IMF deal & Xi exits Moscow

A first for the IMF - lending into a war situation - as it announces a new $15.6bn long term loan deal for Ukraine.

But the Fund came under huge pressure from Western shareholders to pull its fingers out. I have heard much criticism of IMF foot dragging - but the deal is over the line which is a major win for Ukraine.

https://www.ft.com/content/137479f8-c748-4953-9efa-affba553695a

Interesting to see the programme broke into two time stints: 12-18 months, then the next four years. Guess under the first the Fund gives time for the war to end - it also takes Ukraine to the period to the end of the current debt service moratorium which ends in August 2024. There has been talk of further debt treatment before then but I cannot see bondholders engaging until much closer to the end of the moratorium. They already gave two years debt relief and will likely just say, “we are happy to wait. Let’s talk further when we know more about the length of the conflict/wars end.”

On the peace lots of focus on the Xi-Putin summit in Moscow. But little substantive on the Chinese peace plan and whether Xi is taking it forward.

So far some conclusions from the summit which seemed more of a PR stunt by China.

Xi went to Moscow to signal to the West that Putin is still his man, albeit the Xi - Mishushtin meeting also suggested that China has the latter as Plan B.

But in exchange for Xi affirming his support for Putin, China ripped Putin’s face off in terms of various economic deals. That would have hurt/humiliated Putin but needs must - he is desperate. If Putin survives he will remember that. But there is much to suggest that Putin and Xi don’t get on on a personal level. Two are rivals albeit one cut down to size by his idiotic invasion of Ukraine.

Nothing in terms of military support for Putin from China - which will have encouraged the West.

I also think Xi would have given Putin some guardrails or red lines for his conduct of the conflict - don’t do anything to rock global markets, like the use of WMD or using commodity prices as leverage with the West, as that hurts China. That economic support is probably the bribe therein to behave in terms of escalation to global markets.

And the peace plan - guess China laid it out to Putin and the Global South, but it’s now up to Putin to get on with it.

So in summary, no arms for Russia but economic backstopping (but to the advantage of China), red lines set to limit global impact of conflict, Putin is China’s man still but it also likes Mishushtin (Russian elites take note - and the Wagner guy and Kadyrov will not be supported by China) and the peace plan is there as the off-ramp (we prefer you to take it but it’s your call). Putin just comes out as mega weak and Xi’s little Shetland pony from all this.