Reuters blog archive
from Anatole Kaletsky:
Oscar Wilde described marriage as the triumph of hope over experience. In finance and geopolitics, by contrast, experience must always prevail over hope, and realism over wishful thinking.
A grim case in point is the confrontation between Russia and the West in Ukraine. What makes this conflict so dangerous is that U.S. and EU policy seems to be motivated entirely by hope and wishful thinking. Hope that Russian President Vladimir Putin will “see sense” -- or at least be deterred by the threat of sanctions to Russia’s economic interests and the personal wealth of his oligarch friends. Wishful thinking about “democracy and freedom” inevitably overcoming dictatorship and military bullying.
Investors and businesses cannot afford to be so sentimental. Though we should never forget Nathan Rothschild’s advice at the battle of Waterloo -- “buy on the sound of gunfire” -- the market response to this week’s events in Ukraine makes sense only if we believe that Russia has won.
The alternative to acquiescence in the Russian annexation of Crimea would be for the Ukrainian government to try to fight back, either by military means or by pressuring the Russian minority in the rest of the country. That, in turn, would almost inevitably imply a descent into Yugoslav-style civil war -- with the strong possibility of sucking in Poland, the North Atlantic Treaty Organization and the United States.
from The Great Debate:
The Putin era in Russia, now in its 15th year, has given birth to the ongoing diplomatic challenge of reading what’s going on behind the Kremlin leader’s steely eyes.
President George W. Bush famously perceived something trustworthy and sympathetic in President Vladimir Putin in 2001, while former Defense Secretary Robert Gates, in his new memoir, recalls seeing “a stone-cold killer.” But there is no doubt what was preoccupying the Russian president during the closing ceremonies in Sochi on Sunday: the upheaval underway 250 miles to the west, the distance to the border between Russia and Ukraine -- where Viktor Yanukovich’s government had just been toppled.
An extraordinary weekend. Ukraine’s President Yanukovich is gone and is probably at large somewhere in the pro-Russian heartlands of the east.
There’s no prospect of his return given how fast events have moved and after his people saw the shameless opulence stored within his country retreat.
A glimmer of hope in Ukraine?
Let’s not count our chickens after 75 people were killed over the past two days but President Viktor Yanukovich’s people are saying an agreement on resolving the crisis has been reached at all-night talks involving the president, opposition leaders and three visiting European Union ministers.
A deal is due to be signed at 1000 GMT apparently although no details are as yet forthcoming. There has been no word from the EU ministers or the opposition so far.
Even if the violence subsides and some sort of political agreement is reached (a huge if), there is potential financial chaos to deal with despite Russia’s only partially delivered pledge of $15 billion to bail its neighbour out.
Dramatic twist in the Ukraine saga last night with a conversation between a State Department official and the U.S. ambassador to Ukraine posted on YouTube which appeared to show the official, Assistant Secretary of State Victoria Nuland, deliberating on the make-up of the next government in Kiev.
That led to a furious tit-for-tat with Moscow accusing Washington of planning a coup and the United States in turn saying Russia had leaked the video, which carried subtitles in Russian. A Kremlin aide said Moscow might block U.S. "interference" in Kiev.
Lots of action in Switzerland today with the annual get-together of the great and good at Davos getting underway and Syrian peace talks commencing in Montreux.
On the latter, few are predicting anything other than failure, a gloom that Monday’s chaotic choreography did nothing to dispel.
U.N. chief Ban Ki-moon Ban first offered Iran a seat at the table, prompting a threat to pull out by Syrian opposition groups which led to Washington demanding the invitation to Tehran be withdrawn. In the end, Ban did just that.
A deal on European banking union was finally struck overnight. Already the inquests have begun into how robust it is.
As we exclusively reported at the weekend, EU finance ministers agreed that banks will pay into funds for the closure of failed lenders, amassing roughly 55 billion euros which will be merged into a common pool in 2025. Yes, 2025.
from The Great Debate:
In the three weeks since Ukraine formally suspended talks aimed at signing an Association Agreement with the European Union, two important facts have become clear.
First, it is now apparent that Ukraine's president, Viktor Yanukovich, had no effective strategy to resist intense pressure against the EU deal from Moscow. The Kremlin promised big cash loans, a gas discount and debt forgiveness, while explicitly threatening to block Ukraine's access to the Russian market and implicitly threatening to stoke separatism in regions of the country.
from David Rohde:
In Kiev, hundreds of thousands of Ukrainians have taken to the streets to demand the government join the European Union, in the hopes it will spur economic growth. In Kabul, Afghan leaders overwhelmingly voted to have American troops remain for another decade, in the hopes they will maintain a “war and aid economy” that has brought them unprecedented riches.
As a fiscally constrained and war-weary Washington confronts its foreign policy challenges, events in Ukraine and Afghanistan show that economic incentives can play a major role in addressing them. Younger generations in both countries are eager for prosperity, reduced corruption and a place in a globalized economy. Globalism is challenging cronyism.
No sign of tensions calming on the streets of Kiev, in fact today we could have a new flashpoint.
Prime Minister Mykola Azarov's cabinet is holding its weekly meeting in the government building which protesters have blockaded since Monday, paving the way for a possible showdown.