Blood rises in Ukraine

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From The Australian:

ARMED, pro-Russian separatists inside government buildings in eastern Ukraine have until today to negotiate an exit, or face expulsion by force, the government in Kiev said yesterday.

The ultimatum came as Russian President Vladimir Putin tightened pressure on Ukraine’s almost bankrupt economy, saying the nation might soon have to pay in advance for its gas.

…Top finance officials from the Group of Seven leading economies were expected to meet overnight to consider ratcheting up sanctions against Russia for its actions in Ukraine, according to people familiar with the matter.

…In Luhansk and Donetsk, two large industrial cities close to the Russian border, protesters have fortified their positions — prompting Ukrainian interior minister Arsen Avakov to say that one way or another, the stand-offs would be resolved “within the next 48 hours”.

Authorities are reassuring themselves that:

Russia probably wouldn’t cut off gas and oil exports even if the European Union imposes sanctions aimed at the Russian economy, Germany’s leading economic research institutes said.

A “spiral” of sanctions in the conflict over Ukraine might lead Russia to halt gas and oil flows to European Union countries “in the worst case,” with a potentially “severe” impact on the EU, the institutes said in a report presented in Berlin today. Yet Russia’s dependence on energy exports is a restraint on President Vladimir Putin, the forecasters said.

“It is therefore likely that sanctions wouldn’t impact on energy deliveries, even if an escalation occurred,” according to the report. Curbs on Russian gas and oil exports “would hit both Russia and Germany hard.”

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I am sorry to say that such reassurances count out one important factor: human beings. The Ukrainians do not look like they’re too keen on letting the great Russian bear eat them piecemeal. As their blood rises so too does the risk of armed conflict and then we’re into the terrain of instant martyrs, community mobilisation and civil war. The assessment of which nation’s interests are at stake then takes a back seat to human passions.

Russia has roused the passions of the Ukraine’s Russian-speaking east, explicitly or implicitly. The rest of Ukriane is set to respond. Diplomats can lie all they want but this is now a time bomb that will be very difficult to disarm.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.