Less than a day after a U.S. State Department spokesperson confirmed that Washington and Brussels were conferring on an emergency aid package for Ukraine, President of the (EU) European Council Herman Van Rompuy made clear yesterday that all that the EU is offering is the same death pact Kiev rejected in November: signing its Association Agreement with the EU. Van Rompuy was at least honest enough to admit that Europe is broke and that it is hard enough to get EU aid for member countries Greece, Portugal and Ireland.
Hiking pressure on President Victor Yanukovych to resign, European Union foreign affairs head Lady Catherine Ashton arrived Tuesday night in Kiev and immediately went into a dinner meeting with the three opposition party leaders, including the head of Svoboda, the neo-Nazi Banderist party. Today she was meeting with Yanukovych, to be followed by a meeting Thursday between Yanukovych and U.S. Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland. During the Tuesday dinner meeting, Vitali Klitschko of the Udar Party demanded that Yanukovych agree to revert to the Orange Revolution Ukrainian constitution of 2004. On Friday, Feb. 7, Yanukovych is scheduled to go to Sochi for the opening session of the Winter Olympics, where he will also confer privately with President Vladimir Putin. That meeting will be critical, and it explains the timing of the Ashton and Nuland trips to Kiev. Klitschko, fresh back from meetings early this week in New York City, also called on the EU to “mediate” the talks between the government and the opposition.
On Tuesday, German Foreign Minister Frank-Walter Steinmeier had publicly warned that now may be time for new sanctions by the EU against Ukraine. His remarks led to the German ambassador in Kiev being called into the Foreign Ministry this morning to receive a formal protest. Hours later, Steinmeier backed off from his sanctions call.
Further underscoring the true nature of the Western-backed opposition, TIME magazine yesterday published an exclusive interview with Dmitro Yarosh, the head of Right Sector, one of the most virulent neo-Nazi groupings. He warned that his organization and two allied groups, Common Cause (“SS”) and the Afghantsy (veterans of the Soviet war in Afghanistan), are heavily armed and are prepared to launch nationwide civil war if the Parliamentary opposition parties compromise with Yanukovych.
In addition to the continuing political mobilization against Ukraine and Russia, there are now explicit economic actions being taken as well. All three of the major rating agencies have lowered Ukraine’s sovereign debt in the past week, and there is now a free-fall of the Ukrainian currency, the hryvnia, which has dropped by 10% against the dollar since the start of the year. On Tuesday and again today, the Central Bank had to intervene to prop up the currency. Total foreign currency reserves are now down to $18.8 billion, from $20.4 billion at the end of 2013. In 2014, Ukraine is scheduled to make $5.6 billion in debt payments on maturing bonds, and $3.8 billion in interest payments. Russian Prime Minister Dmitri Medvedev told a cabinet meeting last week that Ukraine is not making even current payments to Russia’s Gazprom, at the reduced prices negotiated in December, never mind payments on its large arrears. In 2013, Ukraine had a balance-of- payments surplus, but that was due to a $3 billion purchase of government bonds by Russia in December as the first tranche of a $15 billion loan package that is now on hold, pending the Yanukovych-Putin meeting in Sochi and the formation of a new Ukrainian government. Putin has made clear his view that outside pressure on the political crisis in Ukraine (including, obviously, Western pressure for Yanukovych to resign), is unacceptable.
While the focus remains on Kiev negotiations and the expanding violence of neo-Nazi gangs, one retired American military officer noted that every sane strategist knows that, for Russia, the use of its Black Sea naval bases in Ukraine (Crimea) is a red line that no one should be testing or challenging. That issue alone makes the current Ukraine crisis a potential trigger for general war, even thermonuclear war.