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The Russians Have Already Quietly Pulled Their Money From The West | Zero Hedge

The Russians Have Already Quietly Pulled Their Money From The West | Zero Hedge.

Earlier today we reported that according to weekly Fed data, a record amount – some $105 billion – in Treasurys had been sold or simply reallocated (which for political reasons is the same thing) from the Fed’s custody accounts, bringing the total amount of US paper held at the Fed to a level not seen since December 2012. While China was one of the culprits suggested to have withdrawn the near USD-equivalent paper, a far likelier candidate was Russia, which as is well-known, has had a modest falling out with the West in general, and its financial system in particular. Turns out what Russian official institutions may have done with their Treasurys (and we won’t know for sure until June), it was merely the beginning. In fact, as the FT reports, in silent and not so silent preparations for what will be near-certain financial sanctions (which would include account freezes and asset confiscations following this Sunday’s Crimean referendum) the snealy Russians, read oligarchs, have already pulled billions from banks in the west thereby essentially making the biggest western gambit – that of going after the wealth of Russia’s 0.0001% – moot.

From the FT:

Russian companies are pulling billions out of western banks, fearful that any US sanctions over the Crimean crisis could lead to an asset freeze, according to bankers in Moscow.

Sberbank and VTB, Russia’s giant partly state-owned banks, as well as industrial companies, such as energy group Lukoil, are among those repatriating cash from western lenders with operations in the US. VTB has also cancelled a planned US investor summit next month, according to bankers.

The flight comes as last-ditch diplomatic talks between Russia’s foreign minister and the US secretary of state to resolve the tensions in Ukraine ended without an agreement.

Markets were nervous before Sunday’s Crimea referendum on secession from Ukraine. Traders and businesspeople fear this could spark western sanctions against Russia as early as Monday.

It probably will. What it will also do is force Russia to engage China far more actively in bilateral trade and ultimately to transact using either Rubles or Renminbi, and bypass the dollar. Perhaps even using gold, something which the price of the yellow metal sniffed out this week, pushing itself to 6 month highs. It will also make financial ties between the two commodity-rich nations even closer, while further alienating that “imperialist devil,” the US.

Of course, the west thinking like the west, and assuming that all that matters to Russia is the closing level of the Micex, believes that a sufficient plunge in Russian stocks would have been enough to deter Putin. After all, the only thing everyone in the US cares about is if the S&P 500 closed at yet another all time high, right?

What the west didn’t realize, as we predicted a month ago, for Putin it is orders of magnitude more important to have the price of commodities, primarily crude and gas, high than seeing the illusion of paper wealth, aka stocks, hitting all time highs. Especially since in Russia an even smaller portion of the population cares about the daily fluctuations of the stock market. As for the oligarchs, if there is someone who will be delighted to see their power, wealth and influence impacted adversely, if only for a short period of time, it is Vladimir Vladimirovich himself, whom the west misjudged massively once more. Not to mention that the general population will be even more delighted, and boost Putin’s rating even higher, if these crony billionaires are made to suffer by the west, if only a little.

(Here we would be remiss not to comment on his easy it supposedly is for Obama to freeze the assets of a few corrupt Russian billionaires, and yet the very proud Americans who nearly brought the entire financial system to the brink in 2008, are now richer than ever.)

In the meantime, some of Russia’s oligarchs are effectively welcoming the challenge. Bloomberg reports:

Alisher Usmanov, the country’s richest person, controls his most valuable asset, Metalloinvest Holding Co., Russia’s largest iron ore producer, through three subsidiaries, one of which is located in Cyprus, an EU member nation. The 60-year-old also owns a Victorian mansion in London that he bought in 2008 for $70 million, according to a May 18, 2008, Sunday Times newspaper report. He’s lost $1.5 billion since the crisis began, according to the Bloomberg ranking.

“We are concerned with the possible sanctions against Russia but don’t see any dramatic repercussions for our business,” Ivan Streshinsky, CEO at USM Advisors LLC, which manages Usmanov’s assets, including stakes in Megafon OAO and Mail.Ru Group Ltd., said in an interview at Bloomberg’s offices in Moscow today.

“Mail.Ru and Megafon revenue is coming from Russia and people won’t stop making calls and using the Internet,” he said. “Metalloinvest may face closure in European and American markets, but it can re-direct sales to China and other markets.”

Great job, Obama: you just pushed Russia and China even closer by necessity! Furthermore, it should come as no surprise that while Russians were pulling their money from the west, western firms were getting out of Dodgeski.

One senior Moscow banker said 90 per cent of investors were already behaving as if sanctions were in place, adding that this was “prudent exposure management”.

These moves represent the flipside of the more obvious withdrawal of western money from Russian markets that has been evident over the past fortnight.

Traders and bankers said US banks had been particularly heavy sellers of Russian bonds. According to data from the Bank for International Settlements, US banks and asset managers between them have about $75bn of exposure to Russia.

Joseph Dayan, head of markets at BCS, one of Russia’s largest brokers said: “It’s been quite an ugly picture in Russian bonds the last few days and some of it has to do with international banks reducing exposure.”

Although foreign banks have not yet begun cutting credit to Russian companies en masse, bankers said half a dozen live deals to fund some of Russia’s biggest companies were in limbo as lenders waited to see how punitive western sanctions would be.

So the bottom line is that Russia, thinking a few steps ahead, already has withdrawn the bulk of its assets from the West, and why not. Recall that a year ago it was revealed that the same Russians who were supposed to be punished in Cyprus had mostly withdrawn their funds in advance of the bail in: they tend to know what is coming. It was the ordinary Cypriot citizens, who had done nothing wrong, who were most impaired.

And so while the Russian response is already known, we wonder just how true is the inverse: just how prepared is the west, and especially Europe, to exist in a world in which a third of Germany’s gas is suddenly cut off? We can’t wait to find out early next week.

The Russians Have Already Quietly Pulled Their Money From The West | Zero Hedge

The Russians Have Already Quietly Pulled Their Money From The West | Zero Hedge.

Earlier today we reported that according to weekly Fed data, a record amount – some $105 billion – in Treasurys had been sold or simply reallocated (which for political reasons is the same thing) from the Fed’s custody accounts, bringing the total amount of US paper held at the Fed to a level not seen since December 2012. While China was one of the culprits suggested to have withdrawn the near USD-equivalent paper, a far likelier candidate was Russia, which as is well-known, has had a modest falling out with the West in general, and its financial system in particular. Turns out what Russian official institutions may have done with their Treasurys (and we won’t know for sure until June), it was merely the beginning. In fact, as the FT reports, in silent and not so silent preparations for what will be near-certain financial sanctions (which would include account freezes and asset confiscations following this Sunday’s Crimean referendum) the snealy Russians, read oligarchs, have already pulled billions from banks in the west thereby essentially making the biggest western gambit – that of going after the wealth of Russia’s 0.0001% – moot.

From the FT:

Russian companies are pulling billions out of western banks, fearful that any US sanctions over the Crimean crisis could lead to an asset freeze, according to bankers in Moscow.

Sberbank and VTB, Russia’s giant partly state-owned banks, as well as industrial companies, such as energy group Lukoil, are among those repatriating cash from western lenders with operations in the US. VTB has also cancelled a planned US investor summit next month, according to bankers.

The flight comes as last-ditch diplomatic talks between Russia’s foreign minister and the US secretary of state to resolve the tensions in Ukraine ended without an agreement.

Markets were nervous before Sunday’s Crimea referendum on secession from Ukraine. Traders and businesspeople fear this could spark western sanctions against Russia as early as Monday.

It probably will. What it will also do is force Russia to engage China far more actively in bilateral trade and ultimately to transact using either Rubles or Renminbi, and bypass the dollar. Perhaps even using gold, something which the price of the yellow metal sniffed out this week, pushing itself to 6 month highs. It will also make financial ties between the two commodity-rich nations even closer, while further alienating that “imperialist devil,” the US.

Of course, the west thinking like the west, and assuming that all that matters to Russia is the closing level of the Micex, believes that a sufficient plunge in Russian stocks would have been enough to deter Putin. After all, the only thing everyone in the US cares about is if the S&P 500 closed at yet another all time high, right?

What the west didn’t realize, as we predicted a month ago, for Putin it is orders of magnitude more important to have the price of commodities, primarily crude and gas, high than seeing the illusion of paper wealth, aka stocks, hitting all time highs. Especially since in Russia an even smaller portion of the population cares about the daily fluctuations of the stock market. As for the oligarchs, if there is someone who will be delighted to see their power, wealth and influence impacted adversely, if only for a short period of time, it is Vladimir Vladimirovich himself, whom the west misjudged massively once more. Not to mention that the general population will be even more delighted, and boost Putin’s rating even higher, if these crony billionaires are made to suffer by the west, if only a little.

(Here we would be remiss not to comment on his easy it supposedly is for Obama to freeze the assets of a few corrupt Russian billionaires, and yet the very proud Americans who nearly brought the entire financial system to the brink in 2008, are now richer than ever.)

In the meantime, some of Russia’s oligarchs are effectively welcoming the challenge. Bloomberg reports:

Alisher Usmanov, the country’s richest person, controls his most valuable asset, Metalloinvest Holding Co., Russia’s largest iron ore producer, through three subsidiaries, one of which is located in Cyprus, an EU member nation. The 60-year-old also owns a Victorian mansion in London that he bought in 2008 for $70 million, according to a May 18, 2008, Sunday Times newspaper report. He’s lost $1.5 billion since the crisis began, according to the Bloomberg ranking.

“We are concerned with the possible sanctions against Russia but don’t see any dramatic repercussions for our business,” Ivan Streshinsky, CEO at USM Advisors LLC, which manages Usmanov’s assets, including stakes in Megafon OAO and Mail.Ru Group Ltd., said in an interview at Bloomberg’s offices in Moscow today.

“Mail.Ru and Megafon revenue is coming from Russia and people won’t stop making calls and using the Internet,” he said. “Metalloinvest may face closure in European and American markets, but it can re-direct sales to China and other markets.”

Great job, Obama: you just pushed Russia and China even closer by necessity! Furthermore, it should come as no surprise that while Russians were pulling their money from the west, western firms were getting out of Dodgeski.

One senior Moscow banker said 90 per cent of investors were already behaving as if sanctions were in place, adding that this was “prudent exposure management”.

These moves represent the flipside of the more obvious withdrawal of western money from Russian markets that has been evident over the past fortnight.

Traders and bankers said US banks had been particularly heavy sellers of Russian bonds. According to data from the Bank for International Settlements, US banks and asset managers between them have about $75bn of exposure to Russia.

Joseph Dayan, head of markets at BCS, one of Russia’s largest brokers said: “It’s been quite an ugly picture in Russian bonds the last few days and some of it has to do with international banks reducing exposure.”

Although foreign banks have not yet begun cutting credit to Russian companies en masse, bankers said half a dozen live deals to fund some of Russia’s biggest companies were in limbo as lenders waited to see how punitive western sanctions would be.

So the bottom line is that Russia, thinking a few steps ahead, already has withdrawn the bulk of its assets from the West, and why not. Recall that a year ago it was revealed that the same Russians who were supposed to be punished in Cyprus had mostly withdrawn their funds in advance of the bail in: they tend to know what is coming. It was the ordinary Cypriot citizens, who had done nothing wrong, who were most impaired.

And so while the Russian response is already known, we wonder just how true is the inverse: just how prepared is the west, and especially Europe, to exist in a world in which a third of Germany’s gas is suddenly cut off? We can’t wait to find out early next week.

Gazprom Chairman Sold All His Shares Just Before Russia Invaded Crimea | Zero Hedge

Gazprom Chairman Sold All His Shares Just Before Russia Invaded Crimea | Zero Hedge.

We are sure it is just coincidence – and awkward combination of luck and suspicious timing – but Vedomosti reports that Viktor Zubkov, the Chairman of Russia’s massive energy monopoly Gazprom, dumped his entire stake in the company just a few weeks before Vladimir Putin crossed the red line. Gazprom shares have dropped 25% in the last 3 weeks so his timing was impeccible.

 

 

Via Vedomosti (Google Translate),

The Chairman of the Board of Directors “Gazprom” Viktor Zubkov has sold his stake in the company, it follows from the monopoly.

The change in share occurred February 11, 2014, the issuer learned about it on March 13.

Now Zubkov 0% stake in the company.

Thus, Zubkov sold his shares prior to the collapse of the Russian stock market on March 3.

It’s good to have friends running the country eh? Thank you Mr. Putin. This is important as so many Western watchers believe a crumbling Russia stock market will prompt Putin to back away… it appears his Oligrach friends already got the nod…

Gazprom Chairman Sold All His Shares Just Before Russia Invaded Crimea | Zero Hedge

Gazprom Chairman Sold All His Shares Just Before Russia Invaded Crimea | Zero Hedge.

We are sure it is just coincidence – and awkward combination of luck and suspicious timing – but Vedomosti reports that Viktor Zubkov, the Chairman of Russia’s massive energy monopoly Gazprom, dumped his entire stake in the company just a few weeks before Vladimir Putin crossed the red line. Gazprom shares have dropped 25% in the last 3 weeks so his timing was impeccible.

 

 

Via Vedomosti (Google Translate),

The Chairman of the Board of Directors “Gazprom” Viktor Zubkov has sold his stake in the company, it follows from the monopoly.

The change in share occurred February 11, 2014, the issuer learned about it on March 13.

Now Zubkov 0% stake in the company.

Thus, Zubkov sold his shares prior to the collapse of the Russian stock market on March 3.

It’s good to have friends running the country eh? Thank you Mr. Putin. This is important as so many Western watchers believe a crumbling Russia stock market will prompt Putin to back away… it appears his Oligrach friends already got the nod…

US Drone “Intercepted” Over Crimea By Russian ‘Self-Defense’ Forces | Zero Hedge

US Drone “Intercepted” Over Crimea By Russian ‘Self-Defense’ Forces | Zero Hedge.

An American scout-attack drone, “almost invisible at a height of 4000 meters” has, according to AFP, been intercepted in the Crimean sky. Reports from the Russian state arms and technology group Rostec stated, judging by side-markings it was an MQ-5B drone – which is likely part of the 66th US Recon Brigade based in Bavaria. It was possible to break the drone’s link with its American operators with the help of the EW (electronic warfare) complex Avtobaza. As a result, the device made an emergency landing and passed into the possession of the self-defense forces almost unbroken.”

Via AFP,

An American scout-attack drone was intercepted in the Crimean sky, the Rostec state corporation reports. “Judging by side marking, the MQ-5B drone was part of the 66th US brigade of military intelligence with the main location in Bavaria,” the report on the website of the corporation reads.

According to the report, at the beginning of March, the American brigade was relocated to the Ukrainian Kirovohrad, from where drones commit reconnaissance raids in the direction of Crimea and Russian border areas.

Earlier, they reportedly appeared in the Kherson region, in the area of the Crimean roadblock Chongar. “According to some data, the American reconnaissance brigade had 18 MQ-5B drones in its arsenal. This is the second time the American UAV is intercepted over Crimea,” the report says.

The drone was at the height of about 4 thousand meters and was practically invisible from the earth. It was possible to break the drone’s link with its American operators with the help of the EW (electronic warfare) complex Avtobaza. As a result, the device made an emergency landing and passed into the possession of the self-defense forces almost unbroken,” the report says.

“Self-defense” it would appear does not cross a red-line (until Sunday).

It is perhaps ironic that the US is complaining abouit Russia’s military presence in Ukraine even as its own equipment is reportedly operating in the country.

What next: CIA spooks in Kiev inciting a violent coup, oh wait, that would be Libya or Egypt. And everyone knows what a success that way.

And as expected, the Pentagon promptly denied the drone belonged to the US. It denied it not the biblical three times, but four. They must really mean it.

Seeking expert opinion on who else has UAV MQ-5B drones. Pentagon say not playing semantics “No truth” its US. Asked four times, four ways.

— Peter Foster (@pmdfoster) March 14, 2014

US Drone "Intercepted" Over Crimea By Russian 'Self-Defense' Forces | Zero Hedge

US Drone “Intercepted” Over Crimea By Russian ‘Self-Defense’ Forces | Zero Hedge.

An American scout-attack drone, “almost invisible at a height of 4000 meters” has, according to AFP, been intercepted in the Crimean sky. Reports from the Russian state arms and technology group Rostec stated, judging by side-markings it was an MQ-5B drone – which is likely part of the 66th US Recon Brigade based in Bavaria. It was possible to break the drone’s link with its American operators with the help of the EW (electronic warfare) complex Avtobaza. As a result, the device made an emergency landing and passed into the possession of the self-defense forces almost unbroken.”

Via AFP,

An American scout-attack drone was intercepted in the Crimean sky, the Rostec state corporation reports. “Judging by side marking, the MQ-5B drone was part of the 66th US brigade of military intelligence with the main location in Bavaria,” the report on the website of the corporation reads.

According to the report, at the beginning of March, the American brigade was relocated to the Ukrainian Kirovohrad, from where drones commit reconnaissance raids in the direction of Crimea and Russian border areas.

Earlier, they reportedly appeared in the Kherson region, in the area of the Crimean roadblock Chongar. “According to some data, the American reconnaissance brigade had 18 MQ-5B drones in its arsenal. This is the second time the American UAV is intercepted over Crimea,” the report says.

The drone was at the height of about 4 thousand meters and was practically invisible from the earth. It was possible to break the drone’s link with its American operators with the help of the EW (electronic warfare) complex Avtobaza. As a result, the device made an emergency landing and passed into the possession of the self-defense forces almost unbroken,” the report says.

“Self-defense” it would appear does not cross a red-line (until Sunday).

It is perhaps ironic that the US is complaining abouit Russia’s military presence in Ukraine even as its own equipment is reportedly operating in the country.

What next: CIA spooks in Kiev inciting a violent coup, oh wait, that would be Libya or Egypt. And everyone knows what a success that way.

And as expected, the Pentagon promptly denied the drone belonged to the US. It denied it not the biblical three times, but four. They must really mean it.

Seeking expert opinion on who else has UAV MQ-5B drones. Pentagon say not playing semantics “No truth” its US. Asked four times, four ways.

— Peter Foster (@pmdfoster) March 14, 2014

Russia Warns Of East Ukraine Invasion To “Defend Compatriots”, EU Threatens Gazprom, Rosneft CEOs With Visa Ban | Zero Hedge

Russia Warns Of East Ukraine Invasion To “Defend Compatriots”, EU Threatens Gazprom, Rosneft CEOs With Visa Ban | Zero Hedge.

While Russia has been massively piling up troops next to Ukraine’s eastern border, one thing that was missing to allow the crossing of the border was a provocation, aka the proverbial spark to give Moscow the green light to “defend” Russian citizens in the East. It may have just gotten that last night, when as previously reported, clashes in the eastern city of Donetsk between pro-Ukraine and pro-Russian civilians turned lethal, killing at least one person and dozens injured. A clip of the clashes can be seen below:

 

Needless to say, this escalation was just the green light Russia needed. As Reuters reports, the Russian Foreign Ministry, responding to the death of at least one protester in Ukraine’s eastern city of Donetsk, repeated President Vladimir Putin’s declaration of the right to invade to protect Russian citizens and “compatriots”.

“Russia is aware of its responsibility for the lives of compatriots and fellow citizens in Ukraine and reserves the right to take people under its protection,” it said. Curiously, organizers of the anti-Moscow demonstration said the dead man was from their group. That, however, is irrelevant, and in the fog of war, when tank batalions enter a country to “defend” select citizens, mistake are made.

In the meantime, and as we have been reporting since day one, Russian troops continue to gather:

A Reuters reporting team watched a Russian warship unload trucks, troops and at least one armored personnel carrier at Kazachaya bay near Sevastopol on Friday morning. Trucks drove off a ramp from the Yamal 156, a large landing ship that can carry more than 300 troops and up to a dozen APCs.

As also reported before, the key event in the coming days is the Crimean referendum whether to join Russia. Which is why a doomed last ditch diplomatic scramble has seen John Kerry rush to London where he later today he will meet Russian foreign minister Lavrov in a final attempt to diffuse the situation. The attempt will fail.

Summarizing it best, or perhaps just waking from a month-long nap, was the Estonian defense minister, Urmas Reinsalum who suddenly appears agitated to quite agitated:

  • PUTIN IS PREPARING TO INVADE EASTERN UKRAINE: ESTONIAN DEF MIN
  • UKRAINE EVENTS CLEARLY SHOW RUSSIA ONLY ACCEPTS FORCE: ESTONIAN DEF MIN

Hardly anyone is surprised there…

But perhaps the biggest news so far this morning is that the EU is considering visa bans to 13 Russian politicians and industry leaders, which according to Germany’s Bild, include the headest hocnho of all: Gazprom CEO Alexei Miller. From Reuters:

Visa bans threatened by the European Union and United States should Crimea vote to join Russia in a referendum would target at least 13 Russian politicians and industry leaders including Vladimir Putin’s close aides, Germany’s Bild newspaper reported.

The visa ban list includes Defence Minister Sergei Shoigu, Deputy Prime Minister Dmitry Rogozin, head of the presidential administration Sergei Ivanov, the secretary of the National Security Council Nikolai Patrushev, as well as several of Putin’s advisors, Bild said in an advance copy of a report to be published on Saturday. The report cited diplomatic sources in Brussels and Washington.

Visa bans could also be slapped on the chief executive of Russian energy firm Gazprom Alexei Miller, and Igor Sechin, head of Russia’s top crude oil producer Rosneft .

Remember, it is all about the gas. And if Europe “forces” Russia’s hand by denying Gazprom free access, then Gazprom will have no choice but to retaliate. At that point all bets are off.

Russia Warns Of East Ukraine Invasion To "Defend Compatriots", EU Threatens Gazprom, Rosneft CEOs With Visa Ban | Zero Hedge

Russia Warns Of East Ukraine Invasion To “Defend Compatriots”, EU Threatens Gazprom, Rosneft CEOs With Visa Ban | Zero Hedge.

While Russia has been massively piling up troops next to Ukraine’s eastern border, one thing that was missing to allow the crossing of the border was a provocation, aka the proverbial spark to give Moscow the green light to “defend” Russian citizens in the East. It may have just gotten that last night, when as previously reported, clashes in the eastern city of Donetsk between pro-Ukraine and pro-Russian civilians turned lethal, killing at least one person and dozens injured. A clip of the clashes can be seen below:

 

Needless to say, this escalation was just the green light Russia needed. As Reuters reports, the Russian Foreign Ministry, responding to the death of at least one protester in Ukraine’s eastern city of Donetsk, repeated President Vladimir Putin’s declaration of the right to invade to protect Russian citizens and “compatriots”.

“Russia is aware of its responsibility for the lives of compatriots and fellow citizens in Ukraine and reserves the right to take people under its protection,” it said. Curiously, organizers of the anti-Moscow demonstration said the dead man was from their group. That, however, is irrelevant, and in the fog of war, when tank batalions enter a country to “defend” select citizens, mistake are made.

In the meantime, and as we have been reporting since day one, Russian troops continue to gather:

A Reuters reporting team watched a Russian warship unload trucks, troops and at least one armored personnel carrier at Kazachaya bay near Sevastopol on Friday morning. Trucks drove off a ramp from the Yamal 156, a large landing ship that can carry more than 300 troops and up to a dozen APCs.

As also reported before, the key event in the coming days is the Crimean referendum whether to join Russia. Which is why a doomed last ditch diplomatic scramble has seen John Kerry rush to London where he later today he will meet Russian foreign minister Lavrov in a final attempt to diffuse the situation. The attempt will fail.

Summarizing it best, or perhaps just waking from a month-long nap, was the Estonian defense minister, Urmas Reinsalum who suddenly appears agitated to quite agitated:

  • PUTIN IS PREPARING TO INVADE EASTERN UKRAINE: ESTONIAN DEF MIN
  • UKRAINE EVENTS CLEARLY SHOW RUSSIA ONLY ACCEPTS FORCE: ESTONIAN DEF MIN

Hardly anyone is surprised there…

But perhaps the biggest news so far this morning is that the EU is considering visa bans to 13 Russian politicians and industry leaders, which according to Germany’s Bild, include the headest hocnho of all: Gazprom CEO Alexei Miller. From Reuters:

Visa bans threatened by the European Union and United States should Crimea vote to join Russia in a referendum would target at least 13 Russian politicians and industry leaders including Vladimir Putin’s close aides, Germany’s Bild newspaper reported.

The visa ban list includes Defence Minister Sergei Shoigu, Deputy Prime Minister Dmitry Rogozin, head of the presidential administration Sergei Ivanov, the secretary of the National Security Council Nikolai Patrushev, as well as several of Putin’s advisors, Bild said in an advance copy of a report to be published on Saturday. The report cited diplomatic sources in Brussels and Washington.

Visa bans could also be slapped on the chief executive of Russian energy firm Gazprom Alexei Miller, and Igor Sechin, head of Russia’s top crude oil producer Rosneft .

Remember, it is all about the gas. And if Europe “forces” Russia’s hand by denying Gazprom free access, then Gazprom will have no choice but to retaliate. At that point all bets are off.

Ukraine: Challenging the pipelines narrative

Ukraine: Challenging the pipelines narrative.

by Alexis Rowell, originally published by Resilience.org  | MAR 11, 2014

As a former correspondent in Kiev, Moscow and Georgia at the time of the collapse of the Soviet Union, and as someone who has an ongoing interest in events in the former Soviet space, I would maintain that the attempt to link the Ukraine conflict with pipelines and natural resources is highly debatable. There are of course pipelines running through Ukraine transporting oil and gas from Russia to the West, and Crimea currently gets its oil, gas and much of its water from pipelines that flow from Ukraine, so they are important, but the idea that these pipelines, and natural resources in general, are in some way the cause of this conflict seems to me to be unfounded.

Most Moscow-watchers agree this conflict is about the limits of the Russian sphere of influence, the anxiety of Russia as it watches NATO and the EU expand up to its front door and stupid moves by the new Ukrainian government such as the dropping of the new language law. It’s about Russian pride, Putin’s vision of a Greater Russia, and Washington’s desire to keep pushing their views even when their interests are not really affected. It’s about competing nationalisms and Ukrainian clumsiness or worse.

Natural resources and pipelines are not causes, they are merely potential weapons – although who would actually win by using them can be hard to pin down. For example, Ukraine could stop Russia exporting gas to the West, or cut off gas and water to Crimea, but then Russia would close the stopcocks at the Ukrainian border thereby closing down Ukrainian businesses and making life unbearable in Ukrainian homes. Alternatively Russia could stop pumping gas to Ukraine, but then they would reduce their petro-euro earnings in Europe.

Most far-fetched of all is the idea that this conflict is in some way about Persian Gulf oil.

One article last week said Crimea would face difficulties without its connections to Ukraine. True, but those problems will be temporary and far fewer than the problems Ukraine is likely to experience. If Russia annexes Crimea, Crimea will, in time, be fine in terms of natural resources – just like Abkhazia and South Ossetia eventually were when they exited Georgia/were annexed by Russia. It may take a while, but Moscow will build a new bridge over the Kerch Strait that will carry water, oil, gas, goods, Russians and weapons. Until then the resources will arrive by boat and plane.

Ukraine, by contrast, will have enormous natural resource problems. Or rather Ukraine will have more problems than it already does because it has no natural resources except agricultural land.

A post-script on Crimea…
Of course, arguably Crimea is no more Russian than it is Ukrainian. The Cimmerians, Bulgars, Greeks, Scythians, Goths, Huns, Khazars, the state of Kievan Rus’, Byzantine Greeks, Kipchaks, Ottoman Turks, Golden Horde Tatars and the Mongols have all controlled Crimea. In the 13th century, it was partly controlled by the Venetians and by the Genoese. A Crimean Khanate emerged in the 15th century, which came under the protection of the Ottoman Empire until the 18th century when it became part of the Russian Empire. During the Russian Civil war it changed hands several times and was a stronghold and last stand of the anti-Bolshevik White Guard. From there it became part of the Russian Soviet Socialist Republic until Germany invaded during the Second World War. After the Germans were kicked out and Stalin had died, Crimea was transferred by Khrushchev to the Ukrainian Soviet Socialist Republic in 1954, where it stayed until becoming part of independent Ukraine with the break-up of the Soviet Union in 1991.

Ukraine flag on painted on cracked wall via shutterstock. Reproduced at Resilience.org with permission.

Where The Russian Troops Are – The Full “Pre-Takeover” Infographic | Zero Hedge

Where The Russian Troops Are – The Full “Pre-Takeover” Infographic | Zero Hedge.

As we reported yesterday, Crimea is last week’s story. Now it is all about east Ukraine. In that vein, moments ago John Kerry’s latest stand up comedy routine hit the tape which contained, besides the usual laugh lines, this particular pearl:

  • KERRY SAYS RUSSIA DOESN’T YET HAVE FORCES FOR UKRAINE TAKEOVER

Is that so? We provide this map showing the latest distribution of Russian military forces on the Ukraine borders so that readers can make up their own mind.

 

And here is another map compiled by Dmitry Tymchuk, a former Ukrainian military officer, who has established an organization, the Center of Military and Political Research on Kiev, to effectively collect and gather data about military-related facts.

Kerry concluded:

  • KERRY SAYS `CONTINGENCIES’ IF RUSSIA MOVED INTO EAST UKRAINE

We’ll know just what those are by Sunday night. The only question: will Referendum Sunday be the new Lehman Sunday…

h/t @BSpringnote

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