Ukraine has threatened to issue a debt moratorium and cease making payments to creditors if terms favorable to the government are not reached by the end of June. This latest piece of news comes as the Ukrainian government continues debt restructuring negotiations with the International Monetary Fund, although with a deadline fixed at the end of this month the threat of a moratorium seems at best inopportune. While the IMF has insisted that will support the Ukrainian bailout even if Ukraine fails to pay its creditors, the latest announcement had infuriated creditors that have become increasingly frustrated by the Ukrainian government’s refusal to negotiate unless certain criteria were met.
Earlier yesterday, Kiev announced that it will be unable to meet the terms of the IMF bailout unless its creditors write off 40% of its debt. This claim has been disputed by a committee of creditors led by Franklin Templeton, who have decried the claim as inconsistent with the terms of the IMF’s bailout. Some analysts have been quick to discredit Kiev’s plea for a 40% haircut, labeling it a negotiating ploy and that Ukraine’s goal is to ultimately arrive at a 25% increase. The committee of creditors have thus far ruled out any write down of bond interest, although it is uncertain if it will retain this stance if Kiev agrees to compromise.
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- Iran has strengthened ties with the Afghan Taliban and is purportedly supplying the group with arms, according to quotes taken from a Taliban commander published in the Wall Street Journal. The strategy of backing the Taliban stems from Iran’s desire to curb US influence in the country and bolster the strength of the Afghan extremist group as a counterweight to increasing ISIL influence in the country.
- According to an article published by Sputnik News, more than 500 Uzbeks and 300 Kyrgyz have joined the extremist group ISIL in conflict zones in Iraq and Syria. A new study published by the US National Counterterrorism Center also indicates that Central Asia has become a recruiting priority for ISIL as it is one of the regions in which unemployment and corruption are the highest and salaries are the lowest.
- UN Secretary General Ban Ki-moon has urged Kyrgyzstan to launch a new investigation into clashes that killed hundreds approximately five years ago. The clashes of 2010 between ethnic Kyrgyz and Uzbeks in the southern cities of Osh and Jalalabad led to the destruction of thousands of homes, and the majority of those killed were Uzbeks, an ethnic minority in Kyrgyzstan. Ban has called for the implementation of policies that he feels the Kyrgyz government supports but has still not enacted.
- Pakistan and Tajikistan have agreed to hasten efforts to reach an agreement on the CASA-1000 power supply project long discussed by both countries. Tajik President Rahmon and Pakistani Prime Minister Sharif issued a joint statement indicating that a number of issues, including joint energy collaboration, remain a high priority for both of their nations and that they would work to “early completion” of the project. The Casa-1000 project, if completed, would allow for Tajikistan to export 1,000 megawatts of electricity to Pakistan.
- Private Russian oil company Lukoil announced that its profits are down 60% in Q1 2015. The drop is not unexpected and is consistent with those felt by Russian competitors Gazprom and Novatek, both of which have reported heavy losses.
- Gazprom has published plans to reroute all of its natural gas destined for Western markets around Ukraine by 2019. If, as expected, Ukraine continues to look westward and the conflict in eastern Ukraine persists, the countries’ relations have little chance of improving, making the search for alternatives incumbent upon both nations. Ukraine is already courting Western nations and international organizations, while Russia has sought alternative delivery routes through Turkey. Analysts have pointed out that the development of new pipeline infrastructure will be costly and EU nations have been lethargic and largely uninterested in alternative Russian natural gas routes.