Late day news......

Ukraine situation updates.....

Ukraine Shocks Population With Staggered 100% Heating Price Increase While Restricting Cash Use

Submitted by Tyler Durden on 03/28/2014 17:23 -0400

In a TV address to his divided nation, Ukraine's PM Yatsenyuk stunned the people by first suggesting heating prices would rise gradually, then confirming a plan that will see prices rise 100% in the next 2 years (and almost 200% by 2017)as the cost of imported Russian gas is expected to be around $500 (up from the current $84). This standard of living crushing move was then followed by tougher capital controls, restricting cash purchases to around $1300 per person per day after the Central bank basically admitted "amid a tense situation in money markets" it was broke. And all of this comes on the heels of what can only be described as a vague pro-forma comment by US and EU governments over the riots by the "Right Sector" ultranationalists that clearly did not want to upset the state-sponsored thugs too much.

Yatsenyuk addressed the nation in a TV appearance:

*UKRAINE TO RAISE GAS, HEATING PRICES GRADUALLY, PREMIER SAYS
*UKRAINE TO RAISE HEATING PRICES 40% THIS YEAR, 40% NEXT YEAR
*UKRAINE TO RAISE HEATING PRICES 20% IN 2016 AND 20% IN 2017

So a 182% increase by 2017

*YATSENYUK SAYS PRICE INCREASE WILL BRING IT TO MARKET LEVELS
*UKRAINE HOUSEHOLDS PAY $84 PER 1,000 CUBIC METERS GAS:YATSENYUK
*IMPORTED RUSSIAN GAS WILL BE ABOUT $500: YATSENYUK
*HOUSEHOLD RATE INCREASE IS `ONLY RIGHT DECISION:' YATSENYUK

And then, via The Ukraine Central Bank, they implement tougher capital controls:

*UKRAINE CENTRAL BANK SETS LIMITS ON FOREIGN CURRENCY PURCHASES
*UKRAINE CENTRAL BANK LIMIT PURCHASES 15,000 HRYVNIA PER PERSON PER DAY ($1300)
*UKRAINE CENTRAL BANK LIMIT PURCHASES 150,000 HRYVNIA PER PERSON PER MONTH ($13,000)
*UKRAINE CENTRAL BANK SAYS ON WEBSITE LIMITS TAKE EFFECT TODAY
*UKRAINE CENTRAL BANK SAYS FX RESTRICTIONS TO REMAIN UNTIL MAY 1

After admitting they are broke...

Taking into account the preservation of the tense situation in the money market, the Decree ? 172 introduced some additional stabilization measures, such as:

Given the increased demand for foreign currencies set the maximum amount of sales of the same individual, which is equivalent to not exceed 15 000 for other operating (working) day in the same banking institution; imposed certain restrictions on transfers of foreign currency by individuals outside of Ukraine for current non-commercial operations.

Such operations are allowed to an amount not exceeding the equivalent of 150 000 per month. However, these restrictions do not apply to a number of important social and transfers, namely to cover the costs of medical treatment abroad, transporting patients, transfers carried out in case of change of the state of residence relating to the payment of non-residents of Ukraine and some others. Residents allowed to repay loans

And then, following last night's riots where the allegedly US sponsored ultranationalists who ousted Yanukoych turned on their new masters,

*NEED TO BALANCE POWERS PRESIDENT, GOVT, PARLIAMENT: YATSENYUK

And this rather vague response from a joint EU/US statement:

The U.S. Embassy in Kyiv and the Delegation of the European Union to Ukraine condemn the incident that took place at the Verkhovna Rada on the night of March 27.

This is a difficult moment in Ukraine’s history, which requires consolidation of all reform efforts, while embracing mutual respect and eschewing violence.Lasting reform in Ukraine will be a long and complex process. To be credible, it must remain democratic, transparent, and peaceful and be pursued exclusively in coordination with the nation’s democratic institutions. As in the past, we call on all sides to refrain from violence and to stick to legal methods for expressing their views and concerns and to avoid any actions which may destabilize the situation.

We welcome the statements of Pravy Sector’s leadership that they intend to keep their actions “within the framework of the law”. We urge all political forces to distance themselves from extremists, who undermine the efforts to stabilize Ukraine and to protect its sovereignty.

We urge the Ukrainian Government to ensure that those who broke the law are held accountable. We stand by previous assertions that any death which occurs in unclear circumstances should be investigated impartially in order to provide citizens the feeling of security and accountability of law enforcement organs. We welcome the establishment of the special parliamentary commission which will scrutinize all evidence on the events involving the police and resulting losses.

During this process, the United States and European Union remain committed to standing with the Ukrainian people to help them build the prosperous, democratic future they deserve.

So to summarize... the government has a plan that dramatically raises living costs for Ukrainians (ensuring that various international factions will need to lend them more money in bailout terms)... while restructuring what the Ukrainian people can spend... promising fair elections in May as the EU and US barely flutter an eyelid at the riots that occurred against the new government... and all of this as Putin gathers increasing amounts of military might on the borders...

Putin Calls Obama To "Draw Attention To Ukraine Extremists", Obama Replies With Request To Pull Back Troops

Submitted by Tyler Durden on 03/28/2014 18:03 -0400

Moments ago the White House made a fine point of announcing that - for the first time since the Ukraine crisis erupted and led to the unanswered annexation of Crimea by Russia - Putin called the White House first to discuss what was vaguely enough described as "a diplomatic resolution to the crisis in Ukraine." However a more detailed read through of what actually happened reveals that there is less here than meets the eye (as a rational person would suspect since any truly good news would have been divulged during market trading hours).

As the Kremlin's own interpretation of the call between the two leaders discloses, "Vladimir Putin drew Barack Obama’s attention to continued rampage of extremists who are committing acts of intimidation towards peaceful residents, government authorities and law enforcement agencies in various regions and in Kiev with impunity."

Here, Putin undoubtedly is focusing on last night's storming of the parliament by the "Right Sector" neonazis, which initially had been instrumental in the violent Ukraine coup and have now become a huge nuisance to the acting government. Which, as we noted yesterday, meant they suddenly had become Putin's best friend. Because in bringing attention to their actions, the Kremlin makes it quite clear that the Russian case of neo-fascists running rampant in Kiev, was in fact at least partially accurate.

Kremlin goes on:

In light of this, the President of Russia suggested examining possible steps the global community can take to help stabilise the situation. The two presidents agreed that specific parameters for this joint work will be discussed by the Russian and US foreign ministers in the near future.

Vladimir Putin also pointed out that Transnistria is essentially experiencing a blockade, which significantly complicate the living conditions for the region’s residents, impeding their movement and normal trade and economic activities. He stressed that Russia stands for the fair and comprehensive settlement of the Transnistria conflict and hopes for effective work in the existing 5+2 negotiation format.

Simply said, Putin called Obama to make it quite clear that the Russian is nowhere close to de-escalating, and in fact is bringing even more attention to the old party line - that Russia is concerned about the living conditions of Russians and other "compatriots" in Ukraine. The implicit threat here is that should the neonazis continue to act with "rampant impunity" then Russia will have no choice but to intervene.

How about the flip side? Here is the White House's version of events from The Hill:

President Obama called on Russian President Vladimir Putin to pull back his troops from Ukraine’s border on Friday during a phone call between the two leaders. Obama noted that the Ukrainian government has pursued “a restrained and de-escalatory approach” in the crisis, the White House said.

He urged Russia to support Ukraine’s democratic process and to "avoid further provocations, including the buildup of forces on its border with Ukraine.” The phone call, which was initiated by Putin, comes a day after Agence France-Presse reported nearly 100,000 Russian troops had lined up along their border with Ukraine, according to a Ukrainian official.

“President Putin called President Obama today to discuss the U.S. proposal for a diplomatic resolution to the crisis in Ukraine, which Secretary Kerry had again presented to Foreign Minister Lavrov at the meeting at the Hague earlier this week, and which we developed following U.S. consultations with our Ukrainian and European partners,” the White House said in a statement.

...

Obama made it clear to Putin, the White House said, that de-escalation in the crisis can only happen if Russian pulls its troops back and doesn’t take steps “to further violate Ukraine’s territorial integrity and sovereignty.”

During the phone call, Obama also reiterated the United States “strongly opposes” Russia’s actions, which he said violated Ukraine’s sovereignty. Obama also expressed this message to Russia in an interview that first aired on “CBS This Morning” on Friday.

Russia’s troop buildup, Obama said in the interview, “may simply be an effort to intimidate Ukraine or it may be that they've got additional plans.”

To summarize, Putin calls Obama to inform him, and thus the international community, just under what conditions Russia will continue to push on inside Ukraine - namely a real or false flag provocation by "extremists" against Russians, while Obama drones on, pun intended, about de-escalating and threatening with "costs." Sounds about right.

Pressures upon Russia.....

Moody's Puts Russia On Downgrade Review; Cites Event Risk, Investor Sentiment, And Weakening Economy

Submitted by Tyler Durden on 03/28/2014 18:02 -0400

Hot on the heels of what S&P said was not a "politically motivated" shift to rating watch, Moody's (who did not downgrade the USA and are not currently in a lawsuit over such terrible misrepresentations) has decided now is the time to put Russia on rating downgrade watch. The decision was triggered by 3 key factors: the weakening of Russia's economic strength, potential shifts in investor sentiment, and susceptibility to event risk. Full report below...

Moody's Investors Service has today placed Russia's Baa1 government bond rating on review for downgrade.

The decision was triggered by the following factors:

1.) The weakening of Russia's economic strength, as the conflict with the Ukraine and the related uncertainty over future policy actions further weigh on Russia's already impaired investment climate and medium-term economic outlook.

2.) The upward revision in Moody's assessment of Russia's susceptibility to event risk, owing to the heightened geo-political risk implied by the potential for the conflict in the Ukraine escalating further.

During its ratings review, Moody's will seek to obtain greater clarity on (1) the extent to which the current crisis will exacerbate the country's medium-term growth challenges; (2) the level of risk that the crisis escalates further; and (3) the consequent impact on Russia's economy, public finances and external position.

Should the review lead to a downgrade, the most likely outcome would be a one-notch adjustment. However, Moody's would consider a downgrade of more than one notch were the probability to rise of events occurring which could lead to more severe economic shocks. Moody's would consider confirming Russia's sovereign rating at its current Baa1 level if the current tensions were to dissipate and if a possible resolution of the crisis were to emerge with the potential to improve the country's growth outlook.

Russia's Prime-2 short-term debt rating is not affected by this review and remains unchanged.

RATINGS RATIONALE

RATIONALE BEHIND REVIEW FOR DOWNGRADE

-- FIRST DRIVER: WEAKENING OF RUSSIA'S ECONOMIC STRENGTH IN LIGHT OF AN IMPAIRED INVESTMENT CLIMATE

The first driver behind the decision to place Russia's sovereign rating on review for downgrade is the potential for the current crisis to further exacerbate the recent weakening of the country's economic strength and medium-term growth potential. Moody's already expects that the increased economic uncertainty triggered by the conflict with Ukraine will contribute to an economic GDP contraction of around -1.0% in 2014, against pre-crisis expectations of growth of around 2%.

Moody's expectation that Russia will slide into recession comes against the background of an ongoing deceleration in GDP growth since September 2011 that reached a low of 1.2% year-on-year in Q3 2013. Factors responsible for this deceleration -- namely, sluggish consumption growth, stagnating investment and a weak external environment -- will be further exacerbated by the elevated political and economic uncertainty.

The rating agency believes that the current crisis could significantly dampen investor sentiment for several years to come by adding to existing deterrents to investment posed by Russia's weak rule of law and high levels of corruption. This could further damage the country's economic outlook given its large investment needs. It could also further constrain its ability to diversify the economy away from overreliance on oil and gas. Overall, the crisis with Ukraine could therefore further weaken Russia's medium-term growth prospects, which had already been lowered by the Russian authorities in 2013.

-- SECOND DRIVER: RUSSIA'S INCREASED SUSCEPTIBILITY TO EVENT RISK AS A RESULT OF THE CONFLICT WITH UKRAINE

The second driver underlying the review for downgrade is Moody's concern regarding the country's rising susceptibility to political and financial event risk, primarily driven by the risk of further escalation of hostilities.

Moody's acknowledges Russia's large foreign-currency reserves and limited external debt repayments and the current strength of the government's balance sheet. However, wider economic sanctions and potential countermeasures by Russia could, were they to materialise, erode those financial buffers. That said, the agency notes that the exposure of the corporate and banking sectors to external refinancing risks this year appears to be manageable.

FOCUS OF THE REVIEW

During its ratings review, Moody's will seek to obtain greater clarity on (1) the extent to which the current crisis will exacerbate the country's medium-term growth challenges, (2) the level of risk that the crisis escalates still further; and (3) the resilience of Russia's economy, public finances and external position to such a scenario.

Related to the latter point, the rating agency notes that Russia's fiscal metrics compare favourably with countries in the same rating category. Russia's debt-to-GDP ratio remains very low (estimated at around 13% in 2013) and Moody's expects that its debt-servicing costs will remain lower than those of its peers in the same rating category.

In addition, Russia's oil funds (equivalent to around 9% of GDP) provide a cushion to a potential fall in oil prices and any associated shortfall of revenues or problems with market access. Russia also compares well to its rating peers in terms of external metrics. While the country's current account balance has declined, it remains in surplus. Russia's external vulnerability indicator, which measures a country's short-term and currently maturing long-term external obligations in relation to its foreign exchange reserves, compares favourably to rating peers.

WHAT COULD MOVE THE RATING DOWN/UP

Moody's would downgrade Russia's sovereign rating were it to conclude that the financial, diplomatic and political consequences of the crisis will materially undermine Russia's medium-term economic strength, whether by further discouraging foreign investor sentiment, undermining exports or weakening domestic consumption and investment still further. In that event, the most likely outcome would be a one-notch downgrade given the current state of the crisis. However, Moody's would consider a downgrade of more than one notch were the probability of more severe economic shocks to rise.

While an upgrade is unlikely over the medium term given the current review for downgrade, Moody's would confirm Russia's sovereign rating at its current Baa1 level were the crisis to stabilise, current tensions to dissipate and a possible resolution of the crisis with Ukraine to emerge, given that this could be conducive to improving the country's growth outlook and investor confidence.

GDP per capita (PPP basis, US$): 17,518 (2012 Actual) (also known as Per Capita Income)
Real GDP growth (% change): 1.3% (2013 Actual) (also known as GDP growth)
Inflation Rate (CPI, % change Dec/Dec): 6.5% (2013 Actual)
Gen. Gov. Financial Balance/ GDP: -1.3% (2013 Actual) (also known as Fiscal Balance)
Current Account Balance/GDP: 1.6%(2013 Actual) (also known as External Balance)
External debt/GDP: 35% (2013 Actual)
Level of economic development: Moderate level of economic resilience
Default history: At least one default event (on bonds and/or loans) has been recorded since 1983.

On 25 March 2014, a rating committee was called to discuss the rating of the Russia, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have decreased. The issuer has become increasingly susceptible to event risks.

We thought this chart might help...

and.....

The First Russian Casualty: World's Largest Aluminum Company, Rusal, Warns It May Default

Submitted by Tyler Durden on 03/28/2014 15:50 -0400

While it is easy to blame western sanctions for the recent tribulations at the world's largest aluminum company, Oleg Deripaska's Rusal, the reality is that the industry specific issues plaguing aluminum makers, certainly including former Dow Jones Industrial Average member Alcoa, which involve a fair share of manipulation of physical inventories at assorted global warehouses are much more responsible than some theatrical rhetoric flaring up between the West and East in the past month. Regardless of the cause, as FT reports, Rusal just announced it is on the verge of insolvency after it warned of "material uncertainty" about its future, and that it has asked its creditors to delay repayment on a maturity from its $10 billion debt pile due next month.

From the FT:

Rusal warned of “material uncertainty” over its future as the world’s largest aluminium producer reported a $3.2bn loss in its worst annual performance since 2008.

The Russian aluminium group, controlled by Oleg Deripaska and listed in Hong Kong,confirmed that it had asked lenders to delay a repayment due next month on part of its $10bn net debt pile.

It said that it expected to complete long-running negotiations with its banks to amend the terms of its debt, but warned that there could be no certainty it would succeed.

“Management acknowledge that these conditions result in the existence of a material uncertainty with respect to the group’s ability to continue as a going concern,” the company said. Rusal’s auditor, KPMG, included an “emphasis of matter” paragraph in its report on the company’s earnings statement to draw attention to the issue.

Any other time, a successful waiver or debt extension (at a price) would have been guaranteed, thank the unprecedented amount of liquidity sloshing around desperate to earning some, any return, but now that politicians are involved, it would not be surprising if a Steve Ratner-type figure were to make a few phone calls to Rusal's offshore lenders, and force them to demand payment or else put the company - long a shining star of the Russian commodity landscape - in default, a move which would certainly leave a mark on Vladimir Putin's ego, if not his bottom line. After all, Putin would certainly enjoy getting additional "equity" stakes in other domestic commodity companies in exchange for bail outs.

FT's take: "Rusal’s difficulties highlight the plight of Russia’s metals sector as it struggles under the burden of a slowing economy, weak commodity markets and the imposition of sanctions from the west." Fine - force it to default. The temporary plunge in supply will simply drive the price of aluminum higher, and in the meantime, Rusal's new owner will be the Russian government itself.

FT is more accurate in its assessment of how the company ended up in a sorry state that reflects the near-crash Russia's commodity industry found itself in early 2009:

Rusal’s $3.2bn loss was exacerbated by $1.9bn in write-downs and restructuring charges as it closed high-cost plants in an attempt to reduce costs. It was its worst annual performance since a $6bn loss in 2008.

The company’s aluminium production fell 7.6 per cent from 2012 to 3.9m tonnes, while its production cost per tonne fell 3.6 per cent over the year to $1,864. Benchmark aluminium prices on Friday were trading at $1,753 a tonne.

Mr Deripaska, chief executive, said the company had “gone through a difficult, but important transformation” and predicted resilient demand for aluminium. Rusal has been weighed down by high debts since it spent $14bn to buy a stake in Norilsk Nickel in 2008 just before metals prices tumbled in the financial crisis. It underwent a huge restructuring in 2009, but has remained highly leveraged.

The company had succeeded in restructuring loans of $4.9bn from Sberbank and $660m from Gazprombank, it said. It also received, in February, $400m in prepayment financing for alumina from Glencore Xstrata, which holds an 8.75 per cent stake in the company and is its single largest trading counterparty.

However, it has yet to reach unanimous agreement with a syndicate of lenders on restructuring $3.7bn of pre-export finance facilities. A person familiar with the matter said that only a handful of banks had not yet agreed to new terms, which would waive mandatory repayments on Rusal’s debt until 2016.

In a nutshell Rusal has become a curious nexus of three distinct issues: i) corporate over-leverage, a pervasive problem for corporations which as we pointed out a month ago have far more net debt than they did at the last bubble peak; ii) an industry in decline as the key marginal market, China, is no longer in peak euphoria mode - one need only look at the most recent "non-one time, non-nonrecurring charges" Alcoa earnings report to see how the aluminum space is going from bad to worse, and iii) a new political wildcard, as it is increasingly becoming obvious that the next cold war will be fought in bank board rooms, at least from the perspective of the US.

There is a fourth point. Rusal on Thursday received a surprise boost when it won a court battle over proposed new London Metal Exchange trading rules, which the aluminium producer said had helped to push down prices.

In other words, if something does happen to Rusal, one can expect an accelerated discovery of just how the big banks and commodity trading firms are abusing commodity warehouses in and out of the US, in order to manipulate prices - something the Fed recently promised it too would look into, although nobody is holding their breath, as among the firms most directly impacted would be Goldman and JPMorgan, not to mention Swiss giant Glencore.

So pay close attention to Rusal - should it indeed default, Putin may take that as an unwillingness to negotiate (assuming of course this was not the desired outcome all along) a forbearance by the West as an escalation going directly at Russia's lifeblood. How Putin would retaliate is unknown, but since the former KGB spy has had the bulk of his recent foreign policy wins in the geopolitical map, one could see why Ukraine, of all places, and all other former USSR member countries, should be nervous to quite nervous should the world's largest aluminum company file for bankruptcy protection in the coming weeks.

Russian push-back....

Sanctioned Russian Bank Shuts US Accounts To "Protect" Russian Clients

Submitted by Tyler Durden on 03/28/2014 10:18 -0400

The sanctioned Russian bank - Bank Rossiya - is "taking measures to protect its Russian clients" from potentially unfair actions by US banks by shutting correspondence accounts in the US. Furthermore, the bank, which is oh so grateful for the support of Vladimir Putin (who opened a personal account with the bank soon after the sanctions), added it will meet all obligations and will not need additional support as will concentrate only on its Russian clients and work only in Rubles.

*BANK ROSSIYA SAYS IT WILL ONLY WORK WITH RUBLES, ONLY IN RUSSIA
*BANK ROSSIYA SAYS IT'S TAKING MEASURES TO PROTECT CLIENTS
*BANK ROSSIYA TOLD U.S. BANKS IT WAS CLOSING CORRESPONDENT ACCTS
*BANK ROSSIYA SAYS WILL MEET OBLIGATIONS, DOESN'T NEED SUPPORT
*BANK ROSSIYA THANKS RUSSIAN PRESIDENT PUTIN FOR SUPPORT

STATEMENT OF "AB" RUSSIA "DATED 28/03/2014

In order to protect customers from fraud Bank foreign financial institutions AB "RUSSIA" decided to work exclusively on the domestic market and only one currency - the national currency of the Russian Federation - the ruble.

In this regard, a number of U.S. banks sent notification of the closure of correspondent accounts. In the near future similar notice will be sent to other foreign financial institutions.These changes in the Bank's work will not affect the implementation of the obligations of the Bank before its clients and partners.

All obligations of the Bank will perform on time and in full. Bank's activities are not in need of financial support, including from the state regulator.

AB "RUSSIA" will take part in thedevelopment and implementation of the national payment system and its activities will be focused exclusively by national rating agencies.

AB "RUSSIA" expresses sincere gratitude to the President of the Russian Federation and the Russian citizens for the Bank's credibility.

From earlier today.....

http://www.zerohedge.com/news/2014-03-28/its-ultranationalists-rage-ukraines-ousted-president-calls-regional-referendums

( Everything proceeding as Putin would have wished .... )

As Its Neonazis Rage, Ukraine's Ousted President Calls For Regional Referendums

Submitted by Tyler Durden on 03/28/2014 07:56 -0400

While the US and its allies are locked in a war of words which Russia has so far been completely ignoring, things continue to move both literally (along the Russian side of Ukraine's eastern border) and metaphorically. Overnight, ousted President Viktor Yanukovych has called for a national referendum to determine each region's "status within Ukraine". As a reminder, the Kremlin still refuses to accept the current Ukraine government, claiming it got there only after an illegitimate, violent overthrow of Yanukovich. "As a president who is with you with all my thoughts and soul, I urge every sensible citizen of Ukraine: Don't give in to impostors! Demand a referendum on the status of each region within Ukraine."

In his first comments since Crimea voted to become part of Russia, Mr Yanukovych denounced fresh presidential elections planned for 25 May. BBC adds that at the same time Russia's defense minister, Sergei Shoigu, said that all Ukrainian service personnel loyal to Kiev have now left Crimea and all military installations there are under Russian control.

And while the Russian noose continues to tighten, first around East Ukraine, it almost appears as if developments in Kiev are doing their best to help out Putin. Perhaps Kiev took a little too much to heart the statement by Schauble that Ukraine has Greece as a role model to look up to, because while it has skipped the entire economic collapse phase (for now), it has jumped straight to the infighting with its ultra-nationalist, far-right "Right Sector" elements, which were certainly one of the main factors for the ascent of the current acting government and the overthrow of the last one.

FT adds that the ex-president’s call, reported by Russian media, came as members of a radical rightwing fringe group, Right Sector, staged a second protest outside Kiev’s parliament in little more than 12 hours. The reason: Ukraine's interim President Olexander Turchynov has condemned the ultra-nationalist Right Sector, saying the group is bent on "destabilisation".

Right Sector activists blocked the parliament (Rada) building in Kiev on Thursday night and smashed windows. They blamed the interior minister for the killing of a Right Sector leader. From BBC:

At a parliament session on Friday, Mr Turchynov, called the Right Sector rally outside parliament "an attempt to destabilise the situation in Ukraine, in the very heart of Ukraine - Kiev. That is precisely the task that the Russian Federation's political leadership is giving to its special services".

Right Sector activists are furious over the death of Oleksandr Muzychko, better known as Sashko Bily, one of their leaders. The interior ministry said he died on Monday night in a shoot-out with police in a cafe in Rivne in western Ukraine.

A member of the far-right group in Rivne threatened revenge for the killing of Mr Muzychko.

"We will avenge ourselves on [Interior Minister] Arsen Avakov for the death of our brother. The shooting of Sashko Bily is a contract killing ordered by the minister," Right Sector member Roman Koval was quoted as saying by the Ukrayinska Pravda website.

Keep track of the internal strife as the Right Sector played a prominent role in the Kiev protests - and the clashes with police - which led to the removal of Mr Yanukovych from power. Its main support base is in western Ukraine. Should the government escalate its relations with the "Right Sector" the new government may be overthrown just as fast as its predecessor.

It has gotten so bad that Ukraine security officials, taking another page of the Greek playbook, are actively considering banning the "Right Sector." RT reports:

Following a siege of Kiev parliament building by the Right Sector nationalists, Ukraine’s security officials have discussed banning the movement during an urgent security meeting, a source in Batkivshchina party told Ria. According to the source, the meeting was attended by the acting Interior Minister Arsen Avakov, National Security and Defense Council chief Andrey Parubiy, as well as Oleg Tyagnibok, the leader of nationalist Svoboda party.

During the meeting, Avakov suggested a complete ban of the organization given the radicalization of the Right Sector, the source said.

Parubiy was allegedly supportive of the idea of dismantling the neo-Nazi movement and said such a move would allow those present at the meeting to whitewash themselves of having any connections to the radicals, the source said. Tyagnibok reportedly did not take any sides.

According to the source, the proposal will be further discussed on Friday “within a wider circle.”

Meanwhile on Friday, Verkhovna Rada is also expected to hold an emergency session to discuss the possibility of Avakov’s resignation, after hundreds of Ukrainian nationalists gathered outside the parliament building threatening to storm it unless Avakov takes personal responsibility for the killing of one of their leaders and resigns.

The right-wing militant leader Muzychko, also known as Sashko Bilyi, was killed in a police raid against his gang in Rovno, western Ukraine.

It is here that Russia may suddenly have found an unwilling "the enemy of my enemy is my friend" ally. It perhaps explains why Russia was just cited as escalating the war of words yet again. Via Reuters:

SENIOR RUSSIAN SECURITY OFFICIAL TELLS PUTIN THERE HAS BEEN A SHARP INCREASE OF EXTERNAL THREATS TO RUSSIA FROM THE UNITED STATES AND ITS ALLIES - INTERFAX NEWS AGENCY
SECURITY OFFICIAL SAYS "LAWFUL DESIRE OF PEOPLES OF CRIMEA AND EASTERN UKRAINIAN REGIONS TO BE WITH RUSSIA IS CAUSING HYSTERIA IN THE UNITED STATES AND ITS ALLIES" - INTERFAX
SECURITY OFFICIAL SAYS WESTERN NATIONS SEEKING TO WEAKEN RUSSIAN INFLUENCE IN A VITALLY IMPORTANT REGION, RUSSIA TAKING "OFFENSIVE COUNTERINTELLIGENCE MEASURES" IN RESPONSE - INTERFAX

Last, and certainly least, there is Obama who said in a CBS interview that Russia "needs to move back the troops" from Ukraine border. Obama says Putin is “certainly misreading American foreign policy" adding that “we have no interest in encircling Russia."

The problem is that Russia certainly has an interest in encircling Ukraine: "You’ve seen a range of troops massing along that border under the guise of military exercises,” Obama says "these are not what Russia would normally be doing."

Perhaps Obama should explain the whole "costs" thing again, because over a month in and Putin still hasn't quite understood it.

Ukrainian govt strained as presidential election looms

Published time: March 28, 2014 08:41

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Yulia Tymoshenko and Vitaly Klitschko (Reuters / Suzanne Plunkett)

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US targets Russia with further sanctions

Published time: March 28, 2014 11:35

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President Obama Delivers State Of The Union Address At U.S. Capitol (AFP Photo / Chip Somodevilla)

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House prepares fresh sanctions, threatens Russian arms exporter

Meanwhile, the US House of Representatives is also readying additional sanctions on Russian officials in addition to the 27 individuals sanctioned earlier this month, alongside Bank Rossiya.

The bill, which would impose additional asset freezes and visa bans on unspecified senior Russian officials, their close associates and family members, as well as corporations, passed 399-19.

Earlier Thursday, a group of US senators called on President Barack Obama to impose sanctions on Russia's defense sector, and more specifically, its state arms exporter Rosoboronexport.

“We call on you to cancel all existing (Pentagon) contracts with Rosoboronexport, as well as any plans for future deals, and impose sanctions to ban contracts with any company that cooperates with Rosoboronexport on military programs," Reuters cites Republican Senator John Cornyn of Texas and Senator Dan Coats of Indiana as saying in a letter to Obama.

The Pentagon has paid Rosoboronexport over $1 billion for Russian-made Mi-17 helicopters, which the US purchased for Afghan security forces.

"Rosoboronexport is an arm of the Russian government and a powerful instrument of Vladimir Putin's increasingly belligerent foreign policy, and it handles more than 80 percent of Russia's weapons exports," the senators wrote.

Coats had previously offered an amendment to a separate Ukrainian aid bill which was also passed by the US Senate on Thursday. The proposal sought to cut off all US business with Rosoboronexport. That amendment has so far not been acted upon.

The White House has offered no immediate comment on the senators’ proposal.

'Everybody owns a piece of everything'

At a joint news conference with Italian PM Matteo Renzi, Obama said in Rome on Thursday that the US would further target Russia’s military, energy and financial industries if Russian forces moved into Ukraine.

Obama admitted, however, that any effective sanctions regime would also come back to hurt the United States.

“None of them, to have a powerful impact on Russia, are going to have zero impact on us because Russia is part of the world economy,” Obama said, adding: “Everybody owns a piece of everything.”

The European Union, which annually exports upward of $120 billion in goods to Russia and is highly dependent on Russian gas exports, has taken a far more cautious approach. The EU has thus far proposed visa restrictions and asset freezes on 33 Russian citizens it holds responsible for an internationally contentious referendum in which Crimea voted to rejoin Russia, though economic sanctions are being resisted.

But on Friday Hungarian Prime Minister Viktor Orban said that economic sanctions would neither benefit Russia nor the EU, while officials from the EU’s 11 ex-Communist states have said they would resist efforts to impose the next stage of sanctions, which would target trade and economic ties.

On Wednesday, German Chancellor Angela Merkel also said she was not ready to back economic sanctions against Russia, saying she is not interested in an escalation of tensions.

Meanwhile, Russian Economic Development Minister Alexei Ulyukayev admitted that private investment in the country had taken a hit over the past month.

“From the point of view of investors, it means taking a pause," The Moscow Times cited him as saying at an annual financial forum organized by the Moscow Stock Exchange. "People are not ready to make decisions about investing insofar as they assess the risks as unacceptable or assess the situation as unclear. This affects both domestic and foreign investors."

Capital flight is expected to reach $65 billion in the first quarter and could hit $100 billion by the end of the year, which Ulyukayev says would knock back GDP growth to 0.6 percent.

The government's current official forecast for economic growth in 2014 is 2.5 percent.
Ulyukayev said that mass infrastructure projects paid out of the country’s $3 trillion ruble Federal Welfare Fund, expanding trade with Asia, and preferential purchases of Russian-made goods for government contracts were means to fortify Russia’s economy.

On Thursday, the UN General Assembly overwhelmingly voted for a resolution submitted by Ukraine denouncing the referendum in Crimea that made the Black Sea peninsula an integral part of the Russian Federation.

Following the vote, Vitaly Churkin, Russian Ambassador to the UN, said the vote proved that Russia was not isolated in its stance on the Ukraine crisis.

“Very many countries complained that they were undergoing colossal pressure on the part of Western powers to vote in support of that resolution,” Churkin told journalists after the vote, adding that he believes the pressure “produced a certain effect.”

A total of 100 UN member countries voted in favor of the resolution, while 11 voted against and 58 abstained. Only 168 out of 193 UN member states were present at the General Assembly in New York.

Anti - War.......

Obama Falsely Claims Kosovo Secession Involved UN-Backed Referendum

No Referendum at All Actually Took Place

by Jason Ditz, March 27, 2014

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President Obama’s recent speeches condemning the Crimean secession as much worse than anything else in recent history have raised a lot of eyebrows, as yesterday he bizarrely tried to portray the bloody US occupation of Iraq as much less of a deal.

But Obama appears now to be inventing events wholesale to try to rebrand them, claiming that in contrast to the Crimean secession, Kosovo seceded from Serbia after a referendum organized “in careful cooperation with the United Nations.”

While Iraq may have been a bizarrely skewed interpretation of what happened, Kosovo is just a flat out lie. There was no referendum, UN organized or not, at any point around the 1999 NATO invasion of Kosovo through the 2001 imposition of secession and the 2008 declaration of independence.

Kosovo’s provincial assembly did hold a referendum on the possibility of secession in 1991, but it was not done with UN backing, nor did the US or anyone else even recognize the result. Albania was the long state to recognize the vote, and it was never cited as justification in NATO’s 1999 war.

The only other referendum to take place in Kosovo came in 2012, under Obama’s watch. In that vote, 99% of Kosovar Serbs in several northern districts voted against being part of an independent Kosovo. As with the 1991 vote, the US rejected its validity.

US Officials Play Up ‘Threat’ of Russia Invading Ukraine

Somewhere Between 20,000 and 100,000 Russian Troops on Border

by Jason Ditz, March 27, 2014

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Though there is no indication of any moves along the border itself, US officials are playing up the “threat” of a Russian invasion of Ukraine at some point in the future, saying they reckon the likelihood has increased.

The official Pentagon estimate remains 20,000 Russian troops along the Ukraine frontier, engaged in training exercises in the area. Yet the numbers are constantly being challenged as insufficiently scary, and others are suggesting much grander figures.

Rep. Michael Turner (R – OH) claimed he figured there could be as many as 80,000 Russian troops in the border area, terming that cause for alarm. Ukrainian officials, not to be outdone, came back with a claim of 100,000 Russian troops.

Pentagon officials were reportedly skeptical of the claims, which they said sound much too high. Russia assured the Pentagon last week that they don’t intend to invade Ukraine.

US, EU Agree to Work on More Russia Sanctions

Obama Vows 'More Consequences for the Russian Economy'

by Jason Ditz, March 27, 2014

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Though officials had suggested earlier at the Brussels summit that no new sanctions were likely on Russia, today’s reports are claiming the US and EU have both agreed to “work together” on penning more sanctions.

President Obama addressed the matter, saying “isolation will deepen, sanctions will increase and there will be more consequences for the Russian economy.”

Though the US seems up for whatever, their trade with Russia is extremely limited, so they have few options to do anything themselves. The EU has much bigger trade ties with Russia, with nations like Germany hugely dependent on them for energy supplies.

Many in the EU are pretty supportive of the idea of more sanctions, but any such move needs to be unanimous, and several nations, led by Austria, are averse to the idea of more sanctions, fearing they will harm the European economy more than Russia’s.

2 comments:

Kev3/28/2014
Evening Fred,

Yes I'm hoping the Turkish elections send a message too. And not much action in the markets today.

Putin is sending a message but our ass clown isn't smart enough to listen. I wonder if Ukraine will be able to reel in their Nazis or will the Nazis cross Putin's red line. Damn the times are interesting in that Chinese curse way.

Have a great evening

Catharsis Ours

Friday, March 28, 2014

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The First Russian Casualty: World's Largest Aluminum Company, Rusal, Warns It May Default

Sanctioned Russian Bank Shuts US Accounts To "Protect" Russian Clients

As Its Neonazis Rage, Ukraine's Ousted President Calls For Regional Referendums

Ukrainian govt strained as presidential election looms

US targets Russia with further sanctions

House prepares fresh sanctions, threatens Russian arms exporter

'Everybody owns a piece of everything'

Obama Falsely Claims Kosovo Secession Involved UN-Backed Referendum

No Referendum at All Actually Took Place

US Officials Play Up ‘Threat’ of Russia Invading Ukraine

Somewhere Between 20,000 and 100,000 Russian Troops on Border

US, EU Agree to Work on More Russia Sanctions

Obama Vows 'More Consequences for the Russian Economy'

2 comments: