Krishnan Srinivasan
November 18, 2014
Pro-Russian separatists with a picture of Stalin in Donetsk,
Ukraine has slipped from the Indian headlines, but it is still the prime security concern in Europe. With Nato engaging in more frequent and bigger military exercises, and Russia responding with aggressive patrolling by sea and air, there have been 11 dangerously close encounters this year, three of which were considered ‘high risk’. In Ukraine itself, following the separatist elections in Donetsk and Lugansk on November 2 and the Russian ‘acceptance’ of the result — acceptance, not approval, the Russian spokesman was quick to clarify — the crisis in Ukraine has moved into a new third phase.
The first phase had ended with the re-unification of Crimea with Russia, the Ukraine government’s signing of the association agreement with the European Union and the first round of Western sanctions against Russia. The last two events represented the Euro-American challenge to Russian authority in Ukraine in the backdrop of the exchange of accusations that were shot through with the rhetoric of a new Cold War.
The second phase of the Ukraine crisis closed shortly after the Ukrainian parliamentary elections in October, when President Poroshenko’s party emerged as the largest in the Rada, and culminated in the wholesale collapse of Western initiatives to build on the first phase, initiatives that were designed to lead to a consolidation of authority by Kiev over the whole of Ukraine and abject submission by Russia. The Western retreat was occasioned by the EU’s desperation that the escalating situation would jeopardize Europe’s gas supplies (30 per cent of requirements) from Russia during the approaching winter, and the conviction that an association agreement with a country where the economy was so unstable would be of little help to an EU itself faced with several economic and financial difficulties.
This second phase witnessed Kiev’s military manoeuvres in its two eastern ‘rebel’ provinces where the Russian speaking population is numerous. Oligarchs were appointed by Kiev as governors, and military and para-military forces were thrown into the area. This was countered by the large-scale militarization of the opposition to Kiev in the Donetsk and Lugansk provinces, and fighting between Kiev’s forces and the separatists, who were undoubtedly assisted by Russia from across the border. The separatists went on to fashion a sketchy establishment termed the Donetsk and Lugansk People’s Republics as part of a long-term objective to create a state of Novo- rossiya (New Russia). The fighting between the Kiev forces and the separatists created the context of the tragic Malaysian Airlines crash, which, in turn, led to an increase in the range of sanctions imposed by the West against Russia.
Contrary to the outcome expected in the West, the consequence was the steadfast determination by Russia to stay the course of its policy. Moscow continued to demand constitutional reform in Ukraine to address the concerns of the Russian-speaking people (40 per cent of the population in Donetsk and Lugansk), and an Ukrainian government commitment to pay its debts to Russia for past deliveries of fuel. Meanwhile, militant separatism in the two provinces, with Russian support, continued unabated.
Faced with such determination, concessions to Russia were given by the Kiev government and the EU. Following the Minsk accord to establish a ceasefire in Donetsk and Lugansk, Poroshenko agreed on September 12 to postpone the implementation of the economic aspects of the EU association agreement until 2016, and a package of financial assistance was arranged from the EU and the International Monetary Fund to help pay for Russian gas by October 31. Ironically, the requests former President Yanukovich had made to the EU in November, last year, were now substantially met — except, this time, to an administration that the West regards as an ally and in circumstances where the old disparate Maidan opposition to Yanukovich has been constituted into formations that defend the authorities in Kiev. The reforms in financial and business law that the association agreement with the EU would have required of the Ukraine, making things very difficult for Russian business in the country, are on hold, and EU goods will not be given free access to Ukraine, and thereby indirectly to Russia. Above all, Russia’s gas revenues were guaranteed by Europe. Poroshenko also agreed to hold a referendum in Donetsk and Lugansk in early November to evaluate opinions concerning decentralization and local autonomy. That promise has now, of course, been rescinded, with both parties blaming each other.
It is significant that the Russian government’s agreement on gas did not follow from unilateral strength. It was an indication of the fact that the sale of gas to Ukraine and Europe is as compelling for Russia as for its customers. Moscow clearly understands that it must sell as much gas as possible to Europe at a time when its revenues are falling owing to the fall in international energy prices. The Ukraine channels 50 per cent of Russian gas supplies to Europe, and the Russian government in closing the pipelines to Ukraine had shut off much of the gas supply to European customers in the process. The use of energy as a weapon to achieve Russian ascendancy in Ukraine, irrespective of the losses in revenue, would have involved unsupportable losses to Russia in the long term.
The bravado of the Russian indifference to sanctions, on the other hand, is an indication of the domestic strength of the Putin government. The West hoped the embargoes would destabilize the Russian economy sufficiently to undermine the Kremlin through generating dissatisfaction among the country’s oligarchs and business magnates who constitute its economic élite. Sensing this danger, the Russian government spurned any concessions to the West that would have scaled down the sanctions, and instead sent a stern warning to the economic élite. Similar to its action against the oligarch, Khodorkovskii, a decade ago, the Putin government demonstrated its capacity to deal with the Russian plutocrats, this time through its actions against the Sistema chief, Yevtushenkov. The Communist Party is the main opposition in Russia, and its nationalist credentials have been successfully appropriated by Putin and his United Russia Party. The decline in per-capita income that will result from currency depreciation, revenue losses, fall in government investment and capital flight will have no political repercussions in a country where there is no opposition platform that can count in the political process.
The obvious gains for Russia in Ukraine have undermined the West’s hopes for a consolidation of the status quo in the aftermath of the Ukrainian parliamentary elections. This was made abundantly clear from the holding of presidential and parliamentary elections by the separatists in the two rebel provinces and Russia’s acceptance of the result that questions Ukraine’s sovereignty. The short reason for this is that Moscow does not trust the EU or Poroshenko’s government. Putin anticipates attempts to rein in ‘Novorossiya’ through financial means like the withholding of state pensions, business and loans, and the slow absorption of the region, along with the rest of Ukraine, into the EU and ultimately the Nato.
The only guarantee against this, as Russia sees it, is to preserve the chaotic circumstances that separatism in the east creates for the Ukrainian economy and authorities. Alternative spheres of influence, pension systems and currencies are being generated in the separatist enclaves with important resources. If Kiev wishes to avoid the deleterious consequences of Russian-inspired separatism, it must place the economic association agreement with the EU on hold indefinitely, and create the institutional basis of radical federalization in the country that will render this postponement irreversible.
At this time of writing, even given the reality of a pro-EU government in Kiev — and on September 16 there was great jubilation over Ukraine’s association with the EU — the Euro-American alliance is still on the back foot in Ukraine. The Russians seem determined, in spite of the sanctions and the hardships arising therefrom, to see that the West will not have its way in Ukraine without contest.
K. Srinivasan is former foreign secretary of India. H. Vasudevan is professor of history at Calcutta University
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