“Ukraine’s Destiny Is To Go Medieval”

Authored by James H. Kunstler,

My country can cry all it likes about yesterday’s referendum vote in eastern Ukraine, but we set the process in motion by sponsoring the overthrow of an elected Kiev government that was tilting toward Russia and away from NATO overtures. The president elected in 2010, Viktor Yanukovych, might have been a grifter and a scoundrel, but so was his opponent, the billionaire gas oligarch Yulia Tymoshenko. The main lesson that US authorities have consistently failed to learn in more than a decade of central Asian misadventures: when you set events in motion in distant lands, events, not policy planners at the State Department, end up in the driver’s seat.

And so now they’ve had the referendum vote and the result is about 87 percent of the voters in eastern Ukraine would prefer to align politically with Russia rather than the failing Ukraine state governed out of Kiev. It’s easy to understand why. First, there’s the ethnic divide at the Dnieper River: majority Russian-speakers to the east. Second, the Kiev government, as per above, shows all the signs of a failing state — that is, a state that can’t manage any basic responsibilities starting with covering the costs of maintaining infrastructure and institutions. The Kiev government is broke. Of course, so are most other nations these days, but unlike, say, the USA or France, Ukraine doesn’t have an important enough currency or powerful enough central bank to play the kind of accounting games that allow bigger nations to pretend they’re solvent.

Kiev owes $3.5 billion to Russia for past-due gas bills and Moscow has asked Kiev to pre-pay for June deliveries. This is about the same thing that any local gas company in the USA would demand from a deadbeat customer. The International Monetary Fund has offered to advance a loan of $3 billion, of which Kiev claims it could afford to fork over $2.6 billion to Russia (presumably needing the rest to run the country, pay police salaries, et cetera). Ukraine is in a sad and desperate situation for sure, but is Russia just supposed to supply it with free gas indefinitely? As wonderful as life is in the USA, the last time I checked most of us are expected to pay our heating bills. How long, exactly, does the IMF propose to pay Ukraine’s monthly gas bill? In September, the question is liable to get more urgent — but by then the current situation could degenerate into civil war.

The USA and its NATO allies would apparently like to have Ukraine become a client state, but they’re not altogether willing to pay for it. This kind of raises the basic question: if Russia ultimately has to foot the bill for Ukraine, whose client state is it? And who is geographically next door to Ukraine? And whose national histories are intimately mingled?

I’m not persuaded that Russia and its president, Mr. Putin, are thrilled about the dissolution of Ukraine. Conceivably, they would have been satisfied with a politically stable, independent Ukraine and reliable long-term leases on the Black Sea ports. Russia is barely scraping by financially on an oil, gas, and mineral based economy that allows them to import the bulk of their manufactured goods. They don’t need the aggravation of a basket-case neighbor to support, but it has pretty much come to that. At least, it appears that Russia will support the Russian-speaking region east of the Dnieper.

My guess is that the Kiev-centered western Ukraine can’t support itself as a modern state, that is, with the high living standards of a techno-industrial culture. It just doesn’t have the fossil fuel juice. It’s at the mercies of others for that. In recent years, Ukraine has even maintained an independent space program (which is more than one can say of the USA). It will be looked back on with nostalgic amazement. Like other regions of the world, Ukraine’s destiny is to go medieval, to become a truly post-industrial agriculture-based society with a lower population and lower living standards. It is one the world’s leading grain-growing regions, a huge advantage for the kind of future the whole world faces — if it can avoid becoming a stomping ground in the elephant’s graveyard of collapsing industrial anachronisms.

Ukraine can pretend to be a ward of the West for only a little while longer. The juice and the money just isn’t there, though. Probably sooner than later, the IMF will stop paying its gas bills. Within the same time-frame, the IMF may have to turn its attention to the floundering states of western Europe. That floundering will worsen rapidly if those nations can’t get gas from Russia. You can bet that Europe will think twice before tagging along with America on anymore cockamamie sanctions. Meanwhile, the USA is passing up the chance to care for a more appropriate client state: itself. Why on earth should the USA be lending billions of dollars to Ukraine when we don’t have decent train service between New York City and Chicago?




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Elizabeth Arden Earnings Stink, Blames Weather; Stock Tumbles 15%

Q1 2014 was the first negative EBITDA quarter for Elizabeth Arden since before Lehman (June 2008) and worst quarterly EBITDA loss for the company since Q3 2001… and the rest of the data was terrible:

  • *ELIZABETH ARDEN 3Q SALES $210.8M, EST. $255.7M
  • *ELIZABETH ARDEN 3Q ADJ. LOSS/SHR 84C, EST. BREAK-EVEN

The reason… come on you can guess… “an unprecedented number of weather-related store closures in our North America business during the quarter.”

 

EBITDA…

 

The data:

Net sales for the third fiscal quarter were $210.8 million, a decrease of 20.3%, or 19.4% excluding the impact of foreign currency rates. Net loss per diluted share was $0.89. On an adjusted basis, excluding non-recurring items, net loss per diluted share was $0.84. The non-recurring items include Elizabeth Arden repositioning and restructuring costs. A reconciliation between GAAP and adjusted results can be found in the tables and footnotes at the end of this press release.

 

Net sales of the Company’s North America segment decreased 23% to $121.9 million from $158.7 million in the prior year. The decline in net sales was primarily due to fewer fragrance launches in the fiscal 2014 period as compared to the prior year and lower replenishment orders at a number of non-prestige retail accounts.

The excuse…

E. Scott Beattie, Chairman, President and Chief Executive Officer commented, “Clearly these results are not indicative of the strength and potential of our brand portfolio. We have been hampered this year by weak performance in our North American mass fragrance business and a global environment that has been highly promotional. We also did not have the same level of significant fragrance innovation as we did last year. This coincided with an unprecedented number of weather-related store closures in our North America business during the quarter, which is our seasonally weakest quarter, exacerbating the impact of these other factors and contributing to the weak overall results.”

So if some cold weather can cause your entire business model to collapse to 13 year low EBITDA… then maybe it is time for that “strategic alternative”…

The Company has engaged Goldman, Sachs & Co. to assist the Board of Directors in exploring potential strategic alternatives to enhance shareholder value and to accelerate the growth and maximize the value of its brand portfolio. 

The reaction…




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Fed Governor Admits Truth About QE: “Can’t Go From Wild Turkey To Cold Turkey Overnight”

Submitted by Jim Quinn via The Burning Platform blog,

“I was not for this program, popularly known as QE3, to begin with. I doubted its efficacy and was convinced that the financial system already had sufficient liquidity to finance recovery without providing tinder for future inflation. But I lost that argument in the fall of 2012, and I am just happy that we will be rid of the program soon enough. “I am often asked why I do not support a more rapid deceleration of our purchases, given my agnosticism about their effectiveness and my concern that they might well be leading to froth in certain segments of the financial markets. The answer is an admission of reality: We juiced the trading and risk markets so extensively that they became somewhat addicted to our accommodation of their needs… you can’t go from Wild Turkey to cold turkey overnight.

 

So despite having argued against spiking the punchbowl to the degree we did, I have accepted that the prudent course of action and the best way to prevent the onset of market seizures and delirium tremens is to gradually reduce and eventually eliminate the flow of excess liquidity we have been supplying… one would be hard pressed to say that ending our asset purchases, which the depository institutions from which we buy them deposit back with us as excess reserves, would deny the economy needed liquidity. The focus of our discussions now is when and how to ‘normalize’ monetary policy.”

 

– Fed Governor Richard Fisher

Talk about speaking the truth!!!

He admits that QE was designed to benefit Wall Street banks, hedge funds, HFT and the rest of the parasites on the ass of America. It was designed by the few for the few. It benefited Wall Street, not Main Street. The .01% saw their riches expand exponentially. The 1% benefited modestly as their 401k’s rebounded. The 99% got higher food and energy prices, along with declining real wages.

I know that John Hussman’s weekly letter is too deep in the weeds for many people, but I learn stuff every week that helps me understand the truth about our financial system and our manipulated, bubble markets. The Federal Reserve is primarily responsible for the two bubbles that have already burst since 2000. They are single-handedly responsible for the bubble that will burst in the near future. The Fed will have withdrawn the $85 billion per month punchbowl by October of this year. Hussman explains what happens next:

That sucking sound you hear is the Federal Reserve exiting from the most reckless policy experiment in its history. Unfortunately, that policy experiment has been the primary driver of speculation in recent years. One can’t rule out some stall in the tapering timeline, but even QEternity appears to have an expiration date. Despite present complacency, this transition is likely to be painful for the market, as one does not normalize valuations that are 100% above historical norms without pain – typically concentrated in a handful of steep but short-lived free-falls. That said, there was no evidence years ago that boosting the market to speculative highs would do much good for the economy (consumers spend from their view of “permanent income,” not from temporary fluctuations in volatile assets).

Make no mistake about it, valuations today are more extreme than they were in March 2000. Think about that for a few moments. Are you mentally and financially prepared for a third 50% plunge in the stock market in the last fourteen years? Well, are you punk?

With advisory sentiment running at 56% bulls and fewer than 20% bears, with most historically reliable valuation metrics about twice their pre-bubble norms (and presently associated with negative expected S&P 500 nominal total returns on every horizon of 7 years and less), with capitalization-weighted indices near record highs but smaller stocks and speculative momentum stocks diverging badly, and with a Federal Reserve clearly intent on winding down the policy of quantitative easing that has brought these distortions about, we continue to view the present market environment as among the most dangerous instances in history.

 

Major market peaks, even those like 2000 and 2007 that were followed by 50% losses, have never felt dangerous at the time. That’s why they were associated with exuberant price extremes. Sure, investors had a sense that prices had advanced a great deal, but endless reasons could be found to justify the advance. Avoiding major losses required an intimate familiarity with market history, and enough discipline and patience to maintain what Galbraith called a “durable sense of doom” about observable conditions. The general rule is that you don’t observe the “catalyst” in advance, only the stack of dynamite.

 

Make no mistake, reliable valuation measures for the median stock are actually more extreme today than in 2000. On a capitalization-weighted basis, valuations are beyond every pre-bubble point in history except for a few months in 1929. In the bubble that ended in 2000, final valuations were higher owing to the extremes in large-capitalization technology stocks at that peak. Many observers seem to believe that valuations are of no concern unless they match that singular extreme. Good luck on that. The novelty, imagination, and extrapolation born of the late-1990’s internet and technology revolution is unlikely to be matched by an economy that can’t post growth beyond the threshold between expansion and recession despite the largest monetary intervention in history. The Fed is already retreating from that intervention, and for good reason, because while the Fed’s extraordinary actions are not actually linked to real economic outcomes, they encourage very risky speculative side-effects.

 

Meanwhile, an average, run-of-the-mill bear market would wipe out the entire advance in the S&P 500 Index since April 2010. Even on a total return basis, I doubt that any of the market’s gains from that point will actually be retained by investors by the completion of the present cycle. We currently estimate S&P 500 nominal total returns averaging about 2.4% annually over the coming decade.

Understand that nominal means before inflation. Therefore, you will be getting a big fat ZERO real return from the stock market over the next ten years. Considering the Fourth Turning has approximately fifteen years to go, this makes sense as we enter the war zone. I’m sure all seven of these valuation methods are wrong this time.

 

Just ask a CNBC bimbo or Wall Street economist shyster.




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Today’s WTF “All Clear” Indicator To Buy Everything

Does this look in any way normal to anyone?

 

 

Certainly seemed like someone is was in a hurry to dump VIX futures contracts at the open… (and that rippled down to the spot VIX)

 

And as Salient Partners’ Epsilon Theory notes,

1M implied volatility on the VIX fell to an all-time low last week. Generally speaking, this means that options on short-term market volatility increasing have never been cheaper.

 

How is this possible, you ask, with outright war simmering in Eastern Ukraine and China flexing its muscles in the South China Sea? Because Mario Draghi is “signaling” that he’s going to launch a European version of QE. Because the Narrative of Central Bank Omnipotence has never been stronger, and for markets this is the only thing that matters. Because we continue to live in the new Goldilocks environment, where mediocre growth is not so weak as to plunge us into recession but not so strong as to take central banks out of play. If the news gets a lot better the market will go down, and if the news gets a lot worse the market will go down.  

 

But what I call the Entropic Ending, a market-positive gray slog where global growth is more-or-less permanently crippled by the very monetary policies that prevent global growth from collapsing, can go on for a looooooong time.

and how to tell when this starts to change…

How can you know if this Narrative starts to waver or shift? If and when gold starts to work.

 

This is what gold means in the modern age… not a store of value or some sort of protection against geopolitical instability but an insurance policy against massive central bank error and loss of control.

And gold and silver started to work today.




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Silver & Stocks Soar To Celebrate Donetsk Independence; Russell Up 4% In 24 Hours

The Russell 2000 had its best day in over 17 months today – up 2.5% (best since Jan 2nd 2013) and +4% from Friday's lows. All US equity markets exploded higher our of the gate thanks to a ridiculous spike lower in VIX (below 12) and USDJPY stop-run back through 102 which squeezed "most shorted" dramatically higher. The Dow, Trannies, and S&P all made new record high closes…and it's not even Tuesday yet! Away from stocks, silver jumped over 2% for almost its best day in 3 months. Gold rebounded over $25 from overnight smackdown lows. Oil broke back above $100. Treasury yields rose modestly (2-3bps) – majorly out of sync with equity exuberance. JPY was large and in charge of stocks but the USD ended the day unchanged. S&P futures volume was 30% below recent average.

 

A major short-squeeze…

 

lifted all the major US equity indices into the green for May… (and the Nasdaq green for 2014)

 

The Russell is up 4% from Friday's lows – destroying the meme that this is a healthy rotation from high-valuation names to low… this is just another squeeze

 

Homebuilders were the best performers… sure they were… makes perfect fucking sense as rates rise…

 

From the early March highs in the Nasdaq and Russell…

 

Volume was dreadful…

 

USDJPY was in charge all day…

 

Does this VIX behavior look normal to you?

 

FX markets were volatile during the European session but ended the NY session unahcnged from Friday… (with JPY weakest)

 

Copper and Silver surged, oil and gold rose…

 

and this came after the overnight smashdown in PMs…

 

Treasuries sold off very modestly – not exactly the heart-pounding wreck that huge risk on belief in stocks woul dhave one believe…

 

And tomorrow's Tuesday!!!! Fuck yeah! Just 3 more points for Goldman Sachs 2014 year-end target (8 months early!)

 

Charts: Bloomberg




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Bank Account Raid Powers Needed Or Taxes Will Rise – UK Prime Minister

DAILY PRICE
Today’s AM fix was USD 1,292.75, EUR 938.95 and GBP 765.08 per ounce.                            

Friday’s AM fix was USD 1,289.00, EUR 933.25 and GBP 762.54 per ounce.


Gold fell $0.50 or 0.04% Friday to $1,288.70/oz. Silver slipped $0.02 or 0.1% to $19.15/oz. Gold and silver were both down for the week 0.74% and 1.54% respectively.
 

Gold recovered on Monday after falling 0.5%. Safe haven demand from escalating geopolitical tensions in Ukraine is supporting gold. Gold is a proven safe haven at times of political and economic uncertainty.
 


Spot Gold Price in U.S. Dollars – 1 Month (Thomson Reuters)

Gold in euros has eked out marginal gains again after the European Central Bank said it was ready to loosen monetary policy even further next month. European gold buyers have realised that the euro is not going to be a store of value in the coming years.


In Ukraine, pro-Moscow separatists declared a resounding victory in a referendum on self-rule for eastern Ukraine. Fighting is increasing in a conflict increasingly out of control.



Spot Gold Price in U.S. Dollars – 10 Years (Thomson Reuters)

Chinese demand remains very robust and looks set to surpass 2,000 tonnes in 2014. Chinese gold premiums over the global benchmark have climbed to about $3 an ounce after trading at a discount for most of the last two months on weak demand, showing continuing demand. Chinese silver demand is very high and may hit record levels this year.


Bank Account Raid Powers Needed Or Taxes Will Rise – Cameron

Taxes will have to rise unless officials are given new powers to raid people’s bank accounts, David Cameron told Sky News yesterday.

The Treasury select committee warned that allowing HM Revenue and Customs to remove cash from bank accounts without court orders is “very concerning” because of its history of mistakes according to The Telegraph.

The committee said that taxpayers could suffer “serious detriment” if officials are able, either by mistake or through an “abuse” of power, to take money from people who have done no wrong.


Mr Cameron bizarrely threatened that the alternative was to “put up taxes”.

“We have a choice here. If we don’t collect taxes properly and make sure people pay their taxes properly we look at the problems of having to raise tax rates. I don’t want to do that, so I support the changes the Chancellor set out in the Budget which is to really say that not paying your taxes is not acceptable.”

“It is very clear that they can only do this if there is a debt of over £1,000, they can only do it if there’s £5,000 or more in the account after this has been completed. The general principle – do we want to pursue every avenue of making people pay their taxes they are meant to pay before we put up taxes, because that’s the alternative – absolutely, yes we do.”


Yesterday, chartered accountants noted that monies should only be taken with citizen’s approval or by a court order. ICAEW, the body representing accountants, said that members are worried the about government “mistakes and misuse”.

Under these proposed new measures, tax officials will have an automatic power to take money from a bank account when the holder has failed to act on four formal warnings requiring payment. Presently, monies can only be removed with the with the consent of a magistrate or judge.

The UK Treasury claims that the new power is only used against those who have repeatedly refused to pay their taxes. However, MPs say in their report:


“The ability directly to have access to millions of taxpayers’ bank accounts raises concerns about the risk of fraud and error. This policy is highly dependent on HMRC’s ability accurately to determine which taxpayers owe money and what amounts they owe, an ability not always demonstrated in the past. Incorrectly collecting money will result in serious detriment to taxpayers.”

The UK Revenue has faced repeated criticism over the accuracy of its tax records and its handling of citizen’s sensitive personal data.

 

This is another example of creeping powers that pose a real threat to bank deposits. It will create further jitters about the safety of deposits and heighten the risk of bank runs. These risks highlight the importance of diversifying and having some of your wealth outside the vulnerable banking and financial system.

Guide: Protecting Your Savings From Confiscation

 

 





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When Not Even The “1%” Can Afford College

Since in America one now needs a Bachelor’s degree (if not a PhD in economics, of course) to get a job as a waiter, according to the following chart the US may soon have a severe waiter shortage considering the cost of college tuition has outpaced even the income of the 1%. As for everyone else, forget it – want that French Polynesian belly-dancing major? Prepare to become a debt slave for life.




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Bank Of America Would Like To Buy Your Gold, Seeing “No Gains Above $1315”

Last year it was Goldman Sachs telling clients to “dump your gold” (only to become the biggest buyers of the precious metal in the following quarter). Just last month, Morgan Stanley advised clients that ‘gold will not see $1300 again’… and today, Bank of America joins the crowd as Macneil Curry advises “It is time to sell Gold” (to BAML we presume?)… as the range trade of the past month is completing and the downtrend is set to resume.

 

BofAML notes…

It is time to sell Gold. The range trade / consolidation of the past month is drawing to a conclusion. Further gains should not exceed 1315.70 (May-05 high) AND CAN’T EXCEED the Mar-14 high at 1331. Downside targets are seen to 1215.

Sell Spot Gold at market (1300), risking 1325, targeting 1215, potentially below.

 

Which leaves us wondering… have we found a Thomas Stolper replacement?




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European Companies Write Off Half A Trillion Dollars Due To “Culture Of Late Payment”

40% of European firms say the severity of late-payment problems were preventing them from hiring as “even when the public sector pays promptly, the money doesn’t sloosh down the system promptly because of the culture of late payment.” As the FT reports, small and medium-sized enterprises are the hardest hit by late-payment consequences with nearly three-quarters saying nothing has changed in the last few months and in fact nearly half saying the problem is getting worse. “The late payment consequences for businesses pose a real threat to Europe’s competitiveness and social wellbeing,” warns one analyst, as “companies are deliberately not sticking to the provisions of the EU directive as a way of managing their cash flow.” The reason – of course – the unintended consequences of policy-makers centrally planned efforts to ensure nothing bad ever befalls an important firm/nation ever again – “It’s a way of borrowing off smaller companies – and they should be held to account.”

 

As The FT reports,

The debt written off by Europe’s companies due to late payment or non-payment of bills has swelled to €360bn despite the pick-up in economic activity in the region.

 

“The late payment consequences for businesses pose a real threat to Europe’s competitiveness and social wellbeing,” said Lars Wollung, president of Intrum Justitia, a credit management group. “Hardest hit by the problem . . . are small and medium enterprises.”

And it’s not getting any better…

Nearly three-quarters of the companies taking part in the research said that there had been no improvement in the late payments problem in the past three months despite the economic pick-up, and 46 per cent believed late and non-payment risks were actually increasing.

 

“Even when the public sector pays promptly, the money doesn’t sloosh down the system promptly because of the culture of late payment,”

 

Forty per cent of the companies which took part in the EPI research said the severity of late payment problems was preventing them from hiring staff.

Of course, it’s the smaller business that suffers as the trickle-down of government intervention suckles large enterprise and they squeeze small business…

Suppliers are often unwilling to go public about late payment problems for fear of jeopardising relationships with their most important customers.

 

 

A 2011 EU directive, which has been adopted by 27 out of the 28 member states, sets limits on how long public and private sector companies can keep their suppliers waiting – 30 and 60 days respectively.

 

Although the directive has been adopted by the UK government, that does not mean large companies stick to its provisions. UK retailer Marks and Spencer, for example, changed its supplier terms last September to extend its window of payment from 60 to 75 days.

 

“Companies are deliberately not sticking to the provisions of the EU directive as a way of managing their cash flow,” said Mr Fisher. “It’s a way of borrowing off smaller companies – and they should be held to account.”

But then again – so what – there appears no consequences anyway…




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Donetsk Warns Ukraine Army Located In The East To “Leave In 48 Hours” Or Face War

With the US having voiced its support for Ukraine’s “anti-terrorist” operations, and Russia strongly supportive of pro-Russian people’s decisions to regional self-determination, the threats coming from the newly independent regions are a concern (that markets clearly do not care about):

  • DONETSK ARMY SAYS WILL FIGHT UKRAINE FORCES IF DEADLINE IGNORED

Ukrainian military forces have 48 hours to leave the region or Donetsk own “anti-terrorist” forces will fight. Of course, with the US already saying the referendums are illegal and not recognizing them, we suspect it will be time for more sanctions soon (despite the lessons below).

Insurgent group army of so-called Donetsk People’s Republic “will start its own anti-terrorist operation in Donetsk region” against Ukrainian military forces if they don’t heed seperatist army chief Igor Girkin’s 48-hour ultimatum to leave or obey him, head of seperatist group, Denis Pushilin, says by phone.

So… buy stocks?

And a different perspective on which the western approach to resolving the Ukraine crisis may not be exactly “working.”

Lessons on Sanctions Based on Past Experience (via PIIE)

1. Don’t overreach. Policymakers should avoid inflated expectations of what sanctions can accomplish. Sanctions seldom impair the military potential or change the policies of an important targeted power. Modest goals contribute to successful outcomes. Thus it may make more sense to achieve the modest goal of thwarting an impending invasion of Eastern Ukraine than to try to reverse the fait accompli of Russia’s annexation of Crimea.

2. Russian economic integration with the West is an advantage. Economic sanctions are most effective when aimed against close trading partners with more to lose.

3. Don’t count on Russian public opinion. It is hard to “bully a bully” with economic measures. Democratic regimes are more susceptible to economic pressure than autocratic regimes like Russia.

4. Slam the hammer; don’t turn the screw. Economic sanctions are best deployed with maximum impact. Gradually imposed steps may simply strengthen the target national government’s resolve. In the present case, threatening very heavy sanctions if Russian armed forces cross the Ukrainian border has the best chance of deterrence.

5. International cooperation is not always essential, but in the case of Russia, it probably is. A large coalition of sanctioning countries does not necessarily make the sanctions highly likely to succeed. Financial sanctions against Iran, on the other hand, succeeded in large part because they were backed by an international coalition of countries willing to forgo Iranian oil imports and dealings with Iranian banks. To be sure, the effort to gain international support can dilute their scope. But the United States has little choice but to gain the cooperation of Western Europe in this case.

6. Choose the right tool. Sanctions deployed in conjunction with other measures, such as covert action or military operations, increase chances of success. So far, the United States has been reluctant to provide substantial military assistance to Ukraine, out of concern that Russia will escalate its own intervention.  Instead, the military dimension of US support has been limited to greater assistance to NATO allies in the region, especially Poland.

7. Don’t be a cheapskate or spendthrift. Sanctioning governments must balance the benefits against the costs borne domestically to sustain public support at home. At present, the United States, but especially Europe, are facing the resistance of major business firms over the possibility of severe energy and financial sanctions.

8. Look before you leap. Sanctioning governments should weigh their means and objectives against unintended costs and consequences.  In the Ukrainian case, all signs indicate that President Obama and his European counterparts (especially Chancellor Angela Merkel of Germany) are giving each step of the sanctions regime their carefully guarded attention.




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