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KYIV, UKRAINE

The Ukrainian central bank is stepping up efforts to edge Russian state-owned commercial banks out of the local market, though that process should be gradual to avoid disruptions, one of its deputy chiefs said Tuesday.

Five Russian state-owned banks operate in Ukraine, including three in the top 20, and they hold a combined market share of 8.6 percent.

The central bank has sought to cut that following a breakdown in bilateral relations in 2014 because of Moscow's annexation of Crimea and support for pro-Russian separatists.

"We want them to leave our market painlessly," deputy chief Kateryna Rozhkova told journalists. "There are two options: Either find a new owner or gradually reduce your presence."

Two of the Russian banks, VEB and VTB, are already in talks to sell their Ukrainian subsidiaries, and Rozhkova said the central bank expected progress by the end of the first quarter.

The three others are Sberbank and subsidiaries of Kremlin-owned BM Bank and VS Bank.

In 2014, the central bank introduced restrictions on the five banks, banning them from increasing their assets and deposits. This resulted in their market share falling by half.

A recent deadly escalation in Ukraine's nearly three-year-old separatist conflict prompted a few dozen protesters to gather outside a branch of Sberbank in Kyiv, demanding that it stop operating in the country.

But Rozhkova said it was not in Ukraine's interests for the banks to close abruptly. Together, they hold 22 billion hryvnias ($815 million) in Ukrainian consumer deposits and 16 billion hryvnias in business deposits.

The central bank is formulating a scheme to transfer loans owed to these banks by Ukrainian companies elsewhere, she said.

She said central bank experts had found no evidence that the banks financed separatists in eastern Ukraine, as claimed by some Ukrainian politicians.

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Ukraine Central Bank Presses for Exit of Kremlin-owned Banks - Voice of America

Ukrainian servicemen ride an armed personal carrier on a street in Avdiivka in Donetsk, Ukraine. Moscow has desperately tried to keep the Donbas conflict frozen, writes Professor Richard Sakwa. Photograph: Markiian Lyseiko/EPA

Jonathan Freedland (First on the White House agenda: the collapse of the global order. Next, war?, 4 February) asserts that with his swooning admirer in the White House, Vladimir Putin feels free to flex his muscles, and has launched an offensive in eastern Ukraine. As so often in recent coverage of Russia, the opposite is the case. Moscow has desperately tried to keep the Donbass conflict frozen, and has restrained the various militias from responding.

In recent weeks, we have watched with increasing alarm as Ukrainian forces have pushed forward into the demilitarised demarcation line in a bite and hold strategy. This was admitted by the Ukrainian deputy defence minister, Igor Pavlovsky, when he stated that step by step our boys have been advancing. The rebel forces in the Donbass have nothing to gain by a renewed offensive, but in the end were forced to respond.

It is worrying that the Guardian seems to have an enthusiasm for demonising Putin and discrediting the present Russian government. This only helps to undermine the liberal international order, which seems unable to uphold the values that it proclaims, and which now generates conflict, rather than seeking negotiated solutions.

Freedland is right in one thing, though: the stakes could not be higher and war is on the horizon. In these circumstances, balance and responsibility are essential. Professor Richard Sakwa School of politics and international relations, University of Kent

I cannot share Jonathan Freedlands apocalyptic vision. That America has been convulsed by war every 80 to 100 years does not mean that it is due for another such convulsion. A sounder historical analysis, as argued persuasively by the American academic Steven Pinker, points to democracy as one of the the reasons why world wars have been avoided since 1945.

Has one mature democracy ever invaded another mature democracy? When Trump or his henchmen start ordering the arrest of opposing or satirical journalists, I shall join Mr Freedland on the demonstrations. Trump may like the idea of journalists disappearing, as has happened in PutinsRussia, but he will surely discover that the democratic freedoms in America are too deeply entrenched. David Simmonds Woking, Surrey

Join the debate email guardian.letters@theguardian.com

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Another take on Putin, Trump and Ukraine - The Guardian

The Ukrainian State Border Guard seized anti-tank missile components, reportedly the AT-4 Spigot, destined for Iran on Jan. 19. The weapons were concealed in the cargo section of a UM Airlines flight from Kiev to Tehran. Ukraine deserves praise for capturing the illicit cargo, but Kiev continues to let Iran use its aviation sector to evade a U.N.-implemented sanctioned international arms embargo and Western sanctions.

Banned Iranian carriers like Caspian Airlines and Mahan Air continue to benefit from close cooperation with Ukrainian airlines, and Kiev's failure to enforce U.S. sanctions against Iran should loom large as the Trump administration reviews its foreign policy options toward Ukraine.

The Iranian aviation sector's reliance on Kiev is not new. Publicly available data from commercial flight trackers show that Dart Airlines is currently leasing aircraft to Iran's privately owned Kish Air. Dart's fleet is also frequently chartered for Iran and Lebanon routes by unknown operators. Iran Air Tours, ATA Airlinesand Zagros Airlines, among others, also lease aircraft from Ukrainian operators.

None of these private companies is under U.S. sanctions, but Ukraine's fleet caters to sanctioned entities, too. Data show that one of Air Khors's aircraft is currently leased to the Iraqi Al-Naser Airlines, which the U.S. Treasury sanctioned in May 2015 when the company fronted for Mahan Air.

Air Khors has also leased a Boeing 737 to Naft Airlines, which is being operated by U.S.-sanctioned Caspian Airlines. Treasury also slapped sanctions on two more Ukrainian airlines for assisting Mahan Air: Bukovyna Airlines and UM Airlines, which was carrying the missile parts seized last week.

Since last year, there are daily flights between Kiev and Tehran, including a weekly Mahan flight that commenced last March, when Mahan and UM announced an expanded partnership. Their cooperation connects Kiev to Mahan's Asian destinations through Tehran, giving Ukrainian passengers a convenient connecting hub to Asia.

It also enables Mahan to officially enter the Ukrainian market.

Rather than concealing a partnership that Washington has sanctioned since 2013, Kiev and Tehran actually announced it with pomp, with the inaugural Mahan flight to Kiev welcomed by former Ukrainian President Viktor Yushchenko and Oleh Barna, a senior member of the Ukrainian parliament and ally of current President Petro Poroshenko. Also in attendance were Eugene Dykhne, acting head of Kiev's Boryspil International Airport; theIranian ambassador to Kiev; and Mahan Air's managing director for international relations.

This is further evidence that the lack of U.S. sanctions enforcement under the Obama administration greatly eroded U.S. credibility and deterrence. Yushchenko, after all, led a pro-Western government in Kiev from 2005 to 2010.

The current government, so well-represented at the ceremony, is clamoring for more U.S. military assistance and a tougher Western stance in its current predicament against Russia in Eastern Ukraine. Yet, it sees no contradiction between its demands for Western support and its deepening partnership with Iran's sanctioned aviation sector.

Merhej boasted this summer about the increasing popularity of the Kiev-Tehran route. "The occupancy is increasing every day. We have about 75 passengers per flight today," he said. "Two months ago, it was 55 passengers. I am confident that we will reach 100 passengers by the end of June."

What Merhej failed to address is that UM Airlines, via its support of Mahan Airlines, has been involved in moving illicit cargo for the Syrian regime and the Iranian Revolutionary Guard Corps' external arm, the Qods Force. The U.S. Treasury confirmed in 2013 that UM Airlines has trained Mahan Air pilots and engineers, and transferred airplanes to Mahan Air. UM has now been caught transferring weapons as well.

Last week's seizure of weapons shows that UM Airlines has not stopped its illicit activity with Mahan Airlines, and that this illicit activity has only increased since the initial designations by Treasury. Given the airlines' record of illicit activity, its increased business partnership is a major red flag.

The question remains whether last week's weapons seizure was just the tip of the iceberg in illicit activity facilitated by UM and Mahan Airlines. Since its conflict erupted in 2014, Ukraine has become a "supermarket"for the illicit arms trade a platform that Iran could easily exploit through its direct air connection to Kiev.

Authorities in Ukraine should be commended for seizing the weapons shipment, but when Kiev asks the United States for economic and military assistance, the least it can do is prevent sanctioned entities such as UM and Mahan Airlines to operate from its soil.

Emanuele Ottolenghi is a senior fellow at the Foundation for Defense of Democracies, where Boris Zilberman is deputy director of congressional relations and a Russia analyst. FollowOttolenghiandZilbermanon Twitter @eottolenghi and @rolltidebmz.

The views of contributors are their own and not the views of The Hill.

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Ukraine needs to enforce US sanctions on Iran - The Hill (blog)

WASHINGTON, Feb. 7, 2017 Defense officials are concerned about the recent violence in eastern Ukraine, a Defense Department spokesman said today.

The violence has been largely centered around Avdiivka-Yasynuvata, Navy Capt. Jeff Davis, the director of defense press operations, told reporters at the Pentagon.

"We're deeply concerned with the recent spike in violence in eastern Ukraine," he said. "We reaffirm U.S. support for full implementation of the Minsk agreements and we continue to provide security assistance to Ukraine."

Assistance for Ukraine

Davis pointed out the 2016 package of U.S. security assistance to Ukraine was $335 million. The training program is being conducted by about 350 U.S. soldiers in cooperation with other allies and partners, he said.

"We have a robust advisory effort to advance the implementation of key defense reforms and equipment to support the operational needs of Ukraine's security forces," he said.

"We do however continue to believe that there's no military solution to the crisis and that the Minsk agreements are the only way to resolve the conflict peacefully," he said.

"Our focus has been on supporting Ukraine and pursuing a durable diplomatic solution that respects Ukraine's sovereignty and territorial integrity," he said.

Davis described the violence as the most significant flare up there since 2015.

"We're troubled by it, we've taken note of it," he said. "I can tell you what we havent seen is any sort of large-scale movement of Russian forces that would suggest that this is part of something bigger."

(Follow Lisa Ferdinando on Twitter @FerdinandoDoD)

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Defense Officials 'Deeply Concerned' About Violence in Eastern ... - Department of Defense

Displaced residents talk to UNHCR staff in the front line village of Luhanske, in eastern Ukraine. UNHCR/Evgeny Maloletka

UNHCR, the UN Refugee Agency, is increasing its humanitarian assistance to help civilians affected by the recent spike in fighting and the harsh winter conditions in eastern Ukraine.

Fierce clashes over the last two weeks have caused civilian casualties and damaged homes and schools in the government-held townof Avdiivka. After a decline in hostilities over the weekend, 20 new families lost their homes due to shelling on Monday night. In total, close to 150 houses and 30 apartments have been damaged or destroyed by shelling and fighting in Avdiivka since last week.

Last Thursday, UNHCR delivered 40 metric tons of shelter material and relief items for 2,000 people in the town as part of a government-led response. These included blankets, bedding and towel sets, jerrycans, buckets and winter clothing.

Although electricity, water and heating have now been restored in most of Avdiivka, people living in houses close to the contact line are still without services.

Some 300 people, including 135 children, were voluntarily evacuated from Avdiivka last week. However further fighting and damage to critical infrastructure could lead to a new wave of displacement among the more than 800,000 people still residing in the conflict zone.

According to one of our partner organizations, some 46 unaccompanied children arrived in the neighboring town of Slovyansk, some of them without documentation. UNHCR is working with local authorities and partners to provide them with legal assistance and relief items, including blankets, bedding sets and winter jackets.

We welcome the more active role the Ukrainian Government is starting to play in the coordination of humanitarian assistance, both at the provincial and central levels.

The fighting is also severely impacting civilians living in and around Mariupol, insouth eastern Ukraine. Over the weekend, the city of Mariupol, which hosts half of million people, was left without electricity for several hours, while some 70 houses were damaged in neighboring villages.

Renewed fighting is also affecting non-government controlled areas. Communities living along the contact line near the city of Donetsk are particularly affected, with more than 20 villages still without electricity, despite temperatures expected to fall below minus 20 C this week.

According to the de-facto authorities of the Donetsk region, some 500 people have been displaced since the surge of fighting late January, the majority of whom are now being sheltered in collective centers.

UNHCR has distributed plastic sheeting and basic relief items to the most vulnerable and to those accommodated in the collective centers in Donetsk. Some 2,000 vulnerable families have also received coal, as part of our winterization programme in non-government controlled areas.

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Eastern Ukraine: UNHCR speeds up assistance after spike in fighting - UNHCR