Ukraine moves off dollar peg as currency falls through the floor ......Ukraine trying to force hands of US , EU , IMF for an immediate bailout ? Smart Ukrainians taking money out of their banks as the risk of stringent capital controls and bail-ins is rising sharply !
Submitted by Tyler Durden on 02/26/2014 19:34 -0500
Submitted by Tyler Durden on 02/26/2014 15:58 -0500
Submitted by Tyler Durden on 02/26/2014 13:36 -0500
Submitted by Tyler Durden on 02/26/2014 10:59 -0500
Submitted by Tyler Durden on 02/26/2014 08:17 -0500
Submitted by Tyler Durden on 02/26/2014 07:25 -0500
http://rt.com/news/kiev-clashes-rioters-police-571/
Turchinov was light on the details, but said the discussion included “punishing people guilty of this.” In the Russian-speaking Crimea, where a strong majority backed the ousted President Yanukovych, there is growing support for secession and a possible return to being part of Russia, as they historically were.
Initially promising a deal by today, the “deadline” has been pushed back to Thursday as the opposition parties which are supposed to form the new government battle over key issues.
Russia Responds To US Warning: Expands Military Presence Globally
Shortly after the US warned Russia over its "provocative actions" with regard Ukraine...
- *KERRY: RUSSIA MILITARY MOVE ON UKRAINE WOULD BE GRAVE MISTAKE
RiaNovosti reports defense minister Sergei Shoigu saying Russia plans "to expand permanent military presence outside its borders by placing military bases in a number of foreign countries,"including Vietnam, Cuba, Venezuela, Nicaragua, the Seychelles, and Singapore. "The talks are under way, and we are close to signing the relevant documents," Shoigu told reporters in Moscow.
Russia is planning to expand its permanent military presence outside its borders by placing military bases in a number of foreign countries, Defense Minister Sergei Shoigu said Wednesday.Shoigu said the list includes Vietnam, Cuba, Venezuela, Nicaragua, the Seychelles, Singapore and several other countries.“The talks are under way, and we are close to signing the relevant documents,” Shoigu told reporters in Moscow.The minister added that the negotiations cover not only military bases but also visits to ports in such countries on favorable conditions as well as the opening of refueling sites for Russian strategic bombers on patrol.Moscow currently has only one naval base outside the former Soviet Union – in Tartus, Syria, but the fate of this naval facility is uncertain because of the ongoing civil war in that country.Post-Soviet Russia closed a large naval base in Vietnam and a radar base in Cuba in 2002 due to financial constraints.However, Russia has started reviving its navy and strategic aviation since mid-2000s, seeing them as a tool to project the Russian image abroad and to protect its national interests around the globe.Now, Moscow needs to place such military assets in strategically important regions of the world to make them work effectively toward the goal of expanding Russia’s global influence.
Kerry Promises Ukraine $1 Billion Bailout (Detroit, Not So Much)
Having threatened Russia that "any military move would be a grave mistake" and sounding awefully like a "line" to be crossed, US Secretary of State John Kerry told reporters that the US is ready to bail out Ukraine...
- *KERRY: RUSSIA MILITARY MOVE ON UKRAINE WOULD BE GRAVE MISTAKE
- *KERRY SAYS U.S. PLANNING $1 BLN LOAN GUARANTEE FOR UKRAINE
- *KERRY SAYS U.S. WORKING WITH IMF, OTHERS ON AID TO UKRAINE
One has to wonder how many US jobs this will create (or save)? Or will Ukraine offer unlimited vodka to citizens of Detroit (or Puerto Rico for that matter)?
As Reuters headlines show:
- U.S. CONSIDERING UNSPECIFIED BUDGET SUPPORT FOR UKRAINE ON TOP OF POSSIBLE $1 BILLION LOAN GUARANTEE - KERRY
- KERRY SAYS POSSIBLE MILITARY INTERVENTION BY RUSSIA IN UKRAINE WOULD BE A COSTLY DECISION, GIVES NO DETAILS
Via AP,
Secretary of State John Kerry says the United States is planning to provide Ukraine with $1 billion in loan guarantees and will consider additional direct assistance to the former Soviet republic.Speaking to reporters at the State Department on Wednesday, Kerry said it was "urgent to move forward" in assisting Ukraine following the ouster of its Russian-backed president. But he said it was also urgent for Ukraine's interim authorities to enact reforms, curb corruption, and prepare free and fair elections.The U.S. aid would be part of a planned massive international assistance package that was expected to include European contributions as well as loans from global financial institutions.
US Warns Russia Over "Provocative" Actions In Ukraine
As today's actions by Russia have raised concerns and stirred flight-to-safety flows in the markets, The White House has decided to add its $0.02 worth:
- *OBAMA AIDE EARNEST URGES 'OUTSIDE ACTORS' TO RESPECT UKRAINE TERRITORY
- *EARNEST SAYS RUSSIA SHOULD AVOID `PROVOCATIVE' ACTIONS
- *U.S. WARNS RUSSIA TO RESPECT UKRAINE SOVEREIGNTY
Or else...? On the bright side, he did not say anything about crossed lines of color.
The White House is urging "outside actors" to respect Ukraine's sovereignty, as neighboring Russia prepares for massive military exercises.White House spokesman Josh Earnest said the U.S. is aware of Russia's plans to launch the military maneuvers. While Russian officials said the exercises were unrelated to the tensions in Ukraine, these exercise will take place near the shared border between the countries.Without specifically mentioning Russia, Earnest also called on others in the region to end "provocative rhetoric and actions."Russia has questioned the legitimacy of Ukraine's acting government, which took charge after pro-Russian President Viktor Yanukovych fled after signing an agreement aimed at ending his country's three-month political crisis.
NATO Responds To Russian Military Drill, Backs "Inviolability" Of Ukraine Frontiers
Shortly after today's surprising announcement by Russia that it would conduct broad military drills in Central and Western Russia, which would include 150,000 troops, we posted a rhetorical question: How will NATO respond?
Ukraine Currency Crashes To Record Low; Abandons Dollar Peg
Following yesterday's admission by the new head of Ukraine's central bank of the considerable bank runs in recent days and the rapid dwindling of central bank reserves, Sergiy Kruglik - the director of international affairs for the bank - announced this morning that Ukraine has abandoned the dollar peg and will adopt a flexible exchange rate. The Hyrvnia collapsed through 10.00 on the news and is now trading 10.40 at record lows against the USD.
As The Economist notes, on February 7th the National Bank of Ukraine (NBU, the central bank) finally devalued the official rate of the hryvnya, to HRN8.7:US$1.
The policy was then to set the peg to the dollar roughly in line with trading on the interbank exchange. At the same time, the authorities introduced more foreign-exchange controls.
This has now changed and the currency is in free-fall. One cannot but think this is a desperate attempt to force the hands of a bailer-out to move before total chaos ensues (and of course, as the UAH plummets so import costs of energy will soar).
Charts: Bloomberg
Putin Launches Military Drill In Western, Central Russia; Ruble Drops To Lowest Since 2009
Lest it be confused that Russia has somehow forgotten about the Ukraine coup, and that it no longer concerns the bread basket (and key gas pipeline hub) of Europe a core strategic resource, moments ago Russian wire services blasted the following diplomatic summary of Russian bullish grace in a china store:
- PUTIN ORDERS URGENT COMPREHENSIVE CHECKS OF TROOPS' COMBAT READINESS IN WESTERN AND CENTRAL MILITARY DISTRICTS, AND OF AEROSPACE, AIRBORNE TROOPS, LONG-RANGE AND MILITARY TRANSPORT AVIATION - SHOIGU
Bloomberg adds the following:
- President Vladimir Putin issued orders to conduct immediate check of combat-readiness of central, western military districts, test of air defense, airborne troops, aviation, Interfax reports, citing Russian Defense Minister Sergei Shoigu.
- Test began at 2pm local time today: IFX
- Exercise to be conducted Feb. 26-March 3 in 2 stages
- Commander-in-chief ordered test of military capability to react to “crisis situations, posing a danger to the country’s military security,” Shoigu is cited as saying
- Second test phase will include tactical exercises involving Northern, Baltic Fleets
In short, not only has the Russian bear woken from hibernation but is rather angry. Incidentally, Russia's ever-louder war footing rumblings have not been lost on investors who sent the USD/RUB to the highest level since March 2009, just north of 36.
As for the Ukraine Hryvnia, don't ask.
And now back to watching your regularly scheduled S&P500 all time high melt up. Because there is nothing at all concerning in the world.
http://rt.com/news/kiev-clashes-rioters-police-571/
Wednesday, February 26
10:47 GMT:
Crimean Tatars and supporters of pro-Russian organizations are trying to approach the building of the peninsula’s parliament. All in all, there are up to 5,000 Tatars and 700 pro-Russian demonstrators gathered at the scene.
10:36 GMT:
An ex-MP, pro-Russian politician Igor Markov, has been released from detention by a southwestern Odessa court.
“It’s one of the hardest episodes in our history, and it all ended very well,” Markov said.
“The words of condolences – to the families of all those who died, and on both sides of the fence,” he added.
“It’s one of the hardest episodes in our history, and it all ended very well,” Markov said.
“The words of condolences – to the families of all those who died, and on both sides of the fence,” he added.
08:41 GMT:
Russian Foreign Minister Sergey Lavrov has urged a major European watchdog, the Organization for Security and Cooperation in Europe, to “decisively condemn” the increase in "nationalist and neo-fascist" sentiments in western Ukraine. Also, Lavrov stressed that the OSCE should condemn the attempts to ban the Russian language in Ukraine.
08:40 GMT:
The special riot police force known as ‘Berkut’ has been invited to join the ranks of the law enforcement officials in the city of Sevastopol, located on the Crimean Peninsula. It comes shortly after the force was disbanded by the interim government of Kiev, following the bloody clashes in the capital.
“These people have done their duty with dignity, have shown to be true men, and now are being thrown to the gang of nationalists by their own ex-bosses,” the head of Sevastopol City administration Aleksey Chaly said, as quoted by the local ForPost media outlet.
“These people have done their duty with dignity, have shown to be true men, and now are being thrown to the gang of nationalists by their own ex-bosses,” the head of Sevastopol City administration Aleksey Chaly said, as quoted by the local ForPost media outlet.
08:40 GMT:
Ukraine’s acting President Alexander Turchinov has assumed the duties of the head of the country’s armed forces, according to the presidential website.
00:40 GMT:
New Speaker of the Ukrainian Parliament Aleksandr Turchinov says that MPs have until Thursday to form a coalition majority and a government of national trust, RIA reports.
The composition of the new Ukrainian government will be announced and approved on Maidan Square on Wednesday, according to the Batkivshchina party.
00:13 GMT:
The Russian flag has been taken down in the Crimean city of Simferopol after being briefly erected by the protesters over the city’s administration building, UNN reports. Yet protesters continue to call for a referendum on the status of Crimea and say the seizure of power in Kiev was illegal.
Protesters are demanding the restoration of the constitution of Crimea of 1992, according to which the region would have its own president and foreign policy. An extraordinary session of the Crimean parliament is scheduled for Wednesday.
Tuesday, February 25
23:35 GMT:
Ukraine’s Berkut riot police force has been disbanded, acting Interior Minister Arsen Avakov announced on his Facebook page. The details of the newly signed order will be announced on Wednesday.
22:47 GMT:
A technical support group from the International Monetary Fund (IMF) might soon head to Ukraine, IMF chief Christine Lagarde said on Tuesday.
"We will probably shortly send some technical assistance support to the country," Lagarde said at Stanford University in California. "Because this is our duty to a member if that member asks for that. That is clearly what is likely to happen."
21:02 GMT:
Additional members of the Marine Corps’ new Security Augmentation Unit have been deployed for extra security measures at the US Embassy in Ukraine
“We have slightly augmented our existing Marine Security Guard force at the Embassy in Kyiv,” Jen Psaki, State Department spokeswoman said Tuesday.
An official with the department told NBC news that nine Marines have been deployed to Kiev.
Interim Ukraine Leader Vows to Punish Pro-Secession Crimeans
Terms Them 'Threats to Ukraine's Territorial Integrity'
by Jason Ditz, February 25, 2014
Newly installed as the de facto leader of the country, interim president Olexandr Turchinov says that he met with other “key officials” to discuss a full ban on expressing secessionist sentiment, saying the people in Crimea calling for a split are “threats to Ukraine’s territorial integrity.”
Turchinov was light on the details, but said the discussion included “punishing people guilty of this.” In the Russian-speaking Crimea, where a strong majority backed the ousted President Yanukovych, there is growing support for secession and a possible return to being part of Russia, as they historically were.
The Russian government initially downplayed the prospect, but parliament isconsidering a bill that would allow residents of the Crimea to easily obtain Russian citizenship.
Interestingly, while the pro-West officials are now presenting secessionist sentiment as a crime, pro-Western demonstrators in Lviv spent much of the past two weeks doing the exact same thing, calling for historical Halych-Volyn to secede from the Ukraine and form a new pro-Western state.
New Ukraine Govt Delayed Amid Coalition Infighting
Opposition Factions Split Over 'Interim Govt'
by Jason Ditz, February 25, 2014
Despite the ouster of elected Ukrainian President Yanukovych and his replacement by interim President Oleksandr Turchinov, the installation of a new pro-West government in the Ukraine is very much a work in progress.
Initially promising a deal by today, the “deadline” has been pushed back to Thursday as the opposition parties which are supposed to form the new government battle over key issues.
The three opposition parties are at odds over much of their policy, and are all hoping to take the issue to the protesters in the streets to try to cement themselves as the legitimate “voice” of the protest.
Ukraine has five major political parties: the ruling Party of Regions, which dominates the Russian-speaking parts of the country, is being forced out after the protests in anticipation of new elections.
The three parties planning an “interim” government are Fatherland, the party of Turchinov and Yulia Tymoshenko, the Democratic Alliance Party of boxer Vitaly Klitschko, and the nationalist Freedom Party. The fifth party, the Communist Party, is not allied with either the outgoing or incoming governments, and is the smallest of the five.
The Fatherland Party is the largest of the incoming parties, though Klitschko’s alliance is seen as more popular among protesters. Either way, they are supposed to simply hold power until May 25, when an election will install a new government, though given the current chaos it remains to be seen how much of an election will actually take place.
Other voices.......
'EU doesn't know what it's doing in Ukraine'
Published time: February 25, 2014 16:06
Things have happened too quickly in Ukraine for the EU, and there are also American interests involved – the EU would be too cautious to act immediately, a former British diplomat William Mallinson told RT.
RT: The EU, IMF and US are all now pledging massive financial support to Ukraine - what are they hoping to get in return?
William Mallinson: Money, in the end, and also a lot of their money back, because a lot of their banks are worried about losing a lot of money and want to control the situation as much as possible on the one hand, they also want to prevent too much potential Russian financial interest. They want to do this over the whole country, but they know that it is going to be difficult to do in the Eastern part of the country. So they are doing what they can in the part of the country they control. It’s not entirely similar to what happened to Greece, by the way. They end up controlling as much as they can, otherwise a lot of money is potentially going to be lost, because Ukraine is in a huge debt.
RT: Any financial assistance will come with certain obligations. What are the chances the Ukrainian people will eventually find themselves in the same situation as Greek citizens, who are struggling with austerity measures?
WM: I think the chances are even greater than with Greece, because at least the Greek economy was in a strange way more integrated with the EU system than the Ukrainian one of course. Therefore, in that sense Ukraine is in a far weaker position [than Greece] because the Ukrainian politicians do not have an experience of how to deal and negotiate with the European Central Bank, with the European Commission, with the Americans. So they will be in a very weak position, also very emotional at the moment and they are in a very weak situation. Most of the people are themselves not fully aware of the economic implications of what they are doing because this is really the banks and Germany and the US trying to get as much control as they can over as much of the country as they can. Eventually, I have to say, directed against their fear of Russian responsibilities.
‘Removing Russian language official status is extremely irresponsible’
RT: One of the first laws passed by the new leadership was to remove the Russian language's official status. What kind of a backlash could that cause in eastern Russian-speaking regions?
WM: Language is one of the most vital integral and emotional parts of the make-up of a nation. Therefore, to have overreacted like this possibly on the advice of outsiders is extremely irresponsible and will create anger not only among extremist people but anger among all simple Russian-speaking people. It is divisive and I think, rather childish. It goes against the grain of what they do in most countries which is more democratic. It is in fact very undemocratic because there are far more people speaking Russian as their first language than has been admitted in many cases, in Crimea, in the eastern and even western parts of Ukraine. So it’s emotionally divisive and it goes against the concept of united country. And I think they are even expecting there to be two Ukraines and that’s why they are doing this in advance, but that is speculation.
RT: Most Western leaders have been turning a blind eye to the nationalist ideas throughout this crisis. Are they prepared to face the possible consequences?
WM: They are irresponsible. At the moment they wish to cause a certain degree of chaos that’s why they are turning a blind eye to what I can only describe as a strong Nazi-style party, which is actually somewhat similar to the Greek Golden Dawn, and I think that suits them because it’s a question of divide and rule. It’s easier to control chaos than to control order. If there is a certain degree of chaos it’s easy to control with enormous sums of money that they have. That’s a very calculated sociological, political decision which has been taken, I think, at the highest level by the major banks as well, and possibly external agencies.
‘A lot will depend on the Russian policy’
RT: Brussels says that it won't be signing the trade agreement with Ukraine for now - and will consider it only after the May election. What are the chances the deal will indeed be sealed then?
WM: Quite low. By the middle of May more responsible people, I hope, will be putting their heads up and I think a lot will depend on the Russian policy, which from what I have seen in recent years in relations between states is not one of shooting from the hip, it is slow and it tends to defuse crises like, for example, Russia succeeded so far in defusing the far worse crisis in Syria. So it’s a question of the least bad approach. I think it’s undoubtedly the Russian one because Russia is nearby, Russia has the power, Russia has the responsibility and a lot of money, but it’s not going to throw the money down the drain. Russia has the natural resources, the gas, and I think even the EU itself doesn’t know exactly what it’s doing because this thing has happened so quickly, and also there are the German and the American interests involved in it. There are bigger interests than simply Ukrainian interests, there are very crude geopolitical interests. I think geopolitics is a crude science because it puts business borders on natural peoples, creating tension. I think they are simply waiting to see what Russia does. To act immediately would be dangerous for them because there could be quicker reactions than they can imagine. So it will be a few interesting couple of months until May.
RT: The West continues to reiterate that a coalition legitimate government needs to be formed in Ukraine. Do you think it will be effective in quelling the political chaos?
WM: At the moment the government, to be honest, is not very legitimate. If you look at it in black and white legalistic terms, Yanukovich, whether he is a bad leader or a good leader, was elected and he has been thrown out. And he has not been thrown out legitimately. So I think if you want to have less stress you have to continue to sit down and bang heads together, and even a temporary technocratic government will be a good idea, with the parties that are already in parliament. You can’t just throw out a party and throw out a president like that, at the wave of a magic wand and say “Go away, now we have a democracy.” What we've got is something looking like a coup, a coup by stealth. Police and army are not doing anything at the moment, and I hope they won't, because they may be divided inside themselves. As for the armed forces no one has even mentioned them. But I don't think martial law is possible, because if that happens I don't think that even the army will be able to put the whole country under martial law, and again it will be divided. You can't have a government made just out of people who threw out the president, it won't be a representative government.
http://rt.com/op-edge/ukraine-us-interest-austerity-762/
Ukraine needs real economic development, not the US’s approach to aid, which is focused on just paying off the country’s foreign bond holders and does nothing to help ordinary Ukrainians, professor of political science Jeffrey Sommers told RT.
RT: The mayor of Sevastopol says he considers the new regime in Kiev to be illegitimate. Why is the West seemingly recognizing an unelected government that's risen to power on the back of an uprising?
Jeffrey Sommers: Well, because of course they think it will be in line with their interests to do so. So unfortunately what we have seen with the US policy, and it is not unique to the United States, [is that] they will support any group regardless of how they come to power as long as they are in line with US financial interests and they feel that they’ll be in line with them politically. So, for instance, in 1993 Boris Yeltsin sent the tanks against the Russian parliament, a highly undemocratic act, and of course the US supported that. So we see the same thing in Ukraine. If we feel that the government is going to be in line with US interests we’ll support it, if not we won’t. And if a group comes to power and does so even through the rather violent overthrow, through protests, [and] that results in a democratically elected government pushed aside, so be it as long as the US gets the government it wants.
RT: Do you think the current composition of the new government in Ukraine will lead to a viable government?
JS: Well, it is very difficult to say at this point, because the situation is so turbulent and I have to say that the US is not interested in having a fascist government in place. So while we do have these nationalistic extreme elements among some of those in the new Ukrainian government, the US certainly does not want those type of people in power. What is it hoping for is ultimately for it to be displaced and we can get more moderate figures that can be more or less controlled.
RT: We've heard many promises of financial aid from the West for Ukraine. How much do you think Washington is willing to chip in?
JS: Of course, the issue is whether or not they are going to have enough to pay their foreign bond holders. It is in the US’s interest to see that those bond holders get paid off. So my guess is that there will be an IMF-ECB standard stabilization program that will put in place the usual structural adjustment, or what is now called more fashionably austerity. And that there will be sufficient funds to pay off those foreign bond holders. But it is going to come with a rather extreme price for the people of Ukraine.
RT: How much damage has the unrest affected the country’s GDP and what can be done to help Ukraine?
JS: Well unfortunately their GDP was so low that I don’t think it is going to do too much damage in the short run. If you take a look at Ukraine versus Poland, Poland has twice per capita GDP that Ukraine does. So Ukraine’s relatively low level of development means that they are not going to sink too much further than they already are. But that is the real chief issue here that needs to be addressed. Ukraine needs real economic development and just paying off its foreign bond holders does nothing to develop the country. What we really need is an entirely new dialogue on what will be required to develop Ukraine and of course that would be things like ramping up its export of wheat, and seeing that we can do something to identify markets for some of its industrial products from the East. Of course, some of those already go to Russia, but perhaps investment from the EU can result in new industries located to the Western part of Ukraine that would actually purchase industrial products from the East. But unfortunately, again I see a kind of triage measure just designed to ensure that bond holders are paid off and nothing is done to develop Ukraine.
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