Note: An unexpected event this morning left me with no time to write, so this is the green door post from yesterday to fill the void. Assuming nothing else goes wrong today, I should be back tomorrow.
As January 20th grows closer, the Europeans are growing more hysterical about what Trump may do with Project Ukraine. There were rumors before the holidays that Keir Starmer was set to visit Mar-a-Lago to talk with Trump about Ukraine. Starmer had a call with Trump which must not have gone well, as the British media came out with stories about Trump rambling during the call.
It is hard to know what Trump is thinking with regards to Ukraine, which is why the Europeans are in a panic. If they knew what he is planning, they would be busy undermining it, which is why Trump is not talking about his plans. His personal emissary on Ukraine and Russia, Keith Kellogg, has cancelled his plants to visit Kiev and European capitals, which only adds to the intrigue.
The big fear in Europe is that Trump will do a deal with Putin and cut the Europeans out of the process. One would think that any deal that leads to peace would be welcome, but the Euros have more skin in the game than most realize. They either need the war to continue, or they need it to end in a way that does not expose the financial corruption around the entire project.
One good example for why the Euros are in this predicament is a town called Shevchenko, which is in eastern Ukraine. The Russians have just captured it as part of the steady push west. This little village would not matter, if not for the fact that it has one of the largest lithium mines in the world. It is part of what may be the world’s biggest lithium deposit.
While lithium is enormously important, that is not why this matters. You see, this mine is not actually owned by Ukraine. The rights to exploit it were traded away to an English company that was planning to use an Australian company to mine it. How this came to be is not all that clear but given the way the world works it surely required underwriting, which means British bankers were involved.
Now west of this town are other towns with massive lithium deposits, which have been pledged as collateral for various things, including the war. It is the thing that never makes it into the media. A significant portion of the financing for this war is tied to Ukrainian assets, which serve as collateral. They also buy the support of economic elites for this project. Project Ukraine is important business.
The reason the Russians captured this town is they are slowly encircling a city called Pokrovsk, which has been a major supply hub for the Ukraine army. The Russians are trying to split the front so they can break up the Ukraine army. This lets them destroy it piece by piece, limiting Ukraine’s ability to shift reserves where needed. This town with the big lithium mine is near the city of Pokrovsk.
This is a huge problem for Ukraine, but it is an even bigger problem for the EU, because Pokrovsk is vital to the coal and steel industry of Ukraine. You see, project Ukraine was supposed to bring the Ukraine steel industry into the EU economic zone, but now it looks like it will become part of Russia. The many investors in Ukrainian industry are not going to happy if Trump signs this land away to Russia.
This is the reason they put a gun to Speaker Johnson’s head last year to get the $60 billion Ukraine bill passed. Much of that money was to make whole those who had invested in project Ukraine. The arms dealers had “lent” the Biden admin weapons to send to Ukraine and they needed to be paid. The same is true for players like Blackrock that invested in Ukrainian agriculture.
Based on the hysteria in Europe, it does not appear as if the political class there has a similar way to solve their problem. If Trump makes a deal with Russia, all those companies and banks that invested in the project will be left with nothing but worthless Ukrainian bonds. It is why the European political class is desperate to be included in the negotiations. They think they can claw back some of the money.
Then there are the Russian frozen assets. Most of these are held in European banks and the Euroclear Bank. Any deal the Russians make with Trump to end the Ukraine war will include those assets. Otherwise, the Russians will confiscate American assets currently in Russia and Trump will not agree to it. In fact, walking bank sanctions and unfreezing assets may be the prerequisites for negotiations.
What if those assets are not available? The Europeans have been issuing bonds against the profits from those assets, but what if they have been using the assets themselves for other things? Even if the principle is intact, the investors expect to get paid, so if the assets are gone, then the profits are gone as well. Billions rest on those assets not being unfrozen anytime soon.
In a way, project Ukraine is coming full circle. In Trump’s first term, official Washington freaked out when Trump sent Giuliani to Ukraine. What followed was the first Trump impeachment as a massive smokescreen to hide what was happening. Five years later and the Europeans are in the same bind, but they cannot stage a phony scandal and impeachment to buy time and conceal the crime.
This is probably why the Europeans are going crazy over Musk. They think they can escalate their feud with Trump to the point where he either backs off and agrees to consult with them on Ukraine or maybe they can pin the blame on Trump for whatever happens to Ukraine in the coming year. It is not a great plan, but when you owe money and have no way to pay, you will try anything.
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