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Thursday, July 24, 2014 1:54 PM


Ukraine Government Breaks Up: Prime Minister Resigns Over "Vital Laws on Energy and Army Financing"; Follow the Money


Some interesting happenings in Ukraine today, in Kiev rather than the war zone. Issues concern unpaid soldiers, pro-Russian MPs, and various oil schemes to finance the war.

Let's take a look starting with Kiev Government Breaks Up as EU Mulls Fresh Russia Sanctions

Ukraine’s premier Arseniy Yatseniuk tendered his resignation on Thursday, clearing the way for early elections aimed at producing a more reform-minded parliament in Kiev but also risking a short-term political vacuum.

Two parties quit the country’s governing coalition earlier in the day and President Petro Poroshenko backed the idea of an early parliamentary poll. New elections would be likely to reduce the number of pro-Russian MPs and supporters of ousted president Viktor Yanukovich.

Mr Yatseniuk rebuked the existing parliament for putting Ukraine’s future at risk and betraying the ideals of the protests that toppled Mr Yanukovich in February, by failing to pass vital laws on energy and army financing.

The Ukrainian government break-up came as EU ambassadors in Brussels met behind closed doors for more than eight hours debating whether to take the first step towards sweeping sanctions against the Kremlin over its support for pro-Russian separatists in Ukraine. These would target entire sectors of the Russian economy.

“History will not forgive us,” Mr Yatseniuk told the parliament, after it failed to pass a law to liberalise control of Ukraine’s natural gas pipelines system. “Millions of people made this revolution,” he said, referring to the winter protests in Kiev.
Soldiers Not Paid

Also from the Financial Times, here are a few snips from Ukraine’s Prime Minister Quits.
Arseniy Yatseniuk, Ukraine’s prime minister, resigned on Thursday after two parties quit the ruling coalition government in a move designed to trigger early elections.

The fact that the coalition has fallen apart, that laws haven’t been voted on, that soldiers can’t be paid, that there is no money to buy rifles, that there is no possibility to fill gas storages. What options do we have now?” Mr Yatseniuk said in address to parliament.
Vital Laws on Energy and Army Financing

Inquiring minds may be asking "What Might Those Vital Laws Be?"

That's a very good question that the Financial Times does not properly explain. RIA does explain its take Ukrainian Prime Minister Yatsenyuk Announces Resignation.
“If no new coalition is formed and the existing coalition in a parliamentary-presidential republic had collapsed, the government and the prime minister have to resign. I announce my resignation because of the coalition’s collapse,” he said.

Yatsenyuk also expressed disappointment with Ukrainian parliament’s decision to reject a bill that allows the government to hand over up to 49 percent of the country’s gas transport system to investors from the European Union and the United States.
Follow the Money Step by Step

  1. Prime minister Yatseniuk resigned
  2. This will lead to early elections in which pro-Russian members will be ousted from Parliament
  3. Parliament will pass a law selling 49% of Ukraine's gas and transportation systems to US and European investors.
  4. Ukraine needs the money to pay soldiers to fight an inane war.

Far be it from me to propose state ownership of energy pipelines. Yet, here's the vital question: Think Kiev is going to get full value, in the midst of a war, when it desperately needs money to pay unpaid soldiers?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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