KYIV IS COMPELLED TO PEACE BECAUSE OF IMF.
At worst, the $17bn IMF programme signed in April could fall apart, possibly forcing the country to default and restructure its debts.
«If the conflict lingers for another several months in its current form the cost for the Ukrainian economy would be huge», – the newspaper is quoting one of Kyiv advisors. IMF officials based their bailout on the initial assumption that Ukraine’s economy would shrink 5 per cent this year before bouncing back in 2015. Officials visited and made their assessments shortly after Russia had annexed Crimea and just as separatists were seizing control in eastern Ukraine. They did not therefore fully factor in the economic damage that was to follow. Even at the time, however, their judgments were questioned intensely by some economists. The eastern industrial base is even more important. Experts say the restive provinces of Donetsk and Lugansk accounted for about 16 per cent of GDP, and a quarter of exports and industrial goods and services. The newspaper writes even if Kiev reasserts full control of the eastern region and Russia backs off, the economic damage wrought by the conflict will be severe. The IMF last month adjusted its economic forecast to a more realistic 6.5 per cent shrinkage for 2014. Even this could be optimistic. Gabriel Sterne, head of macro research at Oxford Economics, predicts it will contract by at least 8 per cent.
Western economic sanctions may be useful in the short run, but the goal is a stable Russia that is engaged economically and otherwise with Europe, the United States, and the world, not a sickly and isolated Russian bear..
Christian Science Monitor
A new gas crisis could happen if EU and Russia have not reached an agreement by Autumn.
Bulgaria makes its contribution to the situation’s escalation. The government of the country following Brussels’ wishes has suspended construction of South Stream gas pipeline. Minister of economy Vasyl Shtonov said works would be restarted when project met European standards – operator and users of infrastructural objects should be of independent structures.
France’s President Francois Hollande: “At this time the level of sanctions do not prohibit Mistral supply” “We’ve reached the point where we can talk again about crisis recovery: to stop weapons’ supply, to cease the fire over the borer and start a political dialogue.”
“Yes, the head of the republic agrees, sanctions have their price as for those who impose and for those against whom they have been imposed. It is Europe’s choice which she made despite negative economic consequences. It is another reason to seek a solution, which is based on maintenance of Ukraine’s sovereignty.
German exporters loose more out of Russian sanctions. In the first half of 2014 Germany suffer nearly 3 milliard EURO export loses to Russia comparing to 2013.
Westinghouse urges EU to break the dependency on Russian nuclear fuel.
The Financial Times:
Westinghouse, the Japanese-US atomic group, is pressing the EU to introduce competition rules that will break eastern Europe’s dependence on Russian nuclear fuel, The Financial Times writes.
NATO has the military might to crush Russia. Despite downward spending trends, NATO defense budgets are still more than 10 times what Moscow spends.
Everywhere we look, deadly threats abound — from radical Islamist terrorist groups and a future nuclear-armed Iran to a resurgent Russia focused on restoring an empire to the rise of China, and more. Despite these shared security challenges, the continued alliance isn’t guaranteed as most member nations balk at budget expectations equaling 2 percent of national gross domestic product, while sharply disagreeing on policy matters, including what constitutes a mutual threat. In NATO’s case, it’s mostly collecting from America. Though 315 million Americans constitute just 35 percent of NATO’s 910 million combined population, according to NATO figures in 201, they paid 73 percent of the defense expenditures.
Rasmussen does not exclude Russia may invade Ukraine. NATO could significantly help Ukraine to modernize its army.