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Friday, April 18, 2014 3:27 PM


Ukraine Accord Broken Already; Key Uninvited Group to Peacy Party Doesn't Like the Deal; Reflections on Hubris


Immediately after the 4-player Ukraine accord announcement yesterday (See Ukraine Talks End in Accord; What About the Key Missing Player?) I commented ...

Lots of Questions

This accord raises more questions than answers.

  • Did anyone consult the separatists?
  • Who is going to enforce the agreement?
  • Is there a single voice, or even a small group of voices who can speak for the separatists?

If the separatists are acting on their own, then unless Russia or someone else can convince the separatists to lay down their arms, the accord may break down.

Separatists are the key players in this crisis, but it does not appear they were even invited to the table.
Ukraine Accord Broken Already

Here we are, one day later and the Financial Times reports Ukraine: The ‘War Without War’ that Rumbles On
In Geneva on Thursday the US, the EU, Russia and Ukraine agreed steps aimed at reducing the tensions. But that agreement is already in danger of unravelling as separatists in the big eastern city of Donetsk refuse to evacuate their headquarters. Any violence risks creating the pretext for a Russian invasion.

While the government in Kiev and much of the west stresses its desire to integrate with Europe, the east remains firmly anchored to Russia by language, culture and history. Many companies are also oriented eastward, above all those working in its Soviet-era agricultural, metallurgy, pipe-making and defence industries – all of strategic importance to Moscow.

“The Russian market is very important, especially for the older, heritage economy,” says Gennadiy Chyzhykov, president of the Ukrainian Chamber of Commerce, who is from Donetsk, now capital of the self-styled “republic” where activists claim to lead the anti-Kiev protests. “We export mainly raw materials and semi-finished goods to Europe, but finished goods, including sweets, to Russia. They share our tastes.”
Sentiment

Read that last paragraph above closely. Most of the people in Eastern Ukraine lean towards Russia.

Banning Russian broadcasts, or even forceful military action cannot change that sentiment. Indeed, it can only strengthen it.

Geneva Agreement Does Little to Counter Russian Military Threat

Also consider Geneva Agreement Does Little to Counter Russian Military Threat
Analysts said the fact that US, EU, Russian and Ukrainian foreign ministers managed to agree on a document at all was positive, at a meeting for which expectations had been low.

They agreed illegal armed groups should hand over their weapons, Ukraine should undertake reforms to give more powers to its regions, and a monitoring mission from the Organisation for Security and Cooperation in Europe would be stepped up.

But several steps are difficult to implement, or provide no guarantee that the situation in eastern Ukraine could not escalate. “The wording of the agreement is fine, but when I saw it I immediately thought, how can this actually happen?” said Oleksiy Haran, a Kiev-based political scientist who was visiting Donetsk on Friday.

Most importantly, Russia made no commitment to pull back thousands of troops it has massed on Ukraine’s border. The groups which must agree to hand over their weapons, moreover, were not directly represented in Geneva.

Hubris

Finally, please note the extreme hubris of the four parties that agreed to a solution without consulting the views, wishes, and demands of the key group: the separatists.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Thursday, April 17, 2014 1:22 PM


Ukraine Talks End in Accord; What About the Key Missing Player?


Bloomberg reports Treasuries Fall Most in a Month as Ukraine Talks End in Accord

Treasuries fell, pushing 10-year note yields up the most in a month, as talks on the crisis in Ukraine ended with an accord aimed at de-escalating the conflict, damping haven demand.

Talks in Geneva between Russian Foreign Minister Sergei Lavrov, his Ukrainian counterpart, Andriy Deshchytsia, U.S. Secretary of State John Kerry and Catherine Ashton, the European Union’s foreign-policy chief, went on for more than six hours, longer than scheduled.

"The Geneva meeting on the situation in Ukraine agreed on initial concrete steps to de-escalate tensions and restore security for all citizens,” the four said in a joint statement. “All sides must refrain from any violence, intimidation or provocative actions.”
Text of the Joint Statement

Here is the complete Text of Joint Statement on Ukraine
The Geneva meeting on the situation in Ukraine agreed on initial concrete steps to de-escalate tensions and restore security for all citizens.

All sides must refrain from any violence, intimidation or provocative actions. The participants strongly condemned and rejected all expressions of extremism, racism and religious intolerance, including anti-semitism.

All illegal armed groups must be disarmed; all illegally seized buildings must be returned to legitimate owners; all illegally occupied streets, squares and other public places in Ukrainian cities and towns must be vacated.

Amnesty will be granted to protesters and to those who have left buildings and other public places and surrendered weapons, with the exception of those found guilty of capital crimes.

It was agreed that the OSCE Special Monitoring Mission should play a leading role in assisting Ukrainian authorities and local communities in the immediate implementation of these de-escalation measures wherever they are needed most, beginning in the coming days. The U.S., E.U. and Russia commit to support this mission, including by providing monitors.

The announced constitutional process will be inclusive, transparent and accountable. It will include the immediate establishment of a broad national dialogue, with outreach to all of Ukraine's regions and political constituencies, and allow for the consideration of public comments and proposed amendments.

The participants underlined the importance of economic and financial stability in Ukraine and would be ready to discuss additional support as the above steps are implemented.
Defusing the Conflict

The Guardian reports Geneva talks produce agreement on defusing conflict.
The US, Russia, Ukraine and the European Union have agreed a plan aimed at defusing the gathering conflict in eastern Ukraine.

At a meeting in Geneva which began with low expectations but led to seven hours of intense negotiations, foreign ministers agreed a series of "concrete steps" to be taken by all sides. The agreement puts on hold for now at least additional economic sanctions against Russia.

The US secretary of state, John Kerry said the agreement "represents a good day's work" but would have little meaning if it was not followed by action on all sides to calm the situation. He said if the US and EU did not see progress, new sanctions would follow.

The success of the agreement will depend on its implementation. Kerry made it clear that the US would hold Moscow responsible for controlling the pro-Russian protesters, who Putin has portrayed as independent minded Ukrainians.
Lots of Questions

This accord raises more questions than answers.

  • Did anyone consult the separatists?
  • Who is going to enforce the agreement?
  • Is there a single voice, or even a small group of voices who can speak for the separatists?

If the separatists are acting on their own, then unless Russia or someone else can convince the separatists to lay down their arms, the accord may break down.

Separatists are the key players in this crisis, but it does not appear they were even invited to the table.

In the meantime, let's see if it holds. It might. And if it does hold, then Russia probably got what it wanted out of the agreement.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

11:01 AM


Putin Threatens Military Intervention in Ukraine; Obama's Hypocritical Response


In his strongest message yet to Ukraine, the EU, and US, Putin says Russia ready to act in Ukraine

Russian President Vladimir Putin has warned of his readiness to deploy troops in eastern Ukraine if diplomatic efforts fail to resolve the escalating crisis there.

The threat came as foreign ministers from Russia, Ukraine, the US and EU were meeting in Geneva to find ways to ease the tension.

Speaking in a live television phone-in hours after the first deadly clash between pro-Russia protesters in the eastern region and Kiev’s security forces, Mr Putin said he hoped for a political resolution to the crisis but warned that the campaign for Ukraine’s May 25 presidential election was “being run in an absolutely unacceptable way”.

“The Federation Council granted the president the right to use military force in Ukraine,” he said in response to one of 2m questions submitted to him. “I really hope that I do not have to exercise this right and that we are able to solve all of today’s pressing issues with political and diplomatic means.”

But he added: “If everything continues like this, then of course we cannot recognise as legitimate what is happening and what will happen after May 25.”

Mr Putin called on Kiev to withdraw its forces from southeastern Ukraine and engage in dialogue on the country’s future with pro-Russia protesters in the region.

Mr Putin signalled that he might be ready for a pragmatic solution. Despite repeating Moscow’s scathing rejection of Ukraine’s interim government as illegitimate, he said: “We need to come to agreement with those who view themselves as the authorities in Ukraine. But they need to behave reasonably.”

US President Barack Obama said in an interview on Wednesday that Mr Putin was supporting “at minimum, non-state militias” in Ukraine.
Obama's Hypocrisy 

Two wrongs don't make a right but it's certainly fair to point out the "US is supporting, at minimum, non-state militias in Syria". How many other places?

We only like intervention when we do it.

Assuming one believes that Russia is indeed directly supporting militias in Ukraine (something that is arguably debatable), at least Russia has a vested interest given that it borders Ukraine.

Russia fears US missiles and military buildups in Eastern Europe, as well it should. After all, the US did renege on promises not to expand NATO into Eastern Europe.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com


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