GEO-ECONOMIC RISK - Ukraine

GEO-ECONOMIC RISK - Ukraine

Memo to Obama: This Was Their Red Line! 03-02-14 David Stockman, via his new blog Contra Corner via ZH

In 1783 the Crimea was annexed by Catherine the Great, thereby satisfying the longstanding quest of the Russian Czars for a warm-water port. In fact, over the ages Sevastopol emerged as a great naval base at the strategic tip of the Crimean peninsula, where it became home to the mighty Black Sea Fleet of the Czars and then the commissars.

For the next 171 years Crimea was an integral part of Russia—a span that exceeds the 166 years that have elapsed since California was annexed by a similar thrust of “Manifest Destiny” on this continent, thereby providing, incidentally, the United States Navy with its own warm-water port in San Diego. While no foreign forces subsequently invaded the California coasts, it was most definitely not Ukrainian and Polish riffles, artillery and blood which famously annihilated The Charge Of The Light Brigade at the Crimean city of Balaclava in 1854; they were Russians defending the homeland.

And the portrait of the Russian ”hero” hanging in Putin’s office is that of Czar Nicholas I—whose brutal 30-year reign brought the Russian Empire to its historical zenith, and who was revered in Russian hagiography as the defender of Crimea, even as he lost the 1850s war to the Ottomans and Europeans. Besides that, there is no evidence that Putin does historical apologies, anyway.

In fact, its their Red Line. When the enfeebled Franklin Roosevelt made port in the Crimean city of Yalta in February 1945 he did know he was in Soviet Russia. Maneuvering to cement his control of the Kremlin in the intrigue-ridden struggle for succession after Stalin’s death a few years later, Nikita Khrushchev allegedly spent 15 minutes reviewing his “gift” of Crimea to his subalterns in Kiev in honor of the decision by their ancestors 300 years earlier to accept the inevitable and become a vassal of Russia.

Self-evidently, during the long decades of the Cold War, the West did nothing to liberate the “captive nation” of the Ukraine—with or without the Crimean appendage bestowed upon it in 1954. Nor did it draw any red lines in the mid-1990?s when a financially desperate Ukraine rented back Sevastopol and the strategic redoubts of the Crimea to an equally pauperized Russia.

In short, in the era before we got our Pacific port in 1848 and in the 166-year interval since then, the security and safety of the American people have depended not one wit on the status of the Russian-speaking Crimea. Should the local population now choose fealty to the Grand Thief in Moscow over the ruffians and rabble who have seized Kiev, what’s to matter!  Worse still, how long can America survive the screeching sanctimony and mindless meddling of Susan Rice and Samantha Power? Mr. President, send them back to geography class; don’t draw any new Red Lines. This one has been morphing for centuries among the quarreling tribes, peoples, potentates, Patriarchs and pretenders of a small region that is none of our damn business.

GEO-ECONOMIC RISK - Ukraine

Ukraine Crisis: Crimea in the Crosshairs 03-01-14 Geo-Political Monitor

What is unfolding between Ukraine and Russia on the Crimean Peninsula? The answer is ostensibly simple: Russia is defending its interests at the behest of the mostly ethnic Russian population in Crimea. And while there are reports of an imminent Russian invasion, the fact is that Russia already has troops on the ground in Crimea, given that they have leased a major military base in Sevastopol.

The port of Sevastopol serves as the headquarters of the Russian Black Sea Fleet, which oversees maritime operations throughout the Mediterranean. The base is leased through 2042, and the Russian fleet stationed there consists of 380 ships, 170 aircraft, and 25,000 troops. Crimea and Sevastopol in Ukraine represent a powerful means to exert pressure against Russia considering the fact that Moscow views the region as an indispensable strategic asset. In view of the street protests that have brought Ukrainian nationalists into power (not necessarily many ‘democrats’ here), and fearing a similar action on the part of the same political party in Crimea, Russia’s President Putin ordered a general mobilization of the western military region under the guise of ‘emergency exercises’ along with two districts of the central military region. This move masked a de facto preparation for some 2,000 troops to enter Crimea along with a squadron of helicopters. These steps give Russia a rapid response capability in the event that some battalions of the Ukrainian armed forces attempt to reach Crimea – they are also deploying air defense systems already in place at the base.

The arrival and deployment (even partial) of Russian troops has not been followed by shoot-outs with police departments in Crimea, nor has the new government in Kiev issued any orders to its armed forces, which continue to maintain a ‘passive’ attitude. Russia now has effective control of Simferopol, the naval base of Sevastopol, and Balaklava - every airport on the Crimean peninsula. Russian military units also surround regional support facilities for the Ukrainian armed forces, as well as an important air defense base north of Sevastopol.

How will the situation evolve?

Russian troops will continue to flow into Crimea if the Russian Duma – a bit of a rubber stamp – approves Putin’s request (it has already passed a resolution urging the government to consider all options to ensure the safety and stability of the Crimea). Approval would mean Russian helicopters could be deployed in greater numbers in order to further discourage a response from the Ukrainian army – which remains highly unlikely. In fact, even if Russia made a complete bid to take over Crimea, there is little chance of a Ukrainian military response. Effectively, the Crimean peninsula is already being controlled by the Russian Federation and Putin’s recent moves are merely designed to protect or consolidate that control. Russia’s armed forces can be deployed so quickly and in such numbers that it will be impossible for the Ukrainian army to oppose.

Tensions will definitely rise over the announced referendum on Crimean independence, scheduled for 30 March. This suggests that Russian troops will remain on high alert protecting the pro-Russian Crimean government until that time and beyond. In the unlikely event of a Ukrainian response, the much better equipped Russian troops would extend their reach and gain control of eastern Ukraine’s most important industrial and mining districts, replicating in a sense, though on a smaller scale, what happened in Georgia in 2008. For now we can say with relative certainty that the Russian Federation after sixty years – when a possibly drunken Khrushchev ‘donated’ it to Ukraine – has taken full control of the Crimean peninsula, and it will do whatever is necessary to keep it.

GEO-ECONOMIC RISK - Ukraine

"Welcome To The Era Of Failed States" 03-03-14 James H. Kunstler of Kunstler.com, via ZH

So, now we are threatening to start World War Three because Russia is trying to control the chaos in a failed state on its border — a state that our own government spooks provoked into failure? The last time I checked, there was a list of countries that the USA had sent troops, armed ships, and aircraft into recently, and for reasons similar to Russia’s in Crimea: the former Yugoslavia, Somalia, Afghanistan, Iraq, Libya, none of them even anywhere close to American soil. I don’t remember Russia threatening confrontations with the USA over these adventures.

The phones at the White House and the congressional offices ought to be ringing off the hook with angry US citizens objecting to the posturing of our elected officials. There ought to be crowds with bobbing placards in Farragut Square reminding the occupant of 1400 Pennsylvania Avenue how ridiculous this makes us look.

The saber-rattlers at The New York Times were sounding like the promoters of a World Wrestling Federation stunt Monday morning when they said in a Page One story:

“The Russian occupation of Crimea has challenged Mr. Obama as has no other international crisis, and at its heart, the advice seemed to pose the same question: Is Mr. Obama tough enough to take on the former K.G.B. colonel in the Kremlin?”

Are they out of their chicken-hawk minds over there? It sounds like a ploy out of the old Eric Berne playbook: Let’s You and Him Fight. What the USA and its European factotums ought to do is mind their own business and stop issuing idle threats. They set the scene for the Ukrainian melt-down by trying to tilt the government their way, financing a pro-Euroland revolt, only to see their sponsored proxy dissidents give way to a claque of armed neo-Nazis, whose first official act was to outlaw the use of the Russian language in a country with millions of long-established Russian-speakers. This is apart, of course, from the fact Ukraine had been until very recently a province of Russia’s former Soviet empire.

Secretary of State John Kerry — a haircut in search of a brain — is winging to Kiev tomorrow to pretend that the USA has a direct interest in what happens there. Since US behavior is so patently hypocritical, it raises the pretty basic question: what are our motives? I don’t think they amount to anything more than international grandstanding — based on the delusion that we have the power and the right to control everything on the planet, which is based, in turn, on our current mood of extreme insecurity as our own ongoing spate of bad choices sets the table for a banquet of consequences.

America can’t even manage its own affairs. We ignore our own gathering energy crisis, telling ourselves the fairy tale that shale oil will allow us to keep driving to WalMart forever. We paper over all of our financial degeneracy and wink at financial criminals. Our infrastructure is falling apart. We’re constructing an edifice of surveillance and social control that would make the late Dr. Joseph Goebbels turn green in his grave with envy while we squander our dwindling political capital on stupid gender confusion battles.

The Russians, on the other hand, have every right to protect their interests along their own border, to protect the persons and property of Russian-speaking Ukrainians who, not long ago, were citizens of a greater Russia, to discourage neo-Nazi activity in their back-yard, and most of all to try to stabilize a region that has little history and experience with independence. They also have to contend with the bankruptcy of Ukraine, which may be the principal cause of its current crack-up. Ukraine is deep in hock to Russia, but also to a network of Western banks, and it remains to be seen whether the failure of these linked obligations will lead to contagion throughout the global financial system. It only takes one additional falling snowflake to push a snow-field into criticality.

Welcome to the era of failed states. We’ve already seen plenty of action around the world and we’re going to see more as resource and capital scarcities drive down standards of living and lower the trust horizon. The world is not going in the direction that Tom Friedman and the globalists thought. Anything organized at the giant scale is now in trouble, nation-states in particular.  The USA is not immune to this trend, whatever we imagine about ourselves for now. 

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