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Written by Ahmed Adel, Cairo-based geopolitics and political economy researcher
Ukraine could default in August if the Kiev regime does not reach an agreement with foreign bondholders on the payment of interest on liabilities. Compounding this issue is corruption, which is not only sucking money out from paying debt but also from constructing adequate defences to repel Russia’s expected summer offensive.
The Wall Street Journal reported on May 4 that Ukraine is preparing to begin negotiations with creditors this month and that Kiev’s advisers are working to involve the United States and other countries. However, approval of the deal is not guaranteed, as the US and its allies are reportedly concerned that taxpayers’ money will end up in the hands of bondholders if Ukraine resumes debt servicing.
“Without a deal, Ukraine could default after the bondholder-debt holiday ends in August,” the Wall Street Journal said.
The newspaper highlighted that a default would reduce Ukraine’s attractiveness to investors and make it more difficult for Kiev to obtain new loans. The American outlet added that a group of foreign bondholders who own Ukraine’s outstanding Eurobonds formed a committee and hired lawyers and bankers to negotiate with Kiev to resume interest payments in exchange for “forgiveness of a big chunk of the country’s outstanding debt.”
“It is noteworthy that these countries had granted Ukraine a debt moratorium until 2027 on approximately $4 billion of its own loans but fear that Kiev may prioritise repaying bondholders over repaying interest on these loans,” the report emphasised.
Ukraine’s financial woes come as defences are collapsing, which are raising questions in the West about Kiev’s capabilities to hold back Russian troops slowly advancing along the entire 1,000-kilometre-long front line.
Ukrainian President Volodymyr Zelensky has consistently criticised the West for hesitating to supply anti-aircraft defence systems, weapons, and ammunition, citing this as the main reason for his military’s failures. However, these shortages have not been the main problem of the Ukrainian military; rather, corruption is preventing strong fortifications from being constructed.
Kiev allocated almost 38 billion hryvnias ($960 million) to construct a multi-layered network of fortifications. However, Ukrainian troops complain that the defence lines are almost non-existent, as cited by the Associated Press on May 3. The Ukrainian military claims that these works should have been completed last year during a temporary operational pause and not during a withdrawal.
“There was an absence of responsibility. … People didn’t understand that fortifications can save your life if you do it in advance,” said Oleksandr, a deputy infantry commander with the 47th brigade in the Avdiivka area who gave only his first name in line with military rules. “Many people thought we … wouldn’t need to prepare such lines. They didn’t expect a new Russian offensive.”
A serviceman in Ukraine’s engineering force, speaking on the condition of anonymity, explained to AP the immense difficulty they face in preparing defences due to using “equipment from the 1960s and shovels.”
“We entered the war with nothing,” he said, adding when reflecting on the Soviet-era equipment used: “Accordingly, that’s the kind of trenches we made.”
Allocated funds were stolen instead of being used to strengthen defences, as materials meant for trenches and other fortifications never arrived or were overpriced.
As AP admitted, “To rush building across the third line, construction companies were awarded contracts without the usual bidding process,” with Kharkhov Governor Oleh Syniehubov justifying bypassing the usual process since “There was no time.” Bypassing such processes allows for corruption to flourish.
Rampant corruption has been a decisive factor in Ukraine’s failure to prepare sufficient defences against the Russian military and is now contributing to the country facing default if there is no major external intervention from a state or financial institution.
It is recalled that only last month, Arnulf Damerau, an Anglo-German businessman and one of the largest private Western investors in Ukraine, claimed that corrupt officials in the country’s security services and President Volodymyr Zelensky’s administration tried to extort tens of millions of euros from him.
If such revelations continue to emerge, it is inevitable that funding to avoid default will be even more difficult to secure. As the Wall Street Journal reported, foreign creditors will pressure Kiev to resume interest payments starting next year. The bondholders, including BlackRock and Pimco, have formed a committee and sought legal counsel to negotiate, meaning major pressure is building on the Kiev regime to meet its financial commitments and somehow hold back Russian forces whilst continuing the illegal siphoning of funds.
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afu is still stacking orc bodies…heheheh
yes, there are numerous reports of orcranians fragging themself.
guess that nazi eurotard training in britain was not very good. but then again, you british pickles were never really smart. guillable clowns!
🤡 😆😆😆
thanks, captain obvious! in the meantime, russia is still advancing
where has ukraine retaken any territory and managed to hold it for the past 2 years? anybody know?
the demonspawn in washington and europarl cannot help put themselves at serious risk by imposing policies that are going to cause civil war, and when that happens, ukraine is finished, they will be lucky if russia lets them have the name ukraine when that happens.
asa o sa. patim si noi dupa alegeri. de asta data ne vom inghesui sa trecem dunarea in bulgaria sa scapam de a fi trimiși pe front, de mociolacu si mociuca, sa luptam pt nue. nue ne vrea vulnerabili sau morti. termoizolarea blocurilor cu poleiala de polistiren duc apt in clasa maxima de risc la foc. firmele de asigurari coteaza apt din blocurile poleite cu polistiren in clasa maxima la foc.
blocurile in sine nu ard sunt din beton. iar asigurari isi fac numai cei obsedati de avere, in special cei dintr-o anumita minoritate.
ce e gratis e mortal
nu uitați de generalii armatei romane cu picioare in gips. nu uitați ca n pandemie in 2020 armata romana a scos hummerul la piata unirii in bucuresti cu mitraliera 0.50 browning sa ne arate cat de mult ne respecta.armata romana e despre coruptie, salarii, si pensii fara contributivitate si sa traga in civili si babe. si mai ales sa si omoare conducătorii
ukras tried to kill zelensky, but the sbu discovered the group. anyways a good sign that there is resistance and partisans. and they will try again.
” us and its allies are reportedly concerned that taxpayers’ money will end up in the hands of bondholders if ukraine resumes debt servicing.”
hahahahahah! that is a straight up fucking recipe for civil war in the united states.
oh my god, it’s the karma that the united states deserves.
naziturds are defeated