(1) State Secretary Tillerson Trip to Moscow - Deal Making Still Possible

COMMENTARY by Timothy Ash, Bluebay Asset Manage,  The key thing to watch for me with Tillerson's trip to Moscow this week is whether or not he gets to meet Putin. Putin will only turn up if he is not expecting a dressing down from Tillerson and if he thinks there is still the potential for a deal to be done. 

That said in my mind everything is still set up for deal making. And I would expect Putin to turn up, eventually, likely after making Tillerson wait a very, very long time, just to affirm who is the boss. For Putin this will be key to revealing whether Tillerson, and importantly Trump actually want to deal - how long Tillerson is prepared to wait in the ante room.

Why do I have a sneaking suspicion over a deal in the making?

Well, both Trump and Tillerson have tried to establish some hawkish Russia credentials by surprising and supporting military intervention in Syria, against Putin's ally Assad. This was carefully calibrated to limit risks both to US and Russian service personnel in the theatre, and likely also to Syrian troops on the ground, given the prior warning given. Through this action Trump eased off pressure on his administration from the media and Congress around the Flynngate saga, giving him scope now to negotiate.

Meanwhile, the threat of even greater Western sanctions on Russia were hinted at in the run up to this week's G7 summit, but then the UK attack dog, Boris Johnson, was called off. The hint was left of what could happen if Russia does not cooperate and Johnson was left in London to prowl the corridors of power in London with his own no show trip to Moscow. Any deal making to be done was to be left to Tillerson to give give Trump a much needed victory.

Notable also in my mind was the call made to President Poroshenko of Ukraine - to assure him and other allies that whatever the deal struck in Moscow, that Ukraine will not be sold down the river for Syria.

From the Russian perspective Putin himself has likely been left somewhat puzzled by the initial actions of the Trump administration, and its unpredictability therein. But importantly Putin craves a great power deal with the US, and will still be eager to carefully manage potential allies in the US administration. Tillerson is now one of the few remaining Russia doves in the administration, and I doubt that Putin would seek to further undermine his position, and turn Tillerson into the rival camp by publically dressing him down on this latest trip to Moscow.

Rather Putin will want to give the Russia doves in the White House something, some hint of a concession, to give Trump something of a win and a reward to those arguing at the G7 that moderation and compromise with Russia is still the best approach. This compromise is likely the offer of further talks over the future of Syria, with the hint, just, of a negotiated exit for President Assad.

(2) The Era of Zombie Banks in Ukraine Is Over: A tough round of reforms shut down almost half of the nation’s banks and led to a state takeover of  the country’s largest privately owned bank – The Wall Street Journal:

In her prominent op-ed Valeria Gontareva, governor of the National Bank of Ukraine writes: Further legislation is also required to raise banking regulation and supervision to EU and international standards. Deep reforms of nonbanking financial institutions must also be undertaken. In short, after explaining what the National Bank has been doing she says those efforts are only the beginning of the journey. She assures that the banking reforms have now guaranteed a stable foundation for growth and investment, which will help Ukraine’s economy recover and allow for the building of  a better future for Ukraine and its people.

COMMENTARY: The International Monetary Fund has announced that it has approved the fourth instalment of its $17.5 billion funding package to Ukraine. One condition of IMF funding was the fundamental reform of banking in Ukraine. Progress is being made.

Link: https://www.wsj.com/articles/the-era-of-zombie-banks-in-ukraine-is-over-1491418122?emailToken=JRrydfhzZHyShN0yaMwg1FBtY7MBTuiHA0HQKXrLNw3GvXrWuqegweAohMG+oGWiAEdhotca4nR6HGGA2TYzDJbLwQ==

ADDITIONAL COMMENTARY:  By Timothy Ash - Bluebay Asset Manage --- Governor Gontareva has official submitted her resignation to the President.  Poroshenko has one month to find a replacement - Gontareva served one month's notice. Parliament also has to accept the resignation - which I think they will given that the Rada very often gave Gontareva a torrid time when he had to appear. Gontareva had indicated her intention to resign some months ago, so Poroshenko has had plenty of time to mull over a replacement.

The added complication herein is we are nearing the one year anniversary of the approval of PM Hroisman's government on April 14, and that could well also see an effort to table a no confidence motion therein. In order to survive that we might see some horse-trading over the position of Governor of the NBU. The IMF in its announcement of the signing off of the 3rd review also signalled the importance of the position of the NBU - so likely will want to have some kind of input into the decision. But the conditionality attached to the 4th review looks tough, and we could see foot-dragging therein from this/the next government if Grosiman is dropped also. 

Lots of names mentioned in dispatches to replace Gontareva, including Lavrenchuk (chairman of Aval) who is seemingly the favourite for reformers/IFIs, then Alex Hrytsenko (CEO of Ukreximbank, former Standard banker) plus also former PM Yatseniuk. Yatseniuk is likely too political - albeit some would say the NBU has to be political to deliver on the final stages of cleaning up the banks. Net-net, I think we are likely entering a tricky domestic political time for Ukraine, with the resignation of Gontareva being just one piece in the jigsaw.

(3) U.S. Ambassador Marie Yovanovitch - Remarks as delivered at Procter & Gamble 
      (P&G) event marking 20th Anniversary in Ukraine, Boryspil - April 6, 2017

Hello, everybody, and thank you for inviting me here today for the 20-year anniversary of Procter & Gamble here in Kyiv, Ukraine, in Boryspil. It’s really an honor to be here, and I congratulate everybody, because this is truly a wonderful occasion. Obviously, I want to welcome First Vice Prime Minister Kubiv, and also Mayor Fedorchuk.  It’s great to be with all of you.
I was lucky enough – and I hope you may have an opportunity to do this as well – I was lucky enough to actually be able to take a tour of the plant.  It’s a really impressive operation, as those of you who were with me know.  I think it’s a great example – P&G’s operations here are a great example of the strong business ties that have developed between our two countries.

Over the past 20 years P&G’s presence has grown to nearly 700 employees working on two facilities.  And their products can now be found all over Ukraine and in fact beyond Ukraine as well.  
Since 1997, my understanding is that P&G has invested over $300 million in the facilities here in Boryspil and Ordzhonikidze.  That’s meant new production manufacturer, new equipment and opportunities for Ukrainian employees to learn new skills and to develop professionally.

I have to say – I’m sort of biased, but I think everybody in this room would say the same thing – we’re hoping for another $300 million dollar investment here. (Applause) It would not only be to the benefit of the company, but also of course to those strong U.S.-Ukrainian business ties. P&G’s presence here provides important benefits to the state budget through its payment of business and social taxes.  
And one of the things I was particularly impressed with was the way P&G was leading the way in corporate social responsibility, by providing household and hygiene products to hundreds of thousands of people here in Ukraine, including Internally Displaced People. And I think what’s equally important is this isn’t just top management making a decision that is then implemented.

It goes further than that because P&G employees are personally involved as well.  Whether that’s packing hygiene kits or signing and sending postcards, raising funds for those who are less well-off, renovating children’s playgrounds, visiting orphanages, I think all of that is really important to the social fabric and it sets a very good example. 
So it makes me really proud as the American Ambassador to see American corporations taking such a proactive role in supporting the communities where they operate.  I think that’s really important.

We are probably going to hear more about it later, but during the tour, I also got like a little sneak peek in terms of some of the innovations that P&G has brought to the company here. And some of the really important ways that they do business in terms of recycling and other really important corporate policies. American investment also supports employees and their families, both here in Ukraine as well as in the United States. Which is why it’s important from my point of view – but I think from everybody’s point of view – that American corporations continue to grow and prosper here in Ukraine.  And that depends on continuing to improve the rule of law and creating a level playing field for all corporations in Ukraine. 

The important new anti-corruption institutions like NABU and the specialized Anti-Corruption Prosecutors’ Office as well as the National Investment Council and Ukraine Invest are aimed at exactly doing those things - improving the rule of law and making it possible for major corporations like P&G to prosper and to expand.  These kinds of programs and institutions that the Ukrainian government is establishing will also attract new investors for the future. 

Whether in agribusiness, the IT sector, or manufacturing consumer goods, Ukraine holds great potential for future expansion and future growth. In 2017, our 25th anniversary of U.S.-Ukraine diplomatic relations, I’m especially delighted to see that one of our best known corporations, P&G, has been operating, thriving, and expanding in Ukraine for nearly as long.  By continuing to improve the business climate here, our trade relations will only deepen.  I look forward to see what the next 25 years brings.  Congratulations and best wishes for continued success!  Thank you very much.

(4) IFC LOAN TO SUPPORT NEW GRAIN TERMINAL AT BLACK SEA PORT 
         Partners include Cargill, European Bank for Reconstruction and Development (EBRD), IFC and MV Cargo 
         The new terminal at the Port of Yuzhny is expected to help Ukraine to boost its agricultural exports; Eric Schroeder, World-Grain.com, Kansas City, MO, April 6, 2017 

KYIV- International Finance Corporation (IFC), a member of the World Bank Group, is providing a $37 million loan to MV Cargo to support the construction of a new grain terminal at the Black Sea port of Yuzhny. The new terminal is expected to help Ukraine to boost its agricultural exports and contribute to global food security, according to the IFC.

The $37 million loan will be used to build a terminal capable of handling up to 5 million tonnes of grain annually. In addition to IFC, other partners in the project include Cargill and the European Bank for Reconstruction and Development [EBRD]. The total project costs are estimated at about $150 million, the IFC said.

“We have already started the construction works at the Yuzhny port,” said Andrii Stavnitzer, co-owner of MV Cargo. “Our plan is to have the new grain terminal operational by spring 2018. The works include the development of rail infrastructure and dredging works. The deep water port capacities are essential to boost Ukrainian grain exports further. Actually, it is one of the largest recent investments in Ukraine.”

Elena Voloshina, IFC’s acting country manager for Ukraine and Belarus, said, “This project is key to helping Ukraine improve its export competitiveness, support foreign currency inflows, and reduce logistics costs for exporters. It is also a part of IFC’s broader work to help Ukraine realize the potential of its agribusiness sector.” MV Cargo is a Ukrainian company set up to implement the grain terminal project at the Black Sea port of Yuzhny, near Odessa. By March 2017, the project was 40% complete and had received more than $30 million in investments. 

LINK:  http://www.world-grain.com;  argill is a long-time member of the U.S.-Ukraine Business Council (USUBC), Washington, D.C., www.USUBC.org. 

(5) Ukraine will finally feel benefit of reforms this year, says PM:
      Groysman insists nation now at point where it can move to growth -- Financial Times:

Ukraine’s prime minister has pledged that his citizens will finally start to feel the benefit of reforms this year after three years of painful austerity that stabilised state finances and helped the war-scarred economy start to emerge from its post-revolutionary plunge.  In an interview, Volodymyr Groysman hailed the International Monetary Fund’s decision to disburse the next $1bn instalment of a $17.5bn bailout as a “scorecard of recognition of the progress that has been achieved”.

On top of the IMF money, the EU disbursed a further €600m loan on Tuesday.  But Mr Groysman acknowledged the massive public disillusionment with reforms that, along with recession sparked by Russia’s military intervention in Ukraine, have hit living standards and heaped pressure on pro-western President Petro Poroshenko’s administration. “Proof of change must be foremost judged by whether it is felt by the people,” he said.

COMMENTARY: Let us hope the Prime Minister is correct.  There is no question a number of important reforms have been achieved in the last several years but the people of Ukraine need to “feel” there is progress.  At this point there is too much evidence that the people of Ukraine have not “felt” the changes that have been made since the Maidan’s “Revolution of Dignity” but can clearly see significant and troubling corruption remains.  The government needs to continue, expand, and speed-up the critical reforms.

Link:  https://www.ft.com/content/80e6b64a-1927-11e7-9c35-0dd2cb31823a

(6) UKRAINE’S LEGAL PROFESSION PARTLY TO BLAME FOR CORRUPTION
         Interview with Andriy Stelmashchuk, Managing Partner, Vasil Kisil & Partners, By Brian Bonner, Kyiv Post, Kyiv, Ukraine, Fri, March 31, 2017

When it comes to corruption, bribery and tax evasion in Ukraine, Andriy Stelmashchuk believes lawyers are part of the problem. They should, instead, be part of the solution, according to the managing partner of Vasil Kisil & Partners, one of Kyiv’s leading law firms. That is one reason why he might run for president of the Ukrainian Bar Association, which claims to unite 6,000 legal professionals in the nation, including lawyers. The election will be held in June. Current president Denys Bugay cannot seek re-election because he has reached the two-term limit.
 
Most Ukrainian law firms, Stelmashchuk says, structure themselves in ways similar to other businesses, with complicated offshore entities designed to minimize or evade taxes. Such practices, he says, include not declaring the full amount of employees’ salaries to minimize taxes. As long as law firms persist in structuring their businesses in this way, Stelmashchuk said, “corruption will prosper and tax evasion and other illegal forms of doing business will prosper in Ukraine.” The financial reporting by law firms, he says, shows that a majority of the top 50 law firms “are structured in a way that allows them to minimize taxes on the edge of tax evasion.”

Stelmashchuk, however, doesn’t expect his campaign for greater tax compliance and transparency among law firms to help him win the presidency of the Ukrainian Bar Association. He says many of his fellow lawyers “don’t see a problem with” the status quo. “They see it as normal.” He acknowledges some of the practices are “legal from a purely formal standpoint,” but unethical. “They want to achieve some goal with such structure,” Stelmashchuk says. “It’s obvious for me that such a goal is paying less taxes than they could. In the USA, it’s not a crime to say you want to optimize your taxes. But there is a thin line between tax optimizing and tax evading.” He’s gotten into arguments with other lawyers, who rationalize not paying taxes because “you never know how the government uses the money….It’s a poor justification for not wanting to change yourself and to start a different business environment in Ukraine.”
Tale of 2 rankings - He says comparing two rankings illustrate his point. One is of top law firms, done by Yuridicheskaya Practika, a legal publication, and another is a ranking of revenue by Delo.ua, an online business magazine. Top-rated law firms show only part of their revenue in “officially submitted information” to the State Statistical Service, Stelmashchuk contends. “Delo took information only from one legal entity, believing that all law firms were acting through one legal entity,” rather than the 5 to 15 entities that some operate, he says.

Culture of bribery- Another frustration for Stelmashchuk is the legal community’s complicity in Ukraine’s culture of bribery – both demanded and paid to settle legal disputes. He says bribery would wither if law firms simply stopped “being intermediaries in corruption – bribing judges and officials,” he says. “Law firms can play a crucial process in transformation. We are advising clients on how to structure businesses, run businesses. That’s why we have a huge impact on our clients.” He says that Vasil Kisil & Partners, among at least a handful of law firms that he knows, have persuaded clients that they can win disputes “without exploiting some illegal methods. “When you want to get a result from your brain, not with cash you got from the client, it’s possible to structure (a case) in a legal way so the court will not be able to render a decision against your client,” he says. For these reasons, Stelmashchuk says, he is thinking about running for president of the Ukrainian Bar Association. Altogether, he says, Ukraine has 40,000 attorneys admitted to the bar. He estimates that Kyiv has 100 active law firms, with a top tier of 50 firms, a secondary tier of 30 law firms and another 20 firms “we do not know well, but are also very active.”
‘Ambitious goal’ - If he runs for president, he must declare his candidacy by April 3, two months before the June 3 election. [Stelmashchuk has confirmed to USUBC that he has now declared his candidacy].  The contests, he says, are usually competitive. “I am thinking about it, frankly speaking,” he says. “I want to change the legal market. It’s a very ambitious goal. I realize that many law firms who comprise the Ukrainian Bar Association do not act in a way that our law firm acts. That’s one problem.” Win or lose, he says, he expects that it will eventually become a competitive advantage rather than a liability to operate cleanly. He says nations that take a tough stance on bribery will inflict criminal cases and financial penalties on enough law firms to change their habits.

“The market will put pressure on law firms,” he predicts. “Sooner or later clients will prefer to work with those law firms who are ethical, transparent and compliant. It’s a matter of time.”He says the legal community must enforce a tougher code of ethics among members. In America, for instance, disbarment for ethical violations ends a lawyer’s career and ability to practice. “This should be an evolutionary process. You cannot pass a law and everyone will change,” he says. “Ukraine is a very young democracy. I am not sure it’s a democracy, in fact, but a very young country in terms of independence from its Soviet heritage…Each of us should understand the necessity to change himself or herself. We have to realize from personal experience that there are benefits to being transparent: You sleep better; you can easily run for president. Nobody can get any ‘kompromat’ against you.”

LINK: https://www.kyivpost.com/business/stelmashchuk-ukraines-legal-profession-partly-blame-corruption.html; Vasil Kisil & Partners is a member of the U.S.-Ukraine Business Council (USUBC). 

COMMENTARY:  Of course lawyers are a part of the problem – probably a huge part of the problem.  When you have systemic corruption you can count on plenty of lawyers serving as enablers at the very least.  A series of questions:

     (1) Does the bar association have any role in licensing lawyers to practice?

     (2) If not who does?  Surely a guy can’t just finish law school and start a practice without some professional certification of his ability to practice.

     (3) Whatever the licensing agency, does it have a bureau or committee on professional conduct?

     (4)  People should be referring lawyers engaged in corruption or other unprofessional activities to the ethical standards people and sanctions should be placed on those guilty.

(7) Coming Crackdown on Ukraine’s  Anticorruption Crusaders – Atlantic Council:

On March 27, Poroshenko signed an amendment that makes anticorruption activists subject to the same asset declarations as politicians and public officials. Asset disclosure for public officials is a common international anticorruption practice. The logic is simple: public officials wield state power and are paid by taxpayers from the state budget; therefore taxpayers should have oversight over their earnings and spending. In Ukraine, the new amendment contradicts this logic; it enables the authorities to control the assets of activists, who serve as government watchdogs.

Even worse, the new law is selective. It applies only to anticorruption groups, specifically, persons who “receive funds or assets as part of implementation in Ukraine of programs of technical or other assistance in the sphere of prevention, combating corruption (both directly and through third parties...).” This vague wording means that it may apply to subcontractors of anticorruption NGOs, including landlords, printing houses, and water suppliers. Moreover, even innocent participants eating sandwiches and drinking coffee at an anticorruption roundtable funded by technical assistance could fall under the new law. It also applies to all development organizations and their international staff that “systematically” work on anticorruption projects.

COMMENTARY Daria Kaleniuk’s (she is the executive director of the Anti-Corruption Action Center in Kyiv) article is an important one and should be read in full.  The last Washington Watch (#19) also criticized this amendment but Ms. Kaleniuk presents a compelling case, one everyone should understand and one that the government of Ukraine should act on.  It is time for repeal.

Link:   Atlantic Council

(8) The pendulum is swinging toward autocracy and repression in Central Asia

      and Central Eastern Europe, according to the new Freedom House rankings  

      of nascent democracies from post-communist Europe and Eurasia – Foreign Policy:

Freedom House’s Nations in Transit 2017 Report covers 29 countries, stretching from Central Eastern Europe to Central Asia. For the first time since 1995, the number of so-called consolidated authoritarian regimes outweighs the number The former are your classic repressed societies in which dictators rule with an iron fist, quashing dissent without regard for civil rights, while the latter are the most democratic regimes. (More about the methodology can be found here).   This means, of the countries in the report that were once in the Soviet Union, only Armenia, Georgia, Moldova, and Ukraine don’t carry the worst-kind-of-regime status.  Among the “key findings” are Ukraine, Romania, and Kosovo. Ukraine and Kosovo which made modest gains due to gradual structural reforms.

COMMENTARY: It is nice that Ukraine is seen to have made some structural reforms.  BUT, Ukraine needs to avoid slipping backward as strongly suggested in Daria Kaleniuk’s article immediately above.  In addition, as discussed in the “Commentary” on the Financial Times article above that, the reforms need to get to the point where they are “felt” by the people of Ukraine.

Link: Foreign Policy

(9) EU legislature overwhelmingly approves Ukraine visa waiver – The Washington Post:

The European Union legislature by a vote of 521-75 (with 36 abstentions) has overwhelmingly backed plans to allow Ukrainian citizens into the bloc for short stays without visas.  The legislation still needs to be approved one more time by the member states and should enter into force in June.If, as expected, it is approved it would allow Ukrainians who have biometric passports to enter the bloc for up to 90 days within any 180-day period.

Link: https://www.washingtonpost.com/world/europe/eu-legislature-overwhelmingly-approves-ukraine-visa-waiver/2017/04/06/b87de71a-1aba-11e7-8598-9a99da559f9e_story.html 

(10) U.N. Ambassador Haley Says She’s Constantly ‘Beating Up’ on Russia – The Wall Street Journal:

President Donald Trump’s ambassador to the United Nations said she is continually “beating up on Russia” over its actions in Ukraine and its interference in the U.S. election, indicating the administration is sticking with America’s adversarial stance toward Moscow despite earlier signs that Mr. Trump wanted warmer relations.

COMMENTARY: In the American press much has been made recently of the firm and constant statements by Trump Administration officials against Russia’s seizing Crimea and on-going aggression in Donbass.  It is still important to continue making that case in public as the President himself has yet to speak out forcefully.

Link:  https://www.wsj.com/articles/u-n-ambassador-haley-says-she-is-constantly-beating-up-on-russia-1491138091

(11) How Trump Became a Russia Skeptic - The conventional wisdom about 
       a Kremlin-friendly White House is dated. Reality forced a change – The Wall Street Journal:

Adrian Karatnycky presents a summary of the Trump-Russia narrative over the better part of the last year.  Candidate Trump praises Putin, calls NATO obsolete, suggests he might accept the annexation of Crimea, gets elected, Putin escalates his war against Ukraine, Putin deploys new cruise missile violating treaty obligations, Russian pilots buzz American ships, Trump starts putting together his national security team which turns out to be almost completely anti-Putin, calls for a huge increase in defense spending, writes (tweets) about how Russia “ran over” Obama for 8 years, commits to continuing sanctions, etc. 

Karatnycky seems to explain the Trump evolution mostly as a result of investigations into whatever ties Trump and his campaign may have had with Moscow.  As Karatnycky sees it the pressures from anti-Russian Republican hawks, Democrats mad about Putin’s interference in the election, the views of European leaders, and the coverage of the on-going investigations has left Trump unable to show any openness toward Putin and Russia.

COMMENTARY: Trump’s apparent evolution seems to be reality as discussed in Washington Watch a number of times. However, WW still looks for direct action by the President.  Yet, saying that it would still seem possible – given Trump’s well-established determination to count his own reasoning to be the most important of all – the President, once in office, has given a fresh look at the realities that are Putin and the Kremlin and “evolved” to a great extent on his own.

Maybe, maybe not, but not to be dismissed as out-of-hand. Interesting here is that Karatnycky, who was ravenously anti-Trump as recently as a few weeks ago in relation to the President’s apparent position on Ukraine has chosen to chronicle his evolution even before Trump himself actually takes any clear action exposing his personal positions.  Like Karatnycky we all hope the President a convert.

Link:  https://www.wsj.com/articles/how-trump-became-a-russia-skeptic-1491261744?emailToken=JRrydvF4YnmTgtI2bMw800JtcrMVDvfMTF7cJXXHf0GJrmHOuuOogr42isOroGjqHBorvopatjFjGQ==

(12) When America Toes Moscow’s Line - I saw what happens when a U.S.

         president lets Vladimir Putin get away with murder. His name was

         Barack Obama – Politico: OP-ED by Mikaeil Saakashvili

In very clear language Mikheil Saakashvili compares the President George W. Bush (Bush 43) approach to Putin and the President Barack Obama approach. He describes how when Putin invaded of George Bush immediately intervened.  Several ships from the U.S. Sixth Fleet were sent to Georgia to provide humanitarian relief and an unmistakable signal to Moscow: Don’t push it. And when Turkish authorities created obstacles to passing through the Bosphorus, the commander of the Sixth Fleet told them that he would go through with or without documents since it was an order of the U.S. president. Saakashvili believes Bush’s bold actions spared the full annihilation of the Georgian state and restored U.S. credibility after Russia dared to invade its pro-American neighbor.  

By comparison Saakashvili writes that from day one, the Obama administration saw relations with Russia’s neighbors through the eyes of Moscow, introducing, for instance, a de facto arms embargo in Georgia. And in March 2009, Secretary of State Hillary Clinton and her Russian counterpart Sergei Lavrov pushed the reset button in the misguided hope that the Kremlin would become more cooperative. The demoralizing effect of the reset reverberated all over the region, and Saakashvili argues it was largely responsible for the demise of the pro-Western governments all around the Russian periphery, including Viktor Yanukovich in Kiev. He provides examples to make his case that at times, the Obama administration’s fear of angering Putin reached absurd heights.

Then, as to Ukraine Saakashvili writes that the Obama administration was totally taken by surprise when Russia began its meddling in yet another once-hopeful U.S. ally. He says that at the time, Ukrainian leaders told him that the only action that Secretary of State Kerry and other American interlocutors took was to insist that the government in Kiev should do nothing to provoke Russia, in particular strongly urging Ukrainians not to use force. As a result, the annexation of Crimea went very smoothly, despite the fact Ukraine had enough forces on the ground to put up strong resistance. As a result, Russia grew emboldened and did what I, and many other observers, was expecting them to do: Start another military adventure in Donbass, Ukraine’s eastern region. And here again, the Obama administration was stubborn and skittish: They refused to provide defensive antitank weapons to Ukraine. Their hesitancy was a catalyst for further adventures by Russia, which had little fear of a serious U.S. reprisal.

As for Trump Saakashvili believes legitimate questions should be answers as to whether people in the President’s camp may have colluded with Russia.  But Saakashvili relates his own experience with Trump. After the 2008 invasion, He says many politicians in the West would avoid him in order not to alienate Putin—and many businessmen did, too. Anyone who invested in Georgia risked becoming persona non grata with Putin. Trump faced the same dilemma - a choice between investment projects in Georgia or Russia, with Russia promising greater returns. And Trump, who clearly had presidential ambitions even back then, opted for Georgia.  Saakashvili says he I never detected any weakness in Trump for the Russian system—in fact he was very skeptical of corruption and red tape in Russia in his conversations with me.

COMMENTARY: Personal experience is worth keeping in mind.

Link: http://www.politico.com/magazine/story/2017/03/when-america-toes-moscows-line-214970

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NOTE:  NOTE:  The USUBC WASHINGTON WATCH newsletter is compiled from a large number and a wide variety of sources. The views and opinions and statements expressed in any such document or by any source from Research reports, OP-ED's, controversial commentaries, opinion pieces, analysis, U.S. government statements, U.S. Congressional Resolutions, statements by U.S. Congressmen and Senators, Letters-to-the-Editor, statements from professional groups and organizations, news articles, etc., inculding the authors of Washington Watch are the views and opinions expressed of the authors and do not necessarily reflect the official policy or position of  USUBC or its members.