Yanukovich Sulking in Hideout

Over the past several days, more and more of his political supporters have deserted Ukraine's president Yanukovich in light of the bloody confrontations between police and protesters in Kiev. In the end, all of them decided they would be better off without him. The final straw seems to have been news that Moscow wouldn't send any money after all until calm was restored in the Ukraine and a political solution to the conflict was found (we imagine the Russians were concerned their money might end up getting stolen, not an entirely unreasonable fear). Yanukovich thereupon apparently decided that he would be best served by disappearing in the presidential helicopter and was last seen heading toward an unknown retirement hideout by air. However, from there he immediately resumed complaining:


“Yanukovych was removed in a 328-0 vote in the 450-seat chamber. As protesters took control of central Kiev and flooded into his luxury estate, Yanukovych said in a speech from an undisclosed location that attempts to remove him from power were a “coup d’etat.”

The peace agreement, signed on Feb. 21 after all-night talks in Kiev with EU foreign ministers, envisioned a national-unity government within 10 days. Lawmakers approved a return to the 2004 constitution, curbing presidential powers.

Polish Foreign Minister Radoslaw Sikorski, who helped negotiate the EU deal signed by Yanukovych and the opposition, said there was “no coup in Kiev,” and that parliament is acting legally. Yanukovych had said in a statement published on his presidential website that he wouldn’t resign and deemed all of the new acts illegal.”


(emphasis added)

In spite of this rather feeble last-ditch show of defiance, Yanukovich can probably be safely regarded as history. It was an interesting development that Russia decided to ditch him by refusing to send the financial aid it had only promised to release a few days earlier. We would point to this interesting little news item in this context:


“U.S. Treasury Secretary Jacob J. Lew and Russian Finance Minister Anton Siluanov agreed on the importance of promoting economic and financial stability in Ukraine and the need for reforms that could be supported by an IMF program, according to the Treasury Department. “There needs to be stability in the Ukraine,” Lew told reporters in Sydney yesterday, adding he’d had a “very good conversation” with Siluanov.

Lew spoke with Arseniy Yatsenyuk, leader of ex-Premier Yulia Tymoshenko’s Batkivshchyna party, and encouraged Ukraine to begin discussions with the IMF as quickly as possible, the Treasury Department said.”


(emphasis added)

If they had 'a very good conversation', we conclude that A) Russia decided it would be a lot cheaper to let the IMF pay and B) there must be some way in which the Russians think they will be able to forestall NATO expansion into the Ukraine (the main reason why the Russian government lent its support to Yanukovich in the first place was very likely to ensure that the Ukraine would not sign any 'security agreements' with Europe). Just guessing of course – it is impossible to tell what is really going on, but it is absolutely certain that Russia is set dead against being encircled via its 'near abroad', i.e., the former Soviet Republics.



iznogoud(Image by Jean Tabary)



TurchynovMeet the Ukraine's interim Caliph, former parliamentary speaker Alexandr Turchynov

(Photo via tymoshenko.com.ua)



And guess who has appeared on the scene moments after all of this happened, accompanied by the US ambassador and some EU minion?



YULIA_2831816cJulia Tymoshenko was immediately released from prison – here in a photo op with US ambassador Geoffrey Pyatt shortly after her release (yes, this Pyatt).

(Photo via saltspringnews.com / Author unknown)



According to European media reports, Tymoshenko is already plotting her political comeback. Never mind that she was twice in coalition with Yanukovich, or that there continue to be considerable doubts about her past energy deals – even though it is very likely true that her imprisonment was mainly politically motivated.

According to the AP:


“In 2011, she was arrested and charged with abusing power as premier in a natural gas deal with Russia. Tymoshenko said the proceedings were naked revenge, and Western governments voiced concern about a politically motivated prosecution. International criticism of Ukraine grew after she was convicted, received a seven-year sentence, and sent to prison.

Long before achieving global fame, Tymoshenko was already a high-profile figure in Ukraine. She and her husband took early advantage of former Soviet leader Mikhail Gorbachev's perestroika reforms by creating a popular video rental business.

The couple founded a fuel distribution company and she became head of Unified Energy Systems, a wholesale broker of natural gas. In that post, she became one of Ukraine's richest and most powerful oligarchs — and was dubbed "The Gas Princess."


(emphasis added)

There can probably be little doubt that her prosecution was a case of political revenge, or at least about the removal of potential competition (although she did lose the last election, and even her former 'Orange Revolution' partner, ex-president Viktor Yushchenko testified against her), but only insofar as her accusers were quite possibly even bigger thieves. As our friends at 'Oilprice.com' noted at the time of her trial, her past in the energy business is, let us say, not likely to be entirely spotless:


During 1995- 1997 Timoshenko was the president of Ukraine’s natural gas trading company United Energy Systems of Ukraine, which became Ukraine’s main importer of Russian natural gas to Ukraine. Accusations swirled that she was reselling enormous quantities of stolen gas and avoiding tax, having given former Prime Minister Pavlo Lazarenko kickbacks in exchange for her company's access. In August 2006 Lazarenko was convicted and sentenced to prison in the United States for money laundering, wire fraud and extortion.

Interesting company the Ukraine’s “gas princess” keeps, along with her personal wealth estimated in the millions. That said, Ms. Timoshenko is simply a product of her environment, and the 2009 natural gas deal that she cut with Russia was pragmatic, which raises the question of why she’s on the rack now. Speaking of personal fortunes – in the past two decades it has been impossible for anyone in the post-Soviet space to become rich. Why?

Simple – because theoretically, according to Marxism, “property is theft” and in December 1991 every Soviet citizen following the collapse of the USSR started out on the same starting line. Not – those with connections prospered, those on the assembly line did not. Timoshenko, cagey about her private wealth and reinventing herself as a populist politician, was nonetheless one of the former.


(emphasis added)

Well, who knows. Maybe she's really the only honest oligarch in all of the former Soviet Republics who became a millionaire in no time at all with the help of formerly state-owned assets purely due to her dedication to hard work. Right.

It will be interesting to see who gets closest to the place at the trough next, and whether they will behave any better than the kleptocrats preceding them. We wish the people of the Ukraine all the best, but we have our doubts on that count.


Ethnic Russians May Want to Split

Meanwhile, it is actually too early to state that peace has broken out, as there have been reports of clashes between the new (mainly same old, actually) revolutionaries and pro-Russian demonstrators. It seems possible that contrary to the wishes of the US and the EU, the Ukraine will eventually end up splitting along ethnic lines:


“Pro-Russian demonstrators have clashed with anti-government protesters in Ukraine’s south and eastern regions. Several attempts by opposition supporters to hold rallies over this weekend’s historic events have been roundly shut down.

In the poor industrial city of Donetsk, pro-Russian protesters made their feelings clear over their allegiances. A scene repeated in several other cities like Kerch in Crimea where some Ukrainians have spoken openly of their desire to see the country split along political lines.”


(emphasis added)

Western powers wasted no time warning Russia not to actively support such desires for the independence of the ethnic Russian part of the Ukraine:


“U.S. officials insisted on Sunday that Ukraine should remain unified and cautioned that any military intervention by Russia would be a mistake after bloody street protests ousted the pro-Moscow president.

In an appearance on the NBC TV program "Meet the Press," National Security Adviser Susan Rice was asked about a scenario in which Russia would send troops to restore a government more friendly to Moscow, or for the country to be carved up.

"That would be a grave mistake. It is not in the interests of Ukraine or of Russia or of Europe or the United States to see the country split. It's in nobody's interest to see violence return and the situation escalate," Rice said.


"The message has to be sent to him (Putin) that let the Ukrainian people determine their own future, and a partition of Ukraine … is totally unacceptable," Republican Senator John McCain, a key Republican voice on foreign policy, told the CBS program "Face the Nation".

"And we need to act immediately to give them (Ukrainians) the economic assistance that they need, based on reforms that are going to be required, as well. So it's going to be tough sledding."

Bob Corker, the top Republican on the Senate Foreign Relations Committee, said in a statement: "The United States should do everything possible to ensure Ukraine remains one country and that their territorial and political integrity is maintained, allowing them the freedom to choose a future within Europe."


(emphasis added)

Excuse us for asking, but who cares? What business is it of the US, EU, or Russia for that matter, whether the Ukraine 'remains a unified country'? What makes a unified Ukraine better than a split one? Wouldn't it be best to avoid future conflict along ethnic lines by allowing Ukrainians to decide this for themselves? What makes a bigger country inherently better than two smaller ones?

We would argue that on the contrary, statism is automatically reduced when political territories become smaller, and it would actually be best if not only the Ukraine, but every large nation state territory broke apart into smaller ones. Big is definitely not beautiful when it comes to nation states – except for the people  forming the ruling elite of said states. Citizens are generally far better off the smaller the political entity they inhabit is. We conclude that there is nothing to worry about in the event the Ukraine splits in two – from the point of view of the inhabitants it may be the best solution actually.


Addendum: Hryvnia Unmoved

Interestingly, there is no rejoicing yet in the currency markets about the latest developments – the Ukrainian currency has even weakened slightly further:


HryvniaThe Hryvnia has failed to recover so far … – click to enlarge.



The stock market has however rallied sharply over the past three trading days – the old saying has once again been proven true, somewhat sooner than expected in this case (i.e., 'buy when there is blood in the streets'):



UAXThe Ukraine's stock market soars – click to enlarge.




Charts by: Investing.com



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