Tuesday, July 22, 2014

Ukraine is spending $130 million a month fighting rebels. -IBT

A rebel fighter standing on a tank. IBT/Reuters

Ukraine is spending $130 million a month fighting the insurgency. -IBT Despite international bailouts the high cost of the war is threatening the Ukrainian economy. The economy has shrunk by 5% and Ukraine is expecting GDP to drop by 6.5%

My Comment:
This obviously isn't sustainable for Ukraine. They were in horrible financial shape before the revolution and civil war, now they are in especially dire straits. What they need is cash and lots of it. But who is going to give it to them? The EU has their own financial problems and I doubt the United States population would approve of a bailout. 

Putin knows this and I think this, along with my previous post about how natural gas will pressure Ukraine even further, goes a long way in explaining his sudden out of character conciliatory approach. He's playing the long game and he knows that all he needs to do is wait. His position grows stronger as Ukraine goes further and further into debt. 

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