Yanukovich Sulking in Hideout
Over the past several days, more and more of his political supporters have deserted Ukraine's president Yanukovich in light of the bloody confrontations between police and protesters in Kiev. In the end, all of them decided they would be better off without him. The final straw seems to have been news that Moscow wouldn't send any money after all until calm was restored in the Ukraine and a political solution to the conflict was found (we imagine the Russians were concerned their money might end up getting stolen, not an entirely unreasonable fear). Yanukovich thereupon apparently decided that he would be best served by disappearing in the presidential helicopter and was last seen heading toward an unknown retirement hideout by air. However, from there he immediately resumed complaining:
“Yanukovych was removed in a 328-0 vote in the 450-seat chamber. As protesters took control of central Kiev and flooded into his luxury estate, Yanukovych said in a speech from an undisclosed location that attempts to remove him from power were a “coup d’etat.”
The peace agreement, signed on Feb. 21 after all-night talks in Kiev with EU foreign ministers, envisioned a national-unity government within 10 days. Lawmakers approved a return to the 2004 constitution, curbing presidential powers.
Polish Foreign Minister Radoslaw Sikorski, who helped negotiate the EU deal signed by Yanukovych and the opposition, said there was “no coup in Kiev,” and that parliament is acting legally. Yanukovych had said in a statement published on his presidential website that he wouldn’t resign and deemed all of the new acts illegal.”
In spite of this rather feeble last-ditch show of defiance, Yanukovich can probably be safely regarded as history. It was an interesting development that Russia decided to ditch him by refusing to send the financial aid it had only promised to release a few days earlier. We would point to this interesting little news item in this context:
“U.S. Treasury Secretary Jacob J. Lew and Russian Finance Minister Anton Siluanov agreed on the importance of promoting economic and financial stability in Ukraine and the need for reforms that could be supported by an IMF program, according to the Treasury Department. “There needs to be stability in the Ukraine,” Lew told reporters in Sydney yesterday, adding he’d had a “very good conversation” with Siluanov.
Lew spoke with Arseniy Yatsenyuk, leader of ex-Premier Yulia Tymoshenko’s Batkivshchyna party, and encouraged Ukraine to begin discussions with the IMF as quickly as possible, the Treasury Department said.”
If they had 'a very good conversation', we conclude that A) Russia decided it would be a lot cheaper to let the IMF pay and B) there must be some way in which the Russians think they will be able to forestall NATO expansion into the Ukraine (the main reason why the Russian government lent its support to Yanukovich in the first place was very likely to ensure that the Ukraine would not sign any 'security agreements' with Europe). Just guessing of course – it is impossible to tell what is really going on, but it is absolutely certain that Russia is set dead against being encircled via its 'near abroad', i.e., the former Soviet Republics.
(Image by Jean Tabary)
Meet the Ukraine's interim Caliph, former parliamentary speaker Alexandr Turchynov
(Photo via tymoshenko.com.ua)
And guess who has appeared on the scene moments after all of this happened, accompanied by the US ambassador and some EU minion?
Julia Tymoshenko was immediately released from prison – here in a photo op with US ambassador Geoffrey Pyatt shortly after her release (yes, this Pyatt).
(Photo via saltspringnews.com / Author unknown)
According to European media reports, Tymoshenko is already plotting her political comeback. Never mind that she was twice in coalition with Yanukovich, or that there continue to be considerable doubts about her past energy deals – even though it is very likely true that her imprisonment was mainly politically motivated.
“In 2011, she was arrested and charged with abusing power as premier in a natural gas deal with Russia. Tymoshenko said the proceedings were naked revenge, and Western governments voiced concern about a politically motivated prosecution. International criticism of Ukraine grew after she was convicted, received a seven-year sentence, and sent to prison.
Long before achieving global fame, Tymoshenko was already a high-profile figure in Ukraine. She and her husband took early advantage of former Soviet leader Mikhail Gorbachev's perestroika reforms by creating a popular video rental business.
The couple founded a fuel distribution company and she became head of Unified Energy Systems, a wholesale broker of natural gas. In that post, she became one of Ukraine's richest and most powerful oligarchs — and was dubbed "The Gas Princess."
There can probably be little doubt that her prosecution was a case of political revenge, or at least about the removal of potential competition (although she did lose the last election, and even her former 'Orange Revolution' partner, ex-president Viktor Yushchenko testified against her), but only insofar as her accusers were quite possibly even bigger thieves. As our friends at 'Oilprice.com' noted at the time of her trial, her past in the energy business is, let us say, not likely to be entirely spotless:
“During 1995- 1997 Timoshenko was the president of Ukraine’s natural gas trading company United Energy Systems of Ukraine, which became Ukraine’s main importer of Russian natural gas to Ukraine. Accusations swirled that she was reselling enormous quantities of stolen gas and avoiding tax, having given former Prime Minister Pavlo Lazarenko kickbacks in exchange for her company's access. In August 2006 Lazarenko was convicted and sentenced to prison in the United States for money laundering, wire fraud and extortion.
Interesting company the Ukraine’s “gas princess” keeps, along with her personal wealth estimated in the millions. That said, Ms. Timoshenko is simply a product of her environment, and the 2009 natural gas deal that she cut with Russia was pragmatic, which raises the question of why she’s on the rack now. Speaking of personal fortunes – in the past two decades it has been impossible for anyone in the post-Soviet space to become rich. Why?
Simple – because theoretically, according to Marxism, “property is theft” and in December 1991 every Soviet citizen following the collapse of the USSR started out on the same starting line. Not – those with connections prospered, those on the assembly line did not. Timoshenko, cagey about her private wealth and reinventing herself as a populist politician, was nonetheless one of the former.
Well, who knows. Maybe she's really the only honest oligarch in all of the former Soviet Republics who became a millionaire in no time at all with the help of formerly state-owned assets purely due to her dedication to hard work. Right.
It will be interesting to see who gets closest to the place at the trough next, and whether they will behave any better than the kleptocrats preceding them. We wish the people of the Ukraine all the best, but we have our doubts on that count.
Ethnic Russians May Want to Split
Meanwhile, it is actually too early to state that peace has broken out, as there have been reports of clashes between the . It seems possible that contrary to the wishes of the US and the EU, the Ukraine will eventually end up splitting along ethnic lines:
“Pro-Russian demonstrators have clashed with anti-government protesters in Ukraine’s south and eastern regions. Several attempts by opposition supporters to hold rallies over this weekend’s historic events have been roundly shut down.
In the poor industrial city of Donetsk, pro-Russian protesters made their feelings clear over their allegiances. A scene repeated in several other cities like Kerch in Crimea where some Ukrainians have spoken openly of their desire to see the country split along political lines.”
Western powers wasted no time warning Russia not to actively support such desires for the independence of the ethnic Russian part of the Ukraine:
“U.S. officials insisted on Sunday that Ukraine should remain unified and cautioned that any military intervention by Russia would be a mistake after bloody street protests ousted the pro-Moscow president.
In an appearance on the NBC TV program "Meet the Press," National Security Adviser Susan Rice was asked about a scenario in which Russia would send troops to restore a government more friendly to Moscow, or for the country to be carved up.
"That would be a grave mistake. It is not in the interests of Ukraine or of Russia or of Europe or the United States to see the country split. It's in nobody's interest to see violence return and the situation escalate," Rice said.
"The message has to be sent to him (Putin) that let the Ukrainian people determine their own future, and a partition of Ukraine … is totally unacceptable," Republican Senator John McCain, a key Republican voice on foreign policy, told the CBS program "Face the Nation".
"And we need to act immediately to give them (Ukrainians) the economic assistance that they need, based on reforms that are going to be required, as well. So it's going to be tough sledding."
Bob Corker, the top Republican on the Senate Foreign Relations Committee, said in a statement: "The United States should do everything possible to ensure Ukraine remains one country and that their territorial and political integrity is maintained, allowing them the freedom to choose a future within Europe."
Excuse us for asking, but who cares? What business is it of the US, EU, or Russia for that matter, whether the Ukraine 'remains a unified country'? What makes a unified Ukraine better than a split one? Wouldn't it be best to avoid future conflict along ethnic lines by allowing Ukrainians to decide this for themselves? What makes a bigger country inherently better than two smaller ones?
We would argue that on the contrary, statism is automatically reduced when political territories become smaller, and it would actually be best if not only the Ukraine, but every large nation state territory broke apart into smaller ones. Big is definitely not beautiful when it comes to nation states – except for the people forming the ruling elite of said states. Citizens are generally far better off the smaller the political entity they inhabit is. We conclude that there is nothing to worry about in the event the Ukraine splits in two – from the point of view of the inhabitants it may be the best solution actually.
Addendum: Hryvnia Unmoved
Interestingly, there is no rejoicing yet in the currency markets about the latest developments – the Ukrainian currency has even weakened slightly further:
The stock market has however rallied sharply over the past three trading days – the old saying has once again been proven true, somewhat sooner than expected in this case (i.e., 'buy when there is blood in the streets'):
Charts by: Investing.com
It is that time of the year again – our semi-annual funding drive begins today. Give us a little hand in offsetting the costs of running this blog, as advertising revenue alone is insufficient. You can help us reach our modest funding goal by donating either via paypal or bitcoin. Those of you who have made a ton of money based on some of the things we have said in these pages (we actually made a few good calls lately!), please feel free to up your donations accordingly (we are sorry if you have followed one of our bad calls. This is of course your own fault). Other than that, we can only repeat that donations to this site are apt to secure many benefits. These range from sound sleep, to children including you in their songs, to the potential of obtaining privileges in the afterlife (the latter cannot be guaranteed, but it seems highly likely). As always, we are greatly honored by your readership and hope that our special mixture of entertainment and education is adding a little value to your life!
Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke
Most read in the last 20 days:
- A Striking Chart
The Economy and the Stock Market As long time readers know, we are always paying close attention to the manufacturing sector, which is far more important to the US economy than is generally believed. In terms of gross output it is the largest sector of the economy, and it should of course be obvious that saving, investment and production are the only ways to create wealth. What's left of the Brooklyn Domino Sugar Refinery. Photo credit: Paul Raphaelson Contrary...
- Trump and Putin Narrowly Escape Assassination Attempt
The Gloves are Coming Off First a little bit of recent history. Readers are probably aware that some questions about the occasionally malfunctioning Deep State android... no, wait, we'll start again. Questions have recently been raised about the health of presidential candidate Hillary Clinton by various “alt-right” tinfoil hat-wearing conspiracy theorists, such as this one. The monsters are normally hiding under Hillary's bed, but lately they have come out into the open...
- US Economy - Curious Pattern in ISM Readings
Head Fake Theory Confirmed? This is a brief update on our last overview of economic data. Although we briefly discussed employment as well, the overview was as usual mainly focused on manufacturing, which is the largest sector of the economy by gross output. Pepsi factory in Baltimore, 1956 Photo via pinterest.com Readers may recall that we have pointed out for some time that there was quite a large gap between the data reported in regional Fed manufacturing...
- Why the Fed Destroyed the Market Economy
What Have You Done for Me Lately? Swing voters are a fickle bunch. One election they vote Democrat. The next they vote Republican. For they have no particular ideology or political philosophy to base their judgment upon. The primacy of the wallet. They don’t give a rip about questions of small government or big government. Nor do they have any druthers about the welfare or warfare state. In effect, they really don’t care. What’s important to the...
- How is Real Wealth Created?
An Abrupt Drop Let’s turn back to our regular beat: the U.S. economy and its capital markets. We’ve been warning that the Fed would never make any substantial increase to interest rates. Not willingly, at least. Groping in the dark, Yellen-style Each time Fed chief Janet Yellen opens her mouth, out comes a hint that more rate hikes might be coming. But each time, it turns out that the economy is not as robust as she had believed... and that a rate hike isn’t...
- Janet Yellen’s Shame
Playing Politics In honest capitalism, you do what you can to get other people to voluntarily give you money. This usually involves providing goods or services they think are worth the price. You may get a little wild and crazy from time to time, but you are always called to order by your customers. In the market economy, consumers reign supreme. There is no such thing as a “lost” vote in the marketplace; every penny spent affects production. Mises noted: “Consumers...
- Get Ready for a New Crisis – in Corporate Debt
Imposter Dollar OUZILLY, France – We’re going back to basics here at the Diary. We’re getting everyone on the same page... learning together... connecting the dots... trying to figure out what is going on. The new three dollar bill issued by the Apprehensive States of America. We made a breakthrough when we identified the source of so many of today’s bizarre and grotesque trends. It’s the money – the new post-1971 dollar. This new dollar is green. You...
- The Economy, the Stock Market and the Fed
John Hussman on Recent Developments We always look forward to John Hussman's weekly missive on the markets. Some people say that he is a “permabear”, but we don't think that is a fair characterization. He is rightly wary of the stock market's historically extremely high valuation and the loose monetary policy driving the surge in asset prices. The S&P 500 Index and the NYSE advance-decline line. Most market internals weakened steadily until early February 2016, but...
- Hanjin Marooning in San Pedro Bay
Global Trade Reversal Expansions and contractions in global trade have played out over long secular trends for thousands of years. The Silk Road, for example, was established by the Han Dynasty of China in 130 BC, and allowed for continuous trade between East and West for nearly 1,600 years. In addition to economic trade, the Silk Road was also a conduit for culture and knowledge among its network of civilizations. A map of the main ancient Silk Road - click to...
- Great Causes, a Sea of Debt and the 2017 Recession
Great Cause NORMANDY, FRANCE – We continue our work with the bomb squad. Myth disposal is dangerous work: People love their myths more than they love life itself. They may kill for money. But they die for their religions, their governments, their clans... and their ideas. Famous French hippie and author Voltaire. He wears the same sardonic grin in every painting, whether he's depicted at a young or an old age, doesn't matter. His real name was François-Marie Arouet; he...
- The Donald Versus Killary: War or Peace?
War: A Warning from the Past Although history does not exactly repeat itself, it does provide parallels and sometimes quite ominous ones. Such is the case with the current U.S. Presidential election and the one which occurred one hundred years earlier. The Donald probably has the better slogan... The dominating question which hung over the 1916 campaign was whether the country would remain neutral in regard to the horrific slaughter which was taking place on the...
- A Rift in the Space-Time Continuum
Weird and Unnatural NORMANDY, France – First, a quick look at the markets. The Dow bounced on Monday, recovering 239 points of the nearly 400 it lost on Friday. Why the comeback? FOMC member Lael Brainard: her comments on Monday were touted as the “reason” for the stock market recovering half of Friday's losses. We suspect the real reason is the triple witching on Friday... Photo via twitter.com The financial press has a ready answer: “Stocks gain...