Category Archives: Ukraine


(JPost) According to Ukrainian media, over $1.3 billion dollars allocated by the United States to strengthen Kiev’s defensive capabilities.

A UKRAINIAN military vehicle rushes to the front as fighting flares in Ukraine between separatists a

A UKRAINIAN military vehicle rushes to the front as fighting flares in Ukraine between separatists and the government.. (photo credit: REUTERS)

Israel has been selling military equipment to Ukraine for over two decades, and with the election of Jewish comedian and novice politician Volodymyr Zelensky, there is a good chance to increase defense ties between the two countries.

Israel has maintained a neutral stance since the outbreak of the Donbass war with Russia in 2014, refraining many times from voting for Western-backed condemnations of Moscow’s annexation of the Crimean peninsula.Last Thursday, Ukrainian Armed Forces Chief of General Staff Viktor Muzhenko warned that a chance still remains of full-blown war breaking out between Ukraine and Russia.

“The peculiarity of the Russian-Ukrainian war is that within one hour it can turn into a full-scale conventional conflict involving land, naval, aviation components and special operations forces,” Muzhenko said in an interview with Ukraine’s Fakty i Kommentariinewspaper.

The conflict has killed more than 13,000 people (approximately 3,300 of them civilians) according to the UN Monitoring Mission on Human Rights, and has led Ukraine to refurbish their military with large contracts for new NATO-friendly military equipment.

According to Ukrainian media, over $1.3 billion has been allocated by the United States to strengthen Kiev’s defensive capabilities. US Special Representative for Ukraine negotiations Kurt Volker said that Washington is considering the possibility of supplying more anti-tank missiles, as well as air defense and coastal defense systems to Kiev.

“They are losing soldiers every week defending their own country,” Volker was quoted by The Guardian as saying in September. “And so in that context it’s natural for Ukraine to build up its military, engage in self-defense, and it’s natural to seek assistance and is natural that other countries should help them. And of course they need lethal assistance because they’re being shot at.”

Ukraine’s Defense Minister Stepan Poltorak announced in March that 120 new types of military equipment had been recently introduced in the Ukrainian armed forces and that the military is working to design new reconnaissance systems, electronic warfare systems, new reconnaissance vehicles, and radar systems “to significantly increase their [Ukrainian Armed Forces] capabilities.”

And that possibly opens the door to new contracts with Israeli companies.

Israel’s Defense Ministry and companies like Elbit and Rafael would not divulge to The Jerusalem Post any information on arms exports, but defense ties with Kiev are certainly in place.

In January, Ukrainian media reported that a memorandum of cooperation was signed between Israeli defense giant Elbit Systems and Ukraine’s Ukroboronprom for the development of joint projects in the areas of communications, surveillance and reconnaissance systems for the ground and air forces, air rescue equipment, radar stations, equipment for port protection and modernization of armored vehicles.

Elbit Systems is part of a group investing in Ukraine’s defense establishment. Elbit CEO Bezhalel Machlis said in March that the company’s sales in Europe accounted for 22.6% of its 2017 sales, a 20% increase from the previous year, largely due to European countries realizing the need to rebuild their defense systems in the face of the growing Russian presence in both Syria and Ukraine.

And while millions of dollars in revenues from an increase in contracts is possible, military ties between the Israel and Ukraine are likely to remain under the table.

During the January visit of an official Ukrainian delegation, Defense Minister Poltorak said that Kiev was considering the possibility of training Ukrainian troops in Israel at the IMI Academy for Advanced Security & Anti-Terror Training.

“The possibility of training members of the Armed Forces of Ukraine at that academy was considered during the meeting,” he was quoted by Ukrainian Press Service as saying at the time.

The academy, which specializes in training and projects in the fields of security and anti-terrorism, is a subsidiary of Israel Military Industries Ltd. and was recently bought by Elbit.

Israeli troops were also reportedly in Ukraine in October to train on the Russian S-300 missile defense system that was recently deployed to Syria. While Israel refused to comment on the matter, foreign reports said both Israel and the US had sent military delegations to Ukraine to train against the system.

Though the S-300 deployed to Syria remains in the hands of Russia, with which Israel has a deconfliction mechanism in place, it is only a matter of time before the system is handed over to the Assad regime and poses a real threat to Israeli jets.

While ties between Israel and Ukraine might remain largely hush-hush due to Israel’s fear of Russian wrath, considering the crises in Syria and Donbass, by exchanging experience fighting Russian-equipped forces, the two countries stand to gain much in ensuring their respective security.

(Times of Israel) Zelensky win makes Ukraine 1st country outside Israel with Jewish PM, president

(Times of Israel) Marvels one columnist: ‘Imagine, a pure-blooded Jew with the appearance of a Sholom Aleichem protagonist wins by a landslide in a country that glorifies Nazi criminals’

Ukrainian comedian and presidential candidate Volodymyr Zelensky reacts after the announcement of the first exit poll results in the second round of Ukraine's presidential election at his campaign headquarters in Kiev on April 21, 2019. (Photo by Sergei GAPON / AFP)

Ukrainian comedian and presidential candidate Volodymyr Zelensky reacts after the announcement of the first exit poll results in the second round of Ukraine’s presidential election at his campaign headquarters in Kiev on April 21, 2019. (Photo by Sergei GAPON / AFP)

JTA — Following the victory of Volodymyr Zelensky in Ukraine’s presidential elections, the country will become the only one in the world besides Israel whose president and prime minister are both Jewish.

When Zelensky is sworn in as president, his prime minister — at least for a while and possibly until the parliamentary elections scheduled to take place sometime later this year — will be Volodymyr Groysman, a Jewish politician who was the mayor of the city of Vinnytsia.

To some of incumbent Petro Poroshenko’s critics, the landslide success of the vague campaign by the politically inexperienced Zelensky, a comedian, was not surprising in light of widespread resentment over the persistence of corruption under Poroshenko, who was elected in 2014 on a platform that vowed remedial action on exactly that front.

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More unusual to some, however, was how Zelensky’s appears to have won the elections so decisively in spite of how his Jewish ancestry – his mother, Rima, is Jewish and he has jokingly referred to this during the campaign — is well known in Ukraine.

After all, Russia and other critics claim Ukrainian society has a serious anti-Semitism problem and legacy.

Ukrainian Prime Minister Volodymyr Groysman gestures as he speaks at a meeting of Ukrainian President Petro Poroshenko’s supporters in Kiev, Ukraine, Tuesday, Jan. 29, 2019. (AP Photo/Efrem Lukatsky)

“Imagine, a pure-blooded Jew with the appearance of a Sholom Aleichem protagonist wins by a landslide in a country where the glorification of Nazi criminals is enacted into law,” wrote Avigdor Eskin, a Russian-Israeli columnist, in an analysis published earlier this month by the Regnum news agency.

Eskin in column on Zelensky downplayed allegations of widespread anti-Semitism in Ukraine, attributing much of the attention to the problem in media and beyond to propaganda by Russia, which is involved in an armed conflict over territory with Ukraine.

But Eskin’s statement about Ukrainian laws glorifying Nazi criminals is not inaccurate, and Russia is not alone in criticizing Ukraine over this and other issues connected to anti-Semitism.

Last year, Israel’s government singled out Ukraine as a regional trouble spot in the Israeli government’s annual report on anti-Semitism.

“A striking exception in the trend of decrease in anti-Semitic incidents in Eastern Europe was Ukraine, where the number of recorded anti-Semitic attacks was doubled from last year and surpassed the tally for all the incidents reported throughout the entire region combined,” the report said. The authors of the report counted more than 130 reported anti-Semitic incidents in Ukraine in 2017, they said.

Also last year, more than 50 US Congress members condemned Ukrainian legislation that they said “glorifies Nazi collaborators” and therefore goes even further than Poland’s controversial laws limiting what can be said about local complicity during the Holocaust.

A letter signed by the US lawmakers stated, “It’s particularly troubling that much of the Nazi glorification in Ukraine is government-supported.” It noted ceremonies, gestures and legislation venerating leaders of the UPA and OUN militias, who fought alongside Nazi Germany during World War II and whose troops participated in atrocities against Jews and other victims.

Poroshenko’s government greatly encouraged glorification of those troops and leaders as fighters for Ukrainian freedom who it insisted sided with Germany only in order to fight against the Russian-controlled Soviet Union.

Several cities across Ukraine named streets for the Nazi-collaborator Stepan Bandera, who prior to Poroshenko’s time in office was openly glorified only in the country’s west.

A statue of Stepan Bandera in Lviv, Ukraine, September 2014. (Courtesy Andrey Syasko/via JTA)

Meanwhile, in the western city of Lviv, nationalists became emboldened enough to celebrate with city authorities’ permission the anniversary of the 14th Galician division of the Waffen SS. The anniversary events featured men parading in Nazi SS uniforms on the street.

Such sights would have been unthinkable under Viktor Yanukovych, the corrupt president who was deposed in a 2013 revolution that ended with Poroshenko’s election. Careful to alienate neither ethnic Russians in Ukraine nor its powerful neighbor to the east, Yanukovych was less tolerant of this nationalist phenomenon.

On this subject, Zelensky has said only that he personally does not favor the veneration of people like Bandera, whom he described as “a hero to some Ukrainians.” It was a markedly reserved formulation compared to the unreserved endorsement of figures like Bandera by officials under Poroshenko.

Thousands of Ukrainian nationalists hold a torchlight procession across Kiev in honor of Stepan Bandera, a World War II anti-Soviet insurgent, on January 1, 2015 (photo credit: AFP/Genya Savilov)

The presidential campaign itself has featured some anti-Semitism.

In some far-right circles, Zelensky’s work in a television stationed owned by the Jewish billionaire Igor Kolomoisky was proof of his belonging to a “Jewish cabal.” But it made Zelensky popular with other nationalists who appreciated Kolomoisky’s reputation as a fiery patriot.

Alexander Paliy, an influential political analyst supporting Poroshenko, last month stirred controversy when he wrote on Facebook that, despite his “respect” for Jews and some Russians, “The president of Ukraine should be Ukrainian and Christian, like the absolute majority of Ukrainians.”

Such rhetoric is shocking to many of Ukraine’s 300,000-odd Jews, whose ancestors suffered murderous anti-Semitism in Ukraine for centuries before, during and decades after the Holocaust.

The French-Jewish philosopher Bernard-Henri Lévy also referenced Ukrainian Jew’s bloody history in an interview with Zelensky, the 41-year-old son of scientists who lived near major Soviet army bases in Ukraine, that he published earlier this month in the Le Point weekly.

“His Judaism. It’s extraordinary that the possible future president of the country of the Shoah by Bullets and Babi Yar is a self-affirmed Jew from a family of survivors from Kryvy Rih near Dnipro – the land of pogrom if ever there was one,” Levy wrote. “This postmodern kid, is he new proof that the virus of anti-Semitism has been contained” after the revolution, Levy added.

Not denying his Jewish ancestry, Zelensky declined to explore it at length in the interview, Levy wrote. On this subject, he replied with typical self-deprecating humor, telling Levy: “The fact that I am Jewish barely makes 20 in my long list of faults.”

Zelensky, whose mother, Rima, is Jewish, has ingratiated himself with the Ukrainian public with such jokes as the star of “Servant of the People” – a primetime television show where he portrays a teacher thrust by an unlikely chain of events to become Ukraine’s president. He announced his candidacy in January, becoming an instant favorite.

Volodymyr Zelensky, Ukrainian actor and candidate reacts after debates between in the weekend presidential run-off at the Olympic stadium in Kiev, Ukraine, April 19, 2019. (AP Photo/Vadim Ghirda)

This popularity has allowed Zelensky to both win on an unusually vague platform and distinguish himself from his professional politician rivals, with their proclivity to hyperbole and nationalist slogans.

For example, when a reporter asked him how he would deal with Russian President Vladimir Putin, Zelensky reverted to his comic roots, saying “I would speak to him at eye level.” It was a reference to him and Putin being at least three inches shorter than Poroshenko, a 6-footer.

Zelensky opaqueness means a high level of uncertainty, Dolinsky, the Jewish community leader, said.

“We will need to wait and see what kind of president Zelensky turns out to be,” said Dolinsky, who was an outspoken critic of some policies of the Poroshenko administration. “What is clear is that Poroshenko’s attempt to appeal to nationalism has failed. Ukrainians said they wanted change. And I am feeling optimistic.”

(BBG) ‘Dead’ Ukrainian Found Living in Castle Arrested in French Probe

(BBG) French police arrested an unnamed “high-profile” Ukrainian who allegedly used forged death certificates to evade the authorities and now faces possible extradition to his home country.

The fugitive, identified only as the “King of the Castle” by the European Union’s law-enforcement agency Europol, was detained on Oct. 5 near Dijon, according to a Tuesday statement. Officers recovered 4.6 million euros ($5.3 million) of property, including a 12th-century feudal castle, a vintage Rolls Royce Phantom, jewelry and three works of art by Salvador Dali. In parallel, the spokeswoman of Ukraine’s prosecutor general said the country will seek to extradite Dmytro Malynovskyi from France.

“The suspect is thought to be behind a complex case of international fraud and money laundering,” Europol said. French police began investigations in January over alleged suspicious transactions relating to the purchase of the castle for 3 million euros by a company in Luxembourg “whose ultimate beneficial owner was a Ukrainian citizen suspected of corruption at a large scale in his country,” according to the statement.

The man was detained with three accomplices, according to the Hague-based agency, which said it had coordinated with French, Ukrainian and Luxembourg authorities to establish that the suspect who’d used false death certificates “was not only alive, but was enjoying a lavish lifestyle in France.

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French @Gendarmerie arrest Ukrainian ‘King of the Castle’ and seized over EUR 4 million, with Europol’s support. The suspect is thought to be behind a complex case of international and .
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The arrests highlight how graft remains a key political issue for Ukraine even after a 2014 revolution toppled then-President Viktor Yanukovych and exposed massive government corruption and bribery. The International Monetary Fund made the creation of an anti-corruption court a condition of unlocking its $17.5 billion bailout. Non-residents based in Ukraine were among customers implicated in about 200 billion euros that flowed through the Estonian unit of Danske Bank A/S between 2007 and 2015, much of which the lender regarded as suspicious.

The office of Ukraine’s prosecutor general has prepared documents to seek the extradition of Malynovskyi, spokeswoman Larysa Sargan said Tuesday in a post on Facebook.

“The ‘resurrected’ citizen forged his death certificate and is now using a forged passport of a foreign country,” she said. Prosecutors found out that Malynovskyi stole 12 million euros from a private company in March to May 2015 and channeled the money to offshore accounts, she added.

Separately, France’s gendarmerie, a law-enforcement body that took part in the arrests, provided the name of the castle — the Château de La Rochepot, a quarter of an hour away by car from world-renowned vineyard village Chassagne-Montrachet.

A Dijon investigative magistrate leading the case charged two men of dual Ukrainian and Moldavian nationality and subsequently placed them in pretrial detention, the gendarmerie said in its separate statement. Two women, also dual nationals from the same countries, were charged and then released.

In France, investigative magistrates can decide to press charges in a procedure known as “mise en examen” when there is “serious and consistent” evidence showing likely involvement in the matter under investigation.

Separately, Swiss authorities froze $2 million in accounts belonging to a Yanukovych ally, Sergey Kurchenko, at the request of Ukrainian law enforcement, according to a statement from the prosecutor’s office in Kiev on Tuesday.

Ukraine ranked 130th with Sierra Leone and Myanmar in the latest Transparency International Corruption Perceptions Index, lower than any European country except Russia.

(Reuters) New computer virus spreads from Ukraine to disrupt world business

(Reuters) A new cyber virus spread from Ukraine to wreak havoc around the globe on Wednesday, crippling thousands of computers, disrupting ports from Mumbai to Los Angeles and halting production at a chocolate factory in Australia.

The virus is believed to have first taken hold on Tuesday in Ukraine where it silently infected computers after users downloaded a popular tax accounting package or visited a local news site, national police and international cyber experts said.

More than a day after it first struck, companies around the world were still wrestling with the fallout while cyber security experts scrambled to find a way to stem the spread.

Danish shipping giant A.P. Moller-Maersk (MAERSKb.CO) said it was struggling to process orders and shift cargoes, congesting some of the 76 ports around the world run by its APM Terminals subsidiary.

U.S. delivery firm FedEx Corp (FDX.N) said its TNT Express division had been significantly affected by the virus, which also wormed its way into South America, affecting ports in Argentina operated by China’s Cofco.

The malicious code locked machines and demanded victims post a ransom worth $300 in bitcoins or lose their data entirely, similar to the extortion tactic used in the global WannaCry ransomware attack in May.

More than 30 victims paid up but security experts are questioning whether extortion was the goal, given the relatively small sum demanded, or whether the hackers were driven by destructive motives rather than financial gain.

Hackers asked victims to notify them by email when ransoms had been paid but German email provider Posteo quickly shut down the address, a German government cyber security official said.

Ukraine, the epicenter of the cyber strike, has repeatedly accused Russia of orchestrating attacks on its computer systems and critical power infrastructure since its powerful neighbor annexed the Black Sea peninsula of Crimea in 2014.

The Kremlin, which has consistently rejected the accusations, said on Wednesday it had no information about the origin of the global cyber attack, which also struck Russian companies such as oil giant Rosneft (ROSN.MM) and a steelmaker.

“No one can effectively combat cyber threats on their own, and, unfortunately, unfounded blanket accusations will not solve this problem,” said Kremlin spokesman Dmitry Peskov.

ESET, a Slovakian company that sells products to shield computers from viruses, said 80 percent of the infections detected among its global customer base were in Ukraine, with Italy second hardest hit with about 10 percent.


The aim of the latest attack appeared to be disruption rather than ransom, said Brian Lord, former deputy director of intelligence and cyber operations at Britain’s GCHQ and now managing director at private security firm PGI Cyber.

“My sense is this starts to look like a state operating through a proxy … as a kind of experiment to see what happens,” Lord told Reuters on Wednesday.

While the malware seemed to be a variant of past campaigns, derived from code known as Eternal Blue believed to have been developed by the U.S. National Security Agency (NSA), experts said it was not as virulent as May’s WannaCry attack.

Security researchers said Tuesday’s virus could leap from computer to computer once unleashed within an organization but, unlike WannaCry, it could not randomly trawl the internet for its next victims, limiting its scope to infect.

Bushiness that installed Microsoft’s (MSFT.O) latest security patches from earlier this year and turned off Windows file-sharing features appeared to be largely unaffected.

There was speculation, however, among some experts that once the new virus had infected one computer it could spread to other machines on the same network, even if those devices had received a security update.

After WannaCry, governments, security firms and industrial groups advised businesses and consumers to make sure all their computers were updated with Microsoft (MSFT.O) security patches.

Austria’s government-backed Computer Emergency Response Team (CERT) said “a small number” of international firms appeared to be affected, with tens of thousands of computers taken down.

Security firms including Microsoft, Cisco’s (CSCO.O) Talos and Symantec (SYMC.O) said they had confirmed some of the initial infections occurred when malware was transmitted to users of a Ukrainian tax software program called MEDoc.

The supplier of the software, M.E.Doc denied in a post on Facebook that its software was to blame, though Microsoft reiterated its suspicions afterwards.

“Microsoft now has evidence that a few active infections of the ransomware initially started from the legitimate MEDoc updater process,” it said in a technical blog post.

Russian security firm Kaspersky said a Ukrainian news site for the city of Bakhumut was also hacked and used to distribute the ransomware to visitors, encrypting data on their machines.


A number of the international firms hit have operations in Ukraine, and the virus is believed to have spread within global corporate networks after gaining traction within the country.

Shipping giant A.P. Moller-Maersk (MAERSKb.CO), which handles one in seven containers shipped worldwide, has a logistics unit in Ukraine.

Other large firms affected, such as French construction materials company Saint Gobain (SGOB.PA) and Mondelez International Inc (MDLZ.O), which owns chocolate brand Cadbury, also have operations in the country.

Maersk was one of the first global firms to be taken down by the cyber attack and its operations at major ports such as Mumbai in India, Rotterdam in the Netherlands and Los Angeles on the U.S. west coast were disrupted.

Other companies to succumb included BNP Paribas Real Estate (BNPP.PA), a part of the French bank that provides property and investment management services.

“The international cyber attack hit our non-bank subsidiary, Real Estate. The necessary measures have been taken to rapidly contain the attack,” the bank said on Wednesday.

Production at the Cadbury factory on the Australian island state of Tasmania ground to a halt late on Tuesday after computer systems went down.

Russia’s Rosneft, one of the world’s biggest crude producers by volume, said on Tuesday its systems had suffered “serious consequences” but oil production had not been affected because it switched to backup systems.

(BBG) Tillerson Asks Why U.S. Taxpayers Should Care About Ukraine

(BBG) With one offhand remark, U.S. Secretary of State Rex Tillerson left European diplomats befuddled at a gathering in Italy.

“Why should U.S. taxpayers be interested in Ukraine?” Tillerson asked foreign ministers discussing Russia’s intervention there at a Group of Seven gathering Tuesday in Lucca, Italy.

French Foreign Minister Jean-Marc Ayrault, who later recounted the exchange to reporters, said he responded that American taxpayers ought to want a European Union that’s “strong politically, strong from a security point of view, and strong economically.”

But the provocative remark suggested Tillerson, the former chief of Exxon Mobil Corp., is still finding his footing in a world of diplomacy where even passing remarks are parsed for deeper meaning.

The question was sure to give pause to any European official fearful that PresidentDonald Trump might ease sanctions and let the former Soviet state slip back into it Russia’s orbit, even as tensions with Moscow are running high.

Asked what Tillerson was driving at with his question about Ukraine, State Department spokesman R.C. Hammond responded with two words: “Rhetorical device.”

In fact, Tillerson has been explicit that the U.S. and Europe shouldn’t lift the sanctions imposed against Russia for its invasion of Ukraine and its annexation of its Crimea region.

“The reason the sanctions were put in place continue to exist,” Tillerson said in an interview with ABC’s “This Week” broadcast Sunday. “There’s been no change of the status of the situation in Ukraine or Crimea. And those sanctions will remain in place until those issues are addressed.”

(Express) THE FINAL BETRAYAL: Dutch MPs set to force through EU deal voters REJECTED in referendum

(Express) DUTCH MPs were today set to railroad through a controversial EU agreement despite the fact that it was rejected by an overwhelming majority of voters in a referendum.

Parliamentarians in The Hague were poised to approve the highly contentious pact between Brussels and Kiev which will grant 40 million Ukrainians visa-free access to Europe.

Their decision comes despite the fact that two-thirds of Dutch voters rejected the agreement in a referendum last spring, a result which establishment politicians immediately insisted they would ignore.

And this week they are set to come good on their word with the majority of MPs in the lower house of the Dutch parliament expected to row in behind Brussels and approve the pact.

Dutch MPs are set to vote through an EU-Ukraine deal rejected by voters in a referendum.

Late last year Dutch PM Mark Rutte secured a series of concessions from other European leaders which he insists together address the concerns of people who voted against the agreement.

Brussels chiefs agreed to bolt on a legally binding paragraph to the accord which states that the treaty does not give Ukraine the automatic right to EU membership or financial and military support from Europe.

But critics have argued that the amendment does not address the issue of visa-free travel – a central theme in the referendum debate – and Mr Rutte refused to confirm that Kiev will not join the bloc in the future.

Geert Wilders

Geert Wilders’ party strongly opposed the agreement with Kiev

Dutch PM Mark Rutte

But Mark Rutte says concessions he has secured address people’s concerns

Eurosceptics said the move had echoes of the 2005 EU constitution scandal, when France and the Netherlands rejected Brussels’ plans for increased federalisation only for them to be railroaded through as the Lisbon Treaty.

In a strongly worded statement the political movement Geenpeil, which organised the initial petition which led to the referendum, said the decision would be a two-finger salute to ordinary voters.

It said: “One year, nine months and eleven days after this issue first emerged you just knew what The Hague would do – officially ignore the outcome of the first democratic referendum brought about by the citizens themselves.

“This is an anti-democratic déjà vu of 2005 all over again. Confidence in representative democracy is again delivered another hammer blow.”

This dossier has seriously undermined people’s trust in politics

PVV MP Harm Beertema

MP Harm Beertema, member of Geert Wilders’s anti-EU Party for Freedom, said “the objections of 2.5 million voters” were set to be ignored by his fellow MPs.

Rounding on Mr Rutte’s dossier of concessions, he raged: “This dossier has seriously undermined people’s trust in politics.”

Conservative MP Pieter Omtzigt said he would also be voting against the “unimportant” deal secured by the PM in December, questioning whether it would be respected by other member states.

He told the parliament chamber he had written to all 27 other member states asking them about the text, and that of 20 who replied 15 of them said they had never even heard of it.

But Green MP Rik Grashoff said MPs should vote through the Ukraine deal despite admitting the choice was a “dilemma” given the result of last year’s referendum.

He argued that the reasons for strengthening ties with Kiev had only grown stronger since that vote in light of the expansionist and “intimidating” path pursued by Vladimir Putin’s Russia.

The pact is also being backed by the pro-EU Labour Party, which is polling at just 11 per cent and faces near oblivion when the country holds its general election next month.

Labour MP Marit Maij insisted: “This legally binding declaration clearly addresses the objections No voters had.”

But despite everything Mr Rutte refused to guarantee to opposition MPs that the Netherlands would use its veto to stop Ukraine joining the bloc in the near future, which was the biggest concern of all.

He would only say that an “overwhelming majority of member states is against” such a move, telling them he would not waste his breath making promises about something which would not happen.

The Netherlands is set to hold its next general election on March 15 with the anti-EU and anti-Islam politician Mr Wilder’s party currently leading the polls on 28 per cent of the vote.

(WSJ) Ukraine Must Make Painful Compromises for Peace With Russia

(WSJ) Crimea should not get in the way of a deal that ends the war. The lives that will be saved are worth it.

A sniper rifle and the Ukrainian flag in Marinka, Ukraine, Aug. 25.
A sniper rifle and the Ukrainian flag in Marinka, Ukraine, Aug. 25. PHOTO: ASSOCIATED

Many Ukrainians are worried about the new U.S. administration because it has promised a different approach to Russia—which invaded and forcibly annexed Ukraine’s Crimean peninsula in 2014 and then initiated and supported a so-called “separatist” movement to also gain control over parts of eastern Ukraine. We additionally worry that amid anti-establishment currents in Europe, coming elections across the Continent will usher in leaders who will want to make a deal with the Kremlin.

There will not be a solution over the heads of the more than 40 million Ukrainians. Our citizens have demonstrated since the end of 2013 that they will fight if the prospect of living in a free, democratic, tolerant and fair country is taken away. Those looking for a “realist” solution would be well advised to take this into account.

But the instinctive response of many Ukrainians to the new circumstances—to demand the same as before, but with greater intensity and urgency—may not work. Instead of issuing ever-shriller appeals, we must also adapt to the new reality, and help our international friends help us.

The new administration in Washington can be an opportunity for Ukraine to contribute to the solution of Russia’s intervention.

Yes, we must stand up for the fundamental principles of our struggle—Ukraine’s right to choose its own way, safeguard its territorial integrity and build a successful country. Moscow must implement its obligations under the 2014 and 2015 Minsk agreements to end the conflict in eastern Ukraine. It must ensure enforcement of the cease-fire and the withdrawal of its fighters and heavy weapons, which it has failed to do.

But this can be part of a larger picture in which we make painful compromises for peace. Consider the following ideas.

• Ukraine should consider temporarily eliminating European Union membership from our stated goals for the near future. We can build a European country, be a privileged partner, and later discuss joining.

• While we maintain our position that Crimea is part of Ukraine and must be returned, Crimea must not get in the way of a deal that ends the war in the east on an equitable basis. It will take Ukraine 15 to 20 years to generate enough economic growth and stabilize our infrastructure, social safety net and financial system. Everyone from Crimea will then want to live in this future Ukraine—just as East Germans wanted to become part of West Germany.

• Conflict in the east was initiated from abroad and is not a genuine autonomy movement or civil war. There will not be conditions for fair elections until Ukraine has full control over its territory. But we may have to overlook this truth and accept local elections. Such compromises may mean letting down Ukrainians from the east who have suffered enormously. But if this is what it takes to demonstrate Ukraine’s commitment to peaceful reunification, then we may have to make this compromise to save thousands of lives.

We must focus on helping those who had to leave their hometowns, and cannot return to live under repressive and unsafe conditions, by offering them all possible support to rebuild their lives in a new reality.

• Finally, let’s accept that Ukraine will not join NATO in the near- or midterm. The offer is not on the table, and if it were, it could lead to an international crisis of unprecedented scope. For now, we should pursue an alternative security arrangement and accept neutrality as our near-term vision for the future.

Ukraine will need security guarantees. In the 1994 Budapest Memorandum the U.S., Russia, Britain, France and China gave security assurances in exchange for Ukraine giving up its nuclear arsenal. We trusted this agreement but learned painfully when Russia invaded Crimea that assurances are not guarantees.

Ukraine must offer realistic, detailed proposals on all of these points. We should also make clear that we are ready to accept an incremental rollback of sanctions on Russia as we move toward a solution for a free, united, peaceful and secure Ukraine.

The Ukrainian lives that will be saved are worth the painful compromises I have proposed. We must reiterate that Ukraine can be part of solving its own problems and addressing global challenges as part of a broad international coalition.

When I hosted Donald Trump as a speaker by video link at the 2015 Yalta European Strategy annual meeting, he expressed great respect for Ukraine and the belief that we were not getting the support we deserved. I am hopeful that his sympathy for Ukraine can be the basis for meaningful negotiations, agreements and eventually a peaceful settlement.

Mr. Pinchuk is a Ukrainian industrialist and philanthropist.

(Politico) EU extends Russia sanctions over Ukraine

(Politico) Asset freeze and travel ban against 146 persons and 37 firms renewed until March 2017.

EU sanctions designed to deter Russian aggression in Ukraine were prolonged by six months Thursday, with the bloc’s foreign affairs ministers agreeing there had been insufficient change to warrant lifting the measures.

The asset freeze and a travel ban against 146 people and 37 firms, most of them Russians, were first introduced in March 2014 and have since been extended periodically.

“The assessment of the situation did not justify a change in the regime of sanctions nor in the list of persons and entities under restrictive measures,” a Council of the European Union statement read.

An East European diplomat told POLITICO when the sanctions were last extended in March that those on the list include members of the Russian parliament who voted to cement the illegal annexation of Crimea and others involved in inciting military tensions in eastern Ukraine.

The sanctions will continue until March 15, 2017 and can be extended further.

Another set of sanctions targeting the energy, banking and defense sectors of the Russian economy were also extended in July until the end of January.

(Reuters) Russia announces war games after accusing Ukraine of terrorist plot


Vladimir Putin summoned his security council and the Russian Navy announced war games in the Black Sea a day after the Russian president accused Ukraine of trying to provoke a conflict over Crimea, which Moscow seized and annexed in 2014.

The belligerent posture heightened worries in Ukraine that Russia may plan to ramp up fighting in a war between Kiev and pro-Russian eastern separatists that had been de-escalated by a shaky peace process.

Using some of his most aggressive rhetoric against Kiev since the height of the war two years ago, Putin has pledged to take counter-measures against Ukraine, which he accused of sending saboteurs into Crimea to carry out terrorist acts.

Ukraine has called the accusations false and says they look like a pretext for Russia to escalate hostilities. Such an escalation could be used by Putin to demand better terms in the Ukraine peace process, or to inflame nationalist passions at home ahead of Russian parliamentary elections next month.

The Russian leader met his top military and intelligence service brass on Thursday and reviewed “scenarios for counter-terrorism security measures along the land border, offshore and in Crimean air space,” the Kremlin said.

Ukrainian President Petro Poroshenko said he had ordered all Ukrainian units near Crimea and in eastern Ukraine onto the highest state of combat readiness. He was seeking to urgently speak to Putin, the leaders of France and Germany, U.S. Vice President Joe Biden and European Council President Donald Tusk.

In Washington, State Department spokeswoman Elizabeth Trudeau said the United States was extremely concerned and called on both sides to reduce tension and rhetoric.

In New York, the U.N. Security Council held a closed-door meeting at Ukraine’s request to discuss the growing tensions.

Ukrainian U.N. Ambassador Volodymyr Yelchenko warned that Russia had amassed more than 40,000 troops in the region and said the build-up could reflect “very bad intentions.”

Oleh Slobodyan, a spokesman for the Ukrainian border guards, said he had observed an uptick in Russian military activity in northern Crimea in recent days after heavier fighting in eastern Ukraine.

“These troops are coming with more modern equipment and there are air assault units,” he told a news briefing in Kiev.

The Russian Defence Ministry said its navy – whose Black Sea Fleet is based in Crimea – would start to hold exercises in the area to practice repelling underwater attacks by saboteurs.

There were reports on Thursday evening that the authorities had cut off Internet access in northern Crimea close to Ukraine.


Russia says it caught infiltrators after at least two armed clashes on the border between Crimea and Ukraine over the weekend, and one of its soldiers and an FSB security service employee were killed. Kiev denies the events ever happened.

Whatever the truth, the allegations have already scuppered planned talks about eastern Ukraine slated for the sidelines of a G20 summit in China next month. Putin said such talks would now be “pointless.”

In an editorial, the Russian newspaper Vedomosti said escalation was a proven Kremlin tactic ahead of negotiations. Putin was trying either to alter or to tear up the Minsk peace process, named for the Belarus capital where truces were hammered out for the war in eastern Ukraine’s Donbass region.

“Events in Donbass in 2014-15 showed that the Kremlin tactic is to raise the stakes before negotiations. The main political question now is what will happen to the Minsk process. Will Russia break away from it or will it demand new concessions?” the newspaper wrote.

“Putin in his rhetoric has returned to the start of 2014. Once again, he does not deem the Ukrainian authorities legitimate.”

Volodymyr Fesenko, a political analyst in Ukraine, said he thought the Kremlin had its own revised peace plan for eastern Ukraine up its sleeve.

“Putin will scare the West with the prospect of full-scale conflict with Ukraine,” he said. “He is trying to increase pressure on Kiev to force Ukraine to accept a Russian plan to resolve the conflict in the east.

“Putin won’t go all out for a big war. But there might be pinpoint military operations against radicals whose bases are located near the border with Crimea.”


The European Union and the United States have tied the success of talks under the Minsk process to any possible decision to lift financial sanctions imposed on Russia over the Ukraine crisis.

But Moscow has grown increasingly frustrated by the talks and by what it says is Ukraine’s refusal to fulfill the terms of the truce. Kiev for its part says Moscow is the one that is still stirring tensions among pro-Russian separatists.

Escalating tension over Crimea could give Putin a pretext to abandon talks altogether, or demand changes to their format and terms, while holding out the prospect of a full-scale renewal of hostilities if he doesn’t get what he wants.

It could also help rally Russians ahead of the parliamentary vote, in which the main pro-Kremlin United Russia Party might struggle to win as many votes as usual because of an economic slump caused by low oil prices as well as the sanctions.

“While polls show United Russia doing okay (60 percent support), Putin never likes to take chances with domestic politics,” Timothy Ash, a strategist at Nomura Bank, wrote in a note. “(He) will want to impress on the Russian electorate his own strength and how lucky they are to be Russian citizens as perhaps compared to their Ukrainian counterparts.”

The imbroglio also gives Crimea’s pro-Russian authorities an excuse for their failure to raise living standards since Russia took over. Sergei Aksyonov, the Russian-backed prime minister, told state TV he blamed the Ukrainian incursions on the U.S. State Department.

Putin may also hope instability in Ukraine can feed into the U.S. presidential election campaign, where Republican candidate Donald Trump accuses President Barack Obama’s administration of incompetence and has called for better ties with Moscow. Putin may yet hope to cut a deal on both Ukraine and Syria, the two big issues of contention with Washington, before Obama exits.

What actually happened in and around Crimea at the weekend remains disputed. U.S. ambassador to Ukraine Geoffrey Pyatt said Washington had so far seen nothing to corroborate Russia’s version. A spokeswoman for EU foreign affairs chief Federica Mogherini also said there had been no independent confirmation.

Russia’s Kommersant newspaper on Thursday cited unnamed security sources as saying a group of men Russia had arrested for planning attacks had confessed to seeking to destroy Crimea’s tourist industry by bombing resorts.

The sources told Kommersant two of seven saboteurs in one group had been killed and five captured.

Russian state TV on Thursday evening broadcast footage of one of the detained men being interrogated by the FSB security service. The man, whose name was given, said he had been part of a group of saboteurs working for Ukrainian military intelligence and that they had planned to blow up a ferry, an oil refinery and a chemical factory among other targets.

State TV aired footage of what it said was the saboteurs’ weapons cache showing a large number of mines, grenades and improvised explosive devices laid out on the floor.

In Ukraine, the detained man’s brother had earlier said he thought his brother had been kidnapped as part of “a big game.”

(Spiegel) Dangerous Propaganda: Network Close To NATO Military Leader Fueled Ukraine Conflict


Former NATO Supreme Allied Comander Europe Philip Breedlove at a press conference in 2015

Former NATO Supreme Allied Comander Europe Philip Breedlove at a press conference in 2015

Working with dubious sourcing, a group close to NATO’s chief military commander Philip Breedlove sought to secure weapons deliveries for Ukraine, a trove of newly released emails revealed. The efforts served to intensify the conflict between the West and Russia.

In private, the general likes to wear leather. Philip Mark Breedlove, 60, is a well-known Harley-Davidson fan, and up until a few weeks ago, he also served as the commander of NATO and American troops in Europe. Even during his tenure as the military leader of the alliance, the American four-star general would trade his blue Air Force uniform for motorcycle gear and explore Europe’s roads with his friends.

Photos show a man with broad shoulders, a wide gait and an even wider smile. The pictures of the general’s motorcycle tours were recently made public on the online platform DC Leaks. Restraint, it seems, was never Breedlove’s thing.

The photos are the entertaining part of an otherwise explosive collection of Breedlove’s private email correspondence. Most of the 1,096 hacked emails date back to the dramatic 12 months of the Ukraine crisis after Russia annexed Crimea in March 2014. Thousands died in the skirmishes between Kiev’s troops and Moscow-aligned separatists. More than 2 million civilians fled eastern Ukraine.

Russia supports the separatists with weapons, fighters and consultants. When people began calling for Washington to also massively intervene in 2015, the Ukraine conflict risked escalating into a war between East and West.

Early Concern

The newly leaked emails reveal a clandestine network of Western agitators around the NATO military chief, whose presence fueled the conflict in Ukraine. Many allies found in Breedlove’s alarmist public statements about alleged large Russian troop movements cause for concern early on. Earlier this year, the general was assuring the world that US European Command was “deterring Russia now and preparing to fight and win if necessary.”

The emails document for the first time the questionable sources from whom Breedlove was getting his information. He had exaggerated Russian activities in eastern Ukraine with the overt goal of delivering weapons to Kiev.

The general and his likeminded colleagues perceived US President Barack Obama, the commander-in-chief of all American forces, as well as German Chancellor Angela Merkel as obstacles. Obama and Merkel were being “politically naive & counter-productive” in their calls for de-escalation, according to Phillip Karber, a central figure in Breedlove’s network who was feeding information from Ukraine to the general.

“I think POTUS sees us as a threat that must be minimized,… ie do not get me into a war????” Breedlove wrote in one email, using the acronym for the president of the United States. How could Obama be persuaded to be more “engaged” in the conflict in Ukraine — read: deliver weapons — Breedlove had asked former Secretary of State Colin Powell.

Breedlove sought counsel from some very prominent people, his emails show. Among them were Wesley Clark, Breedlove’s predecessor at NATO, Victoria Nuland, the assistant secretary of state for European and Eurasian affairs at the State Department, and Geoffrey Pyatt, the US ambassador to Kiev.

One name that kept popping up was Phillip Karber, an adjunct assistant professor at Georgetown University in Washington DC and president of the Potomac Foundation, a conservative think tank founded by the former defense contractor BDM. By its own account, the foundation has helped eastern European countries prepare their accession into NATO. Now the Ukrainian parliament and the government in Kiev were asking Karber for help.

Surreptitious Channels

On February 16, 2015, when the Ukraine crisis had reached its climax, Karber wrote an email to Breedlove, Clark, Pyatt and Rose Gottemoeller, the under secretary for arms control and international security at the State Department, who will be moving to Brussels this fall to take up the post of deputy secretary general of NATO. Karber was in Warsaw, and he said he had found surreptitious channels to get weapons to Ukraine — without the US being directly involved.

According to the email, Pakistan had offered, “under the table,” to sell Ukraine 500 portable TOW-II launchers and 8,000 TOW-II missiles. The deliveries could begin within two weeks. Even the Poles were willing to start sending “well maintained T-72 tanks, plus several hundred SP 122mm guns, and SP-122 howitzers (along with copious amounts of artillery ammunition for both)” that they had leftover from the Soviet era. The sales would likely go unnoticed, Karber said, because Poland’s old weapons were “virtually undistinguishable from those of Ukraine.”

       A destroyed airport building in the eastern Ukrainian city of Donetsk        : Thousands were killed in fighting during the Ukraine conflict.      Zoom


A destroyed airport building in the eastern Ukrainian city of Donetsk : Thousands were killed in fighting during the Ukraine conflict.

Karber noted, however, that Pakistan and Poland would not make any deliveries without informal US approval. Furthermore, Warsaw would only be willing to help if its deliveries to Kiev were replaced with new, state-of-the-art weapons from NATO.

Karber concluded his letter with a warning: “Time has run out.” Without immediate assistance, the Ukrainian army “could face prospect of collapse within 30 days.”

“Stark,” Breedlove replied. “I may share some of this but will thoroughly wipe the fingerprints off.”

In March, Karber traveled again to Warsaw in order to, as he told Breedlove, consult with leading members of the ruling party, on the need to “quietly supply arty (eds: artillery) and antitank munitions to Ukraine.”

Much to the irritation of Breedlove, Clark and Karber, nothing happened. Those responsible were quickly identified. The National Security Council, Obama’s circle of advisors, were “slowing things down,” Karber complained. Clark pointed his finger directly at the White House, writing, “Our problem is higher than State,” a reference to the State Department.

Sights on Germany

Breedlove and his fellow campaigners also had the German federal government in their sights early on. In April 2014, Clark sent a mail to Nuland and Breedlove and wrote that Bulgarian President Rosen Plevneliev had implied there was a “problem with German attitude” concerning its “sphere of influence.”

Efforts by Merkel and German Foreign Minister Frank-Walter Steinmeier to find a peaceful solution to the Ukraine crisis were portrayed by hardliners as a readiness in Berlin to let Russia bully Ukraine.

In order to build up pressure for the desired weapons aid, Clark and Karber began painting grim scenarios. If the West were to abandon Ukraine, former NATO Supreme Allied Commander Europe Clark prophesized, China would then be encouraged to expand its sphere of influence in the Pacific. It could also lead to NATO’s collapse. The situation could only be prevented with the help of military aid, they argued. On November 8, 2014 Clark sounded the alarm internally after talks with Ukrainian President Petro Poroshenko, his advisers and senior military and intelligence officials. The Ukrainians were expecting an attack as early as the end of the month.

Breedlove answered, “I will focus on this immediately.” He also wrote, “One of our biggest problems” is that one of the United States’ allies had been denying the findings of its intelligence. The remark was aimed at Germany’s BND foreign intelligence agency, which had been much more reserved in its assessment of the situation — a position that in retrospect would prove correct.

‘The Front Is Now Everywhere’

Karber’s emails constantly made it sound as though the apocalypse was only a few weeks away. “The front is now everywhere,” he told Breedlove in an email at the beginning of 2015, adding that Russian agents and their proxies “have begun launching a series of terrorist attacks, assassinations, kidnappings and infrastructure bombings,” in an effort to destabilize Kiev and other Ukrainian cities.

In an email to Breedlove, Clark described defense expert Karber as “brilliant.” After a first visit, Breedlove indicated he had also been impressed. “GREAT visit,” he wrote. Karber, an extremely enterprising man, appeared at first glance to be a valuable informant because he often — at least a dozen times by his own account — traveled to the front and spoke with Ukrainian commanders. The US embassy in Kiev also relied on Karber for information because it lacked its own sources. “We’re largely blind,” the embassy’s defense attaché wrote in an email.

At times, Karber’s missives read like prose. In one, he wrote about the 2014 Christmas celebrations he had spent together with Dnipro-1, the ultranationalist volunteer battalion. “The toasts and vodka flow, the women sing the Ukrainian national anthem — no one has a dry eye.”

Karber had only good things to report about the unit, which had already been discredited as a private oligarch army. He wrote that the staff and volunteers were dominated by middle class people and that there was a large professional staff that was even “working on the holiday.” Breedlove responded that these insights were “quietly finding their way into the right places.”

Highly Controversial Figure

In fact, Karber is a highly controversial figure. During the 1980s, the longtime BDM employee, was counted among the fiercest Cold War hawks. Back in 1985, he warned of an impending Soviet attack on the basis of documents he had translated incorrectly.

He also blundered during the Ukraine crisis after sending photos to US Senator James Inhofe, claiming to show Russian units in Ukraine. Inhofe released the photos publicly, but it quickly emerged that one had originated from the 2008 war in Georgia.

By November 10, 2014, at the latest, Breedlove must have recognized that his informant was on thin ice. That’s when Karber reported that the separatists were boasting they had a tactical nuclear warhead for the 2S4 mortar. Karber himself described the news as “weird,” but also added that “there is a lot of ‘crazy’ things going on” in Ukraine.

The reasons that Breedlove continued to rely on Karber despite such false reports remain unclear. Was he willing to pay any price for weapons deliveries? Or did he have other motives? The emails illustrate the degree to which Breedlove and his fellow campaigners feared that Congress might reduce the number of US troops in Europe.

Karber confirmed the authenticity of the leaked email correspondence. Regarding the questions about the accuracy of his reports, he told SPIEGEL that, “like any information derived from direct observation at the front during the ‘fog of war,’ it is partial, time sensitive, and perceived through a personal perspective.” Looking back with the advantage of hindsight and a more comprehensive perspective, “I believe that I was right more than wrong,” Karber writes, “but certainly not perfect.” He adds that, “in 170 days at the front, I never once met a German military or official directly observing the conflict.”

Great Interest in Berlin

Breedlove’s leaked email correspondences were read in Berlin with great interest. A year ago, word of the NATO commander’s “dangerous propaganda” was circulating around Merkel’s Chancellery. In light of the new information, officials felt vindicated in their assessment. Germany’s Federal Foreign Office has expressed similar sentiment, saying that fortunately “influential voices had continuously advocated against the delivery of ‘lethal weapons.'”

Karber says he finds it “obscene that the most effective sanction of this war is not the economic limits placed on Russia, but the virtual complete embargo of all lethal aid to the victim. I find this to be the height of sophistry — if a woman is being attacked by a group of hooligans and yells out to the crowd or passersby, ‘Give me a can of mace,’ is it better to not supply it because the attackers could have a knife and passively watch her get raped?”

General Breedlove’s departure from his NATO post in May has done little to placate anyone in the German government. After all, the man Breedlove regarded as an obstacle, President Obama, is nearing the end of his second term. His possible successor, the Democrat Hillary Clinton, is considered a hardliner vis-a-vis Russia.

What’s more: Nuland, a diplomat who shares many of the same views as Breedlove, could move into an even more important role after the November election — she’s considered a potential candidate for secretary of state.

(BBG) Ukraine Approves Hroisman as Premier in Long-Awaited Shake-Up

(BBG) Ukraine’s parliament speaker was approved as prime minister in a bid to end a political crisis that’s threatened to trigger early elections and has jeopardized the flow of billions of dollars in international financing.

After weeks of deliberations among the dominant parties, Volodymyr Hroisman, an ally of President Petro Poroshenko, was confirmed by parliament Thursday as Arseniy Yatsenyuk’s replacement. He was backed by a slimmed-down ruling coalition made up of the parties of Poroshenko and Yatsenyuk, as well as independent lawmakers lured by the president’s bloc to achieve a majority.

Hroisman, 38, takes charge amid a volatile environment, with voters and Ukraine’s foreign backers losing patience over delays in fighting graft after a street revolution demanding European values. Stalled reforms prompted key administration officials to quit and the International Monetary Fund to halt a $17.5 billion bailout. While the economy is healing after an 18-month recession, the hryvnia has lost 6 percent against the dollar this year.

“The change of prime minister could allow stalled reforms to be restarted and the country’s frozen IMF deal to resume,” said Liza Ermolenko, an analyst at Capital Economics Ltd. in London. “It’s clear the current government’s position has become increasingly fragile. Support has declined dramatically.”

Bonds Advance

Ukrainian government bonds, which rallied the most in a month on Monday on optimism a new government was close, kept gains after Hroisman’s appointment. The yield on debt due 2019 fell two basis points to 9.608 percent.

Hroisman has been parliament speaker since November 2014, serving previously as a deputy premier under Yatsenyuk. His appointment, ahead of candidates such as Finance Minister Natalie Jaresko, consolidates Poroshenko’s grip on power. He’s vowed to nurture the economy’s nascent recovery and restart IMF cooperation.

Poroshenko said Sunday that $1 billion in U.S. loan guarantees would be approved once the new cabinet is in place. More aid — needed to boost foreign reserves — would follow, including 600 million euros ($680 million) from the European Union and $1.7 billion from the IMF, he said.

Cabinet Jobs

Hroisman must now propose his government lineup for parliamentary approval. Oleksandr Danylyuk, deputy head of the presidential staff, is being put forward for the critical post of finance minister, while ex-central bank Governor Stepan Kubiv is being suggested as first deputy prime minister and economy minister. The defense and foreign ministers — both presidential appointees — will retain their jobs.

Danylyuk, picked after ex-Slovak Finance Minister Ivan Miklos rejected joining Ukraine’s government, would replace U.S.-born Jaresko, a favorite among investors after she oversaw last year’s $15 billion debt restructuring.

Poroshenko and Yatsenyuk emerged to lead Ukraine after a popular uprising two years ago ousted the country’s Kremlin-backed president, Viktor Yanukovych. They arrived with a mission to bring European levels of transparency to the ex-Soviet republic after decades of misrule. Before infighting sank their partnership, Ukraine exited recession and signed a pact to end the armed conflict against pro-Russian separatists in its east.

+++ V.V.I. (FT) Dutch vote knocks hopes for further EU enlargement to the east


A likeness of Russian President Vladimir Putin standing beside a map of Europe and Russia sits on a vote
© Bloomberg

When a Malaysia Airlines jet was shot down over eastern Ukraine in 2014 killing 196 Dutch citizens — almost certainly by a missile fired by Russian-backed separatists — the tragedy hardened views towards Moscow in the Netherlands and across Europe.

Yet less than two years on, Dutch voters on Wednesday rejected Kiev’s integration deal with the EU, which sparked the Ukrainian crisis, in a referendum that handed the Kremlin a valuable symbolic victory.

The vote was non-binding and turnout, at 32 per cent, was small. But it crossed the threshold required to make the vote valid — and put moral pressure on the Dutch government to take account of it.

That could be a gift to President Vladimir Putin in his geopolitical struggle to undermine the EU’s unity and reassert Russia’s influence over ex-Soviet republics. Moscow had put immense pressure on Kiev not to sign the deal, leading to Ukraine’s pro-Russian president Viktor Yanukovich being toppled by street protests two years ago.

Mr Putin then fought to reverse or undermine the agreement after Ukraine’s new pro-western president, Petro Poroshenko, signed it in 2014.

Even if the trade deal with the EU that is the backbone of the Ukraine deal survives, the Dutch vote could complicate Kiev’s hopes of further integration with the EU, including a long hoped for visa-free travel deal.

Moscow could barely conceal its glee. Prime minister Dmitry Medvedev said the vote was an “indicator of Europeans’ attitude to the Ukrainian political system”. Alexei Pushkov, head of the Russian parliament’s foreign affairs committee, called it “self-defence by Europeans against a Ukraine that frightens them”.

The result also signalled that insularity, suspicion towards political leaderships and rejection of immigration are becoming powerful forces, even in countries such as the Netherlands, an EU founder member.

That could have implications for the workings of the bloc, and for its further enlargement to east and south-east Europe, especially the fragile states of the former Yugoslavia.

“If European decisions become increasingly subject of national referendums, the EU will ultimately be unable to act,” said Jo Leinen, a German Socialist MEP.

Marine Le Pen, France’s National Front leader, called the vote a “step further towards the Europe of nations”.

How much the Dutch rejection damages Ukraine’s integration hopes — potentially pushing the country back towards Russia’s orbit — will depend in part on how The Hague and the EU respond.

Dutch prime minister Mark Rutte stopped short of promising to follow fully the result but said he would examine the vote over “weeks”.

While Jean-Claude Juncker, the European Commission president, had warned of a “continental crisis” if the vote went the wrong way, Brussels diplomats were searching on Thursday for a way to work around it.

One potential “minimalist” option could be to work on an EU political statement clarifying contentious parts of the agreement — making it clear, for instance, that it does not put Ukraine on a path to EU membership.

Ukrainian President Petro Poroshenko gestures as he gives a joint press conference with the German Chancellor (not in picture) on March 16, 2015 at the Chancellery in Berlin. AFP PHOTO / ODD ANDERSENODD ANDERSEN/AFP/Getty Images
Petro Poroshenko: has not ruled out euro-integration © AFP

More difficult alternatives would be to recast the deal to acknowledge Dutch reservations. One senior EU diplomat said this could involve separating pure trade elements — decided at EU level — from political elements that require national ratification.

Mr Poroshenko called the referendum result “an attack on the spreading of European values”. But he insisted Ukraine would “not turn away from the euro-integration path”.

But Vadim Karasiov, a Kiev political analyst, said the result was a “shock for much of the political elite and citizens”. Despite the price Ukraine had paid for its pursuit of European integration — from Russia’s annexation of Crimea to thousands of deaths in the east Ukraine conflict — the referendum showed “many in Europe still don’t see Ukraine as a part of Europe”.

“A Eurosceptic mood could swell in Ukraine as well,” he said.

Many Ukrainians’ initial response, however, was to blame their own government for failing to make sufficient progress on tackling corruption and strengthening the rule of law to change European perceptions of the country.

Mr Poroshenko, a billionaire businessman, has been under pressure after revelations in the Panama Papers that he set up an offshore company to move his confectionery business to the British Virgin Islands. The president has denied wrongdoing.

Some Dutch papers this week carried front-page photos of Mr Poroshenko alongside Mr Putin, whose associates’ dealings were also exposed by the Panama leaks. In opinion polls, opponents of the deal cited Ukrainian corruption as a primary concern, ahead of worries over further EU expansion.

Mustafa Nayem, an instigator of Ukraine’s 2013 political protests and now a pro-reform MP, blamed Mr Poroshenko. “This is a verdict on a president who … for the past two years has systematically and persistently chosen the past over the future.”

Mr Poroshenko, he said, had chosen to partner with Ukraine’s “elites and oligarchs, not civil society and the next generation”.asdnhui

+++ V.I. (FT) Editorial: A Dutch embarrassment for Europe and Ukraine

(FT) Putin would applaud the loudest if referendum hurt EU ties with Kiev.

GeenPeil frontman Jan Roos, initiator of the Dutch referendum on the EU's treaty of association with Ukraine, follows the outcome of the referendum in Amsterdam on April 6, 2016. Dutch voters rejected a key EU-Kiev pact in a referendum seen as a barometer of anti-EU feeling, but it was not immediately clear if enough people had taken part for the ballot to be valid, exit polls showed. / AFP PHOTO / ANP / Remko de Waal / Netherlands OUTREMKO DE WAAL/AFP/Getty Images
Jan Roos, initiator of the Dutch referendum on the EU’s treaty of association with Ukraine © AFP

In 1972, 44 years before this week’s Dutch vote on a EU-Ukraine association agreement, France held a referendum on whether to let Britain, Denmark and Ireland join the European Economic Community, the EU’s forerunner. If French voters had said “No” to what became the EEC’s first expansion beyond its six-member founding club, Europe’s history might have turned out very differently. In the event, the French voted in favour by 68 to 32 per cent on a 60 per cent turnout.

Contemporary commentators viewed the margin of victory and turnout, which was low for that era, as a less-than-ringing endorsement of EEC enlargement. Measured by the standards of 1972, however, Wednesday’s Dutch referendum was a far less satisfactory consultation of the popular will. Some 61 per cent of voters rejected the EU-Ukraine accord, but the 32 per cent turnout was so low that the referendum was almost invalid.

Vast numbers of the 12.5m eligible Dutch voters either did not know the referendum was happening, or did not understand what it was about, or did not care enough about it to vote. A segment of the electorate abstained in a deliberate attempt to invalidate it. The outcome bears a less convincing stamp of democratic legitimacy than the 2005 referendum in which Dutch voters, on a 63 per cent turnout, rejected a draft EU constitutional treaty.

The referendum will nonetheless have consequences for European politics. The fact that it happened at all underscores that anti-EU movements are eager to exploit the doubts of many European citizens about the quality of democracy and accountability in the EU. More attempts to embarrass Europe’s political establishments and weaken the EU are to be expected, starting with Britain’s referendum on staying in or leaving the bloc.

Pro-EU Ukrainians, meanwhile, will take the Dutch result as a slap in the face. Scores of their compatriots, wrapped in the EU flag, sacrificed their lives in the 2013-14 Maidan revolution that toppled Viktor Yanukovich, the corrupt Moscow-backed president. Critics of Petro Poroshenko, his successor, and other post-Maidan politicians will contend that the Dutch suspicion of closer ties reflects broader EU concerns about persistent corruption and oligarchy in Ukraine since 2014.

Europe’s rightwing populist movements, such as France’s National Front, the Dutch Freedom party and Britain’s UK Independence party, are portraying the result as a popular revolt against the EU and, in particular, its future enlargement into eastern Europe. This is deceitful insofar as Ukraine is not a candidate for EU membership, a point the Dutch government should have made more explicitly to voters in the campaign.

European governments justifiably want to help Ukraine by expanding trade and encouraging it to adopt EU standards in public procurement and company law. If the Dutch result caused the EU to retreat from these features of the association accord, it would damage the bloc’s reputation as a reliable partner. No one would applaud louder than Vladimir Putin, Russia’s president. Hostility to the EU is the common ground on which Mr Putin and Nigel Farage, Ukip’s leader, stand. British voters should keep this in mind when they vote on June 23.

Thankfully, the Dutch result need not derail the EU-Ukraine association accord. Its trade arrangements came into provisional force on January 1. They cannot be suspended without the unanimous agreement of all 28 EU nations. Even if the Dutch government decides not to ratify the accord, the EU’s efforts at forging closer ties with Kiev can and should survive.sjuiom

+++ V.V.I. (FT) Dutch reject EU-Ukraine trade deal

(FT) Dutch voters opposed a trade deal between the EU and Ukraine by a margin of nearly two-to-one, throwing Europe’s united stance against Kremlin meddling in Ukraine into question and boosting those in the UK campaigning for Britain to leave the bloc.

Turnout just breached the 30 per cent level required to force the hand of a government that had agreed to abide by the result if the threshold were passed.

Although Dutch Eurosceptics used the referendum as a test case for rising anti-EU sentiment in the country, the vote could have wider-ranging implications for Ukraine’s future.

The EU pact, which is both a European integration treaty as well as a free-trade agreement, sparked demonstrations in Kiev two years ago that led to the overthrow of President Viktor Yanukovich when he bowed to Kremlin pressure and refused to sign it.

The revolution in Kiev prompted Russia to annex Crimea and Russian-backed separatists to launch a bloody civil war in Ukraine’s eastern Donbass region. Kiev’s new pro-western leadership later went on to sign the EU deal.

Ukraine’s president, Petro Poroshenko, condemned the vote, calling it “an attack on the spreading of European values,” and vowed to continue working towards integration with the EU.

“I declare that we will not turn away from the Euro-integration path,” Mr Poroshenko said on Thursday.

In a statement, Mariana Betsa, a spokesperson for Ukraine’s foreign ministry, said that while her country “takes into consideration” the results of what she noted was a non-binding referendum, Kiev hoped the Dutch government would make a “decision meeting the interests of Ukraine, the Netherlands and Europe.”

Mark Rutte, the Dutch prime minister, who had offered cautious and last-minute support for the treaty, conceded that the Netherlands would not be able to automatically ratify the Ukraine deal, potentially paving the way for months of tortuous negotiations with Brussels over a new pact. Vladimir Putin, the Russian president, has long demanded a reopening of treaty negotiations to halt Kiev’s drift into the EU’s sphere of influence.

In total, 61 per cent of Dutch voters opposed the deal, while just 38 per cent supported it.

Voter turnout was always expected to be low but miserable weather across the country — with rain, strong winds and unseasonably cold weather — depressed it further. Many voters engaged in “tactical non-voting” in a bid to push the referendum under the 30 per cent threshold. They failed, however, withturnout reaching 32.2 per cent.

The potential implications of the Dutch vote on Britain’s EU referendum have been closely watched. For those campaigning for Britain to remain in the EU, it will provide a sharp lesson in the necessity of making sure supporters turn up on polling day.

But campaigners for Brexit will take succour from the outcome of the referendum, which had spread from a specific focus on a 2,135-page trade deal with the Ukraine, into a far wider debate that touched on the Netherlands’ relationship with both Brussels and Moscow.

The results of the vote cam as a shock for Ukrainians. Two years ago many demonstrators in Kiev carried EU flags. The scores of protesters who were killed demonstrating in Kiev during the final stages of the revolution are widely seen in Ukraine as having died for “European values.”

The vote came about after a group of journalists at an anarchic website called GeenStijl, which styles itself as “tendentious, unfounded and needlessly offensive”, launched an attempt to secure the 300,000 signatures needed to call a referendum on the deal last summer.

Initially the Dutch government ignored the prospective referendum, partly in the hope that this would stop it from reaching the 30 per cent threshold but also to disassociate itself from any defeat.

In the final weeks of the campaign, however, senior ministers, including Mr Rutte, offered vocal support for the deal.

Additional reporting by Roman Olearchyk in Kiev


+++ V.V.I. (BBG) Dutch Snub EU in Vote Hailed From ‘Brexit’ Camp and Le Pen

(BBG – click to see) Dutch voters rejected a treaty between the European Union and Ukraine by a resounding margin, in a referendum that exposed the extent of anti-EU sentiment in one of the bloc’s founding members.

British campaigners to leave the bloc hailed the news from the Netherlands, as did the leader of France’s anti-EU National Front, Marine Le Pen, and Russian Prime Minister Dmitry Medvedev. About 61 percent voted against the so-called association agreement Wednesday and turnout was about 32 percent, clearing the 30 percent threshold needed to declare the vote valid.

The result put Dutch Prime Minister Mark Rutte under pressure as the growing swell of populist support will force his government to renegotiate the treaty, first at home and then at EU level. Rutte, whose cabinet campaigned for approval of the pact, said the Netherlands couldn’t ratify the treaty after the rejection, even though, technically, the referendum is not binding.

The Dutch ballot is the latest success for insurgents outside of power managing to directly influence the mechanics of government. The U.K. Independence Party managed to push Prime Minister David Cameron into calling a vote on leaving the EU for later this year, while in France, Le Pen has helped drive the country’s security agenda to the right. European citizens are showing their frustration with a bloc that has been beset by a refugee crisis, security challenges and economic stagnation.

‘Long-Term Implications’

“This vote has very profound long-term implications for Europe on so many different levels,” wrote Tim Ash, head of emerging-market credit strategy at Nomura International in London. “It just further shows how far Europe’s elites are detached from their populations. All too eager to embark on elite political projects, e.g. even including the single currency, without thinking through all the implications and popular opinion.”

Supporters of the referendum were also hindered by Sunday’s publication of leaks from a Panamanian law firm, which sparked global outrage about money hidden by the world’s elite. They mentioned loans to companies linked to Ukrainian President Petro Poroshenko that were backed by offshore deposits. In the Netherlands, opponents said the discovery was a reason to be wary of Ukraine.

‘Humiliating Rejection’

“The Dutch result is a stunning condemnation of the European Union’s willingness to extend its borders,” a spokesman for the British Leave.EU campaign group, Brian Monteith, said in an e-mailed statement. “This humiliating rejection of the Ukraine agreement demonstrates that people don’t have to support the EU and its expansionist agenda to feel European.”

Geert Wilders, the leader of the Dutch anti-EU, anti-Islam Freedom Party, hailed the result as “fantastic,” and Le Pen congratulated him on Twitter, saying it was another “step away” from the EU. Medvedev said the rejection was an “indication of Europeans’ attitude to the Ukrainian political system,” in a post on Twitter.

While all other members of the bloc have ratified the treaty, which facilitates EU trade and other links with Ukraine, the Dutch subjected it to a referendum as a result of a new law that allows citizens to challenge legislation provided they gather a requisite number of signatures. A group of local activists picked the association agreement, deciding it would serve as a perfect test case to try out the mechanism — especially as a rejection would demonstrate the growing strength of opposition within the Netherlands to the bloc.

The referendum law will be reviewed by the Dutch government, Interior Minister Ronald Plasterk said Thursday, according to national newswire ANP.

“The target is an attack against Europe’s unity,” Poroshenko said in a video-recorded comment from Japan. “I’m confident that strategically this event is not an obstacle on Ukraine’s EU-bound path.” He committed to implementing the treaty, saying it was the way forward for a modern and independent Ukraine.

+++ (FT) Brussels briefing: The Dutch question

(FT) The Netherlands votes today on the EU’s trade pact with Ukraine. Polls suggest the deal will be rejected. But what will it actually mean? For an answer to that, prepare to enter the topsy-turvy world of Dutch referendums.

Here are some of the contradictions to grapple with. The plebiscite is merely advisory. Most Dutch politicians support the Ukraine deal. Two-thirds of voters say they have no idea what was agreed with Kiev, according to I&O research. Even the referendum organisers were not particularly interested in the details. Yet, in spite of all that, this vote may have some real political consequences for the Netherlands and the EU.

The first muddle is over what it means for the Ukraine trade deal. The Dutch government has little choice but to act on a No vote, if there is a half-decent turnout (over 30 per cent). In other words the Ukraine agreement may never be ratified (it needs unanimity from EU states).

But – read this carefully – its provisional application may still survive (repealing it also needs unanimity). So the trade benefits temporarily enjoyed by Ukraine today could continue for some time. The question is how long the EU can live with the hypocrisy of a provisional deal that will never becomes permanent. That will require a political fudge of some sort. But Brussels is the place for such things.

Then there is the tangled question of what the vote is actually about. Some say it isRussia and Vladimir Putin. Other darkly mutter this is all a Russian plot to destabilise Ukraine and the EU (Russian diplomats joke that this was a Dutch gift they didn’t have to pay for). Voters on the other hand tell pollsters their worry is corruption in Kiev (not helped by revelations from the Panama Papers). To confuse matters further, some of the campaigning has involved gory posters of mistreated chickens.

If there is a No vote, though, the clear winners are eurosceptics. The result will be the latest in a miserable run of referendum defeats for pro-EU politicians. Denmark thumbed its nose at the option of more integration in December, the Dutch are now poised to blow a raspberry at a trade deal and the EU in general, and the British look close to abandoning the club in June. The implications of the Dutch vote should not be overstated: it is unlikely to hasten Brexit, or be a watershed for the EU. But as Judy Dempsey writes for Carnegie Europe, it is further proof that EU champions need to learn how to campaign and stop running scared of the ballot box.

The revelations about offshore activities roll on. Iceland’s premier Sigmundur David Gunnlaugsson resigned on Tuesday, becoming the first casualty of the Panama Papers. David Cameron struggled to scotch questions over his late father’s role in tax avoidance and possible benefits enjoyed by his family at some point. Associates of the Marine Le Pen, the French far-right leader, wriggled under the spotlight. The new head of Fifa cameunder pressure too.

Regarding the policy response, Nicholas Shaxson argues in the FT that the big problem is “armies of offshore enablers looking for loopholes: accounting firms, offshore company formation agents and trust companies and banks”. The FT, the Wall Street Journal andLe Monde take a look at some of the banks under scrutiny, including HSBC, Société Générale and Credit Suisse.

One of the founders of the law firm Mossack Fonseca meanwhile dismissed the “witchhunt” against a legitimate offshore industry. “It’s like if you buy a car and sell it to a dealership and it sells it to a woman who kills someone — the factory isn’t responsible,” Ramón Fonseca told the FT. That must be an old Panamanian proverb.

The Pope, Lesbos, asylum reform

This should be interesting. The Pope is preparing a visit to the migrant hot-spot of Lesbos next week to see first-hand the plight of refugees. The timing of the Papal visit is less than ideal for EU authorities, who are under fire from the UN and aid agencies over a controversial deal to return asylum seekers to Turkey.

Around 200 migrants were returned to Turkey on Monday, but more than 300 landed on Greek islands on the same day. Returns are largely on hold for the moment because most of the around 6,000 migrants on Greek islands are seeking asylum. With EU countries only offering Greece just 22 of the 400 interpreters needed, they may have a long wait for their applications to be processed. Francois Hollande speaks to Bild Zeitung today, stressing that resettlement from Turkey is only possible if external borders are under control.

The European Commission, meanwhile, will unveil its option paper today to overhaul rules on who is responsible for asylum claims (the so-called Dublin system). The FT’s Duncan Robinson saw a leaked draft in early March and the basics are the same. Two main options are outlined. The first is to fundamentally reshape the bloc’s system and would result in all asylum seekers being shared out across the EU on a quota basis, regardless of where they first arrived (that’s what Greece and Italy want and eastern Europe will try to block). The other would build on the status quo, with asylum seekers shared out on a quota basis if a country is overwhelmed by a sudden influx (the French helped design this compromise route). The longer term plan is to centralise the handling of asylum claims. The politics around this is fraught, even in countries like the UK that are only marginally affected.

Nagorno Karabakh

A ceasefire was called on Tuesday between Armenia and Azerbaijan after days of fighting over the Nagorno-Karabakh region. It seems to be holding but there are doubts over how long. Thomas de Waal of Carnegie Europe describes it as the “most menacing”of all the conflicts that erupted with the break-up of the Soviet Union. There are international efforts to calm things down. But even Russia has for decades struggled to impose its will on this conflict, attempting a balancing act between providing security for Yerevan without fully alienating Baku. Throw some Russo-Turkish tensions into the mix(Ankara is a backer of Turkish-speaking Azerbaijan) and it is not hard to see how this could end badly.htybf

+++ V.I. (FT) Dutch referendum on Ukraine seen as test of EU sentiment

(FT) Dutch voters headed to the ballot box for a referendum on a controversial trade deal between the EU and Ukraine on Wednesday — with the latest polls pointing to a victory for those opposed to the move.

Although the vote is non-binding, a negative outcome is likely to complicate the implementation of the agreement with Kiev and would deal a blow to the Dutch government, which has a majority of one.

Since the campaign for a vote on the deal was launched last year by a satirical blog, the referendum has snowballed from a “yes” or “no” on an arcane trade deal between Brussels and Kiev into a plebiscite on a list of grievances, ranging from general anger at the EU to the Netherlands’ own relationship with Russia.

Peter Kanne, senior research consultant at I&O research, said: “The people who [will] vote against it are very critical of the European Union. The main reason people are deciding to vote against is fear of corruption in Ukraine. Another is the fear that this is the first step towards Ukraine’s EU membership. Also people don’t want to provoke Russia and Putin.”

Most polls suggest that the campaign against the Ukraine deal will scrape a narrow victory, with a low turnout expected to benefit the “no” camp. The referendum is the country’s first since 2005, when Dutch voters torpedoed plans for an EU constitution by voting overwhelmingly against the idea.

This time, however, both sides have had to contend with widespread apathy. Pollsters are not certain the turnout will breach 30 per cent — the level required for the government to take note of it. But opponents of the deal have a clear lead among those who say they are likely to vote.

Nearly two-thirds of Dutch citizens admit they have little to no idea what is contained in the 2,135-page deal with Ukraine. The referendum has instead become a lightning rod for other issues, leaving the “yes” campaign facing an uphill battle that has got tougher in recent weeks.

Allegations of corruption in Ukraine — a key plank of the “no” campaign — were this week heightened by the release of the Panama Papers, which ensnared the Ukrainian president Petro Poroshenko, who was accused of using offshore accounts.

Even the weather has conspired against the “yes” campaign: the day of drizzle forecast is likely to put off the less impassioned “yes” voters, according to Mr Kanne, the pollster at I&O.

A defeat would cause headaches for the Dutch government, which is dominated by the Labour party and the centre right VVD, to whom the prime minister Mark Rutte belongs.

According to the latest polls, both parties lag far behind Geert Wilders’ anti-immigration and anti-EU party PVV, which has the backing of nearly 40 per cent of Dutch voters.

Even a comprehensive “no” vote is unlikely to blow apart the pact with Ukraine. Parts of the trade deal are already in place on a provisional basis and reversing this would require all 28 member states to unanimously agree.

EU lawyers have in the past examined ways of giving individual countries some form of opt out on measures such as sanctions. Previous compromises discussed have involved EU member states implementing the same agreement but on a bilateral basis, which would give a reluctant country a de facto carve out.asdft

+++ (EUbusiness) Dutch ‘no’ to Kiev-EU accord could trip crisis: Juncker

(EUbusiness – click to see) European Commission chief Jean-Claude Juncker urged Dutch voters Saturday not to oppose an EU cooperation deal with Ukraine, saying such a move “could open the doors to a continental crisis”.

A citizens’ campaign in the Netherlands spearheaded by three strongly eurosceptic groups garnered more than 300,000 votes needed to trigger a non-binding referendum on the deal, three months from now.

Observers said the vote, set for April 6, pointed more towards broader euroscepticism among the Dutch than actual opposition to the trade deal with Kiev, which fosters deeper cooperation with Brussels.

A Dutch ‘no’ “could open the doors to a continental crisis,” Juncker told the authoritative NRC daily newspaper in an interview published on Saturday.

“Let’s not change the referendum into a vote about Europe,” Juncker urged Dutch voters, adding: “I sincerely hope that (the Dutch) won’t vote no for reasons that have nothing to do with the treaty itself.”

Should Dutch voters oppose the deal, Russia “stood to benefit most,” he said.

The 2014 association agreement provisionally came into effect on January 1 and nudges the former Soviet bloc nation towards eventual EU membership.

On a visit to the Netherlands in November, Ukranian President Petro Poroshenko hailed the deal as the start of a new era for the Ukraine.

Dutch Prime Minister Mark Rutte has said his government was bound by law to hold the referendum, and would afterwards assess the results to see if any change in policy was merited.

Although the results are not binding on Rutte’s Liberal-Labour coalition, the referendum is likely to be closely watched as eurosceptic parties — including that of far-right politician Geert Wilders — rise in the Dutch polls ahead of elections due in 2017.

Russia has been incensed by the EU’s move to bring Ukraine closer to the European fold.

The tensions spilt over into civil war in eastern Ukraine in 2014, with Moscow accused of backing pro-Russian separatist rebels and raising the prospect of all-out war on Europe’s doorstep.

The conflict has left more than 9,000 dead since April 2014.

+++ (BBG) Ukraine Defaults on $3 Billion Russia Bond as Court Battle Looms

(BBG – click to see) Ukraine defaulted on a $3 billion bond payment due to Russia, deepening a dispute over the debt as the two sides move closer to legal action.

Prime Minister Arseniy Yatsenyuk said Kiev is imposing a moratorium on the note due Dec. 20, which Russian President Vladimir Putin bought two years ago to bail out Ukraine’s former president just months before he was toppled. Russia said as recently as last week it would take Ukraine to court if the payment was missed.

The default comes after Russia refused to participate in an $18 billion restructuring with commercial creditors earlier this year, arguing it should receive better terms since it’s a sovereign lender. The two sides indicated this month that they’re open to negotiations to restructure the debt and have been using German officials to mediate indirect talks.

Yatsenyuk announced the payment freeze at a government meeting in Kiev on Friday, saying the step was needed after Russia “refused to sign an agreement on restructuring.” Payments are frozen “until our propositions on restructuring are accepted or until a relevant court decision is made,” he said.

The moratorium also applies to about $507 million owed to Russian banks by two state-run companies, according to Yatsenyuk.

Debt Agreement

The government in Kiev is barred from paying Russia back in full under the conditions of the agreement with private creditors and a $17.5 billion International Monetary Fund aid package secured this year to keep the country’s economy afloat. Under that deal, bondholders including Franklin Templeton accepted a 20 percent reduction to their principal holdings.

“A court case is the baseline scenario now,” Vadim Khramov, a strategist at Bank of America in London, said by phone. “An out-of-court restructuring is possible, but the only way to negotiate is to negotiate directly. I don’t see a simple solution coming from bilateral talks.”

Prior to today’s default, Russia had been softening its stance on the debt, with Putin proposing last month that Ukraine pay it back over three years so long as a Western government or bank provide a guarantee. That offer fell through earlier in December, and Russian Finance Minister Anton Siluanov said Dec. 16 an out-of-court settlement may be “impossible.”

Relations between Russia and Ukraine have deteriorated since the bond was sold as Putin annexed Crimea in March 2014 and supported a separatist rebellion in Ukraine’s easternmost regions that’s killed 9,000 people. Germany helped negotiate a fragile truce between the separatists, Russia and the government in Kiev that has held since September. Germany declined to immediately comment on the default.

Ukraine’s restructured dollar-denominated bonds stayed lower, with the yield on the debt due 2025 rising two basis points to 9.65 percent by 12:05 p.m. in Kiev. It’s heading for the fourth week of increases.

(FT) Victory for Putin in fight to force Ukraine to repay $3bn bond

(FT) The International Monetary Fund has handed a victory to Russia’s Vladimir Putin in his fight to force Ukraine to repay a $3bn bond that matures on Sunday, the fate of which has been threatening to force a halt to western efforts to rescue the war-hit Ukrainian economy.

Kiev has been trying unsuccessfully to force Moscow to participate in a restructuring it agreed with commercial creditors including US fund giant Franklin Templeton earlier this year. But the IMF’s executive board ruled on Wednesday that the Russian debt was official, or sovereign, throwing those efforts into disarray.

The decision means that under new IMF rules Ukraine will now have to demonstrate “good faith” in at least attempting to negotiate a restructuring of its debt with Russia if it wants to secure the next instalment of a $17bn IMF-led rescue programme.

But the “good faith” bar is one that senior IMF officials do not believe Ukraine has yet met. To do so Ukraine’s government will probably have to sit down for face-to-face negotiations with Russian representatives, as Moscow ramps up economic pressure on Kiev.

In his latest move, Mr Putin on Wednesday announcedthat he was suspending a free-trade agreement with Ukraine because of lack of progress in talks over Kiev’s signing of a separate trade deal with the EU.

The IMF board last week voted to change longstanding rules that prohibited it from continuing to make emergency loans to any country that defaults on debts to another IMF member economy, drawing a furious reaction from Mr Putin.

Although a change to those rules has been in the works since at least 2013, the US and European IMF shareholders had sought the amendment to make sure that Moscow could not sabotage the rescue of Ukraine’s economy. It is expected to contract by 9 per cent this year amid conflict with Russian-backed rebels.

However, with Wednesday’s move the IMF board has handed new leverage to Mr Putin over Kiev, and created a new hurdle for Ukraine for its IMF rescue to continue.

“This is a figleaf for the Russians. It makes no sense,” said Anders Aslund, a Ukraine expert at the Washington-based Atlantic Council.

The bond was issued by one of Russia’s sovereign wealth funds, the National Wealth Fund, in December 2013, as part of an effort by Moscow to prop up the previous government in Kiev.

The Ukrainian government has argued that the sovereign wealth fund is a commercial entity. But the IMF said that both its staff and board had decided that the bond was held by the sovereign wealth fund on behalf of the government.

“Based on the foregoing considerations, staff is of the view that the Eurobond is an official claim,” IMF staff wrote in a report.Victory-for-Putin-in-fight-to-force-Ukraine-to-repay-3bn-bond-FT