Voting in the Crimea referendum is now closed and the preliminary results (with more than 50% of the ballots counted) show that 95.5% of the voters backed Crimea joining the Russian Federation; opting to leave the Ukraine. The Vice Premier of Crimea has already announced that the Crimean parliament will prepare the official annexation legislation in tomorrow morning?s session, and in the second half of the day a diplomatic envoy will be on their way to Moscow.
The vote itself went quite smoothly, without any major disturbances in Crimea itself, unlike in some cities in the east.
Also on Saturday the Ukrainian Ministry of Defence reported an unmarked (presumably Russian) troop incursion in the Kherson area, which is next to Crimea. The military reported that the objective of the troops was to ensure security at Chernomorneftegaz gas pumping stations, which supply Crimea (UNIAN). Official reports say that Ukrainian forces stopped the incursion and that the unmarked troops returned to the point of initial entry (comments from an army commander imply that no firing took place). On the positive side, Ukraine and Russia reached a truce agreement with regard to Ukrainian military bases in Crimea, ensuring the safety and resupply of Ukrainian troops remaining in those bases, though they must be evacuated within five days.
ADW Capital’s 2020 letter: Long CDON, the future Amazon of the Nordics
ADW Capital Partners was up 119.2% for 2020, compared to a 13.77% gain for the S&P 500, an 11.17% increase for the Russell 2000, and an 8.62% return for the Russell 2000 Value Index. The fund reports an annualized return of 24.63% since its inception in 2005. Q4 2020 hedge fund letters, conferences and more Read More
Ukraine – The West not happy
Washington, London and Paris have already announced that they will not recognise the results of the referendum. Tomorrow the EU is expected to announce targeted sanctions against Russian policymakers. Further developments depend on the Russians? next step. It is very hard to have a clear view, but we think that Russia may delay the formal annexation for some time, while Crimea informally becomes part of Russia, with a tighter integration of the peninsula both economically and politically with the rest of Russia. This could leave some room for diplomacy and possibly restrict western sanctions expanding beyond those targeting public officials. This is what has happened in Abkhazia and South Ossetia – an independent country but in effect a state of Russia.
The greater medium-run risk remains a wider push by Russia into the east of Ukraine. Such a move would trigger a much stronger set of international sanctions and intervention than we expect just with Crimea.
Ukraine – Protests today
There were substantial and violent pro-Russian protests in the streets of Kharkiv, Luhansk and Donetsk today, demanding help from Russia, and Russia responded that it may have to aid Russian speakers there. In the latter city, the protesters have taken the prosecutor?s office and have tried to seize control of the regional administration?s premises. In addition to Ministry of Foreign Affairs? official statements condemning “Right Sector” violence in Kharkiv and Donetsk, highlighting Russia?s right to protect its citizens abroad, President Putin also raised his concerns about the safety and stability of other east Ukraine regions. In our piece out last week we noted that for Kiev the eastern regions remain the most vulnerable part of Ukraine economically.