Berlin, Germany (Weltexpress). Ukraine is on the brink not only militarily but also financially. International debts and refused credit negotiations threaten to plunge the country into insolvency. Who benefits from the state bankruptcy and why German taxpayers will ultimately have to foot the bill.
As early as mid-June of this year, there were reports in the financial media that Ukraine was unable to reach an agreement with a group of lenders such as BlackRock and Pimco on the restructuring of around USD 20 billion in international debt, meaning that the country was in danger of sliding into insolvency if it did not reach an agreement by 1 August.
The private Western lenders rejected Ukraine’s proposal to accept a 60 per cent debt haircut – in other words, to waive 60 per cent of their loans. The Ukrainian government obviously felt morally justified in demanding such a colossal capital waiver from the Western capitalists, as it was sacrificing tens of thousands of young men every month as cannon fodder to protect Western civilisation from the Russian beasts. But Kiev was wrong.
It is one thing for the warmongers and Russophobes in the US/NATO governments to ‘lend’ countless billions of dollars and euros of taxpayers’ money to Ukraine, never to be seen again, or simply to give it away. None of these Western politicians will ever be held personally accountable for this, because they themselves decide who their prosecutors, who are bound by their instructions, will indict and who they will not.
Things are different with private lenders, where the bosses have to give a meticulous account of their business dealings. If it turns out that they have made huge financial losses for their own financial company due to generous, ideologically motivated gifts of billions to an incredibly corrupt state, they are chased away by their shareholders at the next best opportunity.
Against this backdrop, it becomes understandable why strange changes have taken place in the minds of European and American investors in recent weeks and months with regard to Ukraine and its thieving authorities.
As recently as 8 May this year, everything was all sunshine and roses. On that day, the Ukrainian government and BlackRock signed an agreement on the establishment of a ‘Development Fund of Ukraine’. Modelled on the way the fraudulent Deutsche Treuhand handled the national assets of the GDR, BlackRock was to manage the assets of the Ukrainian state as part of this deal. The declared aim was to attract foreign investment in energy, infrastructure and agriculture.
In reality, BlackRock aimed to privatise the last remaining (mainly agricultural) businesses in Ukraine, to export Chernozem, the famous, fertile Ukrainian black soil, and for US companies to take over the country’s power grids. In addition, BlackRock was to manage the finances from the so-called ‘international aid’ as well as Ukraine’s foreign debt, which amounted to 132 billion US dollars or 90 per cent of GDP at the end of March 2024. All in all, it was a gigantic deal with the prospect of huge profits that fell into BlackRock’s lap, obviously not without the use of a lot of soft soap.
But as early as 24 June, six weeks after the signing of the ‘Ukraine Development Fund’, BlackRock not only refused a further investment package demanded by Kiev, but also demanded the return of some of the investments already made. BlackRock told the media that it was ‘concerned’ about the extent of corruption in Ukraine and the way in which Ukrainian oligarchs were handling Western investments. Apparently, the financial group had had frightening first-hand experience with the underhanded, thieving government authorities and their bosses over the past six weeks.
Ukraine’s private creditors had obviously lost patience by then. In general, Zelensky was given one last chance for a while. However, he used the time to pass a law prohibiting any payment of interest as long as a debt cut or rescheduling has not taken place.
Currently, the US rating agencies Fitch and S&P have downgraded the Ukrainian covered bonds to junk and total loss respectively. Nevertheless, the private lenders will not be left hanging. Western governments and taxpayers will ultimately be called upon to maintain payments to BlackRock, Amundi, Pimco et cetera via Ukraine.
This will play out according to the familiar scenario: ‘Profits are private, losses are socialised.’ Western financiers got involved in Ukrainian debt because it offered them a return profile that they could only dream of with US government bonds or federal treasury bonds. They were aware of the risks. But they knew exactly that as long as the Western alliance of the US, EU and NATO waged a proxy war against Russia, they would never accept Ukraine’s national bankruptcy. Ultimately, the taxpayer, including the German taxpayer, will foot the bill this time too, while the rentier capitalists expect an automatic bailout. Last but not least, they will also receive profits from frozen Russian assets that are nominally destined for Ukraine.
So who are the winners and losers? The former include BlackRock and the other financial groups as well as the corrupt administration in Ukraine, from the very bottom to the top of the state, of which ex-President Zelensky (his term of office has expired) is a prime example. It is no coincidence that Western financial experts classify Ukraine as ‘the most corrupt nation in Europe’ – a fact that the United States has capitalised on by buying the entire Ukrainian ruling class. The losers are the Ukrainian people, the fallen and wounded soldiers on both sides and, last but not least, the taxpayers in the West. There is no longer enough money in all social areas because the governments are prioritising the needs of Ukraine and the war against Russia.
