Monday, March 24, 2014

Ukraine situation updates March 24 , 2014 -- US sanctions on Russian Bank fallout and hype over state of play in Ukraine and Russia threat beyond Crimea in focus --- Russian Bank Impacted By US Sanctions Hit By Mini Bank Run Over The Weekend -- SMP Bank said on Monday around 9 billion roubles ($248 million) had been withdrawn by depositors since U.S. sanctions were announced last week.

Late afternoon /evening news items.....


http://www.zerohedge.com/news/2014-03-24/ukraine-leader-new-leaked-recording-8-million-russians-ukraine-must-be-killed-nuclea


Ukraine Leader In New Leaked Recording: 8 Million Russians In Ukraine "Must Be Killed With Nuclear Weapons"

Tyler Durden's picture





 
While the NSA is busy justifying its spying of every American its existence thanks to famous Moscow resident Edward Snowden, its Russian counterparts have been busy intercepting even more phone Ukrainian conversations.
After a month ago a leaked phone callbetween US assistant secretary of state Victoria Nuland and the US envoy to the Ukraine, Geoffrey Pyatt confirmed that it was the US that was pulling the strings in what was about to be a violent coup overthrowing Ukraine's president Yanukovich, "someone" has just leaked another phone conversation, this time between parliamentarian Nestor Shufrych and former PM and ideological leader of the Ukraine "revolution" Yulia Tymoshenko and most probable future president of West Ukraine, in which Tymoshenko is makes the following threats, "It’s going too far! Bugger! We must grab arms and go whack those damn katsaps [a Ukrainian word used to refer to the Russians in a negative tone] together with their leader", "I’ll use all my connections, I’ll raise the whole world – as soon as I’m able to – in order to make sure.. Bugger!.. not even scorched earth won’t remain where Russia stands" although all her empty threats collapse in the last sentence of the phone conversation in which she says, regarding the Crimea annexation, that "we are going to take it to the Hague International Criminal Court." Good luck with that.
But the smoking gun, and where Putin once again shows just how masterful of a chess player he is, is the following statement by Tymoshenko, after asked, rhetorically, by her counterparty, "what should we do now with the 8 million Russians that stayed in Ukraine. They are outcasts"... to which she replies: "They must be killed with nuclear weapons."
Needless to say, that is not how you make Russian friends, or diffuse geopolitical tensions with your superpower neighbor, who just happens to be set on recreating USSR 2.0. Because just like that Putin has his provocation carte blanche, as the second something, anything happens to any ethnic Russian in east Ukraine, Putin can point to precisely this conversation as proof of how Ukraine's "government" feels toward the ethnic minorities in the east, and why "they deserve to be protected" the Russian bearhug. Which has been precisely Putin's plan all along.
It is not surprising that after this recording was leaked, that Tymoshenko admitted the validity of the recording except for this part, because she knows just how greatly it can and will be used against her once Putin decides it is time to expand a little further beyond just Crimea.
Розмова була, але про 8 млн росіян в Україні - монтаж. Насправді сказала: росіяни в Україні - це українці.Привіт ФСБ:) Вибачте за нецензурне





http://rt.com/news/lavrov-g8-crimea-kerry-933/

Russia not clinging to G8 if West does not want it – Russian FM

Published time: March 24, 2014 18:09
Edited time: March 24, 2014 20:31
Russian Foreign Minister Sergei Lavrov attends the opening session of the Nuclear Security Summit (NSS) in The Hague on March 24, 2014. (AFP Photo / Yves Herman)
Russian Foreign Minister Sergei Lavrov attends the opening session of the Nuclear Security Summit (NSS) in The Hague on March 24, 2014. (AFP Photo / Yves Herman)
Russia is not clinging to the G8 format, as all major world problems can be discussed at other international venues such as G20, Russia’s Foreign Minister Sergey Lavrov has said.
“The G8 is an informal club, no one gives out membership cards and no one can expel members,”Lavrov told a media conference at the Hague. “If our Western partners believe that this format has exhausted itself, let it be. We are not clinging to it.”


“Generally speaking, there are also other formats for considering many questions, including the UN Security Council, the Middle East Quartet and the P5+1 on the Iranian nuclear problem,”Lavrov told journalists.
The Minister also commented on earlier reports regarding Australia considering not inviting President Vladimir Putin to the November G20 meeting, which is going to be held in Brisbane.
“The G20 was not established by Australia, which voiced the proposal not to invite Russia to the meeting. We created the format all together,” Lavrov said.
Meanwhile, G7 leaders – Canada, France, Germany, Italy, Japan, the UK and the US – are also holding a gathering at The Hague. According to the media, the Ukraine issue is high on the agenda.
Russia’s top diplomat is in the Netherlands, where representatives of over 50 states and chiefs of the UN, the EU, the International Atomic Energy Agency and the European Police Office have gathered for the Nuclear Security Summit to address the threat of nuclear terrorism.
On the sidelines of the gathering, Lavrov met with US Secretary of State John Kerry and yet again discussed the Ukraine question, which has caused quite a chill in relations between the two powers.
US Secretary of State John Kerry arrives in The Hague on March 24, 2014. (AFP Photo / Sean Gallup)
US Secretary of State John Kerry arrives in The Hague on March 24, 2014. (AFP Photo / Sean Gallup)

Both Moscow and Washington understand that Ukraine needs constitutional reform, Lavrov said.
“We discussed the necessity to call on the authorities in Kiev to pay serious attention to the constitutional reform, which would take into consideration the interests of all Ukrainian regions,”he said.
However, Lavrov admitted, that it is their evaluation of the situation and they “cannot impose” this idea on the Ukrainian leadership. Still, it would be very difficult to overcome the “Ukraine’s deep internal crisis” without such a reform, the Russian minister believes.
According to Lavrov, Kerry realizes that it is necessary to “push” the Ukrainian authorities into fulfilling the February-21 agreement on the crisis settlement, which was signed by ousted President Viktor Yanukovich, opposition leaders and foreign ministers of Germany, France and Poland.
On Friday, Ukraine's coup-imposed government and the EU signed the core elements of a political association agreement; this is part of the deal with the EU (that was predominantly economic) that Yanukovich put on hold in November, which resulted in mass bloody unrest and his ousting.
In Lavrov’s view, the coup-installed authorities in Kiev should have waited until a legitimate government was formed in the country after elections, and should have only then decided whether to sign an agreement with Brussels.
“Presidential elections were announced for the end May rather than December as it had been agreed upon in the February 21 accords. A constitutional reform should be carried out before the vote,” he said. “Perhaps, it would be right from all points of view, I would say it would be more ethical towards [Ukrainian] people to wait for a more legitimate situation in Kiev, and within the Ukrainian leadership before signing any agreements on behalf of their state.”
At The Hague, Lavrov met for the first time with Ukraine’s acting Foreign Minister Andrey Deshchitsa.
The tete-a-tete was initiated by the Ukrainian side.
“I told him how we see the steps that officials appointed by the Verkhovna Rada (the parliament) should take in order to finally establish normal nationwide dialogue,” Lavrov said.
Ahead of the meeting, Deshchytsa told journalists that he was hoping to discuss with Lavrov peaceful ways of settling the existing situation between Moscow and Kiev.




View image on Twitter
Russian FM meets coup-imposed Ukranian FM Andrey Deshchytsia (via @mfa_russia) http://on.rt.com/vayp51 



Relations between the two neighboring states - former Soviet republics - sharply deteriorated after the February military coup which brought ultra-nationalists to power in Kiev and split the country with eastern regions of Ukraine strongly opposing the new leadership and western regions of the country supporting it.
The Autonomous Republic of Crimea – home to an ethnic Russian majority – refused to recognize the legitimacy of the new government which they feared would not respect their rights. In a move that proved Crimeans’ concerns, parliament voted to revoke the law that allowed regions to give Russian and other minority languages the status of a second official language.
Crimea held a referendum on March 16 where over 96 percent of voters decided to rejoin Russia rather than remain part of Ukraine. On March 21, Crimea and the city of Sevastopol officially became part of Russia - or rather “retuned home,” as many Crimeans say. The region was transferred from Russia to Ukraine in 1954 by Soviet leader Nikita Khrushchev without consent of its population.




http://www.zerohedge.com/news/2014-03-24/russia-slowly-turning-natgas-tap-europe



Russia Is Slowly Turning The NatGas Tap Off To Europe

Tyler Durden's picture





 
While Naftogaz (Ukraine's gas pipeline operator) states that all gas transportation from Russia to Europe is running normally, Bloomberg reports that Russian natgas exports to Europe are declining.Shipments are down over 4% from the prior week and also lower to Ukraine. This 'adjustment' follows increased sanctions by the West as Medvedev's notable statement this morning that Ukraine owes Russia $16bn.
NatGas output is tumbling
The good news:
Gazprom today said natgas transit to Europe via Ukraine, supplies for Ukrainian consumption  
But Pay Up...
Ukraine owes Russia $11b after collapse of 2010 deal,Russian Prime Minsiter Dmitry Medvedev says to President Vladimir Putin at Security Council meeting, according to transcript on Kremlin website.

Medvedev adds $3b Ukraine bonds bought in Dec., ~$2b debt to Gazprom for natgas supplies

NOTE: In 2010, Russia agreed to sell natgas at discount in exchange for extending lease to Black Sea naval port of Sevastopol in Crimea to 2042 from 2017
Or Else...
Russian natgas exports to Europe and Turkey, excl. former Soviet Union, declined to 405.3mcm as of March 22,  according to Bloomberg calculations based on preliminary data from Energy Ministry’s CDU-TEK unit.

Avg daily exports to region were ~457mcm in March, lower than yr earlier: calculations based on CDU-TEK data

Shipments March 16-22 were 3.04bcm, 4% decrease vs level in week ended March 15
It is too early to see a trend, but for now, the direction is not hopeful for Europe.
Furthermore, Gazprom has cut its Diesel output by the most in 7 months...

and then... (via NY Times),
Russia is now asking close to $500 for 1,000 cubic meters of gas, the standard unit for gas trade in Europe, which is a price about a third higher than what Russia’s gas company, Gazprom, charges clients elsewhere.

Russia says the increase is justified because it seized control of the Crimean Peninsula, where its Black Sea naval fleet is stationed, ending the need to pay rent for the Sevastopol base. The base rent had been paid in the form of a $100 per 1,000 cubic meter discount on natural gas for Ukraine’s national energy company, Naftogaz.
And if that's not clear enough...

Of course, not every country is as exposed as the chart above shows, however, as Reuters shows belowEU's eastern members depend very heavily on Russia...
Below are details of how some of the ex-Communist EU states are economically exposed to Russia:
BULGARIA
Imports from Russia accounted for 18.5 percent of Bulgaria's total imports last year, worth about $6.6 billion. Russia is Bulgaria's biggest source of imports.
Energy is the main import from Russia.Bulgaria gets about 90 percent of its gas from Russian firm Gazprom. Its only oil refinery, controlled by Russia's LUKOIL, works on Russian crude and its onlynuclear power plant, which provides over 40 percent of electricity, operates two 1,000 MW Soviet-built reactors that work on Russian nuclear fuel.
Last year some 700,000 Russians were among Bulgaria's 2.6 million tourists. Tourism revenue makes up about 13 percent of annual gross domestic product.
CZECH REPUBLIC
In 2012, the latest year for which figures are available, 66 percent of Czech imports of natural gas came from Russia.
Exports to Russia in 2013 were worth $5.83 billion, and represented 3.67 percent of total exports. Imports from Russia were worth $7.80 billion.
Russia's largest steelmaker Evraz has a plant in the Czech Republic.
A consortium including Russia's Atomstroyexport is competing in a multi-billion dollar tender to expand the Temelinnuclear power plant. Russian firm TVEL supplies CEZ nuclear power units with fuel.
In 2013, Russians accounted for the second largest group of tourists coming to the Czech Republic with 759,000 people, or 10.4 percent of total tourists.
HUNGARY
Russia is Hungary's largest non-EU trading partner. Exports to Russia last year were worth 2.55 billion euros ($3.5 billion), of total exports worth 81.7 billion euros.
Hungary imports about 80 percent of its gas needs from Russia.
The government has signed an agreement with Russia's Rosatom to expand the Paks nuclear power plant that supplies about 40 percent of Hungary's electricity.
Russia is Hungarian drug maker Richter's biggest market. The company has warned first quarter profit will fall due to the rouble's slide.
LITHUANIA
About one fifth of Lithuanian exports go to Russia, though a large part of this is "re-exports," meaning that Lithuanians are importing the goods from a third country and then shipping them on to Russia.
* Lithuania and its industry are almost totally reliant on Russia for energy resources.
POLAND
Russia accounts for 90 percent of Poland's oil imports and more than half of its gas.
Russia is Poland's second largest trade partner, with combined 2013 imports and exports accounting for 8.8 percent of foreign trade, worth $36 billion.ROMANIA
Romania's exports to Russia totalled 1.3 billion euros ($1.8 billion) in the first 11 months of 2013 or 2.8 percent of overall exports. Romanian imports from Russia were 2.1 billion euros in January-November 2013, representing 4.2 percent of total imports.
Romania is much less dependent on imported gas than other countries in the region. Romanian gas fields provide about 80 percent of domestic needs, and President Traian Basescu said that if Russia cuts gas deliveries, the effects will not be substantial.
SLOVAKIA
Exports to Russia in 2013 were worth 2.55 billion euros ($3.5 billion), or 3.96 percent of total exports. Imports from Russia were worth 6.15 billion euros ($8.5 billion)
Fuel for two nuclear power plants is imported from Russia. Russian firm Rosatom has been in talks to take part in constructing new nuclear power units in Slovakia.
Slovakia is nearly 100 percent reliant on Russian gas, and its budget revenues depend on the tariffs it charges for Russian gas crossing its territory.
SLOVENIA
Slovenia is among the EU countries with the largest surplus in trade with Russia. It exports some 1 billion euros of goods and services to Russia per year, about 4.6 pct of total exports.
For Slovenia's largest listed company, pharmaceutical firm Krka, Russia is the biggest single market. Krka has a factory in Russia and last year sold products worth 300 million euros ($413.5 million) to Russia, a quarter of its total sales.




http://www.zerohedge.com/news/2014-03-24/us-prepares-provide-billion-ukraine-detroit-plans-mass-water-shutoffs-over-260-milli




US Prepares To Provide A Billion To Ukraine As Detroit Plans Mass Water Shutoffs Over $260 Million

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Moments ago the CBO released its estimate of what S. 2124, aka "Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014", better known as the "Payment of Overdue Gazprom Invoices Act" - here is the verdict: "CBO estimates that enacting the bill would decrease direct spending by $373 million over the 2014-2024 period. S. 2124 would achieve that decrease mostly by rescinding funds that were provided as an emergency requirement. Certain sanctions, if enacted, would affect revenues, but CBO estimates that those effects would not be significant. Pay-as-you-go procedures apply because enacting the legislation would affect direct spending and revenues. CBO estimates that the statutory pay-as-you-go effects of S. 2124 (which, by law, do not including the effect of rescinding funds provided under the emergency designation) would be to increase the deficit by $320 million over the 2014-2024 period." Of course, the total amount authorized is substantially higher at $1.3 billion, and will be met through various loan guarnatees, and other US-backed promises, which the CBO is assuming right now, will not result in outlays (they will).

Either way, one thing is certain: in order to enforce the fading Pax Americana in the Ukraine, and to keep the funding to the otherwise insolvent Ukraine flowing, which as everyone knows will be first and foremost used to pay Russia's Gazprom, the US is about to send lots of moneyabroad. As in, not in the US.
So when it comes to priorities, whom does Putin have to thank for the billions in Western funds he is about to receive? Maybe he can start in Detroit, where the local utility is planning mass water shutoffs over $260M in delinquent bills.
In other words, while the US is enforcing some odd international law, according to which a democratic vote is not credible but a violent coup is, US citizens are about to have no drinking water over a paltry $260 million. From Detroit News:
The Detroit Water and Sewerage Department has a message for Detroit residents and companies more than 60 days late on their water bills: We’re coming for you. With more than half of the city’s customers behind on payments, the department is gearing up for an aggressive campaign to shut off service to 1,500-3,000 delinquent accounts weekly, said Darryl Latimer, the department’s deputy director.

Including businesses, schools and commercial buildings, there are 323,900 Detroit water and sewerage accounts; 164,938 were overdue for a total of $175 million as of March 6. Residential accounts total 296,115; 154,229 were delinquent for a total of $91.7 million. The department halts cutoffs through the winter because of complications associated with freezing temperatures, such as damaged pipes. But this spring, a new contractor has been hired to target those who are more than two months behind or who owe more than $150 — twice the average monthly bill of $75.

The department says it’s now ready to “catch up” with cutoffs halted because of the unusually harsh winter weather. DWSD is looking to show there are consequences associated with not paying water bills, Latimer said.

“Not everyone is in the situation where they can’t afford to pay,” he said. “It’s just that the utility bill is the last bill people choose to pay because there isn’t any threat of being out of service.”

People pay up more when they see the department out cutting off water to neighbors, and the statistics bear that out, officials said. In July, for example, before contractors started on the shutoffs, the department cut off 1,566 customers. That month, it collected $149,000 in water bills. Extra contractors started working on cutoffs last summer. Attheir peak in October — before cold weather caused a halt to the disconnects — 3,700 cutoffs occurred. The department collected more than $350,000 in overdue bills that month. That number of cutoffs translated to more than double for warm weather months compared to last year.

We’re trying to shift the behavioral payment patterns of our customer base right now,” said Constance Williams-Levye, DWSD commercial operations specialist. “And so aggressively we’ll have a team of contractors coming in, in addition to our field teams.” Up to 20 additional contractor crews are expected to be employed working on the cutoffs, DWSD officials said.

The department bills monthly and sends out notices when bills are overdue. When an account is more than 60 days late, a notice goes out saying service could be cut, Latimer said.

Residents don’t necessarily have to move out but Latimer said there were instances, in the case of households with children, where the department of social services will come in and say the kids will be removed from the home if water is not restored.

“Usually folks will then come in and make some kind of arrangement,” Latimer said.
While we respect the DWSD's "behavioral" experiment at making Americans accountable and taking responsibility for their action, such as paying for services rendered, it is far too late - the entire fabric of US society would tear apart, with disastrous and deadly consequences, if such an approach was taken at the wholesale level. Confused why? Just look at the $17.5 trillion in public obligations the US government is on the hook for, and which it will never repay, aka the "Minsky Moment" with the only footnote that for now the US is the world's reserve currency, so the Fed can always print more $ and monetize even more debt. Sadly, this always ends in tears.
In the meantime, since everyone in the US is merely living from can kicking to another can kicking, one wonders: wouldn't the $373 million in funds destined to pay off Putin's oligarch buddies not be better used to pay overdue DWSD bills, which would then allow several tens of thousands of Detroit residents to have running water for a few more months?
Not that we advocate either course of action, but we do wonder: just who sets capital allocation responsibilities at the White House. Because last time we checked, Russian billionaire oligarchs don't even vote in the US.





Morning items.....



http://www.zerohedge.com/news/2014-03-24/russia-retaliates-sanctions-13-canadian-officials



Russia Retaliates; Sanctions 13 Canadian Officials

Tyler Durden's picture





 
With the list of high-ranking US officials running dry, it appears Russia has turned its attention, in the tit-for-tat sanction battle, to Canada. Following Canada's sanctions against 10 top Russian an Ukrainian officials last week, Russia has placed travel bans on 13 Canadian lawmakers and officials.
  • *RUSSIA SETS SANCTIONS AGAINST 13 CANADIANS IN RETALIATORY STEP
The list includes aides to PM Harper and the head of the Ukrainian Canadian Congress, and is, according to Russia's foreign minister, a response to the "unacceptable action by the Canadian side that has inflicted serious damage to bilateral relations."

Russia announced on Monday that it was barring 13 Canadian officials, lawmakers and public figures from the country in retaliation for sanctions imposed by Canada over Russia's annexation of Crimea.
Full list of persons sanctioned indicated on the Foreign Ministry's website :
1. Christine Hogan -  ‎Foreign & Defence Policy Advisor to the Prime Minister at Privy Council Office
2. Wayne G.Wouters - public servant and Clerk of the Cabinet. Canada's most senior civil servant.
3. Jean-Francois Tremblay - Deputy Secretary to the Cabinet (Operations), Privy Council Office
4. Andrew Sheer - Canadian Member of Parliament and the Speaker of the House of Commons. At age 32, he became the youngest person to serve in this capacity in Canadian parliamentary history
5. Peter Van Loan - Canadian politician who is the Member of Parliament for the electoral district of York—Simcoe. He has been the Leader of the Government in the House of Commons since May 18, 2011
6. Raynell Andreychuk - Canadian Senator, lawyer, and former judge and diplomat
7. Dean Allison - Canadian politician. He was elected to the Canadian House of Commons in the 2004 federal election for the new riding of Niagara West—Glanbrook
8. Paul Dewar - Canadian educator and politician from Ottawa, Ontario. He is the New Democratic Party Member of Parliament for the riding of Ottawa Centre
9. Irwin Cotler - Member of Parliament for Mount Royal. He served as the Minister of Justice and Attorney General of Canada from 2003 until the Liberal government of Paul Martin lost power following the 2006 federal election.
10. Ted Opitz - Canadian politician and a retired Canadian Forces Lieutenant-Colonel who was elected to the House of Commons of Canada in the 2011 election.
11. Christia Freeland - Canadian writer, journalist and politician. Freeland has served in various editorial positions with the Financial Times, The Globe and Mail and Thomson Reuters, where she was the managing director and editor for consumer news before she announced her resignation to run for the Liberal Party nomination in the by-election to replace Bob Rae as the Member of Parliament for Toronto Centre.
12. James Bezan - Canadian politician. In 2004, he was elected to the Canadian House of Commons as a Conservative.
13. Paul Grod - President of the Ukrainian Canadian Congress

Intriguingly, they sanctioned 13 Canadians and only 9 Americans...?!





http://www.zerohedge.com/news/2014-03-24/russian-bank-impacted-us-sanctions-hit-mini-bank-run-over-weekend


Russian Bank Impacted By US Sanctions Hit By Mini Bank Run Over The Weekend

Tyler Durden's picture






Last week, after western sanctions against Russia expanded to include not only the first financial institution, Bank Rosiya, but also SMP bank whose main shareholders were on the sanctions list, unexpectedly both Visa and MasterCard halted providing transaction services to the two banks, without providing an explanation. Over the weekend, one of the banks got its full credit card functionality back after Visa Inc and MasterCard both resumed services for payment transactions for clients at Russia's SMP bank.
As a reminder, SMP, which has about 100 branches covering more than 20 Russian cities, has co-owners Boris Rotenberg and older brother Arkady,  who received large contracts in the Sochi Winter Olympics, and who were both added to the expanded US sanctions list, and as we reported before, SMP had said on Friday that Visa and MasterCard had stopped providing services for payment transactions for clients at Russia's SMP bank. The bank said the decision to stop providing services by Visa and MasterCard was unlawful because the sanctions were imposed on shareholders, not the bank, which said it has no assets in the United States.
"We are glad that the two biggest international payment systems have heard our arguments and reversed their decision to block (SMP bank transactions)," SMP bank CEO Dmitry Kalantyrsky, said in a statement.
What was the purpose of this escalation? Simple: as Reuters reports, SMP Bank said on Monday around 9 billion roubles ($248 million) had been withdrawn by depositors since U.S. sanctions were announced last week.
Washington imposed sanctions on Thursday against 20 Russians close to President Vladimir Putin over Moscow's involvement in the Ukraine crisis, including Boris Rotenberg and his older brother Arkady, the co-owners of SMP Bank.
SMP CEO Dmitry Kalantyrsky told a news conference that an estimated 4 billion roubles had been withdrawn by individuals and 5 billion by organisations.
In other words, the staggered escalations against Russian banks, to which credit card processors have joined without any specific reason, were meant solely to incite a bank panic and to promote bank run conditions. With SMP this succeeded partially, with quarter of a billion withdrawn, however hardly enough to cripple the bank. At least for now.
As Bloomberg reports, as the new Cold War escalates between the West and Russia, the next most likely event is a Russian recession:
Banks including state-run VTB Capital say the world’s ninth-biggest economy will shrink for at least two quarters as penalties for annexing Crimea rattle markets, curb investment and raise the cost of borrowing. Sanctions that have so far focused on individuals via visa bans and asset freezes may be expanded to target specific areas of the economy.

President Vladimir Putin sent his popularity surging to a five-year high by making Crimea a part of Russia again after 60 years and says he won’t be swayed by foreign retaliation. Even so, the costs of the decision are starting to unfold, with Russian stocks this year’s worst performers and the economy set to suffer more than the West, said Mircea Geoana, Romania’s government representative for diplomacy and economic projects.

“We’re witnessing the start of a new geopolitical and economic Cold War and I think it will take at least two to three years to establish some sort of equilibrium,” he said. “The ones who’ll pay the bill for this aggression, no matter how popular and patriotic it looks, will be the Russian people because there’s a huge difference between the economic force of the EU and the U.S. and that of Russia.”

* * *

Russia will probably dip into a recession in the second and third quarters of this year as “domestic demand is set to halt on the uncertainty shock and tighter financial conditions,” according to Moscow-based VTB.

Russia’s central bank unexpectedly raised its benchmark interest rate by 150 basis points after the armed takeover of Crimea triggered a rout in the ruble. Putin completed his annexation of the Black Sea peninsula March 21.

Russia may shun foreign debt markets in 2014 because of higher borrowing costs, according to Finance Minister Anton Siluanov. He expressed frustration at disruptions to MasterCard Inc. and Visa services for cards issued by banks on or linked to persons on the U.S. sanctions list.

“Some people say these sanctions won’t affect Russia’s financial system but they already are,” he said March 21.
Of course, as we reported last week, any dramatic deterioration in the Russian economy will simply push it closer to China, which for all intents and purposes is the provider of funding for Western "discretionary spending" anyway, so why not just cut the middleman, and the petrodollar, entirely ?



Ukrainian  and US hype ......


White House: Russian Invasion of Ukraine ‘Possible’

Pushing for Aid, Ukraine Govt Hypes 'Threat'

by Jason Ditz, March 23, 2014
Still looking to escalate the sanctions war with Russia, the Obama Administration continues to play up the possibility of a huge Russian invasion, saying it was “possible” that Russia could invade all of Ukraine at any moment.
Officials cited the Russian troops “massing” near the border, which Russian leaders say were engaged in military training exercises. Russia has repeatedly promised not to cross into eastern Ukraine.
The hype around a Russian invasion seems to be driven primarily by Ukraine’s new “interim” government, which has been playing up the ideaof a Russian invasion of Ukraine, and indeed much of Europe, while pushing for US and Western military aid.
Ukrainian officials say that the situation is becoming “more explosive” by the minute, as they continue to press for the US to start sending them arms and other aid.


NATO Commander: Russia a Threat to Moldova

by Jason Ditz, March 23, 2014
NATO’s Supreme Allied Commander Gen. Philip Breedlove, following the lead of NATO’s political brass in hyping the Russian “threat” to Europe, has warned Russia’s deployment along its border with Ukraine could mean a plan to attack Moldova.
That’s his theory, though over 500 miles of Ukrainian territory lies between the Russian border and Moldova’s breakaway region of Transnistria, so the deployments aren’t exactly within striking distance.
Breedlove urged a major military redeploymentwith an eye on defending Eastern Europe, and Moldova in particular, from a full scale Russian invasion, noting “you cannot defend against that if you are not there to defend against it.”
Transnistria is a narrow strip that hugs the Dniester River, and seceded from Moldova in 1992, though its secession is not generally recognized by NATO member nations. The region’s population is split roughly in thirds by ethnic Moldovans, Ukrainians, and Russians.
The Russian military retains a 1,200-man military presence in Transnistria, which Moldova claims is an “illegal occupation,” since they don’t recognize Transnistria’s independence and seek to re-annex them.
NATO officials are trying to draw a parallel between Transnistria and Crimea, though as a region with little strategic value which Russia is protecting from re-annexation, it seems to have more in common with South Ossetia, which Georgia continues to claim as its own territory.


Congressional GOP: Send Small Arms to Ukraine to ‘Defend Themselves’

Sen. Ayotte: Chance to Give Putin a Punch in the Nose

by Jason Ditz, March 23, 2014
Congressional Republicans, eager to seem more hawkish on the Ukraine-Russia spat than the administration but realizing how unpopular starting World War 3 might well be, are pushing to step up shipments of “small arms” to Ukraine.
Rep. Mike Rogers (R – MI) said the shipments were vital for Ukraine to “defend themselves,” and called for the inclusion of unspecified “defensive posture weapons systems.”
Sen. Kelly Ayotte (R – NH) similarly said the US should immediately start sending small arms to Ukraine and step up economic sanctions against Russia, saying it was a chance to “punch them in the nose.”
Sen. Dick Durbin (D – IL) said he didn’t think sending arms to Ukraine should be ruled out, and that it was vital to “help Ukraine’s army get on its feet” after the recent violent regime change that ousted a pro-Russia government.