Russia President Vladimir Putin put troops near the Ukraine border on high alert, which is now affecting Ukraine’s economy and the opposition’s efforts to implement a new government.
With the political turmoil hammering Ukraine’s economy, the hryvnia currency tumbled 4 percent on Wednesday, with ripples spreading to Russia where the rouble fell to five-year lows and bank shares took a hit.
Ukraine’s central bank, which has been rapidly spending its hard currency to protect the hryvnia, said it had abandoned a managed exchange rate in favor of a flexible currency.
On February 22nd, parliament ousted Russia-backed president Viktor Yanukovich after three months of heavy protests in Kiev’s Independence Square. The people protested after he turned down a trade deal with the European Union in favor of a $15 billion bailout from Russia.
Many expected Putin to come out fighting after the 2014 Winter Olympics in Sochi ended, but despite a few statements there has not been much action. The high alert is the first move from Putin. He is receiving help from the Crimea peninsula, which is home to numerous Russian navy ports and has a Russian-leaning local population. Sevastopol elected a Russian mayor on February 25th while people chanted “Russia! Russia! Russia!”
Russian Prime Minister Dmitry Medvedev said the country doubts the new Ukraine government and said he did not see any legitimate authority figures to talk to.
“Strictly speaking, today there is no one to talk to there. The legitimacy of a whole host of government bodies is raising huge doubts,” Medvedev said in Sochi, responding to a question posed by Interfax.
Parliament hoped to have a new government by the 25th, but pushed back the deadline to the 27th after the events in Crimea and infighting between the three main opposition groups.