Ukraine Live Day 325: Eleventh Russian ‘Humanitarian Convoy’ Enters Donbass

January 8, 2015
Photo: Sergei Pivovarov / RIA Novosti

Yesterday’s live coverage of the Ukraine conflict can be found here. An archive of our liveblogs can be found here. For an overview and analysis of this developing story see our latest podcast.

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For links to individual updates click on the timestamps.

For the latest summary of evidence surrounding the shooting down of flight MH17 see our separate article: Evidence Review: Who Shot Down MH17?

Ukrainian POW Facing Charges In Moscow Still On Hunger Strike

Ukraine Has a Serious Debt Problem, With No Solution In Sight

The Economist has published an analysis of Ukraine’s economy. Prospects are dim to say the least. Despite the IMF (International Monetary Fund) bailout, Ukraine is facing a major crisis in 2015, and in many ways its efforts to combat 2014’s crisis means that 2015’s outlook is even more dim:

Ukraine’s foreign-exchange reserves are at about $9 billion, having been above $20 billion a few months ago. They fell in 2014 because the central bank tried to prop up the hryvnia. Ukraine has also cleared big debts with Russia for gas imports. But next year’s debt repayments and gas bills will probably send them into the red. The biggest payment comes in December, when Ukraine needs to repay a $3 billion bond to Russia.

Trouble may come sooner than that. Ukraine’s official state-finance statistics are released in March or April. According to a bizarre rule of the $3 billion Russian bond, Ukraine’s debt-to-GDP ratio cannot exceed 60%. If it does, the Kremlin can force Ukraine to pay back the bond immediately. Not only that: Ukraine would technically be in default of all its international bonds, meaning that other creditors could demand immediate repayment. Everyone suspects that Ukraine already has breached the 60% threshold; but that will only be known for sure when official figures are released.

The problem is compounded by the fact that the debt-to-GDP ratio has been getting worse since 2012, long before the Euromaidan protests, Russia’s annexation of Crimea, or Russia’s invasion of eastern Ukraine.

Since so many factors in Ukraine’s economic crisis are external, and many of them predate the Euromaidan revolution, it’s not clear what Ukraine’s government can do to stop the bleeding. And it’s also not entirely clear how any plans presented by external powers in either the West or in Moscow will make things better.

Of course, the Russian propaganda outlet Sputnik is running the following headline: Ukraine Heading for Default yet Looking to Beef up Defence Spending. Since evidence published just in the last few weeks indicates that Russia is still sending new weapons to Russian-backed rebels in the east, it’s no surprise that the Kremlin’s propaganda brigade is pushing for Ukrainian defense cuts.

Cartoonists, however, seem to have been able to spot the difficulty of the current situation before Western policy makers:

European Commission Offers Ukraine 1.8 Billion Euros, Says IMF Conditions Must Be Met

Good news for Ukraine? RFE/RL reports that the European Commission has offered 1.8 billion euros ($2.12 billion) in medium-term loans to Ukraine, but that loan comes with a catch:

The EU’s executive arm said on January 8 that Ukraine must continue reforms under an International Monetary Fund (IMF) program and implement economic and financial policies agreed with the EU…

Meanwhile, an IMF team on January 8 resumed talks with authorities in Kyiv about terms for a possible new loan to Ukraine. 

An existing IMF bailout package is worth $17.1 billion, but only $4.6 billion has been paid out so far.

The conditions of the IMF loan require Ukraine to make significant cuts in the government’s deficit. Ukraine is trying to do this while simultaneously increasing military spending to counter the threat from Russia and the Russian-backed militants in the east.  In order to do that, the Ukrainian government has had to cut back on other services, adding to Ukraine’s economic woes.

Meanwhile, the Ukrainian hryvnia is trading at 15.76 to the US dollar, near its worst rate. Here is a graph of the hryvnia’s performance against the dollar over the last year. As you can see, the currency started to struggle after the Euromaidan revolution in February 2014 and has faced significant devaluation since the Russian military operations started 10 months ago.

Angela Merkel Says Russian Sanctions Can’t Be Lifted Until Minsk Agreement Fully Implemented

German Chancellor Angela Merkel is signalling that she will not advocate the lifting of sanctions against Russia and Russian-occupied Crimea unless the Minsk agreement is full implemented.

The Minsk deal, signed at the close of August, was an agreement brokered by Russia that was supposed to bring about a ceasefire, prisoner exchanges, and new rounds of discussion about how to permanently end the crisis in Ukraine. Since then, the Russian-backed separatists have continued to launch attacks, the Kremlin has continued to supply the separatists with advanced weapons systems, and the conflict in Ukraine is only semi-frozen instead of resolved.

Reuters reports that sanctions against Russia and Crimean officials for the annexation of the peninsula also could not be reversed, Merkel said, unless Crimea was returned to Ukraine.

“I have little hope on that front,” Merkel said. “The other sanctions were introduced in response to the intervention in eastern Ukraine. Fulfilling the entire Minsk agreement is the way to bring about a reversal (of sanctions) here. The entire Minsk agreement must be implemented before we can say these sanctions can be lifted.”

The New York Times reports that Germany, France, Russia and Ukraine are trying to set up a meeting in Astana, Kazakhstan, but Merkel was also signalling that there is not optimism that such talks would solve the crisis:

“A meeting in Astana won’t lead to all points being fulfilled the next day,” she said. “What we can do is try to make visible progress and at the same time have a reliable road map for other points. What is difficult is that we already often had road maps that weren’t kept to.”

Yatsenyuk said the Minsk deal is still viable and the most urgent priority is to seal the Russia-Ukraine border. He called for continued Western unity in pressing Russia on the deal, saying that Moscow is “desperately trying” to split EU countries, “but they’re going to fail.”

James Miller

Eleventh Russian ‘Humanitarian Convoy’ Enters Donbass

The eleventh ‘humanitarian convoy’ organised by the Russian Emergencies Ministry has crossed the Ukrainian border. 

The BBC Russian Service reported in the early hours of this morning that the Emergencies Ministry had said that 120 trucks carrying around 1.5 tonnes of aid, had set off from the Rostov region.

The convoy split into two before crossing the border. One group passed through the Donetsk-Izvarino crossing and headed towards Lugansk, the other crossed near the Russian village of Avilo-Uspenka and headed to Donetsk.

As with the previous convoys, the Ukrainian government considers the unauthorised entry of the Russian columns to be a violation of territorial integrity.

UNIAN reports that Andrei Lysenko, spokesman for the Ukrainian National Security and Defence Council, claimed that all of the ‘humanitarian convoys’ had in fact carried ammunition, rations and weapons for Russian and separatist fighters in the Donbass.

Russia’s state-owned RIA Novosti news agency reports that OIeg Voronov, the deputy chief of the Emergencies Ministry’s National Centre for Crisis Management, has told them that one of the convoy groups has now arrived in Donetsk.

Voronov said that more than 60 trucks carrying more than 700 tonnes of aid, were now being unloaded. Voronov said that the journey had passed without incident.

— Pierre Vaux