A Key Day In The Ukrainian
Conflict?
By Alexander Mercouris
January 24, 2015 "ICH"
- This may turn out to be a critical day in
the evolution of the Ukrainian conflict.
1. The Russian Security Council met today.
We do not (obviously) have a full account
but Putin's website has provided some
details.
Strikingly, Putin referred to the junta as
"official Kiev" and not "the Ukrainian
government" or "the Ukrainian side". He also
referred to the two east Ukrainian republics
as "the Donetsk People's Republic" and "the
Lugansk People's Republic".
This is the closest Putin has yet come to
since Poroshenko's election in implying that
the junta is not the legitimate authority in
the Donbass and that the two NAF republics
are.
2. Putin also pointedly referred to
"criminal orders" coming from "official
Kiev".
http://eng.kremlin.ru/news/23512
3. Putin has also had a telephone
conversation with Lukashenko, who is a key
partner in relation to the Ukrainian
conflict. Again we have scarcely any
information about what was discussed but
Putin will have wanted to ensure that
Lukashenko remains on board. I expect a
phone call to Nazarbayev shortly.
4. We now know from comments made by
Shuvalov at Davos that Beijing is being
consulted all the time. The key point about
what happened at Davos is that Shuvalov made
it absolutely clear that Russia will not
submit to sanctions and Kostin of VTB gave a
very clear warning against any attempts to
exclude Russian banks from the SWIFT
payments system. The Financial Times has a
good summary of the comments Shuvalov and
Kostin made and I attach it below.
5. The Russian Justice Ministry meanwhile
has formally banned a number of Ukrainian
organisations including Right Sector. Some
of us are surprised that they had not been
banned already.
http://itar-tass.com/en/russia/773105
6. Zakharchenko has said that the Minsk
Memorandum no longer applies. This is not
the same document as the Minsk Protocol,
which was the original ceasefire agreement
that was agreed on 5th September 2014.
Rather, it is the technical follow-up
document that purported to set out the
ceasefire line and which provided for the
withdrawal of heavy weapons, which was
agreed on 19th September 2014. Neither the
Minsk Protocol nor the Minsk Memorandum have
ever been implemented. By saying the Minsk
Memorandum no longer applies Zakharchenko
has freed the NAF to pursue offensive
operations, which is currently what it is
doing.
7. Lastly, Zakharchenko has also again been
saying that the DPR's/LPR's decision to
secede from the Ukraine is final.
Now it may be that all these discussions and
conversations and comments are uncoordinated
and do not in total amount to anything.
Perhaps there has been no change in Russian
policy. However they do look like a
hardening of position and perhaps give clues
that the Russians have at least for the
moment given up hope of the diplomatic
approach. They also suggest a preparation
for a battening down of the hatches in case
another round of sanctions is on the way.
From the Financial
Times:
One of Russia’s top bankers on Friday
warned
that excluding the country from the Swift
banking payment system would be tantamount
to “war”.
The suggestion that Russia could be shut out
of Swift triggered widespread alarm in
Moscow’s financial community when it was
floated by western politicians last summer.
Russia’s banks rely heavily on the
Belgium-based payments system for both
domestic and international payments.
However, the move was at the time considered
too punitive a sanction, being described by
one adviser as “the nuclear option”.
Speaking at a panel in Davos on Friday
Andrei Kostin, chief executive of VTB,
Russia’s second-largest bank, said: “If
there is no Swift, there is no banking . . .
relationship, it means that the countries
are on the verge of war, or they are
definitely in a cold war.”
“The next day, the Russian and American
ambassadors would have to leave the
capitals,” he added.
Mr Kostin’s comments highlight how the
west’s sanctions regime is creating a sense
of anger and defiance among the Russian
political and business elite.
“The more you press Russia, I do not think
the situation will change,” he said,
pointing out that the country was moving to
reduce its reliance on western payment
systems such as Swift.
“We have already created a domestic
alternative to the Swift system . . . and we
need to create alternatives
internationally.”
He drew attention to efforts under way
between Russia and China to create a
separate platform of their own, outside
western control.
Igor Shuvalov, Russia’s deputy prime
minister, echoed this theme. “We are
developing our eastern vector,” Mr Shuvalov
declared, pointing out that although efforts
to build links with China had been under way
before the crisis, they had dramatically
intensified since sanctions started, as
Russia looked for alternatives to the west.
Mr Shuvalov said that the so-called Bric
countries (Brazil, Russia, India and China)
were ready to help each other in a financial
crisis too. “Large Chinese investors are
coming to us,” he said.
The “pivot to Asia” has become a key part of
Vladimir Putin’s foreign policy since the
breakdown in relations with the west over
Ukraine. While several flagship deals have
been signed, such as the $400bn contract to
supply Russian gas to China for 30 years
last May, few Russian policy makers or
businesspeople believe China can save the
Russian economy from a painful recession.
“The present situation looks like it is
softer than [the 2008-09 financial crisis]
but we are going into a long crisis
situation and it may be protracted,” Mr
Shuvalov said.
But he added that foreign pressure would not
succeed in changing the political leadership
of the country.
“We will survive any hardship in the country
— eat less food, use less electricity,” he
said.
Alexei Kudrin, the respected former finance
minister, predicted Russia could see capital
outflows of $90bn this year after a record
$151bn in 2014. “We should clearly
understand the price we are paying for
sanctions,” he said.
Via Vineyard of the Saker
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