Ukrainian update

This would have been easy to prevent – by allowing Ukraine to make its own decisions and not aid and abet in the activities of right-wing radicals

Western nations scramble to contain fallout of Ukraine crisis

EU leaders worry about country fracturing into pro and anti-Russian factions in aftermath of Viktor Yanukovych's ousting

the Guardian,

24 Febraury, 2013

Western governments are scrambling to contain the fallout from Ukraine's weekend revolution, pledging money, support and possible EU membership, while anxiously eyeing the response of Russia's president, Vladimir Putin, whose protege has been ousted.

Seemingly the biggest loser in the three-month drama's denouement, the Kremlin has the potential to create the most mischief because of Ukraine's closeness, the country's pro-Russian affinities in the east and south, and its dependence on Russian energy supplies.

On Sunday evening Russia recalled its ambassador to Ukraine for "consultations", the foreign ministry said.

"Due to the escalation of the situation in Ukraine and the necessity of analysing the existing situation from all sides, a decision has been made to recall the Russian ambassador to Ukraine [Mikhail] Zurabov to Moscow for consultations," the foreign ministry said in a statement late Sunday.

A woman pays her respects at a memorial to killed anti-government protesters in Kiev. Photograph: Brendan Hoffman/Getty Images

With the whereabouts of the former president Viktor Yanukovych still uncertain, the Ukrainian parliament legitimised his downfall, giving interim presidential powers to an ally of Yulia Tymoshenko, the former PM who was released from jail on Saturday. Oleksandr Turchinov said the parliament should work to elect a government of national unity by Tuesday, before preparations begin for elections planned for 25 May.

Yanukovych appeared on television from an undisclosed location on Saturday night, claiming he was still president and comparing the protesters to Nazis, but he continued to haemorrhage support on Sunday; even the leader of his parliamentary faction said he had betrayed Ukraine, and given "criminal orders".

Western leaders, while welcoming the unexpected turn of events in Kiev, are worried about the country fracturing along pro-Russian and pro-western lines. They are certain to push for a new government that is as inclusive as possible to replace the collapsed and discredited administration of Yanukovych, who vanished within hours of signing an EU-mediated settlement with opposition leaders on Friday.

"France, together with its European partners, calls for the preservation of the country's unity and integrity and for people to refrain from violence," said Laurent Fabius, the French foreign minister.

Putin, preoccupied with the closing ceremony of the Sochi Olympics, has not yet commented publicly on the violence of the past week and Yanukovych's flight from the capital. Angela Merkel phoned him on Sunday to press for assurances on Russia's reaction. Susan Rice, the national security adviser to Barack Obama, warned that Moscow would be making a "grave mistake" if it sent military aid to Ukraine.

Protesters roam the garden in front of the mansion of former Ukrainian president Viktor Yanukovych's home in Mezhygirya, near Kiev. Photograph: Etienne De Malglaive/Getty Images

"There are many dangers," said William Hague, the foreign secretary. "We don't know, of course, what Russia's next reaction will be. Any external duress on Ukraine, any more than we've seen in recent weeks … it really would not be in the interests of Russia to do any such thing."

Whether such nightmares are realised will hinge largely on the Kremlin's position and policies. Sergei Lavrov, the foreign minister, has called the protesters on Independence Square "pogromists", but it appears that Moscow is grudgingly coming to terms with the new reality. In a phone call with the US secretary of state, John Kerry, on Sunday, Lavrov accused the opposition of seizing power and failing to abide by the peace deal thrashed out on Friday.

Analysts say Yanukovych, disgraced as he is, no longer holds any use for the Kremlin, but how the Russians will react on the ground is still an open question. This also partly depends on the new Ukraine government. One of the first issues the parliament tackled this weekend was that of the language, annulling a bill that provided for Russian to be used as a second official language in regions with large Russian-speaking populations. If the new government also looks to end the lease of a Black Sea naval base by the Russian military, the response from Moscow could be more aggressive.

"It will definitely depend on how the new government behaves," said Vladimir Zharikin, a Moscow-based analyst. "If they continue with these revolutionary excesses then certainly, that could push other parts of the country towards separatist feelings. Let's hope that doesn't happen."

In Kiev, the barricades around Independence Square remained in place, though the lines of riot police have long dissipated. Thousands of people came to the barricades to pay respects to the 77 people who died last week in the bloody clashes that eventually led to Yanukovych fleeing.

As the third of three official days of mourning ended, priests continued to sing laments from the stage in the square. Between the soot-black pavements and the slate-grey sky, there were splashes of bright colour as thousands brought bunches of flowers to lay at makeshift memorials to the dead.

At Yanukovych's residence outside Kiev, a team of investigative journalists went to work on a trove of documents fished from the water; the president's minders had apparently tried to destroy them before fleeing. Thousands of people again came to see the vast, luxurious compound with their own eyes.

Tymoshenko, who has her eyes on the presidency, met the US and EU ambassadors in Kiev. She was released from prison on Saturday and went straight to Independence Square, where she promised to fight for a free Ukraine. There was ambivalence about the former PM among the protesters, with many feeling that she represents the divisive and corrupt politics of the past.

There was no clear central authority in Kiev on Sunday, with the city patrolled by a self-proclaimed "defence force", comprising groups of men wearing helmets and carrying baseball bats. Nevertheless, the mood was orderly and peaceful, and the protest representatives have been meeting with the police and security services in an attempt to restore a feeling of normality to the capital.

With the country about to turn a new page in its history, for the first time since the crisis erupted in November senior EU officials spoke of the possibility of Ukraine joining the union which, if serious, would represent a major policy shift.

"We are at a historical juncture and Europe needs to live up to its historical moment and be able to provide Ukraine with an accession perspective in the medium to long term – if it can meet the conditions of accession," said the economics commissioner, Olli Rehn, at a G20 meeting in Australia.

Until now, Brussels's policy towards Ukraine and other post-Soviet states, known as the eastern partnership, has been expressly intended as a substitute for rather than a step towards EU membership. It was the EU deal – Yanukovych's rejection of political and trade pacts with the bloc in favour of cheap loans and energy from Russia – that sparked the conflict and crisis in November.

With the likelihood of Russia's $15bn (£9bn) lifeline dissolving, the EU is under pressure to come up with funding to shore up the country's economy, on the brink of bankruptcy. "We are ready to engage in substantial financial assistance for Ukraine once a political solution, based on democratic principles, is finalised and once there is a new government which is genuinely and seriously engaged in institutional and economic reforms," said Rehn.

The EU said its foreign policy chief, Catherine Ashton, would travel to Ukraine on Monday. "In Kiev she is expected to meet key stakeholders and discuss the support of the European Union for a lasting solution to the political crisis and measures to stabilise the economic situation," an EU statement said.

The upshot is expected to be an IMF programme, supported by the US and the EU, although EU officials partly blame the IMF for the November fiasco by attaching strict terms to loans and prodding Yanukovych towards Moscow.

"We will be ready to engage, ready to help," said Christine Lagarde, the IMF chief who is also being tipped as a contender for a top job at the EU this year. The fund is likely to insist on major reforms and steps in an attempt to prevent the plunder of the country by Ukraine's oligarchs.

After aiding and abetting the neo-nazis, the US threatens Russia. Today the Russian media is focussed on the completion of the Sochi Olympics

Obama Official Warns Russia on Military Action in Ukraine

WASHINGTON, February 23 (RIA Novosti) – A senior US official on Sunday warned Moscow not to send troops into Ukraine amid the political crisis gripping Russia’s ex-Soviet neighbor, saying such a move would constitute a “grave mistake.”

RIA Novosti,

26 January, 2013

“It’s not in the interests of Ukrainian or of Russia or of Europe or the United States to see the country split. It’s in nobody’s interest to see violence returned and the situation escalate,” White House National Security Adviser Susan Rice said in an interview with NBC’s “Meet the Press."

Rice’s comments followed a report by the Financial Times last week quoting an unidentified senior Russian official as saying that Moscow could intervene to protect ethnic Russians in Ukraine’s Crimea territory, home to a Russian naval base.

“If Ukraine breaks apart, it will trigger a war. They will lose Crimea first [because] we will go in and protect [it], just as we did in Georgia,” the official was quoted as saying in a reference to Russia’s 2008 war with Georgia over the breakaway republic of South Ossetia.

Rice said in Sunday’s interview that the situation in Ukraine “is not about the US and Russia” and that closer Ukrainian ties with Europe would not come at the expense of the country’s historical links with Russia.

“There is not an inherent contradiction … between a Ukraine that has longstanding historic and cultural ties to Russia and a modern Ukraine that wants to integrate more closely with Europe,” she said.

Ukrainian President Viktor Yanukovych on Saturday abandoned his lavish estate in the wake of bloody street clashes between security forces and anti-government protesters last week that evaporated his authority in the capital Kiev and broad swathes of the country.

Ukrainian lawmakers impeached Yanukovych on Saturday, though he remained defiant in a statement issued the same day from a location in his political stronghold in the east of the country, describing attempts to unseat him as a coup.

Rice said that Russian President Vladimir Putin agreed with a message delivered by his American counterpart, Barack Obama, in a phone call between the two leaders Friday.

“The president’s message was, look, we have a shared interest in a Ukraine that remains unified, whole, independent and is able to exercise the will of its people freely,” she said.

In a telephone call with Russian Foreign Minister Sergei Lavrov on Sunday, US Secretary of State John Kerry expressed the United States’ “strong support” for the Ukrainian parliament’s decision to transfer presidential duties to speaker Oleksander Turchinov, the State Department said in a statement.

Kerry also “underscored the United States’ expectation that Ukraine’s sovereignty, territorial integrity and democratic freedom of choice will be respected by all states,” the State Department said.

Lavrov told Kerry, meanwhile, that the Ukrainian opposition has “effectively seized power,” refuses to lay down arms and “continues to place its stake on violence,” the Russian Foreign Ministry said in a statement.

Lavrov emphasized to his US counterpart that an agreement signed Friday between Yanukovych and Ukrainian opposition leaders calling for early presidential elections and constitutional reforms must be enforced, noting that the United States welcomed the deal at the time.

Meanwhile In Non-Pro-Europe Ukraine

Zero Hedge,

23 Febraury, 2013

The bad feelings concerning Russia run deep in the Western parts of Ukraine (as they topple statues of Lenin in growing numbers) while in the East they see themselves much more as Russians. These feelings run very deep in the region and memories do not fade so easily as the mayor and police chief of Kerch vigorously defend the Ukrainian flag in the clip below - deep in the eastern Crimea region (that Russia has already suggested it is willing to go to war over). Russian President Vladimir Putin has now been placed in a very difficult position, as Martin Armstrong notes, the entire set of circumstances creates the image of events in Ukraine that have diminished the power of Russia, which is a matter of pride and the only stable resolution remains a split along the language faultline. The critical question then is - will Putin let it go?

In the west they are toppling Lenin statues en masse

The big question- of course - will Putin let it go? (via Martin Armstrong),

Russian President Vladimir Putin has now been placed in a very difficult position. As the protesters in Ukraine gathered the support of the police against the mercenaries, they turned the tide of politics for the moment. Putin’s Sochi Olympic moment has been overshadowed by the bloody mess in neighboring Ukraine thanks to the insanity of Yanukovich trying to oppress the people as in the old days. Yanukovich has demonstrated that ultimate power always corrupts ultimately. There must be checks and balances.

The entire set of circumstances creates the image of events in Ukraine that have diminished the power of Russia, which is a matter of pride. The situation may appear that it is slipping out of control and Russia will just walk away. Indeed, it’s hard to imagine that Putin will just walk away and leave Ukraine to its own devices. There is political pride that is at stake here and Putin said in 2005 that the fall of the Soviet Union was “the greatest geopolitical catastrophe” of the 20th century. Putin’s view of this is not economic, but only political. From that perspective, we must understand that if the USA split apart as was the case with the Civil War, there is a sense that a loss of prestige and power will engulf the nation unless the lost portion is regained.

There are lessons from history on this point to demonstrate this is not my personal opinion. Take the Roman Emperor Aurelian (270–275 AD) who fought to regain the European portion that separated from Rome known as the Gallic Empire and in the East defeated Zenobia who established the Empire of Palmyra. Putin’s desire to retake the former nations that were part of the Soviet Union is in accordance with history and would be an exception if it were not true.  Therefore, to allow Ukraine to slip out of Russia’s orbit would make Putin no better than Mikhail Gorbachev, who presided over the Soviet empire’s dissolution in 1991 and allowed the very thing he sees as a great geopolitical catastrophe.

There can be no question that Putin wants Ukraine to join Russia’s economic attempt to create the offset to the EU with his Customs Union that includes Belarus, Kazakhstan, and soon, Armenia. The Customs Union is his counter economic response to the European Union’s much larger trading bloc. On this score, economics is the battleground.

It is true that only after Yanukovych broke off with the EU moving away from a European Union integration accord last November and chose Russia instead that the protests began in Ukraine. Putin applied pressure and Yanukovych responded taking the nation toward the Customs Union rather than the EU that would have no doubt curtailed trade to a large extent and reduced the prospect for greater entrepreneurship in Ukraine. The emergence of small business in Ukraine does not match the oligarchy monopolies inside the Russian economic model. However, this was more the straw that broke the camel’s back than the spark that ignited the revolution.

I have explained in the Cycles of War that Russia and Ukraine have deep historical links dating back to the Kievan Rus, from whom the very word “Russia” emerges. They were the days of the 11th and 12th centuries and they are traditionally seen as the beginning of Russia and the ancestor of Belarus and Ukraine. Kiev was the first real capital of Russia before Moscow. Therefore, we have a mother-country complex involved as well.

According to the Russian business daily Kommersant, they cited a source in a NATO country’s delegation back in 2008 that reported Putin had told President George W. Bush: “You understand, George, that Ukraine isn’t even a state.” Indeed, Ukraine has been the real mother-country to Russia for most of the last 900 years prior to the collapse of the Soviet Union in 1991. Certainly, parts of what is now called Ukraine have been controlled by many various countries as the borders have constantly change including Poland, Lithuania, the Khanate of Crimea, Austria-Hungary, Germany, in addition to Russia. Putin has often referred to Ukraine as “little Russia.” So clearly, there are serious issues here that warn that the immediate result in Ukraine may not yet be permanent independence. I have suggested that Ukraine split along the language faultline BECAUSE history warns that Russia is not likely to simply fade into the night. This is the ONLY solution that may allow Ukrainian independence and Russia to maintain its pride.

Strategically, Crimea, the southern part of Ukraine on the Black Sea, was part of Russia until 1954. At that time, Crimea was given to the Ukrainian Soviet Socialist Republic by the Presidium of the Supreme Soviet, supposedly to strengthen brotherly ties. However, the majority of the population were Russian – not Ukrainian! Therein lies part of the problem. This “gift” of Crimea to Ukraine would be like the USA giving Texas to Mexico and Texans would suddenly all be Mexican. Would they “feel” Mexican or American?

There is also Russia’s Black Sea Fleet that is headquartered in the Crimean city of Sevastopol, which is less than 200 miles northwest of Sochi where the Olympic Games are being held. It is hard to imagine that the Ukrainian government could even end that lease without major consequences. Russia would no doubt be forced to move its headquarters east to Novorossiysk, yet this will have a serious geopolitical loss of face. Just last December, Russia proposed a deal of providing cheaper natural gas to Ukraine in exchange for better terms on its lease in Sevastopol. This is another reason there should be serious consideration of a split handing back the Crimea to Russia.

With the crisis over Syria that is the Saudi attempt to get a pipeline through Syria to compete with Russia on natural gas sales to Europe, Ukraine also presents a very serious problem for Russia. Natural gas sales to Europe are a key source of foreign exchange for Russia, yet a large portion of that gas actually passes through Ukraine. An independent Ukraine may present an economic threat to Russia if those pipelines were to be shut off. Nevertheless, Gazprom is also hedging its bets by building a new South Stream pipeline that crosses the Black Sea on the seabed from Russia to Bulgaria, bypassing Ukraine. This could relieve that geopolitical-economic threat, but it is not immediate. Clearly, this comes at a time that is serious in light of what the USA and Saudi’s are trying to pull off with the overthrow of Syria pretending they care about human rights when in fact it is all about that pipeline.

The Ukrainians really do not “feel“ that they are Russian and they have toppled statues of Lenin everywhere.  Why? Historically, Josef Stalin brutally subjugated Ukraine back in the 1930s. He confiscated all the wealth liquidating the farmers that were known as kulaks. The bad feelings concerning Russia run deep in the Western parts while in the East they see themselves as Russians. These feelings run very deep in the region and memories do not fade so easily. We still have the word “vandalize” that comes from the North African Vandals sacking Rome back in 455AD. China still hates Japan for their brutal invasion. These feelings and memories do not really exist in the USA most likely because of the very diverse ethnic backgrounds creating a melting pot rather than one group that remembers another.

EU Offers Conditional "Aid" For Ukraine's "Catastrophic, Pre-Default" Economic State

Zero Hedge,

23 Febraury, 2013

"There is no money in Ukraine's Treasury account," exclaimed 'Interim President' Oleksandr Turchynov to the Ukrainian parliament; adding that the Ukraine economy is in a "catastrophic state."

*THERE ARE PROBLEMS WITH BANKING SYSTEM AND HRYVNIA: TURCHYNOV

*PROBLEMS WITH PENSION FUND ARE "COLOSSAL": TURCHYNOV

*UKRAINE'S ECONOMY IS IN A `PRE-DEFAULT' SITUATION: TURCHYNOV

Hardly surprising given the months of protest; but with Russia 'conditionally' postponing its EUR2bn 'loan', the Europeans are riding to the nation's aid with promises of EUR20bn (if Ukrainian authorities meet certain conditions). But, as the map below shows, a great deal of the nation's wealth lies in the eastern (pro-Russia) region.

*NEW UKRAINE GOVT'S PRIORITY IS TO RETURN TO EU PATH: TURCHYNOV

*RUSSIA SHOULD RECOGNIZE UKRAINE'S EUROPEAN CHOICE: TURCHYNOV

Russia is on hold but the Europeans are willing... conditionally...

The European Commission has said it is ready to conclude a trade deal with and offer aid to Ukraine once a new government is in place in Kiev, Reuters reported Feb. 23. An EU official added that the European bloc could give the country more than 20 billion euros (some $27 billion) if Ukrainian authorities meet certain conditions, The Wall Street Journal reported. According to the official, this figure is a conservative estimate of the potential assistance Ukraine could receive from EU members. Russia is currently holding out on economic aid to Ukraine as it waits to see how the country's political crisis plays out.

But as a reminder, a great deal of the nation's wealth resides in non-pro-Europe eastern Ukraine...

The Economic Consequences of Ukrainian Federalism (via Stratfor)

For a country like Ukraine, the appeal of federalism, which divides authority between the central government and its constituent regions, is undeniable. Located in Europe's borderlands, Ukraine has been contested by its neighbors for centuries, a competition that has left it internally divided along linguistic, cultural and religious lines. Broadly speaking, Ukraine is divided between the east and the west, with eastern Ukraine favoring Russia and western Ukraine favoring Europe. Ukraine's regions are also distinct economically. The country's industrial base is located in the east. The east's close proximity to Russia creates strong cross-border trade that enriches regional economies. According to Ukraine's government statistics service, manufacturing contributes at least three times more than agriculture to the country's gross domestic product. Thus, eastern regions generally have higher per capita GDP rates. In 2011, the per capita GDP in the eastern region of Dnipropetrovsk, the country's most important industrial center, was 42,068 Ukrainian hryvnia ($4,748), while it was only 20,490 hryvnia ($2,312) in Lviv region, which is one of western Ukraine's industrial centers.

Seven of Ukraine's 10 largest private companies by revenue are either headquartered or maintain the majority of their operations in eastern Ukraine. These firms are owned by some of Ukraine's wealthiest and most influential individuals. Three of these 10 corporations -- mining and steel company Metinvest, energy firm DTEK and its subsidiary Donetskstal -- are based in the eastern industrial city of Donetsk and are owned by Ukraine's wealthiest man, Rinat Akhmetov. Interpipe, the company that controls 10 percent of the world market share of railway wheels and more than 11 percent of the world market share of manganese ferroalloys, is based in Dnipropetrovsk and belongs to businessman and politician Victor Pinchuk.

The country's most important businessmen are embedded in the east, where their businesses make disproportionately high contributions to the Ukrainian economy and national budget. Westerners staunchly oppose federalism because they believe it would threaten their economic and security interests. Others believe it could dissolve Ukraine as a country, leaving the west weak and defenseless against the Russia-backed east. Whether or not these concerns are misplaced, federalism would in fact benefit eastern regions disproportionately by giving them more control over state revenue, aggravating the socioeconomic tensions between the regions.

However, the Ukrainians are keeping their options open...

*`WE ARE READY TO HAVE A DIALOG WITH RUSSIA:' TURCHYNOV

*UKRAINE TIES WITH RUSSIA SHOULD BE ON EQUAL FOOTING: TURCHYNOV