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Different treatment of debtors

Going easy on the Right while bashing the Left

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According to an article in the weekend’s Financial Times (30/31 May 2015); Ukraine rejects deal to restructure $23 billion debt, the government in Kiev has rejected a deal put forward by international creditors to restructure its national debt. According to the FT, someone close to the talks reported that the restructuring would have involved bundling Ukraine's outstanding international debt to bonds and extending the repayment date to 10 years.

However, a formal call on Friday 29 May failed to find agreement between the Ukrainian government and its creditors. Relations between both sides have soured over the last months with Kiev recently passing a law to allow it to call a moratorium on sovereign bond payments. The disagreement hinges on a demand from the Ukrainian government for a debt write-down based on the fact that its economy is devastated as result of war in the country’s eastern region.

In contrast to the situation in Greece, the Ukrainian government is clearly receiving very sympathetic treatment from the world's most powerful countries. Indeed the Group of Seven (G7) finance ministers meeting in Dresden on Friday, 29 May backed efforts to support Ukrainian in its negotiations to restructure debt. Unlike his tough stance in relation to the government in Athens; Germany's finance minister Wolfgang Shauble said, 'We agreed we must try to support the negotiation of the restructuring of Ukraine's debt, which must be brought to a successful conclusion’.

It would appear obvious that the group of seven finance ministers, including Germany's right-wing Minster Shauble have a lot more sympathy for the semi-fascist regime in Ukraine than for the left leaning Syriza government in Athens. 

Are we surprised?

Tommy McKearney 3 June 2015

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