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Putin Orders Nuclear Alert As Ukraine Fiercely Resists Russian Invasion

Putin Orders Nuclear Alert As Ukraine Fiercely Resists Russian Invasion

Kyiv (AFP) - President Vladimir Putin's announcement that his nuclear forces were on alert sparked outcry in the West as the invading Russian troops faced stiff resistance in Ukraine on Monday.

The UN General Assembly will hold a rare emergency session Monday to discuss the conflict, which has claimed dozens of lives and raised fears that it will displace millions of people.

Ukraine has also said it had agreed to send a delegation to meet Russian representatives on the border with Belarus, which would be the two sides' first public contact since war erupted.

Russia invaded on Thursday and quickly announced it had neutralized key Ukrainian military facilities, but fierce fighting has since raged.

Ukraine forces, backed by Western arms, are stymieing the advance of Russian troops, according to the United States, which has led Western condemnation and a campaign of sanctions.

On Sunday Putin ordered Russia's nuclear forces onto high alert in response to what he called "unfriendly" steps by the West. Russia has the world's largest arsenal of nuclear weapons and a huge cache of ballistic missiles.

The United States, the world's second largest nuclear power, slammed Putin's order as "totally unacceptable".

Germany said Putin's nuclear order was because his offensive had "halted" and was not going to plan.

Ahead of the planned talks with Russia and as Ukrainian forces defended key cities, Foreign Minister Dmytro Kuleba voiced defiance.

"We will not capitulate, we will not give up a single inch of our territory," Kuleba said.

Ukrainian President Volodymyr Zelensky said he was sceptical about the talks.

"As always: I do not really believe in the outcome of this meeting, but let them try," he said.

'Brutal' Night

On day four of an invasion that stunned the world, Ukrainian forces said Sunday they had defeated a Russian incursion into Ukraine's second city Kharkiv, 500 kilometres (310 miles) east of Kyiv.

A regional official, Oleg Sinegubov, said Kharkiv had been brought under Ukrainian control and the army was expelling Russian forces.

Moscow has made better progress in the south, however, and said it was besieging the cities of Kherson and Berdyansk.

Both are located close to the Crimean peninsula, which Russia annexed from Ukraine in 2014, and from which it launched one of several invasion forces.

Ukrainian officials said they were fighting off Russian forces in several other areas, and claimed that 4,300 Russian troops had been killed.

In Kyiv, many residents spent another night in shelters or cellars as Ukrainian forces said they were fighting off Russian "sabotage groups".

But Sunday was relatively calm compared to the first days of fighting and the city was under a blanket curfew until Monday morning.

Ukraine has called on its own civilians to fight Russia, with a brewery in Lviv in the country's west switching its production line from beers to bombs, making Molotov cocktails for the volunteer fighters.

Western sources said the intensity of the resistance had apparently caught Moscow by surprise.

Ukraine has reported 198 civilian deaths, including three children, since the invasion began and Russia has acknowledged for the first time that a number of its forces had been killed or injured.

The UN has put the civilian toll at 64 while the EU said more than seven million people could be displaced by the conflict.

"We are witnessing what could become the largest humanitarian crisis on our European continent in many, many years," the EU commissioner for crisis management Janez Lenarcic said.

At the Medyka border crossing with Poland, volunteer Jasinska said the long line of arrivals, mostly women and children, need warm clothes.

Crossing Medyka with his family, Ajmal Rahmani, an Afghan who fled Afghanistan for Ukraine four months before the US withdrawal, told AFP: "I run from one war, come to another country and another war starts. Very bad luck".

'Stand Together'

The United States and its allies continued to try and build economic and military pressure.

The US and Europe "need to really stand together... to both the aggressive actions of Russia against Ukraine but also the threatening rhetoric coming from Moscow," said NATO chief Jens Stoltenberg.

NATO will deploy its rapid response force for the first time to bolster its eastern flank.

EU member states also closed their airspace to Russian planes and many pledged arms for Ukraine -- but stressed they would not themselves intervene militarily.

Brussels also announced it would provide 450 million euros ($500 million) for Ukraine to buy weapons and ban Russian central bank transactions, as well as restricting two Moscow-run media outlets.

The West said it would remove some Russian banks from the SWIFT bank messaging system, and freeze central bank assets.

The Kremlin has brushed off sanctions, including those targeting Putin personally, as a sign of Western impotence.

However the European Central Bank warned Monday that the European subsidiary of the Russian state-owned Sberbank was facing bankruptcy.

The Russian ruble fell almost 30 percent on Monday morning.

British energy giant BP announced Sunday it was pulling its 19.75-percent stake in Rosneft, a blow to Russia's key oil and gas sector, which is partly reliant on Western technology.

Also in response to hostilities, FIFA ordered Russia to play its home international fixtures in neutral venues and warned it was considering banning it from the 2022 World Cup.

Oil prices have also surged in response to the crisis, with West Texas Intermediate crude up more than five percent in early trade Monday.

Putin has said Russia's actions are justified because it is defending Moscow-backed separatists in eastern Ukraine.

The rebels have been fighting Ukrainian government forces for eight years in a conflict that has killed more than 14,000 people.


Thomas Piketty: Germany’s Position On Greek Debt A ‘Huge Joke’

Thomas Piketty: Germany’s Position On Greek Debt A ‘Huge Joke’

Thomas Piketty is calling out Germany. The French economist who rose to prominence with the publication of his 2013 treatise on income inequality, Capital in the Twenty-First Century, gave a candid interview to German newspaper Die Zeit, in which he described Germany’s hard line on Greece’s debt as hypocritical and a “huge joke.”

In a 61-to-39 public vote Sunday, Greeks rejected a bailout proposal from European Union leaders that would have kept the country afloat but increased austerity measures, which have already taken a severe toll on the economy since they were imposed in 2010.

The critically indebted country is currently in a standoff with the other 18 eurozone nations, among which Germany is the most prosperous and populous, and has been in a position of de facto leadership in Brussels’ debt negotiations with Athens. At stake is Greece’s continued membership in the European Union, which German chancellor Angela Merkel has said she wants to preserve, but “not at any price.”

That Germany is in a position to dictate terms at all, Piketty claims, is owed largely to the rest of Europe forgiving that country’s own debts after World War II.

“When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke!” Piketty said in the interview, first published in German and translated into English by Medium’s Gavin Schalliol (who took down the post due to copyright concerns). “Germany is the country that has never repaid its debts. It has no standing to lecture other nations.”

Piketty further accused Germany of “profiting from Greece as it extends loans at comparatively high interest rates.” Among eurozone nations, Germany is Greece’s largest creditor. According to the AP and Open Europe, the eurozone holds 60 percent of Greece’s total debt, the International Monetary Fund holds 10 percent, and the European Central Bank 6 percent

Piketty continued:

[A]fter the war ended in 1945, Germany’s debt amounted to over 200 percent of its GDP. Ten years later, little of that remained: Public debt was less than 20 percent of GDP. Around the same time, France managed a similarly artful turnaround. We never would have managed this unbelievably fast reduction in debt through the fiscal discipline that we today recommend to Greece.

“Those who want to chase Greece out of the eurozone today,” he warned, “will end up on the trash heap of history.”

You can read excerpts from the interview in English here and the original on Die Zeit

ViaQuartzandMedium

File photo: Thomas Piketty in October 2014 (blu-news.org via Flickr)

Germans See Dim Prospects For Reaching New Greece Bailout Deal

Germans See Dim Prospects For Reaching New Greece Bailout Deal

By Carol J. Williams and Amro Hassan, Los Angeles Times (TNS)

BERLIN — German Chancellor Angela Merkel flew off to Paris on Monday to consult with French President Francois Hollande a day after Greek voters rejected Merkel’s signature strategy for getting their heavily indebted country’s finances in order.

As leader of the eurozone’s largest and most prosperous country, Merkel has been the key architect of eurozone bailouts that have forced tough austerity measures on Greece in exchange for loans enabling it to remain part of the 19-nation common currency club.

Merkel has long said she wants to see Greece remain in the eurozone, but “not at any price.” And the Sunday vote by Greeks to reject their creditors’ formula for repayment of $270 billion in bailout loans sent that price skyrocketing.

The German chancellor is widely resented in Greece for her preference for imposing budget cuts on Athens rather than investing in job creation and growth. At the same time, her support for austerity is applauded by politicians across a wide spectrum in Germany and other prosperous eurozone states.

The result leaves Merkel confronted with competing pressures: Holding the Greeks’ feet to the fire means risking the first failure of the European Union’s common currency experiment, marring her tenure as its de facto leader.

During five years of imposed austerity, the Greek economy has contracted by 25 percent and more than a quarter of the working-age population is unemployed. Grinding poverty and an eroding social safety net induced voters to reject their creditors’ demands for more belt-tightening with a 61 percent “no” vote in Sunday’s referendum.

Greek Prime Minister Alexis Tsipras, whose leftist government had urged voters to say no to more austerity, spoke with Merkel by telephone Monday and said he would bring new proposals to an emergency meeting of the eurozone finance ministers in Brussels on Tuesday, a Greek government official told reporters in Athens.

But with both voters and the government having spurned what was presented as a final offer by the European Central Bank, the International Monetary Fund and the European Commission — the major creditors _ there was nothing left on the table to talk about, in the opinion of many influential European leaders.

Merkel made no public comment on the Greeks’ convincing “no” vote, but her spokesman, Steffen Seibert, told reporters at a Berlin news conference that she “takes notice” of the rejection and respects it as the will of the voters.

“However, in light of the decision by the Greek citizens, the conditions to start negotiations on a new aid program are not met yet,” Seibert said, adding that Berlin would “wait and see what the Greek government makes of it.”

Seibert said the German government was “stressing the principle that solidarity is inseparable from (a country’s) own efforts,” implying that the attempt by Athens to get a significant write-down on its debts was not in the offing.

Technically, the proposals put forward by the creditors nearly two weeks ago expired with the end of the previous bailout program on June 30. That was also the deadline for Athens to make a $1.8 billion payment on its loans from the IMF, a bill that still needs to be paid before talks can begin on a new bailout package.

Time is now ticking away on the next loan installment due July 20, a $3.9 billion payment owed the European Central Bank and one with far more dire and immediate consequences for Greece if it is missed than was the case with the IMF default.

Greek banks have been closed for more than a week since the European Central Bank froze emergency cash infusions to prevent their collapse after depositors, fearful of the coffers being emptied, began pulling out their savings.

Greek banks are reported to have only $555 million left in their vaults, or the equivalent of about $50 per person in the country of 11 million. With the banks shuttered, Greeks have been limited to daily withdrawals of about $66.

The European Central Bank has already pumped about $99 billion into Greek banks in recent weeks to prevent their collapse. The stewards of the European financial system were expected to wait for direction from the Eurogroup finance ministers after Tuesday night’s meeting on whether to resume the cash infusions to prevent what could be a destabilizing collapse of banking and the government’s inability to pay public sector salaries and pensions.

The eurozone supporters of holding Greece to its previous commitments exuded frustration and an approaching end to their patience after the referendum rejecting their terms for getting Greek finances in order and the country’s debts repaid.

While Merkel may be reluctant to see the integrity of the eurozone breached, her conservative colleagues in the grand coalition that governs Germany are of the view that the Greek “no” vote may well be a prelude to the country’s exit from the eurozone.

The referendum was a clear signal that Athens refuses to be beholden to its creditors, said Markus Ferber, who oversees euro policy for the Christian Social Union, the Bavarian sister party to Merkel’s Christian Democratic Union.

“The country and the government have knocked away the helping hand” of its eurozone colleagues, Ferber said. “The only chance for Greece now is to leave the euro.”
Opposition political forces in Germany also signaled their willingness to take no for an answer from the rebellious Greeks.

“Now Merkel and the others (of the European creditors) must organize a Grexit, with all the cushions and upheavals that will result as a consequence,” said Alexander Graf Lambsdorff of the Free Democratic Party, employing the shorthand for a Greek exit from the eurozone.

The Economist Intelligence Unit, an independent forecasting and advisory service of the Economist Group, put the chances of a Greek exit from the eurozone at 60 percent.

But there were also calls for making yet another stab at keeping the eurozone intact and finding a solution to the standoff with Greece.

“The basis of a dialogue is on the table, but it’s up to Greece to show us that it takes the dialogue seriously and that it knows it can stay in the euro, and that there are decisions to make,” French Finance Minister Michel Sapin said, urging eurozone colleagues to approach Tuesday’s gathering with an open mind.

(Special correspondent Hassan reported from Berlin and Times staff writer Williams from Los Angeles.)

(c)2015 Los Angeles Times. Distributed by Tribune Content Agency, LLC.

Photo: Journalists wait for a statement from Greece’s Prime Minister Alexis Tsipras on July 6, 2015 in front of Presidential palace in central Athens, Greece. Greece’s finance minister has resigned following Sunday’s referendum in which the majority of voters said “no” to more austerity measures in exchange for another financial bailout. (Kay Nietfeld/DPA/Abaca Press/TNS)

Analysis: The Biggest Danger Of A Greek Default Could Be Political Instability

Analysis: The Biggest Danger Of A Greek Default Could Be Political Instability

By Carol J. Williams, Los Angeles Times (TNS)

When recession exposed the glorified pyramid scheme that was Greek government budgeting in 2009, fear of a global economic meltdown on a par with the collapse on Wall Street a year earlier rippled through international markets.

The budget crisis was eased, but not before a short-lived panic in the financial markets. Now, as Greece once again peers over the precipice of expulsion from the Eurozone common currency club, millions worldwide are wondering what consequences lie ahead for other countries and investors if, as now appears likely, Athens defaults on its bailout debts on Tuesday.

Economists and financial strategists seem confident that the world will weather the latest crisis with minimal long-term disruption. Thanks to intervention plans crafted by the European Central Bank over the last three years, there are cash reserves on hand for emergency lending to other heavily indebted Eurozone countries and a $1.2 billion bond-buying fund to protect the most vulnerable in the event that a Greek default sends interest rates from private lenders skyrocketing.

This time around, the greater peril for Greece’s neighbors and allies is the political fallout that could follow a failure of Athens’ revolving-door leaderships to alleviate the pain from creditor-demanded austerity measures that have shriveled the economy and boosted unemployment to 26 percent.

The leftist firebrands of the Syriza party took power from the conservatives in January after campaigning on the promise that Greeks could demand debt relief but still retain the euro as their currency. They have instead led the country into a high-stakes standoff with the other 18 Eurozone nations, which have cut emergency cash infusions to Greek banks, prompting their temporary closure and a suspension of stock trading.

What lies ahead for a country that has already run the ideological gamut of political leaders in recent years, with none able to ease the crisis, may be a return to the more profound instability and tumult that afflicted Greece for decades before and after World War II — civil war, military coups, and dictatorship.

“Will democracy survive in Greece? If things get too bad, they’ve tried every political party already and they all screwed up,” said Jim Angel, a finance professor at Georgetown University’s McDonough School of Business. He points to Venezuela’s late leftist strongman, Hugo Chavez, as an example of a military autocrat coming to power and “systematically dismantling democracy.”

Greece is a member of the North Atlantic Treaty Organization. The rise there of an authoritarian regime, especially if Athens drifts further into alliance with Russia, would present major challenges to the unity and function of the Western security pact and add insecurity to Europe’s economic woes.

Greek Prime Minister Alexis Tsipras has engaged his country in a perilous game of chicken with its major creditors, defying Tuesday’s deadline for payment of $1.8 billion to the International Monetary Fund as well as the “troika” of lenders’ conditions for extension of a repayment plan on Greece’s $270 billion in bailout loans. The current bailout program expires Tuesday, which will cut off Athens from further borrowing to pay its international obligations as well as salaries for government workers and pensioners due on this last day of the month.

Monday was the first trading day since Tsipras signaled an end to negotiations with creditors on Saturday by announcing that the government was leaving it to Greek voters to decide whether to accept the additional burdens of government spending cuts in exchange for a new bailout deal. Tsipras called a referendum for Sunday _ five days after the deadlines for averting default and exclusion from new credit.

Markets dropped worldwide, with major European bourses losing 3 percent of their value and Asian and U.S. traders seeing shares plunge by 2 percent. Even so, trading volume was moderate, a sign that the latest Greek brush with disaster was foreseen and unlikely to unleash widespread panic.

The other Eurozone nations continue to call for an 11th-hour agreement for Greece to accept the extension terms laid out during months of haggling with the major creditors, which include the European Central Bank and the European Commission as well as the IMF. Leaders of the lending institutions have said a “yes” vote by Greeks on Sunday to take on the additional belt-tightening could spur new negotiations on a deal to keep Greece in the Eurozone, which a majority of Greeks tell pollsters they want.

Tsipras and much of his government, however, are urging Greeks to vote “no” on the new bailout terms, deepening the social divide between those willing to suffer through more austerity to keep the euro and those who think defaulting on their obligations will somehow force the creditors to ease the terms for repayment.

Whether the majority votes for or against the creditors’ proposals, gross dissatisfaction with the current government can be expected. A “yes” vote would demonstrate rejection of the Tsipras strategy in this sixth year of crisis, which may prompt his resignation, or spur another military or political faction to take over by force.

Click to enlarge

Click to enlarge

Unrest has spread in recent days, with rival pro- and anti-Europe rallies flaring in Athens, the capital that is home to 40 percent of Greece’s 11 million people. That concentration of the dispute provides a political cauldron for the opposing camps that could become increasingly violent as people struggle with an economic twilight zone or submit to creditors’ demands for deeper cuts in pensions and public services. And social disorder could chase away tourism, which had lately been on the rise and accounts for at least 17 percent of the nation’s income.

Even if Greece exits the Eurozone in a relatively peaceful and democratic manner, the first dropout from the ambitious experiment to create a continental nation-state would deal a blow to the European Union founders’ vision of a vibrant United States of Europe in which the rising tide of growth lifts all national boats.

Failure of the unity experiment, even if now limited only to Greece among the European Union’s 28 states, raises the prospect of other countries bailing.

“If Greece exits the euro, then the idea of the irreversibility of euro membership vanishes,” Raj Badiani, senior economist at the IHS research firm, wrote in an investors’ note on Monday. Worries over depletion of the union and retreat from its goals of common political, economic and security policies would undermine confidence in Eurozone members’ commitment to reform. That would lead investors to increasingly scrutinize pledges to fight corruption and bureaucracy and harmonize regulations.

During the last major Greek debt crisis, soaring interest rates demanded of other indebted Eurozone members, in particular Spain, Italy, and Portugal, raised the prospect of contagion that could tank their economies with unpayable levels of debt servicing. That is a risk that has been successfully averted this time, many analysts say, because of the emergency rescue programs adopted by the European Central Bank.

Southern members of the Eurozone also have healthier economies this time around, because their more stable governments adhered to the lenders’ formulas for balancing their budgets and stimulating growth.

“Nobody would expect Portugal and all of the others to leave any time soon; there doesn’t seem to be enough public support for that,” said Douglas Elliott, a fellow in economic studies at the Brookings Institution. “But it makes it possible to consider that in five or 10 or 15 years, maybe circumstances would be different. So as a rational investor, you’d have to factor that in” in deciding to invest or lend to other struggling Eurozone countries.

The European integration project will only succeed if all nations are willing to compromise, because “no one can get 100 percent,” German Chancellor Angela Merkel said Monday, describing the creditors’ last offer to Greece as generous and unjustly spurned. She blamed Athens for the collapse of negotiations.

(Special correspondents Lauren Frayer in Madrid and Tom Kington in Rome, and Times staff writers Dean Starkman, Hugo Martin, Samantha Masunaga, and Alexandra Zavis in Los Angeles contributed to this report.)

(c)2015 Los Angeles Times. Distributed by Tribune Content Agency, LLC.

Photo: xamogelo via Flickr