On March 15, the National Security and Defense Council of Ukraine, headed by Alexander Turchinov, a hardliner who launched the “Anti-Terrorist Operation” as the interim President after Euromaidan, signed off on the legalization of the Donbass blockade, and transmitted a request to Ukraine’s Central Bank to finalize a plan to put sanctions on Russian banks operating in the country.
Formally, the legalization of the Donbass blockade is a response to the LDNR’s nationalization of Ukrainian (aka Akhmetov’s) enterprises on its territories. In practice, this was a forced response to the blockade itself, which was being carried out by far right militant groups – probably financed by Kolomoysky, Akhmetov’s oligarchic rival – in contravention of official Kiev’s wishes.
We know that this is the case because Kiev did half-heartedly send armed policemen to do… something, to get the blockade lifted. But the “activists” proved a tougher bunch, spraying pepper spray into the cops’ faces and forcing them to retreat with their tails between their legs. It is also worth noting that Ukraine’s European backers are shocked and distraught by the legalization of the blockade, which effectively puts an end to Minsk II. Finally, Poroshenko himself described a law currently being touted in the Rada to formally cut off the LDNR economically as something that would “cut away these territories, build a wall, and gift them to Putin.”
But whereas the resulting “Transnistriazation” of the LDNR is not in Kiev’s interests – LNR head Igor Plotnitsky has already announced the possibility of a new referendum on joining Russia – being seen as weak and not in control of its own armed batallions is even more potentially fatal, so this is probably best seen as a face-saving measure more than anything else; a facade of vindictive incompetence meant to hide the even more damning fact that it is the armed militants, not Kiev, who wield the real power in the country.
Remarkably for a supposed “aggressor” country – the long-suffering denizens of Donbass can only wish! – Russia has been by far the biggest investor in the Ukraine. Since 2014, its banks and corporations have invested an astounding 175 billion rubles, including $1.7 billion in 2016 alone – that’s 38% of total investment. This has happened even as many of the Euromaidan’s most ardent fans, such as Thomas C. Theiner, have long since given up on the new Ukraine as a corrupt sinkhole).
According to Central Bank vice head Jacob Smoly, the sanctions will illegalize “all operations that benefit the mother banks – such as the allocation of interbank credits, the purchase of securities, and the payment of dividends and other operations” (incidentally, why isn’t CB head Valeria Gontareva making this statement? Is she packing her bags already?).
This came on the heels of “activist” attacks on Russian state bank Sberbank buildings in Kiev and Dnepropetrovsk.
For its part, Sberbank has instituted limits on withdrawals from its Ukraine branches. Should the government take over the banks, it will still have to guarantee Ukrainians’ deposits in those banks. In the worst case, this might usher in a more general bank run. Even though that is unlikely, it still can’t be any good from the perspective of Ukraine’s creaking banking system, which has yet to fully cope with the nationalization of Kolomoyksy’s PrivatBank three months ago.
In any case, Russian pro-Donbass and nationalist websites are cheering this news, since they view it as a well-deserved strike against a “financial fifth-column” that has, in effect, subsidized Ukraine’s ATO while being too cowardly to provide services to Donbass or even Crimea.
Alexander Mercouris connects this to a power play by Yulia Tymoshenko against Poroshenko. As he noticed, these recent events come in the context of her secret visit to Washington D.C. in early February, where she allegedly had a short meeting with Trump; her longstanding alliance with Turchinov; and, more speculatively, a more recent alliance of convenience with Kolomoysky and his mercenary batallions.
As of the past year, opinion polls have shown Tymoshenko consistently ahead of Poroshenko in a direct runoff. Since Poroshenko has presided over a depression, failed to achieve any of the Maidan’s promises, and now has an approval rating lower than Yanukovych’s lowest, this can hardly be surprising.
Outright rebellions by restive oligarchs in 2016 were checked by US intermediation, when in the course of a ten hour conversation Obama’s VP Joe Biden made it clear to Kolomoysky and Poroshenko’s reticent PM Yatsenyuk that mutiny would not be tolerated.
This time, however, the US is less likely to intervene to save Poroshenko’s bacon. Trump is a man known to bear grudges, so in all likelihood he has it out for Poroshenko and his allies, who (unsuccessfully) tried to sabotage his own election in favor of Hillary Clinton.
If this interpretation of events is more or less accurate – that Poroshenko has lost substative control of the functions of state to allies of Tymoshenko, and that Tymoshenko herself has acquired Washington D.C.’s “jarlig” authorizing her to rule the Ukraine – then the Chocolate King’s days in power are surely numbered.