The latest list of sanctions looks "quite odd" in view of the peace drive including a ceasefire in eastern Ukraine, Russia's President Vladimir Putin said as the EU's restricting measures came into force Friday.

Speaking after a meeting of the Shanghai Cooperation Organization (SCO), Putin said that Russia has not ruled out responding with tit-for-tat sanctions. At the same time, he said, those measures would only be implemented if they did not harm Russia, and if they would help protect the country.

"The government is thinking about that. But if they are to be imposed, this will be to create better conditions for ourselves," Putin said.

As for trade partnerships and cooperation in sectors targeted by the EU sanctions, Putin said that "there is always an alternative" in case somebody "does not want to work with Russia."

"There are some things that are negative, but if we consider the problem in its totality, there is more positive than negative," Putin said, adding that sanctions open up opportunities for Russia's manufacturers.

Putin has criticized attempts to "destabilize" the situation in Ukraine rather than solve it. Putting the prime minister of the self-proclaimed Donetsk People's Republic, Igor Plotnitsky, on the list of people sanctioned may jeopardize the peace talks in Ukraine, Putin said.

The European Union is to provide Ukraine with €8 billion to carry out reforms, the President of the European Parliament Martin Schulz said Friday.

"We are convinced that this Agreement (EU - Ukraine Association Agreement) will promote further economic growth and modernization of the Ukrainian economy. Eight billion euro will be transferred to Ukraine to stabilize the economy. But this support is not unconditional. It is based on the expectation that the country will continue to follow the path of reformation," RBC quotes Schultz.

The required reforms would include electoral law, a comprehensive constitutional reform, elimination of corruption, and the respect of human rights and minority rights, Schultz explained.


In turn Aleksey Ulyukayev, the Russian Minister of Economic Development said that if Ukraine proceeds with the EU Association Agreement as of November 1, Russia will respond with the introduction of import tariffs on Ukrainian goods.

Heads of state of the Shanghai Cooperation Organization say that the crisis in Ukraine is spilling beyond the borders of the country and needs immediate action, while stressing that the only solution to the conflict lies in dialogue and consensus.


At a press conference following the summit President Putin said the leaders had touched upon various issues of international politics, including those connected with the settlement of the Ukrainian crisis, and added that the approaches to this settlement proved to be similar.

"We are very satisfied by the fact that the approaches to basic directions of cooperation appear to be identical or very close," Putin told reporters.

Kazakh President Nursultan Nazarbayev has confirmed that he, together with the leaders of Russia, China, Tajikistan, Uzbekistan and Kyrgyzstan, supported a peaceful settlement in Ukraine within the guidelines of the plan suggested by President Putin. "The only long-term solution to the problem is in political dialogue and consensus. It is necessary to emphasize the importance of the Minsk summit that took place on August 26. The step-by-step plan of conflict settlement proposed by President Putin has become an important document on the way of peaceful resolution of the crisis. We call upon all sides to strictly observe the letter of these documents," Nazarbayev said.

The Dushanbe declaration also supports active measures to fight terrorism, extremism, separatism and drug trafficking, and leaders of the SCO nations expressed their readiness to assist all sides engaged in countering these threats. In its economic part the document provides for growing cooperation, trade and developing of the hi-tech sector as well as for mutual effort to ensure the food and energy security of the bloc.

Fighting flared near an airport in eastern Ukraine on Saturday in breach of a fragile eight-day ceasefire as the prime minister accused Russian President Vladimir Putin of planning to destroy his country.


Prime Minister Arseny Yatseniuk said only membership of NATO would enable Ukraine to defend itself from external aggression.


Kiev and its Western backers accuse Moscow of sending troops and tanks into eastern Ukraine in support of pro-Russian separatists battling Ukrainian forces in a conflict that has killed more than 3,000 people. Russia denies the accusations.


A ceasefire negotiated by envoys from Ukraine, Russia, the separatists and Europe's OSCE security watchdog, has been in place in eastern Ukraine since Sept. 5 and is broadly holding despite regular but sporadic violations, especially in key flashpoints such as Donetsk.

On Saturday afternoon, a Reuters reporter heard heavy artillery fire in northern districts of Donetsk, the largest city of the region with a pre-war population of about one million. He saw plumes of black smoke above the airport, which is in government hands. The city is controlled by the rebels.

Recall a week ago we wrote "US Begins Delivering F-16s To Iraq This Week, A Decade After It Wiped Out Iraq's Air Force" in which we said:

... the US will deliver the first of 36 F-16 fighter jets to Iraq in what Baghdad's envoy to the United States called a "new chapter" in his country's ability to defend its vast borders with Iran and other neighbors. ....the US earlier in March provided Iraq with some 100 Hellfire missiles as well as assault rifles and other ammunition. Then in April the US sent more arms, providing Iraq with 11 million rounds of ammunition and other supplies.

It is unknown how many of these have fallen into Al Qaeda/ISIS hands (we do know that at least one Iraqi Black Hawk chopper was captured during the rush for Mosul). What is known is that as PBS Frontline reported two weeks ago, while the administration has denied arming Syrian "rebels", i.e. the same ISIS militants that have crossed the border and are now fighting in Iraq...

... the reality is that it has. From: "Obama Says Not Arming Syrian Rebels, Syrian Rebels Say He Is"

Makers of munitions and unmanned aircraft top the list of private-sector beneficiaries.

It's far too soon to tell how the American escalation in the sprawling, complex mess unfolding in Iraq and Syria will play out. But this much is clear: As our military machine hums into a higher gear, it will produce some winners in the defense industry.

New fights mean new stuff, after all. And following the U.S. withdrawal from Iraq and Afghanistan - and the belt-tightening at the Pentagon imposed by steep budget cuts - military suppliers are lining up to meet a suddenly restored need for their wares. Presenting his vision for expanding the confrontation with the terrorist group ISIS in a speech to the nation on Wednesday night, President Obama outlined a program of intensified airstrikes designed to keep American troops away from the danger on the ground. So defense analysts are pointing to a pair of sure-bet paydays from the new campaign: for those making and maintaining the aircraft, manned and unmanned, that will swarm the skies over the region, and for those producing the missiles and munitions that will arm them.

The militants of Islamic State have reportedly struck a deal with moderate Syrian rebels not to fight each other and focus on toppling the government. Some reports say the deal was brokered by the Al-Nusra Front, an Al-Qaeda branch in Syria.

The IS, formerly known as ISIS/ISIL, is preparing its forces in Syria for likely bombings by the US, which now considers itself at war with the extremist movement. In addition to spreading out from their known facilities, the group that took over portions of Syria and Iraq to build a caliphate is apparently seeking to safeguard itself from attacks of other armed groups in the war-torn country.

According to the Syrian Observatory for Human Rights, a London-based conflict watchdog, the IS has signed a non-aggression pact with moderate fighters, who control the Hajar al-Aswad neighborhood of Damascus.

Under the deal, "the two parties will respect a truce until a final solution is found and they promise not to attack each other because they consider the principal enemy to be the Nussayri regime," AFP reported. "Nussayri" is a derogatory name for the Shiite Alawite sect, to which Syrian President Bashar Assad and many of his officials belong.

According to Orient Net, the truce is meant to stop fierce fighting that engulfed the neighborhood for over 40 days and was brokered by the Al-Nusra Front, an Al-Qaeda affiliate that has frequently clashed with the Islamic State, which itself splintered from the terrorist network to pursue an independent struggle for power in the region.

The moderate rebels who signed the deal include four distinct groups, including the US-backed Syria Revolutionary Front, reported Charles Lister, an analyst at the Brookings Institute. The SRF was considered moderate enough to merit the West's support and a part of the Free Syrian Army, a loose coalition of secular and moderate groups fighting to topple the Assad government with the blessing of Washington.

Islamic State jihadists have released a video which they claim shows the beheading of a 44-year-old British aid worker, David Haines, who has been held hostage since his abduction last year.

The masked man in the latest video released across social media on Saturday night claims that Haines was killed because of UK Prime Minister David Cameron's pledge to arm Kurdish forces in order to battle the jihadist group, according to reports.

"This British man has to pay the price for your promise, Cameron, to arm the Peshmerga against the Islamic State," the executioner said, according to liveleak.

"My name is David Cawthorne Haines," the hostage reportedly said before the execution.

"I would like to declare that I hold you, David Cameron, entirely responsible for my execution. You entered voluntarily into a coalition with the United States against the Islamic State, just as your predecessor, Tony Blair, did, following a trend amongst our British Prime Ministers who can't find the courage to say no to the Americans."

The footage could not be immediately verified. However, the video footage was similar to that of the executions of two American journalists, James Foley and Steven Sotloff, by Islamic State militants.

History did not end with the Cold War and, as Mark Twain put it, whilst history doesn't repeat it often rhymes. As Alexander, Rome and Britain fell from their positions of absolute global dominance, so too has the US begun to slip. America's global economic dominance has been declining since 1998, well before the Global Financial Crisis. A large part of this decline has actually had little to do with the actions of the US but rather with the unraveling of a century's long economic anomaly. China has begun to return to the position in the global economy it occupied for millenia before the industrial revolution. Just as the dollar emerged to global reserve currency status as its economic might grew, so the chart below suggests the increasing push for de-dollarization across the 'rest of the isolated world' may be a smart bet...

Introduction:

Yesterday's press conference by Strelkov is, I believe, a historical moment because it marks the move of Strelkov from the Novorussian military struggle into the much larger, and far more dangerous struggle, the struggle for the political future of Russia. This in itself is not necessarily unexpected, but the way he did it was a surprise, at least for me. But before I zoom out to the bigger picture, I think that it would be helpful to try to summarize some of the key points of his presentation (thanks to Marina, you can download the full English transcript by clicking here and the Q&A is here). Here is how I summarized what I saw as the key elements of his presentation:

External factors (staging) - symbolic message:

• He is clearly alive and well
• The reason for his departure was infighting inside the Novorussian leadership and the fact that he was told that supplies would only be delivered if he left
• The photo of Putin in the back on the wall
• He is sitting behind a Russian monarchist flag on the table and a Russian and Novorussian flag in the back (no Soviet or Communists symbols)

His view about the ceasefire agreement:

• This ceasefire has now created a military situation that is now worse than this spring
• What is disgraceful is not the ceasefire by itself but "the conditions which are now being discussed in Minsk"
• There is plan to blame the betrayal of Novorussia on Putin
• There are powerful interests which want a never ending war which would create a bleeding ulcer for Russia