Russia Presses Ukraine on Nationalists Amid NATO Talks

April 2, 2014 JRL Russia List Ukraine, Russo-Ukrainian War

Map of Commonwealth of Independent States, European Portion

(Bloomberg – bloomberg.com – James G. Neuger, Gopal Ratnam and Henry Meyer – April 2, 2014) Russia pressed Ukraine to disarm nationalists it says are oppressing its compatriots there as NATO looked to bolster European security as the alliance’s Cold-War foe massed troops on Ukraine’s border.

The presence of as many as 40,000 soldiers along Ukraine’s eastern frontier is fueling concern that Russia is poised to invade on the pretext of protecting Russian-speaking inhabitants of eastern and southern Ukraine. Backed by state-run media, President Vladimir Putin says the Kiev-based government is influenced by Russophobe extremists and it hasn’t done enough to stop them from persecuting Russian-speakers.

“We urge the Ukrainian authorities not to limit themselves to sham statements about the fight against radical forces in Ukraine and to take decisive measures to disarm the militants,” Russia’s Foreign Ministry said in a statement on its website today.

Russia issued similar comments in the run-up to its military occupation of Crimea and its annexation following a Kremlin-backed referendum there. Ukraine’s government denies that Russian speakers are at risk.

Military Buildup

In Brussels, the North Atlantic Treaty Organization vowed to boost support for eastern nations unnerved by Russia’s takeover of Crimea last month. NATO Secretary General Anders Fogh Rasmussen said yesterday allied intelligence had no signal Russia is scaling back its “massive military buildup.”

The worst confrontation between the U.S. and European states and Russia since the collapse of the Soviet Union has rattled markets.

The Micex stock index slid 0.5 percent to 1,368.38 by 2:05 p.m., extending to 5.3 percent its decline since March 1, when Putin’s intervention sparked the standoff between Russia and the U.S. The ruble has depreciated 6.9 percent against dollar this year, making it the second-worst performer of 24 emerging market currencies tracked by Bloomberg.

Ukraine, whose hryvnia has lost 27 percent against the dollar this year, may return to international markets with a Eurobond sale in the second half of this year, Finance Minister Oleksandr Shlapak said today in Kiev. He said the government was willing to pay 6 percent to 7 percent, versus the 8.547 percent yield on its 2023 dollar bond as of 2:10 p.m. today.

NATO Options

Shrugging off U.S. and European sanctions, Putin has justified the annexation of Crimea, a region with a majority of Russian speakers with historic ties to Moscow, away from Ukraine as righting a historical wrong that split the province from Russia when the Soviet Union collapsed.

NATO has decided to halt “all practical cooperation” with Russia, Rasmussen said. Russia condemned the NATO decision, saying this would hurt joint efforts to fight terrorism, piracy and other global problems.

“It’s not hard to guess who will benefit from halting the joint work of Russia and NATO in countering modern threats,” the Foreign Ministry said on its website. “In any case, it certainly won’t be Russia and the members of NATO.”

Options being considered by NATO’s supreme military commander, U.S. Air Force General Philip Breedlove, also include putting an additional U.S. warship in the Black Sea, beefing up previously scheduled NATO exercises and improving the readiness of the alliance’s 13,000-member rapid-response force, according to an American defense official who spoke on condition of anonymity to discuss military planning.

Russian Pressure

“We directed our military commanders to develop additional measures to enhance our collective defense and deterrence against any threat of aggression,” Rasmussen said.

Russia is pressuring Ukraine to change its constitution to cede more autonomy to its regions and enshrine Russian as a second official language. After a deadly clash between Ukrainian police and far right activists as well as confrontations between pro-Russian and pro-Kiev protesters last month, the parliament in Kiev voted yesterday for a resolution backing the immediate disarmament of illegal military groups.

Ukrainian Foreign Minister Andriy Deshchytsya will hold talks with his Russian counterpart Sergei Lavrov “soon” about Crimea and economic and energy issues, Ukrainian Prime Minister Arseniy Yatsenyuk said today.

Yatsenyuk’s government says Russia has sent agents into its southern and eastern regions to provoke clashes. Ukraine is trying to prevent a situation that could prompt Russia to send in troops or the regions, which have large Russian-speaking communities, to follow Crimea into secession.

“The two sides are talking totally different languages,” Timothy Ash, a London-based economist for emerging markets at Standard Bank Group Ltd., said in e-mailed comments today. “While the battle for Crimea may have been lost, the stealth war for Ukraine is only just beginning.”