Ukraine Stiffs China for Billions Owed


China paid Ukraine $3B two years ago for grain still not delivered, now demands refund. Another $3.6B that’s owed to China, will probably also default.

Eric Zuesse

Russia’s RIA Novosti News Agency reported, on January 17th, that China is demanding refund of $1.5 billion in cash and of an additional $1.5 billion in Chinese goods that were paid in advance by China (in 2013), for a 2012 Chinese order of grain from Ukraine, which goods still have not been supplied to China.

According to RIAN, “State Food and Grain Corporation of Ukraine (STATE FOOD) supplied grain in 2013, elsewhere, but not to China. The new Kiev authorities had an opportunity to fix the short-sighted actions ‘of the [previous] Yanukovych regime,’ and to present a positive economic image to the Chinese.” But it didn’t happen.

Furthermore: “Prior to the Presidency of Yanukovych [which started in 2010], China’s leadership had simply refused to do business with the pre-Yanukovych Administration’s Yulia Tymoshenko, and they planned to wait until Yanukovych became President. He then came, and since has been ousted, and yet still only $153 million of grain has been delivered.” (None of the $1.5B cash that China advanced to Ukraine to pay for growing and shipping grain has been returned to China, but only the $153M that had essentially been swapped: Chinese goods for Ukrainian grain.) This $153 million was approximately as much as the interest that would be due on China’s prepayment, and so Ukraine still owes China the full $3 billion ($1.5B in cash, + $1.5B that China supplied in goods).

The RIAN report goes on to quote Alex Luponosov, a Ukrainian authority on Ukraine’s banking system, who says, “Ukraine won’t be able to supply the grain to China, because we don’t have it.” The reason he gives is that “there is a big shortage of technicians: combiners, adjusters, mechanics, farm-machinery operators – all of them were taken by the army.” Those men are being required to fight in Ukraine’s ‘ATO’ or ‘Anti Terrorist Operation,’ that’s occurring in Ukraine’s former Donbass region (the far-eastern tip of Ukraine), the place where the residents don’t accept the new Ukrainian Government’s legitimacy, and they are therefore being called ‘Terrorists’ by this new Government, which is thus bombing them, supposedly in order to convince them that this new Government’s authority over them is legitimate (even though the residents there never participated in its selection, and have been cut off even from Ukraine’s social-security payments).

The Russian news report continues by quoting Luponosov again: “If the declaration of mobilization will take place in the planned figures, up to 100 thousand people in three stages, the sowing campaign cannot take place, either on the farms or at the grain traders.” As part of Ukraine’s military mobilization – the new phase of which which started on January 20 – military offices take first the rural male population of the country, and farm-production must therefore suffer.

Luponosov was quoted: “Now try to tell Parliament to amend the war-legislation so that these people won’t be taken from their villages. No one will deny the military. Parliament thus cannot do anything [to fulfill on Ukraine’s grain-contract with China].”

The RIAN report says that, “China is angry,” and it closes: “By the way, in addition to China’s $3B loan that’s to be repaid with grain [which cannot be supplied], Ukraine also received from China a $3.6 billion loan to pay for the gasification of coal, by Ukraine’s gas company, Naftogaz, which the Ukrainian Government has guaranteed up to 2.3 billion dollars. Information on the implementation of the coal-gasification project has not been made available, but there seems to be a high probability that this matter too will be decided in a court. If China decides to call in that loan, then the result will be the bankruptcy of either Naftogaz, or the Ukrainian Government.”

On January 9th, Ukraine’s Prime Minister, Arseniy Yatsenyuk, reassured the IMF, EU, and other investors of all funds that are being loaned to Ukraine, that Ukraine is doing everything possible to fulfill on its financial obligations to all investors:

“I would also like to note that the money that we get in the framework of international financial assistance, does not go to finance the state budget deficit, it does not go to the payment of pensions, it does not go to the payment of wages. All of this is happening in the first place, solely to perform our external obligations.” On 1 May 2014, the IMF (whose money comes from taxpayers in U.S. and the EU, not from the aristocrats whose investments the IMF protects and whom the IMF actually serves) had stated that Ukraine’s first obligation, without which the IMF would lend no more money, is to win the war against Donbass. Yatsenyuk, thus, is here reassuring the IMF, and other investors in Ukraine, that their money will not go to pay for anything but winning this war.

The IMF, and other lenders, require Ukraine to win this war, because, if the Ukrainian Government doesn’t win, then the natural gas and other assets that are in the ground in that region will not become available to be sold off by the Ukrainian Government in order to pay-off those investors; instead, the residents there (the people whom the Ukrainian Government is now trying to eliminate) will control those assets, as being assets of a separate state – one which has not borrowed from these investors. The IMF wants the assets that are in the ground, not the people who are living on it. That is why it demands victory (elimination of the people in Donbass) – or else Ukraine will promptly go bankrupt. (And, perhaps, so too will some of those investors.)


Investigative historian Eric Zuesse is the author, most recently, of They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

  • NormVan

    Another good article from Eric.
    Porky had this to say at Davos
    “The solution is very simple. Stop supplying weapons. Stop supplying
    ammunition. Withdraw the troops and close the border. A very simple
    peace plan,” Poroshenko said to a round of applause in Davos.

    What does he plan to do then.

    • He plans to bleed JUSA and EU dry supporting the usual schemes and projects that cover the graft and extortions… that’s what “they” do, ya kno.

  • Edward

    Ratsynyuk, pay your debts you welcher. Pay China and Russia both at the same time and then vacate. You are about to enter into a man’s game not your Nuland/Nudelman cookie handing match.

  • TheJokool .

    What an idiotic bunch…They sent their farmers off to die…What are you going to eat fools?

  • Alabama Mothman

    You just know that at one point these lunatics will get what’s coming to them. When Russia gets their hands on these people, lets just say that Putin wont be sending Christmas cards. They are all going to be hung.

    • One wishes…but PUTIN is a reasoning and peaceable man and will allow the people those ones have raped to do what they will to the perps
      They will BECOME perps when PUTIN chooses to make them so.
      But he wil not raise a hand against them. He is uber CLASSY GUY.

      • Eileen Kuch

        What Putin will be doing (and, he’s preparing it) is to cut off the gas to Ukraine and reroute it to Turkey, where the EU will need to build a pipeline to reroute it to its member states. He’ll simply leave it to the Ukrainian people themselves to overthrow the illegitimate regime in Kiev and hang the leading members ( Yatsenyuk, Porky, et al).

  • Ken

    Looks like Ukraine is doing the same job to themselves that Stalin did to them last century.

    • Ricsi

      Not Ukraine,its the jewish clique that now runs Ukraine-just like the old commie days.

  • Hollywood

    Good for Ukraine. Stiff those cheats dirty commie bastards.

  • Sam Nelson

    “The RIAN report goes on to quote Alex Luponosov, a Ukrainian authority
    on Ukraine’s banking system, who says, “Ukraine won’t be able to supply
    the grain to China, because we don’t have it.” The reason he gives is
    that “there is a big shortage of technicians: combiners, adjusters,
    mechanics, farm-machinery operators — all of them were taken by the
    army.” Those men are being required to fight”

    For whom are they fighting, why are they fighting; China, can’t get what’s owed it but you can bet some people are making big time money, from the “fighting.”

    I’d bet if the people could they would stop fighting, return to the fields and pay China off. What is keeping them on the war front? Why is all of this terror happening.

    Everyone who has a desire to read this article, to post a comment, everyone of us know exactly what the situation is and who is causing it. We know what and who they are that are pushing the governments to push the people to war; and, that’s a start.

    BLOOD MONEY, it seems is the big money, the best money, the most money, were it not so then the children would be in school, the workers would be in the factories and the farmers would be in the fields, farming. When will we have had enough?

  • Truman Golden

    china should go around the world grabbing every assets ukraine has.

  • Pete752

    ‘Ukraine Stiffs China for Billions Owed’

    I’m not so sure that’s a real good idea.