Germany's Reaction to NAF's Victory in Debaltseve Bad Sign for Greece

Debaltseve has fallen to the Novorossiya Armed Forces (NAF). What is interesting about David Herszenhorn's story, "Ukraine Forces Withdraw From Debaltseve, a Strategic Town," is he doesn't let on to where the Ukrainian Army is planning to retreat. 

Andriy Lysenko, a spokesman for the Ukrainian national security and defense council, confirmed the retreat at a briefing in Kiev, the capital, on Wednesday afternoon, and said that the pullout was nearly completed. 

“Today, the armed forces of Ukraine are conducting the organized, planned retreat of units of forces of the antiterrorist operation from the city of Debaltseve,” Mr. Lysenko said. “At the moment, almost 80 percent of the Ukrainian units have retreated from this sector, and this operation is to be completed soon.”

Herszenhorn doesn't mention in his story that Debaltseve is encircled by the NAF. There is nowhere for the Ukrainian Army to flee. But in a story yesterday by Andrew Kramer, "Despite Ukraine Truce, a Battle That Continues," it is clear Poroshenko's troops are surrounded and in deep trouble:

As many as 8,000 Ukrainian soldiers are holed up in the city, a rail hub connecting the capitals of the two rebel regions, Donetsk and Luhansk. Rebels have reportedly sent text messages to phones in the town, telling the soldiers that they have been abandoned and should surrender.

The Ukrainian government maintains that the town was not surrounded before the cease-fire took effect, and that European monitors of the truce should insist that the separatist forces halt their offensive and open a corridor to evacuate the wounded.

The main rebel group, the Donetsk People’s Republic, has said it will not observe the agreement in Debaltseve, saying that it was encircled before the cease-fire began and that it is therefore now an internal region in its enclave, not a section of the front.

The only resupply road into Debaltseve is mined, in range of rebel artillery and at times held by pro-Russian infantry. On Friday, eight Ukrainian soldiers reportedly escaped on foot through the fields, and on Sunday, a dozen or so made it out in a truck [one of the soldiers on the truck said it was dumb luck that they made it out alive]. 

On Tuesday, however, Ukrainian rocket-launching trucks and tanks were barreling down the resupply road toward the fighting, though the cease-fire required both sides to withdraw heavy weaponry starting at midnight Monday.

The Saker explains in a post yesterday, "Yet another monumental failure for the junta," that worse is yet to come for Kiev:

All my sources confirm that Debaltsevo is mostly in Novorussian hands and that the junta forces are in full retreat to the south of the pocket. All the top Novorussian brass was on hand today, including Kononov, Motorola, Givi, Mozgovoi and Zakharchenko as were many tens of Ukrainian prisoners. It appears that the junta forces were unable to provide the kind of resistance they showed in Peski, and that make sense because in Peski they were not surrounded and they had the fire support of Ukrainian forces just north and west of them. This time the cauldron is too deep and the "lid" too strong.

You can see that the cauldron "lid" has now closed on Debaltsevo from the north and that the junta forces are either surrendering of fleeing south where there is quite literally nothing for them to do then to wait until they run out of food and ammo. Bottom line: it's over for the Ukie forces in the Debaltsevo cauldron.

Amazingly, the freaks in Kiev as still insisting that there is no cauldron but only a "bridgehead". The good news is that apparently nobody buys that nonsense any more and the mothers and wifes of the men caught in the cauldron are trying everything they can to force the Ukie high command to accept the Novorussian offer of an evacuation corridor. The try to protest in front of the General Staff building in Kiev, then the blocked traffic. In a particularly poignant moment one of these women put a megaphone next to a cellphone to amplify the voice of her son/husband calling from the cauldron and announcing that they had for about 3 hours of supplies left.

All this is truly catastrophic news for the junta in Kiev. First, their policy of denying the issue made it impossible for their forces to get out while it was still possible. According to Russian military experts, about half of all the (comparatively) combat capable units of the Ukrainian military have been surrounded in this cauldron and that means that 50% of the Ukrainian army is now gone. Second, while Poroshenko and the junta freaks tried as hard as they could to completely deny the very existence of the cauldron, thanks to the Internet and the Russian TV channels most folks in junta-controlled Ukraine know that they are being lied to. That, in turns, means that the regime is loosing the very little credibility it might have had with the general public. Last and not least, now there will be a lot of very ugly recriminations from all sides of the political spectrum about who is guilty for that latest disaster. I would not be surprised one bit if the Ukrainian death-squads (aka Azov battalion & Co.) decided to storm Kiev for two reasons: a) to take out their rage on the regime and b) because it is safer to storm Kiev than Donetsk. Poroshenko better watch his back now. By the way, rumor (unconfirmed!) has it that he already evacuated his family to Germany.

Novorussian intel is reporting that the junta is trying to assemble three battalion tactical groups and numerous MLRS north of the cauldron to try to rescue the surrounded forces, but this will be too little too late. The Novorussians are used to Ukie artillery and they don't fear their armor or, even less so, infantry. Besides, I bet you that now that they are inside Debaltsevo, the Novorussians will deeply dig in. When is the last time that the junta forces succeeded in an urban assault operation? Exactly.

Bottom line: yet another brilliant victory for the Novorussian forces and yet another humiliating defeat for the junta in Kiev.

Judging from the reaction to Debaltseve by various participants at Minsk last week, The Saker is on the money: This is another titanic blunder by the junta which bodes ill not just for Kiev but for the West and Russia as well.

First, Herszenhorn reports Putin's reaction as follows:

[Poroshenko's] comments [asserting bizarrely that Ukrainian troops had accomplished their mission in Debaltseve], however, came after the separatists boasted of controlling the town, and after President Vladimir V. Putin of Russia suggested on Tuesday in Hungary that Ukraine should accept its defeat at Debaltseve by separatist forces he described as “underdogs.”

“Life is life; it just goes on,” Mr. Putin said. “No need to dwell on it.”

Germany's reaction is troubling: more sanctions, more blame for Russia. According to Herszenhorn:

Ms. Merkel’s office condemned the separatist offensive, calling it a clear violation of a cease-fire. 

At a regular government news conference, Steffen Seibert, Chancellor Merkel’s spokesman, said Europe was prepared to support a new round of sanctions against Russia if the situation in Ukraine continued to deteriorate. 

“There has been a massive violation of the cease-fire which took effect on Sunday,” Mr. Seibert said, according to Reuters. He said it was too early to say whether the Minsk peace deal had collapsed. 

“The hopes linked to the Minsk agreement have been seriously damaged,” he said. “We must push for the implementation of the package of measures.” 

“We see the U.N. resolution as an impulse in this direction, and in the coming days, we will work with the possibilities that we have,” he said.

To blame the NAF solely for a violation of the Minsk 2.0 ceasefire is not credible. Even the extremely biased Gray Lady reports that the Ukrainian Army violated the ceasefire. All indications are that the West is going to continue to back the junta. Hopefully, The Saker is right and Kiev will collapse from within either due to a new Maidan uprising or another Right Sector putsch. Because of the lifeline the West keeps extending to Poroshenko, change will have to come from within, and that appears to me to be a longshot.

Germany's insane behavior -- doing the same thing (sanctions) and expecting a different result (surrender of the NAF) -- does not bode well for the outcome of loan negotiations between Greece and the troika. Germany's institutional obtuseness has to be factored in.

On the other hand, one might argue that what determines German behavior is what Washington wants. Germany did not want a civil war in Ukraine, but Merkel has gone along with the disastrous U.S.-backed ATO in the Donbass. Washington supports some flexibility for Greece (see today's NYT unsigned editorial, "Give Greece Room to Maneuver"); Obama has voiced support, albeit meekly, for the Syriza-led government being allowed to implement some of its pro-growth policies. The idea here, as expressed in an "Upshot" today by Neil Irwin, "A Possible Day of Reckoning, Again, for Greece and Europe," is that eventually Germany will capitulate in favor of European unity:

If Greece ends up dropping out of the euro currency zone entirely, with unpredictable ripple effects across the Continent and the world financial system, the events of the last few days will look like a turning point that led to that moment. As of Tuesday, to be clear, markets were predicting nothing of the sort. European stock markets were down only slightly, and the value of the euro was actually up a bit. In effect, markets have seen this show before: the sturm und drang of threats and counterthreats that end in a last-minute deal.

The hedge fund manager Mark Dow offered on Twitter a way to think about the tense negotiations: “EZ bears underestimate the short-term resolve of EZ policy makers. EZ bulls overestimate the long-term viability of the exchange rate system.” 

Here’s what Mr. Dow is saying. We have seen again and again that this generation of European leaders, who built their careers on the altar of European unity, will eventually do what it takes to prevent the common currency from ripping apart. If this recent history is a guide, then the drama of the last few days is merely the theatrics required to get these finance ministers to arrive at a deal. 

On the other hand, Mr. Dow also points out, Europe really does have a big and plausibly unsolvable macroeconomic problem.

One more way to look at it is if Germany goes against her interests in Ukraine by supporting the Washington war drive then she earns the right to lead in negotiations with Greece. This means that the Moscovici document that Varoufakis was willing to sign but that was withdrawn at that last moment by Jeroen Dijsselbloem at Germany's behest will not be recycled. There are reports in the media that this is what is in the works.

Right now, given Germany's reaction to the fall of Debaltseve, it looks like continued impasse between the troika and Greece.