that only has to do with government spending, not government revenue. The same goes for onerous taxation and manipulations by the central banks. Make the taxes too high and you will see an exodus of businesses expatriating at faster rates than they are from the US! And let’s say the central banks keep their interests rates low? That doesn’t equate to jobs. That only eases the burden of debt a little.

In terms of solutions for the EU, the options are rather slim. And the options that will actually solve anything are rather painful. Then again, those are the same options available to all the unsustainable economies comprising the EU now. Cyprus, Spain, Italy, France, Ireland, Portugal, and if things persist and the Ukraine gets on board, they too will eventually be faced with some tough choices, to say the very least.

I don’t know what’s in store for any of these states. But this is realpolitik at play or geopolitics.

People aren’t the primary concern. They are just in the way of the real objectives which is concentration of control and power. “European bank depositors should be very concerned, and indeed everyone else for that matter,” says Erico Tavares of Sinclair and Co.