----- Original Message ----- The new Ukrainian government announced today that household gas prices would rise by 50 per cent from May 1, a condition being imposed by the IMF in exchange for a $15bn emergency loan. “At least it will be the end of the heating season, so less politically disruptive – and many Ukrainians would argue that this is a price to pay for freedom”, Tim Ash, emerging markets strategist at Standard Bank, told the Financial Times (below).
Meanwhile, today's Wall Street Journal reports that Western solidarity with the Ukraine only goes so far. One idea which has been recently been circulating in Western policymaking circles is that the Ukrainian government should invoke the doctrine of "odious debt" and default on the recent $3bn loan extended to the previous Yanukovych government by the Russians. The Russians provided the loan to dissuade Yanukovych from signing an EU association agreement, subsequently signed by the Yatsenyuk government. Since the Russian bond was registered in accordance with English law, the UK government could make collection of the debt unenforceable in English courts. However, it's considered highly unlikely that the Cameron government will agree to go down this road. After all, the overriding principle is the sanctity of debt. "It could give the impression that the Brits are fickle about debts", the WSJ reports. “It would be quite a big step for the British government to try and say it becomes unlawful to pay back this bond", a British corporate lawyer told the Journal. Yes, quite.
There are still a lot of people in Eastern Europe who think that joining the EU means being magically transformed into Germany overnight.
When I used to visit Romania, people would tell me that if they could only get to the U.S., they would be given a car, a house, and a job. Nothing I could say would sway them. I have a new friend from Romania who tells me this sort of nonsense is still going on.
So. I guess now Ukraine will find out what it means to be free.