Sunday, March 23, 2014

Ukraine situation Updates - March 23 , 2014 -- China makes a move to increase the financial pressure not just on insolvent Ukraine , but also on the West -- China Takes Sides: Sues Ukraine For $3bn Loan Repayment for future grain delivery to China ( Looks like the prior Administration of Ukraine acted in bad faith in taking the money from China but then not fulfilling the terms of the Agreement actually reached in 2012 ) ....... Moscow: No troop build-up or undeclared military activity near Ukraine borders ..... Europe's caution regarding sanctions reflected by statement from Poland's Foreign Minister ( sanctions are like nuclear weapons , better used as a threat than deployed ) ..... Another demonstration in Eastern Ukraine on subject of holding a Referendum on whether to join Russia ( small crowd of 5 ,000 in Donetsk ) ..... Russia reserves right for additional sanctions - message to Europe ..... Afghanistan President Karzai respects Crimea right to self - determination ( US must have had a bird when they heard this one from Karzai )

Ukraine Official Warns "Chance Of War With Russia Growing" As Mike Rogers Calls For Sending Weapons To Ukraine

Tyler Durden's picture

Concurrently with out post on what the odds are of a war between the US and Russia over Ukraine, the House Intelligence Committee Chairman Mike Rogers, and war hawk, appeared on TV this morning saying that the United States ought to provide weapons to the Ukrainian army "so it could defend the country from a Russian invasion." This is the same Mike Rogers who last August did everything in his power to perpetuate the lie that Syrians had used chemical weapons against "rebels" (who subsequently turned out to be mostly Qatari-funded Al Qaeda mercenaries and other Islamic extremists) “There are things that we can do that I think we’re not doing. I don’t think the rhetoric (from Obama administration officials) matches the reality on the ground,” he said.
Seemingly oblivious that all Russia desperately wants is further escalation in the conflict, which can then immediately be seen as a provocation for further incursions into either the Ukraine and/or other former Soviet counteries, Rogers said that, while ruling out the deployment of U.S. military forces in Ukraine, he called for sending small arms and radio equipment that the Ukrainian military could use to “protect and defend themselves. And I think that sends a very clear message."
Absolutely it does: the message it sends is that US foreign policy has just hit rock bottom in terms of game theoretical escalation cluelessness. At least in Syria someone put some effort in fabricating YouTube videos and at least putting together a media campaign demonizing Assad. And still failed.
More from NBC:
Speaking from Tblisi, the capital of Georgia, a country that Russian forces invaded in 2008, Rogers said on NBC’s Meet the Press that the Ukrainians “passionately believe” that Russian President Vladimir Putin “will be on the move again in Ukraine, especially in the east.”

He said both Ukrainian and U.S. intelligence officials “believe that Putin is not done in Ukraine. It is very troubling. He has put all the military units he would need to move into Ukraine on its eastern border and is doing exercises.”

If Putin orders Russian forces into the Baltic nations of Estonia, Latvia and Lithuania – which are NATO member states and which the United States is obligated by the NATO treaty to defend -- then “we (will) have allowed people who want to be free, who want to be independent, who want to have self-determination, and we’ve turned our back and walked away from them.”

In an apparent allusion to the seizure of Czechoslovakia which was a prelude to Hitler’s invasion of Poland in 1939, Rogers added, “The world did that once – and it was a major catastrophe.”
The full clip:

And while US neocons are warmongering, Ukraine is all too happy to raise the tension level just a bit more, hoping that NATO will finally intervene and present Putin with at least some hurdle to overrunning all of East Ukraine, using exactly the same template as already show in Crimea. From WSJ:
Ukraine’s top diplomat warned Sunday that the chances of war with Russia “are growing” due to the buildup of Moscow’s forces along his country’s eastern border. In an interview with ABC’s “This Week,” acting Ukrainian Foreign Minister Andrii Deshchytsia said Kiev “is ready to respond” should Russia–which has already seized the Crimea–move further in Ukrainian territory.

The situation is becoming even more explosive than it was a week ago,” Mr. Deshchytsia said.

He said Ukraine’s first approach to the Russian threat on the frontier would be diplomatic. But, he said, “people are also ready to defend their homeland.”
Meanwhile, Putin is sitting back in his chair and smiling, since everything so far continues to unwind precisely according to his plan.

Who will benefit from an IMF bailout of ukraine ( you know the answer , right ? )  Great discussion !

China Takes Sides: Sues Ukraine For $3bn Loan Repayment

Tyler Durden's picture

It is widely known that Russia is owed billions by Ukraine for already-delivered gas (as we noted earlier, leaving Gazprom among the most powerful players in this game). It is less widely know that Russia also hold $3b of UK law bonds which, as we explained in detail here, are callable upon certain covenants that any IMF (or US) loan bailout will trigger. Russia has 'quasi' promised not to call those loans. It is, until now, hardly known at all (it would seem) that China is also owed $3bn, it claims, for loans made for future grain delivery to China.It would seem clear from this action on which side of the 'sanctions' fence China is sitting.

In 2012, The State Food and Grain Corporation and the Export-Import Bank of China agreed to provide Ukrainian corporation loan of $ 3 billion, which was planned to be on the spot and forward purchases of grain for future delivery to China.


Minister of Agrarian Policy and Food of Ukraine Igor Schweich confirmed that China has filed a lawsuit against Ukraine in a London court for the return of a loan of $3 billion.
The Ukraine minister disagrees with China's case:
"filed false information that there are no claims to us from China. According to the contract have different interpretations, different interpretations, which led to the treatment of the Chinese side in court Gaft who works in London. Registered dispute between the parties exists," - said Minister told reporters.

According to him, the parties agreed to take the following week a representative of the Chinese corporation for the possibility of peaceful settlement of the dispute.

"We, for our part, will do their steps to ensure that the other party or retract its announcement, or we found another way to a peaceful settlement," - he said. According to Schweich, a meeting will be held on March 26.
Ukraine appears to claim that these loans were made by the previous administration
The Minister added that the main problem lies in the fact that some leaders of PJSC "State Food and Grain Corporation of Ukraine" incorrect information. "These people are now removed during the protest,"- said Schweich, noting that China "is relevant to understand."

In February 2014. the current Prime Minister of Ukraine Yatsenyuk said that "location $ 3 billion is not found."
While China has been relatively quiet in the background - though abstaining from the UN vote was a clear signal of relative support for Russia - this is a meaningful step in the direction of pressure against the West, as yet again, any bailout funds would flow straight to either Russia (gas bill sor callable bonds) or China (agriculture loans).


China Sues Ukraine for Breach of US$3-Billion Grains Contract

Feb 27, 2014 08:32 AM EST |Qi Qin


  • China is suing Ukraine for breach of a 2012 loan agreement where the latter was supposed to supply China with grains in payment for a US$ 3 billion loan that it granted.
    Instead, Ukraine shipped most of its grains to other countries while China only received 180,000 tons of the product worth US$ 153 million.
    Now China is seeking a compensation of US$ 3 billion in a complaint that it filed before the London Court of International Arbitration.
    In a report by Voice of Russia on February 26, the first deputy director of the Ukrainian Anti-Organized Crime and Corruption Commission confirmed that the loan-for-grain contract was breached.
    Under the deal, the Export-Import Bank of China granted Ukraine's State Food and Grain Company a US$ 3 billion loan from China in exchange for a 15-year supply of grains.
    But contrary to agreement, Ukraine's State Food and Grain Company used the funds to provide US$ 28 million worth of grains for Ethiopia, US$ 14 million for Monaco, US$ 7 million for Saudi Arabia, US$ 24 million for Iran, US$ 11 million for Kenya, US$ 1.5 million for the Philippines, US$ 61.9 million for Switzerland, US$ 26.3 million for Egypt, US$ 325 thousand for Syria, and only US$ 153 million worth of grains for China, the report said.
    The first tranche of the loan amounting to US$ 1.5 billion (91.9 billion RMB) was received by the Company in March 2013. The remaining US$ 1.5 billion was to be used by Ukraine to purchase Chinese products.
    China's Exim Bank has yet to issue a statement on the matter.

    Moscow: No troop build-up or undeclared military activity near Ukraine borders

    Published time: March 23, 2014 11:00
    Edited time: March 23, 2014 12:50

    RIA Novosti / Evgeny Yepanchintsev
    RIA Novosti / Evgeny Yepanchintsev
    Russia is observing all international agreements on troop limits in regions bordering Ukraine, the Russian Deputy Defense Minister said, adding that foreign missions’ inspections can confirm that.
    The statement was made in response to reports by several foreign media outlets over concentrations of "thousands" of Russian servicemen on the Russian-Ukrainian border.
    “By the way this issue has during the last month been regularly raised in telephone conversations between Russia’s Minister of Defense Sergey Shoigu, and his foreign counterparts, including US Defense Secretary Chuck Hagel and even acting Ukrainian Defense Minister Igor Tenyukh,”Anatoly Antonov, the Russian Deputy Defense Minister said.
    Sergey Shoigu has, in a very transparent manner, informed all of them about the real situation on the Russian-Ukrainian border. He also stressed that Russia has no intention to concentrate troops there, Antonov said.
    Following recent probes by foreign missions in Russia of Ukraine’s bordering regions, foreign inspectors came to the conclusion that "Russian Armed Forces are not undertaking any undeclared military activity that would threaten the security of neighboring countries," Antonov added.
    The official said eight foreign inspection groups have recently visited Russia.
    “Our venues and regions, where troops are stationed near Ukrainian borders, have twice been checked by the Ukrainian military,” the Deputy Minister said. “Besides, we have had on our territory inspectors from the US, Canada, Germany, France, Switzerland, Poland, Latvia, Estonia and Finland.”
    Seven of those eight missions were interested in Russian regions bordering with Ukraine, Antonov said. Foreign inspectors were allowed to talk to chiefs of the Russian military units, make pictures of deployment sites and military vehicles, and control them during relocation.
    “We did our best to meet our partners’ requests by allowing them to inspect all of the sites they wanted to. We have nothing to hide,” Antonov said.
    The deputy minister said he was hoping that participants of those inspecting missions would inform their countries’ leaderships of what is really going on at the border between Russia and Ukraine.
    "We believe this would to large extent facilitate release of tension, something the head of the Pentagon, Hagel, called for during his recent phone conversation with Minister Shoigu.”

    Germans, French ‘nullified military co-op with Russia under pressure’

    Berlin’s and Paris’ moves to halt military cooperation with Moscow are derailing the bilateral efforts of recent years and are completely unconstructive, Antonov said. However, according to the defense official, the two did so under pressure from their NATO ally.

    “Obviously, the proverbial ‘Atlantic solidarity’ has made our French and German partners come up with loud statements against Russia,” Antonov said.

    “Refusing from contacts and delegatory exchange though military departments brings to naught the positive tendencies established in the recent years, including the cooperation on Afghanistan, the dialogue on transparency of military activity and military-technical cooperation. We perceive the decision of the German side as taken under pressure and unconstructive,” Antonov stressed.
    Both Russian and German defense ministries have recently undertaken some “serious efforts” in mutually beneficial cooperation, the official noted. He also highlighted the “unprecedented”bilateral work with France, including that of the Air Forces and Airborne Forces, noting that a “new impulse of cooperation” had been planned for 2014.

    The Russian side will now act in accordance with the “existing realities,” Antonov said, adding that Moscow is still ready to continue military cooperation with its partners if they are “interested.”

    Polish minister cautions sanctions are like 'nuclear weapons'

    BERLIN Sat Mar 22, 2014 11:52am EDT


    (Reuters) - Polish Foreign Minister Radoslaw Sikorski has warned that sanctions against Russia - a measure Warsaw supports in retaliation for the annexation of Crimea - are better used as a threat than actually imposed.

    Poland, which shares a border with Ukraine and Russia's Kaliningrad enclave and is a member of the European Union and NATO, has supported action against Moscow, including visa bans and asset freezes on people close to President Vladimir Putin.

    "Sanctions are like nuclear weapons - it is better to use them as a threat than to deploy them," Sikorski told the mass-circulation German daily Bild.
    "But in the current situation we have no choice. We have to weigh up the sanctions and how they will affect us. On the other hand, doing nothing may be costlier in the long term."
    Europe is especially worried that Russia may restrict its exports of oil and gas, on which countries like Germany rely.
    Russia's annexation of Ukraine's Crimea peninsula has made some NATO members in former communist central and eastern Europe such as Poland anxious about their own security, prompting the United States to reassure them that it will protect them if needed, in line with NATO security guarantees.

    DONETSK, Ukraine — More than 5,000 pro-Russia residents of a major city in Ukraine’s east demonstrated on Saturday in favor of holding a referendum on whether to seek to split off and become part of Russia.

    The rally in Donetsk came less than a week after the Ukrainian region of Crimea approved secession in a referendum regarded as illegitimate by the Western countries. After the referendum, Russia moved to formally annex Crimea.

    With Crimea now effectively under the control of Russian forces, which ring Ukrainian military bases on the strategic Black Sea peninsula, concern is rising that Ukraine’s eastern regions will agitate for a similar move.

    Russia has brought large military contingents to areas near the border with eastern Ukraine. Russian President Vladimir Putin has said there is no intention to move into eastern Ukraine, but the prospect of violence between pro- and anti-secession groups in the east could be used as a pretext for sending in troops.

    Eastern Ukraine is the heartland of Ukraine’s economically vital heavy industry and mining and the support base for Viktor Yanukovych, the Ukrainian president who fled to Russia last month after being ousted in the wake of three months of protests in the capital, Kiev.

    Russia and Yanukovych supporters contend Yanukovych’s ouster was a coup and allege that the authorities who then came to power are nationalists who would oppress the east’s large ethnic Russian population.

    “They’re trying to tear us away from Russia,” said demonstrator Igor Shapoval, a 59-year-old businessman. “But Donbass is ready to fight against this band which already lost Crimea and is losing in the east.”

    Donbass is the name for the region of factories and mines that includes Donetsk.

    About an hour after the Donetsk rally began, the crowd marched through the city center and assembled before the regional administration building chanting: “Crimea! Donbass! Russia!”

    Demonstrators waving Russian flags were faced off by lines of shield-wielding riot police. Inside, German Foreign Minister Frank-Walter Steinmeier was meeting with local officials.

    The demonstrators erected several tents, an ironic echo of the massive tent camp that was established on Kiev’s central square after the protests against Yanukovych broke out in late November.

    “I’m ready to live in a tent, but I’m not ready to submit to the West, to dance to their tune,” said Viktor Rudko, a 43-year-old miner.
    The local parliament on Friday formed a working group to develop a referendum analogous to the one in Crimea. Activists on Saturday passed out mock ballots, although no referendum has been formally called.

    A number of leading pro-Russian activists have already been detained by police on suspicion of fomenting secessionist activities. The country’s security services said Saturday that they have arrested Mikhail Chumachenko, leader of the self-styled Donbass People’s Militia, on suspicion of seeking to seize authority.

    As tensions roil in the east, the Organization for Security and Cooperation in Europe is deploying an observer team aimed at easing the crisis.

    Russian Foreign Ministry spokesman Alexander Lukashevich said in a statement on Friday that Moscow hopes that the 200-strong team “will help to overcome the internal Ukrainian crisis” and ensure the respect for human rights there.

    It is unclear whether the team will be allowed into Crimea. Russian forces last week stopped OSCE military observers from entering Crimea. The organization on Friday did not specify whether the observers will go to Crimea.

    Lukashevich said on Saturday that the OSCE’s mission “will reflect the new political and legal order and will not cover Crimea and Sevastopol which became part of Russia.”

    Daniel Baer, the United States’ chief envoy to OSCE, said the observers should have access to the territory because Crimea remains Ukrainian to the rest of the world.

    The seizure of military facilities and navy ships by pro-Russian forces in Crimea has been proceeding apace since the peninsula was this week nominally absorbed by Russia.

    On Saturday, a crowd stormed the Novofedorivka base, some 50 kilometers west of the Crimean capital of Simferopol, Ukraine’s Defense Ministry said.

    Ukrainian television station TSN said troops inside the base hoisted smoke grenades in an attempt to disperse groups of burly young men attempting to break through the front gates.

    TSN reported that there were children among the crowd attempting to seize the base.

    The Russian Defense Ministry says that as of late Friday less than 2,000 of 18,000 Ukrainian servicemen in Crimea had “expressed a desire to leave for Ukraine.” The ministry, however, stopped short of saying the remainder of the troops would serve in the Russian army.

    Russia says has right to answer new EU sanctions with its own

    MOSCOW Sat Mar 22, 2014 5:24am EDT


    (Reuters) - Russia's foreign ministry said on Saturday that Moscow has the right of a tit-for-tat response to the second wave of sanctions imposed by the European Union over Russia's annexation of the Ukrainian region of Crimea.
    The EU imposed an new set of sanctions on Friday adding 12 Russians and Ukrainians to a list of people targeted by EU asset freezes and travel bans. There are now 33 on the list.
    "It's a pity that the European Council made a decision that is divorced from reality," the ministry's spokesman Alexander Lukashevich said in a statement on the ministry's website.
    "We believe it is time to return to the platform of pragmatic cooperation that reflects the interests of our countries. However, of course, the Russian side reserves itself the right to give a comparable answer to the actions taken."
    In a separate statement, the ministry said Moscow hoped the decision to send to Ukraine a monitoring mission of the Organisation for Security and Co-operation in Europe would help resolve what it called an "internal Ukrainian crisis".
    On Friday, after several failed attempts in recent weeks, Russia agreed to join the 56 other members of the OSCE in a consensus decision to send a six-month monitoring mission toUkraine.
    "The mission's mandate reflects the new political and legal realities and does not apply to Crimea and Sevastopol, which became a part of Russia," Russian Foreign Ministry said in its statement on Saturday.
    "Russia hopes that the objective and impartial work of the international observers will help to overcome the internal Ukrainian crisis, stop rampant nationalist banditry, eradicate ultra-radical tendencies."

    Afghanistan respects Crimea's right to self-determination – Karzai

    Published time: March 22, 2014 22:31
    Afghan President Hamid Karzai (Reuters / Mohammad Ismail)
    Afghan President Hamid Karzai (Reuters / Mohammad Ismail)
    Afghan President Hamid Karzai told a US congressional delegation that he respects the decision of the people of Crimea to reunite with Russia. His comment follows the March 16 referendum in which 96 percent of voters opted to join the Russian Federation.
    The events in Crimea and Ukraine were among several issues discussed in a Kabul meeting between Karzai and the group of Democratic and Republican congressmen. The bipartisan delegation was led by Senator Kelly Ayotte.

    Karzai made it clear that Afghanistan respects the free will of the people of Crimea and Sevastopol to decide their own future, the Afghan president’s office said on its website.

    Despite Western claims that the accession of Crimea to Russia will never be recognized internationally, Afghanistan and many other nations have backed the decision made by the Crimean population.

    On Friday, Ukraine recalled its ambassador to Armenia after the country’s president, Serzh Sargsyan, told Vladimir Putin in a phone conversation that the Crimean referendum was a “model for the realization of self-determination.”

    Belarus, Kazakhstan, Kyrgyzstan, Syria, Venezuela, and North Korea have also supported the right to self-determination for the people of Crimea.

    On Friday, Crimea and Sevastopol – which used to be part of Ukraine – officially joined Russia, with President Putin signing the finalizing decree.

    Previously, Russian lawmakers ratified an international treaty with Crimea and the city of Sevastopol, which the sides signed at the Kremlin on March 18.

    Crimea’s rejoining of Russia was triggered by an armed coup in Kiev, which saw democratically elected Ukrainian President Viktor Yanukovich ousted.

    The uprising of the predominantly Russian-speaking region of Crimea began after the new self-proclaimed authorities passed a law revoking the regional status of the Russian language.

    It resulted in a referendum in which 83 percent of the Crimean population participated. An overwhelming majority of over 96 percent voted in favor of reunification with Russia.

    Saturday, March 22, 2014 7:40 PM

    Criminal Actions by Obama; Two Wrongs Make a Right

    To President Obama, two wrongs make a right. Also, might makes right.

    Suppose a neighbor steals your cat. Would it even be morally just to punch another neighbor (or the neighbor's kid) in the face to retaliate?

    If you are president Obama, the answer is yes.

    Please consider How Obama Crippled a Russian Bank with a Stroke of a Pen
     On Thursday, President Obama sent a message to Russian president Vladimir Putin about strength. Specifically, economic strength. The message was this: Whenever I decide to, I can pick up a pen, and kill a significant financial institution in your country.

    Obama’s victim was the St. Petersburg-based Bank Rossiya.

    Bank Rossiya is not the largest bank in Russia by a long shot, but its significance lies in its clientele rather than its size. In announcing the sanctions, the Treasury Department noted that Bank Rossiya “is the personal bank for senior officials of the Russian Federation” including members of the Ozero Dacha Cooperative, an exclusive community where members of Putin’s inner circle live. In addition, it provides financial services to the single largest segment of the Russian economy – the oil, gas, and energy sector.

    Essentially, this is a credit union for oligarchs, with a side business in financing the Russian energy industry. Its customers include many more high-profile Russians than just those named in the Treasury statement. As of Thursday it is, for all intents and purposes, out of business.

    “They’ve got to go to another bank,” said Lester M. Joseph, former principal deputy chief of the Department of Justice’s Asset Forfeiture and Money Laundering section. “That bank is pretty much a pariah.”

    Currently the international investigations manager at Wells Fargo Bank, Joseph said when heard about the sanctions on Bank Rossiya, the first thing he did was check to see if it was a customer of his institution. “It is not, thankfully,” he said.

    The impact doesn’t stop there, Joseph explained. His next step, which is ongoing, is to see if any banks that Wells Fargo has relationships with are also doing business with Bank Rossiya, and to make sure that none of those banks are routing transactions from the Russian bank through Wells Fargo’s system. “If a transaction from that bank is coming from another bank, we would have to block it,” he said.

    As one U.S. official told Reuters, Bank Rossiya will be “frozen out of the dollar.”

    “This is a new thing,” said Joseph. “It’s not a rogue bank. It’s a bank in a country where we do a lot of business. It’s not involved in a criminal case.” Compared to other actions by past administrations, he said, “It’s much more complex.”
    Criminal Actions by Obama

    Bank Rossiya is frozen out of the US dollar even though it is not a rogue bank, is not involved in any criminal investigation, and in fact has not done anything wrong.

    I cannot predict the result of this, and also suspect the impact as assessed above is a bit trumped up. After all, how many US dollar transactions does Bank Rossiya conduct?

    Regardless, the actions of Obama are disturbing. You do not (rather you should not), punch an innocent party in the face as a means to force a third party to do what you want.

    The action by Obama is both criminal and hypocritical. And I bet it does not even work.

    Mike "Mish" Shedlock

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