Bloomberg News

Ukraine Starts Military Drills as Russia Warns on Eastern Unrest

March 10, 2014

Ukrainian Air Force Pilots

Ukrainian Air Force pilots march at their base in Belbek, near Sevastopol, on March 4, 2014. Photographer: Viktor Drachev/AFP via Getty Images

Ukraine began military drills as Russian forces tightened their hold on the Crimean peninsula and the Foreign Ministry in Moscow warned of “lawlessness” in the former Soviet republic’s eastern provinces.

Ukraine’s armed forces are testing the combat-readiness of troops, the Defense Ministry said today on its website, reiterating the government’s desire for a peaceful end to the standoff in Crimea. Russia, which has vowed to defend the ethnic Russians that dominate Crimea after an uprising in Kiev, accused Ukraine of ignoring radicals in the nation’s east.

Russia is wresting control of Crimea, home to its Black Sea Fleet, from Ukraine following last month’s ouster of the former Soviet republic’s Moscow-backed president, Viktor Yanukovych. Ukraine says its neighbor has almost 19,000 soldiers in the region, which will vote on joining Russia on March 16. The crisis is the worst between Russia and the West since the Cold War, with the European Union and the U.S. imposing sanctions.

More on the Crisis in Ukraine:

  • Russian Forces Gain in Ukraine as Separatist Vote Looms
  • Crimea Referendum Offers Taste of Democracy ‘Under Guns’

“In Europe we have spent the last 70 years working to keep the peace, and we know from history that turning a blind eye when nations are trampled over stores up greater problems for the longer term,” U.K. Prime Minister David Cameron told lawmakers in London today. “We must stand up to aggression, uphold international law, and support the Ukrainian government and the Ukrainian people who want the freedom to choose their own future.”

Missile Unit

Ukraine sent troops to training grounds after alleging that Russian soldiers seized a missile unit at Chornomorskoe in Crimea. Ukraine’s border service said Russian forces control 13 border bases and the ferry crossing across the Kerch Strait to Russia.

Ukraine’s interim prime minister, Arseniy Yatsenyuk, said his country could hold a dialogue about more rights and powers for Crimea, but not “under muzzles of Russian guns,” according to a statement on his government’s website.

The Ukrainians “are hoping for the best but preparing for the worst,” Arseniy Svynarenko, a lecturer at University of Helsinki, said by phone. “If there’s violence, they need to be able to put forces on the border and to move in quickly.The worst-case scenario is separatists trying to escalate the crisis.”

Officer Defects

Russian soldiers opened fire with automatic weapons in an attempt to capture a Ukrainian motorized battalion near the southern Crimean town of Bakhchisaray, Russia’s Interfax news service reported, citing an unnamed representative of the Ukrainian battalion’s command. There were no injuries, Interfax said. A Ukrainian Defense Ministry spokesman said a lieutenant colonel from a battalion in the town had defected.

Russian Foreign Minister Sergei Lavrov said U.S. Secretary of State John Kerry had postponed a visit to Russia to discuss ways of easing the crisis. Russia has drawn up its own proposals in response to proposals put forward by Kerry at the end of last week, Lavrov said at a meeting with Putin in the southern Russian resort of Sochi. The Russian ideas would take into account the interests of “all Ukrainians without exception,” Lavrov said.

The U.S. is “still awaiting a Russian response to the concrete questions that Secretary Kerry sent Foreign Minister Lavrov on Saturday,” State Department Spokesperson Jen Psaki said by e-mail. Kerry “would welcome further discussions focused on how to de-escalate the crisis in Ukraine if and when we see concrete evidence that Russia is prepared to engage on these proposals.”

Eurobond Yield

The yield on Ukrainian government Eurobonds due 2023 rose 20 basis points today to 10.35 percent, the highest in five days. The hryvnia was little changed at 9.2325 per dollar. The currency has slumped 10.8 percent this year.

Cameron, who held talks with Chancellor Angela Merkel last night in Hanover, Germany, called on Russia to “resolve the crisis diplomatically” by engaging in direct talks with Ukraine and recalling troops to their bases. He and Merkel “were clear that any attempt by Russia to legitimize an illegal referendum would require us to respond by ratcheting up the pressure further,” he told lawmakers.

Britain will host a meeting with officials from other western governments tomorrow to begin work on a list of names who could be targeted by sanctions including asset freezes and travel bans if Russia doesn’t co-operate, the premier said.

Khodorkovsky Plea

Former Yukos Oil Co. owner Mikhail Khodorkovsky, who spent 10 years in jail in Russia for tax evasion and fraud before being pardoned by Putin in December, called today on the West to provide financial aid to Ukraine as security against Russia.

“What is needed is a Marshall Plan for Ukraine,” referring to the post-World War II aid program intended to bolster economies and fight against Soviet communism.

Yanukovych, whose claim to be Ukraine’s rightful president is backed by Russia, will speak tomorrow in Rostov-on-Don in southern Russia, the state-run Ria Novosti news service reported.

Crimea residents will be given the choice between Russian and Ukrainian passports if the peninsula votes to join Russia, Ria Novosti said, citing Crimean Premier Sergey Aksenov. The region will have two official languages, Russian and Crimean Tatar, he said.

Ivan Simonovic, the United Nations assistant secretary-general for human rights, will travel to Kharkiv tomorrow, UN spokesman Stephane Dujarric told reporters today in New York. Simonovic will later visit Crimea and Lviv and will remain in the country until Mar. 15.

Loyalty Test

While Russia probably won’t invade eastern Ukraine, it may test the region’s loyalties, according to Stefan Meister, an analyst at the European Council on Foreign Relations.

In Crimea and Donetsk, Ukraine’s most pro-Russian regions, 41 percent and 33 percent of voters respectively support union with Russia, Iryna Bekeshkina, the director of Ukraine’s Democratic Initiative Foundation told a news conference in Kiev. About 12 percent of all Ukrainians want to join Russia, she said, citing a Feb. 8-18 poll of 2,032 people, with most of those in favor more than 50 years old. The poll had a margin of error of 2.2 percentage points.

Russia’s strategy on eastern Ukraine is “not to split this region off but to make it more independent from Kiev so there’s a possibility of closer links with Moscow,” Meister said by phone from Berlin. “The only option Russia has, and we know they’re discussing it, is to pressure Kiev into a stronger federalization of Ukraine.”

To contact the reporters on this story: Volodymyr Verbyany in Kiev at vverbyany1@bloomberg.net; Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net Eddie Buckle


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