Ukraine (closed; covers till August 2014)

[OUTLAW 09]

JMA---your question is at an interesting point in the development of the EU for a number of reasons.

1. Germany via Merkel and her FM have taken quasi lead in the EU---that leads to the division of labor between Germany and France with the UK providing hard rhetoric as a byline---meaning when the Germans do not want to destroy the back channels they have with Russia and an announcement against Russia occurs then it comes from France---when German wants a clear statement from both Germany and the EU then Merkel leads and her FM gets to the point. Last night for example--the Russians have been blocking a OCSE mission to send observers to doublecheck Russian complaints in the Ukraine but Russia has been blocking the mission with their veto--German FM stated bluntly Russia you have not one or two weeks to respond you have 24 hrs to respond or we will be sending a large contingent of the EU Bde officers as observers to together with civilians instead of the OCSE---Russia is now indicating they will approve--but again Russia was told Germany wants to see action not words within the next 24 hrs.

By the way the Germans are at the point of fully not trusting the Russians even with their long history and this is carrying into the EU---think actually Putin might have over reached in his belief the Germans would remain neutral towards his moves.

2. under German guidance the second round or freezes did in fact hit key Russians supporters of Putin

3. and this is important---Merkel realizes as do the Russians that the EU could not get their act together for a unified list on the actual sanctions and embargo if they have to move on it---so she found a middle ground which IMO is a perfect fit for the EU---each member is now analyzing their economy and each will come up with what each can do without a high level of reverse damage---this allows the weaker EU countries to specifically target something they can support and show their support and gives actually the EU a far bigger hammer as Russia must then deal with 28 different approaches/industrial areas that otherwise if unified would be easy to respond to

That is a major plus in getting the EU to act as a single voice and it is the first such time they have done this---actually all 28 leaders were very supportive of the decision.

[OUTLAW 09]

Interfax is showing a brave press face but this stood out and is a result of the sanctions against what in theory was the 17th bank in Russia but it has far more impact than many thought---finally counter threat finance hit a home run in picking the correct bank to start with.

14:33 Companies from Gazprom groups to continue using Bank Rossiya services despite sanctions

The sanctions are starting a spiral that IMO Putin did not fully grasp since Russia is tied into the globalization thing.

1. Visa/MC has not only cut services to Rossiya they have also cut services to three other banks probably because they were tied financially into Rossiya

2. the Russian stock markets and Rubel are taking hits today that will if continued hurt the Russian economy in a direct fashion

3. Fitch and S&P have down graded Russia to a negative making it harder to get bank lines of credit and this is the point that can hurt Russian companies really quick as they tend to live on these lines

The sanctions are now forcing the Russian oligarchs to ditch many investments forcing them to keep their money firmly in Russia out of fear of it being frozen ---the next question then is --- will Putin then "tax" their investments if the financial side starts to hurt which he alluded to in their business meeting yesterday.

On top of this there was a German news article today indicating that the Russians are now struggling in figuring out how to continue to supply the basics to the Crimea as the new bridge and rail line Putin wants built can take years due to the poor substrata on the Straits.

With the Ukrainians leaving the CIS now all truck/train movements from Russia through the Ukraine to Crimea will be taxed at the Russian border and then taxed again at the Crimea border---someone is giving the Ukrainians sound business advice on how to run a customs system that generates cash from Russia supply movements--this was also not calculated by Putin. Thus the not to subtle Russian threat against Ukrainian businesses in Russia and Russia cancelling a Gazprom contract and demanding 16B in payments. It looks like Russian generated customs fees for the Ukraine will offset Russian demands in other places.

Also the Ukraine is not shutting off the electrical and water supplies to the Crimea they are just "raising" the per end customer rates to Russian levels since Russia is increasing Crimea pay--waiting for that to hit the Interfax.

[OUTLAW 09]

Dayuhan---reference the FA article which was good but dated by events yesterday and today.

To quote FA "the dogs of financial war" have started barking and it was not against oil or gas but the Russian banking system---and that is where the Russian inherent weakness lays.

At least five different economic events are all ongoing just from the Rossiya bank being hit and it is reverberating still today.

Russian stock markets and rubel are falling and will continue to fall as the Russian elites see the expanded list of who has been now targeted by the EU/US.

Maybe the oil/gas issue is not going to even play as Russia needs the continuous inflow of hard currency vs EU ability to find workarounds --- the banking sector appears to now be the Achilles tendon.

Russia needs it's banks for capital flows and if that slows so slows their economy.

[Firn]

I think pretty much everybody agrees that for the time being the Crimea is lost to Ukraine. But history proves, as also pointed out by Clausewitz, that stranger things have often happened and the situation might well change in the future.

There is in my opinion little doubt that for the West Russians center of gravity is it's economy, while for Russia it is the Westerns political willpower. Interestingly the EU+USA are roughly twenty times bigger in GDP terms the Russia, almost the same factor by which the Ukraine mainland dwarfs it's occupied territory. It would certainly be the supreme irony if Russias Crimean robbery would result in the long term loss of the Ukraine.

A lot of other questions arise for other countries in the EU/NATO and CIS. For example will we see an increase in military spending in Europe? Will Sweden and Finnland maybe join NATO? How will the Belorussian strongman react?

[Firn]

@Outlaw 09: I was a bit surprised just how much of a focus has been on Germany. I followed the Russian press through the Moscow time and Merkel as been called the 'whore' of Obama and Germany 'the strength of the EU' without not much would happen. I disagree on both, but there is some truth in the latter. The english-speaking media also point mostly to the importance of the German role.

That we hear nothing about Renzi and Italy is sadly obvious, perhaps the same goes for Spain, but there is also relative little about France and only some more about Britain. Even if the press likes to put things in simple terms the degree in which the importance of Germany was highlighted relative to other large nations is remarkable. Personally it seems that Germany rappresents pretty well the compromise or consensus opinion of the EU between the 'hard' Eastern members and the 'soft' South-Western ones.

From a political point of view it is important to point out the surprising degree of unity of the EU. It is also good that most have got the massage that Russia depends far more on Europe then the other way around.

I think now that the Crimea has been annexed a smart way to play the economic sanction game is to ratch them up over a long time to keep stirring up the insecurity in the financial markets which will harm Russia far more. As kaur pointed out, hitting a select group of Putins allies might be a good idea to divided the elite. Ideally capital flight should be encouraged to dry the Russian markets out, the Kremlins actions and words have certainly already driven out Western capital. Stopping selected Technological transfers by trade and foreign direct investment should also be high on the list, with military ones clearly being unacceptable (to you hear me Hollande?).

[Dayuhan]

I have been interested in understanding just why China has been so quiet on the Russian violation of national boundaries as that is the key corner stone of Chinese foreign policy since the 80s.

The Chinese typically don't say a great deal on issues they perceive as being outside their sphere of geographic and economic interest. They've nothing to gain by taking sides. They are also in a somewhat contradictory position: opposition to intervention is their default position, but they are hardly in a position to denounce others for pushing and shoving along their borders or trying to recover "lost" territory. It's quite normal and predictable for them to be fairly quiet.

It is possible that China could see a strategic gain in tension between Russia and Europe. If Europe starts weaning itself from Russian gas and oil, the Russians will need another outlet. The Chinese are acutely aware of the vulnerability of their maritime energy supply routes and always interested in exploring land-based delivery options. I doubt they'd want to become dependent on Russia, but having options never hurts.

Maybe it has to do with China receiving over 690M USD in weapons exports from the Ukraine last year and maybe in supporting very quietly Russia they want to ensure those weapons continue to flow.

I expect the sales would go on even if China took an equivocal or even negative stance on Russian actions in the Ukraine. Russian arms manufacturers need the money.

There is some chatter that both countries are slowly nudging closer together politically/militarily as a combined superpower against the US/EU ie in general anything western.

Of course they will cooperate to the extent that both see benefit in it, but "combined superpower" seems way unlikely. There's a long history of mistrust there, and a number of natural points of conflict, notably the rapidly increasing Chinese investment and influence in Central Asia. Both Russia and China want control (or at least to be the dominant influence) in the energy-rich "'Stans". There's also some concern in Russia over the perception of rapidly increasing Chinese settlement, economic influence, and commercial domination in Eastern Siberia

So again did the US underestimate badly both China and Russia in its soft power thinking?

That's an easy conclusion, but not necessarily an accurate one, at least in the case of the Ukraine. The miscalculation that is getting less attention than it should has nothing to do with "soft vs hard" power. For some time now the West has been very much enamored of the "color revolution/Arab Spring" scenarios... those peaceful revolutions where the people rally, the armed forces switch sides, the autocrat runs away, and everybody gets to be happy until things go to $#!t, by which point the west is looking elsewhere. The fondness for these revolutions has reached the point where they have come to be seen as absolute good things, to be encouraged at every opportunity, at least where the autocrat is not one we like. What has been less actively recognized is the associated risks. Sometimes the armed forces don't switch sides and the autocrat doesn't leave, which gets you a civil war with few acceptable avenues for control or desirable end states. Sometimes the disorder of the revolution opens the door for a neighboring power to take a bite.

If what's happening in the Ukraine is part of a planned strategy of aggression and expansion, then you could argue that only thr threat of "hard power" will deter the next bite. There's still the question of whether this is part of such a strategy, or whether it's simply an act of opportunism. Would Putin have acted the same way if the Ukrainians had waited for the 2015 elections and simply voted the bastard out? In a lot of ways the revolution, much admired in the West at first, handed Putin an opportunity on a silver platter, and it's easy to see why he took it. The bear may not break into your house and eat your food, but if you don't cover the garbage he will stop by and make it his own.

Deterring the next bite may be less a matter of threatening "hard power" than of depriving the Russians of similar windows of opportunity. I suspect that lesson has already been learned: don't expect the Poles (for example) to hand Putin that kind of engraved invitation to make a move.

I view the US troop draw down as a not to subtle signal to Russia that the US was in fact no longer interested in the European area.

Why not view it as a suggestion to the Europeans that they need to be able to look after their own affairs, at least in their own neighborhood? Given the relative economic clout of the US, the EU, and Russia there is really no conceivable reason for the Europeans to be leaning on the US for protection, especially given the extent of US commitment elsewhere. If the Europeans have failed to step up and prepare, the lesson there is not that the US has to rush back and protect them, the lesson is that they need to put more effort into protecting themselves. Why should the US bleed its taxpayers to provide defense for people who have more than sufficient capacity to provide for their own security?

If you notice there is nothing on the military card being played outside of proposed and or actual planned exercises-and talk--only the movement of aircraft which was responded by the Russian AF stepping up their activities---so really not much in the way of military card---all even including Germany have shut out a military response out of fear of triggering something that is uncontrolled breaking out.

Has there ever been a time, post WW@, when you think the US or Europe would have taken an active military response to a Russian (or previously Soviet) power grab on their own borders? I don't think so. There's a long tradition of nuclear powers avoiding confrontation, especially when the matter of contention is in close proximity to one power. Even at the height of "hard power" politics, both sides have backed down in such cases... it's a dangerous road and nobody wants to walk down it. MAD remains in place.

So I am hard pressed to understand why this WH thought diplomacy was all one needed for soft power.

What were their options? They took office with an economic crisis in full swing, US military power wildly overcommitted to legacy wars that had little relevance to core US interests and an electorate with little or no interest in getting into further engagements, at least unless critical interests were directly threatened. Inevitably the priority had to be disengagement from those legacy wars and addressing the domestic economic issues: first things do come first. The lesson, if we want to take lessons, is not only that hard power (or at least the threat thereof) is sometimes needed, but that if you expend your hard power on unnecessary adventures and fail to keep the home front in order, you won't have the capacity to use hard power whether you want to or not.

[TheCurmudgeon]

I apologize as I am a latecomer here, but after reading the last few pages of the thread I have a few observations:

1. What is our interest in these events? The Ukraine is not a NATO state nor have they asked for our protection, so our interest is not based on any security agreements. The Crimea is not of strategic interest to the United States we have no military interest there. Although the ghosts of the past are not far from our memory, the USSR is gone. The global workers revolution that Communism actively supported is no more. So at this point it would appear that our only interest in this Russian aggression is directed toward Putin himself and the ghosts of both Soviet expansionism and the failures of Europe to act against Hitler in 1938.

2. Since we have not been asked to the party, short of a declaration of war, military intervention in the Ukraine is off the table. That does not mean we don’t plan. For all we know the Ukrainians, realizing the ramifications of an open announcement of their intent to join NATO, are waiting until the situation calms down. However, military action cannot be the first option, for a multitude of reasons.

3. If we have determined that Putin is a threat that is not going away soon and are going to become interested in establishing a new Iron Curtain on the Polish border then we better figure out how to pay for it. The Soviet Union collapsed, in part, because it could no longer afford to support its military. We are very close to that. Without the political will to raise taxes to pay for it, our military will continue to shrink. We need to determine what it is we need and fund it. I have no problem moving two heavy brigades, a fighter wing or two, and a small naval presence, into Poland if they are willing to pay for housing them. I think we can redirect some of that military aid from Egypt to Poland, they could use the Tanks more than the Egyptians can. But others have to come to the table and we will have to make compromises elsewhere (dump the F22, keep the Warthog)

We have to realize that we can’t pay for and protect everything. If Putin is an real threat, as he appears to be, then we need to position ourselves to deal with him. Sanctions are definitely one part of this, but how does the “action-reaction-counteraction” play out. How will Putin spin the actions, what are his likely reactions, how will we deal with them? Perhaps we need to yield space for time and begin to prepare for the long haul. We cannot afford another military engagement now. After twelve years of war we have neither the money nor the public support. Putin knows this. He took advantage of it in Georgia and he did again now. At least this time this administration is taking some action, unlike Bush did. But we need to consider the likely reaction. If his political support starts to wane how will he react? What will he do to consolidate power? Do we really think he is just going to give in, or will he raise the stakes? This is not just the Crimea. We have to figure out how to contain Putin and how we are going to deal with him, not just now, but for the next 10-20 years.

If this is a game of Chess with the Russian Bear, then we have lost the first two opening gambits. Now we need to position ourselves to deal with our opponent. That may take many moves over many years to establish the conditions for checkmate. We are not there yet.

[Dayuhan]

If we have determined that Putin is a threat that is not going away soon and are going to become interested in establishing a new Iron Curtain on the Polish border then we better figure out how to pay for it.

I agree with most of what you say here, but I would also emphasize that if Putin is a threat, he is a threat primarily to Europe. The EU has economic and technical capacity equal to that of the US. They are not children or dependents. Whatever decision is made on Europe's security future has to be made in close concert with Europeans, and Europeans need to be paying the bill and taking charge of their own efforts. Of course the US should offer support and assistance where it's needed and asked for, but expecting the US to take the lead role in assuring the security of Europe seems to me simply irrational.

[TheCurmudgeon]

I agree with most of what you say here, but I would also emphasize that if Putin is a threat, he is a threat primarily to Europe. The EU has economic and technical capacity equal to that of the US. They are not children or dependents. Whatever decision is made on Europe's security future has to be made in close concert with Europeans, and Europeans need to be paying the bill and taking charge of their own efforts. Of course the US should offer support and assistance where it's needed and asked for, but expecting the US to take the lead role in assuring the security of Europe seems to me simply irrational.

I agree. As I said, others will have to come to the party. If they are not interested then we should not waste our time. I think the Poles will be interested. I am not sure they would want German's stationed within their borders, but they might accept an English contingent.

But, yes, there needs to be commitments in the form of funds, military troops and equipment, and political will.

Right now we are ill prepared. The EU is dependent on Russia for energy. That is not going to change. The chess board favors them, and Europe is on the front lines (again). They will either want to play, or we will have to step back and watch from a distance.

If Europe does not want to play so be it. Militarily, Russia can only threaten us directly via nuclear weapons. I suppose they could sink some of our ships on the open seas, but they cannot invade the US. We should seriously look at our offensive/defensive options. I am not sure Putin is crazy enough to use nukes, but he will certainly use third parties in his media to make the threats. He already has. We need to let him know that we are preparing to deal with that.

[OUTLAW 09]

Firn---reference the Russian media responses to the Germans---there was something in the Putin speech in the Duma that was a clear signal to the Germans---you got reunification and we view the Crimea as reunification so support us.

There has been an underlying thread in the Interfax of woo is me you all do not understand us and your sanctions are illegal.

The Russians/Soviets have always had a strange relationship to what is or is not legal---meaning they will interpret one agreement they sign one way and then forget they signed it on another occasion depending on their strategic views of that day.

What is interesting is that they interpreted a statement by Bush senior (verbal) when asked if the US was going to push NATO to their borders and he answered no---there was nothing written and the US assumed with the fall of the SU it was no longer an issue and yet Putin keeps coming back to that verbal conversation as if it was written in stone.

What is also interesting with the EU/US sanctions is I am not so sure Putin knows how to respond and or has a way of responding that does not come back immediately and hits his economy---he cannot reach out to EU/US banks, he cannot freeze accounts he cannot stop visas as not wants to travel to Russian anyway and the list goes on so they make jokes about the sanctions---one thing I have learned with Russians if they shift to jokes then they are covering up a serious issue that they do not want to you assume it is an issue.

The Germans are interesting in that long term they had a vision of the Russians joining the EU in an expanded market which is why I think Putin was driving his own Russian version in the advance of a possible merger and the German FM has held the long term view that NATO should be slowly disengaged and a EU based form of seurity built with Russia joining in as well kind of a coast to coast thing which in the long run made sense for the coming years 22/23rd centuries which would have answered what the Germans viewed as the Russian "angst" issues.

That is why in some aspects the Germans are becoming the hard drivers of the EU in this response to Putin because they now feel Russia/Putin have not fully understood the 21st century and the globalization of Europe and they now view him as a existential threat to Germany and the eastern EU/NATO.

What many in American do not understand from the end of the WW2 especially in the area of Brandenburg where I live over 350K Germans were driven into seven different NKVD now KGB/FSB prisons because of alleged Nazi/Socialist/SDP/Union backgrounds---many were older men, there were a large number of women and children as well---Germans died literally in the thousands in these poorly run prisons.

Those that survived moved on in their lives, had to learn Russian, learned to survive in a GDR that was neither German, neither Democratic nor a Republic and had children---Merkel is a product of the GDR and she speaks Russian fluently.

So when she is not toeing the line that Putin assumed she would with his not to subtle comment on reunification that is where the comments are coming from---does not surprise me.

She is in her third tour as the German leader---first time she had the 2008 financial crisis, the second time the Euro crisis and now Putin and she has grown into the position--she is not loud nor a strong public speaker but you fully understand her when her tone and word usage changes and Putin has been hearing that the last couple of days---She is simply now Tee'd off that he is not listening.

[OUTLAW 09]

Firn---who said the Russians/Putin are not scrambling after this last round of sanctions-- from Interfax----check the comments relating to banking/finance especially since their markets and Rubel were way off today

NOTE: First mentioning of Moldavia which is I think the next issue not eastern/southern Ukraine as does their ex President.

March 21, 2014
17:21

RUSSIA'S RESPONSE TO EXPANSION OF U.S. SANCTIONS LIST WILL BE TOUGH - RUSSIAN FOREIGN MINISTRY

17:20

Rogozin advises McCain never say never regarding "spring break in Siberia"


17:15

Russia may go without borrowing abroad this year if need be - Siluanov


17:14

Central Bank: Russia needs private-sector plastic card payment processing center

17:12

Putin orders to transfer his salary to Rossiya bank (Part 3)

17:10

Talks with Moscow possible after troops pullout - Turchynov

17:10

Russian troops holding drills in Transdniestria


17:01

SANCTIONS AGAINST RUSSIA MAY NEGATIVELY AFFECT VALUE OF RUSSIAN PAPER, RAISE BORROWING COSTS - SILUANOV

17:01

RUSSIA MAY GO WITHOUT FOREIGN LOANS, REDUCE SOME DOMESTIC BORROWING WHILE MAINTAINING CURRENT EXPORT INCOME IN 2014

[carl]

Curmudgeon:

The interest the US has in this is in preventing the invasion and acquisition through force of a country's territory by an aggressive police state or by anybody else. Given the situation in the world today with Red China feeling peckish and various jihadis openly proclaiming they want to set up caliphates whenever and wherever they can I figure it is important to demonstrate that we look with disfavor upon this kind of thing.

No historical situation is directly analogous to what happened in the past but rather than Sudetenland, I look toward the occupation of the Rhineland. That was the first big failure of nerve.

Oh I don't know if military action isn't a quick go to option. I think it is if Ivan moves into the rest of Ukraine. Unconventional Warfare is military action and wouldn't require a single US soldier to set foot in Ukraine.

We have the money to pay for increased military expenditure. It is well within the capacity of the economy to handle that. Do we have the will? I don't know.

If it is a choice between the F-22 and the A-10, all you have to do is look at the history of air warfare since 1910 or so. When you do your first impulse will be to get on the phone to the Coca Cola Bottling Company and tell them to head over to the A-10 bases and pick up their scrap aluminum cheap, especially in this situation. The very first task of an air force is to keep enemy aircraft off your back. The F-22 can do that. The A-10 can't.

I get tired of hearing how war weary the Americans are. I think that is nonsense. What we are tired of are losing efforts, efforts that are conducted so incompetently as to be stupid and border on criminally negligent. That is what we are tired of. The Americans aren't the cognoscenti inside the beltway and in the media. They have convinced themselves that the rest of us have no heart. They are wrong. They should look in the mirror.

[TheCurmudgeon]

Curmudgeon:If it is a choice between the F-22 and the A-10, all you have to do is look at the history of air warfare since 1910 or so. When you do your first impulse will be to get on the phone to the Coca Cola Bottling Company and tell them to head over to the A-10 bases and pick up their scrap aluminum cheap, especially in this situation. The very first task of an air force is to keep enemy aircraft off your back. The F-22 can do that. The A-10 can't.

But we have the capability to control the sky with existing aircraft. We don't need something new. The A-10 is a long range tank killer. Like a Longbow, but with more range and speed. That is why I like it. An F22 can't provide that kind of capability, at least not at the same price. And price matters.

I get tired of hearing how war weary the Americans are. I think that is nonsense. What we are tired of are losing efforts, efforts that are conducted so incompetently as to be stupid and border on criminally negligent. That is what we are tired of. The Americans aren't the cognoscenti inside the beltway and in the media. They have convinced themselves that the rest of us have no heart. They are wrong. They should look in the mirror.

I think you are wrong. Even when we are winning, we lose interest. If the US public had actually been taxed to pay for Iraq and Afghanistan we would have been out five years ago. We like to brag, but we will not sacrifice our nice car, vacations, and blinge to pay for those bragging rights. The Russian threat is not at our front door, they are not even on our block. The extreme right wing are protectionist. I will take bets no one is going to push this to open conflict ... except SEN McCain.