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Putin Formally Annexes Crimea, City Of Sevastopol To Russian Federation | Zero Hedge

Putin Formally Annexes Crimea, City Of Sevastopol To Russian Federation | Zero Hedge.

And there it is:

  • PUTIN ASKS FOR CRIMEA, CITY OF SEVASTOPOL TO BE ADDED TO RUSSIA
  • PUTIN SAYS WILL SUBMIT DRAFT LAW ON BRINGING CRIMEA INTO RUSSIA TO PARLIAMENT ON TUESDAY
  • PUTIN CALLS FOR RATIFICATION OF TREATY ON CRIMEA, SEVASTOPOL

And the inevitable conclusion:

  • RUSSIA, CRIMEA, SEVASTOPOL SIGN AGREEMENT ON ENTERING ACCESSION
  • REPUBLIC OF CRIMEA CONSIDERED PART OF RUSSIA FROM DATE OF SIGNING AGREEMENT – KREMLIN

The Kremlin’s official statement, google translated:

Treaty between the Russian Federation and the Republic of Crimea on the adoption of the Russian Federation in the Republic of Crimea and the formation of the Russian Federation signed new subjects March 18, 2014 in the Kremlin.

The document bears the signature of the President of the Russian Federation Vladimir Putin , President of the State Council of the Republic of Crimea Vladimir Konstantinov , Chairman of the Council of Ministers of Crimea Sergey Aksenov and chairman of the Coordinating Council on the organization of the Sevastopol city administration for Life Sevastopol Alexey Chaly .

***

Contract based on the freely expressed will of the peoples and voluntary obschekrymskom Crimea on a referendum held in the Autonomous Republic of Crimea and Sevastopol city March 16, 2014 , during which the people of Crimea decided to reunite with Russia

Republic of Crimea is considered to be adopted in the Russian Federation from the date of signing the Agreement . Since the adoption of the Russian Federation in the Republic of Crimea, the Russian Federation formed new entities – Republic of Crimea and the federal city of Sevastopol.

The text of the Agreement includes a preamble and ten articles which set out provisions relating to the adoption of the Russian Federation in the Republic of Crimea and education in the Russian Federation new subjects , including provisions for the new territories of the Russian Federation , the citizenship of the population , public authorities of the subjects of the Russian Federation.

Under the Treaty, since the adoption of the Russian Federation and the Republic of Crimea education in the Russian Federation and new subjects to January 1, 2015 the transitional period during which resolved the issues of integration of new subjects of the Russian Federation in the economic, financial , credit and legal system of the Russian Federation , in the system of state authorities of the Russian Federation , as well as issues of military duty and military service in the territories of the Republic of Crimea and Sevastopol city of federal significance.

Legislative and other normative legal acts of the Russian Federation within the Republic of Crimea and Sevastopol city of federal importance of the adoption of the Russian Federation in the Republic of Crimea and education in the Russian Federation new subjects , unless otherwise provided by the legislation of the Russian Federation.

Normative legal acts of the Autonomous Republic of Crimea and the city of Sevastopol , Republic of Crimea and the city with special status of Sevastopol operate in the territories respectively of the Republic of Crimea and Sevastopol city of federal significance until the end of the transition period or until the adoption of the relevant normative legal act of the Russian Federation and (or) the normative legal acts of the Republic Crimea, a normative legal act of the Russian Federation and (or) a normative legal act federal city of Sevastopol.

Normative legal acts of the Autonomous Republic of Crimea and the city of Sevastopol , Republic of Crimea and the city with special status of Sevastopol, contrary to the Constitution of the Russian Federation shall not apply.

Treaty shall be ratified in accordance with Article 15 of the Federal Law “On International Treaties of the Russian Federation” and in accordance with Article 10 of the Treaty.

And futures, stocks, and risk in general is soaring, sending the Kremlin precisely the message it needs to know that there is absolutely nothing wrong with this. Perhaps if Russia had annexed all of Ukraine, or the Baltics, or maybe even Poland, the S&P would have soared over 2000 already?

Putin Formally Annexes Crimea, City Of Sevastopol To Russian Federation | Zero Hedge

Putin Formally Annexes Crimea, City Of Sevastopol To Russian Federation | Zero Hedge.

And there it is:

  • PUTIN ASKS FOR CRIMEA, CITY OF SEVASTOPOL TO BE ADDED TO RUSSIA
  • PUTIN SAYS WILL SUBMIT DRAFT LAW ON BRINGING CRIMEA INTO RUSSIA TO PARLIAMENT ON TUESDAY
  • PUTIN CALLS FOR RATIFICATION OF TREATY ON CRIMEA, SEVASTOPOL

And the inevitable conclusion:

  • RUSSIA, CRIMEA, SEVASTOPOL SIGN AGREEMENT ON ENTERING ACCESSION
  • REPUBLIC OF CRIMEA CONSIDERED PART OF RUSSIA FROM DATE OF SIGNING AGREEMENT – KREMLIN

The Kremlin’s official statement, google translated:

Treaty between the Russian Federation and the Republic of Crimea on the adoption of the Russian Federation in the Republic of Crimea and the formation of the Russian Federation signed new subjects March 18, 2014 in the Kremlin.

The document bears the signature of the President of the Russian Federation Vladimir Putin , President of the State Council of the Republic of Crimea Vladimir Konstantinov , Chairman of the Council of Ministers of Crimea Sergey Aksenov and chairman of the Coordinating Council on the organization of the Sevastopol city administration for Life Sevastopol Alexey Chaly .

***

Contract based on the freely expressed will of the peoples and voluntary obschekrymskom Crimea on a referendum held in the Autonomous Republic of Crimea and Sevastopol city March 16, 2014 , during which the people of Crimea decided to reunite with Russia

Republic of Crimea is considered to be adopted in the Russian Federation from the date of signing the Agreement . Since the adoption of the Russian Federation in the Republic of Crimea, the Russian Federation formed new entities – Republic of Crimea and the federal city of Sevastopol.

The text of the Agreement includes a preamble and ten articles which set out provisions relating to the adoption of the Russian Federation in the Republic of Crimea and education in the Russian Federation new subjects , including provisions for the new territories of the Russian Federation , the citizenship of the population , public authorities of the subjects of the Russian Federation.

Under the Treaty, since the adoption of the Russian Federation and the Republic of Crimea education in the Russian Federation and new subjects to January 1, 2015 the transitional period during which resolved the issues of integration of new subjects of the Russian Federation in the economic, financial , credit and legal system of the Russian Federation , in the system of state authorities of the Russian Federation , as well as issues of military duty and military service in the territories of the Republic of Crimea and Sevastopol city of federal significance.

Legislative and other normative legal acts of the Russian Federation within the Republic of Crimea and Sevastopol city of federal importance of the adoption of the Russian Federation in the Republic of Crimea and education in the Russian Federation new subjects , unless otherwise provided by the legislation of the Russian Federation.

Normative legal acts of the Autonomous Republic of Crimea and the city of Sevastopol , Republic of Crimea and the city with special status of Sevastopol operate in the territories respectively of the Republic of Crimea and Sevastopol city of federal significance until the end of the transition period or until the adoption of the relevant normative legal act of the Russian Federation and (or) the normative legal acts of the Republic Crimea, a normative legal act of the Russian Federation and (or) a normative legal act federal city of Sevastopol.

Normative legal acts of the Autonomous Republic of Crimea and the city of Sevastopol , Republic of Crimea and the city with special status of Sevastopol, contrary to the Constitution of the Russian Federation shall not apply.

Treaty shall be ratified in accordance with Article 15 of the Federal Law “On International Treaties of the Russian Federation” and in accordance with Article 10 of the Treaty.

And futures, stocks, and risk in general is soaring, sending the Kremlin precisely the message it needs to know that there is absolutely nothing wrong with this. Perhaps if Russia had annexed all of Ukraine, or the Baltics, or maybe even Poland, the S&P would have soared over 2000 already?

Putin Advisor Threatens With Dumping US Treasurys, Abandoning Dollar If US Proceeds With Sanctions | Zero Hedge

Putin Advisor Threatens With Dumping US Treasurys, Abandoning Dollar If US Proceeds With Sanctions | Zero Hedge.

While the comments by Russian presidential advisor, Sergei Glazyev, came before Putin’s detente press conference early this morning, they did flash a red light of warning as to what Russian response may be should the west indeed proceed with “crippling” sanctions as Kerry is demanding.  As RIA reports, his advice is that “authorities should dump US government bonds in the event of Russian companies and individuals being targeted by sanctions over events in Ukraine.” Glazyev said the United States would be the first to suffer in the event of any sanctions regime. “The Americans are threatening Russia with sanctions and pulling the EU into a trade and economic war with Russia,” Glazyev said. “Most of the sanctions against Russia will bring harm to the United States itself, because as far as trade relations with the United States go, we don’t depend on them in any way.

From RIA:

“We hold a decent amount of treasury bonds – more than $200 billion – and if the United States dares to freeze accounts of Russian businesses and citizens, we can no longer view America as a reliable partner,” he said. “We will encourage everybody to dump US Treasury bonds, get rid of dollars as an unreliable currency and leave the US market.”

 

US Secretary of State John Kerry on Saturday warned that Russian military interventions in Ukraine, which have been justified by the Kremlin as protection for residents in heavily ethnic Russian-populated regions, could result in “serious repercussions” for Moscow.

“Unless immediate and concrete steps are taken by Russia to deescalate tensions, the effect on US-Russian relations and on Russia’s international standing will be profound,” Kerry said.

 

Kerry mentioned economic sanctions, visa bans and asset freezes as possible measures.

 

Former deputy energy minister and lively government critic Vladimir Milov slammed Glazyev’s remarks, saying they would put further downward pressure on the ruble, which was pushed down Monday to a record low of 36.5 against the dollar amid fears about the possible outbreak of war.

 

“That idiot Glazyev will keep talking until the dollar is worth 60 [rubles],” Milov wrote on his Twitter account.

To be sure, a high-ranking Kremlin source was quick to distance his office from Glazyev’s remarks, however, insisting to RIA Novosti that they represented only his personal position. Glazyev was just expressing his views as an academic, and not as a presidential adviser, the Kremlin insider said.

That said, putting Russia’s threat in context, the Federation held $138.6 billion in US Treasurys as of December according to the latest TIC data, making it the 11th largest creditor of the US, which appears to conflict with what the Russian said, making one wonder where there is a disconnect in “data.” This would mean the Fed would need just two months of POMO to gobble up whatever bonds Russia has to sell.

The bigger question is if indeed, as some have suggested, China were to ally with Russia, and proceed to follow Russia in its reciprocal isolation of the US, by expanding trade with Russia on non-USD based terms, and also continue selling bonds as it did in December, when as we reported previously it dumped the second largest amount of US paper in history.

… especially when one considers the latest news released by the Kremlin:

PUTIN, XI DISCUSSED UKRAINE BY PHONE, KREMLIN SAYS
RUSSIA, CHINA SHARE SIMILAR POSITIONS ON UKRAINE, KREMLIN SAYS

Putin Advisor Threatens With Dumping US Treasurys, Abandoning Dollar If US Proceeds With Sanctions | Zero Hedge

Putin Advisor Threatens With Dumping US Treasurys, Abandoning Dollar If US Proceeds With Sanctions | Zero Hedge.

While the comments by Russian presidential advisor, Sergei Glazyev, came before Putin’s detente press conference early this morning, they did flash a red light of warning as to what Russian response may be should the west indeed proceed with “crippling” sanctions as Kerry is demanding.  As RIA reports, his advice is that “authorities should dump US government bonds in the event of Russian companies and individuals being targeted by sanctions over events in Ukraine.” Glazyev said the United States would be the first to suffer in the event of any sanctions regime. “The Americans are threatening Russia with sanctions and pulling the EU into a trade and economic war with Russia,” Glazyev said. “Most of the sanctions against Russia will bring harm to the United States itself, because as far as trade relations with the United States go, we don’t depend on them in any way.

From RIA:

“We hold a decent amount of treasury bonds – more than $200 billion – and if the United States dares to freeze accounts of Russian businesses and citizens, we can no longer view America as a reliable partner,” he said. “We will encourage everybody to dump US Treasury bonds, get rid of dollars as an unreliable currency and leave the US market.”

 

US Secretary of State John Kerry on Saturday warned that Russian military interventions in Ukraine, which have been justified by the Kremlin as protection for residents in heavily ethnic Russian-populated regions, could result in “serious repercussions” for Moscow.

“Unless immediate and concrete steps are taken by Russia to deescalate tensions, the effect on US-Russian relations and on Russia’s international standing will be profound,” Kerry said.

 

Kerry mentioned economic sanctions, visa bans and asset freezes as possible measures.

 

Former deputy energy minister and lively government critic Vladimir Milov slammed Glazyev’s remarks, saying they would put further downward pressure on the ruble, which was pushed down Monday to a record low of 36.5 against the dollar amid fears about the possible outbreak of war.

 

“That idiot Glazyev will keep talking until the dollar is worth 60 [rubles],” Milov wrote on his Twitter account.

To be sure, a high-ranking Kremlin source was quick to distance his office from Glazyev’s remarks, however, insisting to RIA Novosti that they represented only his personal position. Glazyev was just expressing his views as an academic, and not as a presidential adviser, the Kremlin insider said.

That said, putting Russia’s threat in context, the Federation held $138.6 billion in US Treasurys as of December according to the latest TIC data, making it the 11th largest creditor of the US, which appears to conflict with what the Russian said, making one wonder where there is a disconnect in “data.” This would mean the Fed would need just two months of POMO to gobble up whatever bonds Russia has to sell.

The bigger question is if indeed, as some have suggested, China were to ally with Russia, and proceed to follow Russia in its reciprocal isolation of the US, by expanding trade with Russia on non-USD based terms, and also continue selling bonds as it did in December, when as we reported previously it dumped the second largest amount of US paper in history.

… especially when one considers the latest news released by the Kremlin:

PUTIN, XI DISCUSSED UKRAINE BY PHONE, KREMLIN SAYS
RUSSIA, CHINA SHARE SIMILAR POSITIONS ON UKRAINE, KREMLIN SAYS

Ukraine Region Declares Independence Sending Dollar Bonds To Record Low; Russian Ruble Tumbles To 5 Year Low | Zero Hedge

Ukraine Region Declares Independence Sending Dollar Bonds To Record Low; Russian Ruble Tumbles To 5 Year Low | Zero Hedge.

The events in the Ukraine continue to deteriorate. Moments ago Lawmakers in Ukraine’s Lviv region, declared independence after backers evicted appointed governor overnight. Lviv’s parliament formed executive committee with department heads in Governor Oleh Salo’s administration that will take over functions of regional government, Oksana Dmetryv, a spokeswoman for Speaker Petro Kolodiy, said today by phone from Lviv. Protesters also seized headquarters of security services in Lviv, a region of 2.5 million people bordering Poland. Elsewhere, there were reports of more military vehicles crossing through Kiev: if there are any more Molotov Cocktail video follow ups we will be sure to capture them.

Still, to expect president Yanukovich (or Putin) to just sit there and let the country be torn apart by secessionists is naive. As Reuters reportrs, Yanukovich accused pro-European opposition leaders on Wednesday of trying to seize power by force after at least 26 people died in the worst violence since the former Soviet republic gained independence. European Union leaders said they were urgently preparing targeted sanctions against those responsible for a crackdown on protesters who have been occupying central Kiev for almost three months since Yanukovich spurned a far-reaching trade deal with the EU and accepted a $15-billion Russian bailout.

Russian President Vladimir Putin’s spokesman insisted the Kremlin was sticking to a policy of not intervening in Ukraine, although his point man has called for action to crush the protests. The Kremlin said Putin and Yanukovich spoke by telephone overnight, calling the events an attempted coup. Moscow announced the resumption of stalled aid to Kiev on Monday with a $2-million cash injection hours before the crackdown began.

So far, however, the implicit Russian backing of the Ukraine as is is not doing much as both the Ukraine Dollar short-bonds due June 2014 have fallen more than 2 points to a record low of 94.25 according to Tradeweb, while the Russian Ruble has just tumbled to its lowest levels against the dollar since 2009.

The market is finally starting to notice, and realize that nothing in the Ukraine is contained, and the consequences form a prolonged civil war would be dire for everyone involved. Which, as is the case in every proxy war, just happens to be everyone.

Thousands of Anti-Putin Protesters March in Moscow » The Epoch Times

Thousands of Anti-Putin Protesters March in Moscow » The Epoch Times.

Opposition demonstrators carry posters of imprisoned protesters during a protest rally in Moscow, Russia, Sunday, Feb. 2, 2014. Several thousand Russian opposition supporters gathered for a protest on Sunday, venting anger against the Kremlin and demanding the release of political prisoners. (AP Photo/Alexander Zemlianichenko)

Opposition demonstrators carry posters of imprisoned protesters during a protest rally in Moscow, Russia, Sunday, Feb. 2, 2014. Several thousand Russian opposition supporters gathered for a protest on Sunday, venting anger against the Kremlin and demanding the release of political prisoners. (AP Photo/Alexander Zemlianichenko)

MOSCOW— Several thousand protesters have marched through central Moscow to call for the release of 20 people who were arrested after clashes between police and demonstrators in May 2012.

Some of them face up to 10 years in prison if convicted for the protest, held on Bolotnaya Square on the eve of President Vladimir Putin’s inauguration to a third term as Russia’s president.

The protesters marched Sunday with a banner stretching across the street reading: “Freedom to the Bolotnaya heroes, the hostages of Putin.” Others held portraits of the jailed protesters.

Of the 28 people who were rounded up in the case, eight were recently freed on amnesty. Several defendants are under house arrest, but most of the others have been in jail for more than a year and a half.

Russia’s Growing Regional Debts Threaten Stability – Forbes

Russia’s Growing Regional Debts Threaten Stability – Forbes.

Editor’s Note: The following is the first installment of a three-part series on growing debt for Russia’s regional governments.

Since the 2009 financial crisis, the Kremlin has allowed Russia’s regions to take the brunt of the country’s economic decline in order to keep the federal government seemingly healthy, with a nominally small budget deficit and large currency reserves. But now most of Russia’s regional governments’ debt is so high, it is becoming dangerous for the federal government and big banks and could soon become unmanageable.

Analysis

Russia is so large that the Kremlin lacks the resources to run each region of the country directly. Currently Russia is split into 83 regions of all shapes and sizes, which fall into categories of oblasts, republics, krais, federal cities and autonomous okrugs. Historically, the Kremlin has given regional leaders (mayors, governors, heads or republic presidents) the power to run their own regions and ensure loyalty to the Kremlin and stability for the country.

However, the Kremlin is constantly concerned with its control over the regions. The federal government’s ability to maintain the loyalty of each region has been tested often throughout history. For instance, dozens of regions attempted to break away after the fall of the Soviet Union, occasionally leading to wars such as those in Chechnya.

The central government’s control over the regions was demolished during the devastating financial crisis in 1998. Many of the regional heads defied the federal government in order to look out for their own regions’ survival. It was the second-worst regional breakdown in Russia following the collapse of the Soviet Union, and it was related directly to the chaos caused by that collapse. This is why the currently growing economic strains in the regions will be of great concern for the Kremlin.

The Regions’ Mounting Debts

Most of Russia’s regional governments have always had some level of debt, but resource-based export revenues have kept it mostly manageable since the 1998 crisis. However, since the 2008-2009 financial crisis, most of the regions’ debt has risen by more than 100 percent — from $35 billion in 2010 to an estimated $78 billion in 2014, and Standard & Poor’s has estimated that this will rise to $103 billion in 2015. Russia’s overall government debt — the federal and regional governments combined — is around $300 billion, or 14 percent of gross domestic product. This is small for a country as large as Russia, but the problem is that so much of the debt is concentrated in the regions, which do not have as many debt reduction tools as the federal government does.

Russia-Govt-DebtsOf the 83 regional subjects in Russia, only 20 will be able to keep a budget surplus or a moderate level of debt by 2015, according to Standard & Poor’s calculations. This leaves the other 63 regions at risk of needing a federal bailout or defaulting on their debt.

Currently, the Russian regions are financing their debt via bank loans, bonds and budget credits (federal loans, for example). Each region has to get federal approval to issue bonds, because regional bonds create more market competition for the federal and business bonds. Most of the banking loans to the regions carry high interest rates and are short term (mostly between two and five years). The federal loans come with much lower rates and longer repayment schedules (mostly between five and 20 years), so naturally federal credits and loans are more attractive for the local governments, though unprofitable for the federal government. The issuance of federal credits or loans to the regions in 2013 was limited; initially, Moscow said it would issue $4.8 billion in new credits to the regions in 2013, but only issued $2.4 billion due to its own budgetary restrictions. This is one contributing factor to the dramatic local-government debt increases.

Economic Stagnation

The next contributing factor to the rise in regional debt is the overall economic stagnation that has plagued Russia since the 2009 financial crisis and subsequent stimulus aimed at pulling Russia out of the crisis. Despite high energy prices all year, Russia’s gross domestic product growth slowed dramatically in 2013 to 1.5 percent growth after an initial 3-4 percent growth target by the Kremlin at the start of that year. This is low compared to the 7-8 percent growth seen yearly in Russia in the mid-2000s. Most analysts believe the only way Russia’s growth remained positive was through its large energy revenues, which make up half of the federal government’s budget and 20-25 percent of the country’s gross domestic product.

There are a handful of reasons for Russia’s economic stagnation. First, investment in Russia was lower than expected in 2013. Fixed investment was down 1.8 percent year-on-year in the first 10 months of 2013, compared with a 9.1 percent year-on-year growth in the same period in 2012. Private sector outflows of capital were high in 2013, with a net outflow of $48 billion leaving Russia in the first nine months of 2013, compared with $46 billion for the same period in 2012. Moreover, the investment sentiment in Russia is poor at the moment, as the Central Bank of Russia has begun closing some 800 smaller banks in a consolidation. Many of those banks were regionally based, and their closure is making investment in the regions less attractive.

Lower investment, coupled with less corporate borrowing and a decline in demand in many sectors, such as metals, led to lower industrial production. In the first 10 months of 2013, industrial production was flat compared with 2.8 percent growth in the same period in 2012. Industrial production is region-specific in Russia; industry provides nearly the entire economy in some regions. Thirty-one Russian regions, including Komi and Barents, had negative industrial production indexes for 2013. This could get worse in 2014, as many of the metals giants are planning to continue shutting down plants due to a lack of demand and low prices. For example, the world’s largest aluminum producer, Rusal, is shutting down five aluminum plants in the Volgograd, Karelia, Leningrad and Urals regions and laying off tens of thousands of workers.

Federal Obligations

Another factor contributing to the regions’ rising debts is increasingly burdensome obligations to the federal government. Of the income generated in a particular region, only 37 percent of the income stays in that region and the rest goes to the federal budget. The federal government does return some of the funds to the region in the form of subsidies and intergovernmental transfers, but not more than 20 percent. The amount of income that the Kremlin has taken from the regions has increased 12 percent in the past three years (via increases in taxes and decreases in subsidizations), leaving less and less for the regions to work with.

There has also been a large outcry from the regional governments in response to a series of presidential edicts that Vladimir Putin declared when he was re-elected to his third term in late 2011. Putin ordered the regional governments to do a series of tasks, such as replace all dilapidated housing by 2014, and to raise regional and municipal salaries by 7-10 percent in 2014 and another 10 percent in 2015. The regions are calling these “unfunded mandates,” as the federal government is not helping the regions pay for these projects. Already, the Kremlin has had to postpone the housing replacement edict to 2016 due to lack of funding in the regions, but the salary edict remains in place and is estimated to cost the regions $56.6 billion over the next two years.

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