2 – Perspectives On Ukraine Crisis And The Road Ahead
The roof fell in. Both men grossly underestimated the uproar they would provoke — also misunderstood it. As protests across western Ukraine gained momentum through December, Putin consulted with Yanukovych and then offered what the pair presumably calculated would buy off the protesters. Russia would purchase — in effect, retire — a $15 billion slice of Ukraine’s sizeable national debt and slash by one-third the price of the Russian gas Ukraine relies upon for its energy needs.
The offer revealed how utterly Putin and Yanukovych failed to comprehend what they had unleashed. The protesters’ fury wasn’t fuelled by pocket-book passions; they were nationalist: the future of Ukraine. Tens of thousands — mostly students in those early days —- transformed Kiev’s vast central plaza, Independence Square — Maidan, Ukrainians call it — into a tent city Others began to besiege and then occupy government buildings throughout western Ukraine.
Yanukovych tried repression, ramming through laws essentially suspending civil rights. Leading members of the political opposition were abducted, tortured, some killed.
The protests metastasized, now drawing in older Ukrainians — many of them middle-aged veterans of Soviet military conscription outraged by what was being done to their children.
- Yanukovych — Ukrainian born and bred, after all — seems to have grasped that the massacre instantly cost him all legitimacy. Putin refused to acknowledge this. Europe dispatched to Kiev a trio of heavyweight mediators; Putin sent his ‘human rights commissioner’.
- The deal they thrashed out — restoring Ukraine’s 2004 constitution, which Yanukovych had trashed, and calling for elections by the year’s end — signaled the slow-motion demise of Yanukovych’s regime Exhausted, Yanukovych signed the deal. Putin would not: his emissary flew back to Moscow without putting signature to the document.
The Maidan multitudes denounced the deal with intensified fury: too little, too late. Yanukovych’s nerve broke. He abandoned the glitzy palace — complete with private zoo — that embezzled government funds had erected for him outside Kiev, and decamped to Russia. He seems not to have warned Putin of his arrival. Evidently stunned, Putin now demanded implementation of the negotiated deal his emissary had just refused to sign. He also urged Yanukovych to return to Ukraine. On both, he was ignored. It was Putin’s culminating failure in a sequence of tumultuous events which, throughout, found Putin a day late and a ruble short.
Whether Putin initially envisaged his seizure of Crimea as a lone salvaging from the wreckage of his Ukraine policy is unclear. Whether the West’s hesitant response to his coup — minimal economic sanctions on Russia, even those only after much hand-wringing in Europe — emboldened him is as unclear Perhaps he was lured on by polls showing Russian public opinion ecstatically behind him.
Putin doubled down. He began covert support for the resistance in eastern Ukraine. The resistance was genuine, though Russia’s hysterical denunciations of the interim government replacing Yanukovych in Kiev as “fascist” or even “Nazi” surely fanned it.
Ukraine is in many respects two countries. Those in the heavy industrial centers of the east are Russian-speaking, Orthodox worshippers, linked to Russia by networks of family ties. Western Ukraine is Catholic, Ukrainian speaking, increasingly a part of Europe. All Putin needed was to insert modest numbers of Russia’s able Special Forces to organize and arm the easterners’ self-generated resistance. In the short-term, Putin succeeded. Fantasies like the self-proclaimed People’s Republic of Donetsk took birth.
- To foreclose any NATO military response — not that one was ever contemplated — Putin massed along Ukraine’s eastern border rather more than 10,000 troops, most probably two of the Russian Army’s relatively new formations: its “combined arms brigades”, created specifically to put down small-scale threats along Russia’s borders.
- Satellite surveillance indicated that two more brigades were echeloned further back — a second-wave assault force if one were needed. Putin must have taken a NATO intervention seriously. When he told European Commission president Jose Manuel Barroso at the end of August: “if I wanted to, I could take Kiev in two weeks,“ he was being uncharacteristically modest.
He was wrong yet again. It wasn’t an altogether stupid miscalculation. Since reunification, successive German leaders have striven for a special relationship with Russia. Immediately on leaving office, Merkel’s predecessor as chancellor, Gerhard Schroeder, accepted a lucrative position as chairman of a pipeline company majority-owned by Gazprom, Russia’s supplier of gas to Europe.
Just as he had misread the demonstrators in Kiev, Putin misread Merkel. Merkel grew up in Soviet-controlled East Germany. She has no illusions about Russia. German officials add that Putin’s increasingly strident assertions of a right to protect Russian speakers beyond Russia’s borders — thus his right to intervene in eastern Ukraine — hold for Merkel toxic echoes of Hitler’s claims in the 1930s to protect German-speakers beyond Germany’s borders. That led in 193, to the dismembering of Czechoslovakia; Britain’s acquiescence in this is now regarded as an act of shameful “appeasement.”
II– PIPELINE POLITICS
The immediate task has been to ensure that Ukraine has energy this coming winter. That requires an uninterrupted flow of Russian gas. The EU/World Bank guarantee paved the way for that. The EU’s top energy official has said that he expects a deal to be wrapped up before the end of 2014.
- Delaying, meanwhile, the free-trade provisions of the EU agreement actually helps Ukraine. Under the new deal, Ukraine’s exports to the EU are freed from duties or tariffs through 2015, while Ukraine retains border tariffs against imports from the EU.
- Ukraine’s near-derelict manufacturing base — still largely state-owned and as badly managed as most Soviet enterprises were — thus gets a year’s respite from European competition. This is so sensible that several EU governments are already talking quietly of extending Ukraine’s one-way trade deal.
- Helping Ukraine modernize its industrial and commercial base has to be a European priority. Supporting Ukraine as it tackles this gargantuan task is a no-brainer. The cost of one-way free-trade for Ukraine will amount to a rounding error in the EU’s $16 trillion a year economy. Modernizing Ukraine’s industrial heartland will cost billions more — but guarantees of further World Bank loans and the insertion of western know-how will pose no more than marginal costs. Reassuringly, events of the past year seem finally to have convinced EU and IMF bureaucrats to view these issues from more than an auditor’s perspective.
The longer-term challenge is, of course, to reach an understanding with Putin that Ukraine’s sovereignty and territory will be respected. A year’s delay bringing Ukraine into the EU’s common market buys time for diplomacy.
AVENUES FOR A WAY OUT
Putin’s concerns for the political leanings of eastern Ukraine’s Russian adherents could be met, though. Ukraine has signaled that it will cede a good deal of autonomy to its eastern region — probably some sort of federal structure, details TBD.
Would Putin accept this? His foreign minister Sergei Lavrov’s session on Russia’s Channel Five at the end of September suggests Putin might. Read carefully, Lavrov came as close as Russian/ Soviet officials ever do to hoisting a white flag. Lavrov’s message: “The main problem is that we’re absolutely interested in normalizing these relations [with the U.S.] but it wasn’t us who ruined them. And now we need what the Americans will probably call a ‘reset’.”
Lavrov blamed NATO for the crisis: “Look how quickly NATO switched to confrontation over the Ukraine crisis and started hurling serious yet completely unfounded and biased accusations at us.”
NATO was irrelevant in western responses on Ukraine. Sidelined by deliberate policy, NATO officials said as little as possible. EU civilian governments had, with America, all the running. Lavrov will know this. He is an exceedingly able diplomat, trusted by Putin but with a legion of wary friends in western chancelleries. Before Putin promoted him to the foreign ministry in 2004, Lavrov had spent a decade as Russian ambassador to the United Nations.
(His daughter graduated from Columbia and lived in New York until the Ukraine crisis made her return home earlier this year diplomatically desirable. Friends from Columbia days say she has kept the lease of her apartment.) Lavrov knows how to deliver messages. His message in late September was plain: Remove NATO from the equation. Former Soviet leader Mikhail Gorbachev had given the same message a couple of weeks earlier: “Western nations…should stop dragging Ukraine into NATO”, the Novaya Gazeta newspaper reported him opining
Russia’s fears of NATO are real. Western politicians tend to dismiss them as propaganda, but that’s a failure of insight. The NATO alliance decisively won the Cold War, while every village square in Russia bears its memorial mourning a generation killed by Germany’s invasion in 1941. Of course Russians fear NATO. That’s an emotional reality the West would be wise to recognize always and accommodate whenever possible.
Lavrov’s implicit offering —take the prospect of Ukraine’s membership of NATO off the table and we might negotiate a deal — is readily met. Henry Kissinger has suggested that Ukraine be conferred — through a treaty, perhaps — a status like Austria’s or Finland’s through the Cold War: democracies and free-market economies but formally neutral, certainly not members of NATO. (NATO’s present ‘liaison office’ in Kiev would have to close.)
The key is Russia’s gas. Europe meets a quarter of its energy needs with natural gas; Russia supplies a quarter of that. For a decade or more, European defense officials have quietly warned their governments that growing dependence on Russian energy is a strategic vulnerability. One of the European Commission’s signal failures has been its near-passivity in face of those warnings. Russian gas, cheap and plentiful, was too addictive. Witness ex-Chancellor Schroeder’s acceptance of a cushy job with Russia’s gas monopoly, Gazprom.
ADJUSTING TO A TRANSFORMED ENERGY MARKET
The next decade will see two developments. America will build terminals to export its stunningly abundant natural gas discoveries — “the Saudi Arabia of natural gas,” one analyst called America’s new-found reserves. But those exports won’t ramp up until 2017-2020.
Meanwhile, Europe’s leverage is its power to hold Russia’s pipeline plans hostage. Russian gas supplies to Europe flow mostly through pipelines transiting Ukraine. This bottleneck has given Kiev leverage. As a last resort, Ukraine can shut down Russia’s gas supplies to Europe. Unsurprisingly, Russia has, for a decade, been laying down two arteries to bypass Ukraine.
Its pair of ‘North Stream’ pipelines run across the Baltic seabed from a Russian port to a German one. They began sending gas in late 2011 and late 2012. Russia’s planned third and fourth North Stream lines will transit the maritime zones of Estonia and Finland. Russia needs their consent. “Environmental studies” and the like could delay consent indefinitely.
Far more important to Russia’s strategy to bypass Ukraine is its ‘South Stream’ pipeline. Crucially, this is only partially-constructed. It crosses beneath the Black Sea to the Bulgarian resort of Varna, thence divides to send gas northward into Austria, westward into Italy. Construction of South Stream began at the end of 2012. Approval by multiple European governments is needed for its onward routes. In April the European Parliament, awakening at last to Ukraine’s strategic leverage as a pipeline hub, passed a resolution opposing South Stream and recommending that Europe seek non-Russian gas supplies. A few days later, Bulgaria — EU member since 2007 — halted construction of the South Stream section through its territory. The EU, meanwhile, has passed legislation banning gas producers (like Gazprom) from owning pipelines (like Gazprom). Russia has complained to the World Trade Organization. Those disputes can take years to resolve.
Long-term, Gazprom’s dominance of Europe’s energy needs will be challenged by gas supplies from other fields — Iran or even northern Iraq — pipelined through Turkey and thence into the South Stream line. To pave the way for that, the EU is demanding one more condition to approving South Stream’s next phase: the pipeline must be open to gas from non-Russian suppliers.
Construction of both North and South Streams has been financed largely by Western banks. They and their governments realized that the pipelines would bypass Ukraine, depriving it of leverage against Russia. Back then, who cared? Some analysts assert that the EU’s reversal of stance is hypocritical and unwise. Preserving the security of Europe’s energy supplies, they argue, outweighs the need to support Ukraine. The issues are entwined. As to hypocrisy: that was then, this is now. Policies respond to circumstances. Ukraine has moved decisively towards Europe. Anyway, sentiment aside, Europe now has no strategic option but to support Kiev. If EU members were to demonstrate that energy security outweighs support for Ukraine, they would be handing Putin and his successors a weapon to dominate Europe hereafter.
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