Tuesday, May 6, 2014

Ukraine Updates - May 6 , 2014 -- Referendums still scheduled for May 11 , 2014 in Donetsk and Lugansk ( as per Russian FM Lavrov ) who also notes new talks on Ukraine doubtful without Federalists participation at the negotiation table..... Meanwhile Russia prepares to secure Crimea and beef up its Black Sea fleet ........ Party of Regions MP blast Kiev's attempts to undermine and disrupt May 25 , 2014 Presidential Election ....... Is the West interfering directing in Ukraine ( apart from the FBI and CIA advising Kiev government ) - Reports of British Troops, US Guns Fuel Speculation in East Ukraine English-Speaking "Mercenaries" Add to Questions About Offensive ....... Ukraine Sends Special Forces to Replace Local Police in Odessa Moves Detained Protesters Out of City Fearing More Releases

Zero Hedge....

Why Hasn't The U.S. Gone After Gazprom?

Tyler Durden's picture

Submitted by John Daly via OilPrice.com,
Amidst the deepening war of words over Moscow’s annexation of Crimea, U.S. President Barack Obama on April 28 added more Russian individuals and companies to a sanctions list that already included influential members of Russian President Vladimir Putin’s inner circle and Bank Rossiya, which has close ties to the Russian leadership. The new list freezes the assets of Igor Sechin, head of Russia's major oil company, Rosneft, six other individuals and 17 companies.
Significantly, the new U.S. list does not include Alexei Miller, CEO of the Russian natural gas state monopoly, Gazprom.
Although the European Union has imposed its own tough sanctions on 48 Russian individuals, Gazprom is arguably where daylight exists between the Obama administration and the EU on the issue of penalizing Moscow for its actions in Ukraine.
The numbers make it clear why. Russia is the EU’s third-biggest trading partner, after the U.S. and China; in 2012, bilateral EU-Russian trade amounted to almost $370 billion. The same year, U.S. trade with Russia amounted to just $26 billion.
More than half of Russia's exports go to Europe, and 45 percent of its imports come from Europe, according to the EU EUROSTAT agency. Out of 485 billion cubic meters of gas consumed by the EU annually, Russia supplies about 160 billion cubic meters, or almost one-third the total volume.
Germany, the EU’s economic powerhouse, has been explicit about the costs for the German economy from increased sanctions. Anton Börner, the president of Germany’s main trade group, BGA, warnedthat more than 6,000 German businesses with $105 billion of turnover are interlinked with Russia and stand to lose if sanctions are ratcheted up.
U.S. Representative Lois Frankel (D-FL), who recently visited Ukraine with a Congressional delegation, has offered the likeliest official explanation for why the White House left Gazprom and CEO Miller untouched in the most recent round of sanctions.
In an April 28 appearance on MSNBC, Frankel said, "I think our president is taking a cautious approach warranted because our European allies are...trade partners with Russia, they depend on Russia's energy. And so we have [to] be careful because sanctions against Russia also have the good probability of hurting our allies.”
Other members of Congress have shown less willingness to accommodate the EU’s delicate economic position. In recent days, senior members of the U.S. Senate have increased their calls for the White House to move against Gazprom. Carl Levin (D -MI), John McCain (R-AZ) and Bob Corker (R-TN)want Obama to use an executive order that allows him to punish broad sectors of the Russian economy in response to Russia’s actions in Crimea.
The lawmakers’ statements on the issue have been widely covered in the Ukrainian and Russian press.
In an April 12 letter to Obama, Corker, a ranking member of the Senate Foreign Relations Committee, said, “Unless Russia ends its destabilization of eastern Ukraine and drastically reduces troop levels on the Ukrainian border immediately, further sanctions against strategic sectors of the Russian economy, particularly targeting Gazprom and additional important financial institutions, should be imposed within days.”
After the latest round of U.S. sanctions this week, Corker repeated that call in a joint statement with Senator Kelly Ayotte (R-NH), the ranking member of the Senate Armed Services Readiness Subcommittee, in which he said“Until Putin feels the real pain of sanctions targeting entities like Gazprom, which the Kremlin uses to coerce Ukraine and other neighbors, as well as some significant financial institutions, I don’t think diplomacy will change Russian behavior and de-escalate this crisis.”
During an April 25 visit to the Ukrainian capital, Kiev, Levin told reporters, “The existing authority is sufficient to take very strong sanctioning action against Russian banks that have correspondent accounts in the United States. The authority exists. It should be used, and that includes Gazprom.”
McCain advocated in an April 25 press release, “The United States needs to expand sanctions to major Russian banks, energy companies, and sectors of its economy, such as the arms industry, which serve as instruments of Putin’s foreign policy. NATO needs to move toward a robust and persistent military presence in central Europe and the Baltic countries, including increased missile defense capabilities. We need a transatlantic energy strategy to break Europe’s dependence on Russian oil and gas,” which would include sanctions against Gazprom, according to his office.
McCain recently suggested he has a broader agenda in mind when he said, “The strategy of the U.S. for saving Ukraine must be built in opposition to Russia's gas strategy, as this will be the end of Putin and his empire."
Given Gazprom’s centrality to the Russian economy, it’s unlikely that Putin won’t react if and when the company comes in for Western sanctions. In preparation for that possibility, Gazprom’s subsidiary, Gazprombank, Russia’s third largest, last month transferred nearly $7 billion to the Central Bank of the Russian Federation.
Gazprom has already warned that further Western sanctions could disrupt gas exports to Europe.
And Russian Natural Resources Minister Sergei Donskoi has made it explicit that there will be consequences for Western energy firms that comply with sanctions. Speaking on April 24 to journalists in Russia’s far eastern city of Birobidzhan, Donskoi said, "It is obvious that they won't return in the near future if they sever investment agreements with us, I mean there are consequences as well. Russia is one of the most promising countries in terms of hydrocarbons production. If some contracts are severed here, then, colleagues, you lose a serious lump of your future pie."
Donskoi also expressed the certainty that if Western firms leave Russia, other foreign energy companies would take their place.
That kind of threatening rhetoric will only make it harder for U.S. officials to sell an already nervous Brussels on the idea of more sanctions, if it comes to that, and on targeting Gazprom, in particular.

And The First Thing Ukraine Will Buy With IMF Money Is...

Tyler Durden's picture

A month ago, it was alleged, that Ukraine - under cover of night - loaded its gold reserves onto a plane and shipped them off (for safekeeping) in the US, as the potential price of 'liberation'. So how ironic that, given the massive gas debts that Ukraine owes to Russia (and prepayments pending), and sizable bond maturities pending, the first thing that Ukraine's National Bank governor will be buying with his freshly minted loan from the IMF is... buy a billion dollars of gold.
We presume Gazprom still gets its payment and bondholders get paid off - because that seriously impair 'investor confidence' which is, as they note below, is what is crucial to stabilize the nation's economy... but it seems the Central bank has other priorities...

Kiev will use the first portion of the International Monetary Fund (IMF) loan for augmenting its gold and currency reserves in order to stabilize the financial situation in the country, National Bank Chairman Stepan Kubiv said on Monday, May 5.

Over $1 billion from the first portion of the loan will go into the gold and currency reserves of Ukraine, which will strengthen the financial system of the country. The remainder will go to the budget to stabilize the macroeconomic and financial situation in Ukraine,” he said.

Kubiv believes that the IMF loan “will send a positive signal to foreign investors and domestic entrepreneurs, improve the investment climate in the country and stabilize the hryvnia”.

On April 30, the IMF Board of Governors approved a two-year standby credit facility of $17 billion for Ukraine. The first portion will amount to around $3.2 billion.

What is odd is that Ukraine's gold reserves have been soaring in recent years - so it's hardly been a confidence-inspiring move for Ukrainian entrepreneurs and foreign investors so far?

So the big question we are left wondering is - whether all the IMF is doing is "giving" Ukraine money so it can buy gold as proxy for the NY Fed...
with that next batch of gold also set to be confiscated by the Fed and shipped off to Germany (and maybe even Switzerland) to cover their growing repatriation demands.
One wonders if this news has anything to do with the fact that since the approval of the IMF "loan" gold has had its best 2 days in 4 months...

Russia Today.....

New talks on Ukraine doubtful unless opposition takes part – Lavrov

Published time: May 06, 2014 11:21
Edited time: May 06, 2014 12:07

Russia's Foreign Minister Sergei Lavrov addresses a news conference after a Council of Europe meeting in Vienna May 6, 2014 (Reuters / Leonhard Foeger)
Russia's Foreign Minister Sergei Lavrov addresses a news conference after a Council of Europe meeting in Vienna May 6, 2014 (Reuters / Leonhard Foeger)
Russia’s foreign minister has expressed his doubts over international talks on Ukraine, saying all forces in the country should be present at the negotiating table.
"Once again gathering in the same format, when the opposition to the current regime in Ukraine is absent from the negotiating table, this will hardly change anything. It’s possible [to continue on this path] of course, but we will just go around in a circle and once again speak about how everything that we’ve agreed on needs to be implemented," Lavrov said.
Speaking during a news conference on the second day of the ministerial meeting of the 47 nations of the Council of Europe in Vienna, Lavrov remained hopeful that national dialogue was the way forward in Ukraine.
“We are convinced that there is a way out of the crisis. It can be found exclusively on the basis of a national dialogue," - he said.
According to Lavrov, that dialogue should be conducted between the western and eastern regions of the country.
In regards to the Ukrainian Presidential election, which is scheduled for May 25, Lavrov said it would be “unusual” to hold a poll when the regime in Kiev was conducing military operations in the southeast of the country.
“Carrying out an election in a situation, when the army is being used against parts of the population – that is sufficiently unusual. This isn’t Afghanistan, where a war is going on, and nonetheless, elections were held,” he said.
Lavrov said that the absence of violence would be one of the criteria by which Russia judges the legitimacy of the presidential election, as well as the upcoming referenda in Donetsk and Lugansk.
Speaking on the possibility of holding new negotiations in an international format regarding the ongoing Ukrainian crisis, Lavrov said he had arranged a meeting with his German counterpart Frank-Walter Steinmeier on Tuesday.
Meanwhile, the chairman of the Organisation for Security and Cooperation in Europe (OSCE) and Swiss President Didier Burkhalter is scheduled to visit Russia on Wednesday.

​New subs, warships, SAMs, troops to be deployed in Crimea

Published time: May 06, 2014 09:21
Russia's Large Landing Ship "Azov" (C) is pictured moored at the home base of Russia's Black Sea Fleet in the Crimean port of Sevastopol (Reuters)
Russia's Large Landing Ship "Azov" (C) is pictured moored at the home base of Russia's Black Sea Fleet in the Crimean port of Sevastopol (Reuters)
The Russian Defense Ministry is planning to deploy additional forces in Crimea as part of beefing up the Black Sea fleet under a $2.5 billion program. The need for new deployment emerged after the formerly Ukrainian peninsula joined Russia.
“Before year’s end we will form new units of air defense and marine troops at the sites of our fleet’s deployment,” Defense Minister Sergey Shoigu said Tuesday. “The fleet will receive new submarines and surface ships of new generation this year. This requires our attention.”
The minister stressed that the Navy beef-up program for the Black Sea fleet was extended due to Crimea, the fleet’s base, becoming part of Russia in March. The ministry plans to spend more than $2.4 billion for the purpose by 2020.
The announcement of deployment plans comes after Russia voiced concerns of the build-up of NATO forces in Eastern Europe and the Black Sea. The alliance deployed aircraft and warships as well as ground troops, saying it was needed to instill confidence in its members like Poland, Romania and the Baltic states.
NATO’s moves come in response to the ongoing political crisis in Ukraine and the allegations that Russia is preparing to invade its eastern neighbor. Moscow sees the military build-up close to its borders as provocative.

Itar Tass.....

Kiev does everything to disrupt presidential election, opposition MP says

 May 06, 16:15 UTC+4
“The main principle of European democracy has been defied as the candidates have no possibility of informing the voters about their position openly and safely," he adds
© ITAR-TASS/Alexei Pavlishak
KIEV, May 06. /ITAR-TASS/. Ukraine needs its presidential election but Kiev authorities make every effort to undermine it, opposition Party of Regions deputy Nikolai Levchenko told a news briefing on Tuesday, saying candidates were being deprived of a chance "to convey their position to the voters openly and safely”.
“Ukraine needs the legitimately elected president. First of all for representing our country at international agencies and conducting negotiations with partners both in the East and in the West,” he said. “However, today the authorities have done everything to have this election disrupted,” Levchenko added.
“The main principle of European democracy has been defied as the candidates have no possibility of informing the voters about their position openly and safely," he went on.
"Renowned Party of Regions member Gennady Kernes (Mayor of Kharkiv) is in hospital with a chest wound, a deputy of the Odessa regional council from the Party of Regions was burned alive in the building (of Odessa’s Trade Unions House) together with other fellow party members”
"Presidential candidate Mykhailo Dobkin comes under constant attacks, including of a terrorist nature, when armed people break into sensitive sites and prevent him from even leaving a plane. This violates basic democratic principles in the state,” the deputy said. “All this makes the presidential campaign impossible.”
The presidential election in Ukraine is scheduled for May 25.

Anti war .....

Reports of British Troops, US Guns Fuel Speculation in East Ukraine

English-Speaking "Mercenaries" Add to Questions About Offensive

by Jason Ditz, May 05, 2014
Ukraine’s interim government is quick to declare any fighter on the side of the protesters a member of Russia’s special forces, but they aren’t the only nation that is increasingly being reported to have involvement in the region’s fighting.
Claims of western mercenaries have gotten a lot more specific in recent days, with locals offering many reports of English-speaking mercenaries, wielding American M16 assault rifles. Such guns are not part of Ukraine’s military’s own stockpile, which is overwhelmingly Soviet-era surplus.
M16s and NATO ammo cartridges are raising some eyebrows, and some are also reporting British snipers were seen around the TV station, wearing British uniforms. Some uniforms were even founding, fueling speculation that the fighters changed into civilian clothes.
There is no proof that any of this means actually foreign troops on the ground from anywhere, of course, but certain lend credence to repeated reports that Ukraine’s military is not fighting alone in its invasion of the east.

Ukraine Sends Special Forces to Replace Local Police in Odessa

Moves Detained Protesters Out of City Fearing More Releases

by Jason Ditz, May 05, 2014
Ukraine’s government continues to fume over the growing protests in Odessa, and yesterday’s release of 67 detainees after protesters marched against the police headquarters.
That was not all of the pro-Russia protesters being detained, and Ukraine’s Interior Ministry announced dozens of detainees are being moved to other cities pending trials. It may also be the end of Odessa’s police department.
With the interim government blaming the police for not cracking down on the protesters sooner, they have now deployed special forces to the major port city to “replace” the police with people more willing to move against dissent.
Interim Premier Arseniy Yatsenyuk yesterday announced the firing of Odessa police chief Pyotr Lutsyuk for what he called potentially criminal failure to stop the pro-Russia protests in the city. On Friday, far-right protesters aligned with the government moved against the pro-Russian faction, setting a fire that killed 38 of them.
The interim government has dubbed the killings a “tragedy” but also seem to see cracking down on the surviving victims of the fire as a way to prevent a recurrence.

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