Putin’s Words No Solace as East Ukraine Braces for Storm

March 21 (Bloomberg) -- Peter Cook reports on U.S. and Russia relations on Bloomberg Television’s “Bloomberg Surveillance.” (Source: Bloomberg)

Vladimir Putin’s assurances that eastern Ukraine isn’t in his cross hairs rang hollow in the beat-up black Lada taking Anna Gerashchenko to a makeshift army outpost on the Russian border.

“I’m helping the troops because I’m afraid eastern Ukraine will soon look like Crimea,” said Gerashchenko, a 35-year-old NGO worker, as she ferried a trunk full of cookies, socks and blankets to soldiers of her country’s underfunded army with her two young children in the backseat for the bumpy 25-kilometer (16 miles) drive from Kharkiv. “It doesn’t matter what Putin says. He’s a liar.”

Ukraine’s eastern industrial belt is bracing for the worst after watching helplessly as Putin swiped the Black Sea Crimean peninsula. Acting Ukrainian President Oleksandr Turchynov said there’s a “real threat of invasion” from Russia, while Prime Minister Arseniy Yatsenyuk yesterday warned that any attempt to seize further Ukrainian territory would spark an “appropriate response,” including military.

Full Coverage of the Crisis in Ukraine:

The region is one of the focal points of an escalating standoff between Russia and West. Last month’s ouster of Moscow-backed President Viktor Yanukovych put ethnic Russians in jeopardy, according to Putin, who began annexing Crimea after a secession vote deemed illegal by the the Ukrainian government, the U.S. and the EU. Pro-Russia protests have shaken the steel and machine-building hubs of Kharkiv, Donetsk and Luhansk, killing three people.

Russian military personnel walk around a Ukrainian military base on March 21, 2014 in Perevalne. Photograph: The Asahi Shimbun via Getty Images Close

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Russian military personnel walk around a Ukrainian military base on March 21, 2014 in Perevalne. Photograph: The Asahi Shimbun via Getty Images

Volunteer Force

The Russian moves prompted Ukraine to order a tenfold jump in defense spending at the expense of social programs. The nation of more than 40 million people is also mobilizing as many as 40,000 reservists and conscripts, setting up a volunteer national guard and asking the public for cash.

Across the nation, television campaigns encourage viewers to donate for medical supplies and equipment by calling or sending text messages. About $2.5 million has been pledged as of yesterday, the Defense Ministry said. “I serve Ukraine!” cadets chant solemnly in an army-recruitment ad getting blanket coverage.

A Snapshot of Ukraine's Past and Future

More than 4,000 people registered for the national guard the day after its creation, Interior Minister Arsen Avakov said in a website statement. The membership of a Facebook Inc. group set up to gather items including spare parts for military machinery climbed above 2,000 this week. More than 2,000 employees at Kiev’s Oleksandrivska hospital gave a day’s salary.

Photographer: Andrey Rudakov/Bloomberg

Russia's President Vladimir Putin gestures while speaking at a meeting of the Russian Union of Industrialists and Entrepreneurs (RSPP) during Russia Business Week in Moscow. Close

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Photographer: Andrey Rudakov/Bloomberg

Russia's President Vladimir Putin gestures while speaking at a meeting of the Russian Union of Industrialists and Entrepreneurs (RSPP) during Russia Business Week in Moscow.

‘Crystal Clear’

“When you know the army won’t take you, you look for another way to help,” said 31-year-old Yana Kovolenko, who works in sales in Kharkiv. “I saw a post that our boys needed some help. I reposted it and within three hours 16 friends had filled my trunk with stuff.”

There’s reason to be afraid, according to Yatsenyuk, who says eastern Ukraine is occupied by well-trained groups of Russian provocateurs.

Graphic: Mapping the Conflict in Ukraine

“It’s crystal clear for us that the Russian authorities will try to move further and escalate the situation in southern and eastern Ukraine,” he said in an interview yesterday.

Russia has bolstered its military presence near the border, massing along highways to enable a quick strike, Ihor Baluta, the Kharkiv region’s interim governor, said in a March 18 interview. People are responding, he said.

Tractor Camouflage

“Farmers are offering their tractors to help camouflage our military equipment, people are donating cigarettes for soldiers,” said Baluta, who was appointed after Yanukovych fled for Russia. “There aren’t any problems for the troops.”

Serhiy, a 21-year-old private in the mechanized infantry whose armored personnel carrier guarded a road 2 kilometers from the border with Russia, said he was drafted six months ago and recently signed on for three years because of the threat of war.

“Not a step back,” he said, citing a Soviet World War II slogan. “We know our jobs and what we’re fighting for.”

The base is at the end of a dirt road scarred by the tracks that armored personnel carriers left. Ukrainian soldiers in worn camouflage uniforms and carrying Kalashnikov rifles picked over the donations as the major in charge made requests.

“We need disposable plates,” Serhiy said, declining to give his last name because he’s not authorized to speak to the press. “We’re well fed, so please, no more sweets. Nose drops, plastic gloves, cold medicines would be useful.”

Military Funding

Ukraine’s military needs go beyond supplies available at the drugstore. The country’s armed force pales in comparison to Russia’s, which in 2013 had 845,000 active servicemen to its neighbor’s 130,000, according to the IISS Military Balance. Expenditure is a similar story, with Russia’s $91 billion of investments in 2012 making it the world’s third-biggest spender behind the U.S. and China, according to the Stockholm International Peace Research Institute. Ukraine spent $4.9 billion that year.

In Donetsk, a 300 kilometer drive from Kharviv, Dmytro Tkachenko and a group of “patriotic” friends gathered $1,000 in less than two hours to buy sleeping bags for a nearby army unit.

“We don’t have military experience so we provide financial aid,” said the 32-year-old entrepreneur. “They don’t even have radios or screwdrivers to repair vehicles.”

Putin Promise

Putin, who said two weeks ago Russia wasn’t considering absorbing Crimea, calmed jittery global markets in a March 18 speech in the Kremlin, where he denied any desire “to split up Ukraine.” Even so, he’s reserved the right to intervene if Russian speakers are at risk.

While almost 97 percent of Crimeans voted to join Russia in a disputed referendum this week, support for a similar move is far less in Kharkiv and Donetsk, at 15 percent and 24 percent, according to to a February poll by the Democratic Initiatives Foundation and the Kiev International Institute of Sociology. The survey, which had a margin of error of as much as 2.2 percentage points, was conducted before Yanukovych’s ouster.

Russia won’t deploy troops in eastern Ukraine unless a it’s citizens are slaughtered there, Sergei Mironov, leader of the pro-Kremlin Just Russia party, said March 19 in Moscow.

“It would be highly undesirable and I think it’s unlikely unless we see large-scale massacres,” said Mironov, who is among the officials hit by EU visa bans and asset freezes. “Of course we can’t look calmly on while Russians are killed, no country on earth could allow that to happen. But I don’t think things will go that far.”

Such remarks carry little weight around Kharkiv. For Gerashchenko, officials in Moscow are throwbacks to the communist rule of bygone years who aren’t to be trusted.

“The atmosphere of Putin’s speech, with all the pompousness and applause, reminds me of the Soviet Union,” she said. “There’s no future with Russia. We want democracy.”

To contact the reporters on this story: Jake Rudnitsky in Kharkiv at jrudnitsky@bloomberg.net; Volodymyr Verbyany in Donetsk at vverbyany1@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net Andrew Langley, Mark Williams

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