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Economic warfare triggered by Russian insurgency into Ukraine

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Today, news is that 40 persons have died in conflict between the Ukraine military and Russian-backed ethnic Russian protesters in Odessa. That is a terrible circumstance as is all civil war. Russia’s heavy handedness is what has made matters worse, and the prospect is certain that for Russia the economic situation will worsen too. German Chancellor Angela Merkel and President Obama are in alignment about levying new sanctions, and the trigger date seems to be the May 25th elections. If Russia backs off and lets free elections continue, that may delay further sanctions. Yet, the protests and interference continue which may preclude the possibility of not imposing more.

What is the price to gain more territory versus the economic pain imposed by sanctions that can last a very long time? Putin must be weighing that right now.

“Economic Warfare

Russian President Vladimir Putin’s spokesman said Ukraine’s actions kill any chance of implementing an agreement to defuse the crisis that was reached in Geneva last month between Ukraine, Russia, the U.S. and the EU.

Putin has threatened to escalate economic warfare if further sanctions are imposed.
“When we reach a particular tipping point is very hard to say in advance,” Merkel said. “But all I can say is that the elections on May 25 are a decisive juncture for me and if there is further destabilization, things will get more and more difficult.”

The confrontation is already squeezing Russia. The ruble’s 8.3 percent retreat this year is the second-worst after Argentina’s peso among 24 developing-country peers monitored by Bloomberg. The benchmark Micex Index (INDEXCF) has fallen 13 percent since the start of the year.
Russian GDP

The International Monetary Fund this month lowered its estimate of Russia’s GDP growth this year to 1.3 percent from 2 percent in January. Russian Finance Minister Anton Siluanov went even further on April 15, saying economic growth may halt this year as capital flight accelerates.”

http://www.reuters.com/article/2014/05/02/us-ukraine-crisis-odessa-fire-...

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