Streetwise Professor

February 22, 2014

What the West Must Do. Now.

Filed under: Economics,Politics,Russia — The Professor @ 10:52 am

Given the actions of the Rada in Ukraine and the flight of the regime leadership to Harkiv, it is evident that (a) the Russian financial assistance that barely kept the country aloft financially will end, and (b) Russia will engage in economic warfare against the country (even if it does not engage in armed warfare).   Thus, Ukraine faces economic collapse.

This is something that the west-the EU and the US-and international organizations-notably the IMF-can prevent.  It’s only a matter of money.   Emergency economic assistance is imperative.

Concerned about the cost? Don’t be penny-wise, and pound foolish.

And one hopes that after its bitter experience in the past, that Europe has contingency plans in place to respond to a Russian cutoff of gas.  Not just gas going through Ukraine, but through Nordstream as well.  For Russia is blaming Europe for what is happening in Ukraine.  A full cutoff would cut against Gazprom’s interests (and hence the interests of the Russian power structures which feed off it), but the stakes in Ukraine are big enough for Putin that he could well consider that a price worth paying if he believes it will stampede the Europeans into abandoning the opposition-or, I should say, the new government in Ukraine.

Putin is playing for keeps, and this setback to his schemes will only enrage him and steel his resolve to prevail.  He will pull economic levers to do so.  The west should pull the economic levers of its own.

 

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26 Comments »

  1. SWP, you are exactly right

    Here is a propaganda page – the sign reads “after grabbing Ukraine, the Banderovtsi will grab Rossiya”

    “Banderovtsi” are, of course, worse than boogey-men for Kremlinoids. I know you already know about Bandera, so I won’t repeat anything here.

    Picture:

    http://kakuli.net/picture/%D0%BD%D0%B0%D0%BF%D0%B0%D0%B4%D0%B5%D0%BD%D0%B8%D0%B5-%D0%BD%D0%B0-%D1%80%D0%BE%D1%81%D1%81%D0%B8%D1%8E

    Comment by elmer — February 22, 2014 @ 11:18 am

  2. Hey elmer, check out Polish Foreign Minister Sikorski chatting to one of the Glorious Heroes of the Maidan!

    http://blog.foreignpolicy.com/posts/2014/02/21/think_that_kiev_agreement_will_hold_think_again

    “If you don’t support this, you will have martial law, you’ll have the army, you’ll all be dead.”

    The Glorious Heroes of the Maidan may be about to learn how the West crushes protest, without a care as to the amount of blood that flows.

    Comment by PailiP — February 22, 2014 @ 12:34 pm

  3. geeze Pali…. warning people of the possible actions of a desperate dictator like Yanukovich (or Putin) if you corner them without giving them an escape route is quite different to the interpretation you are putting on it.

    Kindly explain when was the last time a western European government responded to protesters with bloodshed of the type you say they use?

    sovok morons always use projection

    Comment by Andrew — February 22, 2014 @ 12:47 pm

  4. I do not know what sort of fiscal problems the Ukraine has, but I am sure they are exacerbated by the monopoly exploitation from GAZPROM just as everywhere else in the FSU and Europe. I agree some transitional support should be given, so long as it is of the “teach to fish” variety and not the string-the-junkie along dose that Putin is expert at. If they are willing to suffer the balanced-budget pain (that neither we, the Greeks nor Spaniards are), then they could do very well. They have more to fight for, so just might be.

    Comment by Robert in Houston — February 22, 2014 @ 1:23 pm

  5. @Robert. Back in November/December I said that Yanukovych chose Russia because Putin was offering a fix, and the Europeans/IMF were requiring rehab. The support must be conditioned on fundamental institutional changes. Rehab, in other words.

    The gas trade is at the center of this: it is notoriously corrupt in Ukraine. This is precisely why Tymoshenko must not be a part of the process. She is too compromised by her long associations with that trade.

    This will also be the biggest challenge if-or should I say when?-Putin decides to cut off the gas. There have been arrangements to reverse flow via Slovokia, but ultimately that is Russian gas. If Europe does transship Gazprom gas to Ukraine via Slovokia, that could be what precipitates Putin shutting down Nordstream.

    In other words, the battle over Ukraine will turn on gas, and the willingness of Europe to withstand a cutoff.

    In this, the timing may be propitious. Much better to face this situation in March and April or May than in January.

    The ProfessorComment by The Professor — February 22, 2014 @ 2:59 pm

  6. Andy, just bring rifles & molotov cocktails to a protest in the West and see what happens.

    Comment by PailiP — February 22, 2014 @ 3:11 pm

  7. Propaganda that the republics were feeding Moscow was one of the reasons for the Soviet collapse. The last 20 years showed otherwise. The Baltics found new sponsors, but they were the exception. Ukraine has been bankrupt for the last 20 years, what else did anyone expect? It’s Russia without oil. The EU is a market for German goods, it’s only reason to exist. But I don’t think that even the industrious Germans can afford another 3 Greeces. Ukraine is fucked, but everything east of Berlin has always been a shithole.

    Comment by So? — February 22, 2014 @ 3:13 pm

  8. The insurgents should have blown up the pipelines. That would shown the Moscals!

    Comment by So? — February 22, 2014 @ 3:14 pm

  9. SWP,

    As you are hollering WMDs, WMDs, why are you ignoring the elephant in the room? At least Sadam’s sons lived in Iraq.

    Comment by So? — February 22, 2014 @ 3:25 pm

  10. Speedy economic assistance and path towards Euro zone might help stop Yanukovich’s attempt to create a break away state. These things need to be done quickly to prevent uncertainty from escalating further. But, US lacks the will so clearly. May be the leaders in the Eurozone will be more level headed.

    Comment by Surya — February 22, 2014 @ 3:39 pm

  11. There will be no civil war in Ukraine. Maybe a federation, maybe. Yanukovich lost. Now someone else will get a chance to lose. Ukraine is bankrupt. Probably the only country to export whores to Russia. Russia is a huge net exporter herself, so that just shows what a dump it is.

    Comment by So? — February 22, 2014 @ 3:43 pm

  12. May be Germany still has spare cash.

    Fixed that for you.

    Comment by So? — February 22, 2014 @ 3:45 pm

  13. Pali, another moronic comment from you. The police at various G20 and G7 summits in western frequently face molotovs and brickbats.
    They don’t resort to massacring the protesters.

    SO? more douchebaggery from you I see. However it is interesting to see your comment that everything east of Berlin is a shithole.

    I thought you said Moscow was a great place, full of tolerance and light. That is your usual line anyway.

    Comment by Andrew — February 22, 2014 @ 3:52 pm

  14. armed people approached customs personnel at the Donetsk airport and attempted to bribe them into letting a jet with Yanukovych out of the Donetsk airport. The customs personnel refused. Yanukovych deplaned and got into one of 2 armored cars, which then drove away from the airport.

    http://tsn.ua/politika/ozbroyeni-lyudi-namagalisya-kupiti-u-prikordonnikiv-vtechu-dlya-yanukovicha-336101.html

    Comment by elmer — February 22, 2014 @ 6:42 pm

  15. I thought you said Moscow was a great place, full of tolerance and light. That is your usual line anyway.

    You sure like building straw men, don’t you? I never said this, because of course it’s a dump. 99% of the Earth’s surface is. The West is the exception to the rule (the Soviet Union tried to buck the trend, but failed). At least it’s better than Tiflis though.

    Comment by So? — February 22, 2014 @ 8:10 pm

  16. Having lived in both I’d say that, as people, the Georgians in Tbilisi are vastly preferable to the Russians in Moscow.

    Georgians tend to be hospitable, friendly, welcoming, kind, and outgoing.

    Russians tend to be unwelcoming, cold, arrogant, and racist.

    Now SO? you are backtracking now, you have spent a lot of time on this forum and others extolling the virtues of Putin’s Russia and Russian culture and doing down the west. Why the change?

    Comment by Andrew — February 23, 2014 @ 12:52 am

  17. I think you’re rushing with your prediction of an impending conflict between Russia and the Ukraine. Putin is giving Yanukovich, Kernes and Dobkin a cold shoulder and he has previously shown that Timoshenko is “someone he can work with”. It looks like he’s taking a wait and see approach.

    Comment by aaa — February 23, 2014 @ 10:30 am

  18. At this point on Sunday, it looks like the rout is complete. Yanukovych has gone in hiding, and the PoR members not in the capital have issued statements abandoning him, condemning his actions, and announce their intention to return to their seats in parliament. While there is some opposition to the new government in the south and east, it looks like most people have no stomach for further conflict, especially since they now lack the powers that come from institutional authority of the president.

    I don’t think there is enough of a pretext for a Russian invasion at this point, although Putin may eventually try other levers to disrupt certain policies.

    Unless some surprise is still to happen, I think the next obstacle is for the IMF to reach a new agreement with Kiev and for new elections to happen.

    Comment by Chris — February 23, 2014 @ 11:59 am

  19. Chris has provided an excellent update

    Here is some personal experience from Ukraine

    from Ukraine:

    Thank you, everybody, for your well wishes. I’m out of the hospital and with good friends for another 5 days of getting well, then back to my Company No. 27 of the Self Defense. Wish to share some insights on what has transpired these days. The Maidan is absolutely right in rejecting the political solution arrived in the Verkhovna Rada, to great fanfare and even Volodymyr Oliynyk singing ‘Shche ne vmerla” with hand over his heart. How many times can the political opposition leadership sit down for negotiations, in good faith, to reach fair compromises and concessions with a gang and their leader who in their lives never showed a sliver of evidence that they understand, subscribe to and are able to adhere to these concepts? It’s an impossibility. It will never happen. I have never heard Yanukovych or his spokespeople from his Party of REgions say one worf of truth on press conferences, in the VRon any of the many talk shows I watched They are lying again in the matter of today’s ‘groundbreaking” votes in the VR.
    The regime lied before the massacre of Feb. 18, assuring opposition politicians that the people would be able to voice their grievances before the Parliament. Self DEfense Companies were sent to various key points around the barricades. Mine was one ofseveral sent to the MAriinsky PARK, where the civilians were gathered. We were faced by a line of the Interior Troops, cadets really, 17-18 year-old boys, whose main purpose there was to be injured, so that the regime could say, ‘See, those Maidan terrorists are killing our children.’ Being in the front row, right across from their metal barriers and shields, I tried to use that opportunity to try to get some to cross to our side. It didn’t happen, as some hotheads on our side broke through and the Interior Troops line quickly rolled up. They quickly retreated, with little damage done on either side. Further back, ‘Berkut’ troops deployed, about 5 rows deep. We were vastly outnumbered, as were, we later found out, were the companies at every other point, another example of how the regime has used ‘ceasefires’ to reinforces their positions and keep on killing activists. The defenders tried to hold Berkut at bay by showering them with rocks (older men and women helping break up and bring up paving stones) and Molotov cocktails. Very few exploded; as my 17-year-old hospital room mate told me, ‘Nobody showed us how to do it right.’ Berkut also tossed rocks, but, more damagingly, gas canisters and concussion grenades.
    Our side had built a wall, using the metal barriers the Internal Troops left and the home-made shields many of our boys had. Then Berkut suddenly and massively attacked, big, aggressive, body armor head to toe. They quickly broke through and pushed on running, leaving no chance for resistance, only to cover our bodies from the blows raining upon us and fleeing. We ran into a fence, then a wall and a narrow gate with no place to go. Obviously, they had a plan; we did not. five and six Berkuts would pound one surrounded defendant. There was no mercy for those on the ground; not one Berkut passed a fallen opponent without adding his blow or a kick to the head. For BERKUT, this, clearly, was a labor of love (no exaggeration, as their rules forbid striking an opponent that is prostrate on the ground). As their waved passed, searched over the ground for the motorcycle helmet that had perhaps saved my life. Small bits and pieces of it lay around, evidence of the power of the blows delivered. We were rounded up with the worse injured of us attended to by medical personnel and waiting for ambulances. Two of the Berkuts standing to the side, sawing me bleeding profusely from a deep gnash in the back of the head, could not resist. “So you wanted your Ukraine, eh?” said one, so proud of himself “So, you going to the Maidan again?” said the other, equally cynical.. have never met such gratuitous brutality and undisguised hatred. These could not have been Ukrainian law=and=order personnel, no matter have depraved by service to a criminal regime. The Russians are not coming. They are already here.

    Comment by elmer — February 23, 2014 @ 1:51 pm

  20. Pshonka was the “prosecutor-general” of Ukraine and a Yanukonvikt loyalist. He has been removed from office.

    He is the one who, together with Rinat Kuzmin, engineered the stalinist show trial against Yulia Tymoshenko

    Pictures of his garish lavish mansion here:

    http://www.pravda.com.ua/news/2014/02/23/7016005/

    http://4ubuk.blogspot.se/2014/02/blog-post_23.html

    Comment by elmer — February 23, 2014 @ 5:36 pm

  21. Prof, I have been reading about the Naomi Buchwald verdict upholding the banks motion to dismiss antitrust charges in the Libor scandal. Just don’t get her logic. She grants that banks colluded but somehow decides that it didnot result in anti-competitive behavior… What is your take? Surprisingly I did not find any posts from you on this in the archives!!

    Comment by Surya — February 23, 2014 @ 8:56 pm

  22. Having lived in both I’d say that, as people, the Georgians in Tbilisi are vastly preferable to the Russians in Moscow.
    Georgians tend to be hospitable, friendly, welcoming, kind, and outgoing.
    Russians tend to be unwelcoming, cold, arrogant, and racist.

    Same can be said about Italians and Germans. But you know that that’s not what I meant.

    Now SO? you are backtracking now, you have spent a lot of time on this forum and others extolling the virtues of Putin’s Russia and Russian culture and doing down the west. Why the change?

    Never said that. He’s an impotent pipeline administrator. A sober Yeltsin. Had Saakashvili been in charge of Russia, tanks would have been rolling in Kiev already.

    Comment by So? — February 24, 2014 @ 2:25 am

  23. So? I judge a city by the character of it’s people. Moscow is vastly inferior to Tbilisi (it is not Tfilis BTW unless you are a Russian chauvinist)

    And also note that Saakashvili didn’t use live ammunition on protesters, not on November 7th 2007, or against any of the other anti government protests that occured during his time in power.

    If, like the pathetic idiot we all know you are, you are referring to the Russian invasion of Georgia in 2008, kindly note that the separatists were the ones that started the killing. The final report on the war stated Georgia had a right to retaliate but used indiscriminate weapons. The report also found ALL of Russia’s actions illegal under international law.

    Comment by Andrew — February 24, 2014 @ 8:51 am

  24. Craig…
    FYI…
    http://www.zerohedge.com/news/2014-02-24/russian-ships-carrying-soldiers-said-be-en-route-sevastopol

    Comment by Louis Hansell — February 24, 2014 @ 6:01 pm

  25. So?,

    Why would you want to argue with Andrew? You will get nothing but childish ad hominem insults.

    Comment by vladislav — February 24, 2014 @ 11:05 pm

  26. > Concerned about the cost? Don’t be penny-wise, and pound foolish.

    To make a change in the desperate Ukrainian economy, the US taxpayers will need to spend at least $1 trillion over the next 10 years, or until the US government defaults on its debt obligations and/or devalues the dollar, at which time the US will ask Ukraine, Moldova, Albania and Uganda for reverse economic aid.

    Comment by vladislav — February 25, 2014 @ 4:57 am

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