There is so much going on at present in Ukraine it’s kind of hard keeping up and making sense of it.
First, still awaiting the Joseph Biden – Volodmyr Zelensky call, but then so are a few other global leaders/allies, including Recept Erdogan in Turkey. But it obviously irks the Ukrainian side that Biden did still get to talk to Vladimir Putin and has failed to follow up with a speedy call to Kyiv. Ukraine is supposed to be an ally and has lost yet more troops this week in the frontline defending Western democracy from the aggression in the east.
Second, the above makes all the above more painful for the Ukrainian side as they think they took one, or two, for the team, by pulling the plug on the Chinese investment in Motor Sich (with the Chinese side seemingly demanding $3 billion in damages), and also taking the Viktor Medvedchuk pro-Kremlin channels off the air at some considerable domestic cost – and maybe also external, with the risk of escalation in the East, which we may have actually seen this week.
The US side was like “great, thanks for these and then blank.
Not sure here whether this is because the Biden Europe foreign policy team are yet not fully in place, and are waiting to be up to full company strength before making any big decisions. But at the moment it kind of feels like they are missing in action. But if the West is going to stand up to Putin, victory will be built in securing wins against Russian aggression in places like Ukraine. Hello guys, anyone in?
Third, but then much worse are all the reports that the German side is pitching solutions to the Biden team over Nord Stream II. Herein I am using the term “solutions” generously, as these are not solutions but rather “sell outs” when viewed from Ukrainian perspective, which would bring the pipeline on stream. Surely the Biden team, which was supposedly going to be tough on Russia, are not going to sell Ukraine down the river or the tube at the first opportunity? They are not, right?
Fourth, I guess the most predictable event this week was the failure of the IMF to complete the first review under the SBA. I was always amazed that the review was ever started given the big “to do” list and the considerable “form” or rather lack of it in terms of the Ukrainian side meeting the Fund demands in a timely manner.
It feels here that both sides are now stalling a bit to see a bit of leadership/focus/direction from the Biden administration. I think the IMF wants the Biden team to read the Zelensky crew the riot act on the anti-corruption agenda, while the Ukrainian side expects the opposite, that the Biden team will read the IMF the riot act telling the Fund to cut the Ukrainian side some slack given the geopolitical setting.
It does not feel that anything is going to happen any time soon on the IMF front, which would leave around $4 billion in official disbursements this year pending – the Ministry of Finance seems to think they can easily cover the gap in the market this year, albeit I would not be so sure/confident with the market now focusing on the reflation trade which will increase the cost of financing for countries like Ukraine. Prime Minister Denys Shmyhal kind of let the cat out of the bag this week by suggesting no IMF money until June. If that is the target I would add a few months on, given Ukraine’s track record, and think September now is a more likely timeframe for any IMF disbursements, if at all.
Fifth, I am tempted now to understand the apparent move against NABU head Artem Sytnyk, and also efforts to clear out the management at Naftogaz, including the independent supervisory board, as a clearing of the decks/unfinished business, while the IMF program is in effect offline. Hence if there is no chance of an IMF deal any time soon, why not do some of the stuff which will no doubt rancor with the IMF now – and present them with a fait accomplis – when talks eventually get back on track. The agenda likely will be different then, and as with the management changes at the NBU, the new team at NABU and Naftogaz will have time to bed themselves in and to present themselves as the guys the IMF will just hard to work with – just get over it!
I sense here that frustrations with the Biden team, the West and the IMF are building, and they are just of the mind to get on with their own agenda – as was evident with the recent trip to the United Arab Emirates. (UAE investment to replace Chinese). If the US is putting its own interests with regards to Nordstream II first, then Ukraine may as well now. The hope here though is that if this means going off track with the IMF, the market will still fund Ukraine. Let’s see in this latter respect – global markets can turn on a dime or a Bitcoin.
