De-escalation? Forget it. Ukrainian forces killed up to five pro-Moscow rebels in the east yesterday and Russia launched army drills near the border in response.
The big question now is whether Russian troops will cross into eastern Ukraine following a constant stream of warnings from Moscow about the security of Russian speakers there.
Foreign Minister Sergei Lavrov is expected to have a telephone conversation with U.S. Secretary of State John Kerry, following last week’s Geneva accord which aimed to pull things back from the brink. Kerry said yesterday that Russia’s “window to change course is closing” and U.S. President Barack Obama said tougher sanctions were ready to go. There is no question of Western military intervention.
According to our sources, Obama – on an Asian tour – will hold a conference call with British Prime Minister David Cameron, French President Francois Hollande, German Chancellor Angela Merkel and Italian Prime Minister Matteo Renzi.
The EU has circulated a document spelling out possible future sanctions and we broke news yesterday on an initial foray targeting financial institutions in Crimea.
Russia’s central bank holds a policy meeting and is expected to keep interest rates at 7 percent with inflation still too high for comfort and in spite of signs that an already faltering economy is now being hit by Western sanctions that could soon be escalated.