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Pressure builds for martial law and a quick end to the cease-fire

Analyst: The current government realizes that the ceasefire carousel is


wearing thin with the Ukrainian public, particularly when numerous leading
political parties are calling for martial law. We see its likelihood at about 75
percent, given that we expect Russian aggression to extend beyond the Donbas
region in the next six months.

KYIV, Sep 8, 2014 (UBO) - Former Ukrainian President Leonid Kuchma, representing the
Ukrainian government, and two self-declared leaders of separatist groups in eastern
Ukraine, signed a ceasefire protocol on Sept. 5 that was supposed to take immediate
effect, Concorde Capital told clients as part of online analysis provided today.

The agreements 14 points include a bilateral ceasefire, conditions for monitoring the
border, the exchange and release of all hostages, the removal of illegal armed fighters,
self-governance in the Donetsk and Luhansk regions and transfer of authority. The
agreement was signed at the meeting of the trilateral contact group to implement the
Ukrainian presidents peace plan in Minsk, which was also attended by Russian
Ambassador to Ukraine Mikhail Zurabov and Heidi Tagliavini, the ambassador of the
Organization for Security and Cooperation in Europe (OSCE).

The two sides exchanged their lists of hostages, Kuchma said. A working group will be
launched on Sept. 8 to oversee the fulfillment of the Minsk agreements. Igor Plotnytskiy,
the prime minister of the Luhansk Peoples Republic, said the Donetsk and Luhansk
Peoples Republics remain committed to separating their regions from the Ukrainian state.
We will continue to course of separation, he said. The ceasefire is a forced measure.

After the ceasefires signing, Ukrainian President Petro Poroshenko ordered the chairman
of the Joint Chiefs of Staff of the Armed Forces of Ukraine to cease fire in the Donbas
region at 18:00 on Sept. 5. He also ordered the foreign affairs minister, together with the
OSCE, to ensure international monitoring of the ceasefire regime, which has an exclusive
bilateral nature. The NATO summit in Wales demonstrated Western leaders want a
political-diplomatic handling of the Donbas conflict, he said in a statement released that
day.

Shootings on behalf of pro-Russian forces were reported throughout the weekend in the
Donetsk region, news reports said. Mortar fire occurred the evening of Sept. 7 in the
outskirts of Mariupol, hitting a roadblock, reported the Azov battalion. The night of Sept. 6,
Ukrainian army positions and roadblocks were shot in the Donetsk region, reported Dmytro
Tymchuk, the director of the Information Resistance news site. A Ukrainian soldier was
wounded by gunfire the night of Sept. 6 in Mariupol, the city council reported.

Several infrastructure sites in and around the city were also damaged that night by intense
artillery fire, including Grad multiple rocket launchers, the Ukrayinska Pravda news site
reported, citing local journalists. Russian armies are shooting at Ukrainian positions, while
the Ukrainians are not shooting in return, reported the Azov battalion press-service on
Sept. 6.The battalion stressed that theres no danger for Mariupol. Most likely, the fighters
are trying to frighten the Ukrainians.

More than 100 rounds of multiple rocket fire were also reported from the DNR-controlled
Novoazovsk, Ukrayinska Pravda reported, citing reports. Large columns of armored
vehicles carrying artillery, tanks, anti-aircraft rocket systems and mobile rocket launchers
entered the Luhansk region on Sept. 6. The International Red Cross reported on Twitter
the same day it couldnt deliver humanitarian aid because of artillery fire. For the first time
in months, the city of Luhansk had a night without gunfire, the city council website
reported on Sept. 6. That night, pro-Russian fighters launched 10 attacks on Ukrainian
positions during the ceasefire in the Donetsk and Luhansk regions, reported Andriy
Lysenko, the spokesman for the Information-Analytical Center of the National Security and
Defense Council. An Aydar battalion company was ambushed the evening of Sept. 5, about
an hour after the ceasefire took effect, by Russian special forces in the Luhansk region, in
which at least nine soldiers were killed.

The Ukrainian government wont have any choice but to impose martial law should the
ceasefire fail, Prime Minister Arseniy Yatsenyuk told the 1+1 television network on Sept. 7.
The main advantages of martial law is the entire country will be placed on a military track,
starting from civilian defense and ending with the military command gaining full authority
on Ukraines territory. The main negative is that Ukraines Western partners wont support
the decision to wage war instead of finding a diplomatic solution, he said. Yatsenyuk
recognized that the Russian government is waging war, which the Ukrainian government
hasnt legally recognized.

Zenon Zawada: The value of the ceasefire agreement will be judged on three main points:
ceasing warfare, the exchange of hostages and the gradual withdrawal of Russian soldiers
and hardware. So far, its very tenuous. The current government realizes that the ceasefire
carousel is wearing thin with the Ukrainian public, particularly when numerous leading
political parties are calling for martial law. We see its likelihood at about 75 percent, given
that we expect Russian aggression to extend beyond the Donbas region in the next six
months.

Meanwhile, the agreements political components are hazy and cant be fulfilled at this
point, considering that its not even clear what would be the boundaries of the territory
known as the Donetsk and Luhansk Peoples Republic. Without further action (such as
martial law or its reverse, complete surrender by Ukraine), the situation is shaping up to be
a frozen conflict, in which Russian-sponsored agents will control about a third of the
Donbas region, and the Ukrainian government will control the rest.

Such a situation would also weigh heavily on the Ukrainian economy, since industry will be
stalled and armed fighting is likely to continue under such conditions. A full-scale war with
Russia is increasingly becoming the only option for the Ukrainian state to survive this
conflict. In our view, Russia has the advantage of time and would succeed in utterly
disabling the Ukrainian economy in a war of attrition.

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