EU paralysis & Ukrainian chaos
Jonathan Lindsell, 8 April 2014
Yesterday pro-Russians occupied the Donetsk regional assembly, declared a People’s Republic, announced a referendum on joining Russia then appealed for Russia to invade as a ‘peace keeping force’. Oleksander Turchinov, interim Ukrainian president, says this deliberate ‘second wave’ recreating the ‘Crimean scenario’ to ‘dismember’ Ukraine, was coordinated by Russian special forces.
Large protests have also affected Government buildings in Dnipropetrovsk, Kharkiv and Luhansk, where weapons were. Ukrainian special forces say they’ve reclaimed ‘300 machineguns, an antitank grenade launcher, grenades, five handguns and firebombs’ from militants. Efforts to seize back government buildings are currently underway.
Meanwhile Gazprom hiked gas prices by 81% and promised to block supplies if Ukraine doesn’t pay – something Moscow knows its bankrupt neighbour cannot do, especially now interim Prime Minister Yatsenyuk refused to recognise the price hike. The Ukrainian currency, the hryvnia, lost 30% of its value this year and foreign currency reserves fell to only £9bn.
Nigel Farage’s criticism of the EU’s role in crisis is flawed: EU membership was the Maidan protests’ catalyst, not their cause. American agitation was equally important. It’s hard to believe Catherine Ashton’s visit especially spurred on protesters – she’d attempted to construct dialogue and restrain militants. It was this violent fringe (the ‘neo-Nazis’ Putin so fondly blames for the coup, Right Sector and Svoboda) who weathered the sniper storm – 88 killed – and terrified Yanukovych into flight.
Nevertheless the EU is both culpable and paralysed. Slovakia and Hungary receive Gazprom gas through Ukrainian pipes. They’re doubly exposed to gas starvation: after Brussels considered ‘reversing’ gas towards Ukraine, the energy giant’s CEO Alexei Miller threatened this would be illegal. Czech President Milos Zeman conceded Crimean secession but urged ‘military readiness…The moment Russia decides to widen its territorial expansion to the eastern part of Ukraine, that’s where the fun ends. There I would plead not only for the strictest EU sanctions, but even for military readiness of the North Atlantic Alliance, like for example NATO forces entering Ukrainian territory.’ NATO has made no move.
We already know the City and Germany’s energy market are overexposed to Russia. There are also questionable links between Tory donors and Russia (noted in Private Eye), which might make effective sanctions even less likely:
Ian Taylor, a Tory donor who gave over £500,000 to the Tories in 2006-2012 (buying him an exclusive lunch date with Dave), is CEO of Vitol , a Swiss-Dutch commodity and energy trading company. Vitol, together with Glencore, announced in March that they would lend $10bn to fund expansion at the Russian state-owned energy firm Rosneft.
Gazprom, also majority owned by the Russian government, announced together with Taylor that it and Vitol would develop underground gas storage in Europe and compete for gas-powered energy generation in the UK and France. Vitol is also hiring Tory MP and former energy minister Charles Hendry as a consultant, paying him £60,000 p.a for a few days’ work each month.
Russian-born billionaire Alexander Knaster is another heavyweight Tory donor, having given £100,00 in 2011 alone and another £50,000 to the “No to AV” campaign. His firm, Pamplona Capital Management, is based in London and invests Russian billions in the West. Knaster was previously chief of Alfa bank, Russia’s largest private commercial bank. The bank and its owner, Knaster’s friend Mikhail Fridman, are known for their association with Putin according to the New York Times.
It’s hardly surprising that Putin and his ruling clique do not seem too worried about the threat of sanctions.