Breaking News -- Russia
|Putin mocks the West and threatens to turn off gas supplies
by Damien McElroy, Donetsk
Russian leader says does not want 'new cold war' but threatens to disrupt European gas supplies.
Vladimir Putin has mocked diplomatic efforts to end the Ukraine crisis as Russia threatened to disrupt European gas supplies by cutting off sales to Kiev over its unpaid debts.
The Russian president said through his official spokesman that, despite deep disagreements with the West, he did not want a confrontation over Ukraine to spiral into a “new cold war”.
Nevertheless Dmitry Peskov ridiculed Western demands for direct talks between the Kremlin and the new Kiev government, claiming that the loss of credibility involved “puts a smile on our face”.
The remarks were broadcast during the opening ceremony of the Paralympic Winter Games in Sochi, where the Ukrainian athlete carrying his national flag was given a loud cheer.
Earlier, Gazprom, Russia’s state-owned energy giant, said it would start to reduce deliveries to Kiev, a move that would disrupt supplies to Europe. Gazprom said Ukraine had failed to make payments on its £1.2 billion debts.
Ukraine is one of the main transit routes for the continent’s gas and the suspension of Gazprom exports in freezing temperatures in 2006 and in 2009 endangered national grids and caused sharp rises in prices. “We can’t supply gas for free,” Alexey Miller, the head of Gazprom, said. “Either Ukraine settles its debt and pays for current deliveries or the risk arises of a return to the situation we saw at the start of 2009.”
Energy experts said Russia had the power to cause problems in markets across Europe, even though peak winter demand was past. “Europe still relies heavily – in some cases 100 per cent – on Russian gas. And if that was interrupted very suddenly, there would be difficulties all round,” said Lord Howell, the former energy secretary.
But the White House brushed off the Russian announcement as less of a blow for EU economies than in previous years. Josh Earnest, the White House spokesman, said reduced Russian exports would not have an immediate effect since stocks in Europe were above normal levels because of a mild winter. Structural changes in the industry also mean that less of Europe’s gas went through Ukraine.
Russian foreign ministry officials issued the tit-for-tat warnings a day after an EU summit suspended talks on visa-free access for Russians to Europe and threatened sanctions if Moscow did not change course. “Russia will not accept the language of sanctions and threats,” a foreign ministry statement said.
Two potential Ukrainian presidential contenders demanded a single, tough Western stance against Russia. Vitali Klitschko, the former boxer, and Petro Poroshenko, a businessman, both of whom are seen as likely candidates in presidential elections in May, used a visit to Paris to shore up European resolve.
Moscow displayed no signs of pulling back in the flashpoint region of Crimea despite the summit outcome and a subsequent telephone conversation between Mr Putin and President Barack Obama.
Russia’s parliament made preparations to endorse next week’s referendum in Crimea on joining the Russian Federation as a group of Crimean MPs were accorded a hero’s welcome in Moscow.
Valentina Matviyenko, the speaker of Russia’s upper house of parliament, said the outcome would be accepted “unquestionably”. Officials in Kiev retorted that no country in the “civilised world” would recognise a vote for merging with Russia.
Checkpoints manned by Russian soldiers and Crimea militias blocked efforts by the Organisation for Security and Cooperation in Europe (OSCE) to enter the peninsula.
The OSCE convoy, led by a police car and followed by two buses carrying the observers, returned to the southern city of Kherson to decide if the unarmed monitoring mission can go ahead at all.
Russia said the mission was blocked because it had begun without seeking the traditional consensus support from all the organisation’s members.
Russia also scuttled a third ship in the Crimean harbour of Donuzlav to tighten its blockade on the doggedly loyal Ukrainian navy vessels trapped behind Russian lines.
The only bright point of the day came when Ukraine’s Paralympic team announced it would participate in the Winter Games in Sochi.
Arseniy Yatsenyuk, Ukraine prime minister, said his government was still pressing for direct talks with Russia to resolve the crisis. He demanded that Russia pull back its forces and stop supporting “separatist” activities inside Ukraine.
“We are ready to build relations with Russia,” he said. “But Ukraine will never be a subordinate or branch of Russia.”
Mr Yasenyuk also revealed the Kiev and the EU would soon sign an agreement on the political aspects of a strategic accord that fell through late last year.
The collapse of the EU association agreement provoked the mass pro-Western demonstration movement that led to the collapse of the former government of President Viktor Yanukovych.
“It is the matter of weeks now,” Mr Yatsenyuk said. “This is the most important decision that the whole country has been waiting for. This is what people were going to the streets for.”
Aggression in Crimea is a sign of Russian weakness
by HENRY ERGAS
FAR from being an emerging superpower, Russia is a weak state, wracked by cronyism and corruption, and overly reliant on exports of oil and gas. That hardly means Russian aggression in Ukraine can be ignored or condoned. But detestable as he may be, Vladimir Putin is no Hitler and the Crimean peninsula is not the Sudetenland.
At the heart of the crisis is the mess that emerged from the sudden collapse of the Soviet Union. In a few cases, such as Uzbekistan and Turkmenistan, communism was succeeded by new regimes that were fully authoritarian; and in a few others it was replaced by fully democratic polities, embracing political and economic liberalism.
But the predominant form of government that developed in the successor states combined elements of democracy and dictatorship, while featuring economic reforms that introduced market forces while corrupting their workings and undermining their legitimacy.
Those regimes are inherently unstable. Offered the pageantry of democracy, people naturally demand its substance; and given the tools of dictatorship, rulers all too readily seek its shelter. That instability has been especially pronounced in countries such as Georgia, Moldova and Ukraine which inherited, from the arbitrary boundaries that defined the Soviet republics, diverse populations that are geographically segregated and lack a shared history of “stateness”.
The absence of any consensus in these countries on each nation’s geographical reach, or on the rights associated with citizenship in the national community, has stymied the formation of broad governing coalitions. At the same time, their location at the borders of the European Union on the one hand and of Russia on the other has provided competing internal groups with rival external reference points and sources of support, entrenching the divisions. The result has been to doom attempted transitions to democracy, such as those that followed Georgia’s Rose Revolution of 2003 and Ukraine’s Orange Revolution of 2004. But the deep divisions have also impeded durable transitions to fully authoritarian rule. Instead, politics has acquired a “winner takes all” flavour which encourages pillage, rather than wealth creation, as the winners in each round amass nest eggs for when they lose power.
The Ukrainian president Viktor Yanukovych, for example, allegedly embezzled some $8 billion a year, both for his immediate family and as a war chest to pay off allies and accomplices. The consequence is a barren treasury and shockingly poor economic performance, with Ukrainian per capita incomes growing by less than 2 per cent a year over the last two decades. Little wonder then that as collapse loomed, Yanukovych tried to play off Russia and the EU; but that Putin offered the best deal hardly means he welcomed what was plainly a debacle. As for the occupation of Crimea, it is no more proof of Russia’s power than are the breakaway enclaves of Transnistria, Nagorno-Karabakh, Abkhazia, and South Ossetia.
On the contrary, these frozen conflicts attest to Russia’s inability to define a workable regional order. Moreover, the limitations on Russian power are only likely to become more acute as the sources of its recent prosperity fade.
That prosperity has rested on two pillars: the far-reaching economic reforms that followed Russia’s 1998 financial crisis; and increases in oil and gas prices, which more than doubled Russia’s terms of trade from 2002 to 2008. But those prices will revert towards their long-term levels, while the one-off gains from the reforms have been exhausted.
And to make matters worse, Putin’s moves to replace the first generation of “oligarchs”, who were often highly efficient entrepreneurs, by his cronies has degraded Russia’s industrial capabilities, which were already severely restricted by its crumbling infrastructure. Rampant corruption, evident in the $50 billion cost of the Sochi Olympics, only adds to the woes, not least by making projects such as even basic road works prohibitively expensive.
Putin has papered over the problems by running down foreign exchange reserves and by allowing a deterioration in Russia’s fiscal position. But investors are not easily fooled, with the market capitalisation of the Moscow stock exchange, expressed as a proportion of GDP, halved from its 2007 level. And the 10 per cent drop the market suffered as the Crimean crisis broke has highlighted the fact that Putin’s Russia, unlike Stalin’s USSR, is heavily dependent on the world economy. So has the fall in the rouble, which will come under even greater pressure as the American recovery increases world interest rates.
None of that means Putin will be easy to control. Indeed, Russia’s difficulties may encourage further adventures, as will the fact that the fragments from the fall of the USSR are still far from being fully resolved. And as the turmoil they cause continues, so will the calls for a strong response.
Those calls are fully understandable; however, seen over the longer term, it may be that the West’s best response is to deepen the links that join the successor states to the world economic system. That the EU treated two-thirds of Ukraine’s exports as “sensitive”, limiting their access, merely worsened the internal conflicts; opening markets would not only encourage a turn to the West but also make politics in the successor states less of a zero-sum game.
Obviously, that is not to claim that freer trade and investment are a panacea that can transform the successor states into liberal democracies. For history offers no magic wands. At times, it is marked by bursts of remarkable synchronisation among countries; the spread of freedom in the 1980s and 1990s was a glorious moment of such synchronised change. But those phases are interspersed by periods of greater diversity, backsliding and chaos.
With the legacies of the Soviet empire’s demise continuing to play themselves out, it is more of that ugliness that lies ahead.
Ukraine seeks US help as Putin talks tough on Crimea
by Dmitry ZAKS
Kiev (AFP) - Ukraine sought urgent Western backing on Monday after Russian President Vladimir Putin insisted that Crimea had the right to join his country even while hinting at a readiness for dialogue.
The pro-European team in Kiev that rode the wave of three months of deadly protests to topple a Kremlin-backed regime is running against the clock to preserve the territorial integrity of the culturally splintered nation of 46 million.
The self-declared leadership on the predominantly ethnic Russian peninsula of Crimea has proclaimed independence from Kiev and set a March 16 referendum on switching over to Kremlin rule.
The decision has been condemned by Western powers who are also furious at Moscow's seizure of Crimea in a lightning but bloodless operation that began days after the February 22 fall and subsequent escape to Russia of president Viktor Yanukovych.
German Chancellor Angela Merkel -- whose cautious approach to imposing sanctions on Russia has clashed with the more hawkish positions of Eastern European nations and the United States -- bluntly told Putin on Sunday that the Crimean referendum was "illegal".
The most explosive East-West crisis since the Cold War was stoked further when the Kremlin said Putin told both Merkel and British Prime Minister David Cameron that he fully recognised the actions of the Crimean leaders -- in power since an end of February seizure of the local parliament and government by pro-Kremlin gunmen.
The Kremlin said Putin stressed "the steps undertaken by the legitimate authorities of Crimea are based on the norms of international law" -- a comment hinting strongly that the Kremlin was ready to annex Crimea after handing the peninsula as a "gift" to Ukraine when it was a part of the Soviet empire in 1954.
But Merkel's office also said Putin had promised to discuss with Russian Foreign Minister Sergei Lavrov on Monday the creation of an "international contact group" on Ukraine that he had resisted in the past.
Germany is pushing the group's creation as a way of avoiding an all-out war breaking out on the eastern edge of Europe that would see Ukraine call for Western help against its nuclear-armed neighbour.
The embryonic sign of diplomatic progress came as Ukrainian Prime Minister Arseniy Yatsenyuk prepared to fly to Washington for his first meeting with US President Barack Obama -- pushing a peace plan that includes support for Ukrainian presidential elections on May 25.
Wednesday's meeting will both boost the credibility of Yatsenyuk's untested government -- not recognised by Russia -- and provide Ukraine with a chance to iron out the details of crucial economic relief for its wheezing economy.
"This is a very important visit," Ukraine's interim Foreign Minister Andriy Deshchytsya told Kiev's 1+1 television late on Sunday.
"We hope that during these negotiations, we will find joint approaches to solving the situation around Crimea."
Deshchytsya -- who had earlier confirmed that Ukrainian troops in Crimea were under orders not to open fire on or be provoked by the pro-Kremlin militia who have overrun the peninsula - -- said Kiev was pushing hard for a "peaceful solution".
The White House said Yatsenyuk's visit would "highlight the strong support of the United States for the people of Ukraine" in the face of the "ongoing military intervention in Crimea."
It added that Obama will discuss an economic support package that so far has seen Washington pledge a quick infusion of more than $1 billion and the European Union promise to deliver 11 billion euros ($15 billion).
Ukraine says it needs about 25 billion euros ($35 billion) in assistance over two years to keep the country running after Russia froze a $15 billion package it promised Yanukovych as his reward for rejecting an historic EU trade deal in November.
Yanukovych's shock decision sparked the Kiev protests in which 100 died -- most of them in days of carnage preceding the pro-Moscow regime's fall.
Deshchytsya said on Sunday that Kiev hoped to sign parts of the rejected Association Agreement at either a meeting of EU foreign ministers on March 17 or a summit of the bloc's 28 leaders on March 20-21.
The escalating standoff has seen Obama vow to impose visa bans and asset freeze on Russia officials held responsible for endangering the territorial integrity of Ukraine.
US officials have stressed that Putin himself is not on that list but also warn that Washington could pull out of a G8 summit the Russian leader is hosting in Sochi in June.
The European Union for its part has halted visa talks and threatened to impose tough economic sanctions unless Putin quickly opens talks with the Kiev team.
The Kremlin blames the new Ukrainian rulers for having fomented an atmosphere of intimidation against ethnic Russians in the eastern and southern swathes of Europe's largest country that prompted Putin to threaten to use force on March 1.
Ukraine on Sunday was hit by rival protests that saw pro-Kremlin separatists seize the regional seat of power in the eastern city of Lugansk and raise the Russian flag on the local security forces' headquarters in Yanukovych's native region of Donetsk.
Pro-Moscow militants wearing balaclavas and bullet-proof vests -- joined by Cossacks wielding whips -- also attacked a small rally for Ukrainian unity in the Crimean naval port city of Sevastopol that has housed Russia's Black Sea Fleet since the 18th century.
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