By Steve Blizard, Roxburgh Securities
WA Business News 11 August 2014
Three weeks after Malaysia Airlines flight MH17 was shot down, and almost two weeks after a United Nations Security Council resolution called for unfettered access to the site, a small team of Dutch and Australian investigators finally managed to reach the wreckage.
The families of the 38 Australians on that fateful flight remain in shock and disbelief at the murder of their loved ones in the skies above Ukraine.
Disgracefully, the remains of up to 80 people are still unaccounted for.
The likelihood of a proper investigation and reckoning for those responsible appear further away than ever.
In an attempt to send a warning to Russia’s President Vladimir Putin’s pro-Ukrainian separatists, the United States and the European Union (EU) have announced a major escalation of financial sanctions against Russian banks and energy companies.
The conflict in Ukraine and imposition of sanctions against Russia signal an escalation of geopolitical tensions that is already being felt in financial markets, meaning international investment fund managers must be alert.
European stock markets tumbled when sanctions were announced, with Frankfurt’s main DAX index down eight percent since June.
The conflict in eastern Ukraine has escalated to its most critical level yet, with Russia giving signs experts claim show it is closer than ever to embarking on a full-scale war against its historic Slavic neighbour.
Russia has deployed thousands of troops and combat vehicles, and advanced multiple launch rocket systems along Ukraine’s eastern border, according to Ukrainian and American officials.
Unwittingly, the Ukrainian crisis has provided valuable insight into President Putin’s long-term strategy.
January 1, 2015 is expected to mark the birth of an important new organization that links Russia with a yet-to-be determined group of neighbouring countries—an alliance Putin has dubbed the Eurasian Economic Union (EEU).
The EEU is the Eurasian dream or vision of long-time Kremlin ideologist and lead organiser of the Russian National Boshevik Party, Aleksandr Dugin.
Currently, only Belarus and Kazakhstan have signed on with Russia.
However, other post-Soviet states, including Armenia, Kyrgyzstan, and Tajikistan, have signalled interest climbing aboard.
Putin’s EEU is expected to build on an existing regional trade pact to establish common policies on labor migration, investment, trade, and energy.
However, the signing on 27 June of an economic association agreement between Kiev and the European Union (EU) has dealt a blow to the Kremlin’s long-term agenda.
The link between Dugin’s ideology and those calling the shots in Moscow is seen in the pivotal importance of Ukraine within the EEU dream.
A new Russian controlled “Eurasian” empire is seen to be meaningless without Ukraine for historical, religious and geographical reasons.
While Dugin believes Ukraine is a collapsed “freak state”, in reality Ukraine’s hotly contested Dnieper-Donets province, where a bloody civil war now rages, also happens to be Ukraine’s major oil and gas producing region.
The Dnieper-Donets basin accounts for approximately 90 percent of Ukrainian production.
And according to the US Energy Information Administration (EIA) it may have 42 trillion cubic feet (tcf) of shale gas resources that are technically recoverable from 197 tcf of risked shale gas in place.
Conveniently, while the fighting ensues, Ukrainian troops are helping to install shale gas production equipment near the east Ukrainian centre of Slavyansk.
Burisma, Ukraine’s oil and gas production holdings, also has the right to develop the shale gas fields in the Dnieper-Donetsk basin of Eastern Ukraine.
Curiously, R. Hunter Biden, son of U.S. Vice-President Joe Biden, has recently emerged as a member of Burisma’s board of directors.
It is reported that Joe Biden’s (Sr) campaign adviser in 2004, financier Devon Archer, and Hunter Biden’s business partner, also joined the Bursima board, claiming it was like `Exxon in the old days’.
German – Russian deal
Allegedly Germany and Russia have been working on a plan to broker a peaceful solution to end international tensions over the Ukraine.
But this has temporarily stalled due to the MH17 disaster.
London’s Independent newspaper reports that German Chancellor Angela Merkel and President Putin are devising an agreement to stabilise Ukraine’s borders as well as a new energy agreement that ensures security of gas supplies.
Russia is Germany’s second largest car market, and while many of its small to medium companies are also expanding into Russia, all are likely to be hit by increased sanctions.
The detailed Merkel-Putin plan apparently requires Crimea to be permanently handed to Russia in exchange for Russian gas, which has been cut-off for a month now due to non-payment by Kiev.
Ukrainian President Petro Poroshenko would need to agree not to apply to join NATO, and in return, President Putin would not seek to block or interfere with the Ukraine’s new trade relations with the European Union.
Ukraine would also be offered a new long-term agreement with Russia’s giant gas supplier, Gazprom, for future gas supplies and pricing.
While Germany has officially denied negotiations are in progress, such a plan would see Putin carefully weighing up his grand Eurasian plan against Merkel’s pragmatic peace deal.