This morning, I noticed that the Dow Jones Iindustrials quickly moved slightly nto positive territory, after yesterday’s 231 point loss. In meetings with his Russian counterpart, Foreign Affairs Minister Sergey Lavrov, Secretary John Kerry was hoping for a “Time-Out” to de-escalate the current tension between the European Union, U. S. and Russia. The two Men met today in London; however, there appears little chance to delay the Referendum in Crimea–regarding formally breaking-away from Ukraine and either joining the Russian Federation or declaring its own Independence from Ukraine.
Yesterday, stock markets around-the-World had weakened and commodities, such as Oil, Gold and Silver, strengthened, but just marginally. That weakness reflected the concern that the World seems to have had in anticipating Russia’s next move–further into Ukraine, or just solidifying its Crimean position. I believe that this will all unfold rather quickly. Let’s hope so!
The Ukraine is a financial basket-case and is basically on the brink of default. Republicans continue to dicker in the U. S. Congress, as egged-on by Charles and Richard Koch, as to how to pay for any aid to Ukraine–and with a requirement of deeply involving the International Monetary Fund. Loan guarantees, rather than outright aid had been originally discussed. The E. U., on-the-other-hand, has suggested a $15 Billion aid package; however, it would undoubtedly come with some of the Austerity measures which it is imposing on its own Member Countries.
Russia appears more ready and willing to provide financial aid; however, it has reduced the amount that it is offering, once the former Ukraine President, Viktor Yankovich, fled the country and Parliament declared him a fugitive and formed a new government. At the same time, Russia is not particularly sound itself. Its economy is overly-dependent on Oil and Gas (70%) and its President, Vladimir Putin, is still delusional–maintaining visions of re-building the old Soviet Empire.
World financial markets appear to have been spooked by Russia’s massing some 10,000 troops, supposedly for peaceful exercises, near the Ukrainian boarder; but, this time, they are closer to the Eastern Region, rather than Crimea. So, is this just a “play-over” for what they didn’t get right during the similar exercises of some ten days ago? The real question appears to be: what is Moscow’s motivation and how far will they go?
I believe that Russia is showing its strength and readiness to go further; but, that this is just a bluff to force a quick, and peaceful, annexation of Crimea. Russia cannot possibly stand to lose the peninsula and its six military installations–including its only warm water port, the huge Naval Base at Sebastopol, the home to its Black Sea Fleet.
Lastly, the World Financial Markets dropped approximately ten days ago as the confrontation began to unfold; but, the DJIA dropped by about seven percent and, then, quickly rebounded to set new all-time records. The U. S. Military Strategy recently has been not to engage in more Wars, and to make a pivot toward Asia and the Pacific Rim. The E. U. is recovering, but only marginally, from a long-term Recession and is dependent on Russia for 40% of its Natural Gas. And Russia, is dependent upon the West for the gaps in its own economy, the EUROs from Europe’s Gas and other trade purchases, and access to World Currency and Commodities Markets. That is why I believe that Russia is bluffing about pursuing more than just Ukraine–and wishes for an Agreement that would provide a quick Status Quo solution.
The best possible outcome at this time, I believe, would be for all sides to agree to: let Russia take-back Crimea, which Nikita Khrushchev literally gave to Ukraine, in 1954; both Russia and the West would agree not to involve itself in Ukraine Internal Affairs; and enable the small country to have trade relationships with all parties involved. Further, that might be just enough to appease Vladimir Putin’s Visions of Grandeur.