Saturday, April 26, 2014

Ukraine Updates April 26 , 2014 -- Kiev attempts to one up the looming cut off of natural gas by cutting off water to Crimea ! Adding up the Kiev owes to Gazprom ( about 13.6 billion euros ) and the loan repayment Russia surely will demand to be repaid early ( 3 billion euros ) , that just about encompasses the so called IMF aid package ( none of which actually has been delivered to date . ) ..... And then there's another 20 billion euros of Ukraine debt ( including another 3 billion in chinese loans ) hanging out there ready to default...... Additional news of note from Eastern Ukraine - OSCE hostages , attempt to negotiate their release by a second OSCE Team ( calling Comedy Central to pick up new material ) ...... Flashpoint in Donetsk sees unknown and unidentifed gunman / helicopters land , checkpoint attacked ...... EU works on latest non biting sanctions ..... ...

Satellite Images Reveal Massing Of 15,000 Ukraine Troops, Hundreds Of Tanks Around Slavyansk

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Yesterday, we jokingly noted that with separatists blockading Slavyansk from a Ukraine special-forces invasion, and with the Ukraine army blockading Slavyansk from said separatists (unclear exactly why), that the east Ukraine city of Slavyansk is easily the most blocked city in the world (and in dire need of fiber). However, based on just released satellite imagery showing the build up of Ukraine forces around Slavyansk - a city which as a reminder is located in Ukraine - what is going on around Slavyansk is no laughing matter.
Russian RIA Novosti reports that it has received satellite photos, "which clearly show the accumulation of a large number of Ukrainian military equipment and weapons on the border with the Russian Federation and in the vicinity of Slavyasnk." RIA cites a source in the Russian Defense Ministry, who commented that the pictures show a military formation designed "to wipe out the city and all its inhabitants from the face of the earth."
According to source, the group has more than 15,000 troops from the Ukraine army and national guard, about 160 tanks, 230 infantry fighting vehicles and APCs, and as much as 150 mortars, howitzers and multiple launch rocket systems ("Grad" and "Smerch").
The source concludes that "This concentration of troops in one area is not compatible with the potential of self-defense forces, armed with only a small number of pistols and submachine guns."
The satellite images are below:

Naturally, none of this should come as a surprise, as rationally one would expect Ukraine to respond to a comparable build up of Russian forces along the Ukraine border which itself was revealed two weeks ago via satellite photos as well:
Above: Purported to be Russian military Su-27/30 "Flankers" aircraft at the Primorko-Akhtarsk Air Base in southern Russia, on the Sea of Azov which borders Ukraine. (Image: Digital Globe).
Above: purported to be Russian military tanks and infantry fighting vehicles at a military base near Kuzminka, east of the Sea of Azov in southern Russia (picture: Digital Glob)
Above: purported to be a Russian military airborne or Spetznaz (special forces) brigade at Yeysk, near the Sea of Azov in southern Russia (picture: Digital Globe).
above: purported to be a Russian artillery battalion at a military base near Novocherkassk, east of the Sea of Azov in southern Russia (picture: Digital Globe).

It goes without saying that a matching build up (or at least an attempt at one) by Ukraine is normal and to be expected. The problem is that as we have witnessed every day over the past two weeks, military provocations on both sides of the conflict happen every day if not every hour. The latest one happened moments ago, as reported by RT:
Unknown assailants landed in helicopters and attacked a checkpoint in Soledar city in eastern Ukraine’s Donetsk region, a militia source told RIA Novosti adding that there is a fight going on. There is no information on the number of casualties.

Soledar is located about 30 kilometers south east of Slavyansk.

The people’s governor of Donbass region Denis Pushilin confirmed to RT that there is fighting in Soledar. As the unknown men attacked the checkpoint, the militia was forced to retreat, the source told RIA.

The second checkpoint is preparing for attack he said, adding that there are about 50 activists, many without weapons.
For now these skirmishes around "checkpoints" have been isolated events. But how long before the Ukraine "special forces" which may well amount to 15,000 troops as reported by Russian media, get involved. And how much longer after that until Russia retaliats. But the biggest question: who will be the agent provocateur who fires the first shot in hopes of launch an all out war? Indeed, who stands to gain the most from yet another war - one which will hardly be "contained"

Tit For Tat: Ukraine Blocks Crimea Water Supply With Russia Set To Halt Ukraine Gas

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With a diplomatic solution to the Ukraine crisis now officially out of the window as an option to de-escalate the second Cold War, and yet with both sides still leery of engaging in an overt military campaign, there is one last trump card both sides can play - natural resources. Specifically, gas for Russia, and water for Ukraine. Not surprisingly both are in play now.
Moments ago, Russia casually hinted that Ukraine should use part of the IMF aid (which has been promised in virtually all increments between $1 billion up to $18 billion, but at last check not one penny has been wired) to repay Gazprom's debt, which is anywhere between the $2.2 billion Gazprom has said Ukraine is delinquent on for 2014 gas supplies, and an additional $11.4 billion which is what Gazprom said Ukraine's state-owned energy firm Naftogaz owes for unused take-or-pay arrangements in 2013.
And here Russia has laid a rather unpleasant, for the interim Kiev government, covenant-trapping Easter egg. As the WSJ explained previously, the additional cash demand adds pressure on Ukraine's already battered economy and finances, "because its ballooning debt gives Moscow the right to demand an early repayment of a loan. That could theoretically cause a domino effect on about $20 billion of Ukraine sovereign and quasi-sovereign debt."
Specifically, Moscow provided Ukraine with a $3 billion loan in late December when it bought the country's Eurobonds. The bond prospectus stated that the volume of total state debt and state-guaranteed debt should not at any time exceed 60% of Ukraine's annual nominal gross domestic product.
If Ukraine fails to meet this condition, Moscow may demand an early redemption. So far the ratio is below the 60% threshold, but Russia's finance ministry said it is monitoring the figures closely. The latest figures from Ukraine put state debt at 804 billion hryvnia ($70 billion), or 52.7% of the GDP. However, if Gazprom's demand is met, the ratio would rise above the 60% threshold.
At that point Russia will clearly demand early payment or else hold Ukraine in default, which in turn will force the IMF to scramble to provide even more funding (more than just promises - actual wire transfers), pushing public opinion in IMF countries which certainly have expansive needs for domestic use of taxpayer funding (think Detroit) away from Ukraine and in Russia's corner.
In keeping with this vein, Russia’s energy minister Alexander Novak, Gazprom CEO Alexei Miller held talks in Moscow on gas transit via Ukraine with officials from Moldova, Bosnia- Herzegovina, Macedonia, Russian ministry’s spokeswoman Olga Golant says via text message. Golant said that participants “expressed concern” over Ukraine’s growing debt to Gazprom for natgas supplies, possible problems with filling Ukrainian underground gas storage facilities before heating season, which may lead to disruptions of gas shipments to Europe.
Which as we reported previously, is a very loud hint to Europe, that if Ukraine doesn't pay its debt to Russia, and if the IMF doesn't provide enough funding to allow the broke country to pay its debt, then Europe gas will, so very sorry, be shut off.
Sure enough, Bloomberg reported that Russia 'hopes' EU will soon take measures to extend financial assistance to Ukraine, including for Russian gas payments to avoid “unsanctioned gas pumping from transit volumes to Ukraine and assist in further enhancing the European energy security."
Again - hint, hint.
So what does a desperate Ukraine do, realizing that all of its leverage is gone, and that its western "allies" are about to let it hang? It used the nuclear option (not very nuclear but it really doesn't have much if any leverage), and stopped the flow of the bulk of water to now Russian Crimea.
Ukraine had closed sluices of the North Crimean Canal, halting water supply from the Dnieper River to the peninsula, Ukraine's UNIAN news agency reported on Saturday.

Crimea received 85% of fresh water through the canal, which was built in 1961-1971. It streches from the Khakhovka Reservoir to Kerch.
Alas, this plan to put Russians in Crimea in an untenable position, may have already failed. Voice of Russia reports that "Crimea will be supplied with water according to a fallback plan, there is currently no lack of fresh water in the region, the interim head of the Republic of Crimea Sergei Aksyonov wrote in his Twitter account Saturday. "Crimea will not be left without water! We have fallback plans. There are no problems with fresh water. Agricultural producers will receive compensations for the losses," Aksyonov wrote.
Earlier the Chairman of Crimean Standing Commission of the State Council in the economic, fiscal and investment policies Vitaly Nahlupin said that republic's authorities had offered payment in advance for the water from Dnepr, but Kiev sabotaged negotiations and only five per cent of the necessary amount of water currently comes through the North-Crimean channel. Crimea, formerly a part of Ukraine, held a referendum on reunification with Russia on March 16 in reaction to dangerous nationalist rhetoric from the new leadership in Kiev.
The Crimean authorities transfer rivers of the peninsula to the North Crimean Canal bed after Ukraine ceased completely Dnieper water supplies to Crimea, Crimean First Deputy Prime Minister Rustam Temirgaliyev said. Water supplies to Crimea via the North Crimean Canal have been stopped completely, Ukrainian mass media outlets reported on Saturday. In the past weeks the volume of water coming to Crimea via the canal was decreased significantly.
If Ukraine is hoping this move will soften Russia's stance on gas, it is wrong - all it will do is force Russia to accelerate the implementation of infrastructure improvements in Crimea which will make it even less dependent on Ukraine. It will, however, assure that Russian exports of gas to Kiev are finished.
The only question is how much "collateral damage" Europe proper, such as Germany, suffers as a result. Ironically, such "damage" may just be the exogenous deflationary factor the ECB needs to unleash the much talked about, if very much unwanted contrary to all the jawboning, QE. After all it will be "Putin's fault" Draghi is forced to monetize debt, in order to offset a deflationary recession that would "surely result" if and when Putin pulls the plug on European gas deliveries.
Yes - in yet another New Normal paradox, Gazpromia halting gas to Europe may be one of the most "bullish" developments (only for stocks, of course) to hit Europe in a long time.

OSCE Sends Second Team To Negotiate Release Of First OSCE Team Held Hostage In East Ukraine

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Yesterday, in merely the latest indication the eastern, pro-Russian region of Ukraine will hardly succumb to Kiev authority, a group of OSCE military observers who had been dispatched to supervise events in the city of Slavyansk were taken hostage by local separatist milita. Soon thereafter even Russia itself chimed in saying it "will take all possible steps to free detained OSCE military observers in the Ukrainian town of Slaviansk, Russian news agencies reported on Saturday, citing Russia's envoy to the Vienna-based Organisation for Security and Co-operation in Europe." "We think that these people need to be freed as soon as possible," Andrei Kelin said in comments cited by ITAR-TASS. "Russia as a member of the OSCE will undertake all possible steps in this matter."
Of course, there are words and there are actions: it was the same OSCE observers who were promptly kicked out of Crimea on the eve of the local independence referendum which saw the territory overwhelmingly vote to join Russia.
As such, it is certain that any further attempts by the west (and Russia which ironically is a member of the OSCE) to inject third parties in what is a clear conflict between Russia and Ukraine, will be met with failure. Which is why we read with amusement that in the latest attempt to de-escalate violence, now that diplomacy has failed, the OSCE has dispatched a negotiating team to try to secure the release of the first OSCE group, a German government source said on Saturday. "A negotiating team from the OSCE is on the way to the region," said the source, declining to give further details, including exactly where they were heading.
So what happens when the OSCE rescue team, too, is captured and held hostage? Will a third OSCE team be unleashed to seek the release of the team that was sent out previously to liberate the original OSCE team, and so on? Hopefully this farce will be avoided, as the separatists made it quite clear they simply intended to hold on to the OSCE hostages as a bargaining chip:
A leader for pro-Russian separatists in eastern Ukraine said Saturday that a group of foreign military observers who have been detained as suspected “NATO spies” could be released in exchange for jailed pro-Russian activists.

“They are officers from NATO member states,” said Vyacheslav Ponomaryev, self-proclaimed mayor of the eastern city of Slovyansk. “As we found maps on them containing information about the location of our checkpoints, we get the impression that they are officers carrying out a certain spying mission.”

The German-led, eight-member team was traveling under the auspices of the Organization of Security and Cooperation in Europe when they were detained in Slovyansk.
And just so Russia doesn't feel like it is the only one engaging in shady activity, at the same time as the OSCE mini drama was unfolding, Russia itself voiced a complaint that its journalists were being assaulted and intimidated, and requested they be protected. RT reports that representatives of Russian TV channels have urged international organizations, including the UN, UNESCO and the OSCE, to protect the rights and dignity of journalists covering the Ukraine crisis from illegal actions of the Kiev authorities.
Disturbed by intensified assaults and intimidation of journalists in Ukraine, their detentions and deportations, the heads of all Russia's major TV corporations, including RT, have called on human rights organizations to “defend the professional rights of journalists working in Ukraine.”

“Ukraine’s Donetsk, Lugansk, Kharkov, Dnepropetrovsk and other regions are witnessing the ruthless suppression of civil liberties on a daily basis. Journalists are being threatened with their lives if they continue to report from Ukraine,” the letter reads, signed by the heads of All-Russia State Television and Radio Broadcasting Company (VGTRK), NTV, REN TV, Channel 5, RT and News Media.

“The new Ukrainian authorities have repeatedly taken illegal actions barring our staff journalists covering the Ukraine crisis from performing their professional duties and violating their human dignity,” the letter says.

In the latest incident on Friday morning, Lifenews journalists Julia Shustraya and Mikhail Pudovkin, were detained and later deported to Russia. The crew was abducted by armed Ukraine Security Service members, after they filmed an interview with one of the leaders of the pro-federalization movement in Ukraine.

“[Journalists] are being watched, their phone conversations wiretapped. There were cases when journalists were forced to get down on their knees, beaten during detention and illegally deported from Ukraine,” the joint address to UN, OSCE and UNESCO reads.
Or, in other words, the fog of pre-war is rapidly falling, and quite soon nobody will know what the truth (or lies) coming out of Ukraine is.

( Not a wise move ...... changes the narrative ! )

Ukraine separatists push for prisoner swap

Leader of pro-Russian group says OSCE monitors being held in eastern Ukraine could be exchanged for men held by Kiev.

Last updated: 26 Apr 2014 18:53
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Pro-Russia gunmen holding a group of international observers captive in Ukraine say they are willing to carry out a prisoner swap.
The self-proclaimed separatist leader in the city of Slovyansk said he was willing to trade the Organisation for Security and Cooperation in Europe (OSCE) monitors for anti-government activists detained by Kiev.
Separatist leader Vyacheslav Ponomaryov told reporters on Saturday that they had not planned to take the monitors, who the pro-Kremlin group accuses of being "NATO spies."
"That was not our plan to take prisoners for a swap. But you understand that prisoners have always been coins to exchange during times of war. It's an international practice to swap prisoners. There is nothing scary about it," he said.
International efforts are still underway secure the release of a 13-member mission from the OSCE held hostage in Slovyansk since Friday.
Denis Pushilin, the self-styled leader of the city of Donetsk, also said the monitors would only be released in exchange for men detained by Ukrainian forces.
Meanwhile, Russia's envoy to the OSCE said Moscow would "take all possible steps in this case".
"We believe that these people should be released as soon as possible," Andrei Kelin said.
Russian's foreign ministry also said Moscow was "taking measures" to resolve the situation but blamed the Ukrainian authorities for the hostage crisis.
"They were invited by the Ukrainian authorities" and their safety "rests fully with the receiving side", the foreign ministry in Moscow said.
'Spying mission'
Ponomaryov described the detained observers as "captives" and said that they were officers from NATO member states.
"As we found maps on them containing information about the location of our checkpoints, we get the impression that they are officers carrying out a certain spying mission," he said.
Germany's Defence Ministry said it had had lost contact with the team, which it said also included five Ukrainians.
Al Jazeera's Barnaby Philips, reporting from Donetsk, said that a team was en route to negotiate the release of the observers.
"Some sort of OSCE mediation is on its way here to try to talk about this situation," he said.
The foreign observers were sent to Ukraine to monitor an April 17 accord signed in Geneva between Russia, Ukraine, the United States and the European Union that was meant to de-escalate the dangerous crisis in the ex-Soviet republic.
Despite assurances from Russia that it would work to secure the release of the team, interim Ukrainian Prime Minister Arseniy Yatsenyuk said the seizure was "another proof and evidence that these so-called peaceful protesters with Russian ideas are terrorists."
'Provoke war'
In a briefing with reporters, he lashed out at Moscow, saying Russian military aircraft violated Ukrainian air space late on Friday.
"Russian military aircraft today overnight crossed and violated Ukrainian airspace seven times. The only reason is to provoke Ukraine to start a war," he said.
Russia's defence ministry, however, denied claims that its planes had made any such violation.
"Russia's airspace monitoring systems have not registered any violations of air borders of the states adjacent to Russia, including Ukraine," the defence ministry said in a statement carried by the state ITAR TASS news agency.

Russia Today......

Unknown gunmen land from helicopters, attack checkpoint in Donetsk region - militia

Published time: April 26, 2014 17:59
Edited time: April 26, 2014 19:11

A Ukrainian military helicopter flies near the village of Malinivka, east of Slaviansk in eastern Ukraine April 25, 2014 (Reuters / Baz Ratner)
A Ukrainian military helicopter flies near the village of Malinivka, east of Slaviansk in eastern Ukraine April 25, 2014 (Reuters / Baz Ratner)
Unknown assailants landed in helicopters and attacked a checkpoint in Soledar city in eastern Ukraine’s Donetsk region, a militia source told RIA Novosti adding that there is a fight going on.
There is no information on the number of casualties.
Soledar is located about 30 kilometers south east of Slavyansk.
The people’s governor of Donbass region Denis Pushilin confirmed to RT that there is fighting in Soledar.
As the unknown men attacked the checkpoint, the militia was forced to retreat, the source told RIA.
The second checkpoint is preparing for attack he said, adding that there are about 50 activists, many without weapons.
“We cannot send reinforcements from Slavyansk as all [forces] are defending the city," the source stressed.
Another checkpoint in area - about 50 unarmed self Defence guys gearing up to fight with them