The Crisis in Ukraine Intensifies

An explosive situation develops in Kiev.

140412-ukraine-russia-mn-01_f3f489860357a657f16a3b8c468ce9a2Yesterday the crisis in Ukraine significantly intensified. Hours after Ukraine's acting president Oleksandr Turchynov announced an "anti-terrorist operation” against the numerous pro-Russian uprisings that have taken place in at least nine cities, government forces engaged about 30 armed militants at Kramatorsk airport, just south of the city of Slovyansk, approximately 100 miles from the Russian border. The exchange prompted a warning from Russian Prime Minister Dmitry Medvedev. "I will be brief: Ukraine is on the brink of civil war, it's frightening," he was quoted as saying by Russian news agencies.

The move is part of an overall counteroffensive aimed at reclaiming control of the eastern part of the country, following the takeover of official government buildings by pro-Russian separatists in at least nine cities. According to eyewitnesses, Slovyansk itself was being surrounded by Ukrainian troops, backed by armored personnel carriers and two helicopters. Pro-Russian forces have had effective control of the city since last Saturday.

What happened during the fighting is largely unclear, but Russian media sources claim between four and 11 militants were killed when Ukrainian troops stormed the airfield, while Yury Zhadobin, coordinator of a pro-Russian defense force, claimed two people were slightly injured and were taken to a hospital. The Ukrainian government claimed there were no casualties at all, but that they had taken an unspecified number of prisoners. Gen. Vasyl Krutov, Ukraine's security services anti-terrorist unit chief, spoke outside the airport, saying his men had repelled an attack by men in green uniforms who had attempted to storm the facility earlier that afternoon.

After the standoff, hundreds of locals surround the airport, fueled by rumors that Ukrainian forces were getting ready to attack the city of Kramatorsk itself. Some attempted to enter the airport facilities, prompting Ukrainian forces to fire warning shots. When Krutov appeared outside to defuse tensions, he was attacked by the crowd.

Russia’s Interfax news agency quoted a pro-Russian militiaman who said Ukrainian troops had seized the airfield, but Kramatorsk remained under their control. “We have, in fact, been pushed out of the airport, but the town is under our control,” the unidentified militiaman told the agency. “We won’t let anyone in.”

President Turchynov explained the reason for the move on his website. “The aim of these actions is to protect people,” he said. “Apart from Russian special forces and terrorists, there’s hundreds of thousands of innocent Ukrainian people deceived by Russian propaganda, and that is why we will take any needed anti-terrorist actions prudently and responsibly.”

Turchynov also addressed the Ukrainian parliament in Kiev. "I just got a call from the Donetsk region: Ukrainian special forces have liberated the airport in the city of Kramatorsk from terrorists,” he told lawmakers. "I'm convinced that there will not be any terrorists left soon in Donetsk and other regions and they will find themselves in the dock - this is where they belong.” 

Another troop buildup is going on near the city of Izyum, which is close to the border of the Kharkiv and Donetsk provinces in the east, 32 miles northwest of Slovyansk. An Izyum official who requested anonymity said the city has been used by Ukrainian troops as a feeding and fueling area since their arrival beginning last weekend. An Associated Press reporter claimed to have seen at least 14 armored personnel carriers with Ukrainian flags, along with helicopters and military vehicles, stationed 24 miles north of Slovyansk. Additional military equipment was also nearby, as were at least seven busloads of government troops wearing black military fatigues. "We are awaiting the order to move on Slovyansk," said a soldier identified only by his first name of Taras.

In the city of Donetsk, Mayor Alexander Lukyanchenko begged pro-Russian forces not to follow through on their threat to seize city offices. “If the city authorities are paralyzed, it would be to the detriment of all inhabitants of the city,” he told reporters.

The move by the Ukrainian military follows an ultimatum issued Monday by Turchynov that was promptly ignored by pro-Russian militants. That ultimatum then became an offer to hold a national referendum to determine Ukraine’s future, followed by yet another offer for a peace-keeping intervention undertaken by U.N. forces.

Unsurprisingly, Ukraine and Russia had completely different takes on the escalating tension. "We have to tell the Ukrainians the truth: the Russian Federation is waging a real war against Ukraine in the east, in the Donetsk and Luhansk regions in particular,” said ex-prime minister and presidential candidate Yulia Tymoshenko, who also called on the West to "recognize Russia's aggression against eastern Ukraine as a war.” Ukrainian First Deputy Prime Minister Vitaly Yarema echoed that assessment, saying Kiev had "evidence that those people occupying Slovyansk and Kramatorsk right now are servicemen of the Russian 45th Airborne Regiment.” Ukrainian security forces also claimed that a Russian foreign intelligence agent named Igor Strelkov, who had helped coordinate the seizure of Crimea, was part of those leading the resistance in Slovyansk.

Dmitry Peskov, a spokesman for Russian President Vladimir Putin, dismissed the allegations altogether. Putin himself called the military maneuvers “unconstitutional,” demanding an international crackdown in response. Russian Foreign Minister Sergey Lavrov insisted Kiev was being contradictory. "You can't send in tanks and at the same time hold talks,” he contended. "The use of force would sabotage the opportunity offered by the four-party negotiations in Geneva.”  Those talks, scheduled to take place tomorrow, involve the Russians, the US, the European Union and Ukrainian officials. In the interim, the EU and the US are ostensibly considering widening sanctions against the Russians.

Or perhaps not. While the Obama administration is reportedly ready to up the ante, the EU is less enthusiastic, due to the reality that stronger sanctions would threaten an already weak economic recovery. Thus, while the US may suggest targeting Russian economic sectors such as financial services and energy, the EU prefers an expansion of individual asset freezes and travel bans. Without EU support, any additional sanctions by the US would have minimal effect. “The level of trade between the US and Russia directly is quite limited,” said Simon Mandel, vice president for emerging Europe equity sales at Auerbach Grayson & Co. “Whatever sanctions the US comes out with, unless the Chinese government or the EU are willing to support them, they will still have a minimal impact on the Russian government.”

Gary Greenberg, who oversees about $785 million in emerging-market stocks at Hermes, believes the latest move by Ukraine greatly accrues to Russian interests. “Russia is in an excellent bargaining position before the start of talks,” he contended. Having provocateurs in Ukraine or having the Ukrainian government forces start shooting puts Russia in much stronger position in its negotiating dance with Europe and the U.S. This is part of their strategy.” 

It is a strategy underscored by a U.N. human rights report that contended ethnic Russians in eastern Ukraine have falsely claimed to be under assault to justify Russian intervention. "Although there were some attacks against the ethnic Russian community, these were neither systematic nor widespread," the report stated. "Photographs of the Maidan protests, greatly exaggerated stories of harassment of ethnic Russians by Ukrainian nationalist extremists, and misinformed reports of them coming armed to persecute ethnic Russians in Crimea, were systematically used to create a climate of fear and insecurity that reflected on support to integration of Crimea into the Russian Federation.”  

The report further noted that during the Crimean referendum, there were "credible allegations" of harassment, arbitrary arrest and torture targeting non-supporters of the referendum, as well as "many accounts of vote rigging.”

It was blasted by Russian officials. "One gets the impression that the report was fabricated to correspond with conclusions formed in advance,” the Russian Foreign Ministry said in a statement.

In the meantime, 40,000 Russian military troops, replete with tank columns and fighter jets, remain based just outside Ukraine’s border. Putin rejects any links to the unrest sparked by pro-Russian forces in Ukraine, even as Ukrainian security forces have produced recordings of conversations between Russians and Ukrainian separatists., and U.S. forces remain on high alert in the Black Sea. The situation is on a knife-edge and a wrong move by either party could ignite a deadly showdown. 

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