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February 27, 2014

Ukraine...Another Day Closer To All Out Civil War And Russian Intervention

[Ben's taking the day off so you no news dump.]

It appears things will get worse, probably much worse, before they begin to get better in Ukraine.

In his statement, [Ousted President Viktor] Yanukovych said the current government is illegitimate, and he called on the Ukrainian military to resist any orders to interfere in pro-Russian protests in eastern and southern Ukraine. Tensions in Simferopol, the capital of the Crimea, were heightened Thursday when a band of armed men seized two government buildings.

...

A Ukrainian news Web site, lb.ua, also reported that it had spoken with a witness who saw Yanukovych in Moscow, at the Ukraine Hotel, on Tuesday. With him, it said, were the former interior minister, Vitaliy Zakharchenko, and the former chief prosecutor of Ukraine, Viktor Pshonka.

Russian wire services quoted unidentified government spokesmen as saying that Yanukovych’s security would be guaranteed as long as he is on Russian soil.

The new provisional government is speaking in rather blunt terms about the economic situation the country is facing.

The Maidan council - made up of protester groups and activists - announced its nominations at a big gathering of protesters at the camp, which is spread over Kiev's Independence Square.

The council proposed Fatherland Party leader Arseniy Yatsenyuk to lead the cabinet until early presidential elections on 25 May.

Mr Yatsenyuk - a former speaker of parliament and foreign minister - has been one of the main opposition leaders during the protests which first erupted in late November.

"We are to undertake extremely unpopular steps as the previous government and previous president were so corrupted that the country is in a desperate financial plight," Mr Yatsenyuk told BBC Ukrainian.

"We are on the brink of a disaster and this is the government of political suiciders! So welcome to hell," he added.

For the record, "Hell" is a term most political leaders tend to avoid when discussing their country's financial situation. But impending civil war and foreign military intervention tends to make investors nervous about the economic future so they begin to pull out, which in turn leads to more instability, which helps to make civil war and foreign military intervention more likely and....you see where this is going.

As for the reality of who will "win" the Ukraine, the US/EU or Russia, who has more invested in the outcome and the long term commitment to the region?

Yeah.


In the months to come, however, Russia will have ample opportunity to play its traditionally active role in Ukraine’s domestic politics. Even if Europe and the International Monetary Fund step forward with substantial financial help, Ukraine will still need heavily discounted Russian energy and a steady flow of commerce and investment in both directions across the Russian-Ukrainian border for the foreseeable future. That’s two crucial sources of Russian leverage with a direct impact on Ukraine’s economy. Russia will never simply surrender its influence in Ukraine.

Then there is the far-from-united European front. The sense of urgency created by violence and white-hot media focus have moved European governments to prepare emergency financial support. Once Ukraine forms its government, a combination of European governments and institutions will offer infusions of cash large enough to allow the IMF time to form a strategy for the next couple of years, but the passage of time will divide European opinion on what to do next.

A crucial question: To help Ukraine through a delicate moment, will the IMF ease the demands it makes on Ukraine in exchange for its help? In the past, the IMF has conditioned any deal with Ukraine on painful economic reforms that a fragile new government might not be able to deliver. Early signs suggest that this time, the Fund may ask for less.

But once the patient is out of critical condition and up off the operating table, can Ukraine stand on its own without a lot more European help? Once the revolution is off the front pages and the sense of urgency has passed, European governments will remember that the redesign of the Eurozone and the needs of weaker economies already in the EU must take precedence. Nor do Europeans want an extended fight with Russia, the country that provides 28 percent of the EU's imported natural gas. It took bloodshed to get the Europeans this involved in Ukraine’s future. What will it take a year from now?

What about Washington? The Obama administration has the same distaste for the Putin regime that the Kremlin has for Obama, but given Putin’s willingness to insert himself in geopolitical hotspots of US interest—places like Syria and Iran—no one in the White House wants a fight. Let Russia’s energy-export-dependent economy rust, U.S. officials might well reason, but avoid a needlessly costly confrontation.

I want to hope for the best for the people of Ukraine but reality is not on their side.

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posted by DrewM. at 09:21 AM

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