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Trouble brewing in Crimea?

Wikipedia

The Guardian's Luke Harding has a great piece on the potential for a South Ossetia-type conflict in Ukraine's Crimea region:

Russian-speaking residents say the peninsula, a mass tourist destination in Soviet times, ended up in Ukraine by mistake. The Soviet leader Nikita Khrushchev transferred Crimea to the Ukrainian Soviet Republic in 1954. Russia affirmed the modern borders of Ukraine in a 1997 friendship treaty. Last April, however, Vladimir Putin, Russia's prime minister, contemptuously described Ukraine as "not even a real state".

Nationalist Crimean MPs now liken Crimea to Kosovo - the former Serbian province largely recognised as independent by the west this year. According to Leonid Grach, a pro-Russian communist MP, Crimea will declare itself independent should Yushchenko press ahead with his plans for Ukraine to join Nato.

"If Yushchenko declares that Russia is the enemy, Crimea won't accept it," Grach said. "It means that Ukraine will break up. In Crimea there will be a war - maybe even a world war." Ukraine should renounce Nato, agree a friendship and cooperation treaty with Russia, and prolong the lease for Russia's Black Sea fleet, Grach said.

I had been skeptical that Russia had the same capacity to undermine the Ukrainian state as it did with fractured Georgia, but after Ukraine's governing coalition collapsed today over disagreement as to whether to condemn the Russian invasion of Georgia, it's starting to seem less far-fetched.

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Morning Brief: Nightmare on Wall Street

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Wall Street suffered its worst day since just after the 9/11 attacks Monday as markets reacted to the Lehman Brothers bankruptcy and the possibility that insurance giant AIG and others might also fail.

By days' end, the Dow Jones industrial average had fallen 504.48 points, losing 4.4 percent of its value. London's FTSE fell 3.9 percent Monday, and today, stock markets in Japan, Hong Kong, China, and South Korea dropped between 5 and 7 percent in early trading. The cost of overnight borrowing in dollars, meanwhile, is soaring.

Credit agencies downgraded AIG Monday, exacerbating a cash crunch at the insurance company. AIG has appealed to the Federal Reserve and the state of New York for help, having lost 92 percent of its value this year. "Wall Street isn't remotely prepared for the inestimable damage the financial system would suffer if AIG collapsed," opines money manager Michael Lewitt. "The company is such a big player in insuring risk for institutions around the world that its failure could undermine the global financial system," the Wall Street Journal observes.

What happens now? "At some point, the federal government will blink again, and taxpayers will probably end up paying at least another couple hundred billion dollars before this extraordinary mess ends," Harvard economist Kenneth Rogoff predicts. "Plenty of potential land mines remain," the WSJ warns. NYU economist Nouriel Roubini foresees a further 20 percent drop in the stock market.

On Monday, the Fed pumped $70 billion into the banking system, and today, all eyes will be on the Fed's Open Market Committee as it meets to set interest rates. A decision is expected by 2:15 p.m. ET.

Decision '08

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Former Secretary of State Colin Powell says an Obama win would be "electrifying," but hasn't made up his mind on whom to endorse.

Americas

Receding storm waters are leaving behind a huge, toxic mess in Texas.

Explosions killed three people in Morelia, Mexico, as they celebrated the country's independence day.

South American leaders are backing Bolivian President Evo Morales.

Asia

Chinese officials arrested two brothers for allegedly mixing melamine into a popular milk powder. So far, two babies have died from the formula, and another 1,253 have gotten sick.

Pakistan's military bombed targets in Bajaur, a tribal agency near the Afghan border, and sent in troops to clear the area.

Middle East and Africa

Iran has improved its uranium enrichment capacity, the IAEA said Monday.

Gen. Ray Odierno has taken over as the top U.S. commander in Iraq.

The French military took action against Somali pirates, freeing two sailors.

Europe

It's official: Ukraine's government has collapsed.

Georgia is citing newly released intelligence intercepts as proof that Russia planned the war.

The European Union is taking up the charged issue of Roma poverty.

Today's Agenda

Palestinian Authority President Mahmoud Abbas meets with Israeli PM Ehud Olmert, who is to be replaced tomorrow in intraparty elections.

Lebanon's feuding political factions meet today for a dialogue.

U.S. President George W. Bush is visiting Texas to inspect storm damage.