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Another well played chess move by Putin. Russia’s increased energy prices in Ukraine and a demand to pay off their overdue energy invoices is being paid in part by the US taxpayer. The US has just guaranteed to cover $1 billion of the overdue costs to keep the energy flowing to Ukraine (and Europe). What will Russia use this money for? As outlined below, Russia has increased it military budget as the rest of the world is cutting back.
David DeGerolamo
Russia boosts military spending
For the first time in 10 years, Russia last year spent a bigger share of its overall economy on arms investments than the U.S. as it seeks to bolster its military capability, a Swedish arms watchdog said Monday.
The Stockholm International Peace Research Institute said Russia increased its military spending in 2013 by 4.8 percent to $87.8 billion, representing 4.1 percent of its gross domestic product. Meanwhile, global military spending fell by 1.9 percent in 2013 to $1.7 trillion, as many Western countries cut arms investments following the financial crisis.
US Pays Half Of Gazprom’s Overdue Invoice With $1 Billion Ukraine Loan Guarantee
With Ukraine no longer paying for Russian gaz, and with Gazprom making it clear Kiev has to:
a) first pay the overdue $2+ billion in invoice and then
b) prepay some $5 billion in gas until the end of the year of Europe gets it, it was only a matter of time before the US Treasury stepped in and paid off part or all of Gazprom’s demands.
That time is now, when moments ago Jack Lew announced a $1 billion loan guarantee for Ukraine – very much the same way that the US provided billions in loan guarantees for the now long overthrown Mursi regime in Egypt. And in other news, many more “costly” and “damaging” US sanctions are surely headed Russia’s way any second now.
From the Treasury:
Treasury Secretary Lew Announces Signing Of $1 Billion U.S. Loan Guarantee Agreement For Ukraine