Will Western Europe finally declare WAR . . . on Ukraine?

Will Western Europe finally declare WAR    . . .    on Ukraine?

by John-Henry Hill, M.D.

August 15, 2014

I think the latest decision on Thursday, August 14, 2014 by Ukraine Prime Minister Arseniy Yatsenyuk, Victoria Nuland’s (of the U.S. State Department) personal choice for the post-coup Prime Minister, may very well lead to a WAR against Ukraine    —-   by the western EUROPEAN nations!!!

All the nations with the European Union (EU), including France and Germany, have faltering or stagnant economies. Italy is technically in another recession and some EU leaders stated today that the ONLY way Italy will ever recover economically is to withdraw from the Euro and re-establish the Lira as its currency. (Of course, many armchair economists have been saying this for several years now – but what do WE know?)

However, on Thursday, August 14, 2014 at the insistence of Prime Minister Arseny Yatseniuk, the Ukrainian parliament approved a law to unilaterally impose sanctions on Russian companies and individuals “for financing terrorism.” (Reuters.com) – also reported by Bloomberg.com and ZeroHedge.com

As Reuters reported, “The first ‘threat’ though – that European energy companies would have to agree major contract revisions when purchasing Russian natural gas, potentially disrupting supplies in the coming winter months – seems suicidal… and EU leaders are not happy.”

Under this newly passed legislation passed by the Ukraine Parliament, European energy companies will have to agree major contract revisions when purchasing Russian natural gas under the new sanctions imposed on Gazprom, Russia’s major natural gas company.

RUSSIAN_NATURAL_GAS_PIPELINES_into_EUROPE___MAP_1

Russia is Europe’s biggest gas supplier, meeting almost a third of the region’s demand, around half of which flows to European clients via Ukraine. Obviously, European utility companies are worried that Ukrainian sanctions could disrupt supplies not only during the coming winter, but at any time, since such a cut-off of natural gas would cripple their industries.

Bloomberg also reported, European leaders are not happy at Ukraine…

Sanctions imposed by European Union and Russia against one another “senseless on both sides,” “will lead to a weaker EU,” Slovak Premier Robert Fico tells reporters in Bratislava.

Slovak Premier Robert Fico asked rhetorically, Isn’t it strange that a country, which has signed an association agreement, a country, which we are all trying to help, is taking steps that jeopardize the interests of individual EU members?

“We don’t want be held hostage by the Russian-Ukrainian conflict, we can’t sacrifice our interests in the name of some duel”

RUSSIAN_NATURAL_GAS_PIPELINES_into_UKRAINE___MAP_1

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Three (3) days ago on August 12, 2014 I wrote the following (published on another web site):

Russia (that is, Gazprom) has officially halted all transfers of Russian natural gas to Ukraine, but the natural gas flow to western European countries remains uninterrupted via pipelines traveling through Ukraine. HOWEVER, since most of the pipelines to the rest of Europe travel through Ukraine, it is easy enough for the Kiev government to siphon off whatever amounts it wishes. The amount owed by Kiev to Russia now far exceeds $4.5 billion USD. The current cost to Ukraine is about $1.2 billion USD when the gas is actually flowing.

Britain doesn’t much care, as it has the northern pipeline running directly from Russia to Britain.

The Southstream pipeline currently under construction will by-pass Ukraine completely. Its route from Russia, across the Black Sea, then into Bulgaria, then Serbia, along with additional pipelines extending into Hungary, Baumgartenin Austria – right on the border with Slovakia, Bosnia-Herzegovina, CroatiaSlovenia and even into Tarvisio in Italy will supply all of these nations with an uninterrupted supply of natural gas.

RUSSIAs__SOUTH_STREAM__Gas_Pipeline__RUSSIA_to_EUROPE______MAP

THAT is why the Kiev government, the EU Commission and the U.S. government have “persuaded” Bulgaria to suspend construction of the Southstream pipeline in Bulgaria. Obviously, completion of this pipeline would eliminate Kiev’s ability to “blackmail” the western European countries via threats of cutting off their natural gas supplies. Further, since these nations now PAY the Kiev government a “transit fee” on all gas flowing through Ukraine, the cost of gas via the Southstream pipeline to these nations would decrease. And Kiev would lose billions of U.S. dollars each year in such “transit fees”. Of course, U.S. production of oil and natural gas currently exceed that of Russia, but the U.S. currently lacks the facilities to liquefy this natural gas for shipment to Europe; and building of such facilities would admittedly require several years and a great deal of money, resulting in vastly increased prices in Europe for this natural gas.

RUSSIAs__SOUTH_STREAM__Gas_Pipeline__EUROPE_Section_Only____MAP

Should the U.S. government succeed in stopping the Southstream pipeline AND in controlling the gas pipelines within Ukraine (via political means or actual ownership by “privatization”, as mandated by the IMF re: its recent $17 billion loan to Kiev), the U.S. would not only significantly hurt the Russian economy, but gain control of all the economies of western Europe!

The old adage, “Never discount your enemy.” applies here. The U.S. policy may seem haphazard and actually quite INSANE, but if it succeeds the U.S. government and international bankers will have significantly degraded Russia’s economic influence AND gained significant political and economic advantage over all of the western European nations. NOT so dumb after all !!!

I think that the nations of Europe will soon realize that the U.S. government’s policy, as put forth by Yatsenyuk’s latest legislation, will KILL OFF western Europe economically. It is in the self-interest of all nations of western Europe to:

1.) end these sanctions against Russia,

2.) support the completion of Russia’s Southstream natural gas pipeline and,

3.) if necessary, remove Yatsenyuk and his allies from power in Kiev.

 

A second issue of importance is that the Kiev government is BROKE, that is, totally BANKRUPT. The Kiev government desperately needs U.S. dollars to pay the interest of its debts and to conduct external trade.

In 2006 the exchange rate was 5 UAH (Hryvnia pronounced “Greev-va”) per 1 USD. By 2009 it was about 7 per USD. Since the Kiev coup of February 2014, the value of the UAH has steadily declined. Today (August 12, 2014) the official exchange rate is 13.5 UAH per USD -and it the UAH has been declining in value virtually every day for the past week.

Crash_of_UKRAINE_CURRENCY_UAH__August_12_2014

Personally, it is no loss for my wife and me, since out bank account in Ukraine is based in U.S. dollars and after every wire transfer into that bank account, we immediately withdraw it all as U.S. dollars. (Further, we have homes and assets safely hidden in Crimea, Scotland and Switzerland.) Ukraine banks have a rather unique system: Accounts in different currencies within the SAME bank require separate bank accounts. By law, withdrawal from accounts denominated in U.S. dollars must be paid in U.S. dollars. There is NO mixing of currencies with any one bank account. If one withdraws funds as USD, Euro, Roubles, etc. one must then go to a different teller within that bank for the actual exchange from the foreign currency in the Ukrainian UAH. Indeed, the devaluation of the UAH has actually LOWERED our everyday costs in terms of USD.

However, for the past several months Kiev has placed “currency controls” on all banks in Ukraine. For example, maximum daily withdrawal limits on USD have reneged from $500 to $1200, with the current maximum of $1,000 USD per day. However, one must give the bank branch at least one’s day advance notice, so they will have your withdrawal on hand. The last time I did a wire transfer, transfers of more than $20,000 USD from an American bank into a Ukraine bank resulted in a maximum of $17,000 USD into my “USD account”‘ I had to accept the rest as Ukrainian UAH. We now limits wire transfers to $5,000 USD and withdraw it as USD immediately thereafter.

A site I have never seen prior to 2014 occurs daily in Ukraine. Due to Odessa being a huge tourist destination, some locals are paid in U.S. dollars, Euros, etc. They are the lucky ones. For those paid in Ukrainian UAH there has been a rush to the banks every day to exchange UAH for just about ANY foreign currency, especially USD and Euros. HOWEVER, the banks have set two types of limits on currency conversions from UAH into foreign currencies: first, a maximum limit exists on the amount per PERSON of USD that can be converted FROM UAH – varying from about $100-$200 per day per person. Second, each BANK BRANCH has a daily limit on the amount of USD it will hand out in exchange for Ukrainian UAH. I have no idea what this limit is, but once the limit in USD for that bank branch is reached, no more exchanges of UAH for USD occur. Those who had been waiting in the long lines must simply come back another day.

This situation has been “Hell” for the ordinary Ukrainian citizen, as he watches his real purchasing power decrease with each passing day – and as prices continue to rise.

That is the end of my comments posted three (3) days ago on August 12, 2014

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In summary, if these insane policies (presumably approved by the U.S. government) enacted by the current Ukraine regime in Kiev are allowed to take effect, then in the interests of self-preservation, certainly the western European nations will be forced to stop the Kiev government OR the people of Ukraine will once again rise up and overthrow the Kiev regime.

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