Ukraine

[admin]

There is an upside for IOC investors though. If Russia start to use its gas as leverage, or even if economic sanctions get off seriously, this is likely to be good for energy prices in general, and LNG in particular.

Even in the present state I think countries will give any dependence upon Russian energy supplies a second thought.

But lets hope this crisis gets resolved satisfactory

[admin]

While the world awaits Sunday’s referendum in Crimea and nervously watches the Russian troops massing on Ukraine’s eastern border, the world is missing that, in Moscow, Vladimir Putin is busily cleaning house. Yesterday, Russian journalist Leonid Ragozin wrote here about Putin’s renewed crackdown on the media..

Within the span of a couple months, the Kremlin, by hook and by crook, has cleared all the media underbrush. There’s suddenly not much left of the independent media, even of what little of it there was left after Putin’s first two terms at the wheel.

But that’s not all. In fact, terrifyingly, it’s not nearly all. Yesterday, Vladimir Zhirinovsky, the pseudo-nationalist pseudo-parliamentarian, proposed banning the letter Ы (usually transliterated as “y” into English, as in NavalnY or, say, blinY) from the Russian alphabet because it was too “Asiatic.” The day before that, Vladimir Yakunin, head of Russian Railways, the biggest company in the country, proposed spending “trillions of rubles” on a “Trans-Eurasian Development Belt” that would take certain non-Western, non-Anglo-Saxon values into account. Yakunin added that the West had foisted onto Russia a form of economics—in which, judging by the number of Russian billionaires, it’s been quite successful—that was all growth for the sake of growth, and which annihilated Russia’s intrinsic spirituality.

While the West Watches Crimea, Putin Cleans House in Moscow | New Republic

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But then came the day a Moscow acquaintance announced on Facebook that her daughter, a first-grader, came home from school in a panic because the teacher had told the class that America was about to invade Russia. But then television host and attack dog Dmitry Kiselev went after the “radicals” in Kiev in a special broadcast dedicated to Ukraine, saying that the transfer of Crime to the Ukrainian Soviet Republic in 1954 was “a historical crime” and blaming the dissolution of Yugoslavia on the West. “What is Yugoslavia now?

While the West Watches Crimea, Putin Cleans House in Moscow | New Republic

Hmm, speaking about rationality out of the window..

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What initially made us think of calling you was that news a week or so ago that the new government in Ukraine was asking a few oligarchs to help out by becoming governors of Eastern provinces. What’s up with that? I also was really struck by that news. I think the people of Ukraine should have some medium-term concerns about that — one of the reasons that you had this uprising against Yanukovych was because there was too much crony capitalism.

But in the short-term, particularly given the subsequent Russian invasion of Ukraine, it is turning out to be a rather prescient action. What is not fully apparent if you’re outside Ukraine is the extent to which Yanukovych compromised the entire structure of government. State institutions were incredibly compromised, incredibly corrupt.  The result was, following the overthrow of Yanukovych, in parts of the country the government just melted away. What the Eastern Ukrainian oligarchs have been able to do because they are very, very wealthy and have their own strong local organizations and contacts, is rebuild some sort of government presence really fast.

Why Is Ukraine's Economy Such a Mess? - Justin Fox - Harvard Business Review

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Turns out what Russian official institutions may have done with their Treasurys (and we won't know for sure until June), it was merely the beginning. In fact, as the FT reports, in silent and not so silent preparations for what will be near-certain financial sanctions (which would include account freezes and asset confiscations following this Sunday's Crimean referendum) the snealy Russians, read oligarchs, have already pulled billions from banks in the west thereby essentially making the biggest western gambit - that of going after the wealth of Russia's 0.0001% - moot.

The Russians Have Already Quietly Pulled Their Money From The West | Zero Hedge

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The looming referendum in Crimea saw Russian markets continue to slide on Friday, as Goldman Sachs reported that capital outflows from the country had hit $45 billion since the start of the year.

Russia's MICEX index closed around 1 percent lower on Friday, as concerns about the outcome of a referendum in Crimea on Sunday weighed on investors. Earlier in the day, the index fell over 5 percent to hit its lowest level since October 2009.

Russia stocks hit 4½-year low; Crimea vote weighs

[admin]

Pro's and con's of letting Russia getting away with taking the Crimea.

When in doubt, it's often useful to suspend judgement and list as many variables as you can, this situation is no different.

The pro's

1. Since it's probable that a majority of Crimean citizens want to join Russia anyway (I write this before the referendum participation % and outcome are known), you either make them happy and a minority unhappy, or it's the other way around.
2. The Crimea used to be part of Russia
3. However outdated a concept, it's Russia's "back yard"
4. We can't stop Russia anyway. The US is relatively exhausted by two very expensive wars with very dubious results and a financial crisis to boot. The EU has too many problems of its own (euro induced) and is financially and militarily weakened.
5. What are we're going to do anyway? Not fight, surely.
6. Sanctions are likely to hurt us considerably as well, depending on how Russia retaliates
7. We need Russia's cooperation in other fields (Iran, Syria, North Corea, nuclear non-proliferation, fighting terrorism, etc.). Perhaps it's better to concede Crimea in return for favors/concessions elsewhere.

The contra's

1. It's a flagrant violation of international law, territorial integrity (the latter guaranteed not just by international law but by a 1994 treaty in which both Russia and the US guaranteed the borders of Ukraine in return for the latter to give up nuclear weapons).
2. If not stopped here, who knows what Putin's next step will be (the '1938 München' argument).

This is certainly not exhaustive. Feel free to add/detract/comment.

[admin]

Well, first results are in..

With a voter turnout (79.09%) that exceeded every US Presidential election since 1900, the people of Crimea have spoken:

*CRIMEA JOINING RUSSIA BACKED BY 93% OF VOTERS: EXIT POLL
*U.K. FOREIGN SECRETARY: U.K. WON'T RECOGNIZE CRIMEAN REFERENDUM

With 79% Turnout, Exit Polls Confirm 93% Of Voters Back Crimea Joining Russia; US,UK Rejects Results | Zero Hedge

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Putin has also shown that he was serious about using force not just in Crimea, but in Ukraine proper. So far, he has kept it just to busing in hooligans into eastern Ukraine to act as grassroots pro-Russian protesters. But make no mistake, Putin is about to take eastern Ukraine, too.

After Crimea, Putin Is Going to Take Eastern Ukraine | New Republic

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Russia’s economy is showing signs of a crisis, the government in Moscow said as the U.S. and the European Union announced sanctions over the country’s support for the Crimea region breaking away from Ukraine.

Russia Sounds Alarm on Economic Crisis as West Imposes Sanctions - Bloomberg

This is the only thing that will restrain Putin