US VP Biden visits Kiev

Макроэкономика 24.11.2014 The situation remains tense in the Donbas region that is still partially occupied by pro-Kremlin separatists and the Russian army. The Ukrainian army continues to suffer daily losses despite the official ceasefire. Quite possibly, the official state visit of US Vice President Joe Biden irked the Kremlin. Since last Friday, not only did the Russian army begin renewed shelling Ukrainian territory across the border for the first time since the ceasefire agreement was reached in Minsk, but pro-Kremlin militants have escalated the number of attacks on Ukrainian soldiers as well. Official announcements from Moscow over the weekend include: (1) Russian Foreign Minister Lavrov's stated that the US plans to destabilize Russia; and (2) Russian President Putin declared that Russia is in the right and will hold firm. In sum, the Kremlin refuses to cower to US political posturing. We expect this to continue, if not worsen, over the next few weeks, particularly as the US and EU together are trying to facilitate a resolution of the Ukraine-Russia military standoff. US VP Biden appears to have convinced top Ukrainian politicians to convene for another round of talks in Minsk. While President Poroshenko said he would agree to Minsk talks, PM Yatsenyuk previously requested that talks with active US participation be held in Vienna instead. We expect that it will take some time, but most likely negotiations will be held in Minsk talks again to attempt a final peace resolution of the Donbas debacle.