The Next Stage in the Ukraine Crisis

by Elizabeth Pond
December 19, 2014

On Black Tuesday of this week soft economic power trumped hard military power for the first time since the Ukraine crisis began. The threatened meltdown of the Russian economy could put pressure on Russian President Vladimir Putin to dial down his undeclared war on Ukraine in return for some easing of Western financial sanctions.

Ever since masked armed men with no identifying insignia snatched Crimea from Ukraine last February the West has strived to avoid two contrary hazards. In a nuclear age it must shun any repetition of the sleepwalk into world war in 1914, when competitive, destabilizing mobilizations cascaded into disaster. But it must also avoid supine surrender of Europe’s most cherished achievement over seven decades in establishing on this war-prone continent a taboo on any nation’s seizure of another’s territory by force.

It was indeed the revolutionary peace order in Europe that Putin violated when he severed Crimea from Ukraine and annexed it, despite Moscow’s explicit commitment to non-violence in Europe in treaties going back to the 1975 Helsinki agreement. His landgrab shocked Europeans who had come to take post-modern reconciliation and peace for granted. Pundits concluded that their Kantian peace was no eternal verity after all, but only an interlude between eras of more normal violent international anarchy.

The immediate anti-sleepwalk reaction of Washington and the European Union was to rule out sending their own troops to defend non-NATO member Ukraine. But its corollary, intended to show that turning the other cheek militarily did not mean acquiescience in armed aggression, was to impose financial sanctions on Russian politicians and oligarchs close to Putin over Russia’s transgression of international law. Political scientists could hardly design a better experiment of a clash between short-term hard power and long-term soft power.

In fact, even though the annexation of Crimea gave Putin’s sagging popularity a chauvinist surge at home, Russia’s military juggernaut performed surprisingly poorly thereafter in advancing Putin’s claim to seigneurial privilege in Ukraine and wherever else Russian minorities live in “the Russian world.”  “I think we have done better than we realize,” former Swedish foreign minister Carl Bildt told a Berlin audience last week. The West’s diplomacy managed to limit Putin’s options, without resort to war, he maintained.

In Bildt’s analytical framework, Putin started this year with all of Ukraine as his client state, administered by the Russian president’s protégé, Ukrainian president Viktor Yanukovych. Yet the Russian president squandered this deep hegemony by overreach. The tenacious pro-democracy demonstrators in Kiev’s Independence Square, far from being cowed by the killing of a “heavenly hundred” of their number by riot police sniper fire in January and February–reportedly at Putin’s instigation–held their ground and even saw their ranks swell with new supporters. The shock of the deaths made Yanukovych’s own clientelist party desert him, and the disgraced president fled the country to Russian exile. Parliament named “chocolate king” oligarch Petro Poroshenko as his successor–and Poroshenko subsequently won the office in a landslide vote.

The ragtag Ukrainian army, after a poor start, learned how to fight on the job by resisting Russian takeover. Steady Western diplomatic engagement with Russia–based on the correct gamble that Putin wanted to reap victories through cheap “hybrid” warfare of irregulars led by Russian intelligence officers rather than through a messy direct invasion of Ukraine by Russian army regulars–gradually shifted the environment. Putin agreed–perhaps because he thought he could manipulate Poroshenko as he had manipulated the willing Yanukovych–to stop demonizing the newly elected president as the leader of an alleged fascist coup and to negotiate with him at the same table.

In July the Ukrainian army and allied militias began a serious counteroffensive that gradually reduced territory held by pro-Russian separatists to two enclaves in eastern Ukraine. In late August Putin signalled his red line: he would not tolerate a victory over his proxies by the upstart Ukrainian army. At that point he did send in paratroopers from airborne regiment 331 and other units in a direct invasion. The heavily armed professionals easily routed the Ukrainian forces in a few days.

President Poroshenko understood the kinetic message immediately. On September 5 he, Putin, representatives of the self-proclaimed People’s Republics of Donetsk and Luhansk, and an official of the Organization for Security and Cooperation in Europe (OSCE) as the monitoring agent agreed on a truce, a buffer zone, and closure of the Russian-controled bilateral border to further passage from Russia into Ukraine of heavy weapons and military personnel.

In the ten weeks since then no buffer zone has actually been implemented, and the Russian-Ukrainian border has not been closed. Yet the uneasy ceasefire has at least deescalated the violence and confined the exchange of shelling to the pre-existing battle line. Talks about talks to turn the truce into a more lasting ceasefire have started.

In Bildt’s view, Putin can hardly be happy with this shrinkage of his original claim on full Ukrainian allegiance to claims only on the eastern half of Ukraine under the resurrected 18th-century name of New Russia, and finally only on half of Ukraine’s two easternmost provinces.

The State of Play This Week

On Black Tuesday the ruble suddenly hit a new low at 50 percent of its value last January, capital flight continued to mount toward a 2014 high of $125 billion, and forecasts projected a likely drop in domestic product next year of close to 5 percent if oil continues to fetch only $60 per barrel. On the next day Putin and Poroshenko joined German Chancellor Angela Merkel and French President Francois Hollande in a joint late-night call to reconvene the “contact group” of Russia, Ukraine, and the OSCE as soon as possible. The group should turn the September 5 truce into a durable peace agreement, implement the already agreed buffer zone and exchange of prisoners, and allow Kiev to send desperately needed humanitarian help to needy civilians in the zone held by pro-Russian separatists, they prescribed.

The best Western guess now seems to be that Putin would like to deescalate fighting in Ukraine, either as a tactical pause or as an effort to stave off the financial meltdown that looms under the impact of sanctions and the plummeting price of Russia’s all-important hydrocarbon exports.

This new stage in the standoff between Russia and the West over Ukraine could be very dangerous, in part because of Putin’s impulsiveness, in part because of the lack of mutually understood constraints in a post-superpower but still nuclear world.

So far this year Putin’s default reaction to each setback–the implosion of Yanukovych, the sure-footedness of President Poroshenko, the stout performance of the Ukrainian army and militias, the failure of east Ukrainians to rally to the pro-Russian cause, the failure of German businessmen with lucrative Russian trade and investment deals to block Chancellor Merkel’s financial sanctions on Moscow, the counterproductive impact of Moscow’s new intimidation in alienating a Germany that has long been Russia’s best Western friend, in accelerating the EU drive to free Europe from its addiction to Russian energy, and in consolidating a still tentative sense of Ukrainian identity into a new conviction that Ukrainians have a common European calling–has been to resort to military threats. His assumption has been that he can raise the stakes with impunity because Moscow holds escalation dominance, thanks to geography and Russia’s raw military might.

Certainly Putin’s instinct today is still to up the ante by periodic nuclear saber-rattling and by aggressive Russian air and sea probes of NATO and non-NATO defenses in the Baltic, with transponders shut down. Yet with this week’s financial crisis in Russia, even Putin–who in the past has scorned Western sanctions as pinpricks–can no longer deny that the sanctions are wreaking serious damage on Russia’s economy and on the vast wealth that he and his inner circle have accumulated in the Russian kleptocracy. Far sooner than the authors of Western sanctions anticipated, the vector of soft long-term economic power has crossed the vector of hard short-term military power in the middle-term of real-time policy. “Only a Russian exit from Ukraine can begin to restore confidence,” concludes the Financial Times.

And, the paper might have added sotto voce, although it’s far too late by now for Vladimir Putin to get “off ramp” and still save face (as both President Barack Obama and Chancellor Angela Merkel repeatedly offered last spring and summer), it’s not too late for him to exit from Ukraine and save the Russian economy.

A version of this blog appeared on the IP-Journal site of the German Council on Foreign Relations on December 17, 2014.

Elizabeth Pond, a Berlin-based journalist and author, first covered Ukraine in the 1960s. She is also a non-resident Fellow at the Center for Transatlantic Relations, and her specialty is tracking the dynamics of transformations.