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Kerry
in Kiev: Shifting blame from Poroshenko govt as US mulls arms for
Ukraine
US
Secretary of State John Kerry, who is in Ukraine to discuss Kiev’s
plea for weapons, laid all of the blame for the conflict’s
escalation on Russia, and disregarded Kiev’s intensified assault on
rebel-held areas.
On
Thursday, the White House admitted that possible military assistance
from the US to Ukraine could increase bloodshed in the region.
Earlier in the day, Kerry said Washington preferred a diplomatic
solution to the conflict and argued “Russian aggression” was the
greatest threat to Ukraine.
Following
his meeting with Ukrainian President Petro Poroshenko, Kerry told
journalists it was impossible to ignore "tanks crossing the
border from Russia" and “Russian fighters in unmarked uniforms
crossing the border, and leading individual companies of so-called
separatists in battle."
Russia
has long rejected allegations of its troops being engaged in the
eastern Ukraine conflict.
“I
say it every time: if you are so sure in stating that, confirm it
with facts. But no one can or wants to provide them,” Russian
Foreign Minister said in January.
Kerry
has urged the Russians to comply with the Minsk peace agreements
signed in September and said the rebel fighters were to pull their
heavy artillery from the areas where civilians could be affected. He
neglected to mention Kiev’s compliance with the peace agreements,
and the heavy weapons used by the government troops.
The
Secretary of State pointed out that the Minsk ceasefire agreements
are being increasingly violated and also recalled Kiev’s
commitments to a promised special status for the troubled regions.
“The special status law is currently on the books,” Kerry said,
referring to his conversations with President Poroshenko.
The
US will provide $1 billion in loan guarantees to Ukraine, Kerry
announced at a joint press briefing with Ukraine's Prime Minister
Arseny Yatsenyuk on Thursday. A further $1 billion of economic aid
will be provided to the country later this year, should it carry on
with its reforms, he added. Kerry has also brought with him an offer
of $16.4 million in humanitarian aid, according to US officials.
President
Obama will make his decision on the possibly of sending lethal aid to
Ukraine next week, Kerry announced in Ukraine, saying that Obama’s
choice will be based on his [Kerry’s] comments and recommendations
following his visit to the country, as well as a result of Angela
Merkel’s visit.
Despite
Poroshenko’s constant pleas for “modern
weapons”
to be sent to Ukraine from the west, it is primarily the US that is
still mulling whether to deliver lethal aid to the country.
European
defense ministers oppose sending weapons to Ukraine, with top
officials from several European countries having firmly spoken out
against any supply of arms this week. Following Angela Merkel’s
Monday announcement, when the Chancellor said that Germany would not
be giving weapons to Ukraine and stated her support for negotiations
and a diplomatic solution to the conflict, France also announced it
would not deliver weapons to Ukraine.
Pointing
to a potential transatlantic split if Washington decides to supply
arms, more European ministers, including Dutch, UK and the
Netherlands officials, voiced opposition to sending weapons to the
country, Reuters reported on Thursday. Finland and the Czech Republic
have also spoken against the idea of giving Kiev any military help,
fearing that lethal aid could only fuel the conflict. A political
dialogue is the only way out of the crisis, European ministers
believe.
Kerry
has urged the Russians to comply with the Minsk peace agreements
signed in September and said the rebel fighters were to pull their
heavy artillery from the areas where civilians could be affected. He
neglected to mention Kiev’s compliance with the peace agreements,
and the heavy weapons used by the government troops.
The
Secretary of State pointed out that the Minsk ceasefire agreements
are being increasingly violated and also recalled Kiev’s
commitments to a promised special status for the troubled regions.
“The
special status law is currently on the books,”
Kerry said, referring to his conversations with President Poroshenkпo.
The
US will provide $1 billion in loan guarantees to Ukraine, Kerry
announced at a joint press briefing with Ukraine's Prime Minister
Arseny Yatsenyuk on Thursday. A further $1 billion of economic aid
will be provided to the country later this year, should it carry on
with its reforms, he added. Kerry has also brought with him an offer
of $16.4 million in humanitarian aid, according to US officials.
President
Obama will make his decision on the possibly of sending lethal aid to
Ukraine next week, Kerry announced in Ukraine, saying that Obama’s
choice will be based on his [Kerry’s] comments and recommendations
following his visit to the country, as well as a result of Angela
Merkel’s visit.
Despite
Poroshenko’s constant pleas for “modern
weapons”
to be sent to Ukraine from the west, it is primarily the US that is
still mulling whether to deliver lethal aid to the country.
European
defense ministers oppose sending weapons to Ukraine, with top
officials from several European countries having firmly spoken out
against any supply of arms this week. Following Angela Merkel’s
Monday announcement, when the Chancellor said that Germany would not
be giving weapons to Ukraine and stated her support for negotiations
and a diplomatic solution to the conflict, France also announced it
would not deliver weapons to Ukraine.
Pointing
to a potential transatlantic split if Washington decides to supply
arms, more European ministers, including Dutch, UK and the
Netherlands officials, voiced opposition to sending weapons to the
country, Reuters reported on Thursday. Finland and the Czech Republic
have also spoken against the idea of giving Kiev any military help,
fearing that lethal aid could only fuel the conflict. A political
dialogue is the only way out of the crisis, European ministers
believe.
“More
weapons in this area will not bring us closer to a solution, and will
not end the suffering of the population,”
German Defense Minister Ursula von der Leyen told reporters in
Brussels.
The
possible supplies of US weapons to Ukraine threaten Russia’s
security, TASS quoted the Russian Foreign Ministry’s spokesman,
Aleksandr Lukashevich, as saying on Thursday.
“We
are very seriously concerned by these plans. Taking into account the
revanchist plans of the ‘party of war’ in Kiev, this could not
only escalate the conflict in the southeast, but also threaten the
security of Russia,”
he said, adding that Russian territory has been shelled several times
from the Ukrainian side.
Moscow
has previously slammed Washington’s readiness to supply weapons to
Ukraine as double standards, with Russian Foreign Minister Sergey
Lavrov saying that the west is calling for dialogue between the
authorities and the opposition "everywhere in the world,"
except Ukraine. "Western colleagues say that in Ukraine the most
important thing is to support Kiev’s actions,” Lavrov said on
Monday.
A
series of US top officials' visits to Europe this week all focused on
the Ukraine crisis, and come as German Chancellor Angela Merkel and
French President Francois Hollande are visiting both Kiev and Moscow,
pledging to come up with a peace deal acceptable to all parties.
Kerry won’t come to Moscow with Merkel and Hollande, Russian
presidential aide Yury Ushakov told journalists.
The
latest escalation of violence in eastern Ukraine started in
mid-January after Kiev announced a mass operation against Donetsk
airport, in violation of a previous ceasefire agreement. There have
since then been almost daily reports of civilian casualties in the
conflict. Five people died in shelling on a hospital in Donetsk on
Wednesday.
The
UN has warned of a looming humanitarian catastrophe in the region.
30,000
troops, 6 rapid units: NATO increases military power in Eastern
Europe
The
NATO Response Force in Europe might increase to 30,000 troops, more
than double the current 13,000, said the alliance’s secretary
general after a defense ministers’ meeting in Brussels. Most of the
troops are set to be stationed near Russia’s borders.
NATO's
rapid deployment forces will consist of a 5,000-strong brigade, sea
and air-based elements and special task troops, said NATO’s
Secretary General Jens Stoltenber after meeting with the alliance’s
28 defense ministers in Brussels on Thursday.
NATO
Chief Admits Russia Poses No Threat to Baltic States, Eastern Europe
NATO
Secretary General Jens Stoltenberg has acknowledged that there is no
immediate threat to the Baltic states and Eastern Europe coming from
Russia.
Jens
Stoltenberg sees no immediate threat posed by Russia to the Baltic
States, Poland, Bulgaria and Romania. He said as much when fielding
media questions on the sidelines of Thursday’s meeting in Brussels
of the defense ministers of the 28 NATO countries.
Asked
whether he saw any real danger of "Russian aggression"
against the Baltic countries, Poland, Bulgaria and Romania,
Stoltenberg said the alliance’s ongoing effort at strengthening its
effective military presence in Eastern Europe was a purely defensive
action that responded to Russia's stance on Ukrainian crisis and was
consistent with the "international obligations" of the
Atlantic Alliance.
The
North Atlantic Alliance has, on many occasions, blamed Russia of
meddling in Ukraine’s troubled east, making unsubstantiated claims
about Moscow alleged arms supplies for the independence supporters
and even Russian troops were actually fighting on Ukrainian soil.
Moscow
has consistently denied the charged insisting that it is in no way
involved in the Ukrainian crisis and seeks a quick end to the
country’s political and economic turmoil.
US
Pledges to Allocate Another $1Bln in Financial Aid to Ukraine
US
Secretary of State John Kerry said at a news conference during his
visit to Kiev that the United States would allocate another $1
billion in financial aid to Ukraine.
KIEV
(Sputnik) – The United States will allocate $1 billion in financial
aid to Kiev in addition to $1 already allocated to support reforms of
the Ukrainian government, US Secretary of State John Kerry said
Thursday.
Kerry
made the public announcement of more financial assistance to Ukraine
at a news conference during his visit to Kiev.
US
Congress said in January it would disburse a billion-dollar loan
guarantee to Ukraine if it followed through on its reform plans.
Washington
has pledged financial assistance several times to the war-torn
country, allegedly to bolster its defense capabilities amid tensions
in its southeast.
According
to US ambassador to Kiev Geoffrey Pyatt, the Ukrainian government has
given almost $200 million in support for its defense sector.
The
promise of more funds comes amid reports that Washington is also
considering supplying lethal aid to Kiev, including Javelin anti-tank
missiles, arms and ammunition.
Kiev
has been particularly persistent in its requests for US arms supplies
during and in the months after Ukrainian President Petro Poroshenko's
visit to Washington last year. The US administration has so far
objected to providing Ukraine with lethal aid, though the White House
has previously indicated its willingness to reassess that position.
2015
Russia GDP Could Contract by as Little as 0.5%
Analysts
are forgetting the positive impact import substitution driven by
ruble devaluation could have on Russian economic health
5
February, 2015
In
2014 Russia GDP was 70,676 billion Rubles; which on current exchange
rates values Russian GDP at 1.03 trillion dollars. That compares to a
GDP of 2.1 trillion dollars in 2013.
This
is not an equilibrium level of prices – in one year the true value
of the Russian economy has not contracted by 50%!
Of
course to the Western analyst they will point out that Russia is an
oil based economy and oil has fallen 50% and hence it is exactly
right. Yet, oil rents represent a mere 13% of Russian GDP and oil
made for export an even lower 7%. So, Russia lost 50% of 13% in 2014
- 6.5% as a result of the oil price collapse.
Where
did the other 43.5% go? – According to dollar gdp, it came from
everything else that is consumed in the economy. But, in pure volume
terms (industrial production, which as measured by Rosstat measures
everything physically produced in Russia from water to chairs) the
Russian economy increased by 1.7% in 2014 – consequently, if dollar
gdp is an accurate measure, then the true price of water and chairs
should have fallen by some 44% in 2014.
But
the true value of water and chairs did not fall by this amount –
instead statistical noise just created this illusion. For reasons
like this, many economists like to use GDP Purchasing Power of Parity
which adjusts for price differences in fixed goods across countries
to use a more representative exchange rate for economic value.
A
good measure of the imbalance is the fact that Russia’s trade
balance – measured in dollars – grew by 6.6% in 2014 to reach
around 190 billion dollars. In %’s, the surplus has grown from 8.5%
of GDP to 19%. In 2015, this imbalance will almost certainly start to
correct.
It
does this through a real exchange rate appreciation which can happen
one of two ways; firstly, the Ruble essentially rallies back to its
old levels of 32 against the dollar, or secondly, inflation jumps to
around 20% but the Ruble remains at today’s level – meaning that
dollar GDP growth would run around 20%.
Economic
history shows that when such imbalances occur the correction process
typically comes through inflation and not exchange rate appreciation
– for instance in Russia this occurred after 1998. For myself, as
an investor this means I am particularly interested in asset classes
which move with inflation (equities and real-estate). However, I
would not rule out a modest exchange rate appreciation as the oil
price strengthens and sanctions are removed in the second half of the
year.
In
my opinion, analysts world-wide could well be in for a major shock in
2015. Currently, almost every analyst is predicting that real GDP
will contract by 1% to as much as 7%. This reminds me greatly of
1998, when the average forecast growth for 1999 was -5.5%. What
followed stunned everybody as growth was +6% (the first ever year of
growth since the break-up of the Soviet Union).
This
happened because of import substitution; the trade balance grew and
domestic production surged on the back of the currency collapse.
Analysts got too hooked on the negative causes of the exchange rate
move (Russia’s default) that they forgot the actual impact of the
enormous positives of an exchange rate move – industrial production
grew by 8.1% in 1999.
I
personally expect the first quarter to show a fairly sharp
deterioration in growth of around negative 2% to 3%. This is mainly
because a large chunk of consumption was transferred from Q1 2015 to
Q4 2014 on the back of the ruble slide.
However,
by the second half of the year I expect growth to have returned on
surging domestic production, import substitution, the removal of
sanctions and a higher oil price. At the time of writing there are
early indications that such import substitution is well underway as
preliminary data shows that imports in January fell by 40%.
The
reason why 1999 won’t be fully repeated in 2015 is the role of the
financial sector. The Russian financial sector has become an integral
part of the economy – something that was not entirely true in 1999.
As a consequence; higher interest rates, foreign exchange losses,
sanctions and a general over-extension of credit created a financial
crisis in Russia in the final quarter of 2014.
Not
only was the Russian financial sector indirectly through lending one
of the greatest contributors to growth, but its direct value added
contributed greatly to the rise in GDP post 1998. 2015 will be a very
painful and difficult year for the banking sector, however, the
sector as a whole is in better shape that it was in 2008.
Consequently,
I predict that Russian GDP will contract by a mere 0.5% in 2015 with
inflation reaching around 13%. I expect the Ruble to end the year at
48 Rubles to the dollar.
John
Kerry tells journalists to look in the social media for proof of
Russian troops in Ukraine
5
February, 2015
Russian
RT
Translated
by Kristina Rus
West
and Kiev continue to accuse Russia of having troops in the conflict
zone in the East of Ukraine. However, so far no evidence has been
provided. Today during the press conference, US Secretary of State
John Kerry was also unable to answer the question about the evidence
of participation of the Russian military in the conflict in Donbass,
and suggested to look for it n social networks.
Today
during a joint press conference with Ukrainian Prime Minister Arseniy
Yatsenyuk in Kiev, the head of the U.S. Department of State, John
Kerry, again failed to answer the question if there is strong
evidence that Russian soldiers are involved in the conflict in the
East of Ukraine. Instead, he invited the journalists to look for it
online.
"Social
networks are filled with reports and photos of Russian soldiers, who
are brought back to Russia dead. And the parents of these soldiers in
Russia are told that their sons were killed somewhere in an accident,
" - Kerry said. - There are also prisoners of war who have
provided proof of their participation in the conflict (in the East of
Ukraine. - RT). And that's enough."
Thus,
at the moment, neither the West nor Kiev can provide convincing
evidence of the presence of the Russian armed forces in the conflict
zone. Moreover, not so long ago, the chief of the General Staff of
Ukraine, Viktor Muzhenko, said during a briefing that Ukrainian army
does not wage battles against the Russian military units and that
Kiev knows only about some Russians fighting on the side of the
militia.
"Currently,
the Ukrainian army is not fighting with the regular army of Russia",
- said the general. However, Muzhenko stated that the General Staff
of the UAF possessed information about the participation of
individual citizens of the Russian Federation, including military, in
the ranks of illegal armed formations".
These
words of the chief of the General Staff, who has access the the full
volume of operational information from the front, clearly are
contrary to the official position of Kiev, which from the beginning
of the conflict repeatedly declared about an organized invasion of
the regular units of the Russian army of the territory of Ukraine.
Recall
that recently the President of Ukraine arrived at the economic forum
in Davos with a fragment of the bus, exploded near Volnovakha. Petro
Poroshenko made an emotional speech in which he accused the tragedy
on Russia. In addition, during his speech, he stated that allegedly 9
thousand Russian soldiers are fighting on the territory of Ukraine .
However, besides the loud proclamations, no evidence of Moscow's
involvement in the incident with the bus or participation in
hostilities of regular units of the Russian army, was presented by
the Ukrainian leader.
These
words of the President were picked up by the permanent representative
of Ukraine to the United Nations, Yuriy Sergeyev. During the last
meeting of the Security Council on Ukraine, he not only repeated the
words of Poroshenko about 9 thousand Russian soldiers, but added that
the military contingent of the army of the Russian Federation in
Ukraine continues to grow and has reached 12 thousand people.
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