Relations between Ukraine and Russia has once again deteriorated rapidly. Three years ago, Russia annexed Crimea. After this was signed the Minsk agreement, and it seemed that the confrontation in Eastern Ukraine has entered a stage of remission. However in 2017, the conflict escalated, which resulted in a large number of victims. Minsk agreements exist only on paper, and the confrontation is proceeding in different directions.
First, the cultural confrontation.
Music contest “Eurovision-2017” will be held in Ukraine. However, Kiev does not intend to allow the participation of the Russian contestant Yulia Samoylova, who sang in a wheelchair at the opening ceremony of the Paralympic games in Sochi, due to the fact that she spoke at the event dedicated to the annexation of Crimea.
Russian banks are walled with concrete blocks
As for the confrontation in the economic sphere, last week the Ukrainian nationalists have walled up with concrete blocks the entrance to the Kyiv branch of “Sberbank”.
The corresponding video can be found on the Internet. It reflects the depth of the confrontation between Russia and Ukraine.
Sberbank is the largest Russian state Bank. Ukrainian “Sberbank” 100% created on the Russian money. He became the object of hatred of nationalists just because it is a Russian financial institution.
The radical actions of the nationalists affected more than one Department. The regions also were broken ATMs of the Bank. In addition, it was reported vandalic actions against Russian Alfa-Bank: the Bank wall paint was made obscene inscription.
It began February 18, when President Putin signed a decree on the official recognition of passports issued by Russian-backed administration in Donetsk and Luhansk oblasts which are under control of Pro-Russian militias.
Ukrainian “Sberbank” has recognized these IDs that turned into hard protests by nationalists, who oppose the independence of the Eastern regions of Ukraine.
According to the Ukrainian “Sberbank”, March 9, he announced a change for its decision. On 14 March, the activities of some of the Kyiv offices was suspended. March 15 the maximum amount that you can withdraw from an ATM, was limited to 30 thousand hryvnia (about $ 1120).
Also on 15 March the Council of national security and defense of Ukraine decided to close all banks on the territory of Ukraine, where the Russian capital.
President Petro Poroshenko on 16 March signed it into law, bringing within one year, the activities of the Ukrainian “Sberbank” and five other banks will be limited. The Ukrainian leader also requires to impose similar sanctions against the Western countries.
In accordance with these sanctions will be denied financial transaction, in the interest of the new banks, the allocation, interest rates, interbank transactions and the payment of the subordinated loan from the correspondent account.
It will still be illegal withdrawal of capital on the territory of Ukraine, however, transactions between residents of Ukraine and customers who have account in the new Bank, will not be limited.
At the beginning of 2017 had been reported in Ukraine, 96 banks, among them 25 with foreign capital.
Under the sanctions were five banks: Sberbank (the capital of 48.4 billion, the sixth place among the Ukrainian banks), Prominvestbank (the capital of 34.3 billion, the 11th place among Ukrainian banks), VTB (capital of 20.6 billion hryvnia, the 15th place among Ukrainian banks) VS Bank (capital 3.9 billion hryvnia, 32nd place among Ukrainian banks), BM Bank (the capital of 1.8 billion hryvnia, 47th place among Ukrainian banks).
Among the top 15 banks in the sanctions imposed against three
Among the top 15 banks under the sanctions were three Bank. This is of considerable importance for the Ukrainian economy as a whole. In the Ukrainian banking sector the share of assets of the five banks is 8.8% of the total.
In Russia in addition to the state “Sberbank” (savings Bank), which occupies the first place, and VTB (foreign trade), also has foreign trade banks are the state development banks. All of them in one form or another are an extension of national policy.
Five banks that came under sanctions, are branches of Russian banks. Prominvestbank is included in the group of “Vnesheconombank”, VS Bank owned by “Sberbank”, VTB Bank and BM Bank is the branches of VTB Bank.
It is obvious that the Ukrainian side believes that the banks, in which there is the Russian state capital, taking a chunk out of Ukraine. Ukraine’s Central Bank wants these measures helped sale the five above-mentioned banks, and that they eventually left the country.
Meanwhile, the “Vnesheconombank” wants to sell “Prominvestbank” in the first half of this year. According to the Agency “TASS”, the buyer has already been found.
VTB Bank was also involved in the search of the investor for BM Bank. However, the Ukrainian “Sberbank” did not think about it.
Usually the access of Russian capital to the markets of Central and Eastern Europe has a special meaning: security of Russia.
Experts believe that Putin’s speech at the Munich conference in 2007, demonstrates that Russia gives priority to transactions which will ensure the safety, not profit.
After the Georgian conflict in 2008 in the CIS countries, the tendency to political coups. Against this background, the Kremlin’s economic expansion, which will help to influence on the political system of the countries concerned, in order to be able to take effective counter measures.
As an example, when the financial impact of the Russian capital has shaken the entire financial system of the state, can lead to bankruptcy in 2014, Corporate Commercial Bank, which was one of the largest banks in Bulgaria.
The Bank was established with the participation of Russian “VTB Capital”, and when the Russian Bank has decided to exit the business, he went bankrupt, which shook the credit of the trust in Bulgaria.
If we analyze the activities of three Russian state banks in Ukraine based on this example, the Ukraine was lucky: they were not able to influence the political situation. However, the concern of Ukraine can understand.
Nevertheless, the confrontation between Russia and Ukraine is not limited only to cultural and banking problems.
The economic blockade of the Eastern regions intensifies
The banking sector is a cause for concern, but the economic blockade of Eastern Ukraine — the problem is much deeper.
In the East produces smokeless coal. Part of the region seized by Pro-Russian separatists, but despite this, there are Ukrainian businessmen. In other regions of Ukraine supplied the fuel for heating purposes and for the production of cast iron.
Despite the battles and confrontation, the Western Ukraine has always depended on East from the point of view of coal supply.
Nevertheless, the nationalists are seriously concerned that the supply of coal is to benefit from Pro-Russian separatists and Russia, so in January 2017, they began to block supply routes.
President Poroshenko is extremely concerned about this problem.
The fact is that smokeless coal mined in the East, covers approximately half of the total number of Ukrainian fuel for heating purposes. If the winter supply will stop, will have to buy fuel abroad at a high price. This will hit the already weakened economy of Ukraine.
Moreover, there is also the political aspect: if you organize an economic blockade of the Eastern regions, they will further strengthen relations with the Russian side. Such measures would give the separatists more excuses for their actions.
Initially there was a problem, which is that the economic blockade is contrary to the Minsk agreements. Due to the lack of fuel for power generation is constantly having power outages. In a month the Ukrainian authorities suffer losses in the amount of four billion.
The Ukrainian government has repeatedly sought to withdraw the economic blockade, but in early March it is acknowledged that work in the coal mines practically stopped due to the fact that the blockade was tightened.
Against this background, the Ukrainian authorities on March 9 decided to block rail and road connections with the Eastern region. In the end, President Poroshenko gave in to pressure from the nationalists.
Pro-Russian separatists responded quickly.
March 15, they are deprived of the energy holding “DTEK”, owned by the richest man in Ukraine, Rinat Akhmetov, control over all the enterprises not under the control of Kiev territories of Donetsk and Luhansk regions and severed trade relations with Ukraine.
We can say that the problem of separatism in the Eastern regions reached a new level.
Victory trump — one of the reasons
As a result, the IMF suspended the issuance of Ukraine tranche of one billion dollars, forming part of the financial assistance, the total size of which amounts to 17.5 billion dollars. As a result, Ukraine may suffer even greater losses than Russia.
Nevertheless, the government was forced to take such steps, not only because of the political situation.
One of the reasons that President Donald trump, who won the election and declared the improvement of relations with Russia.
Despite the fact that Trump will not be easy to follow the path of reconciliation with the Kremlin, Ukraine this development promises many uncertainties. In this situation, the return of the Crimea to forget. Moreover, there is a possibility that Kiev will have to make some concessions on the issue of the Eastern regions.
Therefore, the nationalists, and President Poroshenko was important to show that Ukrainian problem exists to this day.
One fact testifies that the Ukrainian government was thinking about, January 17, the Ukrainian foreign Ministry has filed a lawsuit in the international court of justice against Russia in the framework of the International Convention for the suppression of the financing of terrorism.
Ukraine has filed a lawsuit in connection with the annexation of the Crimea, but in November 2016, Russia has refused to ratify the Rome Statute of the International criminal court in the Hague, which ruled that Crimea was captured.
All the evidence suggests that the conflict between Russia and Ukraine drags on. The parties will be extremely difficult to reconcile. Washington also can’t close eyes to this problem, building policy towards Russia.