Daily Archives: May 8, 2014

The differing responses to the Ukraine crisis
This week, German Chancellor Angela Merkel is in Washington for talks with President Barack Obama, and Ukraine will top the agenda. Washington has led the way on sanctions, imposing asset freezes and travel bans on dozens of senior Russians and scores of companies, in an attempt to show Russia’s President Vladimir Putin that his interference in Ukraine will bring rising economic costs. The EU on the other hand, seems deeply resistant to tougher economic sanctions, given the much more important ties between Europe and Russia. In this week’s podcast, Ben Hall, world news editor, is joined by Geoff Dyer, Washington correspondent, and Stefan Wagstyl, Berlin bureau chief, to discuss how the two leaders should handle the escalating situation

  • With India in the middle of elections, David Pilling argues that the Congress party – which looks set for a drubbing – has done itself out of a job by actually making progress in its mission to eradicate poverty: Indians “have graduated from what Rajiv Kumar of the Centre for Policy Research calls the ‘petitioning’ class to the ‘aspirational’ one.”
  • A Chinese regulatory loophole means that the internet sector enjoys the most foreign equity investment of any part of the Chinese economy, though foreigners do not own a single share. Regulators have turned a blind eye but there is a risk it could all go wrong, writes the FT’s Charles Clover (riffing off the proposed IPO for Alibaba).
  • Want to know who to watch for in the European elections? Explore our interactive feature on the European Parliament – we profile 25 people to watch, from old guard to budding stars, power brokers and iconoclasts, federalist core and political fringe.
  • Sweden’s central bank sounded the alarm on the household debt burden: the average indebted Swede owes 296 per cent of their annual income, while the average mortgage holder owes 370 per cent.
  • The Tea Party is facing a struggle in Georgia, the state which has anchored its movement in the past five years. The Washington Post reports on how some of the Tea Partiers risk being squeezed out in a crowded field by some of the movement’s most reviled Republicans.

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Barely 18 hours after Vladimir Putin called on pro-Russian activists in eastern Ukraine to postpone “independence” referendums planned for May 11, they snubbed the Russian president. There seem only two possible explanations. Either Mr Putin’s statement was cynical theatre designed to distance him from whatever the separatists may do next, and to ward off escalating western sanctions. Or Moscow genuinely does not have full control of those separatists.

Understandably, many are jumping to the first conclusion. Even if, as Moscow claims, there are no Russian soldiers or agents among the rebels in eastern Ukraine, few western military analysts doubt that Moscow has at least lent logistical and other support from across the border. The east Ukrainian rebels wave Russian flags, and have several times publicly called for assistance from Mr Putin (pictured above). It strains credibility that if they received an unequivocal public – and private – signal from Moscow to back off on their referendum plans, they would defy it.

Eurasia Group, the risk consultancy, even on Wednesday night said Mr Putin’s suggestion that the May 25 Ukrainian presidential elections could be a “step forward” if the rebels postponed their referendum and there was dialogue with Kiev, was at best a “tactical feint”. It aimed to wrongfoot the west, exploiting intra-EU and EU-US differences over sanctions policy.

By Thursday, Tim Ash, Standard Bank’s wily watcher of Ukraine and emerging markets, was suggesting Mr Putin “deserves an Oscar for his performance”. Read more