Political ambiguities in Ukraine.

Political ambiguities and military rhetoric in Ukraine and Russia have caused the euro to tumble to a two-week low. The EU countries need to focus on economic unity not expansion and they certainly should not let another country with a poor economy into the group. Neither the EU nor the US have the 50 billion required by Ukraine.

Sabre-rattling continued over Ukraine on Thursday, with Russia putting on alert its fighter jets along its western borders and Kiev’s new authorities warning Moscow against moving its naval forces outside their base in Crimea.

The development in Russia came one day after President Vladimir Putin ordered a snap military exercise in western areas involving 150,000 troops.

In Ukraine, acting president Oleksandr Turchynov cautioned Russia against any movement of its naval forces in Crimea, calling it an act of « military aggression » against Kiev.

On the economic arena, however, the Russian ruble slid to a fresh five-year low against the dollar, while Ukraine’s hryvnia reached a record low after its central bank abandoned its managed exchange rate policy.

Europe’s main markets were held down by the sharpening rhetoric in Ukraine with German stocks on the DAX suffering their biggest drop in a month and the euro tumbling to a two-week low of $1.3641.

« The weakness in Europe today appears to be down to geopolitical uncertainty and the associated rise in risk aversion, » said Robert Parkes, an equities strategist at HSBC in London.

Ukraine has been rocked by anti-government protests since President Victor Yanukovych refrained from signing an Association Agreement with the EU on November 29, 2013, in favor of closer ties with Russia.

New Ukraine