RUSSIA’S ECONOMIC CRISIS IS GETTING WORSE
The collapse of Ukraine's ceasefire yesterday (7/01) has shattered hopes for a quick end to the crisis in the Donbass, setting off fresh capital flight from Russia and raising the specter of further Western sanctions against Russian companies.
Markets were caught off guard as Ukrainian leader Petro Poroshenko launched air strikes and an artillery barrage against rebels, pleading that he had no choice after they killed 27 Ukrainian servicemen. "We will attack and we will liberate our land. The end of the ceasefire is our response to terrorists, rebels, looters," he said.
The International Monetary Fund said the conflict risks deep damage to Russia's economy, starving it of foreign funds and knowhow. "Geopolitical tensions have brought the Russian economy to a standstill... This comes at a crucial moment when the old growth model based on energy has been exhausted," the IMF said.
The EU is holding the Kremlin accountable for the failed ceasefire. Its ambassadors agreed Monday (6/30) to "intensified preparations" for new sanctions, effectively cocking the gun.
A strategy paper from Angela Merkel's Christian Democrat Party called for a complete change in policy, deeming it impossible to work with the Kremlin so long as Vladimir Putin is in charge.