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It is easy for a country like Russia to grab chunks of territory from a smaller country like Ukraine, especially with its modernized special forces.

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.

But it is a lot harder to actually govern. Chaos is running rampant in Crimea and is growing as few basic services and institutions there are functioning. For instance, there are massive waiting lists for the passports that were supposed to be issued by the Russian government. Only 200 a day are being issued, with waiting lists of over 4,000 people. And there is plenty more.

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.”

A massive wave of Russian land buyers has flocked into Crimea. The problem -- there are no land offices in Crimea that are functioning; therefore, no land transfers can be conducted. People who do business there had better hope their customers pay, because there are no court systems there to collect debts. If Russia were to annex East Ukraine like they did Crimea, this sort of chaos would be multiplied many times over. And that is on top of the guerrilla warfare that Ukrainian partisans would likely begin to wage at some point, capitalizing on nostalgia for Ukraine, when everything actually ran smoother. It is really interesting that people are all of a sudden nostalgic for Ukraine in Crimea when Russia was able to exploit nostalgia for the old Soviet Union to seize Crimea.

Vice President Joe Biden pledged $50 million more to Ukraine during his visit. But corruption there is so rampant that it explains why the US is unwilling to commit resources to prop that country up. Biden also called it out:

But the vice president had some tough words for Ukraine’s government, saying that governmental and judicial corruption could undermine the gains made since pro-Western leaders came to power after massive protests forced out President Viktor Yanukovych, a Moscow ally, in February.

“You have to fight the cancer of corruption that is endemic in your system right now,” said Biden. “You need a court system that not only you and your people but the rest of the world assumes can actually adjudicate fairly disputes among people.”

But given the reports out of Crimea, the corruption in Ukraine is nothing compared to the chaos that is running rampant in Crimea right now. Russia can talk all it wants to about turning it into a gambling zone or rehabilitating the Tatars, who were sent to Siberia by Stalin in 1944. And they can talk all they want about building a massive bridge there. But they have lost sight of the basics of providing actual services. And if someone complains too much, there are always the friendly green men in uniforms without insignias who will pay you a friendly visit.

Russian special forces and their allies have seized two more buildings in East Ukraine yesterday.

Late on the night of April 21 – during a holiday extension of Easter – some 20 armed, masked men in camouflage took the Kramatorsk city police station, the Interior Ministry reported. As a result, the local police chief was kidnapped. The same night, 20 armed men seized the local Kramatorsk SBU building.

The Interior Ministry also reported that around 10 armed men captured the training grounds of Ukraine’s Interior Troops in the village of Vasylivka in the Yasynuvatsky District of Donetsk Oblast.

This will only serve to antagonize the US, which will bring new sanctions to bear. The losers will be the oligarchs in Ukraine as well as the Kremlin. The oligarchs:
Hryvnia earnings will fail to grow as fast as revalued dollar and Euro-denominated debts, so covenant and loan defaults will multiply, say analysts at European banks with exposure to the Ukrainian oligarchs’ debts. Audits promised by the IMF of the oligarch-owned banks – Bank Credit Dnepr (Pinchuk), PrivatBank (Igor Kolomoisky), First Ukrainian International Bank (Rinat Akhmetov) – are expected to put additional pressure on their owners to stump up the cash to recapitalize them.

The capacity of this trio, and other eastern Ukrainian oligarchs, to keep their businesses solvent is now held hostage by the terms of the Geneva agreement of April 17. If neither Pravy Sektor nor the pro-Russian groups agree to lay down their arms, halt drive-by and sniper killings, and restore municipal and regional authority; if no presidential election can be conducted in a month’s time for the voters of the region – if at last Russian forces are deployed to re-establish law and order because the Kiev regime cannot, then Pinchuk, Kolomoisky, Akhmetov and the others are likely, according to Ukrainian sources, to lose the power to keep their assets and incomes.

“The eastern oligarchs,” says a US source close to their businesses, “can’t gain influence with Kiev and the US Government unless they crack down on the locals. If they do, they will be Russian targets. They can’t advance. They can’t retreat. They can only disappear from the reckoning that’s coming. It’s already happened to Pinchuk. It’s going to happen to Akhmetov [right], then Kolomoisky.”

And the capital flight out of Russia continues as companies weigh the costs of doing business in light of impending sanctions.
Ilan Berman at the Wall Street Journal published an article yesterday, “What Putin Is Costing Russia,” citing Alexi Kudrin, former finance minister of Russia, who projects $160 billion of capital flight this year. This, in answer to the question: “Just how much is Vladimir Putin’s Ukrainian adventure actually costing Russia?”

Only three weeks ago, we cited Moscow News‘ report of $-65-70 billion for the first quarter, based on estimates from Andrei Klepach, Russia’s deputy economy minister who was quoted as saying it would be “closer to $70 billion.” So now it seems there is to be quite a bit more before the year’s over. The foreign currency reserves are estimated to be $400 billion.

So, almost half of Russia's foreign currency reserves would disappear by the end of the year if this keeps up. Russia can continue on this adventurism for 1-2 years at tops. But then the bill will come due.
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