Category Archives: Alexander Mercouris

The Minsk "Agreement"

by Alexander Mercouris

Already there is debate about who has "won" and who has "lost" in the Minsk talks.

The short answer is that as the German foreign minister Steinmeier correctly said there is no breakthrough but the Russians and the NAF have made progress.

One point needs to be explained or reiterated (since I have explained it already and many times).

The agreement does not make provision for federalisation or autonomy for the Donbass but still only refers to the grant of a law according the Donbass temporary special status within the Ukraine.

There could not be an agreement for federalisation out of the Minsk negotiations because they are primarily a summit meeting of five powers - Russia, Belarus, Ukraine, German and France. The Russians have always insisted that this is an internal conflict and civil war within the Ukraine and between Ukrainians and it is for the Ukrainians and them alone to resolve their internal differences between them through negotiations.

Given that this is Russia's stance, Russia and the other powers cannot impose a federalisation scheme on the Ukrainians and they have not - at least overtly - sought to do so. What the stated objective of the Minsk talks is - at least from the Russian point of view - is to set up conditions and a process for the constitutional negotiations that the Russians have been pushing for (and which were supposedly agreed on 21st February 2014 and on 17th April 2014 and 5th September 2014) to take place.

The Russians have been insisting on these negotiations since the February coup. The Russians are not publicly pre-ordaining the outcome of those negotiations because were they to do so they would not be negotiations at all. Whatever a negotiation is, it is by definition not something whose outcome is preordained.

If the Russians sought to preordain the outcome of the negotiations by insisting on federalisation as the outcome they would be imposing their views on the parties and would be admitting that they are a party to the conflict, which is what they have consistently said they are not. They would in effect be doing what the US has tried to do in the Syrian conflict, which is insist on an outcome to negotiations (Assad's resignation) before negotiations even take place. The Russians have always opposed this sort of behaviour and they are being consistent in not openly adopting it now.

Depending on what the parties agree between them, the negotiations could in theory result in decentralisation, federalisation, a confederation or even outright independence for the Donbass (the Russians floated that idea as a serious possibility in the summer). The latter is not by the way contrary to the reaffirmation of respect or even support for the Ukraine's sovereignty and territorial integrity that we saw in the statement today. If the internal parties to the conflict were to decide on a formal partition as the solution to the Ukraine's conflict, then international actors like Russia could recognise it without calling into question their previous declared support for the Ukraine's territorial integrity, as they previously did when Czechoslovakia split up.

In reality everybody knows that the Russians' preferred option is federalisation and the Europeans are now edging towards that solution. Whether it is a viable solution is another matter.

Once this key point is understood everything else starts to fall into place.

Last spring and summer the Russians sought a ceasefire so the constitutional negotiations could begin. The Europeans are now also demanding a ceasefire (they were less keen on the idea last spring and summer). There is now therefore an agreement for a ceasefire.

Back in August the Russians demanded the withdrawal of heavy weapons from the Donbass. There is now an agreement for the withdrawal of heavy weapons from the Donbass.

If that happens it will be a major weakening of the Junta's position in the Donbass because it is the Junta whose military has the big preponderance in heavy weapons. If the opposing sides are left with light infantry forces, the advantage on the ground will pass decisively to the NAF.

The political machinery that was supposed to have been agreed in Minsk on 5th September 2014 to create the conditions for the constitutional elections is being revived. Thus there is to be a law of special status for the Donbass pending the constitutional negotiations to clarify its current legal status and provide legal mechanisms for its internal administration by the NAF (Ukraine passed one previously and then reneged on it), more elections etc.

There is a new provision, which is the first indications of some sort of timeline for this process with the constitutional negotiations supposed to have been concluded by the end of the year.

There are also some ideas for a beefed up monitoring process via the OSCE.

Will any of this happen? Highly doubtful I would say. Consider what happened after the Minsk process of 5th September 2014. The Junta did not withdraw its heavy weapons. It did not retreat to the agreed boundary line. It imposed an economic blockade on the Donbass (it is now obliged to lift it). It rescinded the law on the Donbass's special status. It reinforced its army and in January it attempted to renew its offensive.

Is there any more prospect of this process succeeding than did the one that was agreed in Minsk in September?

The big difference between this process and the previous process is that the Europeans are now formally involved. Its success or failure ultimately depends on whether the Europeans are going to insist on the Junta fulfilling its obligations. They spectacularly failed to do so before and I have to say I think it is very unlikely they will do so now. If the Europeans fail to insist on the Junta fulfilling its obligations then the process will unravel as the previous Minsk process did and with the balance of advantage continuing to shift every day on the ground towards the NAF we will see a further renewal of the fighting and a further NAF advance in the spring.

In the meantime control of the border, disarmament of "illegal armed groups" etc are now overtly linked to the successful conclusion of the constitutional negotiations, which is supposed to happen before the end of the year. Of course if the constitutional negotiations succeed, then when all these things happen we will have a different Ukraine from the one we have now. At that point the control of border posts etc will be in the hands of differently constituted authorities from those that exist today.

Will those negotiations actually happen? Will they succeed if they do? I doubt it. The Junta will resist them tooth and nail if only because those negotiations put in jeopardy the whole Maidan project and by their mere fact call into question the Junta's legitimacy.

It depends in the end on what the Europeans do. This has been true of the conflict from the start.

That it depends on what the Europeans do is in itself a good reason to doubt this process will succeed. The probability is more conflict down the road but in the meantime Poroshenko's admission that there is "no good news for the Ukraine" from this process tells us who is winning.

Talks in Moscow – a two-part analysis

by Alexander Mercouris

Part one (On 6th February 2015)
They have apparently continued for 5 hours and are still not finished though it seems some sort of document is being prepared for tomorrow.

Three comments:

1. If negotiations go on for 5 hours that does not suggest a smooth and conflict free discussion.

2. One of the most interesting things about the Moscow talks is that they mainly happened without the presence of aides and officials i.e. Putin, Hollande and Merkel were by themselves save for interpreters and stenographers. Putin and Merkel are known to be masters of detail and given his background as an enarque I presume Hollande also is. However the German and French officials will be very unhappy about this. The Russians less so because since the meeting is taking place in the Kremlin they are listening in to the discussions via hidden microphones.

One wonders why this is happening? Even if the Russian officials are not listening in Merkel and Hollande will assume they are. The fact that Russian officials were not present is therefore less significant than that German and French officials have been barred from the meeting by their respective chiefs, suggesting that Merkel and Hollande do not entirely trust them.

There has been an extraordinary degree of secrecy about this whole episode and it rather looks as if Merkel and Hollande were anxious to stop leaks and to prevent information about the talks from getting out. Presumably this is why their officials were barred from the meeting. From whom one wonders do Merkel and Hollande want to keep details of the meeting secret? From the media? From other members of their own governments? From the Americans? What do they need to keep so secret? The frustration and worry on the part of all these groups must be intense.

3. The fact that the British are excluded from the talks is going down very badly with many people here in London. It has not escaped people's notice that this is the first major negotiation to settle a big crisis in Europe in which Britain is not involved since the one that ended the Franco-Prussian War in 1870. Of course it is largely the fault of the inept diplomacy of Cameron, who has taken such an extreme pro-Ukrainian position that Moscow simply doesn't see him as someone worth talking to. Also one suspects Merkel and Hollande do not trust Cameron not to leak the whole discussion to whomever they want to keep it from. Having said that it is difficult to see this as anything other than further evidence of Britain's decline into complete irrelevance. I cannot imagine Thatcher being excluded in this way. If the United Kingdom is indeed in the process of breaking up (and as I suspected the Scottish referendum settled nothing with polls indicating that the SNP may make an almost clean sweep of all the seats in Scotland in the election in May) then the slide into irrelevance still has a long way to go.

Part two (On 7th February 2015)
I am coming increasingly round to the view of Alastair Newman that Merkel and Hollande came with no plan to Moscow but with the purpose of having what diplomats call "a full and frank discussion" in private with Putin looking at all the issues in the one place in Europe - the Kremlin - where they can be confident the Americans are not spying on them. That must be why they sent their officials away.

It is also clear that Merkel's and Hollande's visit to Kiev before their flight to Moscow was just for show.

Poroshenko's officials are insisting that the question of federalisation was not discussed during Poroshenko's meeting with Hollande and Merkel. Hollande has however now come out publicly to support "autonomy" for the eastern regions i.e. federalisation, which makes it a virtual certainty that in the meeting in Moscow it was discussed. The point is that Merkel and Hollande did not want to discuss federalisation with Poroshenko because they know the junta adamantly opposes the idea and did not want him to veto it before the meeting in Moscow had even begun.

The problem is that since everyone pretends that federalisation is an internal Ukrainian issue to be agreed freely between the two Ukrainian sides, its terms will only be thrashed out once constitutional negotiations between the two Ukrainian sides begin. Since the junta will never willingly agree to federalisation, in reality its form will have to be hammered out in private by Moscow after consultations with the NAF and with Berlin and Paris and then imposed on the junta in the negotiations.

Saying this shows how fraught with difficulty this whole process is going to be.

Not only are there plenty of people in the Donbass who now oppose federalisation (and some in Moscow too I suspect) but this whole process if it is to work would somehow have to get round the roadblock of the Washington hardliners, who will undoubtedly give their full support to the junta as it tries to obstruct a process over which it has a theoretical veto. Frankly, I wonder whether it can be done.

If the process is to have any chance of success then Merkel and Hollande must screw up the courage to do what they failed to do last spring and summer, which is publicly stand up to the hardliners in Washington and Kiev and impose their will upon them. Are they really willing to do that? Given how entrenched attitudes have become over the last few months and given the false position Merkel and Hollande put themselves in by so strongly supporting Kiev, the chances of them pulling this off look much weaker than they did last spring.

I would add a few more points;

1. There is one major difference between the situation now and in the Spring, which might offer some hope of movement.

Anyone reading the Western media now cannot fail but see that there is a growing sense of defeat. Sanctions have failed to work, the Ukrainian economy is disintegrating and the junta's military is being defeated.

That was not the case last spring, when many in the West had convinced themselves that the junta would win the military struggle with the NAF. The confrontation strategy Merkel opted for in July based on that belief has totally and visibly failed. It is not therefore surprising if she is now looking for a way-out by reviving some of the ideas that were being floated by the Russians in the spring. She now has a political imperative to look for a solution in order to avoid the appearance of defeat, which would leave her position both in Germany and Europe badly weakened. That political imperative was not there in the spring. It is now. In a sense the pressure is now on her.

2. I should stress that it is Merkel who is Putin's key interlocutor. The reason Hollande is there and appears to be taking the lead is to provide Merkel with cover. The one thing Merkel cannot afford politically is the appearance of a Moscow-Berlin stitch-up that the hardliners in Washington, Kiev, London, Warsaw and the Baltic States will claim is a new Molotov-Ribbentrop Pact to divide Europe into German and Russian spheres of influence. Whether we like it or not in Germany the shadow of Hitler still hangs heavy and exposes Berlin to endless moral blackmail whenever it tries to pursue with Moscow an independent course. That is why Merkel needs Hollande present when she meets Putin for talks of the sort she's just had in Moscow.

3. One other possible sign of hope is that there is some evidence that a sea-change in European and especially German opinion may be underway.

Whatever the purpose of the ongoing debate in Washington about sending weapons to the junta, whether it is a serious proposal or an attempt to secure diplomatic leverage or a combination of the two, it has horrified opinion in Europe, bringing home to many people there how fundamentally nihilistic US policy has become.

All the talk in the Western media yesterday and this morning is of a split between Europe and the US. That is going much too far. However for the first time there is public disagreement in Europe with Washington on the Ukrainian question. Whether that crystallises into an actual break with Washington leading to a serious and sustained European attempt to reach a diplomatic solution to the Ukrainian crisis against Washington's wishes is an altogether different question. I have to say that for the moment I very much doubt it.

4. I remain deeply pessimistic about this whole process. The best opportunity to settle this conflict diplomatically was last spring. I cannot help but feel that as Peter Lavelle said on the Crosstalk in which I appeared yesterday, the train has now left the station.

A peaceful solution to the Ukrainian conflict ultimately depends on European resolve to face down the hardliners in Washington and Kiev. It is going to be much harder to do this now than it was last year.

Moreover, despite the bad news on the economy and on the front line in Debaltsevo, the hardliners in Kiev are bound to have been emboldened by all the talk in Washington about sending them arms, which is going to make the effort to bring them round even harder than it already is.

The besetting problem of this whole crisis is that the Europeans have never shown either the resolve or the realism to face the hardliners down though it is certainly within their power to do so. In Merkel's case one has to wonder whether her heart is in it anyway. My view remains that this situation will only be resolved by war, and that the negotiations in Moscow will prove just another footnote to that.

5. If I am wrong and some autonomy really is granted to the Donbass, then I make one confident prediction. This is that the Ukraine will in that case disintegrate even more rapidly than it would have done if federalisation had been agreed upon last spring or summer.

Following such a terrible war, I cannot see people in the Donbass accepting federalisation as anything other than a stepping stone to eventual secession and union with Russia. If the Donbass secures autonomy, I cannot see people in places like Odessa and Kharkov failing to press for an at least equivalent degree of autonomy to that granted to the Donbass. If the Europeans are prepared to see the Donbass achieve autonomy, by what logic can they deny it to the people of Odessa and Kharkov?

More to the point, the November elections showed the emergence of what looks like an increasingly strong potential autonomy or even independence movement in Galicia.

Given that a terrible war has been fought and lost in the east to defeat "separatism" in the Donbass, and given the widespread disillusion with the junta in Kiev, it is difficult to see how many people in Galicia will not feel betrayed if the grant of federalisation to the Donbass is now imposed on them after so many of their men died to prevent it. If in reaction Galicia presses for the same sort of autonomy as the Donbass - which it could well do - then the Ukraine is finished. I doubt it would hold together for more than a few months. If federalisation had been granted last spring or summer before the war began then it is possible - likely even - that the Ukraine could have been held together in a sort of state of suspended animation at least for a while. I don't think there's much chance of that now.

War in the Ukraine

by Alexander Mercouris

Russia Insider has published my latest piece on the course of the Ukrainian war. It is a more refined and thought through version of the piece I previously wrote on this Page.

1. My key point is that it is not minor tactical movements that are determining the course of this war. It is the level of casualties the Ukrainian military is suffering. They were hammered in the summer and they are being hammered again now.

In my pieces for Russia Insider I quoted the number of Ukrainian military deaths on the basis of official Ukrainian documents obtained by a hacking group as 1,100 for a two week period that covered the battle for Donetsk airport. The NAF today puts the total number of Ukrainian military deaths presumably since the resumption of the fighting at 1,500. Colonel Cassad yesterday was saying that the number could be over 1,800.

The figures of 1,500 and 1,800 cover a longer period than the 1,100 in the hacked Ukrainian documents. The fact that they are all of the same order of magnitude however suggests that all these figures are reliable. If so then that that shows that my guess that the Ukrainian army is suffering deaths at a rate of several hundred a week is probably correct.

2. Of course the NAF is also currently suffering a high rate of losses. However it is clear that these are at a substantially lesser level than the Ukrainian. As I said in the Russia Insider piece an NAF spokesman put the loss ratio at 4 to 1. Colonel Cassad put the total number of NAF deaths at 600 for the same period as that of his 1,800 estimate for Ukrainian deaths. That is a 3 to 1 ratio.

I suspect that the number of NAF deaths over the last 3 weeks is higher than usual because the NAF has been on the attack for most of this period. When that stage ends after the Debaltsevo pocket is fully encircled I would guess the number will fall. By contrast as the pocket collapses the rate of deaths of Ukrainians will rise especially if the pattern of unsuccessful counterattacks the Ukrainians have a habit of launching is followed.

3. As I said in the article for Russia Insider the Ukrainian military simply cannot go on taking losses at a rate of several hundred a week. In the slugfest we are seeing it is only a matter of time before it breaks. This is especially so since I strongly suspect that I have greatly overestimated the total number of Ukrainian troops in the Donbass in my Russia Insider piece. I put the number in the same range of 60,000 or so thousand that was the case in the summer. I suspect the real total is substantially less, thus the attempted mobilisations about which in the Russia Insider piece I have much to say.

4. On the political front, the DPR/LPR are taking a very hardline in the negotiations. Specifically:

(1) they are now formally challenging Kuchma's plenipotentiary rights i.e. his right to sign agreements that formally and legally bind the junta. They are insisting that he formally be given such rights.

As I have argued before there was no doubt that Kuchma was acting on behalf of the junta when he signed the Minsk Protocol and it is fatuous to deny the fact. However the junta has repeatedly resisted pressure to formalise Kuchma's position since if they formally admit he is their representative then they formally admit they are negotiating with the NAF, which is something for political and ideological reasons they emphatically do not want to do.

(2) the NAF has said that they would agree to a new ceasefire on the basis of the actual combat line and not the line agreed in the Minsk Memorandum. This is a way of rejecting calls for a ceasefire because they know perfectly well that the junta will not agree to this. Importantly the NAF rejected a call for a temporary 7 day ceasefire in Debaltsevo today. I think this is the first time the NAF has rejected a ceasefire when it has been offered.

This is a fundamental shift from the position last spring and summer. At that time it was the NAF (and the Russians) who were repeatedly calling for a ceasefire and the junta that was ignoring such calls even as it purported to agree to them. Now the situation is reversed. There is no better indicator that the initiative has now passed to the NAF than that.

(3) The Russians are backing the NAF line. It has been completely overlooked but yesterday 2nd February 2015 Interfax carried this brief but momentous report at 20:03 hours Moscow time:

"Kremlin source: East Ukraine militias' hardline 'absolutely justifiable'"

As I have said previously, the Russians have abandoned hope of Western pressure to force the junta to negotiate. This provides further confirmation. The NAF has the green light from Moscow to see its offensive through.

(4) To understand why the Russians have given up hope of a negotiated solution consider Poroshenko's latest statement today. Even as the situation collapses around him he is continuing to reject calls for federalisation and is continuing to say that the Ukraine will remain a unitary state. As I have said previously, the ideological and political nature of the junta makes no other response possible and anyone who thinks the junta will voluntary agree a compromise is fooling himself.

5. I am not going to say anything about what looks like a gathering political crisis in Kiev because there are others who understand it better than me.

Saker commentary: here is what I wrote in the comments section of Russia Insider under Alexander's analysis.

Since Alexander has been so kind as to mention me I just want to say that I indeed *fully* agree with his analysis, especially when he predicts further disaster for the Ukrainian military. He is also correct when he says that the number of killed Ukrainians is a humanitarian catastrophe: we might well see something quite amazing happening - a war where there are more military casualties then civilian ones. Furthermore, I also fully agree that the decision to stop the massacre depends not on Kiev, but on Washington. This war will last as long as the US wants to keep this bleeding wound open and no amount of western "aid" (lethal or otherwise) will turn the tide in this war. The only question is how many Ukrainians will have to die for this abomination to finally stop. Even the "solution" to this war is obvious and understood by everybody: a nominally unitary Ukraine with full cultural, economic and political autonomy for *all* its regions, not only the Donbass and a full recognition of the Novorussian authorities as a equal partner for negotiations. All this nonsense about "9000 Russian troops" "invading" the Ukraine and Russia as the "aggressor country" (as the Rada says) or the nonsense about the LNR and DNR being "terrorist organizations" (official Kiev position) only delays the inevitable and will generate more useless deaths. Finally, I also agree that the US/NATO cannot and therefore will not send forces to crush the Novorussians. What US/NATO can, and will, do is provide some financial and some military aid, and lots of hot air and big empty statements and promises. That will not be enough. Alexander's analysis is flawless.
The Saker

EU sanctions meeting

by Alexander Mercouris

As Eric Kraus has pointed out there is complete confusion in the media today about how to spin the latest EU sanctions decision.  Did Syriza fold as per Reuters and Bloomberg.  Or did the meeting expose growing splits within the EU as per the Financial Times and the London Times.

The best answer is that nothing definite was decided at the latest EU Council meeting but Syriza did manage to put a marker down.

I go back to my piece about Syriza for Russia Insider (  Whether one likes the fact or not, for Syriza relations with Russia are not the priority.  Syriza does not agree with the sanctions, but its overriding priority is Greece's own economic crisis.

Given that this is so, it is simply unrealistic to expect a very young government in the very first days of its existence to provoke a crisis within the European Union that pitches it against the Commission, Germany, Britain and France, risking a deeper crisis in Greece and putting in jeopardy its own existence, on an issue that for Greeks is of only peripheral importance.  

What Syriza did on Thursday was all that in the circumstances it could realistically do: apply a soft brake on the sanctions train.  

The European Council meeting was convened by Mogherini, the EU's "foreign minister", following demands from the EU hardliners led by Donald Tusk (who now nominally chairs the European Council when it meets at heads of government level) who have been calling for a strong EU response to the breakdown of the ceasefire and the ongoing NAF offensive, which has resulted in the capture of Donetsk airport and the gradual encirclement of the Debratselvo pocket.  It also took place against a drumbeat of orchestrated hysteria following the shelling in Mariupol.  Prior to the meeting Tusk said that he was not interested in a meeting that was purely declamatory.

That however is what Tusk got.  What came out of the meeting was essentially declamatory.  

The Greeks insisted on a belligerent paragraph directed against Russia being removed from the text of the final EU statement and postponed any further decision on further sanctions to a European Council meeting on 12th February 2015, which will take place at heads of government level.  In return they agreed to an extension of the limited sanctions against specific Russian companies and individuals that came into force in March, but not for a full year (as the hardliners apparently wanted) but only for 6 months (to September 2015).  

These sanctions are a serious matter for the individuals concerned, but they are not critical for Russia. 

This is not the outcome that either the Russians or the EU hardliners led by Tusk had wanted, but it gives time and space for Syriza to sort out its own position and make whatever alliances within the EU it can, both on the critical debt question and on the less critical question of sanctions.  

The next test will come at the European Council meeting on 12th February 2015 which Tsipras himself will attend.  As of now it is looking unlikely that the EU will impose further significant sanctions on Russia at that meeting.  Syriza is opposed to such sanctions but more importantly some of the other EU states are not keen on them either.  They now known that one EU government - that of Greece - is strongly of that view, which is likely to make their opposition still stronger.  To what extent more sanctions can be prevented at the meeting on 12th February 2015 will depend on the extent to which Syriza is able to play on the doubts of these other EU states.  Significantly Syriza did manage to play successfully on these doubts at the meeting on Thursday, when it received the discrete support of several other EU states.

The big test however will be when the sectoral sanctions come up for renewal in July.  That is the key decision upon which the future of the sanctions ultimately depends.

I would add that by July - and even more by September when the sanctions that were extended on Thursday come up for renewal - we will also have a better idea of the prospects for a Podemos victory in Spain.  

If Podemos does win in Spain, then the entire calculus changes with Syriza having one of the big EU countries as an ally.  I hardly need say that Spain carries immeasurably more weight within the EU than does Greece.  A Podemos government in Spain can afford to go it alone on sanctions and defy the other big powers in the EU.  A Syriza government cannot.

In my opinion Thursday's decision was the best that could be expected in the circumstances.  As I said the big decisions are still to come.  It would be of no benefit to Russia, Greece or Syriza if Syriza had provoked a crisis in the EU on Thursday on a question of extending the least important sanctions, which caused a dramatic escalation of the economic crisis in Greece, which in turn meant that Syriza was either swept from power in Greece or was unable to make independent decisions when the big decisions come up in July.  

I would finish by again repeating what I said before in my Russia Insider piece and here.  

Greece is a small and economically very weak country.  For its people the sanctions are not the priority.  The economic crisis is.  That is why they voted for Syriza:  to solve the economic crisis, not to get the sanctions on Russia lifted.  On the sanctions issue people should not expect more from Syriza than it promised or can realistically deliver.

A key day in the Ukrainian Conflict?

by Alexander Mercouris

This may turn out to be a critical day in the evolution of the Ukrainian conflict.

1. The Russian Security Council met today. We do not (obviously) have a full account but Putin's website has provided some details.

Strikingly, Putin referred to the junta as "official Kiev" and not "the Ukrainian government" or "the Ukrainian side". He also referred to the two east Ukrainian republics as "the Donetsk People's Republic" and "the Lugansk People's Republic".

This is the closest Putin has yet come to since Poroshenko's election in implying that the junta is not the legitimate authority in the Donbass and that the two NAF republics are.

2. Putin also pointedly referred to "criminal orders" coming from "official Kiev".

3. Putin has also had a telephone conversation with Lukashenko, who is a key partner in relation to the Ukrainian conflict. Again we have scarcely any information about what was discussed but Putin will have wanted to ensure that Lukashenko remains on board. I expect a phone call to Nazarbayev shortly.

4. We now know from comments made by Shuvalov at Davos that Beijing is being consulted all the time. The key point about what happened at Davos is that Shuvalov made it absolutely clear that Russia will not submit to sanctions and Kostin of VTB gave a very clear warning against any attempts to exclude Russian banks from the SWIFT payments system. The Financial Times has a good summary of the comments Shuvalov and Kostin made and I attach it below.

5. The Russian Justice Ministry meanwhile has formally banned a number of Ukrainian organisations including Right Sector. Some of us are surprised that they had not been banned already.

6. Zakharchenko has said that the Minsk Memorandum no longer applies. This is not the same document as the Minsk Protocol, which was the original ceasefire agreement that was agreed on 5th September 2014. Rather, it is the technical follow-up document that purported to set out the ceasefire line and which provided for the withdrawal of heavy weapons, which was agreed on 19th September 2014. Neither the Minsk Protocol nor the Minsk Memorandum have ever been implemented. By saying the Minsk Memorandum no longer applies Zakharchenko has freed the NAF to pursue offensive operations, which is currently what it is doing.

7. Lastly, Zakharchenko has also again been saying that the DPR's/LPR's decision to secede from the Ukraine is final.

Now it may be that all these discussions and conversations and comments are uncoordinated and do not in total amount to anything. Perhaps there has been no change in Russian policy. However they do look like a hardening of position and perhaps give clues that the Russians have at least for the moment given up hope of the diplomatic approach. They also suggest a preparation for a battening down of the hatches in case another round of sanctions is on the way.

From the Financial Times:

One of Russia’s top bankers on Friday warned that excluding the country from the Swift banking payment system would be tantamount to “war”.

The suggestion that Russia could be shut out of Swift triggered widespread alarm in Moscow’s financial community when it was floated by western politicians last summer. Russia’s banks rely heavily on the Belgium-based payments system for both domestic and international payments. However, the move was at the time considered too punitive a sanction, being described by one adviser as “the nuclear option”.

Speaking at a panel in Davos on Friday Andrei Kostin, chief executive of VTB, Russia’s second-largest bank, said: “If there is no Swift, there is no banking . . . relationship, it means that the countries are on the verge of war, or they are definitely in a cold war.”

“The next day, the Russian and American ambassadors would have to leave the capitals,” he added.

Mr Kostin’s comments highlight how the west’s sanctions regime is creating a sense of anger and defiance among the Russian political and business elite.

“The more you press Russia, I do not think the situation will change,” he said, pointing out that the country was moving to reduce its reliance on western payment systems such as Swift.

“We have already created a domestic alternative to the Swift system . . . and we need to create alternatives internationally.”

He drew attention to efforts under way between Russia and China to create a separate platform of their own, outside western control.

Igor Shuvalov, Russia’s deputy prime minister, echoed this theme. “We are developing our eastern vector,” Mr Shuvalov declared, pointing out that although efforts to build links with China had been under way before the crisis, they had dramatically intensified since sanctions started, as Russia looked for alternatives to the west.

Mr Shuvalov said that the so-called Bric countries (Brazil, Russia, India and China) were ready to help each other in a financial crisis too. “Large Chinese investors are coming to us,” he said.

The “pivot to Asia” has become a key part of Vladimir Putin’s foreign policy since the breakdown in relations with the west over Ukraine. While several flagship deals have been signed, such as the $400bn contract to supply Russian gas to China for 30 years last May, few Russian policy makers or businesspeople believe China can save the Russian economy from a painful recession.

“The present situation looks like it is softer than [the 2008-09 financial crisis] but we are going into a long crisis situation and it may be protracted,” Mr Shuvalov said.

But he added that foreign pressure would not succeed in changing the political leadership of the country.

“We will survive any hardship in the country — eat less food, use less electricity,” he said.

Alexei Kudrin, the respected former finance minister, predicted Russia could see capital outflows of $90bn this year after a record $151bn in 2014. “We should clearly understand the price we are paying for sanctions,” he said.