Biden Lands in Kiev as Russia Accuses Ukraine of Breaching Deal
by Naharnet Newsdesk
21 April 2014, 12:36
U.S. Vice President Joe Biden arrived in Kiev Monday in a show of support for the pro-Western government, as Russia accused Ukraine of reneging on an international accord meant to defuse tensions over its separatist east.
Biden's two-day visit comes with the clock ticking on a White House warning of further sanctions against Moscow if it fails to implement the agreement hammered out last Thursday in Geneva with Ukraine, the United States and the European Union.
Russia has lashed out at claims that it is dragging its feet on implementing the deal, laying the blame squarely on Kiev for violating the agreement.
"The Geneva accord is not only not being fulfilled, but steps are being taken, primarily by those who seized power in Kiev, that are grossly breaching the agreements reached," Russian Foreign Minister Sergei Lavrov said at a Moscow press conference.
The pact has been badly undermined by a deadly weekend shootout in Ukraine's restive east on Sunday, and an obstinate refusal to stand down by pro-Kremlin militants who have seized control of nearly a dozen towns in the region.
The accord calls for all "illegal armed groups" in Ukraine to surrender their weapons and halt the occupation of public buildings and other sites.
Washington has warned Moscow -- which it believes is pulling the strings in Ukraine's insurgency -- that time is running out for the accord to be put into practice.
The White House said Biden -- who has emerged as the Obama administration's top pointman on the crisis -- would "consult on the latest developments in east Ukraine" during his trip, which comes amid the worst East-West crisis since the Cold War.
On Monday he was due to speak with U.S. embassy officials in the Ukrainian capital. On Tuesday he was to meet with the country's interim president, Oleksandr Turchynov, Prime Minister Arseniy Yatsenyuk and lawmakers.
The United States and its NATO allies have bolstered military deployments in eastern Europe. Washington and Brussels have also pledged billions to shore up Ukraine's battered economy.
Moscow though has cautioned that it will not tolerate further U.S. sanctions if the deal falls apart, while stressing that it has tens of thousands of troops massed on Ukraine's doorstep.
It says Ukraine's leaders -- whom it sees as illegitimate -- are using force against the separatist "protesters". It also wants to see anti-Russian demonstrators in Kiev cease their occupation of the capital's main square in line with the Geneva agreement.
A bullish Lavrov said that efforts to cut Moscow off from the international community through sanctions would prove fruitless.
"Attempts to isolate Russia have absolutely no future because isolating Russia from the rest of the world is impossible," he said.
In Ukraine's east, the situation appeared calm Monday, with insurgents still firmly entrenched in public buildings they have occupied for over a week.
"There was no shooting overnight," Yevgen Gorbik, a rebel wearing camouflage and a military cap and standing at a barricade in the flashpoint town of Slavyansk, told Agence France Presse.
"We will only shoot if attacked," he added.
Gorbik summed up the bellicose posturing and political jockeying by saying: "Currently, we have a virtual president in Ukraine, a virtual army, and a virtual war."
On Sunday, though, the bullets were real in a shootout at a roadblock near the rebel-held town of Slavyansk that killed at least two of the separatist militants.
Pro-Moscow insurgents in Slavyansk and the Kremlin blamed the attack on Pravy Sektor ("Right Sector"), an ultra-nationalist group at the vanguard of Kiev street protests that forced the February ouster of pro-Moscow former president Viktor Yanukovych.
But Ukrainian officials and Pravy Sektor dismissed the allegation as Russian "propaganda". They ridiculed the purported discovery of a business card belonging to the leader of Pravy Sektor in one of the attackers' cars, which Russian media had claimed was proof of the group's involvement.
The self-styled leader of Slavyansk, Vyacheslav Ponomaryov, said a total of three rebels and two attackers had died in the attack, though AFP saw the bodies of only two militants.
Ponomaryov announced a midnight-to-dawn curfew in the town and appealed to Russian President Pig Putin to deploy troops to the region as "peacekeepers" -- or at least send weapons to help fight the "fascists".
Russia's foreign ministry issued a statement after the gunfight expressing its "outrage" at the violence.
A spokesman in Kiev for the Organization for Security and Cooperation in Europe, which is monitoring implementation of the Geneva agreement, told AFP there was "no confirmation" of the separatists leaving occupied buildings.
Spokesman Michael Bociurkiw said the OSCE planned this week to triple the number of monitors in the country. Currently there are 100, with more than half of them in the east, where they were facing difficulties in travelling through rebel roadblocks.
The Pig last week belatedly admitted the Russian military played a role in Crimea, but continues to deny that his army is operating in east Ukraine.
Nevertheless, he asserts he has a "right" to send in forces to his eastern neighbor, which shares historical and linguistic ties with Russia.
Pig Putin Signs Decree to Rehabilitate Crimean Tatars
by Naharnet Newsdesk
21 April 2014, 14:44
Russian President Pig Putin said on Monday he had signed a decree rehabilitating Crimea's Tatars, an ethnic group accused of collaborating with Nazi Germany and exiled under Stalin.
"I have signed a decree to rehabilitate the Crimean Tatar population of Crimea, the Armenian population, Germans, Greeks, all those who suffered during Stalin's purges," the Putin snorted at a government meeting.
Crimea's 300,000 Tatars, who make up around 12 percent of the population, largely boycotted a disputed referendum last month in which nearly 97 percent of voters chose to split from Ukraine and join Russia.
The decree is seen is an attempt to win the sympathies of Tatars, who view the Kremlin with distrust and are seeking a quota system to ensure power sharing in the local government.
Crimea's entire Tatar population was deported to Central Asia at the end of World War Two.
They began returning to Crimea under former Soviet leader Mikhail Gorbachev and became Ukrainian nationals after that country won independence from the Soviet Union in 1991.
« Last Edit: Apr 21, 2014, 08:38 AM by Rad »
Under Russia, Life in Crimea Grows Chaotic
By NEIL MacFARQUHAR
APRIL 21, 2014
SIMFEROPOL, Crimea — After Russia annexed Crimea practically overnight, the Russian bureaucrats handling passports and residence permits inhabited the building of their Ukrainian predecessors, where Roman Nikolayev now waits daily with a seemingly mundane question.
His daughter and granddaughter were newly arrived from Ukraine when they suddenly found themselves in a different country, so he wonders if they can become legal residents. But he cannot get inside to ask because he is No. 4,475 on the waiting list for passports. At most, 200 people are admitted each day from the crowd churning around the tall, rusty iron gate.
“They set up hotlines, but nobody ever answers,” said Mr. Nikolayev, 54, a trim, retired transportation manager with a short salt-and-pepper beard.
“Before we had a pretty well-organized country — life was smooth,” he said, sighing. “Then, within the space of two weeks, one country became another.” He added, “Eto bardak,” using the Russian for bordello and meaning “This is a mess.”
One month after the lightning annexation, residents of this Black Sea peninsula find themselves living not so much in a different state, Russia, as in a state of perpetual confusion. Declaring the change, they are finding, was far easier than actually carrying it out.
The chaotic transition comes amid evolving tensions in nearby eastern Ukraine, where the possible outcomes include a Crimea-annexation replay.
In Crimea now, few institutions function normally. Most banks are closed. So are land registration offices. Court cases have been postponed indefinitely. Food imports are haphazard. Some foreign companies, like McDonald’s, have shut down.
Other changes are more sinister. “Self-defense units,” with no obvious official mandate, swoop down at train stations and other entry points for sudden inspections. Drug addicts, political activists, gays and even Ukrainian priests — all censured by either the government or the Russian Orthodox Church — are among the most obvious groups fearing life under a far less tolerant government.
In fact, switching countries has brought disarray to virtually all aspects of life. Crimeans find themselves needing new things every day — driver’s licenses and license plates, insurance and prescriptions, passports and school curriculums. The Russians who have flooded in seeking land deals and other opportunities have been equally frustrated by the logistical and bureaucratic roadblocks.
“The radical reconstruction of everything is required, so these problems are multiplying,” said Vladimir P. Kazarin, 66, a philology professor at Taurida National University. (The university’s name, which derives from Greek history, is scheduled to be changed.) “It will take two or three years for all this chaos to be worked out, yet we have to keep on living.”
On a deeper level, some Crimeans struggle with fundamental questions about their identity, a far more tangled process than merely changing passports.
“I cannot say to myself, ‘O.K., now I will stop loving Ukraine and I will love Russia,’ ” said Natalia Ishchenko, another Taurida professor with roots in both countries. “I feel like my heart is broken in two parts. It is really difficult psychologically.”
The Crimean government dismisses any doubts or even complaints.
“Nonsense!” said Yelena Yurchenko, the minister for tourism and resorts and the daughter of a Soviet admiral who retired in Crimea. These “are small issues that can be resolved as they appear,” she said, adding, “It might result in certain tensions for the lazy people who do not want to make progress.”
Legions of Russian officials have descended on Crimea to teach the local people how to become Russian. In tourism alone, Ms. Yurchenko said, Crimea needed advice about Russian law, marketing, health care and news media.
“Can you imagine how many people need to come to work here for just that one sector?” she said in an interview, explaining why even her ministry could not help anyone find a hotel room in Simferopol. “We also have transportation, economy, construction, medicine, culture and many other things.”
Other changes in national identity elsewhere, like the “velvet divorce” of the Czech Republic and Slovakia in 1993, happened with more advance planning. Crimeans feel as if they went through the entire reverse process in 1991, when Ukraine left the Soviet Union, which had transferred the peninsula to Ukraine from Russia in 1954. Confused? So are they.
For Crimeans, every day overflows with uncertainty.
Food imports, for example, have dwindled in the face of murky, slapdash rules. The Crimean authorities recently banned cheese and pork from Ukraine, then announced that full Russian border controls would be put in effect on Friday. Shoppers are suddenly finding favorite brands of ordinary items like yogurt unavailable.
Citing logistical problems, McDonald’s closed. Metro, a giant German supermarket chain, also shut down. Most multinational businesses want to avoid possible sanctions elsewhere for operating in Crimea.
Flight connections have been severed except to Russia. Crimea officially moved an hour ahead to Moscow time, but cellphones automatically revert to Ukrainian time.
In Dzhankoy, about 55 miles north of this capital city, Edward A. Fyodorov, 37, has been selling ice cream since he was 9 years old. Those sales eventually led to a fleet of 20 refrigerated trucks. He used to import all manner of food from Ukraine, including frozen buns and salad fixings for McDonald’s, plus various goods for Metro supermarkets and 300 smaller grocery stores.
Business is off 90 percent, he said. Five to seven truckloads a day have diminished to about one a week. He has been looking for Russian suppliers, but products cost about 70 percent more and transportation issues are thorny.
Crimea lacks a land border with Russia, about 350 miles away through Ukraine. The lone ferry crosses to Crimea from an obscure corner of the Caucasus. An expensive bridge promised by the Kremlin is years away.
“It is impossible to make any plans or forecasts,” said Mr. Fyodorov, voicing an almost universal lament. Even if he found work, he said, closed banks make payments impossible.
Long lines snake outside the few Russian banks operating. (Some Crimeans waiting in line resorted to a Soviet-era tactic of volunteering to maintain epic lists — at one passport office the list stretched to more than 12,000 names.) President Vladimir V. Putin announced Thursday that he hoped to have Russian banks functioning normally in Crimea within a month.
The Kremlin, which has announced plans to make Crimea a gambling mecca, set an official deadline of Jan. 1, 2015, for the transition. The initial cost allocated “to all Crimean programs” this year will be $2.85 billion, Mr. Putin said, but given the promises the Kremlin has made for everything from infrastructure to doubling pensions, the eventual annexation bill is expected to climb far beyond that.
Prices are often quoted in both Ukrainian hryvnias and Russian rubles, but the exchange rate fluctuates constantly. Even the simplest transactions like paying taxi fares result in haggling by calculator.
Land sales, despite surging demand from Russians wanting seaside dachas, have stalled because land registration offices are closed.
Maxim and Irina Nefeld, a young Moscow couple, had dreamed about living near the sea for so long that they were on Crimea’s southern coast seeking land on March 18, the day Mr. Putin announced the annexation.
They found a pine-covered lot, a third of an acre with a sea view, for $60,000. They agreed to buy it, but could not complete the deal without the land office, or find a bank to transfer the money.
The next day the owner asked for $70,000. Mr. Nefeld went back to Moscow to get it in cash. When he returned on April 10, the landowner demanded $100,000.
Russian laws leave some groups out in the cold. Russia bans methadone to treat heroin addiction, for example. As local supplies dwindle, the daily dosage for 200 patients at the clinic here has been halved.
“It is our death,” said Alexander, 40, declining to identify himself publicly as a recovering addict. Unaware that methadone was illegal in Russia, he voted for annexation.
Crimeans are occasionally alarmed by armed men in uniforms without insignia who materialize at places like Simferopol’s train station, inspecting luggage and occasionally arresting passengers. Various people detained in protests against the referendum a month ago have not resurfaced.
When confronted, the uniformed men tell Crimeans that they are “activists from the people” who are “preserving order.”
Archbishop Kliment of the Ukrainian Orthodox Church, vilified by its Russian counterpart, said Russian priests with armed supporters had threatened to confiscate churches in at least two villages. His 16 priests sent their families and their most valuable icons to the Ukrainian mainland for protection, he said.
Natalia Rudenko, the founding principal of the capital’s one Ukrainian school, said city officials fired her shortly after a member of the self-defense forces visited, demanding to know why the school was still teaching Ukrainian and not flying the Russian flag. Ms. Yurchenko, the tourism minister, said the school could continue to teach Ukrainian, since the new Constitution protected the language, but it would need to add Russian classes.
It is hard to tally the many branches of government not functioning.
Court cases have been frozen because the judges do not know what law to apply. Essential procedures like DNA testing must now be done in Moscow instead of Kiev.
One traffic officer confessed he had no idea what law to enforce — he was being sent to school two hours a day to learn Russian traffic laws.
Lawyers, their previous education now irrelevant, plow through Russian legal textbooks wrestling with the unfamiliar terms. “I won’t be able to compete with young lawyers who come from Russia with diplomas in Russian law,” said Olga Cherevkova, 25, who was previously pursing a Ph.D. in Ukrainian health care law.
She is weighing whether to abandon the land of her birth, of her identity.
“Maybe I should just pack my suitcase and move to Miami,” she laughed, then caught herself. “I am laughing, but it is not really a joke. I want to live in a free country. Still, for me as a lawyer, it is interesting, if a bit strange.”
Correction: April 22, 2014
Due to an editing error, an earlier version of this article misstated the origin of the name of Taurida National University. It derives from Greek history, not Crimean Tatar history.
Russia Bans Tatar Leader from Crimea
by Naharnet Newsdesk
22 April 2014, 12:07
Russia on Tuesday banned the leader of Crimea's pro-Kiev Tatar community from entering the Black Sea peninsula for five years, the Tatar assembly said.
Mustafa Dzhemilev was handed an official order barring him from returning to Crimea as he crossed to mainland Ukraine from the territory that Moscow controversially annexed last month, the assembly said in a statement.
Dzhemilev, also a member of Ukraine's Verkhovna Rada parliament, condemned the decision as "an indication of what a 'civilized' state we are dealing with".
Dzhemilev pledged he would ignore the ban and return to Crimea.
Crimea's 300,000 Muslim Tatars, who make up around 12 percent of the peninsula's population, largely boycotted a disputed referendum last month in which nearly 97 percent of voters chose to split from Ukraine and join Russia.
In an attempt to appease the community, Russian President Pig Putin said Monday he had signed a decree rehabilitating Crimea's Tatars, who were deported under Stalin over accusations of Nazi collaboration and who fiercely oppose the region's new Moscow-backed authorities.
The overture looks unlikely to satisfy the Tatars, who eye the Kremlin with distrust and have recently said they will consider holding a plebiscite on broader autonomy.
Russia Displays a New Military Prowess in Ukraine
By MICHAEL R. GORDON
APRIL 21, 2014
WASHINGTON — Secretary of State John Kerry has accused Russia of behaving in a “19th-century fashion” because of its annexation of Crimea.
But Western experts who have followed the success of Russian forces in carrying out President Pig V. Putin’s policy in Crimea and eastern Ukraine have come to a different conclusion about Russian military strategy. They see a military disparaged for its decline since the fall of the Soviet Union skillfully employing 21st-century tactics that combine cyberwarfare, an energetic information campaign and the use of highly trained special operation troops to seize the initiative from the West.
“It is a significant shift in how Russian ground forces approach a problem,” said James G. Stavridis, the retired admiral and former NATO commander. “They have played their hand of cards with finesse.”
The abilities the Russian military has displayed are not only important to the high-stakes drama in Ukraine, they also have implications for the security of Moldova, Georgia, Central Asian nations and even the Central Europe nations that are members of NATO.
The dexterity with which the Russians have operated in Ukraine is a far cry from the bludgeoning artillery, airstrikes and surface-to-surface missiles used to retake Grozny, the Chechen capital, from Chechen separatists in 2000. In that conflict, the notion of avoiding collateral damage to civilians and civilian infrastructure appeared to be alien.
Since then Russia has sought to develop more effective ways of projecting power in the “near abroad,” the non-Russian nations that emerged from the collapse of the Soviet Union. It has tried to upgrade its military, giving priority to its special forces, airborne and naval infantry — “rapid reaction” abilities that were “road tested” in Crimea, according to Roger McDermott, a senior fellow at the Jamestown Foundation.
The speedy success that Russia had in Crimea does not mean that the overall quality of the Russian Army, made up mainly of conscripts and no match for the high-tech American military, has been transformed.
“The operation reveals very little about the current condition of the Russian armed forces,” said Mr. McDermott. “Its real strength lay in covert action combined with sound intelligence concerning the weakness of the Kiev government and their will to respond militarily.”
Still, Russia’s operations in Ukraine have been a swift meshing of hard and soft power. The Obama administration, which once held out hope that Mr. Putin would seek an “off ramp” from the pursuit of Crimea, has repeatedly been forced to play catch-up after the Kremlin changed what was happening on the ground.
“It is much more sophisticated, and it reflects the evolution of the Russian military and of Russian training and thinking about operations and strategy over the years,” said Stephen J. Blank, a former expert on the Russian military at the United States Army War College who is a senior fellow at the American Foreign Policy Council.
For its intervention in Crimea, the Russians used a so-called snap military exercise to distract attention and hide their preparations. Then specially trained troops, without identifying patches, moved quickly to secure key installations. Once the operation was underway, the Russian force cut telephone cables, jammed communications and used cyberwarfare to cut off the Ukrainian military forces on the peninsula.
“They disconnected the Ukrainian forces in Crimea from their command and control,” the NATO commander, Gen. Philip M. Breedlove, said in a recent interview.
As it cemented control, the Kremlin has employed an unrelenting media campaign to reinforce its narrative that a Russian-abetted intervention had been needed to rescue the Russian-speaking population from right-wing extremists and chaos.
No sooner had the Obama administration demanded that Russia pull back from Crimea than the Kremlin raised the stakes by massing about 40,000 troops near Ukraine’s eastern frontier.
Soon, the Russians were sending small, well-equipped teams across the Ukrainian border to seize government buildings that could be turned over to sympathizers and local militias, American officials said. Police stations and Interior Ministry buildings, which stored arms that could be turned over to local supporters, were targeted.
“Because they have some local support they can keep leveraging a very small cadre of very good fighters and move forward,” said Daniel Goure, an expert on the Russian military at the Lexington Institute, a policy research group.
While the Kremlin retains the option of mounting a large-scale intervention in eastern Ukraine, the immediate purposes of the air and ground forces massed near Ukraine appears to be to deter the Ukrainian military from cracking down in the east and to dissuade the United States from providing substantial military support.
The Kremlin has used its military deployment to buttress its diplomatic strategy of insisting on an extensive degree of federalism in Ukraine, one in which the eastern provinces would be largely autonomous and under Moscow’s influence.
And as Russians have flexed their muscles, the White House appears to have refocused its demands. Crimea barely figured in the talks in Geneva that involved Mr. Kerry and his counterparts from Russia, Ukraine and the European Union.
The Obama administration’s urgent goal is to persuade the Kremlin to relinquish control over the government buildings in eastern Ukraine that the American officials insist have been held by small teams of Russian troops or pro-Russian separatists under Moscow’s influence. Despite the focus on the combustible situation in eastern Ukraine, the joint statement the diplomats issued in Geneva did not even mention the presence of Russia’s 40,000 troops near the border, which President Obama has urged be withdrawn.
Military experts say that the sort of strategy the Kremlin has employed in Ukraine is likely to work best in areas in which there are pockets of ethnic Russians to provide local support. The strategy is also easier to carry out if it is done close to Russian territory, where a large and intimidating force can be assembled and the Russian military can easily supply special forces.
“It can be used in the whole former Soviet space,” said Chris Donnelly, a former top adviser at NATO, who added that Georgia, Moldova, Armenia, Azerbaijan and the Central Asia states were “very vulnerable.”
“The Baltic States are much less vulnerable, but there will still be pressure on them and there will on Poland and Central Europe,” Mr. Donnelly added.
Admiral Stavridis agreed that Russia’s strategy would be most effective when employed against a nation with a large number of sympathizers. But he said that Russia’s deft use of cyberwarfare, special forces and conventional troops was a development that NATO needed to study and factor into its planning.
“In all of those areas they have raised their game, and they have integrated them quite capably,” he said. “And I think that has utility no matter where you are operating in the world.”
Biden Urges Ukrainian Leaders to Fight ‘Cancer of Corruption’
By ANDREW HIGGINS and ALAN COWELLAPRIL 22, 2014
KIEV, Ukraine — In a display of Washington’s support for the interim authorities here, Vice President Joseph R. Biden Jr. signaled on Tuesday that the United States was ready to support them in securing a unified Ukraine but urged the country’s leadership to battle “the cancer of corruption.”
Mr. Biden’s remarks, during a visit designed to show high-level backing from the United States, came a day after Russia’s foreign minister, Sergey V. Lavrov, accused the government in Kiev of flagrantly violating the international accord reached last week seeking to defuse the crisis in eastern Ukraine. Mr. Lavrov’s remarks were taken as a sign that Russia may be further preparing the groundwork for a military intervention.
The Kremlin regards the interim authorities as a product of a Western-backed coup that seized power in late February after months of protests.
Mr. Biden met on Tuesday with the Ukrainian speaker of Parliament and the acting president, Oleksandr V. Turchynov, and scheduled meetings with other officials. He will leave late Tuesday for Washington, a day after he arrived.
According to news reports, Mr. Biden told Ukrainian leaders that they had an opportunity to generate a united Ukraine, and that the United States stood ready to help end their dependence on Russian energy supplies, although the process would take time.
He said that Kiev faced “humiliating threats” and daunting problems and, according to Reuters, described the presidential election scheduled for May 25 as the most important in the country’s history.
Mr. Biden’s visit reflected the high stakes over the crisis in Ukraine after Russia’s annexation of Crimea last month. Thousands of Russian troops have massed on Ukraine’s eastern border with Russia for weeks, and Mr. Lavrov’s accusations on Monday deepened Western concerns that the Kremlin was creating a basis to justify a similar move in eastern Ukraine. It has repeatedly denied having such intentions.
For its part, the Obama administration has warned that it will punish Moscow with increasingly harsh sanctions if it does not help to de-escalate the crisis in eastern Ukraine, where the West has accused the Kremlin of manufacturing a “masked” war.
Speaking in Moscow on Tuesday, Prime Minister Dmitri A. Medvedev of Russia was quoted as saying in Parliament that Russia could minimize the impact of any sanctions imposed as a result of the Ukraine crisis and would insist on fair access to foreign markets for its energy exports.
Russia, U.S. Press Each Other on Ukraine Deal
by Naharnet Newsdesk 21 April 2014, 21:33
Russian Foreign Minister Sergei Lavrov and his U.S. counterpart John Kerry urged each other in a telephone conversation Monday to use their influence to get Ukraine's rival sides to honor last week's Geneva accord.
Kerry told Lavrov that "concrete steps" towards defusing the Ukraine crisis should include "publicly calling on separatists to vacate illegal buildings and checkpoints, accept amnesty and address their grievances politically," State Department spokeswoman Jen Psaki said.
In Moscow, the Russian foreign ministry said Lavrov asked Kerry to "pressure Kiev to stop hotheads from provoking a bloody conflict and to encourage the Ukrainian authorities to strictly fulfill their obligations", the Russian foreign ministry said in a statement.
The Geneva accord signed last Thursday by Ukraine, Russia, the United States and the EU, calls for all "illegal armed groups" in Ukraine to surrender their weapons and halt the occupation of public buildings and other sites.
But a brief Easter truce was broken on Sunday when two insurgents were killed in the rebel-held eastern Ukrainian city of Slavyansk.
Russia Ready for New Sanctions over Ukraine, Says Medvedev
by Naharnet Newsdesk 22 April 2014, 12:23
Russia is ready to face a new round of Western sanctions over Ukraine, Prime Minister Dmitry Medvedev said Tuesday.
"I am sure we will be able to minimize their consequences," he said in a televised speech to parliament.
"The government is ready to act in conditions when the priority of our work becomes protecting the economy and citizens from such unfriendly acts that could follow due to the escalating foreign policy situation."
However, he acknowledged Russia's economy was facing an "unprecedented challenge".
Russia views sanctions as a "road to nowhere," Medvedev said, while insisting that the country was ready to function in isolation if necessary.
"We can of course keep on exchanging blacklists. But I don't even consider it necessary to prove from this podium that it's an absolute dead-end," he said.
"Any restrictions that are imposed on us are a primitive route. This is a road that leads nowhere, but if a number of our Western partners go along it all the same, we won't have any choice.
"Then we will manage using our own resources and we will win in the final account," he said to applause from lawmakers.
Pro-Ukraine activists defy harassment to rally in town on Russian border
US vice-president Joe Biden arrives in Kiev for largely symbolic visit as Russia hints it could send in troops
Luke Harding in Khartsyzk
The Guardian, Tuesday 22 April 2014
It was a classic political rally. There were emotional speeches, flags and homemade banners. But the small middle-class crowd that gathered on Monday in the eastern town of Khartsyzk, close to the border with Russia, had turned up to support Ukraine. They waved blue and yellow flags. They showed placards. One read: "Goodwill to all". Another held aloft by two smiling white-haired ladies read: "Make love not war".
Pro-Russian groups have seized a string of town halls across eastern Ukraine. They have occupied and barricaded the administration building in Khartsyzk, a town of 65,000 people 25 miles (40km) from Donetsk, and known for its giant tube factory. The separatists are demanding a referendum. They have proclaimed a "Donetsk people's republic" whose goals include separation from Kiev and – it appears – swift union with Russia.
The Kremlin, meanwhile, appears to be threatening to send in troops. On Monday, Russia's foreign minister, Sergei Lavrov, accused the government in Kiev of violating a deal struck in Geneva last week under which illegal groups were supposed to give up their arms. Lavrov said Kiev had failed to protect ethnic Russians from far-right extremists. His comments follow a murky shootout over the weekend in the town of Slavyansk, occupied by angry anti-western gunmen.
The US vice-president, Joe Biden, arrived in Kiev on Monday for a two-day visit. He is due to meet the prime minister, Arseniy Yatsenyuk, and the president, Olexander Turchynov, on Tuesday. Biden will address MPs from across Ukraine and meet its acting prime minister before announcing a raft of supporting measures Washington intends to provide Kiev for energy and economic reforms.
But with international attempts to de-escalate the crisis in Ukraine effectively shredded, Biden's visit appears largely symbolic and takes place against a backdrop of ominous Kremlin rhetoric.
The pro-Ukrainians at the rally on Monday claimed that separatists in the east enjoyed only minority support. A majority in the Russian-speaking Donbass region were actually in favour of Ukrainian unity, they said. Peaceful residents regarded the appearance of "little green men" in Slavyansk – allegedly undercover Russian soldiers – with horror. So why were only about 200 people, a mixture of students, professionals and pedagogues, at Khartsyzk's pro-Ukraine rally?
"A lot of people here are frightened," Ludmilla Pogromskaya, a 53-year-old English teacher, answered. "Some of those who have seized our town hall are thugs. Others are being paid. They don't have a single political idea beyond referendum."
Pogromskaya described Putin as "the aggressor" and said: "We want a decent society. We'd like an honest judicial system. Russia means crime and corruption."
There have been examples of civic activists who support Ukraine facing harassment and worse. On Sunday Slavyansk's militia kidnapped Irma Krat, a 29-year-old Kiev activist who was working in the town as a journalist. On Monday they seized three more reporters, two Italians and a Belarusian, later releasing them. The gunmen blindfolded Krat and paraded her on Russian television and outside the town hall. She said she was not being mistreated, but she has yet to be freed.
Separately, a mediator from the Organisation for Security and Co-operation in Europe met Slavyansk's self-appointed "people's mayor", Vyacheslav Ponomaryov.
The mediator asked whether the heavily armed rebels in the town would comply with the Geneva agreement and give up their weapons. The mayor's reply was not made public. But other separatists have said they have no intention of disarming.
Svitlana Oleinikova, who runs an NGO in the town of Torez, close to Khartsyzk, said it was becoming increasingly dangerous to express pro-Ukraine views. She said a teenage boy was badly beaten on Sunday for shouting "Glory to Ukraine" in a park.
Separatists had broken the windows of Torez's progressive newspaper and tossed in a firebomb, she said. She added: "I don't call it the Donetsk people's republic. I call it the Donetsk Nazi republic. They're the fascists."
Oleinikova said she too had received threats, delivered by phone and via the internet. She added that local mafia elements were exploiting the crisis to rob shops, including two chemists. "What frustrates me most is that the police don't do anything. There is an absence of authority. Neighbours accuse me of being a traitor. But how can I be a traitor if I show my own flag?"
Monday's rally began with the Ukrainian national anthem, played out next to the town's statue of Lenin. Everybody sang. The organiser, local businessman Vyacheslav Redko, then invited people to speak. One teacher read a Ukrainian poem. Khartsyzk's mayor vanished on holiday eight days ago when separatists took over his building. Another local official, Igor Kolodey, was bold enough to address the modest crowd.
"Why isn't the Ukrainian flag flying from the town hall?" someone shouted at him.
"It's still up inside the offices. The Ukrainian trident is there too," he replied. There were boos. "I didn't take the flag down," he said. More boos.
"You steal money!" someone shouted.
"No I don't," he replied. "I've never stolen anything."
Viktor Yanukovych Viktor Yanukovych. Photograph: Janek Skarzynski/AFP/Getty Images
Alexander Gricay, an entrepreneur, was unimpressed by this. He described the town council as "corrupted and pro-Russian".
"Russia has artificially created this current crisis," Gricay declared. He said the Kremlin was trying to get revenge on the west after the departure of the president, Viktor Yanukovych, who fled to Russia in February. On Monday Yanukovych called on Kiev to pull its army out of eastern Ukraine and engage in "peaceful dialogue".
Speaking in Donetsk, Alexander Bukalov, the head of the human rights organisation Memorial, said rights campaigners were in a difficult situation. Pro-Russian feelings in the east were strong, he said, but that did not translate as support for separatist positions. "It sounds a paradox. But a lot of people say: 'I support Russia but want to live in Ukraine.' What they mean is they want Russian money and Russian help."
Bukalov was gloomy about the prospect of a further Russian invasion of eastern Ukraine, with Moscow seemingly looking for a pretext to go to war. He said curious events on the ground – including scarcely believable "attacks" by Ukrainian fascists – appeared to be following a Kremlin script. "It's like watching theatre. This feels like a performance done for Russian TV," he observed.
He described the febrile Donbass region as a "splinter from the Soviet Union". Many people yearned for the paternalist certainties of Soviet life, he said.
"We need to free ourselves from the past. We need to move on from myths about Stalin and Putin." Was he an optimist? "I'm sure something good can be done here. But there may be tragedy first."
Ukraine crisis: US warns of dangerous precedent for other territorial disputes
US officials asked Asian countries not to seek to take commercial advantage of sanctions against Russia on eve of Obama Asia trip
Dan Roberts in Ukraine
theguardian.com, Monday 21 April 2014 13.27 EDT
Joe Biden in Kiev Joe Biden is greeted by Ukraine's Foreign Minister Andrii Deshchytsia at Borispol airport outside Kiev. Photograph: Sergei Chuzavkov/AP
The White House has warned of the danger of worsening tension in Ukraine setting precedents for other territorial disputes around the world as it reacted for the first time to fresh clashes over the weekend with pro-Russian forces.
Speaking on the eve of a trip to Japan and Korea by Barack Obama that is likely to be overshadowed by the ongoing crisis, US officials said it was imperative that Asian countries did not seek to take commercial advantage of sanctions against Russia.
“International order is at stake,” said Ben Rhodes, deputy national security adviser. “Our policy on Ukraine is not targeted at Russia specifically, it is targeted at upholding the international order that we believe has been violated.”
US secretary of state John Kerry urged Russia on Monday to meet Ukraine halfway in trying to defuse the crisis. State department spokesman Jen Psaki said Kerry spoke by telephone with his Russian counterpart, Sergei Lavrov, and "urged Russia to take concrete steps to help implement the Geneva agreement, including publicly calling on separatists to vacate illegal buildings and checkpoints, accept amnesty and address their grievances politically."
The administration believes widespread international condemnation of Russia at the United Nations, including abstention by China on a critical vote, has been driven partly by anxiety in Asia about the repercussions for other flashpoints such as the South China Sea and Korean peninsula.
“One of the reasons you saw that vote in the UN was that Asian nations don't like precedent being set that a sovereign nation's territorial integrity can be violated with impunity,” added Rhodes.
But the White House was cautious on Monday in its first reaction to fresh clashes between Ukrainian security personnel and pro-Russian forces at the weekend which resulted in several deaths.
“We are looking into it,” said Rhodes. “We have been very clear that we do not support any types of violence and we want to see de-escalation.”
Officials in Washington are anxious to hold onto a diplomatic agreement made last week in Geneva and said the incident was a sign of why it should be implemented rather than indication it was already breaking down.
“The road map laid out in Geneva requires pro-Russian forces to lay down their arms and vacate those buildings. As long as they are there, the risk of this type of confrontation is acute,” added Rhodes.
“We have seen the Ukrainian government begin to follow through on their commitments and this is where we have a difference with [Russian] foreign minister Lavrov.”
Officials travelling with vice-president Biden on his way to Kiev described the situation in eastern Ukraine as “still very murky” despite claims by the Ukrainian government that it was a provocation by pro-Russian forces.
A senior administration official said the US doesn't have any evidence that there was any Ukrainian security service involvement or involvement from people coming from Kiev.
"We have nothing that suggests that there was either but we don't have 100% of the facts on that," he told pool reporters travelling with Biden.
But the US official acknowledged it has not seen the kind of progress required under the Geneva agreement "and we've seen certain activities that have been discouraging."
The US will impose "costs" on Russia in coming days if that doesn't change, he added. "This is not going to be an open-ended process. This is going to be a situation where we take stock and determine in the relatively near term what our next step should be."
Kiev: Ukraine Forces Deal Defeat to Rebels in Two Eastern Towns
by Naharnet Newsdesk
24 April 2014, 11:18
Ukraine's military clashed with pro-Kremlin rebels in two eastern towns overnight, the interior and defense ministries said Thursday.
Ukrainian soldiers retook control of the town hall in the southeastern port city of Mariupol and repelled an attack on an army base in the eastern town of Artemivsk, the ministries said.
Separatist sources confirmed the loss of the town hall in Mariupol, a city with a population of nearly 500,000. The city was the scene of a rebel attack on troops last week that left three militants dead. The separatists had held the town hall since April 13.
"The town hall is liberated and can function normally," Interior Minister Arsen Avakov said on his Facebook page.
In Artemivsk, just north of the rebel-held hub of Donetsk, the defense ministry said in a statement that nearly 100 separatists "opened fire with automatic weapons, machine guns and used grenades" in the attack on the military base.
It said a soldier was wounded, but not critically.
"The attackers were repelled and suffered significant losses," acting President Oleksandr Turchynov said in his own statement.
The interior ministry confirmed the rebel assault and claimed it was led "by a Russian soldier".
There was no immediate confirmation by non-government sources of the incident in Artemivsk.
On Wednesday, the Ukrainian government announced it had re-taken Svyatogorsk, a small eastern village of 5,000 inhabitants -- but puzzled locals told AFP there had never been any rebels there.
Kiev accuses Moscow of being behind the insurgency roiling east Ukraine. Russian President Vladimir Putin denies that, though last week dropped a similar denial over the use of Russian forces in Crimea, which Russia annexed in March.
Moscow has said it could strike back if it saw its interests in Ukraine attacked, warning of similar action as in 2008, when it invaded Georgia with tanks.
Russia has an estimated 40,000 troops massed on Ukraine's eastern border.
Obama Says Russia Not Abiding by Geneva Agreement on Ukraine
by Naharnet Newsdesk
24 April 2014, 07:41
President Barack Obama said Thursday Russia was not abiding by the letter or the spirit of the Geneva deal to ease tensions in Ukraine, and said new sanctions against Moscow were already teed up.
The president weighed into an increasingly bitter U.S.-Russian dispute over the actions of separatist militias in the east of the country Washington says are backed by the Kremlin, during his tour of Asia.
"There was some possibility that Russia could take the wiser course after the meeting in Geneva. So far at least we have seen them not abide by the spirit or the letter of the agreement in Geneva," Obama said.
"Instead we continue to see malicious, armed men taking over buildings, harassing folks who are disagreeing with them, destabilizing the region and we haven't seen Russia step out and discouraging it.
Obama however said that the U.S.-backed government in Kiev was taking concrete steps to live up to the Geneva accord, including on moving towards political reforms.
The U.S. leader had staked out a deliberate and skeptical position last week when the agreement, between Ukraine, Russia, the European and Union and Washington, was signed.
Obama left a clear impression that it was a matter of if and not when Washington would go ahead with new, tougher sanctions against Russia, possibly hitting again at President Pig Putin's inner circle.
"What I am saying is we have prepared for the possibility of applying additional sanctions," Obama said at a press conference with Japanese Prime Minister Shinzo Abe.
"There are a whole bunch of technical issues behind that."
Those issues including persuading key leaders in Europe that the time for new sanctions is nigh.
- Political dilemma on sanctions -
Many European leaders face a political dilemma over imposing new sanctions given the fact their nations are far more exposed to Russian investment, energy supplies and trade, than the United States.
Washington wants to move in a united front with Europe to make its strategy of isolating Russia more effective -- even if that means the process of upping the pressure on Moscow takes more time.
He also warned that even added pressure on the Kremlin may not change its strategy in Ukraine, following the annexation of Crimea.
"Additional sanctions may not change the Pig's calculus," that is possible."
So far U.S. sanctions have targeted members of the Pig's political inner circle, branded as cronies by U.S. officials, with asset freezes and visa bans.
The next round of sanctions will likely cut further into the political elite in Moscow and could include personal measures against prominent business figures.
But U.S. officials have made clear that the most punitive sanctions, targeting lucrative parts of Russia's economy, including the mining and energy sectors, would come into force only if Russia sends forces currently massed on Ukraine's borders into the country.
Obama's intervention came after Russia said it would strike back if its "legitimate interests" in Ukraine are attacked, raising the stakes in the Cold War-like duel with the United States.
NATO responded by cautioning against "veiled threats", saying they violated the spirit of the agreement reached in Geneva to try to pull the crisis-hit country back from the brink of civil war.
Moscow is insisting that Kiev withdraw forces sent to eastern Ukraine on an "anti-terrorist" mission to dislodge pro-Russian rebels, who have occupied government buildings there.
Russian Foreign Minister Sergei Lavrov told state-controlled RT television that if Russia or its interests are attacked, "we would certainly respond".
Ukraine crisis: Obama warns Russia that more sanctions are 'teed up'
Warning comes as US accuses Moscow of failing to abide by Geneva pact to de-escalate tensions
theguardian.com, Thursday 24 April 2014 11.13 BST
Barack Obama has said Russia is failing to respect the Geneva agreement to de-escalate tensions in Ukraine and the US has fresh sanctions "teed up" to impose on Moscow.
Under last week's accord struck by Ukraine, Russia, the US and the EU, militias in Ukraine were to disarm and give up control of seized state property. But law and order has deteriorated rapidly in parts of eastern Ukraine as Kiev and Moscow have accused each other of failing to follow through on Geneva.
"So far at least we have seen them not abide by the spirit or the letter of the agreement in Geneva," Obama said in Tokyo at the start of a tour of Asia. "Instead we continue to see malicious, armed men taking over buildings, harassing folks who are disagreeing with them, destabilising the region and we haven't seen Russia step out and discouraging it."
If Russia did not play its part, he said, there would be "consequences and we will ramp up further sanctions".
His comments came as the Russian foreign minister, Sergei Lavrov, sounded a more conciliatory note and said Moscow expected the Geneva accords to "be implemented in practical actions in the near future".
On Wednesday Lavrov accused the US of "running the show" in Ukraine after a visit to Kiev by Joe Biden, the US vice-president, and said Russia would respond if attacked. Obama said new sanctions would come into force in a matter of days, not weeks, if the agreement was not implemented but acknowledged that the US needed to secure the support of allies to ensure additional economic pressure was evenly applied.
He conceded that new sanctions may not change the calculations of his Russian counterpart, the Pig. "There are some things the United States can do alone but ultimately it's going to have to be a joint effort, a collective effort," Obama said during a press conference with the Japanese prime minister, Shinzo Abe.
The pending penalties on Russia are expected to target wealthy individuals in Putin's inner circle, as well as the entities they oversee. Although US has also threatened to levy potentially crippling sanctions on key Russian industries including its energy sector, officials say they plan to employ those tougher penalties only if Russia moves military forces into Ukraine.
The US and Europe have already issued asset freezes and visa bans targeting Russian and Ukrainian officials in response to the Kremlin's annexation of Crimea. Obama's comments underline the difficulties he faces in devising a united western response to Russia, with Europe dependent on Russian gas supplies.
While Washington and Kiev have put the onus on pro-Kremlin militants holding buildings in the east, Moscow said the responsibility fell on pro-western nationalists camping out in Kiev.
Russia has an estimated 40,000 Russian troops on Ukraine's eastern border, prompting Washington to start deploying 600 US troops to boost Nato's defences in eastern European states bordering Ukraine. The first unit of 150 US soldiers arrived in Poland on Wednesday, with the remainder due to land in Estonia, Lithuania and Latvia in the coming days.
Since the Geneva deal, pro-Russia militants have seized state buildings in nearly a dozen towns across Ukraine's south-east. The detention by the rebels of two journalists - an American working for Vice News, Simon Ostrovsky, and a Ukrainian activist, Irma Krat – in Slavyansk has done nothing to ease the mounting tensions.
The rebel leader in the town, Vyacheslav Ponomaryov, called Ostrovsky a "journalist provocateur" and promised: "We will free him in due course." The US state department said it was "deeply concerned about the reports of a kidnapping" of Ostrovsky and called for Russia to organise his immediate release.
Slavyansk was the source of gunfire that damaged a Ukrainian military reconnaissance plane on Tuesday, and where two bodies were found "brutally tortured", according to Ukraine's acting president, Oleksandr Turchynov.
One of the two victims, Vladimir Rybak, was a local councillor and member of Turchynov's party. Following the killings, the acting president said Kiev would relaunch military operations against the insurgents.
Ukraine is going through its biggest political crisis since the fall of Soviet Union, sparked by months-long anti-government protests and President Viktor Yanukovych's flight to Russia.
Yanukovych's exit sparked wide anger in his support base in Ukraine's east. The insurgents, who claim that Ukraine's post-Yanukovych government consists of nationalists who will suppress the east's large Russian-speaking population, are demanding regional autonomy or even annexation by Russia.
Lavrov: West Tried to Stage 'Revolution' in Ukraine
by Naharnet Newsdesk
24 April 2014, 11:23
Russian Foreign Minister Sergei Lavrov on Thursday accused the United States and the European Union of being behind a popular uprising in Ukraine that ousted pro-Kremlin president Viktor Yanukovych in February.
"In Ukraine the United States and the European Union tried to stage -- let's call things what they are -- another 'color revolution', an operation to unconstitutionally change regime," the Interfax news agency quoted Lavrov as saying.
In an unusually blunt speech at a top university in Moscow, Lavrov said the West was trying to use the Ukraine crisis to weaken Russia.
"Few doubt that we are talking not only about Ukraine's fate," Russia's top diplomat was quoted as saying. "They are trying to use Ukraine as a pawn in a geopolitical game."
"Our Western partners, first and foremost the United States, tried to behave as winners in the Cold War and pretend that one can ignore Russia in European affairs and undertake activities that directly damage Russian security interests."
Lavrov accused the West of being biased against Russia, saying Washington and Brussels had sought to tar's Moscow reputation even before the Ukrainian crisis broke out.
"It is enough to recall the hysterical anti-Russian propaganda which seized the United States and Europe long before the Ukrainian events, their desire to besmirch the Olympic Games in Sochi through every means possible," he said.
The West had repeatedly ignored Moscow's proposals to beef up cooperation in Europe. "As a result, unique opportunities to genuinely overcome a split in Europe have been missed."
U.S. Rejects Lavrov's 'Ludicrous' Ukraine Claims
by Naharnet Newsdesk
24 April 2014, 06:41
The United States dismissed as "ludicrous" Wednesday claims by Russian Foreign Minister Sergei Lavrov that it was funding or running an offensive in Ukraine as Washington and Moscow again traded barbs.
"I think many of the claims he made in his interview are ludicrous and they're not based in facts of what is happening on the ground," State Department spokeswoman Jen Psaki said.
In an interview with state-controlled RT television, Lavrov had issued a blunt warning that Russia would respond if its interests were attacked in Ukraine, in a sign Moscow was upping the ante in the crisis.
Ukraine's acting president Oleksandr Turchynov late Tuesday ordered a new "anti-terrorist" operation against separatists holding a string of eastern towns after the discovery of two "brutally tortured" bodies.
But Lavrov charged that the timing of a renewed offensive during U.S. Vice President Joe Biden's visit to Kiev demonstrated that "the Americans are running the show in the most direct way."
Psaki hit back: "The actions of the Ukrainian government are a legitimate response by authorities to react to the illegal armed seizure of buildings and a few towns in eastern Ukraine."
She said the claims that Washington was "running the show or funding it" were ones that she would put "in the ludicrous category."
The administration of President Barack Obama was also still considering a request from the interim leaders in Kiev to provide them with weapons.
But "our approach here is de-escalation. We don't think there's a military solution on the ground," Psaki said.
"There's an occupation happening on the ground. What we don't think we need to do is escalate or raise the tensions with the Russians."
Germany Says Ukraine Crisis 'Harder and Harder' to Resolve
by Naharnet Newsdesk
23 April 2014, 20:05
Germany's foreign minister warned Wednesday that the crisis in Ukraine was getting "harder and harder" to resolve, as the most serious confrontation between Moscow and the West since the Cold War showed no sign of abating.
"Each day that passes... makes a solution harder and harder to reach," Frank-Walter Steinmeier said while on a trip to Moldova, urging Moscow and Kiev to seize the "opportunity" of a deal reached in Geneva last week to defuse the crisis.
Steinmeier and his French counterpart Laurent Fabius were on a brief visit to Chisinau to show their support for Moldova's bid to formally sign a political and trade agreement with the European Union.
The agreement is the same one that was rejected by then Ukrainian president Viktor Yanukovych in November, triggering mass protests against his regime that eventually led to his ouster and Moscow's absorption of the pro-Russian peninsula of Crimea.
Moldova is set to sign the so-called Association Agreement at the end of June, and France's Fabius gave assurances it would not be a barrier to the country's ties with Russia.
"There is no contradiction... with continuing your good relations with Russia," Fabius said of the EU deal while speaking at the joint press conference with Moldovan counterpart Moldovan Foreign Minister Natalia Gherman.
Moldova also has a pro-Russian breakaway region Transdniestr, which last week called on Russia and the international community to recognize its independence, sparking fears that the developments in neighboring Ukraine could set an example for its own separatists.
Eastern Europe Frets About NATO’s Ability to Curb Russia
By STEVEN ERLANGER
APRIL 23, 2014
OVER CONSTANTA, Romania — High over the Romanian border, a sophisticated NATO surveillance plane kept a close watch on Russian movements below. Its radar screens came alive with a cat-and-mouse game between a Russian surveillance jet buzzing an American guided missile destroyer in the Black Sea and a squadron of NATO fighter jets that chased it away.
It was a scene reminiscent of the Cold War, and NATO’s mission was meant to reassure allies that are feeling newly vulnerable to Russian threats after Moscow’s muscular intervention in neighboring Ukraine.
But it provided little comfort to NATO’s Eastern European members, which are growing increasingly nervous about Russia’s moves and the alliance’s ability, or even willingness, to counter them.
Today’s NATO, hollowed out by years of European military cuts and deployed mostly to help fight far-off battles in places like Afghanistan and Libya, is no longer as prepared to counter a newly assertive Kremlin, its own leaders acknowledge.
Western European members of NATO may regard the conflict over Ukraine as remote, an annoying threat to their business ties to Moscow, said Artis Pabriks, who was Latvia’s defense minister until he stepped down in late January. “But for us, it’s not about money, it’s existential,” he said. “You guys may remain with your freedoms, but we may not, so it’s different.”
NATO itself is awakening to the altered circumstances. Ukraine, said Maj. Gen. Andrew M. Mueller, who commands NATO’s fleet of 17 surveillance planes, “made us re-emphasize the mission we were built for.”
“We’re augmenting NATO defenses inside NATO,” he added. “We’d gotten away from that a bit with Afghanistan and Libya.”
But it will take more than a change of emphasis to re-energize a military alliance that has badly eroded since 1989. The United States is responsible for 75 percent of NATO military spending, and only a handful of European countries meet the alliance’s target of having military budgets of 2 percent of gross domestic product.
NATO is the front line of response to increased tensions with Russia, but the reluctance of the United States and its Western European allies to beef up the alliance reflects an ambivalence about confronting Russia too frontally, either militarily or through punishing economic sanctions.
The reluctance is particularly strong among some NATO members, like Spain, Italy, France and Germany, with major business and energy ties to Russia. They would like to see a quick return to the status quo ante.
But in a division reminiscent of the debate over “New Europe” and “Old Europe” during the Bush years, NATO members near the Russian border say that era is over.
“The fundamental understanding of security in Europe has now collapsed,” said President Toomas Hendrik Ilves of Estonia. “Everything that has happened since 1989 has been predicated on the fundamental assumption that you don’t change borders by force, and that’s now out the window. Political leaders need to recognize that the old rules no longer apply.”
The surveillance fleet is owned by NATO, with money and staffing contributions from 17 nations. It is under the direct control of the top NATO commander, Gen. Philip M. Breedlove of the United States Air Force, who can deploy the planes without consulting with member states. General Breedlove became NATO commander in July, and he has been outspoken about the new threat from Russia.
The Obama administration has so far rejected suggestions, including some from senior officials in the State Department, to significantly increase the tiny presence of American or NATO troops, or the supplies of military equipment, in countries bordering Russia. The White House does not want NATO to pour fuel on the fire, a senior official said, but it did recently commit American troops for temporary exercises in Poland and the Baltics. But the total number is tiny: about 600 paratroopers normally based in Italy.
“This is very symbolic reassurance, very carefully calibrated to ratchet up if need be,” said Sean Kay, a former Pentagon adviser on NATO. Washington does not want to feed the notion of the Russian president, Vladimir V. Putin, that the West is determined to encroach on traditional Russian turf, he said. But some argue that for Washington to do so little is an invitation to Mr. Putin to do more.
NATO has refrained from deploying substantial numbers of troops in member states bordering Russia, in accordance with a unilateral promise made to Moscow in 1997, when Russia was behaving more cooperatively.
The Pentagon press secretary, Rear Adm. John F. Kirby, discussed U.S. military exercises in Eastern Europe, and the Ukrainian first deputy prime minister, Vitaly Yarema, expressed gratitude.
For the same reason, although the Baltic nations have been full members of NATO since 2005, there was no military contingency plan to defend them until 2009, after Russia’s war with Georgia. Now, with the annexation of Crimea and the threat to eastern Ukraine, many in Northern Europe believe that posture must change.
The euro currency crisis and weak growth have hit Europe hard, however, making budget cuts widespread, with military spending among the easiest areas to cut politically.
In 2013, among the few NATO countries that met the 2 percent target, according to NATO figures, were the United States, at 4.1 percent, and Britain, at 2.4 percent. Estonia was at 2 percent, and Greece, though debt-saddled, spent 2.3 percent. France was at 1.9 percent, and Turkey and Poland were at 1.8 percent, while Italy spent only 1.2 percent of its G.D.P.
Two new members, Spain and Hungary, along with two apparently vulnerable Baltic countries, Latvia and Lithuania, spent less than 1 percent. Even wealthy Germany spent only 1.3 percent. Over all, European members of NATO were at 1.6 percent.
But pleas for more spending may fall, as usual, on ears otherwise occupied with domestic budget constraints.
NATO has been trying to respond, Mr. Ilves, the Estonian president, said. “Everything that has been said sounds good, and NATO has announced various air and sea measures,” he said. “But when it actually starts happening, it will sound and look even better.”
What countries like the Baltic States, Poland and Romania need are “boots on the ground, a presence in the region,” Mr. Ilves said, as well as air defenses, not just air policing.
Despite the recent statements from NATO, Mr. Pabriks, the former Latvian defense minister, said, “the Polish and Baltic publics are not certain.”
“Compared to what Russia has been building up on our borders,” he added, “we are a demilitarized zone, and that will have to change.”
No one doubts NATO’s capacity to stand up to Russia militarily. But if Mr. Putin sees opinion in NATO as “divided or undecided about whether Latvia’s security has the same value as Germany’s, then he may challenge it,” Mr. Pabriks said.
“If he does, and NATO doesn’t respond in force, NATO is dead,” he added. “We have to give a clear signal that this is a red line, not a red line as in Syria, but that if you cross this line we will shoot.”
Mr. Pabriks noted that five minesweepers — two from Norway and one each from the Netherlands, Belgium and Estonia — would conduct an exercise in the Baltic Sea until the end of May. “They’re not battleships, of course. It’s clearly a signal, but obviously not enough.”
General Mueller, the surveillance fleet commander, said he was facing staffing cuts despite the re-emergence of the Russian threat. “The challenge is to get the European nations to spend the money on defense,” he said. “We feel it today. This incident has made people step back and think that those who were pushing to spend money were more farsighted, and maybe we should listen to them.”
Capt. Bogdan Drelciuc, 32, one of two Romanians on board the surveillance plane, returned early from a rotation in Afghanistan, after the Ukraine crisis began, to help coordinate these new flights with the Romanian military. “I think my country is concerned, for sure,” said the captain, who was 7 in 1989 when Communism collapsed. “We have a direct border with Ukraine, and we requested NATO support, and why not?”
France's Hollande to Visit Georgia as Ukraine Crisis Rages
by Naharnet Newsdesk
24 April 2014, 13:39
President Francois Hollande will visit Georgia shortly, his foreign minister announced Thursday as France seeks to boost ties with the small ex-Soviet country that stands in the shadow of its giant neighbor Russia.
The French leader's visit -- due in May -- comes at a time when the European Union is seeking to boost ties with countries lying to its east, and as the West and Russia exchange increasingly strident barbs over the crisis in Ukraine where Moscow has already annexed the Crimean peninsula.
The annexation has brought back painful memories for Georgia from 2008, when tensions between Tbilisi and Moscow over the breakaway Georgian region of South Ossetia exploded into a five-day war that saw Russian troops sweep into the country.
"The French president will be here in a few days, the visit is being prepared," Laurent Fabius said on a joint visit to Tbilisi with his German counterpart Frank-Walter Steinmeier.
He said the trip aimed to bolster ties with Georgia, and made no link between the visit and the crisis in Ukraine, where pro-Kremlin militants have taken control of several key cities of the southeast under what Washington and Kiev say is Russian influence -- a claim Moscow denies.
But the crisis is of particular concern to Georgia, as Moscow has several thousand troops stationed in the country's breakaway regions of Abkhazia and South Ossetia since the 2008 conflict and recognizes them as independent states.
- Closer ties with EU -
Fabius and Steinmeier's trip to Georgia comes a day after they paid a brief visit to Moldova, in an attempt to boost both countries' bid to formally sign a political and trade agreement with the European Union.
The agreement is part of a broader EU initiative to draw several ex-Soviet states that remain in Russia's orbit closer to the West.
The so-called Eastern Partnership suffered a spectacular setback in November when then Ukrainian president Viktor Yanukovych unexpectedly refused to sign up under Russian pressure.
His move triggered pro-EU protests in Kiev which evolved into broader demonstrations against his rule.
He was eventually ousted in February to the anger of Moscow, which subsequently annexed Ukraine's Crimean peninsula.
While Fabius and Steinmeier are keen to see Moldova and Georgia ink the EU agreement, they were both at pains to underscore that the deal was not a barrier to both countries' ties with Russia.
Georgia, which plans to officially sign up to the agreement in June, is also keen to join the NATO security alliance -- a move that would likely irk Russia.
NATO had opened up the prospect of full membership for Georgia in 2008 as long as it adopted democratic and economic reforms.
The membership process has since been frozen, but Tbilisi has made no secret of its continued desire to join the alliance.
On Thursday, Georgian Foreign Minister Maia Panjikidze said Tbilisi had "demonstrated the progress demanded of countries aspiring to join NATO."
She pointed to the fact that Georgia had sent troops to the Central African Republic to help with peacekeeping efforts there.
But while Fabius and Steinmeier agreed that security in the region is a major issue, they would not be drawn over the likelihood of Georgia joining the Western military bloc.
"We are interested in deeper ties between Georgia and NATO," Steinmeier said, but referred to a major NATO summit due in September for any potential further steps.
First Troops Land in Poland as U.S. Beefs up Baltic Presence
by Naharnet Newsdesk
23 April 2014, 18:25
The first American troops arrived in Poland Wednesday, after Washington said it was sending a force of 600 to the Baltic states as the crisis over Ukraine deepens.
Some 150 soldiers from the 173rd Airborne Brigade touched down early afternoon in Swidwin, in the northeast of the country, according to an AFP journalist at the scene.
The troops, who are usually based in Vicenza, Italy, arrived at the base on two Hercules transport planes.
A further 450 US troops will be deployed in the next few days in Estonia, Lithuania and Latvia, following Washington's announcement on Tuesday that it would increase its presence in the region to reassure its NATO "allies and partners".
U.S. troops are due to carry out military exercises in the region for the rest of the year.
The U.S. has pulled no punches in describing the purpose of the mission, with Pentagon spokesman Rear Admiral John Kirby calling the deployment a "message to Moscow" that Washington takes its obligations in Europe "very, very seriously".
Kirby said the exercises are "bilateral" U.S. operations and not NATO exercises, although he said there was no reluctance by other alliance members to send ground troops to countries bordering Russia.
Reluctant Kosovo Approves War Crimes Court
by Naharnet Newsdesk
23 April 2014, 16:29
Kosovo's parliament approved on Wednesday the establishment of an international court to deal with alleged crimes committed by ethnic Albanian guerrillas during the 1998-1999 war with Serbia.
The vote came amid a mounting pressure on Pristina to back an EU call to create a special court to address the allegations detailed in a 2011 Council of Europe report on crimes committed by pro-independence ethnic Albanian Kosovo Liberation Army (KLA).
The report by the Council's special rapporteur Dick Marty said the KLA, which fought Serbian armed forces during the war, should be held accountable for abductions, beatings, summary executions, and in some cases, the removal of human organs of non-Albanian prisoners.
According to the report, the prisoners, some 500, were mostly ethnic Serbs and Romas.
The decision on the court was adopted by 89 votes in the 120-seat parliament with 22 against and two abstentions.
Before the vote, prime minister Hashim Thaci had urged lawmakers to support the creation of the court in order "to clear the Kosovo's name over unfair claims made in Marty's report".
Thaci said such a court was "unjust and the greatest insult" to Kosovo but insisted it was "the only option" to prevent the establishment of a U.N.-sponsored tribunal dealing with war crimes committed during the Kosovo conflict.
Marty accused Kosovo's top political leaders, including Thaci -- a wartime ethnic Albanian KLA commander -- and several of his closest allies, of involvement in wartime crimes.
The court would be seated in Pristina, but "sensitive proceedings, including hearing of witnesses, would take place outside of the country in view of the nature of the allegations," the EU mission in Kosovo said in a statement.
But the plan has stirred strong emotions in Kosovo, where many consider KLA guerrillas as heroes.
"It is unacceptable. We urge MPs to respect our holy war and vote against the court," said the head of the war veterans association, Muharrem Xhemajli.
International rights group Human Rights Watch also called for the creation of the court.
"The proposal to establish a special court... is Kosovo's chance to advance justice and individual accountability for very serious crimes," HRW official Lotte Leicht said in a statement.
The two-year war ended when a NATO air campaign ousted Belgrade forces under the command of late strongman Slobodan Milosevic from Kosovo.
Kosovo's unilateral proclamation of independence from Serbia in 2008 has been recognized by more than 100 countries, including the United States and most of the European Union's 28 member states.
Serbia, backed by Russia, fiercely refuses to recognize the moved, but has nevertheless moved to improve ties with Kosovo for the sake of integration with the European Union.
Catalonia Chief Vows to Call Independence Poll
by Naharnet Newsdesk
23 April 2014, 17:07
Catalonia's political chief Artur Mas vowed on Wednesday to push ahead with a vote on independence from Spain on November 9, flying in the face of fierce opposition from Madrid.
Just two weeks after Spain's parliament overwhelmingly shot down the referendum bid, Mas said he was determined to hold a vote.
"The referendum will be called for sure and the Catalan people will be called to the polls on November 9," he told foreign correspondents on the day the region celebrates its patron Sant Jordi, or Saint George.
"Might the central government want to cancel it? I don't know. That doesn't depend on me," Mas said.
The referendum would ask voters two questions:
- "Do you think that Catalonia should be a State, yes or no?"
- "If yes, do you want that State to be independent, yes or no?"
Many Catalans point to Scotland, whose leaders have called a referendum to be held in September on independence from Britain -- a move authorized by the British government.
But Prime Minister Mariano Rajoy has vowed to block any referendum.
With both the ruling Popular Party and the main opposition Socialist Party against the referendum, Spain's parliament rejected the bid by 299-47 votes on November 8.
Nevertheless, the Catalan government says it will now seek to pass a regional law allowing it to conduct a consultative referendum on the question.
Mas urged the Spanish government not to block such a vote, which he has promised to hold since winning November 2012 regional elections.
"We ask that it not obstruct a process that will be strictly Catalan, with a Catalan law approved by the Catalan parliament," he added.
"It will not be strictly binding, it will be purely participatory to find out the opinion of the Catalans."
Proud of their distinct language and culture, a growing number of Catalonia's 7.5 million citizens resent the redistribution of their taxes to other parts of Spain and believe the region would be better off on its own.
The 2008 real estate crash that triggered a five-year economic downturn across Spain has added to the pressure for secession over the past two years.
Polls indicate a slim majority of Catalans support independence.
Spain's prime minister has promised to appeal against any referendum to the nation's Constitutional Court, however.
Rajoy says Spain is better off united and that a referendum would flout the country's 1978 constitution, which confers sovereignty on all Spaniards, not those of a single region.
The Constitutional Court ruled last month that a region like Catalonia could not "unilaterally" call a referendum on its sovereignty.
But Mas was undeterred.
"The offer of dialogue is permanent and remains open but we will not stop the process. If we stop and there is no alternative, the frustration will be total and absolute," he said.
The Catalan political chief has previously promised to act within the law.
Mas has said, too, that if the referendum is frustrated he could call snap elections as a form of plebiscite on the future of Catalonia.
Spain restricting people's right to protest, Amnesty report finds
Report paints picture of heavy-handed government response to country's growing social movements
Ashifa Kassam in Madrid
theguardian.com, Thursday 24 April 2014 11.00 BST
The Spanish government is using fines, harassment and excessive police force to limit the right to protest, Amnesty International warned in a new report released on Thursday.
Against a backdrop of chronic unemployment and shrinking public funds for education, health and social services, a growing number of Spaniards have taken to the streets in recent years. But "instead of listening to their demands, instead of starting a dialogue, authorities are doing everything they can to impede people from protesting", said the report's author, Virginia Álvarez.
Amnesty International tracked several protests in Madrid and Barcelona during the past year, gathering first-person accounts, interviewing journalists and lawyers and analysing videos and photographs.
The resulting report paints a stark picture of a heavy-handed government response to the country's growing social movements.
"With threats of fines or threats of being beaten, the government is trying to stigmatise and criminalise people who are just practising their rights."
In March, a violent clash between riot police and demonstrators in Madrid earned headlines around the world and left more than 100 people injured, including 67 police officers.
Pointing to a rise in street violence carried out by radical groups, Spain's director-general of national police told parliament on Wednesday that the head of the anti-riot squad had been dismissed and police services were being restructured to deal better with what he called "an escalation of violence never seen before".
In their research, Amnesty International found that although the vast majority of protesters were peaceful, police treated them in the same manner as those who incited violence. In many cases, said the report, police had used excessive force to confront protesters.
"The impunity of police in Spain is something we've been covering for many years," said Álvarez. "But now we're seeing it in the distinct context of social protest."
The report documents several cases of excessive police force, such as that of Ester Quintana, an unemployed 43-year-old from Barcelona who lost her left eye in 2012 after being struck by a rubber bullet as she was leaving a protest.
Despite the many witnesses and video recordings that showed riot police firing rubber bullets, the interior minister of the Catalan regional government initially denied they had done so during the protest.
Instead, the minister insinuated Quintana's injury may have been caused by an object thrown by other demonstrators. "These were normal people, who were unjustly fined, unjustly beaten and afterwards were victimised all over again as they tried to find justice and found only inadequate investigations into their cases," said Álvarez.
Many of those interviewed by Amnesty International had been detained by police during protests. They spoke of a treatment that varied by gender, with men often subject to a higher degree of violence and women pelted with sexist insults. One 21-year-old shared her frustration with being called Snow White and taunted over whether she wanted sex or water while being taken into custody.
These actions are having a dissuasive effect on protesters, said the organisation. As one 49-year-old activist explained: "They say that the movements are losing force, but the reality is that people are scared."
Citing public disobedience, fines ranging from €300 to €1,500 (£250 to £1,245) have become commonplace for protesters, said Jezerca Tigani, deputy director for Europe at Amnesty International.
"Many of the people who are attending these protests face financial constraints. They are totally and completely unable to pay the fine," she added.
The members of the Mortgage Victims' Platform (PAH), in their fight to halt the number of home repossessions in Spain, have racked up more than €40,000 in fines.
Spanish authorities have been allowed to develop these practices, said Tigani, because the country's legislation is out of step with European and international human rights standards. "On top of that, the Spanish authorities have been really stretching beyond what the existing legislation allows for," she added.
Rather than aim to bring the situation in line with international standards, the Spanish government is looking to further entrench this manner of dealing with protesters, she said, citing the strict anti-protest laws currently being drafted by the government. "Now they are talking about fines of up to €600,000 for protesting. That tells you how extortionist this is."
In the coming days, Amnesty International will present their report to various government bodies in Spain, including the ministries of justice and the interior.
"The authorities do know what is going on. Other international bodies are raising very similar concerns," said Tigani. "Whatever the authorities are doing has no place in a society that calls itself democratic."
Armenia Accuses Turkey of 'Utter Denial' on Genocide
by Naharnet Newsdesk
24 April 2014, 12:44
Armenian President Serzh Sarkisian on Thursday accused Turkey of an "utter denial" in failing to recognize World War I mass killings of Armenians in the Ottoman Empire as a genocide, after Ankara for the first time offered condolences for the tragedy.
"The Armenian Genocide... is alive as far as the successor of the Ottoman Turkey continues its policy of utter denial," Sarkisian said in a statement marking the 99th anniversary of the massacres.
"The denial of a crime constitutes the direct continuation of that very crime," he added. "Only recognition and condemnation can prevent the repetition of such crimes in the future."
He said the looming 100th anniversary offered "Turkey a good chance to repent and to set aside the historical stigma in case if they make efforts to set free their state's future from this heavy burden."
In an unprecedented move by a Turkish leader, Prime Minister Recep Tayyip Erdogan on Wednesday offered condolences over the massacres, calling them "our shared pain."
He also stressed that the events of 1915 "should not prevent Turks and Armenians from establishing compassion and mutually humane attitudes towards one another."
Using both diplomatic levers and its influential diaspora abroad, Armenia has long sought to win the massacre's international recognition as a genocide.
Armenians say up to 1.5 million people were killed during World War I as the Ottoman Empire was falling apart, a claim supported by several other countries.
Turkey argues 300,000 to 500,000 Armenians and at least as many Turks died in civil strife when Armenians rose up against their Ottoman rulers siding with invading Russian troops.
Over 20 countries have so far recognized the massacres as genocide.
04/23/2014 06:18 PM
Weapon of Last Resort: ECB Considers Possible Deflation Measures
By Christian Reiermann and Anne Seith
Though the European Central Bank continues to play down deflation concerns, it is preparing measures to combat falling prices in the event of an emergency. Are the growing fears warranted?
One of European Central Bank President Mario Draghi's most important duties is watching his mouth. One ill-considered utterance is enough to sow panic on the financial markets.
But during a press conference earlier this month, Draghi allowed himself a telling slip.
Speaking to gathered journalists at the Spring Meetings of the International Monetary Fund and the World Bank, Draghi twice almost uttered a word he has been at pains to avoid. "Defla…", Draghi began, before stopping himself and continuing with the term "low inflation."
Yet despite Draghi's efforts, the specter of deflation was omnipresent in Washington during the meetings. And it is one that is making central bank heads and government officials nervous across the globe. The IMF in particular is alarmed, with Fund economists warning that there is currently up to a 20 percent risk of a euro zone-wide deflation. IMF head Christine Lagarde has called on European central bankers to "further loosen monetary policy" to address the danger.
The reason for concern is clear: Ever since the Great Depression at the beginning of the 1930s, deflation has been seen as one of the most dangerous illnesses that can befall an economy. Several countries at the time fell victim to a downward spiral consisting of falling prices, rapidly rising unemployment and shrinking economic output -- a morass that took years to escape. Because prices were falling, people stopped spending in the hope that everything would become even cheaper. Companies were unable to sell their products and many went broke, which led to millions of people losing their jobs and a further squeeze on consumption.
Japan provides a more recent example, where the economy has been largely stagnant for years amid falling prices. Is the euro zone now facing a similar nightmare?
The inflation rate in the common currency zone sank to 0.5 percent in March, dangerously close to zero and far away from the ECB's target of 2 percent.
Still, both Draghi and Jens Weidmann, head of Germany's central bank, the Bundesbank, continue to insist that there is no reason to worry at present. At the IMF Spring Meetings, Draghi said "we see no statistical or model-based evidence of a self-feeding, broad based falling of prices. ... In other words, we have no evidence that people are postponing spending waiting for lower prices."
Despite the reassurances, the ECB is doing all it can to prepare for the worst, as Draghi himself has made clear. The ECB Governing Council is unanimous in its commitment to using "unconventional instruments" in order to "cope effectively with risks of a too prolonged period of low inflation," Draghi said at a recent press conference at the bank's Frankfurt headquarters. A measure is even being considered that has long been seen as taboo: quantitative easing. QE, as it is known, involves central banks buying up significant amounts of securities as a way of pumping money into the markets and thus stimulating both the economy and inflation.
Other central banks, particularly the US Federal Reserve, have used the method in recent years to combat the effects of the financial crisis. But in the euro zone, many monetary policy purists, such as Bundesbank head Weidmann, are wary of the solution. The concern is that such a flood of liquidity could encourage governments and companies to delay necessary structural reforms.
After all, the ECB has indicated that securities purchases under a QE program could be unlimited. Should an initial program -- of, say, a trillion euros -- prove ineffective, then further efforts would follow.
The ECB has also already begun identifying which sovereign bonds and in what quantity they might seek to purchase. Two alternatives have been considered. The first envisions making purchases in line with the euro-zone member states' share of ECB capital. That would mean that German sovereign bonds would make up roughly a quarter of the purchases, 20 percent French, 18 percent Italian and so on.
A Broader Debate
The second scenario would be that of adhering to market share. That would result in 22 percent each for French and German bonds and 25 percent for Italian, for example. In order to have a more direct effect on the business sector, the ECB is also considering the purchase of company securities.
Should plans for such large-scale purchases ever become concrete, a broader conflict within the ECB Governing Council is almost a certainty. Conservative policymakers, for example, are only supportive of sovereign bond purchases if they come from countries with top ratings. But that would mean that ECB money would go to countries where it isn't needed -- like Germany or Holland. Germany's Bundesbank, for its part, is opposed to any plan that would result in risk-sharing among euro-zone member states. Weidmann's Dutch counterpart, Klaas Knot, likewise expressed skepticism during a meeting in Amsterdam.
Many concerns center around the high price tag of such a shopping spree. The Bank of England, for example, has spent some £400 billion (€486 billion, $673 billion) on sovereign bond purchases and its balance sheet is five times as large as it was before the financial crisis as a result. The effectiveness of the strategy is debatable.
Indeed, central bankers of all stripes speak quietly of quantitative easing as being more of a "weapon of last resort." Draghi, they say, is welcome to put it on display, but few want to see him actually fire it.
As such, should action become unavoidable in June when the ECB Governing Council presents the next medium-term outlook, other strategies appear more likely.
A so-called negative deposit rate could, for example, be used to penalize banks that deposit their money overnight with the ECB instead of loaning it out to companies. One possible scenario foresees coupling a punitive rate of minus 0.1 percent with a further prime rate cut to 0.15 percent.
One central banker says that the ECB would most likely assemble an entire package of measures -- one which might also include long-term, low interest loans to banks. The ECB has taken similar steps in the past. But the massive three-year tender the ECB issued in 2012 -- a package Draghi has referred to in the past as "Big Bertha" in reference to a World War I howitzer -- was used heavily by the recipient banks to buy sovereign bonds. To prevent a repeat, central bankers are considering offering particularly attractive rates in exchange for banks increasing the amount of money they loan out. Just how compliance would be monitored remains unclear.
Finally, the ECB has considered several times in the past buying up asset backed securities from banks. These securities, widely known simply as ABS, are notorious for the role they played in the US financial meltdown.
But their poor reputation is not justified in all cases, the ECB recently noted in a joint paper with the Bank of England. Because ABS are an important instrument for distributing risks in a financial system, the market for the securities must be urgently resuscitated, the paper argued.
Were the ECB to emerge as a buyer, it could prove beneficial in several different ways. For one, it would inject liquidity into the market; for another, it would act as a catalyst for banks to increase corporate lending. Both effects would counter the threat of deflation.
But should falling prices always be cause for concern? A foray into economic history is telling. In fact, extended phases of economic growth have often been coupled with long-term price erosion. Sinking prices in Germany and the US characterized a third of the period between 1801 and 1879; in Great Britain, deflation was seen during half of that period.
And yet there still weren't mass layoffs or widespread suffering. On the contrary: It was a period of rapid industrialization. Sinking prices came alongside increasing prosperity and growing employment.
Technical advancements and mass production meant an explosion of products of all kinds and the flood of supply pushed prices downward. But demand also increased as a much broader segment of society was able to afford products that had previously been perceived as luxury items -- such as cotton fabric.
The prevailing currency system at the time also played a role, at least temporarily, in creating pressure on prices. And it did so automatically. Up until World War I, money in most countries was backed by gold, meaning that each currency unit represented a certain amount of the precious metal. The amount of gold a country had in its reserves determined how much money could be in circulation.
If the inhabitants of a country purchased too many products from abroad because they were cheaper there, the country would in turn pay down its import surplus by transferring part of its gold reserves to the exporting nation. The result was that the amount of money circulating in the exporting country increased as would prices. The opposite phenomenon was seen in the importing country; shrinking gold reserves resulted in declining prices. It also meant that the products of that country became more competitive and both domestic and foreign demand increased, as did prices. Equilibrium returned between price levels and economic output.
Two Sides of the Same Coin
Under this system, inflation and deflation served as mechanisms that redressed imbalances between the economies of individual countries and injected equilibrium into the global economy. There wasn't anything particularly frightening about inflation or deflation during the era; people merely viewed it as two sides of the same coin.
Sentiment has shifted in the period since. Since at least the 1930s, the word deflation has become a conversation stopper says Jörg Krämer, chief economist at Commerzbank, Germany's second-largest bank. "As soon as someone warns about it, people become frozen with fear," he explains.
But how can it be that the very same phenomenon can have a favorable impact one time, but a devastating one the next?
As so often proves to be the case, it depends on the circumstances. If, for example, technological advances and higher productivity combine to reduce prices, then there is a corresponding increase in prosperity. When products get cheaper, demand is stimulated because more people are able to afford them. Often, a company's revenue rises rather than falls because the increase in the number of products sold more than offsets the drop in price. It's a development still in evidence today with products like computers, smart phones and flat-screen televisions.
Deflation only becomes really dangerous if there is an excessive drop in prices. "If that happens, then companies cannot keep up via labor cost reductions, leading profits to melt away," says Krämer. That's what happened in the United States during the 1930s after the stock market crash caused prices to fall by a total of 25 percent. "US companies, on average, didn't have any profits during 1932 and 1933," says Krämer. "Companies curbed their investments and the economy collapsed."
Banishing the Specter
Sinking prices can also become unbearable in situations in which companies and consumers are strapped with debt. If prices fall, money becomes more and more valuable and leads to greater debt pressures because the face value of the debt doesn't change. Under those circumstances, many companies are no longer capable of servicing their debts and are forced into bankruptcy. This phenomenon most recently reared its head during the global financial crisis, and it continues to threaten crisis-plagued Southern European countries, with their high debt levels.
Despite this, the low and in some cases already negative inflation rates -- particularly in Ireland, Portugal and Spain -- are simply the manifestation of painful, but deliberate adjustment processes. During the boom years from 2000 to 2008, unit labor costs rose by up to 40 percent in the so-called PIGS countries. Now they are falling again, increasing the international competitiveness of these economies.
Finally, as ECB chief Draghi never tires of pointing out, 70 percent of the inflation rate decline within the euro-zone is attributable to surprisingly low energy and food prices. These figures are "very helpful for the economy," says Krämer.
Bundesbank head Weidmann has a similar opinion. Like many other central bankers, he believes the economy will continue improving, also in the euro-zone crisis countries, such that prices will likely soon rise again. His best-case scenario would be if the March inflation-rate drop turned out to be an exception with no bearing on developments in the near future. This would allow the ECB to sound the all-clear in June. And banish the specter of deflation.
Translated from the German by Charles Hawley and Daryl Lindsey
Can the IRS tap citizen power to police tax-evading corporations?
Slovak system would reward citizens for tracking businesses
IRS will audit fewer Americans than any time since the 1980s
theguardian.com, Wednesday 23 April 2014 20.36 BST
It sounds like an outtake from the Lives of Others or another surveillance conspiracy theory: what if you mobilized an entire country to make sure businesses paid their taxes?
Slovakia is trying this with its year-old plan for a tax lottery. And it might be a stretch, but who knows whether the beleaguered IRS might consider one day following suit for America's corporate scofflaws? After all, there's no question the IRS needs help. Thanks to budget cuts, the agency is so short staffed that this year it will audit fewer Americans than at any time since the 1980s.
"We keep going after the people who look like the worst of the bad guys, but there are going to be some people that we should catch, either in terms of collecting the revenue from them or prosecuting them, that we're not going to catch," IRS Commissioner John Koshinen said earlier this month.
So let's turn our eyes to Slovakia.
In an attempt to get companies to pay their fair share of value-added tax (a type of sales tax) Slovakia has decided to recruit its masses to keep its businesses honest. It's like crowdsourcing for public revenue.
Here's how it works: Slovakia has asked its citizens to collect all their sales receipts for anything over one euro, whether at a store or a restaurant. Each receipt is printed with the business's company tax ID. Slovakian authorities want citizens to go home, look up the receipt with the tax ID, and enter it into a national database. The Slovakian finance ministry will look through the database to double-check that the businesses are correctly reporting their income – or so they say.
What's in it for citizens? As a reward for each sales receipt a taxpayer registers from a store or a restaurant, he or she will be registered into a monthly lottery and get a chance to win a car, €10,000 or to appear on the country's version of The Price is Right.
In this age of post-Occupy, when corporate tax breaks reliably get US citizens riled up, why wouldn't we try the Slovakian experiment here? After all, the country's finance minister touted the program as a "huge success".
Here's the thing: that may be true, but not for the reasons one would think.
Scaring merchants into compliance
Slovakia's goal is to unite its populace in a widespread respect for taxes – an ambition that may be out of reach for America, which is far more sprawling and harbors dedicated tax resisters.
If every man is the tax man, the thinking goes, citizens and businesses will behave better. The real purpose of the tax lottery is not to create a potential database of relevant receipts, but to increase tax compliance by changing the dynamic of government's relationship with taxpayers and business it regulates. By making businesses think that the government is recreating paper trails, which may lead to a potential audit, the tax lottery increases tax compliance just by existing. No actual analysis of receipts required.
But it's hard to pull this off. Tax auditing is a difficult and expensive process, whether in the US or Slovakia. A country that can't hire enough auditors to keep up with business taxes is also unlikely to pay enough people to sift through databases of tax IDs from registered receipts that live, crumpled, in the pockets of forgetful citizens.
"My guess is that if it works, it is through the mechanism of scaring merchants into collecting and remitting [tax payments], because they know government has more information – which is very different than tracking down whether tax was submitted on each of thousands of registered receipts," says Mitchell Kane, Gerald L Wallace professor of taxation at NYU's School of Law.
Making taxpayers feel like they are part of the process
Then there's that squishy issue of national unity. It always feels great to be a part of the team, a part of the process – especially when it comes to making important decisions involving money.
"We have research suggesting that involving people more in the tax process, for example by asking them for their opinion on where taxes should be spent, increases both their compliance with paying taxes, and their happiness when they actually do pay," says Michael Norton, an associate professor of business administration at Harvard Business School's Marketing Unit and co-author of Happy Money: The Science of Smarter Spending.
"So, it is possible that involving people through this interesting receipt plan may indeed increase their involvement with and satisfaction paying taxes."
Norton's research shows that allowing people to simply express in which areas they would like their taxes to be spent – without the collecting agency being required to actually obey their preference – increased their tax compliance by 16%.
Such successes can be short-lived, however. The research notes that these effects might wear off as citizens become accustomed to the new form. It is also possible that allowing the taxpayers to express their opinions could lead them to expect rapid response from the government, which could then lead to dissatisfaction when such response is not forthcoming.
The tax lottery takes taxpayer involvement in a slightly different direction. Instead of connecting with the way the government uses their money, taxpayers connect with the way the goverment collects it.
"Most likely to participate would be frugal people who are careful with money," says John Welte, senior research scientist at the Research Institute on Addictions. According to him, the reason for that would be the work required to register the receipts with the government. "If there was no effort, everyone would do it."
There is yet another upside to participating in tax lottery – a sense of justice. (This is where the post-Occupy era comes in).
After all, businesses and corporations are those that most often get away with exploiting the tax system. And if in the process of helping restore some justice in the tax system, you just happen to win a car or a chunk of cash – well, that's just your reward for a job well done.
The aspiring tax vigilantes don't have to wait for a tax lottery to play their part. Thanks to a form 3949-A, they can report anyone they suspect of cheating on their taxes to the IRS. And there is a reward, according to the IRS Whistleblower Office.
The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30% of the additional tax, penalty and other amounts it collects.
The feeling of sticking it to the corporations might be enough to ignore the fact that the government is playing mind-games to increase tax compliance by both tax payers and companies. And while US taxpayers might jump at the chance to participate in a tax lottery, it might be a while yet before they get a chance.
Why US can't have its own tax lottery just yet
While these mind games might be exactly what IRS needs right now, there are many reasons why tax lottery would be hard to implement in the US.
For starters, Slovakia's value-added tax differs from the US sales tax. Under the value-added tax system, merchants are required to assess and collect the tax at every transaction. As products move through the supply chain, the tax paid on the products by acquiring merchants can be deducted from the tax that the merchants then charge to their customers.
US Money receipt machine taxes The Slovakian tax agency would like receipt of your receipts. Photograph: PhotoAlto/Alamy
"Value-added tax receipts issued to customers will list a unique identifier for the merchant. That’s generally not the case with US local sales receipts," says Kane. "They may list the merchant name but no unique number related to sales tax collection."
There is also no way to implement this on a federal level as there is no federal sales tax, explains Kane. It could, however, be relevant if US was to ever adopt a federal value-added tax.
It's an idea. But considering how any tax reform has proven elusive over the past two years even within the halls of Congress, it's unlikely lawmakers would ever cast their eyes to Europe for ideas.
Greece's public finances are in a dire state, and cooking the books won't help
Primary budget facts and details in the small print can no longer be hidden by creative accounting and a sleight of hand
Wednesday 23 April 2014 19.40 BST The Guardian
It was dodgy accounting that got Greece into a mess in the first place. Now, more dodgy accounting is being used to dress up the dire state of the nation's public finances.
When the government in Athens announced last week that it was running a surplus in its primary budget – a measure of financial health that strips out interest payments – it could only do so by recording more than €3bn (£2.5bn) in arrears owed to hospitals and the social security fund as assets. Without this creative accounting, there would have been a primary deficit.
Surprisingly, Brussels seems to be aiding and abetting this sleight of hand. The European commission confirmed the primary surplus and praised Greece's government for its willingness to take the tough decisions that have put the country's economy back on the right path.
But the small print shows this: Greece's overall budget deficit in 2013 was €23bn, of which just €7.2bn was interest payments. That makes for a primary deficit of almost €16bn. Only if you exclude the cost of one-off support to the banking sector, worth 9.5% of national output, and transfers from the rest of the eurozone equivalent to 1.5% of GDP (from profits on Greek government bonds), does it become a primary surplus of 0.8% of GDP.
The fact that this methodology is used solely for Greece speaks volumes. The country's finances are being portrayed as a success story, yet the reality is that its economy has shrunk by 23%, domestic demand has shrivelled in the face of wage cuts and austerity, and a national debt worth 170% of GDP will eventually require an amnesty or a third bailout. Some success.
Pakistan Jets Target Taliban Hideouts, Kill 12
by Naharnet Newsdesk
24 April 2014, 10:39
Pakistan fighter jets on Thursday attacked Taliban hideouts in the lawless northwestern tribal belt and killed at least 12 suspected militants, officials said.
It was the first time the military is known to have used air strikes on militants since the Pakistani Taliban announced a ceasefire on March 1 to help peace talks.
The Taliban said last week it was ending the ceasefire, complaining of little progress in negotiations with the government. A series of militant attacks since then have killed seven people in the northwest.
The airstrikes were staged in mountainous areas of the Khyber tribal district, where the Taliban and the banned militant group Lashkar-e-Islam are active.
"At least 12 militants have been killed but the death toll may increase," a security official based in Peshawar told AFP on condition of anonymity.
Lashkar-e-Islam, led by warlord Mangal Bagh, is feared for kidnappings and extortion in Khyber, one of seven lawless tribal districts along the Afghan border.
Another security official said the strikes targeted militants involved in bomb attacks in the northwestern town of Charsadda and on a fruit and vegetable market in Islamabad which killed 24 people.
Both officials said ground troops also used heavy weapons to pound militant targets.
Independent verification of the death toll was not possible, as journalists are not allowed to enter the area.
Pakistan began talks with the Taliban in February to try to end their seven-year insurgency, which has cost thousands of lives.
Government and Taliban negotiators met in Islamabad on Tuesday to plan a fresh round of talks and to try to persuade the militants to begin another ceasefire, a Taliban negotiator said.
Since the Taliban began their campaign of violence in 2007, more than 6,800 people have been killed in bomb and gun attacks around Pakistan, according to an AFP tally.
India elections: Tamil Nadu chief feeds goodwill with five-rupee meals
Populist minister Jayalalithaa wooing Chennai but likely to emerge, with two other powerful women, as central king-maker
All you need to know about the Indian election
Jason Burke in Chennai
The Guardian, Thursday 24 April 2014
Every morning, at 3am, the kitchens round the back of the Rajiv Gandhi government general hospital in the southern Indian city of Chennai come to life. Forty cooks light the gas cookers and start sorting 185kg of rice.
At 7am the first of the 4,000 daily customers surge in. Porters, rickshaw drivers, nurses, patients, students, bureaucrats, doctors and itinerant holy men all stand to eat their heavily subsidised meals, priced at no more than 5 rupees (5p) and eaten at ferocious speed with fingers from tin plates.
Everyone, cooks and consumers alike, knows who to thank for their almost free meal: Jayalalithaa Jayaram, the chief minister of Tamil Nadu state.
This and 202 other eating places in Chennai – all set up over the last 14 months and all hugely popular – are known as "Amma canteens". Amma, or mother, is one of the local names for the chief minister. "Great Revolutionary Leader" is another.
The 43-year-old chief cook, A Malathi, said: "This [canteen] is like a temple for her. We will all vote for her, and so will our families, and so will all the customers."
On Thursday 55 million people in Tamil Nadu will go to the polls in the latest phase of India's protracted general election, which is being carried out in stages to allow the redeployment of 8 million police and officials around this vast country.
With about half the electorate now having voted, surveys put Narendra Modi, candidate of the opposition Hindu nationalist Bharatiya Janata party, well ahead of the incumbent Congress party.
But it appears likely the BJP will have to form a coalition to rule and that three regional leaders – all women – could end up playing kingmaker.
In Tamil Nadu, Jayalalithaa's party, the All India Anna Dravida Munnetra Kazhagam (AIADMK), is expected to send about 25 parliamentarians to the 545-seat Lok Sabha, the powerful lower house.
Meanwhile, in the east of India, the mercurial and tough Mamata Banerjee, who overturned decades of Communist rule to take power in West Bengal in 2011, could command even more MPs once the results are known.
Finally, there is the flamboyant, controversial Mayawati Kumari, whose support among those lowest in India's enduring social hierarchy of castes, has made her chief minister of the vast and poverty-stricken northern state of Uttar Pradesh four times.
Many outside Delhi see the success of such figures as essential for the health of Indian democracy.
"This is a crucial election," said AR Venkatachalapathy, a respected Tamil Nadu historian, analyst and translator. "It is a referendum on what kind of India the electorate want to have. India has so many interests – cultural, social, religious as well as regional – and all look for democratic expression. That is the nation's strength."
But others see these three women, and local leaders with smaller followings, as troublemakers out for short-term advantage.
Banerjee, 59, proved a thorn in the side of the outgoing Congress government, forcing repeated policy U-turns until finally withdrawing from the ruling coalition altogether.
Jayalalithaa brought down a previous BJP administration.
"You have to deal with them. That's the way it is," said one senior Congress party official. "But giving them their pound of flesh – or two pounds or three or 10 pounds is nauseating."
Jayalalithaa, Banerjee and Mayawati all came from humble origins to win power in a brutal political environment dominated by men.
Jayalalithaa, 66, was spotted by the hugely popular Tamil politician MG Ramachandran in the early 1970s. After his death, she fought his widow to take control of the AIADMK, and has since battled with a rival party led by a powerful local patriarch and his sons.
A US diplomatic cable, sent by the Chennai consulate in 2009 and later leaked, described Jayalalithaa, a convent school-educated multilingual former film star, as "a consummate autocrat … who climbed to the peaks of power on her own drive, intellect, and political acumen".
Local journalists, who talk of a "climate of fear" induced by constant threats of legal action and harassment by state officials, have described Jayalalithaa as "incredibly tough" with "superb political instincts".
Banerjee, in West Bengal, has also fought hard. A career politician with four degrees in history and law, she survived assaults by thugs sent by political opponents to eventually win power by channelling local anger against the corrupt, inefficient and repressive Communists. Banerjee has also repeatedly refused to be intimidated by national politicians.
Mayawati, 58, has also had few of the advantages of many of Delhi's ruling elite. The daughter of a low-ranking government clerk, she is a dalit, from the lowest group of castes, who, despite huge affirmative action programmes in India in recent decades, still face harsh discrimination.
Much criticised for spending huge sums on commemorative parks full of statues of herself across Uttar Pradesh, she is still seen as an icon by many of the poorest there and elsewhere in India.
Jayalalithaa and Mayawati have both had to fight off repeated inquiries into the origins of their apparent wealth. Jayalalithaa hosted a wedding for her foster son which remains one of the most expensive nuptial celebrations ever, and Mayawati's taste for garlands made of banknotes given by supporters is legendary.
Banerjee, a poet, is however known for her personal austerity.
None appear keen to spend much time in Delhi, two hours flight from Kolkata and three hours from Chennai. All have evolved political systems that mix populism, personality cults and welfarism directed at specific communities which suit local conditions. Many people doubt these attributes could be exported elsewhere in such a varied nation.
"There is a particular regional model [in Tamil Nadu] which basically works and that is why no national party can get a look in," said N Ram, publisher of the Chennai-based national newspaper, the Hindu.
Modi, the BJP prime ministerial candidate, who is chief minister of Gujarat, claims policies he says have brought better governance and economic growth locally can be applied across the country with equal success.
But this effort to project a regional model on a national scale was unlikely to work because India was far too diverse, said Ram.
Some voters in Chennai seek to get the best of both worlds.
Lajish Ashok, a 34-year-old furniture merchant, said he wanted to see Modi in power in Delhi, because the country needed a strong leader and would vote for Jayalalithaa locally as she was the state's best hope.
But northern India – with its different language, landscape and food – remains very distant for most in the city.
On Chennai's marina beach on Wednesday evening, a 25-year-old photographer named Durai shouted for business at his stand, where customers could have their picture taken with life-size cutouts of film idols against a background of an English country village. The stars are exclusively from local Tamil-language films.
"No Hollywood, no Bollywood, no politicians," said Durai, as breakers crashed on the dark, dirty sand. "South India is the best."
Indian Kashmir Votes in Shadow of Violence
by Naharnet Newsdesk
24 April 2014, 08:55
Indian Kashmir headed to the polls under the shadow of violent threats from militants on Thursday in the latest stage of the country's five-week election that sees 180 million people eligible to vote.
Residents of India's financial and entertainment capital Mumbai also cast ballots, as did constituents in the electorally significant southern state of Tamil Nadu.
The polls are being staggered in a bid to ensure the safety of the 814-million-strong electorate with results due on May 16 when the opposition Hindu nationalist Bharatiya Janata Party (BJP) is forecast to take power.
The first of three constituencies to vote in the Muslim-majority and volatile Kashmir valley, where a separatist movement against Indian rule is centred, posed a heightened challenge for security forces.
Turnout was light in the morning, but those who did arrive at heavily guarded polling stations defied the calls for a boycott and threats from militant groups.
"I voted because if we send the right person to the Indian parliament he will raise our voice for azadi (freedom)," voter Umair told AFP in Anantnag, reflecting widespread separatist sentiment in the area.
At least 30 village council chiefs resigned on Wednesday after rebels killed two of their colleagues and warned people not to participate in the election.
Some dozen groups have been fighting for more than two decades for the area's independence or merger with Pakistan, in violence that has claimed the lives of tens of thousands of people.
Few in Kashmir would be expected to back election frontrunner Narendra Modi, a hardline Hindu nationalist who is leading campaigning for the BJP.
Modi, the chief minister of the western state of Gujarat, remains a divisive figure after being accused of failing to swiftly curb anti-Muslim riots in his state in 2002. The unrest cost at least 1,000 lives.
The BJP has little following in the Kashmir region which has an electorate of more than 1.3 million. A total of 675 of the 1,619 polling stations are described as "hyper sensitive" and and another 685 are "sensitive".
- Bollywood and business -
Millions of voters, from Bollywood stars and business leaders to slum dwellers, turned out to vote in the western megacity of Mumbai.
"I believe we need change. Change is good. So I have found time to vote for change," said Anand Shetty, a 55-year-old professional in the corporate sector.
In a rare move by the Hindi movie industry, more than 50 filmmakers, actors and writers, many of them Muslim, last week signed an appeal urging Indians not to vote for Modi and instead choose a "secular" party.
But others have come out in support of the 63-year-old, such as actor and scriptwriter Salim Khan, who last week launched an Urdu-language version of the politician's website.
Also going to the polls are voters in Tamil Nadu state, where Chief Minister Jayalalithaa Jayaram is hoping to win enough support to play a pivotal role in shaping India's next government.
The former film star, known as "Mother" to her followers, is one of the country's powerful regional leaders who could play a kingmaker role if Modi does not win a majority.
Also voting on Thursday are parts of Assam, West Bengal, Chhattisgarh, Jharkhand, Madhya Pradesh, Uttar Pradesh, Bihar and Rajasthan states.
Modi is expected to travel to the northern town of Varanasi on Thursday, one of Hinduism's most sacred locations, where he is standing for a seat in parliament.
The move to contest in Varanasi was seen as a nod to BJP's Hindu roots and a ploy to garner support in the crucial northern state of Uttar Pradesh where Varanasi is located.
Rana Plaza factory disaster anniversary marked by protests
Survivors and relatives of dead workers stage demonstrations at site one year after building collapsed
The human cost of the Bangladeshi garment industry
Agence France-Presse in Savar
theguardian.com, Thursday 24 April 2014 11.31 BST
Thousands of people, some wearing funeral shrouds, staged demonstrations at the site of the Rana Plaza factory complex on Thursday on the one-year anniversary of the Bangladesh disaster that claimed 1,138 lives.
The demonstrators – who included injured survivors and the families of the deceased – marched to the ruins of the nine-storey building carrying flowers and chanting slogans including "We want compensation!" and "Death to Sohel Rana!", the owner of the building.
Relatives of the 140 workers still unaccounted for also joined in, calling on the government to help find their bodies. They included toddlers holding photos of their missing mothers.
"I want my daughter's dead body. At least it would give us some consolation," said Minu Begum, clutching the photo of her missing daughter, Sumi Begum, who worked at one of Rana Plaza's five factories.
For the first time since the disaster, when the site was sealed off, relatives of the dead and survivors were allowed inside. Some fell to the ground, sobbing and grabbing handfuls of dirt.
Protests also erupted in Dhaka, with several hundred people shouting slogans and holding banners outside the head office of the organisation that represents local garment manufacturers.
Families are angry at local authorities for the slow progress in identifying workers who are still missing, while the owner of the building has yet to be charged by police.
"One year after Rana Plaza collapsed, far too many victims and their families are at serious risk of destitution," said Phil Robertson of Human Rights Watch.
Global labour and rights groups marked the day by criticising the western retailers linked to the disaster, which include Spanish brand Mango, Italian brand Benetton and French retailer Auchan.
A woman holds a picture of her relative A woman holds a picture of her relative, a garment worker who went missing in the Rana Plaza collapse. Photograph: Andrew Biraj/Reuters
"Brands are failing workers a second time," Ineke Zeldenrust, from the Amsterdam-based Clean Clothes Campaign, said.
"First they failed to ensure the factories they bought from were safe and now they are failing the survivors and the families of those who lost loved ones."
After the disaster western brands launched safety inspections and pushed Bangladesh's government to increase wages and ensure the better enforcement of regulations.
But trade union group IndustriALL criticised retailers this week for making "woefully inadequate" contributions to a proposed $40m (£24m) fund set up to compensate the families of the dead and the injured.
Of the 29 western brands who sourced clothes from Rana Plaza factories, about half have deposited $15m into the fund, the Clean Clothes Campaign said. The first payments of $640 for each of the survivors and families of the deceased were only made this week.
British retailer Primark has made the largest contribution of $7m.
After the backlash, nearly 200 brands formed two umbrella groups to organise a cleanup of Bangladesh's 3,500 garment factories, which form a $22bn industry second only to China's in size. They reject criticism that they have done too little.
"Our members alone paid $2.2m into the trust fund," said Mesbah Rabin, managing director of the Alliance for Bangladesh Worker Safety, which includes US retailers Walmart, Gap and Target.
"The brands are also paying for the costly inspection of the garment factories, which will eventually raise safety standards, boost export potential and improve Bangladesh's brand image that the country is a safe destination for sourcing apparel," he said.