Archive for the ‘Eurasia 650’ Category

Crisis in Crimea

Posted: March 2, 2014 in Eurasia 650

Ukraine-Russian-troopIn times like these is it dangerous to resort to exaggeration for dramatic effect, but Europe faces the most dangerous threat to its security since the end of the Cold War. Even the crises of the Yugoslav wars did not threaten a major hot conflict between the great European powers. But since Russian troops arrived in numbers in the Crimea on Friday the situation has become increasingly tense. Crimea is now cut off from the rest of Ukraine by Russian forces who are digging in.  Pro Russian demonstrations have broken out in Donetsk and Kharkiv, resulting in violent clashes with pro-western activists. In this heightened atmosphere, yesterday Russian President Vladimir Putin has secured Federation Council support for the use of Russian troops in Ukraine (not just Crimea).

The response from the interim Ukrainian and western governments seems disjointed. Despite assertions from Ukrainian Prime Minister Arseniy Yatsenyuk that the armed forces of Ukraine are on full alert and prepared to respond to Russian aggression, and western warnings of unspecified ‘consequences’, it appears they do not really know how to respond. NATO met Sunday to discuss the growing crisis, but it is unclear whether there is any support for direct confrontation. Calls from leaders such as US President Barack Obama and UK Prime Minister David Cameron to respect Ukraine’s territorial integrity and the principal of non-intervention are likely to fall on deaf ears.

Western leaders, especially the US and UK who have come late to the Ukrainian crisis fail to appreciate the Russian perspective on what has occurred. Russia has witnessed a popular uprising against a democratically elected leader, one favourable to better ties with Russia, his deposition from power, and his replacement by a non-elected government comprised of members of the supposedly anti-Russian Fatherland and Freedom Parties. They are bemused that countries which constantly deploy rhetoric concerning the primacy of democratic rights, and respect for constitutional order, offered high profile support to the Maidan movement by not only visiting the protest camp in Kyiv, but by consistently laying the blame for violence at the feet of Mr Yanukovych’s government. All while ignoring violence perpetrated by the nationalist, often right wing, hardcore of activists, such as those from the Right Sector movement, which fought deadly battles with the police.

For Russia, this affair has exposed western hypocrisy and machination, the only reason for which can be to gain strategic advantage over Russia by moving Ukraine out of its orbit.  The decision of western government’s to recognise the new unelected, and in Russian eyes illegitimate, Ukrainian government has only reinforced this perception. To Russian strategists the game is now openly being played and the stakes are extremely high. Without Ukraine, Mr Putin’s plans for Eurasian integration will be very difficult, while it is likely Ukraine will once again pursue integration into Euro-Atlantic security structures, which Russia views as hostile.

Western politicians and media outlets have quickly denounced the Russian troop deployment as an ‘invasion’ and claimed that this is contrary to Russia’s position that military action can only be authorised by the United Nations Security Council. From Russia’s perspective, however, Ukraine is operating without an official and legitimate government, and the instability there is a direct threat to Russian security.  Furthermore the inclusion of what Moscow sees as borderline fascist elements in Mr Yatsenyuk ‘s government represents a threat to Ukraine’s Russian minority, as evidenced by the immediate proposal to repeal legislation placing the Russian language on par with Ukrainian in certain regions.

It is doubtful Russia is planning an outright invasion of Ukraine. Despite the disparity in the size and quality of their respective militaries, such a venture would undoubtedly carry a high price in terms of casualties and resources, which Russian can ill afford. A de-facto occupation and the threat of forced separation of the Crimea would secure Russia’s influence over Ukraine’s future political evolution, while keeping it too weak to pursue western integration.

As Crimea is now de facto under Russian control the best course of action is to open a dialogue with the Russian leadership, led by Germany (Russia’s most respected European partner) or Switzerland (A non-EU, non-NATO actor) to establish a scale for de-escalation. The situation remains extremely tense and fluid, however. If either Russian or Ukrainian troops panic and in the heat of the moment shots are exchanged, the situation could spiral out of control very quickly. And it would be very hard for the EU or the US to remain uninvolved for very long.


Ukraine Goes West…Or Does It?

Posted: November 19, 2013 in Eurasia 650

ukraine-euOn November 14th The Ukrainian parliament, the Verkhovna Rada, closed its session without taking a vote on a bill that would have allowed jailed opposition figure Yulia Tymoshenko to go abroad for medical treatment.  Although the government of Viktor Yanukovych has demonstrated flexibility by abandoning its previous refusal to even consider such leniency it will not consider any measure that would lead to her rehabilitation in time to stand in the 2015 elections.  The urgency in reaching an agreement is because of Ukraine’s desire to sign a Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU at its Vilnius summit on November 28th-29th which would reduce trade barriers and open the bloc to Ukrainian public procurement, laying the foundation for eventual EU membership.  The EU has made the agreement was conditional on reforms to Ukraine’s legal and judicial system to eliminate so-called “selective justice”, of which Ms Tymoshenko is the most prominent victim.

The inability to reach an agreement has surprised both Ukraine watchers and EU diplomats, who have said they still expect to sign the DCFTA in Lithuania.  The surprise is acute because Ukraine’s often riotous parliamentary procedure and normally irreconcilable political parties have given way in recent months to a sense of national unity over the president’s decision to improve relations with the EU.  This is in no small part due to Russian attempts to prevent Ukraine signing the DCFTA and convince it to join its own Customs Union together with Belarus and Kazakhstan.  At times the Russian strategy has been pure blackmail involving enforced delays and checks at the border across which 30% of Ukraine’s exports move, and banning key Ukrainian exports in hopes of pressuring Ukraine’s oligarchs to force Yanukovych’s hand.  This pressure has had the reverse effect, uniting the president, the opposition and the oligarchs who want access to EU investment and technology.

But is Ukraine committed to integration with the EU?  Despite the assurances of EU officials that all is on track and statements by Prime Minister Mykola Azarov that Ukraine would do whatever it takes to appease the EU, I doubt many observers recognise what kind of pressure Viktor Yanukovych is under.  It is not just Ukraine’s geopolitical future that is at stake but his own political survival.  With USD 60bn in international obligations coming due in mid-2014, large quasi-fiscal liabilities at state corporations and a commitment to a strong hryvnya to control inflation, Ukraine is standing on the edge of a fiscal precipice.

While there are undoubtedly economic advantages to western integration and the EU has pledged financial support, the effects will likely not be felt for some years.  The economic levers at Russia’s disposal can inflict a much more precipitous kind of pain, especially natural gas.  Absent the subsidies it used to enjoy Ukraine now pays USD 421 per m3 for Russian gas, the source of 95% of its imports, more than the EU at USD 400 per m3.  The government has also steadfastly refused to increase gas prices for either inefficient industries or for consumers, still feeling the affect effect of the 2008-09 recession.  With presidential elections due in 2015, and the 2012 contest demonstrating failing confidence in his leadership, Mr Yanukovych urgently needs to find the funds to avoid devaluation, maintain subsidies and probably hike wages.

The most likely scenario remains that the parliamentary session due to open on November 21st will pass a quick law allowing Ms Tymoshenko to go abroad and the DCFTA will be signed in Lithuania, but the threat of Russia’s response could yet be enough to forestall the agreement.  Mr Yanukovych was secretly in Moscow on November 9th, and I wouldn’t be surprised if he was there to express to Russian President Vladimir Putin his continual friendship and his lukewarm commitment to eventual and permanent Ukrainian-EU integration.  He is acutely aware his political future rests largely on Russia’s next move and although polls show a majority of Ukrainians currently support EU integration, that could easily change if economic conditions deteriorate.