Reuters blog archive
Vladimir Putin said this morning Russia and the United States are still far apart over Ukraine. Moscow, he said, could not ignore “illegitimate decisions” imposed on the east and south of the country and calls for help by ethnic Russians there but the two powers should not sacrifice relations over it.
In an hour-long telephone call last night Barack Obama urged Putin to accept the terms of a potential diplomatic solution to the crisis whereby Moscow would keep its military bases in Crimea while respecting Ukraine’s sovereignty. But he also ordered sanctions – including travel bans and freezing of assets in the U.S. - on people responsible for Moscow’s intervention in Ukraine though Putin himself is not on the list.
Obama also said a Crimean referendum on joining Russia, called for 9 days’ time, violated international law.
Meanwhile, Congress passed a $1 billion loan guarantees package for the new government in Kiev. The European Union has already promised some $15 billion over the next two years, contingent on a deal being signed with the IMF.
In terms of sticks not carrots, the EU stopped a little short of Washington. An emergency summit of the bloc’s leaders condemned Russian actions in Crimea as illegal but took only minor steps, suspending talks with Moscow on visas and a new investment pact while warning of tougher measures if there is no negotiated solution soon.
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.
Foreign ministerial talks in Paris yesterday made little progress on Ukraine. Russia rejected Western demands that its forces in Crimea should return to their bases and its foreign minister refused to recognise his Ukrainian counterpart. Moscow continues to assert that the troops that have seized control of the Black Sea peninsula are not under its command. The West is pushing for international monitors to go in.
Today, at least some of the focus switches to Brussels where EU leaders will hold an emergency summit with a twin agenda of how to help the new government in Kiev and possible sanctions against Russia. On the latter, Europe has appeared more reticent than Washington not least because of its deep financial and energy ties, none more so than Germany and Britain.
By Neil Unmack
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Ukraine bondholders haven’t seen the end of their suffering. The country’s bonds have sunk in spite of talks of an imminent bailout by the International Monetary Fund. The country’s creditors may face either a soft debt rescheduling or more radical haircuts. The risks of austerity, devaluation and continued political uncertainty all point to the latter.
from The Great Debate:
As the crisis in Ukraine escalates, boardrooms and senior management teams worldwide are now likely talking about the problems of doing business in conflict zones. These regions test the boundaries of risk tolerance.
Any multinational corporation involved in and around Ukraine and Russia must be feeling the impact. Companies such as Italian group Eni and France's EDF, which signed an offshore oil and gas production-sharing agreement with Ukraine in November, are likely to be monitoring developments. So, too, are Chevron and Royal Dutch Shell, which signed shale gas deals with Ukraine.
Opinions vary right now as to whether we're seeing the return of bubble-like qualities across a broad swath of the market or just in select names (which really isn't a bubble, then, bubeleh, just overvalued stocks).
With the Ukraine issue subsiding a bit, investors had a chance to sink their teeth back into the market, including a number of areas that seemed ripe for buying, like small-cap names, which saw a very strong 2.6 percent increase on Tuesday that outdid the larger-cap stocks.
from The Great Debate:
The American natural gas revolution has boosted economic competitiveness, and helped reduce U.S. carbon emissions to their lowest levels in 20 years. The question is now whether the United States will leverage this energy bounty to advance its foreign policy goals during the most serious East-West crisis in a generation.
Russian’s intervention in Crimea and looming threats against eastern Ukraine underscore Europe’s energy vulnerability. Roughly 80 percent of Russian exported gas to the EU passes through pipelines in Ukraine, which Moscow has turned off twice in recent years.
The end of Russian military exercises near the Ukrainian border and Vladimir Putin’s statement that force would only be used as a very last resort seemed to have taken some of the tension out of this crisis but the situation remains on a knife edge.
Moscow chose to test fire an intercontinental ballistic missile though Washington said it had been notified of plans to do so before the standoff in Crimea blew up. And there is always the possibility of conflict being triggered inadvertently.
from John Lloyd:
The more or less liberal, democratic, capitalist countries that make up seven of the Group of Eight (G8) have condemned Russia and are discussing boycotting the June G8 meeting in Sochi. There is even talk of expelling Russia from the group.
This western government consensus against Russia’s actions is based on evidence that prompted the U.S. Ambassador to the United Nations Samantha Power to say that it is “hard to avoid concluding that Russia does not want peace and does not want a diplomatic solution.”
A reported 0300 GMT deadline, which Russian forces denied had been issued, for Ukraine’s troops to disarm in Crimea or face the consequences has passed without incident and in the last hour President Vladimir Putin has ordered troops that took part in military exercises in western Russia to return to base.
That has helped lift the euro but the situation remains incredibly tense. Russia’s stock market is up a little over two percent and the rouble has found a footing but they are nowhere near clawing back Monday’s precipitous losses.