Ukraine update - 03/19/2014

Again, that fascist Porubiy in the headlines

Ukraine quits CIS, sets visa regime with Russia, wants Crimea as 'demilitarized zone'

RT,

19 March, 2014

The interim government in Kiev says Ukraine will leave the commonwealth of post-Soviet states and force Russians to apply for entry visas, and plans to ask the United Nations to make Crimea a demilitarized zone.

The raft of measures – a response to Russia’s incorporation of Crimea into its territory following Sunday’s referendum – was announced by National Security and Defense Council chief Andrey Parubiy during a press briefing in Kiev.

The Commonwealth of Independent States (CIS) was founded to maintain economic and security links between former Soviet republics when they became independent states in 1991. It initially included the 12 non-Baltic countries, though Georgia quit after the Ossetian conflict in 2008.

This year, Ukraine was assigned the rotating leadership of the CIS – which is more akin to the formal British Commonwealth than the fully-fledged economic partnership of the EU – but now says it will not carry out its duties.

"We have decided not only to give up the presidency, but to launch the process of quitting the union altogether," Parubiy told journalists.

Parubiy said that Ukraine will ask the United Nations to declare Crimea – which Kiev says was occupied by Russian troops following the ousting of Viktor Yanukovich – a demilitarized zone.

UN-sanctioned demilitarized zones exist between Kosovo and Serbia, North and South Korea, and in areas surrounding Israel.

Ukraine will offer those who want to leave Crimea – where 96 percent of the people voted to join Russia – an opportunity to do so.

“The cabinet has been instructed to devise an evacuation plan for those who do not want to stay in the occupied territories,” said Parubiy.

Ukraine will also introduce a visa regime for Russians, who have not only been allowed to move freely between Ukraine and their homeland since the collapse of the Soviet Union, but could do so with only their internal identification documents.

“In the coming hours we will introduce a mechanism so that only Russians with travel passports can enter the country, until such a moment when formal visas can be issued,” said Parubiy, who stated that his department had issued the Foreign Ministry with “requests to implement these measures as soon as is feasible.”

The Russian Foreign Ministry has said that it will not issue a visa regime of its own until it learns what changes have been proposed by Kiev, sources in the Foreign Ministry informed RIA Novosti.

Ukrainian border guards have turned back Russian citizens in recent weeks due to ostensible concerns that they will participate in anti-government protests in the east of the country. Parubiy also claimed that Russia was contemplating a “full-scale invasion” of Russian-speaking regions.

Russia to redirect trade elsewhere in case of EU-US sanctions

Russia will switch to other trade partners if economic sanctions are imposed by the US and the European Union, the Russian President's Press Secretary Dmitry Peskov has said.

RT,

19 March, 2014

"If one economic partner on the one side of the globe impose sanctions, we will pay attention to new partners from the globe’s other side. The world is not monopolar, we will concentrate on other economic partners," RIA news quotes Peskov.

According to him, possible economic sanctions by the US and EU on Russia are unacceptable, and the Russian Federation intends to offer further economic cooperation with the European Union.

"We want to keep good relations with the EU and with the US. Especially with the European Union as it is the main economic, investment and trade partner of the Russian Federation. Our mutual economic dependence assumes that we shall have good relations," the Russian President's Press Secretary declared. He also emphasized that discussion of global economic problems without involvement of Russia can't be a complete discussion.

In a Tuesday telephone conversation between Russia’s Minister for Foreign Affairs Sergey Lavrov and the US Secretary of State John Kerry they discussed the situation in Ukraine, and Lavrov said sanctions imposed by the US and the European Union against the Russian Federation are absolutely unacceptable and won’t come without consequences.

According to data from the EU’s Eurostat, Russia accounts for 7 percent of imports and 12 percent of exports in the 28 European Union bloc, making it the region's third most important trading partner, behind the USA and China.

In turn, the EU is Russia’s biggest trade and investment partner, with trade turnover estimated at $330 billion in 2012.

The introduction of sanctions may lead to a considerable financial losses for the EU. “The set of economic measures which the EU can apply is extremely limited”, says the deputy director of Institute of economic prediction of the Russian Academy of Sciences Alexander Shirov.

“The Russian economy is 3 percent of the world’s gross domestic product. We generate a considerable volume of demand for European products crucial to such countries as Germany, Italy and France. The absence of normal trade and economic relations with Russia essentially means losses for these countries," the expert concludes.

The US is a much smaller trading partner for Russia, as its trade turnover with Russia was about about a tenth of that with the EU at $38.1 billion in 2012.In 2013, the value of its imports was $26.96 billion, more than double the value of its exports.

Boomerang effect

US based companies that have strong business ties with Russia, including General Electric and Boeing, are becoming increasingly concerned over US plans to harden sanctions against Russia after the association of the Crimea. Businesses are afraid of countermeasures from the Russian authorities, says Bloomberg.

“The CEOs are obviously very concerned about what is happening in Russia,” said John Engler, the president of the US Business Roundtable of major CEOs. “For some companies, it’s a substantial bit of their business. They are watching it very intently, trying to understand what will happen and what the next steps will be.”

The aviation subsidiary of General Electric, GE Capital Aviation Services, has a fleet of 54 airplanes in Russia. The largest aircraft leasing company in the world is watching closely the development of interrelations. Boeing is afraid the demand for airliners will fall if the dispute leads to a decrease in global economic growth.

Some of the world’s biggest companies in the West have already said they would run their businesses with Russia as usual and won’t be involved in the political conflict.

Rex Tillerson, CEO of Exxon Mobil, that has major exploration projects in Russia, said that the Texas-based company, wouldn’t take sides in the conflict between Russia and Ukraine.

On a country level, Latvia has so far voiced the biggest concern over sanctions against Russia, as the adverse effect would hit the country the hardest compared to all the EU member states. The country could lose up to 10 percent of its GDP, as the action against Russia could have a big adverse effect, according to the country’s Prime Minister Laimdota Straujuma. On Monday Latvia also said that the EU should compensate any countries hurt by sanctions against Russia.

On Wednesday the heads of nearly 100 companies from the Business Roundtable association will meet in Washington to discuss the question of sanctions.