Economics

Russian Troops Surround Two Military Bases in Crimea; Kerry Warns Russia Could be Expelled from G8

March 2, 2014

In a live update feed Guardian reports Ukrainian and Russian troops in standoff at Crimean military base.

Summary

Russian troops have surrounded at least two military bases in Crimea and approached others seeking to gain access or get hold or their weapons. There were reported to be about 150 Russian troops and more than 20 military vehicles outside the Perevalnoe base, where there was a tense standoff. Ukrainian soldiers drove a tank up to the inside gates of the base in response and around 15 of them lined up against the gate.The Ukrainian prime minister, Arseny Yatsenyuk, said Russia has declared war on Ukraine and that it is not just a threat from Moscow. He warned: “We are on the brink of disaster”.The US secretary of state, John Kerry, warned that Russia could be expelled from the G8 and face economic sanctions, unless President Vladimir Putin halts his “incredible act of aggression”. He also mentioned visa bans, asset freezes and trade isolation as possible steps.Nato secretary general Anders Fogh Rasmussen accused Russia of threatening peace and security in Europe by its actions and of violating the UN charter. He called on Russia to “de-escalate”.Britain and France joined the US in pulling out of preparatory meetings for the G8 economic summit, scheduled to be held in June at the Black Sea resort of Sochi, site of the just-concluded 2014 Winter Olympics.Ukraine’s parliament has called for international monitors to help ensure the safety of its nuclear power plants.There were demonstrations both for and against Russian intervention in Ukraine in Moscow. There were at least 10,000 people at the pro demonstration, according to AP, although reporters said some were ordered to be there. The anti demonstration was much smaller but saw at least 50 people detained by Russian police.
Ukraine Orders Full Military Mobilization

The BBC reports Ukraine Orders Full Military Mobilization.
Christian Fraser: "There is a new dilemma for the Ukrainian military, submit to the new authority in Crimea - or else"

In Crimea, Ukrainian soldiers faced off with Russian soldiers surrounding their bases while the Russian army is said to be digging trenches on the border with mainland Ukraine.

US Secretary of State John Kerry has warned Russia could be ejected from the Group of Eight developed nations.

Russian President Vladimir Putin, he said, was "not going to have a Sochi G8, he may not even remain in the G8 if this continues," referring to a planned summit in Russia in June.

"He may find himself with asset freezes, on Russian business. American business may pull back, there may be a further tumble of the rouble.

The UK has joined the US, France and Canada in suspending preparations for the Sochi summit.

Russian soldiers continue to occupy key sites on the Crimean peninsula, including airports and communications hubs, although there has been no actual violence and they have been openly welcomed by some sections of the population.

In the east Ukrainian city of Donetsk, apparent members of the disbanded elite police riot unit Berkut appeared in full uniform at a pro-Russian rally.

Ukraine withdrew coast guard vessels from two ports in Crimea and moved them to other bases in the Black Sea and Sea of Azov.

A Ukrainian army base was surrounded by Russian troops at Perevalnoye, south of the Crimean regional capital Simferopol. An Orthodox priest has arrived in an attempt to mediate.

In Sevastopol, Ukrainian naval officers found their headquarters occupied by Russian troops and were unable to go to work.Ukraine No Match for Russia

The New York Times reports Ukraine Forces Are Ill Equipped to Take Crimea Back From Russia
Crimea has always been a vital base for the Soviet and then Russian Navy, serving as the headquarters of the Black Sea Fleet, which has controlled the waters off southern Russia since 1783. After a period of tension following Ukraine’s independence when the Soviet Union collapsed in 1991, Russia got to keep its base in Crimea on a lease, extended until at least 2042 by the now-ousted president, Viktor F. Yanukovych.

But the Ukrainian military has only a token force in the autonomous region — a lightly armed brigade of about 3,500 people, equipped with artillery and light weapons but none of the country’s advanced battle tanks, said Igor Sutyagin, a Russian military expert at the Royal United Services Institute in London. The forces also have only one air squadron of SU-27 fighters deployed at the air base near Belbek.

The Russian takeover of Crimea was relatively easy, in part because the Ukrainian military was careful not to respond to a provocation that would excuse any larger intervention. The military — which has seen its top leader change constantly with the political situation — has also made a point of staying out of the internal political conflict in Ukraine.

The current military chief of staff, Lt. Gen. Mykhailo Kutsyn, was named to the job only on Friday, after Adm. Yuriy Ilyin, 51, was relieved of his post after traveling to Crimea and, reportedly at least, having a heart attack. Admiral Ilyin had only been in the post for a short time himself, appointed by Mr. Yanukovych on Feb. 19 after Col. Gen. Volodymyr Zamana was fired for being unwilling to attack protesters in Kiev. All these changes have been an object lesson for the military to try to stay out of politics and civil unrest.

Even so, Ukraine had no realistic contingency plan for a Russian takeover of Crimea, given the size of the Russian forces legitimately based there, said Mr. Sutyagin, the military analyst. But he also said that he doubted that Russian forces would intervene elsewhere in Ukraine, because Russian forces would be too stretched to control much territory and even in the largely pro-Russia east, Ukrainian forces would be expected to fight back, aided by self-defense militias and partisans.

Steven Pifer, a former American ambassador to Ukraine now at the Brookings Institution, said that if Russian forces tried to move into eastern Ukraine, “there will be some Ukrainian units that will resist, and a flood of people from western Ukraine saying, ‘This is my chance to be my grandfather and fight the Communists.’ ”This could get messy in a hurry if Russian troops advance past the Crimea region.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.comMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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