http://www.golemxiv.co.uk/2014/03/ukraine-some-thoughts-on-who-is-playing-for-what/
( A great thirty thousand foot view by Golem XIV .... )
Ukraine – some thoughts on who is playing for what.
A few quick thoughts to offer on who might be playing for what in Ukraine.
First, most popular uprisings or protests get nowhere unless they get considerable outside help. For example Qatar supplied much of the help in the Arab Spring. In the Ukraine, it has been quite clear for a while now that the US has been in favor of a change of regime from pro-Russian to pro-Free market and aggressively Ukrainain ethinc-nationalist. Witness that well known US peacenik Senator john McCain’s trip last December to Kiev where he made a point of being photographed several times with Oleh Tyahnybok the leader of Svoboda party, one of the three opposition leaders the US likes. McCain spoke to a crowd saying how the Ukraine would be better in Europe and Europe would be better with the Ukraine. That McCain should speak about Ukraine in terms of joining Europe rather than as becoming a friend or ally of America, struck me at the time as interesting. Particularly because the US regime’s frustration with what it sees as Europe’s reluctance to share the US’s enthusiasm and policy has been painfully evident.
A frustration made rather public in the suave “F*kc the EU” comment made by the US State Department’s Victoria Nuland when she was speaking to US ambassador to Ukraine, Jeffrey Pyatt. Ms Nuland was … ‘underlining’ perhaps, the US State Department’s ‘desire’ to see Mr Yatsenyuk become the new power in Ukraine. According to Ms Newland “Yats [Yatsenyuk] is the guy who’s got the economic experience, the governing experience.” Apparently, and rather unsurprisingly, “Yat’s” ’economic experience’ rather than, let’s say, his diplomatic skills or his no doubt deep concern for the human rights of other ethnic groups (like Jews for example) was upper most in Ms Newland’s mind.
And now Yats is the new US backed leader. I say US backed rather than Western backed advisedly because I think what is unfolding in Ukraine is not a simply the West versus Russia.
The US – or at least the Hawks in the US, like McCain, are happy to see Ukraine detached from direct Russian control and for it to split East/West – as I think it likely it will. Such a split will not be clean or free of violence. It will therefore present the opportunity to create a thorn in Russia’s side. In the immediate it presents problems for Russian gas exports to Europe. It doesn’t stop them, of course. There is still Nord Stream running direct into Germany. And South stream is still coming along. But it will dent Russian export profits and worry European markets and governments.
But the benefits for America – at least in the minds of its hawks, don’t stop there.
Nothing hurt Pentagon funding like the fall of the Berlin Wall and the end of the East/West German split. What size of military pork barrel might a new East West Ukraine split deliver? I think the Pentagon is delighted. I doubt AMerica will be as nakedly provocative as to built big new military bases in a new West Ukraine. Though some will certainly think it only right and proper. But I would be amazed if they don’t create a few special forces and intelligence sites – which will need defending!
And of course the Pentagon’s pleasure is Europe’s pain. Europe is split on Ukraine. Germany is not happy to anger Russia. Merkel has conspicuously spent at least as much time on the phone with Putin as with Obama. Being the European terminus of the Nord Stream gas pipeline into Europe means Germany has along term interests in being friendly with Russia. And Germany has historically always looked East in its foreign policy. While France has historically always looked South and Britain always West. On top of which France has, since Syria, become America’s new best War-buddy. The reasons for which I wrote about in Syria – Cui Bono.
So by provoking a “f*ck the EU” split in Ukraine America weakens any pesky European solidarity. Nothing like dividing your allies against each other to maintain control over them. Not only does a split in Ukraine cause welcome friction between the two pillars of the European project, Berlin and Paris, it is also marvelously mischievous because if there is one thing the EU is very sensitive and worried about at the moment it is separatist movements. The EU does not like the idea of its constituent nations beginning to break apart into even more bickering and all-too-democratic factions. Centralization of decision making is what Brussels wants not nationalist democracies. Spain fears anything that gives legitimacy to Basque separatism. The EU and the Conservative Government in Westminster have made it very clear they are neither of them happy about Scotland away from the UK and France is nervous about a possible Belgian break up.
Which makes the present US championing of Ukrainian regime change, raising as it does separatist and ethnic arguments, very difficult fo the EU. Brussels doesn’t want to be seen as turning its back on the Ukrainian’s who want to be in Europe and which the US and the global media have been quick to call ‘Pro-democracy’. Yet it if they join in with American talk about ‘the right to self determination’ etc they leave themselves looking like utter hypocrites.
Not only that but in an East West split a great deal of what wealth there is in the Ukraine would stay with Russia while Europe and Britain , would get another large group of very poor people with an utterly bankrupt government looking for help, bail out and jobs. What wonderful social fears and tensions would erupt within a year, and be whipped up to fever pitch by the lovely, popular European and British press shrieking about how hundreds of thousands of poor Ukrainians were now going to join the flood of Romanians all of whom are about to move into our towns and take our jobs while claiming benefits for their 27 children. Somewhere in the US State department they are laughing with joy.
The US has already begun to back peddle on any idea that America would provide vast cash hand outs, preferring instead that Europe sort something out with the oh-so-lovely IMF. Europe would have a huge potential drain on its already unstable finances to say nothing of the carnage already happening at UniCredit and some of the Austrian banks exposed to Ukrainian debts. A poor Ukraine, promised it was going to be able to ‘join Europe’ and get help and iPads, would do nothing to help political stability and strength in Europe.
And what of Russia? Is this is KO? I don’t think so. Putin has consistently out-played the Obama regime. If I were Putin I would not rush too many troops in to Ukraine to secure the special forces units he has there. I would certainly move them up and move them in to key places. But I would also hope, and try to help along, any useful idiot in Ukraine who felt like shooting any Russian soldier or Russian speaking civilian. And then I would storm in to ‘protect’ vital interests and innocent civilians and to “oppose terrorism”. I would secure the best parts of Ukraine put my hand firmly on the gas tap, and leave the rest for Europe to cope with.
In this scenario American hawks do best, Russia and its military can hope to make a good result from a seemingly bad situation and Europe comes out weakened and divided.
This is, obviously, just one way of seeing a very complex situation and I don’t offer it as a rival to other considerations but rather as a compliment to them. I think, as always, it’s not about championing freedom. It always about power and competition between the large powers. in which the little countries are pieces to be moved about and manipulated wherever possible.
Zero Hedge.....
A round up of the events of the day......
Europe against sanctions US is pushing ?
Europe Can't Even Agree On Russian Trade Sanctions
The (ironically named) United Kingdom is the first to openly raise concerns over trade sanctions against Russia. As The Telegraph reports,
"Britain is preparing to rule out trade sanctions against Russia amid fears that the Ukraine crisis could derail the global economic recovery"
Perhaps it is the fear of a massive liquidity suck out from London's real estate market (or its banking system) that has the Brits on edge. We suspect Germany will be close behind as they eye exploding gas and oil prices and their dependence on Russia's marginal production.
It would appear, just as in the case of Syria, that Obama may find himself alone among his allies...
And....
Ukraine crisis: US-Europe rifts surfacing as Putin tightens Crimea grip
Barack Obama threatens to 'isolate Russia' as EU ministers resist trade sanctions
Ukraine crisis: pro-Russian activists demonstrate in front of police outside the regional administration building in Donetsk. Photograph: Alexander Khudoteply/AFP/Getty
A rift appeared to be opening up on Monday night between the US andEurope on how to punish Vladimir Putin for his occupation of Ukraine's Crimea peninsula, with European capitals resisting Washington's push towards tough sanctions.
With the Americans, supported by parts of eastern Europe and Sweden,pushing for punitive measures against Moscow, EU foreign ministers divided into hawks and doves, preferring instead to pursue mediation and monitoring of the situation in Ukraine and to resist a strong sanctions package against Russia.
On the ground in Crimea, Russian forces continued to tightentheir stranglehold, intimidating and surrounding Ukrainian marines in an attempt to force them to surrender without shots being fired. There were further ominous developments in eastern Ukraine, where pro-Russian crowds forced their way into a number of government buildings.
Barack Obama said the White House was "examining a whole series of steps – economic, diplomatic – that will isolate Russia and will have a negative impact on Russia's economy and status in the world".
Barack Obama talks on the phone in the Oval Office with Russian president Vladimir Putin about the situation in Ukraine. Photograph: The White House/Getty Images
The US state department said it was reviewing its entire portfolio of trade and co-operation with Moscow, including preparing a raft of possible measures targeting senior government and military officials implicated in the invasion of the Ukrainian peninsula.
Obama is expected to use his executive authority to bypass Congress to quickly target senior Russian officials. But Washington is clearly aware it may struggle to rally support for punitive measures from Europe.
"The most important thing is for us – the United States – to make sure that we don't go off without the European community," the majority leader in the Senate, Democrat Harry Reid, told Politico. "Their interests are really paramount if we are going to do sanctions of some kind. We have to have them on board with us."
But at an emergency meeting in Brussels the foreign ministers of Germany, France, Italy and Spain resisted calls for trade sanctions, instead limiting discussion to freezing long-running talks with Russia on visa liberalisation that would have made it easier for Russians to visit Europe. Washington is also threatening to kick Russia out of the G8 group of leading economies, but Berlin opposes this.
The secret government document, which reveals Britain's attempts to ensure any EU action against Russia over Ukraine would exempt the City of London
Britain's attempts to ensure any EU action against Russia over Ukraine would exempt the City of London were embarrassingly revealed when a secret government document detailing the plan was photographed in Downing Street. The document said Britain should "not support, for now, trade sanctions … or close London's financial centre to Russians".
Like other EU countries, and especially Germany, which obtains almost 40% of its gas and oil from Russia, the UK is reluctant to adopt measures that could damage its still fragile economic recovery.
In any event further discussion of EU sanctions are likely to have to wait until an emergency leaders summit in Brussels on Thursday.
Rather than stronger sanctions Berlin is pushing the idea of a "contact group", under the auspices of the democracy watchdog the Organisation for Security and Cooperation in Europe, to go to Ukraine and monitor the grievances of both sides following the Russian seizure of Crimea, achieving its aims without a shot being fired. But no decision was taken on an OSCE "factfinding mission".
Armed men stand guard at the local government headquarters in Simferopol in Crimea. Photograph: David Mdzinarishvili/Reuters
As the Russians consolidated their hold on Crimea and the US administration conceded the peninsula was under complete Russian control, there were contradictory reports of an ultimatum to remaining Ukrainian forces to surrender their weapons by early on Tuesday .
Senior Russian government figures insisted they wanted to avoid a war in Ukraine, but also demanded a new and "more inclusive" government in Kiev and that the policies of the country would have to take account of Russian interests.
The costs of the conflict to Putin became quickly apparent. The rouble fell 2% against the dollar and $55bn (£33bn) was wiped off the Russian stock exchange on Monday as the instability shattered investors' confidence. The value of Gazprom, Russia's energy giant, whose exports to Europe go via Ukraine, fell by $12bn.
As the US secretary of state, John Kerry, headed for Kiev, the Russian foreign ministry accused him of being a cold warrior and demanded the reinstatement of the toppled president, Viktor Yanukovych, who fled Kiev for Russia on 21 February. Moscow said that an agreement that would have kept him in office for the rest of the year, negotiated last Friday, should be reactivated.
But at the Kiev negotiations Russia was the sole party not to support the deal and refused to sign it. It was signed by the German, Polish, and French foreign ministers.
Senior US officials dismissed claims that Washington was incapable of exerting influence on the Russian president, but were forced to admit Crimea had been successfully invaded by 6,000 airborne and ground troops in what could be the start of a wider invasion. "They are flying in reinforcements and they are settling in," said one senior official. Another said: "Russian forces now have complete operational control of the Crimean peninsula."
Russian navy crew members on a patrol boat guard Russian military ships in the port of Sevastopol on Sunday. Photograph: Maxim Shipenkov/EPA
On Monday morning, Russian soldiers were reported to have further cemented their control of the region overnight, having seized a ferry terminal in the Ukrainian port city of Kerch, about 20km from Russia.
The soldiers were reported to be Russian-speaking, driving vehicles with Russian number plates, but refused to confirm their identity. Residents of the neighbouring port town Nikolayev reported Russian troops had arrived overnight, intensifying fears Moscow will send further soldiers beyond Russian-speaking Crimea into eastern Ukraine.
Russia's Interfax news agency reported that Russian fighter jets twice violated Ukraine's air space over the Black Sea during the night. It said Ukraine's air force had scrambled a Sukhoi Su-27 interceptor aircraft and prevented any "provocative actions".
Ukrainian border guards reported a buildup of armoured vehicles near a ferry port on the Russian side of the Kerch channel – a narrow sea lane dividing Russia and Ukraine.
Ukrainian soldiers guard the entrance of a military base in the Crimean city of Bakhchisaray. Photograph: Genya Savilov/AFP/Getty Images
A statement from the guard spokesperson said Russian ships had also been moving in and around the city of Sevastopol, where the Russian Black Sea fleet has a base, and that Russian forces had blocked telephone services in some areas.
German officials denied US reports that the chancellor, Angela Merkel, following a phone conversation with Putin, had told Obama that the Russian leader had lost touch with reality.
While the alarm is high, there is also relief in western capitals that the crisis has not yet turned into a shooting war.
"The real danger is that someone just loses their nerves, not out of political reasons, but because it's so tense," said Frank-Walter Steinmeier, the German foreign minister.
Analyzing Russian tactics in Ukraine ......
http://www.zerohedge.com/news/2014-03-03/realpolitik-ukraine
Realpolitik In Ukraine
Submitted by Anatole Kaletsky via Evergreen-Gavekal,
Oscar Wilde described marriage as the triumph of imagination over intelligence and second marriage as the triumph of hope over experience. In finance and geopolitics, by contrast, experience must always prevail over hope and realism over wishful thinking. A grim case in point is the Russian incursion into Ukraine. What makes this confrontation so dangerous is that US and EU policy seems to be motivated entirely by hope and wishful thinking. Hope that Vladimir Putin will “see sense,” or at least be deterred by the threat of US and EU sanctions to Russia’s economic interests and the personal wealth of his oligarch friends. Wishful thinking about “democracy and freedom” overcoming dictatorship and military bullying.
Financial markets cannot afford to be so sentimental. While we should always recall at a time like this the famous advice from Nathan Rothschild to “buy at the sound of gunfire,” the drastically risk-off response to weekend events in Ukraine makes perfect sense because Russia’s annexation of Crimea is the most dangerous geopolitical event of the post-Cold War era, and perhaps since the Cuban Missile crisis. It can result in only two possible outcomes, either of which will be damaging to European stability in the long-term. Either Russia will quickly prevail and thereby win the right to redraw borders and exercise veto powers over the governments of its neighbouring countries. Or the Western-backed Ukrainian government will fight back and Europe’s second-largest country by area will descend into a Yugoslav-style civil war that will ultimately draw in Poland, NATO and therefore the US.
No other outcome is possible because it is literally inconceivable that Putin will ever withdraw from Crimea. To give up Crimea now would mean the end of Putin’s presidency, since the Russian public, not to mention the military and security apparatus, believe almost unanimously that Crimea still belongs to Russia, since it was only administratively transferred to Ukraine, almost by accident, in 1954. In fact, many Russians believe, rightly or wrongly, that most of Ukraine “belongs” to them. (The very name of the country in Russian means “at the border” and certainly not “beyond the border”). Under these circumstances, the idea that Putin would respond to Western diplomatic or economic sanctions, no matter how stringent, by giving up his newly gained territory is pure wishful thinking.
Putin’s decision to back himself into this corner has been derided by the Western media as a strategic blunder but it is actually a textbook example of realpolitik. Putin has created a situation where the West’s only alternative to acquiescing in the Russian takeover of Crimea is all-out war. And since a NATO military attack on Russian forces is even more inconceivable than Putin’s withdrawal, it seems that Russia has won this round of the confrontation. The only question now is whether the new Ukrainian government will accept the loss of Crimea quietly or try to retaliate against Russian speakers in Ukraine—offering Putin a pretext for invasion, and thereby precipitating an all-out civil war.
That is the key question investors must consider in deciding whether the Ukraine crisis is a Rothschild-style buying opportunity, or a last chance to bail out of risk-assets before it is too late. The balance of probabilities in such situations is usually tilted towards a peaceful solution—in this case, Western acquiescence in the Russian annexation of Crimea and the creation of a new national unity government in Kiev acceptable to Putin. The trouble is that the alternative of a full-scale war, while far less probable, would have much greater impact—on the European and global economies, on energy prices and on the prices of equities and other riskassets that are already quite highly valued. At present, therefore, it makes sense to stand back and prepare for either outcome by maintaining balanced portfolios of the kind recommended by Charles, with equal weightings of equities and very long-duration US bonds.
Looking back through history at comparable episodes of severe geopolitical confrontation, investors have usually done well to wait for the confrontation to reach some kind of climax before putting on more risk.
In the 1962 Cuban Missile Crisis, the S&P 500 fell -6.5% between October 16, when the confrontation started, and October 23, the worst day of the crisis, when President Kennedy issued his nuclear ultimatum to Nikita Khrushchev. The market steadied then, but did not rebound in earnest until four days later, when it became clear that Khrushchev would back down; it went on to gain 30% in the next six months.
Similarly in the 1991 Gulf War, it was not until the bombing of Baghdad actually started and a quick US victory looked certain, that equities bounced back, gaining 25% by the summer. Thus investors did well to buy at the sound of gunfire, but lost nothing by waiting six months after Saddam Hussein’s initial invasion of Kuwait in August, 1990.
Even in the worst-case scenario to which the invasion of Crimea has been compared over the weekend—the German annexation of Sudetenland in June 1938—Wall Street only rebounded in earnest, gaining 24% within one month, on September 29, 1938.That was the day before Neville Chamberlain returned from Munich, brandishing his infamous note from Hitler and declaring “peace in our time.” The ultimate triumph of hope over experience.
and......
http://www.zerohedge.com/news/2014-03-03/ukraine-has-only-4-months-gas-stocks-without-russia
Ukraine Has Only 4 Months Of Gas Stocks Without Russia
Having explained the Ukraine "situation" in one map, it appears the inter-connectedness of Ukraine and Russia is becoming any increasingly problematic part of the current crisis. As Reuters reports, absent Russian gas, Ukraine's natural gas stocks can meet just 4 months of demand. The modest silver-lining is that the stocks are generally in the west of the country (away from potential Russian intervention) but it bears noting that Ukraine meets around half its gas demand through Russian imports (and Russia has cut supplies in the past). The situatio is not just energy though as Bloomberg notes, that Ukraine relies on Russia for about 30 percent of its global trade activity, compared with Russia’s 6 percent dependency on Ukraine.
Sadly, everything you need to know about the crisis in Ukraine in one worrisome map which summarizes all the relevant "red lines."
To prepare for a potential disruption,Ukraine's gas transit monopoly Ukrtransgas has been increasing its gas imports from Russia in recent days, increasing its stocks which now stand at four months worth of supplies, several industry sources said.
Of Ukraine's 33 billion cubic metres (bcm) storage capacity, Gas Infrastructure Europe (GiE) data shows that around 80 percent is in its far west, so even in the case of a Russian intervention in Ukraine's predominantly Russian east, most storage assets would likely remain safe from seizure.
Analysts also say that a continuation of gas supplies was in the interest of all parties.
"Until a real war, I think that all sides (Russia, Europe and all parties in Ukraine) have a vested interest in flowing gas from Russia to Europe," said Thierry Bros, senior gas analyst at French bank Societe General.
"Russia needs the money from gas sales, Europe is 26 percent dependant on Russia for its gas consumption, and Ukraine need the money from the transit fees," he added.
Ukraine's Reliance on Russia goes far beyond just energy...
A conflict between Russia and Ukraine would have a more substantial impact on Ukraine in terms of trade dependency. Trade-flow data show that Ukraine relies on Russia for about 30 percent of its global trade activity, compared with Russia’s 6 percent dependency on Ukraine. The European Union overtook Russia as the larger destination for Ukraine’s exports in January 2013 on a 12-month rolling basis.Still, more than a quarter of Ukraine’s exports are still consumed by Russia. Ukraine depends on Russia for about a third of its total imports. Russia’s reliance on Ukraine is much less, with 6 percent of the country’s exports being consumed by Ukraine and about 5 percent of Russia’s imports coming from Ukraine.
The chart illustrates how trade dependencies between Ukraine and Russia have changed during the past 10 years.
And it's not just Ukraine that faces a problem...
In western Europe, a mild winter and improved infrastructure mean Europe is less reliant on Russian natural gas pumped through Ukraine than in past years, easing worries that the escalating crisis in Ukraine could hurt supplies.Despite the improved situation, analysts warned that a renewed disruption would hit Europe hard."Risks for Europe exist always, that is why it should pursue even more diversification projects further and develop liquefied natural gas (LNG) markets and new connectors in central and southeastern European regions," said Anna Bulakh of the International Centre for Defence Studies.
However, Ukraine has another big problem - while it would like $3bn in IMF loans, that will not even cover interest and principal payments through June...
What is perhaps most ironic is the mainstream media's attention to a 12% drop in the Russian stock market. If this occurred in the US, it would be the end of the status quo... Putin does not care about Russian stocks... all he cares about is the price of oil. Sanctions would merely raise oil prices as supply would be cut... raising the value of Russia's resources - and we are sure the Chinese would be more than happy to buy (in Yuan-terms) crude direct from Russia as the rest of the world shuns them (and faces crushing energy costs).
Source: Bloomberg
and.....
http://www.zerohedge.com/news/2014-03-03/ousted-ukraine-president-yanukovich-has-asked-putin-use-military-force-ukraine
Ousted Ukraine President Yanukovich Has Asked Putin To Use Military Force In Ukraine
The headlines are getting hot and heavy now. Just out from Bloomberg:
- UKRAINE CRISIS 'BREEDING VERY SERIOUS RISKS FOR RUSSIA':CHURKIN
- RADICAL EXTREMISTS TRYING TO TAKE CONTROL IN UKRAINE: CHURKIN
And Reuters with the punchline from Reuters:
- RUSSIAN U.N. ENVOY CHURKIN SAYS UKRAINE'S OUSTED PRESIDENT YANUKOVICH HAS SENT LETTER TO PUTIN ASKING HIM TO USE RUSSIAN MILITARY FORCE IN UKRAINE
CNN has the letter contents:
Ukraine is on the brink of civil war. In the country, there is chaos and anarchy.The life, the security and the rights of people, particularly in the southeast part in Crimea are being threatened.So under the influence of Western countries, there are open acts of terrorism and violence. People are being persecuted for language and political reasons.So in this regard, I would call on the President of Russia, Mr. Putin, asking him to use the armed forces of the Russian Federation to establish legitimacy, peace, law and order, stability, and defending the people of Ukraine.
So what will Putin do if he still believes, as he has said, Yanuk to be the proper president of the Ukraine? Of course, this is all a smokescreen merely created to provide Russia yet another "justification" for its actions before the diplomatic circus that is the UN.
At the end of the day, if Obama's heartfelt pleadings about "costs" and what not did not stop Putin from invading the Ukraine, then certainly nothing aside from an armed retaliation will push him back.
Analyzing the moves of the West......
http://www.zerohedge.com/news/2014-03-03/ukraines-nato-member-neighbors-boost-air-force-presence
Ukraine's NATO Member Neighbors To Boost Air Force Presence
- Estonia
- European Union
- Iran
- Latvia
- Lithuania
- national security
- North Korea
- Obama Administration
- Poland
- Portugal
- SPY
- Ukraine
- Vladimir Putin
As the big questions surrounding the future of the Ukraine crisis persist, the countries neighboring the former communist nation, and especially the Baltic states which are members of NATO, are asking for safeguards should Russian ambitions end up just a little too big to be contained solely by the Ukraine. As a result, the WSJ reports they are considering calling for a greater North Atlantic Treaty Organization presence in their countries “if the situation gets worse” in the Ukraine, Ojars Kalnins, the chairman of the foreign-affairs committee of the Latvian parliament, said Monday. Mr. Kalnins said that a worsening of the Ukraine crisis “such as an outright invasion” of areas outside Crimea would present a threat to all of Russia’s neighbors, including the Baltic states–which are members of NATO. Such an expanded conflict should be reason for NATO to “bring extra military support to the Baltic region as a safeguard.”
Atis Lejins, a member of the Latvian parliament’s foreign-affairs committee, said increasing the number of NATO aircraft patrolling Baltic airspace could be one way to beef up NATO’s presence.Currently a small, rotating contingent of fighter aircraft from NATO countries operates from a base in Lithuania. Mr. Lejins, a former U.S. Marine, said one example of a heightened presence was the U.S. Air Force Aviation Detachment (AV Det) program in Poland, which rotates fighter and transport units to bases in Poland.Critics of an increased NATO presence say that costs to both Latvia and NATO could be a hurdle to expanding air patrols. Increased air patrols would upgrade the NATO presence in all three countries because aircraft cover the airspace of all three Baltic countries.Mr. Kalnins spoke after a joint meeting of the Saeima’ s Foreign Affairs and European Affairs committees that condemned Russia’s incursion into Crimea and called for European Union and Organization for Security and Cooperation in Europe (OSCE) observers to be sent to the Ukraine.He spoke on Monday at the same time as the Lithuanian Parliament’s Foreign Affairs and National Security and Defence Committee passed a resolution condemning Russia’s military aggression against Ukraine and the occupation of the territory of Ukraine. The Lithuanian resolution also called on the North Atlantic Council to temporarily redeploy NATO military forces to its “eastern part, including the Baltic states.”
One country which may have already acted in this regard is Poland. According toDziennik Wschodni, earlier today F-16 fighter jets could be seen above the Polish town of Lublin and other towns of the province. "Military jets appeared over our region between the hours of 2 and 3 pm. Our Internet users say that they heard the roar of the engines also in the morning."
"One of the aircraft from our base flew the route from Lublin to Krakow" confirms Cpt. Marek Kwiatek, Press Officer of the 32nd Tactical Air Base at Lask.The second aircraft came probably from a base in Krzesiny. There were also questions whether the flights are connected with the Russian invasion of Ukraine. - This is the stadard of training, which are held throughout the country. Pilots among others support this so-called. habits flights - explains Cpt. Flower. He adds that the aircraft is on standby.
So more drills or something more? Recall that Russia commenced a massive "drill" last week in the West and Central regions before it quite demonstratively invaded the Crimea. It is only logical that the countries that stand to lose the most from an expansion of the Russian invasion match that drill with "drills" of their own.
Finally, recall that as we reported in December, Russia then had positioned tactical, nuclear-capable missiles along the Polish border. Based on this, and Poland's recent history with friendly and not so friendly neighbors, one can see why the Baltic nation would be very nervous.
From December 2013:
Russia Stations Tactical, Nuclear-Capable Missiles Along Polish Border
2013 was a year when Europe tried to reallign its primary source of natgas energy, from Gazpromia to Qatar, and failed. More importantly, it was a year in which Russia's Vladimir Putin undisputedly won every foreign relations conflict that involved Russian national interests, to the sheer humiliation of both John Kerry and Francois Hollande. However, it seems the former KGB spy had a Plan B in case things escalated out of control, one that fits with what we wrote a few days ago when we reported that "Russia casually announces it will use nukes if attacked." Namely, as Bloomberg reports citing Bild, Russia quietly stationed a double-digit number of SS-26 Stone, aka Iskander, tactical, nuclear-capable short-range missiles near the Polish border in a dramatic escalation to merely verbal threats issued as recently as a year ago.
The range of the Iskander rockets:
From Bloomberg:
- Russia has stationed missiles with a range of about 500 kilometers in its Kaliningrad enclave and along its border with the Baltic states of Estonia, Latvia and Lithuania, Germany’s Bild-Zeitung reports, citing defense officials it didn’t identify.
- Satellite images show a “double-digit” amount of mobile units identified as SS-26 Stone in NATO code
- Missiles were stationed within the past 12 months
- SS-26 can carry conventional as well as nuclear warheads
In other words, Russia quietly has come through on its threat issued in April 2012, when it warned it would deploy Iskander missiles that could target US missile defense systems in Poland. From RIA at the time:
Moscow reiterated on Tuesday it may deploy Iskander theater ballistic missiles in the Baltic exclave of Kaliningrad that will be capable of effectively engaging elements of the U.S. missile defense system in Poland.NATO members agreed to create a missile shield over Europe to protect it against ballistic missiles launched by so-called rogue states, for example Iran and North Korea, at a summit in Lisbon, Portugal, in 2010.The missile defense system in Poland does not jeopardize Russia’s nuclear forces, Army General Nikolai Makarov, chief of the General Staff of the Russian Armed Forces, said.“However, if it is modernized…it could affect our nuclear capability and in that case a political decision may be made to deploy Iskander systems in the Kaliningrad region,” he said in an interview with RT television.“But that will be a political decision,” he stressed. “So far there is no such need.”
Looks like a little over a year later, the "political decision" was taken as the need is there. But why does Russia need to send a very clear message of escalation at a time when the Cold War is long over, when globalization and free trade, promote game theoretic world peace (or "piece" as the Obama administration wouldsay), oh, and when Russia quietly has decided to reestablish the former USSR starting with the Ukraine.
We'll leave the rhetorical question logically unanswered.
and....
http://www.zerohedge.com/news/2014-03-03/obamas-latest-tactic-isolate-russia
Obama's Latest Tactic: "Isolate Russia"
After once again clearly delineating that Russian "costs" are set to surge, and hopefully he means more than just the drop in the Micex and its artificial, paper wealth effect which Putin couldn't care less about as long as crude is soaring...
- OBAMA SAYS INCIDENT WITH UKRAINE WILL BE ‘COSTLY’ FOR RUSSIA
... the US president has laid out his latest tactic:
- OBAMA SAYS HE'S CONSIDERING ECONOMIC STEPS TO ISOLATE RUSSIA
Does he also mean to isolate Russian gas from entering Germany, which just happens to be reliant on Russian imports for a third of its natgas needs? He goes on.
- OBAMA SAYS RUSSIA ON `WRONG SIDE OF HISTORY' IN UKRAINE
Which of course is written by the winners. And the punchline:
- OBAMA URGES CONGRESS TO PROVIDE PACKAGE OF ASSISTANCE QUICKLY TO UKRAINIAN PEOPLE; SAYS SHOULD NOT BE PARTISAN ISSUE ON CAPITOL HILL
Maybe time to send Obamacare to Kiev: so many young, strapping participants just waiting to sign up? Or maybe it just time to raise minimum wages in the Ukraine while giving the local population the safety of mind that comes with investing in the "no risk, guaranteed return" MyRA.
and.....
http://www.zerohedge.com/news/2014-03-03/ukraine-denies-russias-denial-claims-ships-threatened-wirh-seizure
Ukraine Denies Russia's Denial, Claims Ships Threatened With Seizure
Minutes after Russia denied it had issued an ultimatum to the Ukraine navy, Ukraine's acting president has just denied the denial.
- UKRAINE'S TURCHYNOV SAYS SHIPS THREATENED IF ARMS NOT LAID DOWN
- UKRAINE'S TURCHYNOV SAYS SHIPS THREATENED WITH SEIZURE
- UKRAINE'S TURCHYNOV SAYS SITUATION AROUND FLEET IS DANGEROUS
- UKRAINE'S TURCHYNOV SAYS RUSSIA INCREASING CRIMEA FORCES
- UKRAINE'S TURCHYNOV SAYS RUSSIAN BLACK SEA FLEET HAS BLOCKED UKRAINIAN NAVY VESSELS IN SEVASTOPOL BAYS
- TURCHYNOV SAYS SITUATION DIFFICULT IN EASTERN UKRAINE
- TURCHYNOV CALLS ON RUSSIA TO STOP AGGRESSION
What is curious here is that while it is clear why Russia would benefit from an escalation in hostilities in the Crimea, on which it did not "start" - i.e., allowing it a clear pretext to enter the "east" and "protect" its citizens - what is becoming clear is that it is Ukraine that is desperate to raise the level of hostilities. Why - if it is to force the hand of NATO, EU or the west in providing assistance, this is a wild gambit, which will backfire massively.
and.....
http://www.zerohedge.com/news/2014-03-03/unicredit-temporarily-limits-atm-withdrawals-ukraine
Unicredit "Temporarily" Limits ATM Withdrawals In Ukraine
It appears the bank runs - or desparate dash for cash - in Ukraine have escalated. We noted that Russian banks had already limited access but now Unicredit has issued a statement "temporarily limiting operations on cash withdrawal in ATMs, in order to provide all the clients with an access to cash money." The decision, they stress, is a temporary one (like Cyprus capital controls?) and will be cancelled with the "normalization of the situation."
UniCredit Bank has temporarily limited operations on cash withdrawal in ATMs, in order to provide all the clients with an access to cash money. According to the decision of the Management Board, the sum for cash withdrawal for one card is limited at the level of UAH 1500 per 24 hours.
We are stressing that these measures are taken exclusively to provide all the bank’s clients with ATM service. For the same purposes, cash withdrawals at UniCredit Bank’s ATMs using cards of other banks is limited 500 UAH per day.
This decision – is a temporary one and it will be cancelled in the nearest time with the normalization of situation.Besides, it does not involve operations in the trade networks.
We bring our apologies for temporary inconveniences and hope for understanding
and.....
http://www.zerohedge.com/news/2014-03-03/russian-stocks-crash-central-bank-scrambles-hikes-rates-most-1998-default
Russian Stocks Crash As Central Bank Scrambles, Hikes Rates Most Since 1998 Default
Following a 150bps rate hike by the central bank - the largest since the 1998 default -desperate to halt capital outflows and a collapsing currency,Russian stocks have crashed 11% led by some of the country's largest banks. USDRUB rose to just shy of 37 - theweakest RUB rate on record - but rallied back a little on the rate hike but the MICEX stock index tumbled 11% to almost 2-year lows with Sberbank (Russia's largest bank) down 17% and VTB (2nd largest bank) down 20%. Between the threat of economic sanctions from the West and simple risk-aversion-based capital flight, as one analyst noted, "uncertainty risks a further escalation in domestic capital outflow."
MICEX is down 11% today alone...
Ruble at record lows against the USD...
It was the biggest increase in a Russian benchmark rate since June 1998, less than two months before Russia defaulted on domestic sovereign bonds and devalued the currency. The refinancing rate used to be the central bank’s main reference.
The Banks have been battered...
- Sberbank, Russia’s biggest bank, drops 17%, loses most since 2008
- VTB, Russia’s second-bigest lender, tumbles 20%
- Bank St. Petersburg falls 16%
- Bank Vozrozhdenie declines 10%
- Nomos Bank slides 12%
European and U.S. leaders have threatened sanctions against Russia, creating risks that economic growth will stall, demand for the country’s assets will dry up and a selloff in the currency will deepen. "There is a risk of international backlash against Russia at a time when the economy faces an increasing need for foreign capital inflows... This uncertainty risks a further escalation in domestic capital outflow."
Around the world, stock markets are tumbling with Europe down around 2% - almost its largest drop in 7 months; and Japan down 600 from Friday's highs.
As you can imagine , this scrum puts a lot on the line for both Russia , the West and the future balance of global power as the world is watching to see how this all plays out......
Russia Warns Kerry's "Threats Are Unacceptable" As Europe Weighs Sanctions
Russia has lashed out following comments from US Secretary of State John Kerry:
- *RUSSIA SAYS KERRY THREATS ARE `UNACCEPTABLE'
- *RUSSIA SAYS KERRY ISN'T ANALYSING SITUATION IN UKRAINE
- *KERRY IS USING COLD WAR SLOGANS, RUSSIA FOREIGN MINISTRY SAYS
In comments on the Russian foreign ministry website, Lavrov added:
- *RUSSIAN MEASURES IN UKRAINE ARE `REASONABLE,' `LEGAL': FOR.MIN.
- *U.S., ALLIES IGNORED VIOLENCE, RUSSOPHOBIA IN UKRAINE PROTESTS
- *G-8 HALT OF PREPARATIONS FOR SUMMIT IS UNCONSTRUCTIVE: RUSSIA
In addition, EU ministers debate freezing the assets of Ukrainians responsible for corruption and "targeted measures" against Russia if no change of course is undertaken.
- *EU Ministers Debate Freezing Assets of Ukrainians Responsible for Corruption – Draft Text
- *EU Debates Calling Russian Crimea Actions “Invasion” – Draft Text
- *EU Commends Ukraine’s Response to Russia Actions – Draft
- *EU Will Suspend Visa Negotiations with Russia – Draft Text
- *EU Debating Placing Arms Embargo on Russia If No Change of Course
- *EU Could Prepare Future “Targeted Measures” vs Russia If No Change in Course – Draft
Perhaps most notable though this morning was the following headline:
- *RUSSIA DEP FORMIN KARASIN SPOKE ON UKRAINE W/ CHINA COUNTERPART
- *RUSSIA: CHINA EXPRESSED UNDERSTANDING OF ITS UKRAINE ANALYSIS
- *RUSSIA, CHINA DISCUSSED UKRAINE'S INTERNAL POLITICAL CRISIS
In other words, China was well aware of the plan and appears comfortable taking sides.
Ukraine's Prime Minister Speaks
Submitted by Tyler Durden on 03/03/2014 08:05 -0500
Ukraine's acting PM Arseniy Yatsenyuk speaks. Highlights below:
- UKRAINE TO FULFILL ALL IMF REQUIREMENTS, PREMIER SAYS - like Greece?
- UKRAINE PM SAYS BELIEVES RUSSIAN TROOPS WON'T INVADE E. UKRAINE - because they are there already?
- UKRAINE PM SEEKS TO INCREASE RESERVES TO EASE FX FLUCTUATIONS - "Whatever it takes", even printing dollars
- UKRAINE PM SAYS NAFTOGAZ SHOULD BE PRIVATIZED - Ukraine oligarchs delighted by this development
- UKRAINE PM SAYS NEW GOVERNMENT HAS NO INTENTION OF NATIONALISING PRIVATE COMPANIES" - Ukraine oligarchs even more delighted by this development
And finally, why all the above was irrelevant:
- UKRAINE PM SAYS RUSSIA REFUSES TO HOLD BILATERAL UKRAINE TALKS
Oh well, as long as it fools those USDJPY ramp algos if only for a few minutes.
And....
Submitted by Tyler Durden on 03/03/2014 08:05 -0500
Ukraine's acting PM Arseniy Yatsenyuk speaks. Highlights below:
- UKRAINE TO FULFILL ALL IMF REQUIREMENTS, PREMIER SAYS - like Greece?
- UKRAINE PM SAYS BELIEVES RUSSIAN TROOPS WON'T INVADE E. UKRAINE - because they are there already?
- UKRAINE PM SEEKS TO INCREASE RESERVES TO EASE FX FLUCTUATIONS - "Whatever it takes", even printing dollars
- UKRAINE PM SAYS NAFTOGAZ SHOULD BE PRIVATIZED - Ukraine oligarchs delighted by this development
- UKRAINE PM SAYS NEW GOVERNMENT HAS NO INTENTION OF NATIONALISING PRIVATE COMPANIES" - Ukraine oligarchs even more delighted by this development
And finally, why all the above was irrelevant:
- UKRAINE PM SAYS RUSSIA REFUSES TO HOLD BILATERAL UKRAINE TALKS
Oh well, as long as it fools those USDJPY ramp algos if only for a few minutes.
And....
Ukraine Accuses Russian Fighter Jets Of Violating Its Airspace
Submitted by Tyler Durden on 03/03/2014 07:28 -0500
Infantry, navy, and now air force. At least according to the Ukraine, which reported that Russian fighter jets twice violated Ukraine's air space over the Black Sea during the night, Interfax news agency quoted the Defence Ministry as saying on Monday. It said Ukraine's air force had scrambled a Sukhoi SU-27 interceptor aircraft and prevented any "provocative actions" but gave no further details. That was just the cherry on top to what has already been an exhausting day for risk in Russia and the Ukraine, both of which saw their currencies tumble to all time lows.
In the meantime, Russian fortifications in the region continue. Reuters summarizes:
A Ukrainian border guard spokesman said on Monday that Russian ships had been moving in and around the Crimean port city of Sevastopol, where the Russian Black Sea Fleet has a base, and that Russian forces had blocked mobile telephone services in some parts of Crimea.
He said Moscow was building up its armor near a ferry port on Russia's side of the 4.5 km (three mile) wide Kerch straight, which separates Crimea from Russia.
"There are armoured vehicles on the other side of the strait. We can't predict whether or not they will put any vehicles on the ferry," the spokesman said by telephone.
There was no immediate comment from the Russian Defence Ministry.
Russian forces have already bloodlessly seized Crimea - an isolated Black Sea peninsula with an ethnic Russian majority, where Moscow has a naval base.
On Sunday they surrounded several small Ukrainian military outposts there and demanded the Ukrainian troops disarm. Some refused, leading to stand-offs, although no shots were fired.
All eyes are now on whether Russia makes a military move in predominantly Russian-speaking eastern Ukraine, where pro-Moscow demonstrators have marched and raised Russian flags over public buildings in several cities in the last two days.
Russia has staged war games with 150,000 troops along the land border, but so far they have not crossed. Kiev says Moscow is orchestrating the protests to justify a wider invasion.
Ukraine's security council ordered the general staff to immediately put all armed forces on highest alert. However, Kiev's small and underequipped military is seen as no match for Russia's superpower might.
U.S. Secretary of State John Kerry condemned Russia for what he called an "incredible act of aggression" and threatened "very serious repercussions".
G8 countries and other nations were prepared to "to go to the hilt to isolate Russia" if Moscow made the wrong choices in Ukraine, Kerry told CBS program Face the Nation.
"They are prepared to isolate Russia economically. The rouble is already going down. Russia has major economic challenges," he said. He mentioned visa bans, asset freezes and trade isolation as possible steps.
While the EU and NATO stepped up verbal pressure on Moscow, a German spokesman said Merkel believed it was not too late to resolve the Ukrainian crisis by political means despite differences of opinion between Putin and the West.
The German leader, who speaks fluent Russian, has had several long telephone calls with the German-speaking Putin since the crisis erupted with mass protests in Kiev.
"There is no doubt President Putin has a completely different view on the situation and events in Crimea from the German government and our Western partners," spokesman Steffen Seibert told reporters. But he added: "It is still not too late to resolve this crisis peacefully by political means."
U.N. Secretary-General Ban Ki-moon said he would ask Russia's foreign minister at a meeting in Geneva to refrain from acts or rhetoric that would further escalate the crisis. He was sending his deputy to convey the same message to the Ukrainian authorities in Kiev, he said.
So far, the Western response has been largely symbolic. Obama and others suspended preparations for a G8 summit in Sochi, where Putin has just finished staging his $50 billion winter Olympic games. Some countries recalled ambassadors. Britain said its ministers would stay away from the Paralympics due next in Sochi.
With the confrontation in Crimea having remained bloodless for days, a mood of imminent catastrophe has begun to ebb in Kiev, but many people are still on edge.
On Kiev's Independence Square, known as the Maidan, where protesters manned barricades for three months to bring down Yanukovich, the morning crowds were smaller than in the past few days as people returned to work.
"Crimea, we are with you!" read one placard. "Putin - Hitler of the 21st century," read another.
Sergei Lavreynenko, 44, a librarian from Kiev, said Ukrainians were ready to take up arms to defend the country, and were frustrated at mixed messages from the authorities.
"Of course we are all ready to go," he said next to a display of homemade mortar tubes and molotov cocktails used in the uprising against Yanukovich. "We have all served in the military. We have military specialisms. If we can build our own mortar tube like that, we can do even better.... But it needs to be organized. You can't just get a bunch of guys, grab sticks and clubs and race off to Crimea."
From Bloomberg......
Russia Gas Threat Shows Putin Using Pipes to Press Ukraine
http://rt.com/news/kiev-clashes-rioters-police-571/
Monday, March 3
12:17 GMT:
The worsening political situation in Ukraine “gives grounds for fears for the country’s fate”and “creates a threat to peace and stability in Crimea,” the Crimean parliament said in a statement.
“Unfortunately, these fears turned out to be justified,” the statement said. The Feb. 21 agreement to escape the political crisis which was prepared by the representatives from the EU and Russia, and signed by the Ukrainian authorities [President Viktor Yanukovich] and the opposition might have regulated the situation in the crisis-torn country within the frames of law.
“However, the radical forces have broken off the fulfillment of the agreement and chose a violent way to oust the legitimate president. As a result, the actions of the government bodies have exceeded the limits of Ukrainian Constitution and new governmental institutions have been created not authorized by existing laws,” the statement added.
11:31 GMT:
Russia's military activities on Ukrainian soil are unacceptable but international diplomacy must prevail to solve the crisis, German Foreign Minister Frank-Walter Steinmeier said on Monday.
"Crisis diplomacy is not a weakness but it will be more important than ever to not fall into the abyss of military escalation," Steinmeier told reporters ahead of an extraordinary meeting of EU foreign ministers in Brussels.
Steinmeier suggested an fact-finding mission by the OSCE, Europe's main human rights and democracy watchdog, as an initial response. "We are considering whether it wouldn't make good sense to create transparency about what is happening on the ground in eastern Ukraine and Crimea instead of being dependent on rumours," he said.
11:15 GMT:
Local residents in the eastern Ukrainian city of Kharkov are forming a “Protect Kharkov”movement. They have already started patrolling the streets in the center of the city and they will also help local police to guard administrative buildings.
“We don’t want to repeat the event when the radicals from the Pravy Sektor (Right Sector) group and supporters of the new self-proclaimed government in Kiev were seizing the administration buildings for almost a week,” one of the activists said.
A group of nearly 20 men with orange and black ribbons (a Russian symbol popularly used to commemorate the Soviet Union’s victory in World War II) are constantly present near the police cordons. Some of the activists are patrolling the territory near the local administration building.
Earlier, Kharkov Mayor Gennady Kernes called upon city residents “to protect Kharkov from radicals.”
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