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Kyiv Post: 31. July 2014



In its push to purge Russian-backed insurgents from eastern Ukraine, government forces this month freed several cities. Among them are the Donetsk Oblast cities of Dzerzhynsk, Rubizhne, Soledar, Debaltseve, Shakhtarsk and Torez, as well as Luhansk Oblast’s Lutugino, Lysychansk, Severodonetsk and Popasna.

But the nation paid a high price in liberating the cities, with more than 120 soldiers killed in battle since July 17. In total, 363 government troops have been killed and 1,434 wounded since the onslaught of the violence in April. The following is the list of soldiers killed in battle from July 17-28.

Glory to Ukraine! Glory to the heroes!..

July 17

Ivan Yavkushyn, 31, from Yevpatoria, killed during shelling at a checkpoint in Marynivka, Donetsk Oblast. He is survived by his wife and daughter.

Dmytro Hryhorenko, 22, from Fastiv, Kyiv Oblast, died from injuries received during battle on July 12.

Andriy Kostyrko, 24, from Bryukhovychi village, Lviv Oblast, was killed when Kremlin-backed insurgents shelled his group’s position in Luhansk.

Ukraine army during fierce fighting of recapturing a rebel-stronghold in Slovyansk.

July 18

Ruslan Chubatenko, 23, from Bereznyaky in Cherkasy Oblast, killed after rebels fired Grad rockets near Savur-Mohyla in Donetsk Oblast.

Oleh Barskyi, 38, was killed during shelling near Marynivka, Donetsk Oblast. He leaves a wife and a son.

Viktor Boiko, 40, from Cherkasy, was killed by sniper fire. He leaves a 12-year-old daughter.

Ihor Chernyak, a volunteer of the Donbass Battalion, was killed during battle near Popasna village, Luhansk Oblast.

Konstyantun Blozva was killed in battle near Popasna village, Luhansk Oblast.

Sergiy Bohonko, 22, from Yerky village, Cherkasy Oblast. The Donbas Battalion volunteer died from injuries in Artemivsk, Donetsk Oblast.

July 19

Oleksandr Yurchenko, 42, from Abramivka village in Cherkasy Oblast,

Serhiy Belokopytskiy, 31, from Zaporizhia Oblast. He leaves a wife and 6-year-old daughter.

Volodymyr Chornous, 26, from Panasivka village, Vinnytsya Oblast. The first lieutenant, commander of an air defense platoon, he leaves a wife and 1-year-old son.

Artur Pushanko, 20, Zhytomyr, was killed in battle near Lysychansk, Luhansk Oblast. “Curse on you, jackals! Many of you will see hell before you even go there!” his father wrote of his son’s death in a letter.

Markym Savchenko, 25, from Sumy, served as first lieutenant in the 95th Air Mobile Brigade and was killed in battle near Lysychansk, Luhansk Oblast.

Yuriy Lyapin, 19, from Kapustyntsi village in Kyiv Oblast. A soldier of the 95th Air Mobile Brigade, he was killed in battle near Lysychansk, Luhansk Oblast.

Oleh Klym, 37, from Shchyrets in Lviv Oblast, a soldier of the 95th Air Mobile Brigade, died in battle near Lysychansk, Luhansk Oblast. He leaves a wife and a daughter.

Mykola Burlaka, 27, from Stolne in Chernihiv Oblast. The soldier of the 95th Air Mobile Brigade was killed in battle near Lysychansk, Luhansk Oblast.

Denys Begits, 19, from Tsiurupynsk, Kherson Oblast.

July 20

Pavlo Ilchuk, 22, from Voronenko village, Ivano-Frankivsk Oblast. He was killed by mortar fire near Luhansk airport.

Andriy Vasylyshyn, 29, from Doroshivtsi village, Chernivtsi Oblast. A master of unarmed self-defense, he volunteered to join the army.

Andriy Halai, 21, from Vikno village, Ivano-Frankivsk Oblast. He sacrificed his life for more than 50 wounded marines who were freed from encirclement by Kremlin-backed militants.

Oleh Mykhailov, 45, member of the Volyn Maidan Self-Defense from Derno village, Volyn Oblast. He was captured and executed by Russia-backed militants.

July 21

Artem Stryzhenko, 20, a soldier of the 95th Air Mobile Brigade from Zhytomyr.

Roman Maisternyuk, major and commander from Kirovograd Oblast. He died near a checkpoint in Horlivka, Donetsk Oblast. He leaves a wife and 20-year-old son.

Viktor Garkavenko, 29, from Glynyane village, Kirovograd Oblast. He died from severe injuries while receiving treatment in the hospital in Gukovo, Russia,

Oleksandr Zagorodniy, 50, from Dniprodzerzhynsk, Dnipropetrovsk Oblast. The soldier of the 39th battalion was killed in a blast when a minibus was packed with explosives detonated nearby.

Ihor Voloshyn , 28, from Rivne, was a soldier of the 39th battalion.

Roman Vaskalo, 26, from Lviv. A soldier of the 24th Mechanized Brigade, he leaves a wife and 1-year-old daughter.

Oleksiy Lepkalyuk, 58, from Staryi Kosiv village, Ivano-Frankivsk Oblast. A member of the Aidar Battalion, he was an active member of the EuroMaidan Revolution and a veteran of the Soviet War in Afghanistan. He died near a checkpoint in Luhansk.

Volodymyr Mukha, 20. A member of the Aidar battalion, he was from Kamianky village, Vinnytsia Oblast.

Mykola Korolko, 26, an Aidar Battalion soldier from Volyn Oblast, was killed during a combat mission near Luhansk.

Henadiy Toma, 41, an Aidar Battalion soldier from Kharkiv Oblast, was killed during a combat mission near Luhansk.

Pavlo Yashchuk, 48, an Aidar Battalion soldier from Berdyansk, Zaporizhia Oblast, was killed in an explosion during a combat mission near Luhansk. He is survived by a wife and 9-year-old son.

Oleksandr Chygryn, 20, soldier from Ust-Putyla village, Chernivtsi Oblast. He was killed in a blast from an armored personnel carrier in Luhansk Oblast,

Oleksandr Savchenko, 22, a second lieutenant of the 24th Mechanized Brigade in Yavoriv, was born in Kryzhopil, Vinnytsia Oblast. He was killed by mortar shelling in a border area of Luhansk Oblast. He leaves behind his parents and a sister,

The following four servicemen of the 93rd Mechanized Brigade of Cherkasy were killed in a battle with separatists near Pisky village near Donetsk.

Oleksandr Lavrenko, 31, tank company commander, born in Lozova, Kharkiv Oblast.

Oleksandr Vokhrameev, 40, junior sergeant gunner from Apostolove, Dnipropetrovsk Oblast.

Andriy Kuliahin, 21, soldier from Voskobiynyky village, Poltava Oblast.

Fedir Synelnyk, 28, soldier and bomber from Kharkiv Oblast. Before mobilization, he used to work at Donbass Fuel-Energy Company. He leaves his mother and sister.

July 22

Yevhenyi Yudenko, 27, a soldier from Komsomolsk in Poltava Oblast, was killed near Pisky village, Donetsk Oblast, when a mine exploded beneath his armored personnel carrier. Yudenko is survived by his mother and two older brothers.

Oleksandr Shyshko, 28, a gunner of the 12th “Kyiv” Territorial Defense Battalion, was mortally wounded during a Grad rocket attack in Luhansk Oblast. He died in a  Kharkiv hospital. Shyshko leaves his wife and 8-month-old daughter.

July 23

Oleksandr Radievskyi, 44, a commander of a military unit of the National Guard of Ukraine. He was born in Kryvyi Rih. Radievskyi oversaw the liberation of Mykolaivka, Semenivka and Sloviansk. On July 15, he was awarded a medal for courage and dedication by President Petro Poroshenko. He died in a battle in Lysychansk, Luhansk Oblast.

Pavlo Snitsar, 38, commander of Infantry Battalion of the National Guard of Ukraine. Snitsar was born in Ulianivka, Kirovohrad Oblast. He died in the battle for the liberation of Lysychansk, Luhansk Oblast.

Ihor Kotsiar, a soldier from Kirovohrad, died in the battle for Lysychansk, Luhansk Oblast.

Iuri Dutchak was ambushed near Amvrosivka. He leaves a son.

Taras Yakymchuk, 20, a serviceman from Mizoch in Rivne Oblast, was fatally injured by crossfire and died in a helicopter on the way to the hospital.

Mykhailo Honcharenko, 23, soldier from Zaporizhia. He was badly injured when rebels opened fire on a Ukrainian military convoy near Lozove village, Donetsk Oblast. He leaves a mother, stepfather, sister and brother.

Ihor Khol, 21, lieutenant and platoon commander from Oleksandrivka, Cherkasy Oblast. In 2013, he graduated from Lviv Academy of Ground Forces. He was wounded on July 20 and died during surgery in a Kharkiv hospital.

Viktor Makydon, 45, a serviceman from Nizhin, Chernihiv Oblast, was a member of the Dnipro Battalion.

Serhiy Karbinovchy, 33, a private paratrooper from Voznesensk, Mykolaiv Oblast.

July 24

Roman Krakovetsky, 23, a gunner of the 40th territorial defense battalion “Krivbas” from Kryvyi Rih. He was killed when his armored vehiclewas hit by radio-controlled bombs near Amvrosivka, Donetsk Oblast. 

Ihor Berestenko, anti-aircraft gunner of the 93th Mechanized Brigade in Cherkasy, was a member of the Armed Forces of Ukraine. He was born in Nikopol, Dnipropetrovsk Oblast and killed in battle near Novoluhanske village, Donetsk Oblast. 

The following servicemen of the 8th separate special purpose regiment were killed on patrol after discovering a diversionary militant group in Donetsk Oblast. 

Andriy Chaban, 26, sergeant from Zalistsi in Ternopil Oblast. 

Volodymyr Cherkasov, 25, serviceman from Olhopil, Vinnytsia Oblast. 

Vasyl Koberniuk, 31, from Iziaslav, Khmelnytsky Oblast. He leaves a mother, brother and fiancé. 

Oleh Orlov, 23, gun commander in the 72nd mechanized brigade of Bila Tserkva. He was born in Uman, Cherkasy Oblast and was killed by mortar fire near the Russian border at Chervona Zoria village, Donetsk Oblast. 

Serhiy Rokitskyi, 33, officer and sergeant of the 24th Mechanized Brigade. A military doctor, he was killed by a sniper while helping a wounded colleague on the battlefield. He leaves his parents and a 4-year-old daughter. 

July 25 

Volodymyr Statiy was part of a Ukrainian volunteer corps from Lviv. He was killed in a grenade explosion near Pisky village, Donetsk Oblast. 

Andriy Belenets was a member of the Ukrainian volunteer corps from Novokyivka, Mykolaiv Oblast. He was killed by gunfire near Pisky village, Donetsk Oblast. He leaves a wife and four children. 

Dmytro Heorhiev, 36, captain from Mykolaiv. He was killed defending Luhansk airport. He leaves his wife and two sons in Uzhhorod. 

Mykola Povkh, a serviceman from Velymche, Volyn Oblast. 

Pavlo Strelchyk was a member of the Aidar Battalion from Kyiv. He was killed in battle near Luhansk. He leaves a wife and two children. 

Pavlo Leiba, 18, a soldier from Berehomet, Chernivtsi Oblast. He died of a gunshot wound to the head near Lysychansk, Luhansk Oblast. 

Oleksandr Syrota, 24, a contract paratrooper soldier from Prymorske, Odesa Oblast, was killed during shelling near the border village Tarany, Donetsk Oblast. He leaves his parents and five siblings. 

Hryhory Savchuk, 35, Zaluzhne, Volyn Oblast. He leaves a pregnant wife and three children. He died in a Kharkiv military hospital from severe battle wounds. 

Hryhory Horchak, 33, a senior warrant officer of the state border service from Odesa Oblast, was badly wounded during a militant tank attack. He leaves a wife and two children. 

Oleksandr Hryhorovych, 35, a Dnipro Battalion member from Pechanivka, Zhytomyr Oblast, leaves his family and seven-year-old daughter in Dnipropetrovsk. 

July 26 

Vitaliy Piddubnyi, 36, a volunteer serviceman in the “Donbas” battalion, was killed near Lysychansk while transporting food and aid for the platoon. Born in Myropillia village, Sumy Oblast, he lived in Berdiansk and was a Maidan self-defense volunteer during the EuroMaidan revolution. He leaves a wife and two kids. 

Serhiy Lazenko, 46, lieutenant from Pereyaslav-Khmelnytsky, Kyiv Oblast. He was killed in action on the outskirts of Donetsk Oblast. He leaves his wife and 5-year-old daughter. 

July 27 

Oleksandr Dzebelyuk, 24, a border guard from Nova Ushytsia village, Khmelnytsiky Oblast, was killed during massive shelling near Dovzhansky border crossing, Luhansk Oblast. 

Volodymyr Blazhko, 32, a border guard from Mogyliv-Podilskyi, Vinnytsia Oblast, was killed during massive shelling at the Dovzhansky border crossing, Luhansk Oblast. He leaves a wife and a 4-year-old daughter. 

Viktor Sokolovskyi, 27, a border guard from Ozarytsi in Vinnytsia Oblast. He was killed during massive shelling at the Dovzhansky border crossing, Luhansk Oblast. 

Pavlo Dmytrenko, 43, the border guard from Dzhuryn in Vinnytsia Oblast was killed during massive shelling at the Dovzhansky border crossing, Luhansk Oblast. He leaves a wife and a 21-year-old son. 

Serhiy Kyrychuk, junior sergeant of State Border Guard from Rymachi, Volyn Oblast. 

Oleksandr Vasylenko, 20, a soldier of 95th Air Mobile brigade from Ignapil village, Zhytomyr Oblast. 

Serhiy Biloushenko, 21, soldier of the 95th Airmobile Brigade from Korsun-Shevchenkivskyi, Cherkasy Oblast. He was killed near Torez, Donetsk Oblast. 

Oleksandr Knysh, 31, a senior sergeant from the 95th Airmobile Brigade, is survived by a wife and two sons. 

Oleksandr Osnova, a soldier of 93rd Mechanized Brigade from Vilnyansk, Zaporizhia Oblast, was killed in Debaltseve, Donetsk Oblast. 

Vasyl Spasionov, colonel and chief of air defense for the 51st Mechanized Brigade from  Zhytani, Volynska Oblast. He was killed during the liberalization of Lysychansk and leaves a wife and a 5-year-old son the couple adopted two years ago. 

Stanislav Kulakevych, 25, a junior sergeant and sniper of the 51st Mechanized Brigade from Blazhove, Rivne Oblast, died in battle and his survived by his parents and nine siblings. 

The following thirteen servicemen of the “Aidar” Battalion were killed in action on July 27, during operations in Luhutine, Uspenka and Heorhiivka, Luhansk Oblast.

Vasyl Bilyk, 21, known as “Hutsul,” was from Horodenka, Ivano-Frankivsk Oblast. He leaves a 3-year-old daughter. 

Mykola Lychak, a scout from Irpin, Kyiv Oblast. An Afghanistan War veteran, he was killed in a mortar attack. Last year he lost his wife. He leaves two sons, one of which is disabled with cerebral palsy. 

Ihor Rymak, known as “Sirko,” died in battle. 

Ionchu Aliev was killed in action. 

Stanislav Miniuk, from Haisyn, Vinnytsia Oblast. 

Ivan Kulish died in battle. 

Orest Kvach, 23, from Zalischyky, Ternopil Oblast, was killed when he hit a mine. He was an active participant of the Dynamo “ultras.” 

Serhiy Kovryha, known as “Lialik,” from Haisyn, Vinnytsia Oblast was killed in action. 

Mykhailo Verbovyi, known as “Lieshyi” died in combat. 

Oleksandr Davydchuk, a scout from Irpin, Kyiv Oblast. Davydchuk was an veteran of the Afghan War. He leaves his wife and 8 year old daughter in Irpin. 

Serhiy Shostak, known as “Shest,” was from Lutsk. Until 2006, he was a member of the Berkut special riot police force. 

Vitaliy Boyko, died in combat. 

Illia Vasylash, known as “Did,” was killed in action. 

Valentyn Batiuk, 35, a soldier of the 30th Mechanized Brigade from Rohizna, Zhytomyr Oblast, died fighting near Luhansk. 

Mykola Brui, known as “Klyn,” was a grenadier from Chernihiv. He was killed in battle near Luhansk airport when his military column was ambushed by Russian-backed militants. He was a member of the Chernihiv branch “Trident”. He leaves a wife and a young daughter. 

Mykola Kutsenko, 21, a lieutenant and commander of the tank brigade from Honcharivske, Chernihiv Oblast, was born in Myrhorod, Poltava Oblast. He came from a long line of military men and dreamed of becoming an officer. Kutsenko died protecting his crew, which came under fire near Lutuhyne, Luhansk Oblast. 

S. Koval, a serviceman from Yaroslavka, Chernihiv Oblast, was killed in a battle near Luhansk airport when his unit was ambushed.

July 28 

Anatoliy Romanchuk, 33, a captain and chief of intelligence for the 72nd Mechanized Brigade from Bila Tserkva, Kyiv Oblast. 

Mykola Pynchul, 22, was reportedly killed by friendly fire. 

Viktor Khmelnytskyi of Volodymyr-Volynskyi, Volyn Oblast was killed near Krasnodon, Luhansk Oblast. 

Mykola Brui, a bomber of the 1st Separate Tank Brigade from Chernihiv, was reportedly killed during a fight near the Luhansk airport. 

Maksym Stanislav, of Globy, Volyn Oblast, was killed during the fight for Savur-Mohyla near the border with Russia.

The West must prepare for a wounded Putin to become even more aggressive

The Washington Post: 31. July 2014
By Editorial Board

Russia's President Vladimir Putin chairs a Cabinet meeting in his Novo-Ogaryovo residence outside Moscow, on July 30, 2014.

A MONTH ago, Russian President Vladi­mir Putin appeared to be successfully executing his campaign to destabilize Ukraine. While Russian-backed insurgents consolidated a breakaway republic, weak and divided Western governments ignored their own deadlines for imposing sanctions. Now, suddenly, Mr. Putin faces twin reversals: relatively tough sanctions from the United States and European Union on Russian banks and oil companies, and a string of military defeats that have pushed back his proxy forces. It’s a dangerous moment for Mr. Putin — and, perhaps, an opportunity for Ukraine and its allies.

The Obama administration and European governments deserve credit for agreeing on joint action against Russia after months of haggling and hesi­ta­tion. But Mr. Putin is mostly responsible for his own setbacks. Having recklessly supplied his Ukrainian proxy force with advanced anti-aircraft missiles, he was surprised when one downed a Malaysian passenger jet, causing a heavy loss of European lives. Even then he might have avoided significant sanctions, but his response to the tragedy was to stonewall and deny responsibility even while escalating his weapons deliveries to the flailing insurgents.

President Obama, German Chancellor Angela Merkel and other European leaders have bent over backward to avoid a full rupture with Mr. Putin over Ukraine. Mr. Obama said Tuesday that the sanctions did not represent “a new cold war” but rather was “a very specific issue” related to Ukraine. Yet the combination of economic losses from the sanctions and Ukraine’s potential defeat of the rebels could pose a threat to Mr. Putin’s hold on the Kremlin. Having whipped up nationalist passions over Ukraine with his state-directed propaganda apparatus, the Russian ruler might have trouble explaining the rebels’ eclipse. While the effect of sanctions will take time to sink into the economy — the Russian stock market and ruble rose Wednesday — Mr. Putin has already been on thin ice with Russia’s middle class and its private-sector businessmen.

It’s not yet clear how Mr. Putin will react to these reversals. He is capable of surprising shifts of direction — such as his sudden offer last summer to help strip his ally Syria of chemical weapons. Ukrainian officials, like some of their counterparts in the West, worry about a reckless lashing out by a ruler who feels cornered. Mr. Putin, they counsel, still should be offered a face-saving way of retreating from Ukraine. President Petro Poroshenko and the interim government, which have been offering such compromises all along, are set to renew negotiations with the Russian-backed forces this week.

While such initiatives are worth trying, the reality is that Mr. Putin is more likely to escalate than back down. Ukraine and the West must be prepared for a more forceful and overt Russian military intervention. That should mean more support for the Ukrainian military, which is seeking drones and better communications equipment from the West, and more economic support for the new government, which has been forced to spend heavily on the armed forces. Russia should not be allowed to permanently entrench its proxy forces in eastern Ukraine, creating a “frozen conflict.”

The West also should not shrink from the destabilization of Mr. Putin’s regime. Once considered a partner, this Kremlin ruler has evolved into a dangerous rogue who threatens the stability and peace of Europe. If he can be undermined through sanctions and the restoration of order in eastern Ukraine, he should be.

On Hold: Merkel Gives Putin a Blunt Message

The Wall Street Journal: 31. July 2014


German Chancellor Angela Merkel 

The frayed relationship between German Chancellor Angela Merkel and Russian President Vladimir Putin shows the disintegration of a decadeslong effort by both nations to bind the World War II adversaries to each other.

Three days after the crash of Malaysia Airlines Flight 17, German Chancellor Angela Merkel spoke to Russian President Vladimir Putin for at least the 30th time since the Ukraine crisis erupted.

She had a blunt message, according to people briefed on the phone conversation: Call me if you have progress to report in defusing the conflict.

That was July 20. The two leaders haven't spoken since.

The silence marks a breach in perhaps the most important relationship in European geopolitics, illustrating the daunting challenges facing the West in trying to calm the crisis in Ukraine. More broadly, the frayed relationship between Ms. Merkel and Mr. Putin shows the disintegration of a decadeslong effort by both Germany and Russia to bind the World War II adversaries to each other. Mr. Putin, in particular, appears to have given up, for now, on his yearslong project of nurturing Germany into the role of Russia's closest European partner, illustrating the increasing degree of international isolation he seems prepared to accept.

Ms. Merkel's well of patience with Mr. Putin finally ran dry in the aftermath of the Flight 17 disaster, German officials say, as promises by the Russian president to lean on the rebels to improve the situation at the crash site failed to change things on the ground. Departing from past efforts to avoid a quick escalation of the West's response, Ms. Merkel threw her weight behind sanctions targeting swaths of the Russian economy despite doubts in Berlin over their efficacy.

Ms. Merkel and Mr. Putin over the years have both invested heavily in improving ties between their countries. For the pragmatic chancellor, it was a case of Realpolitik transcending what people close to her have long described as her chilly relationship with the Russian president and one characterized by mistrust. The coalition agreement approved by Ms. Merkel's new government late last year called for "open dialogue and broad cooperation with Russia," noting that "security in and for Europe is only attainable with and not against Russia."

Mr. Putin's charm offensive intensified in 2001, the year after he came to power, when he came to parliament in Berlin to deliver one of his first major foreign-policy addresses. He was speaking the fluent German he honed as a KGB officer in Dresden in the 1980s and drew repeated standing ovations.

Caffe 'Putin' to open in Serbian town in support of Russia

The Moscow Times: 31. July 2014


Caffe "Putin", whose sign displays a portrait of the Russian head of state, will open next week in Serbia's second-largest city Novi Sad.


President Vladimir Putin may have won few recent admirers in the West, but he has found an unusual ally in the form of a Serbian restaurant owner who has decided to name his cafe after the Russian leader.

Caffe "Putin", whose sign displays a portrait of the Russian head of state, will open next week in Serbia's second-largest city Novi Sad, owner Radivoj Miljanic told Serbian television network RTC.

"A lot of people in Novi Sad respect President Vladimir Putin. There are many Russophiles and people who adore him," Milyanich said in the interview, adding that he saw nothing controversial with the name of his cafe.

While many Western leaders have condemned the actions of pro-Russian separatists in Ukraine, the residents of Novi Sad appear to have more sympathy for the rebel fighters.

In August, representatives of eastern Ukraine's separatist Luhansk People's Republic will fly to Novi Sad to take part in a friendly football match against the local team, according to a statement on the self-proclaimed republic's website.

"Dear brothers, we are ready to host your national team. … You don't have to pick 18 pro players, pick any 18 players," Tomislav Lovrekovic, FC Novi Sad's president, wrote in his letter to the LPR.

While members of the Luhansk People's Republic will be obliged to pay for their flights, the Serbian team will foot the costs of board and lodgings, the letter added.

Russia threatens Europe with higher energy prices

EUobserver: 31. July 2014
BY Valentina Pop


Russian President Vladimir Putin during the meeting with Government members in Novo-Ogaryovo, Moscow Region, July 30, 2014.

BRUSSELS - Russia on Wednesday (30 July) reacted angrily to the EU economic sanctions, threatening to increase energy prices.

“Obsessed with sanctions, Brussels is itself creating barriers for further cooperation in such a key sector as energy industry,” the Russian foreign ministry said in statement.

“It is a senseless and irresponsible step, which will inevitably cause European energy market prices to rise,” the statement said.

The ministry added that the economies of Russia and the EU are interlinked and that the "stage three" sanctions will affect the economic situation in the EU "not less than in Russia".

Some 30 percent of the overall EU gas consumption is covered by Russian gas imports, but some eastern member states are up to 90 percent dependent on Russia.

The possible retaliation in the energy sector was factored in when the EU decided to adopt economic sanctions, which will enter into force Friday.

As for the arms embargo also due to enter into force Friday, Russia said it was "perplexed" since it "does not take part in the military conflict in Ukraine."

Moscow also accused the EU of being influenced too much by the US: “It’s a shame that after having long searched for its own ‘single voice,’ the EU now speaks Washington’s voice.”

The US has released intelligence showing that Russia continues to arm the pro-Moscow separatists in Ukraine and said it believed YouTube audiotapes of rebels talking about shooting down a passenger plane were authentic.

The Russian foreign ministry however said current EU foreign policy is not based on facts, but defined by Washington who is “watching questionable YouTube videos”.

“Of course, we will take into consideration the current non-constructive and non-independent behaviour of the EU when building our relations,” it concluded.

The statement comes after the EU late Wednesday published eight new names, including three of President Vladimir Putin's closest oligarch friends, to a travel ban and asset freeze list.

The EU also blacklisted Almaz-Antey, the arms manufacturer which produced the missiles believed responsible for the downing of the Malyasia Airlines MH17 flight, in which almost 300 people, mostly EU citizens, were killed.

Later on Thursday, the EU official journal is expected to publish the list of Russian state-owned banks which will be cut off from EU financial markets.

“It’s very unfortunate. It’s not a good day for Russia. I’m concerned [the Russian government] will do something back and start nationalising things like Exxon in Sakhalin," a senior executive at one of the targeted banks told Reuters.

So far, the only EU producers hit by a Russian import ban are Polish apple growers, who sell more than half of their exports to Russia. Moscow claims the ban is for sanitary reasons and is not linked to the economic sanctions, but it added that it will look into other EU producers as well, with Dutch farmers also expected to be hit.

Meanwhile, at the crash site in eastern Ukraine, international investigators were still denied access as heavy fighting was ongoing between government forces and rebels.

Kiev accused the pro-Russian rebels on Wednesday planting land mines on the way to the crash site in order to prevent access to the site.

"They have brought a large number of heavy artillery there and mined approaches to this area. This makes impossible the work of international experts trying to start work to establish the reasons behind the Boeing 777 crash," said Ukrainian military spokesman Andriy Lysenko, as quoted by Reuters.

The leaders of the seven most industrialised nations (G7) on Wednesday called on all sides to establish a ceasefire and grant access to the crash site.

Putin's next move could involve gas

Business Insider: 31. July 2014
By Sam Ro


Russian President Vladimir Putin

The next move for Russian President Vladimir Putin could be to block the transit of gas through Ukraine to Europe, write Morgan Stanley analysts.

This could cause energy prices to spike in Putin's effort to retaliate against the world for imposing economic sanctions on Russia.

New Sanctions

The U.S. and the European Union announced a fresh round of economic sanctions on Russia in their efforts to punish to the country for its ongoing involvement in destabilizing Ukraine.

Policymakers are hoping that these actions will encourage Putin to help cool off the situation on the Ukraine-Russia border.

But he very well could get more aggressive.

Putin's Options In Ukraine

Morgan Stanley analysts Jacob Nell and Alina Slyusarchuk articulate a few of Putin's potential paths.

"We think Putin now faces a stark choice between a pragmatic response, supporting de-escalation in Ukraine in return for neutrality, decentralisation and the lifting of sanctions — or what we characterise as a ‘patriotic’ response, in which Putin focuses on support to the pro-Russian separatist movement in Ukraine, which could trigger a further tightening of sanctions and deepen the divide with the West," they wrote in a note to clients on Tuesday.

In theory, economic sanctions should anger businesses and consumers who are getting squeezed. But in practice, sanctions often just spark nationalism, and anger is often directed toward the implementer of those sanctions.

Indeed, polls show that Putin's popularity has only been increasing since earlier sanctions. It's also worth mentioning the Russian stock market is rallying.

The Problem With Blocking Oil Exports

"Russia has announced that it will not respond in an ‘eye-for-eye way’ — and in any case, we think that a reciprocal approach would not be effective, given different dependencies," the analysts said. "For instance, few G7 citizens or leaders have assets or family in Russia, and Russian banks are not an important source of finance for G7 countries. In fact, if Russia responds with economic measures, we think the most effective measures are likely to be restrictions on exports of oil (Russia exports more than 7.5 million barrels of oil equivalent a day) and gas (where Russia provides 30% of Europe’s demand)."

Unfortunately for Russia, if it cuts the world off from its energy, then Russia effectively shoots itself in the foot.

Europe Gas

"We are skeptical at this stage that Russia would block oil exports, given the disruptive impact this would have on the budget (oil accounts for 44% of federal budget revenues) and trade (oil accounts for 54% of exports)," the analysts said. "Moreover, Russia did not block oil exports in the early 1980s, when the Cold War was at its height."

For now, Russia's response is likely to be more targeted.

"We think that Russia could block transit of gas through Ukraine to Europe, pending settlement by Naftogaz of outstanding debt and might also allow a decline in oil exports, which could add a geopolitical risk premium to the oil price," they write.

The Consequences

Here's Morgan Stanley's scenarios for the financial markets: "In the case of de-escalation, we would expect to see the authorities stick to the current policy mix of a flexible RUB and the fiscal rule, with continued trade and investment links with the West. With a patriotic response, we would expect tighter monetary policy to support RUB; looser fiscal policy to support growth; and a focus on reducing economic links with the West to reduce vulnerability. Recently, we have seen some signs of economic policy drifting towards the patriotic policy mix."