Ukraine’s New Navy Head Denis Berezovsky Defects After Just One Day On The Post

Overnight, there had been numerous rumors that the newly appointed chief of the Ukraine navy, who was just made head of the navy on Saturday, had defected to the Crimean people explicitly, and to pro-Russian forced in the region implicitly. The sourcing of most were various Russian outlets so we discounted these until we got confirmation from a “western” source. The BBC did just that moments ago.

New head of Ukraine’s navy ‘defects’ in Crimea

 

The newly appointed head of Ukraine’s navy has sworn allegiance to the Crimea region, in the presence of its unrecognised pro-Russian leader.

 

Rear Admiral Denis Berezovsky was only made head of the navy on Saturday, as the government in Kiev reacted to the threat of Russian invasion.

 

Russia’s troops have been consolidating their hold on Crimea, which is home to its Black Sea Fleet.

The moment of defection allegedly caught on digital media:

The move is not entirely unexpected: while the US may not have many issues with facing the Russian navy head on as it did last summer in the Mediterranean over Syria, others are not quite as excited with being on the receiving end of the Russian military juggernaut.

So if this has been confirmed, the rest of the news reported earlier by RIA is also true. To wit:

Ukraine’s autonomous region of Crimea confirmed Sunday that the majority of Ukrainian military units stationed on the Crimean peninsula have expressed their support of legitimately elected Pro-Russian authorities.

 

Earlier reports by Russian media about peaceful takeover of the military units by forces loyal to the Crimean government were denied by the Ukrainian defense ministry.

 

However, Crimean authorities said that most of the Ukrainian units sided on Sunday with pro-Russian forces “without a single shot fired,” and warned the commanders of a few units that remain loyal to Kiev that they would face criminal action if refused to surrender.

 

“I would like to warn commanders who force their subordinates to commit illegal actions that they will be punished according to existing laws,” Crimea’s Prime Minister Sergei Aksenov said in a statement.

 

The Crimean government said earlier that some 10 warships from the Ukrainian navy left their naval base in Sevastopol apparently on orders from Kiev.

 

Crimea is now at the center of the ongoing crisis in the country as pro-Russia groups move to distance themselves from a reformed national parliament that ousted President Viktor Yanukovych a week ago.

The map below is said to summarize all the Ukraine cities where the Russian flag has already been hoisted.

If anything, these bloodless victories will only embolden Russia to press on: hardly the resolution the west would like. Perhaps that explains why early unofficial quotes of the Russian Ruble see the currency dropping as much as 10%.


    



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Seven Event Risks in the Week Ahead

The week ahead could very well be the most important week of the month.  Four central banks from the high income countries meet, the latest purchasing managers surveys will be released and the latest reading on the US labor market will be announced.

 

At the same time, Russia’s move on Crimea and the US and European response may eclipse, at least partially, the economic focus of investors.  Lithuania and Latvia have invoked Article 4, which requires consultation over Russia’s actions when a member feels its security or independence is threatened.  It is only the fourth such action in NATO history.

 

1.  Ukraine (Moderate risk):  Neither the US nor Europe are inclined to try to use military force to push Russia out of Crimea.  There may be a short-lived wobble to the detriment of risk assets and beneficial for the dollar, yen and Swiss franc.  Yet, the impact of geopolitics tends to be transitory.  The early July G8 Summit in Sochi may be in jeopardy, but the G7/G8 had already been reduced to a caucus within the G20 and Russia’s special role had already been diluted.  Dis-inviting Russia from the G8 on grounds of not going to the UN for authority is laughable, given what happened in Iraq, but it does not mean it can’t happen.  

 

After Ukraine, Germany may have the most to lose from Russian actions.  Its energy program and efforts to de-nuclearize seems to force greater reliance on Russian energy.  The Soviet invasion of Afghanistan spurred an increase in military spending (which in the US began under Carter, not Reagan as often suggested).  Many countries in the West are reducing military spending presently.   There is some risk that China will use the West’s distraction to press is case in the South or East China Sea.  There may also be knock-on effect in the EU parliamentary election in May, where the anti-EU parties seemed to have moved into ascendancy.

 

2.  China (Low risk):  China reported its official manufacturing PMI eased to 50.2 from 50.5 in January. The Bloomberg consensus was for 50.1.  Output and orders slipped, while exports remained below the 50 boom/bust level for the third consecutive month.  The PMI for large businesses eased to 50.7 from 51.4, while the reading for small businesses is contracting, as the HSBC flash PMI showed. The final manufacturing read and its service PMI, along with the official one, will be released first thing Monday in Beijing.   In part, what is happening is a decline in investment, especially in the credit sensitive sectors, like infrastructure and real estate where investment has been excessive.   

 

We expect the RMB to stabilize in the week ahead, though last week’s decline did not prevent the Shanghai Composite from  finishing the week with a three-day rally or the MSCI Emerging Market equity index from ending February at its highest level since January 23. The depreciation of the RMB is too small, given the relatively low-value added being done by Chinese workers, too boost exports and therefore the direct impact on trade is likely minimal at best.   The National People’s Congress begins at midweek and a solidification of the reform agenda should expected.

 

3.  The Reserve Bank of Australia (Low risk): The RBA meets and the result will be announced Tuesday morning in Sydney.  At its last meeting, it indicated that a period of rate stability is best and although the labor market continues to deteriorate and activity outside mining is not picking up sufficiently quickly, it is too soon to expect much of a change in the RBA’s stance.  The market may decide to ease for it, by taking the currency lower.  Technically, the February rally looks over and a new push lower appears to have begun.   Its failure to resurface above $0.9000 signals initial downside risk back into the $0.8840-80 range.

 

4.  Bank of Canada (Low risk):  The Bank of Canada meets Wednesday March 5.  There is little to no chance of a rate cut and the BoC has already shifted its rhetoric to a more dovish/neutral tone since Carney went to the Bank of England.  As in the US, the extent of the weather-induced economic disruption is not immediately clear and reasonable people can and do disagree.  The February IVEY (Thursday) and jobs data (Friday), the latter to overshadow the January trade figures due out at the same time, may be more important for the Canadian dollar direction.

 

5.  Bank of England (Low risk):  Under Carney, the emphasis at the BOE is on using forward guidance to push against market fears of a rate hike sooner than the first part of next year.  There is practically no chance of a change in rate.  And because the BOE does not say anything when it does not do anything, there is no statement-risk a there is with the other central banks.  The three PMIs (construction, manufacturing and service) are expected to show that UK economic activity has leveled off a bit at a reasonably robust pace.

 

6.   European Central Bank (High risk):  Of the central bank meetings this week, the ECB’s is the only live one in the sense of a realistic possibility of a change.   The failure to act in a substantive way could see the euro appreciate.  Many, if not most, have focused on what we would regard as a symbolic 10-15 bp cut in the main repo rate.  We suspect the euro could rally on this, as it is not the significant rate.  It would unlikely even impact forward pricing.  With the PMI likely showing continued expansion for the region and the preliminary CPI reading unchanged, officials will not feel compelled to take drastic measures such as adopting a negative deposit rate or launching a sovereign bond purchase program.

 

There has been some speculation that to boost the excess liquidity to keep EONIA (the key rate) stable and low, the ECB could formally stop sterilizing the SMP purchases.  We suspect this would be a very controversial decision.  Recall two German ECB member, Weber and Stark resigned over the program.  In the absence of sterilization, this would leave the SMP too close to QE, given the treaty prohibitions.  We have advocated cutting the lending rate, which is the top of the official rate corridor and now sits at 75 bp.  It is true the cap on EONIA,  The ECB is also expected to use the new staff forecasts, that will project out to 2016 for the first time, to point to its belief that the low inflation may persist but the risk of outright deflation for the monetary union is slim.  The euro could rally on this because it would strengthen the view that there is no appetite for those drastic measures.

 

7.  US data (High risk): The US jobs data, with the February assessment due on Friday March 7, tends to be among the most important economic reports of the monthly cycle.  Yet, almost regardless of the report, whose thunder is partly stolen by the ADP estimate a couple days earlier, or the week’s other data, which includes auto sales, purchasing managers surveys, the Fed’s measured tapering pace is unlikely to be disrupted.  

 

The Fed’s tapering has not pushed up US 10-year yields this year, which have fallen by 38 bp through the end of February.  Nor has it lent the dollar support, which has fallen against all the major currencies and many emerging market currencies (including Indonesian rupiah, Polish zloty, Hungarian forint, South African rand, Mexican peso, Brazilian real and Turkish lira).  

 

Most of the US economic data in recent weeks have been reported below expectations.  It means that the market has not fully grasped the magnitude of the slowdown being experienced here in Q1.  Few really claim that it is only due to the weather, which has become a bit of a straw man in the blogosphere.  We highlight three other forces at work:  a) the inventory cycle, b) the end of the tax break for capex and c) the loss of income for 1.7 mln Americans who had been collecting emergency jobless benefits.  At the end of last week, there were a few secondary economic reports, notably new home sales, durable goods orders and Chicago PMI, were stronger than expected.  With more important economic data out this week, it will be important to monitor this pattern, and if, better than expected data lends the dollar support.  We suspect it may with a lag.  

 

For the record, the Bloomberg consensus is for a 150k rise in February nonfarm payrolls.  This is in line with the 3-month average of 154k, but below the 6-month average (177.5k), which is nearly identical with the 2-year average (179.6k).   Although the consensus does not expect a decline in the 6.6% unemployment rate, we see the risk to the downside in response to the loss of the emergency jobless benefits.  This is turn would reinforce expectations for a modification/evolution in the FOMC forward guidance at its March 18-19 meeting.  Judging from the Fed funds and Eurodollar futures strips, the market is not pricing in the first rate hike until the second half of 2015.  

 

Obama is expected to present the FY15 budget proposals on March 4.  This tends not to be a market mover.  Moreover, in recent years, due to the political paralysis, the Federal government has operated on the basis of continuing resolutions.  Yet the budget proposal will help shape the coming debate.  It takes place on the heels of  news that FY13 budget deficit was only $680 bln from $1.1 trillion the previous year.  The budget deficit fell to 4.1% of GDP from 6.8%.  It is projected to continue trending lower over the next few years.  Obama is expected to avoid further cuts in spending, drop efforts to use chain-weighted CPI measures to slow Social Security payouts and promote public investment.  


    



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Ukraine Capital Control Crunch: Largest Bank Limits Cash Withdrawals To $100 Daily

As we warned yesterday, the military escalation in Ukraine has had dire consequences for the financial state of the country, its banks, and ultimately its people. The central bank promised to rescue domestic banks so long as they agreed to its complete control and it appears the first consequences of that “we are here to help you” promise is coming true:

  • *UKRAINE’S PRIVATBANK LIMITS ATM WITHDRAWALS TO UAH1,000/DAY ($103/day)

Privatbank is Ukraine’s largest bank and while claiming this move is temporary (just like Cyprus’ capital controls), the bank has also ceased new loans amid what it calls “geopolitical instability”. In summary, you can’t have your money back! Expect long angry lines at Ukrainian banks on Monday morning (and at the pace of collapse in the Hyrvnia, hyperinflation next).

 

Via WSJ,

Ukraine’s largest commercial bank, Privatbank, announced temporary limits on cash withdrawals for its account holders and suspended writing new loans, saying in a statement the measures were intended to stop those undermining the political situation in the country.

 

“A temporary limit on withdrawals? is needed to stop the forces that are working to destabilize the situation [and] are using the cash for [their] sabotage,” the bank said in a statement. The bank didn’t clarify which political forces it was referring to.

 

The bank first announced withdrawal limits of 1,000 hryvnia ($103) a day at both automated teller machines and in over-the-counter transactions.

 

 

Privatbank’s announcement was the first case in which a major Ukrainian bank has limited customers’ immediate access to cash in the local currency since the military tensions erupted. Privatbank is the largest retail bank by number of clients in Ukraine, a country of approximately 45 million people.

 

Last week, the National Bank of Ukraine introduced a $1,500 daily limit on foreign-currency withdrawal.

But perhaps the most notable, somewhat hidden, comment from the bank was this:

Privatbank said it was suspending all its credit lines issued to both private and corporate customers, including credit cards. It said it would no longer accept debit cards from other banks in the Crimea.

In other words, we won’t allow the people of Crimea (the region now in play with the Russians) to ‘run’ on our bank…

Privatbank said its measures were a “rational” response to the current situation and they were designed to help the bank serve its customers and protect the national currency.

We wonder what ‘loophole’ the uber-wealthy will find (as in Cyprus deposit shifts to the UK) to extract their deposits before the real capital controls collapse the currency.


    



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S.M. Oliva on Michael Jordan and the Nonsensical Commercial Speech Doctrine

Court ruling is no slam dunk for the First Amendment Michael Jordan’s infamously petty and bitter
behavior has driven him into a prolonged court battle with Chicago
supermarket chain Jewel-Osco. At the heart of the matter is the
U.S. Supreme Court’s infamous “commercial speech doctrine,” which
S.M. Oliva calls “a convenient constitutional end-run for the
government to censor any speech it dislikes.” 

Interpreting this doctrine, the 7th U.S. Circuit Court of
Appeals recently suggested that there could be no First Amendment
protection for any speech by a business that so much as mentioned a
famous celebrity. But free speech shouldn’t stop where fame begins,
Oliva aruges. 

View this article.

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Meanwhile, China Quietly Takes Over Zimbabwe

While the developed world is focusing on the rapidly deteriorating developments in the Crimean, China, which has kept a very low profile on the Ukraine situation aside from the token diplomatic statement, is taking advantage of this latest distraction to do what it does best: quietly take over the global periphery while nobody is looking. 

Over two years ago we reported that none other than Zimbabwe – best known in recent history for banknotes with many zeros in them – was bashing the US currency, and had alligned itself with the Chinese Yuan. This culminated last month with the announcement by Zimbabwe’s central bank that it would accept the Chinese yuan and three other Asian currencies as legal tender as economic relations have improved in recent years. “Trade and investment ties between Zimbabwe, China, India, Japan and Australia have grown appreciably,” said Charity Dhliwayo, acting governor of the Reserve Bank of Zimbabwe.

Business Live reported then:

Exporters and the public can now open accounts in yuans, Australian dollars, Indian rupees and Japanese yen, Dhliwayo said. Zimbabwe abandoned its worthless currency in 2009.

 

It accepts the US dollar and the South African rand as the main legal tender. Their use has helped to stabilise the economy after world-record inflation threw it into a tailspin.

 

Independent economist Chris Mugaga said the introduction of the Asian currencies would not make a huge difference to Zimbabwe’s struggling economy.

 

“It is Zimbabwe’s Look East Policy, which has forced this, and nothing else,” he said.

And now, as a result of the “Look East Policy”, we learn that China has just achieved what every ascendent superpower in preparation for “gunboat diplomacy” mode needs: a key strategic airforce base. From the Zimbabwean.

China is planning to set up a modern high-tech military base in the diamond-rich Marange fields, says a German-based website, Telescope News.

 

The news of the agreement to set up the first Chinese military airbase in Africa comes amid increasing bilateral cooperation between Zimbabwe and China – notably in mining, agriculture and preferential trade. China is the only country exempted from the indigenisation laws which force all foreign investors to cede 51% of their shareholding to carefully selected indigenous Zimbabweans.

 

The airstrip at Marange has sophisticated radar
systems and ultra-modern facilities

 

The Marange story quoted unnamed military officials and a diplomat admitting knowledge of the plan to set up the base. Efforts to get a comment from the Zimbabwe Defence Forces were fruitless, as spokesperson Lt Col Alphios Makotore was consistently unavailable and did not respond to emails by the time of going to press.

 

The website speculated that China could be positioning itself for future “gunboat diplomacy” where its military presence would give it bargaining power against superpowers like the US. It would also be safeguarding its significant economic interests in Zimbabwe and the rest of Africa.

 

Veil of secrecy

 

“Military officials in Zimbabwe said details of the airbase plan were sketchy and mostly classified due to the veil of secrecy around President Robert Mugabe’s relationship with China’s Red Army. A sizeable number of Chinese troops are reported to have their boots on the ground in the Marange diamond fields, which have since been cordoned off as a high level security zone,” said the publication.

 

It added that a senior Air Force of Zimbabwe (AFZ) officer based in Harare confirmed that there were rumours of the impending establishment of the airstrip as a “follow up to a military treaty signed between China and Zimbabwe in July 2005”.

 

Telescope News has made sensational claims in recent weeks, among them that Defence Minister and Zanu (PF) Secretary for Legal Affairs, Emmerson Mnangagwa, was secretly anointed by the military to succeed President Robert Mugabe.

 

Key battleground

 

It quoted a former Asian diplomat deployed to Zimbabwe for almost a decade as saying: “Haven’t you heard that Africa is the battlefield of tomorrow, today? As such in terms of geo-politics Zimbabwe is already a key battleground, for various competing powers. During my stay there, we heard about many military agreements being signed between the two countries.”

 

Chinese companies are heavily involved in diamond mining, in partnership with the Zimbabwe Government. They are believed to have constructed the airstrip at Marange that many suspect is being used to clandestinely haul diamonds to unknown destinations. It has sophisticated radar systems and ultra-modern facilities.

At this point expect to see a prompt, and unexpected, escalation in hostilities in southern Africa, most likely due to latent ethnic conflict of some kind (and brought back to the surface with the help of a few CIA dollars), which in turn will be the justification for US drones to begin operations in proximity to Zimbabwe to keep up with China’s encroaching take over of Africa, now from the south.

 

Perhaps most interesting is the finding that Zimbabwe’s president-cum-dictator, Robert Mugabe, so widely despised by the west, is in fact on China’s payroll:

Confidential Central Intelligence Organisation documents leaked last year suggested that China had played a central role in retaining President Robert Mugabe in the July 31 elections, indicating that high level military officers had worked closely with the local army in poll strategies while Beijing bankrolled Zanu (PF).

 

China is Zimbabwe’s biggest trading partner after South Africa and has strategic economic interests in many African countries to guarantee raw materials, job sources and markets for its huge population.

 

The new Chinese Ambassador to Zimbabwe, Lin Lin, recently said trade between the two countries last year exceeded the $1 billion mark. Yet Zimbabwe is only 26th on the list of China’s 58 biggest African trading partners.

 

The Asian country has supplied Zimbabwe with military hardware, including MIG jet fighters, tanks, armoured vehicles and rifles, since Independence.

In other words, while nobody was looking, China just took over one more nation without spilling a drop of blood. And now back to the regularly scheduled Crimean War part X.


    



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John Kerry Slams “Incredible Act Of Aggression”, NATO Says Russia “Must Stop”

Just in case Obama’s Friday message of “costs” should Russia invade Ukraine, which it did, was lost in translation, here is NATO with the clarification, and more harsh language:

NATO Secretary-General Anders Fogh Rasmussen convened an emergency meeting of NATO ambassadors in Brussels on Sunday to discuss the situation in Ukraine.

 

Ahead of the meeting he issued the following statement:

 

I have convened the North Atlantic Council today because of Russia’s military action in Ukraine. And because of President Putin’s threats against this sovereign nation.

 

What Russia is doing now in Ukraine violates the principles of the United Nations Charter. It threatens peace and security in Europe. Russia must stop its military activities and its threats.

 

Today we will discuss their implications, for European peace and security, and for NATO’s relationship with Russia.

 

Afterwards, we will meet in the NATO-Ukraine Commission.

 

We support Ukraine’s territorial integrity and sovereignty. We support the right of the people of Ukraine to determine their own future without outside interference. And we emphasize the need for Ukraine to continue to uphold the democratic rights of all people and ensure that minority rights are protected.

 

Ukraine is our neighbour, and Ukraine is a valued partner for NATO.

 

We urge all parties to urgently continue all efforts to move away from this dangerous situation. In particular, I call on Russia to de-escalate tensions.

And just in case both Obama and NATO were misunderstood, here is Kerry appearing on CBS’ Face the Nation laying down the law, and even more harsh language:

U.S. Secretary of State John Kerry on Sunday condemned Russia’s “incredible act of aggression” in Ukraine and threatened “very serious repercussions” from the United States and other countries, including sanctions to isolate Russia economically.

You just don’t in the 21st century behave in 19th century fashion by invading another country on completely trumped up pre-text,” Kerry told the CBS program “Face the Nation.”

Kerry, however, added that Russia still has “a right set of choices” that can be made to defuse the crisis.

It’s an incredible act of aggression. It is really a stunning, willful choice by President (Vladimir) Putin to invade another country. Russia is in violation of the sovereignty of Ukraine. Russia is in violation of its international obligations,” Kerry added.

Kerry said U.S. President Barack Obama told Putin in a 90-minute phone call on Saturday that “there will be serious repercussions if this stands. The president … told Mr. Putin that it was imperative to find a different path, to roll back this invasion and un-do this act of invasion.”

Kerry said G8 nations and some other countries are “prepared to go to the hilt to isolate Russia” with a “broad array of options” available.

They’re prepared to put sanctions in place, they’re prepared to isolate Russia economically, the ruble is already going down. Russia has major economic challenges,” Kerry said, as he also mentioned visa bans, asset freezes and trade isolation as possible steps.

Some great soundbites: we can’t wait for the White House to release the obligatory photo op, which we assume would look somewhat different than this.

Russia’s response? 

Kremlin spokesman Dmitry Peskov declined to comment on Sunday when asked for a response to harsh words from U.S. Secretary of State John Kerry, who condemned Russia’s “incredible act of aggression” in Ukraine. “No comment at the moment,” Peskov said.

Just laughter.


    



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Noah Berlatsky on Identity Politics and the Security State

The term “identity
politics” is typically used less as a designation than as a sneer:
disapproving shorthand for Balkanized multiculturalism. Arun
Kundnani’s new book The Muslims Are Coming! sees the
subject through a different lens. For Kundnani, as Noah Berlatsky’s
review explains, identity politics isn’t something the left does to
get goodies from the government. It’s something the government
does to justify and expand the power of the national security
state.

View this article.

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Ukraine Orders Full Military Mobilization, Acting PM Says Russian Actions “Declaration Of War”

With less than 6 hours left until FX trading opens, no resolution to the Ukraine crisis is in sight. Instead the situation has devolved even more and overnight Ukraine has ordered a full military mobilization in response to Russia’s build-up of its forces in Crimea. Prime Minster Arseniy Yatsenyuk said the country was “on the brink of disaster.” Several other measures were announced on Sunday by national security officials:

  • The armed forces would be put on “full combat readiness”.
  • Reserves to be mobilised and trained
  • Ukraine’s foreign minister will seek the help of US and UK leaders in guaranteeing its security
  • Emergency headquarters to be set up
  • Increased security at key sites, including nuclear plants.
  • Airspace closed to all non-civilian aircraft.

WSJ has more:

Ukrainian Prime Minister Arseniy Yatsenyuk said Sunday that his country was “on the brink of disaster” and personally blamed Russian President Vladimir Putin for bringing the two nations to the verge of war. Speaking to reporters at the Ukrainian parliament, Mr. Yatsenyuk called on the international community to rein in Mr. Putin and pressure him to remove troops from the Crimean peninsula, where a majority of residents are ethnic Russians but have Ukrainian passports.

 

“If President Putin wants to be the president who starts the war between two friendly and neighboring countries, he has [almost] reached this target,” Mr. Yatsenyuk said. “We are on the brink of disaster. There was no reason for the Russian Federation to invade Ukraine.”

 

 

Western diplomats doubt that the Ukrainian armed forces would be able to match up to the Russian forces already in control of the critical infrastructure and border points in the Crimea.

 

Ukrainian leaders say that Russia has already sent an additional 6,000 troops to Crimea since tensions arose in the peninsula last week. The two countries have a military agreement that allows Moscow to base forces in the region, but Ukrainian officials accuse Moscow of violating that treaty by not informing Kiev of additional troops, and by moving forces without prior notice. Moscow says that it is in compliance of the accord.

 

Earlier Sunday, Ukraine’s interior minister said Russian officials had approached Ukrainian officers remaining in Crimea and offered them immediate Russian citizenship.

 

“Across the entire territory of Crimea, Russian emissaries and military officers have invited the remaining Ukrainian interior ministry troops to take Russian citizenship and immediately receive Russian passports,” Arsen Avakov wrote on his Facebook page. “This appeal has been aimed at upper and middle officer corps troops.”

 

Mr. Avakov denied that Ukrainian forces had threatened the Russian-speaking population on the largely pro-Russian peninsula, and blamed Russian forces for the sharp militarization of the region.

 

“In Crimea, there are no forces from the interior ministry or the regular army threatening citizens of the Russian Federation or the Russian-speaking population,” he said. “And also no self-defense units from Maidan have arrived from Kiev. All destabilization in the Crimea has come from and been masterminded in Russia.”

The BBC adds that it has seen what appear to be Russian troops digging trenches on the Crimean border.  Furthermore, a standoff between Ukrainian troops who have fortified a base in the crimean city of Privolnoye, borth place of the late USSR president Mikhail Gorbachev, and Russians who have surrounded them, may be the match that set it all off. Fox reports that hundreds of unidentified gunmen surrounded a Ukraine’s infantry base in Privolnoye in its Crimea region Sunday. The convoy included at least 13 troop vehicles each containing 30 soldiers and four armored vehicles with mounted machine guns. The vehicles — which have Russian license plates — have surrounded the base and are blocking Ukrainian soldiers from entering or leaving it.

This is the current state of the standoff:


In response, acting Prime Minister Arseniy Yatsenyuk said the move by Russian forces to surround military bases in Crimea was “a declaration of war.”

 His comments were echoed by acting president Oleksandr Turchynov, who said Ukraine had closed its airspace to non-civilian aircraft. Among the other statements by Yatsenyuk, as reported by the WSJ:

  • Ukrainian PM: ‘If President Putin Wants to Be the President Who Starts the War Between Two Friendly and Neighboring Countries, He Has [Almost] Reached This Target’
  • Ukrainian PM: ‘We are on the brink of disaster’
  • Ukrainian PM: ‘There Was No Reason for the Russian Federation to Invade Ukraine
  • Ukrainian PM: We Believe Western Partners and Entire Western Community Will Support Entire Territorial Integrity of Ukraine
  • Ukrainian PM: We Believe They Will Do Everything They Can to Stop Russian Military Aggression in Ukraine
  • Ukrainian Defense Ministry: All Ukraine’s Border Patrol Ships Moved Out of Crimean Ports to Odessa
  • Ukraine PM: Every Half Hour There Are Provocations in Crimea and Ukraine Refuses to Respond to These Provocations
  • Ukraine PM: Ukraine Hasn’t Given Permission to Russia to Deploy an Additional 6,000 troops to Crimea

All told, some 6,000 extra Russian troops and 30 additional armoured vehicles are now in Crimea, Ukrainian Defence Minister Ihor Tenyukh said on Saturday.

An interactive map of the key Ukraine battlefields is shown below:

Finallly, there was the traditional escalation in Western diplomacy with both France and Britain announcing they are putting on hold their plans for participation in the G-8 conference to be held in Sochi. And then this:

  • Kerry Says U.S. Considering Sanctions on Russia for Ukraine Move

Well if nothing else stopped Putin, this surely will.


    



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Ladar Levison: Why He Shut Down Lavabit

His business of providing email was sabotaged by the NSA–and by
law, he was forbidden to talk about it. This week, Lavabit founder Ladar Levison told Reason
TV why he decided to shut down his company, and delete the emails
of 400,000 customers, rather than comply with the government’s
demands to compromise their privacy.

The video, “Lavabit’s Ladar Levison on Snowden, Why He Shut
Down, and How to Beat the NSA,” was first released on Feb. 28,
2014. The original text follows:

“Let me put it this way: If one year from now, you’re
not using Dark Mail, it’s because you enjoy knowing the NSA is
reading your emails,” says Ladar Levison, founder of Lavabit, the
email provider used by former National Security Agency contractor
Edward Snowden.

After Snowden’s identity became known, Levison shut
down Lavabit, posting the following message on the company
website:

“I have been forced to make a difficult decision: to
become complicit in crimes against the American people or walk away
from nearly ten years of hard work by shutting down Lavabit. After
significant soul searching, I have decided to suspend operations. I
wish that I could legally share with you the events that led to my
decision. I cannot.”

Levison was prohibited from discussing any details of
the case until last October, when the court unsealed a portion of
the documents. The unsealed records reveal that the FBI was
demanding access to Lavabit’s Secure Sockets Layer (SSL) keys,
which would essentially allow the agency access to all messages on
Lavabit’s server. While the FBI was ostensibly targeting only a
single user, Levison was unwilling to sacrifice the privacy of his
other 400,000+ users.

He is still not allowed to discuss the identity of the
user the FBI hoped to target.

Runs 15:46.

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