Hudson claims the loan has had a dual purpose: (1) to temporarily prop up the collapsing Ukrainian hryvnia, allowing the country’s oligarchs to convert their holdings to euros and dollars before the currency plunged further and (2) to support the military buildup and assault against the Russian-speaking eastern regions. Little or nothing is slated to be directed towards reconstruction of the east’s shattered infrastructure and flattened homes, schools, hospitals, and factories.
The only conceivable way Ukraine will be able to repay the loan will be to sell off its gas reserves and farmland to Western interests, but Russia has a strong legal claim on the amount for gas arrears and future deliveries as winter nears. US and British politicians and policymakers are trying to devise ways to declare Ukraine’s prior obligations to Russia as “odious debt” but, as Hudson notes, the precedent could render vulnerable their own intergovernmental loans, typically extended for military or political purposes.
Hudson is a former Wall Street analyst who now teaches at the University of Missouri in St. Louis.
http://michael-hudson.com/2014/09/losing-credibility-the-imfs-new-cold-war-loan-to-ukraine/