A new entry has appeared on the Executive Board Calendar on the IMF’s official website: Reforming the Fund’s Policy on Non-Toleration of Arrears to Official Creditors. Discussion of that topic is planned for Dec. 8, 2015.

There’s a tricky question hiding behind this esoteric wording: will the International Monetary Fund continue to loan money to Ukraine, if that country does not repay its $3 billion debt to Russia by Dec. 20 and goes into full-fledged default?

Let’s get right to the heart of the problem. In late 2013 Russia granted Ukraine a $3 billion loan. In accordance with the loan agreement, Dec. 20 of this year is the deadline for the full and final repayment of that debt. With Washington’s encouragement, the Ukrainian government has stated that it will not repay the loan. Kiev has issued Moscow an ultimatum, demanding that the debt be restructured and granted the same terms under which Ukraine’s debt to its private creditors was restructured last summer (a 20% reduction in the principal). Moscow has refused to consider such an option: the Russian loan is considered an official debt, and thus the debtor has no right to demand it to be restructured. A refusal to repay sovereign debt owed to an official creditor means that the state has defaulted, and the IMF is not permitted to provide financial assistance to such a state.

For decades, the IMF has fine-tuned its rules for financing its member states, polishing those guidelines until they shine. However, that was all prior to last spring, when the US dragged the fund into the crooked games it was playing with Ukraine. Over the last year and a half, the fund has lost what remained of its former reputation, and on Dec. 8 it may end its life by committing suicide.

The shenanigans surrounding Ukraine’s debt to Russia have been going on a long time. Everyone has been waiting for the IMF’s final judgment regarding the status of Russia’s loan to Ukraine. In November the fund officially announced that the money Russia had issued to Ukraine was considered an official credit. IMF officials understood that the decision Washington wanted from them (labeling the loan as private, commercial debt) would spell suicide for the IMF. What is astounding is that after the IMF’s official declaration, Yatsenyuk once again issued Russia an ultimatum, demanding that Moscow take part in the restructuring efforts of Ukraine’s private creditors.

SNIP