Thursday, February 26, 2015

Sucks to Be U(kraine)

Ukrainian leadership must be very weary these days.

It was reported yesterday that Russia has again escalated its conflict with Ukraine by threatening (again) to cut off gas supplies within the next two days if Ukraine cannot pay Gazprom, the Russian energy giant, what it owes. As fighting rages on in the east, winter rages on throughout Ukraine and Europe - natural gas is literally vital to the survival of many throughout the next several weeks. The natural gas dilemma also constitutes a severe economic threat to Ukraine, who has banned the purchase of foreign currency as its own continues to slide. Ukraine's economy is hanging on by a thread these days; any disruption in energy supplies would be catastrophic. Europe, too, is not in the most secure of financial positions - particularly the eurozone. With much of Western Europe's natural gas supply coming from Russia in pipelines that run through the Ukraine, they stand with as much to lose as Ukraine itself.

Courtesy of Telegraph

Perhaps most frustrating about Russia's threat is that the Ukraine alleges it prepaid months ago a sum large enough to cover their natural gas supply through the whole winter. So where is the discrepancy? It lies in Eastern Ukraine, which has been controlled by pro-Russian separatists for months. Russia has been pumping gas directly to the separatists through different pipelines in order to keep them warm as they serve as proxies in the fight to shatter Ukraine's sovereign borders. Russian President Putin is calculated in doing this: he can support those loyal to him across the border, without having to financially support them. All he has to do is argue that the region is technically part of Ukraine, so the energy supplied there comes out of Ukraine's budget.

Meanwhile, most likely according to Putin's plan, all of Europe is slowly destabilizing. Lithuania yesterday reintroduced conscription, out of fear of Russian aggression spilling over into its borders the way it did Ukraine's. Lithuanian leaders estimate adding 3,500 or so additional soldiers to their army each year, at least for the next five years. While not instituting a compulsory policy like their neighbor, Latvia has also pledged to ramp up its military spending and bolster its armed forces in the event of Russian aggression. If nothing else, the conflict in Ukraine has put the entire former Soviet bloc on edge as it creeps closer to an all-out armed engagement. Russia's unpredictability has only exacerbated anxieties.

And yet, the separatists in Eastern Ukraine march forward, this time to the port city of Mariupol. Should this be their destination, it would mark a significant shift in the conflict - Mariupol is on the way to Crimea, and it would indicate that the separatists are making an effort to carve out a path connecting their stronghold farther up north to the annexed Crimea. France's foreign minister has already warned Russia that this would be a red line, suggesting a retaliation of some sort, although this is a weak threat considering the fact that the conflict has lasted months without any direct military intervention from the U.S. or any European country. Should Ukraine fail to secure Mariupol, it's hard to see any real, effective response from the west.

Courtesy of Reuters

So what is Ukraine to do? For starters, it's time to give up the east.

This is a frightening suggestion, one that seemingly defies the logic that has kept the developed world relatively conflict-free in the 21st century. And there are major downsides - most notably, that it will be giving Russia what they want, and incentivizing similar action in other corners of the former Soviet bloc. But it is a necessary action, one that will mostly free Ukraine from conflict while stabilizing their economy.

As mentioned earlier, Russia has effectively equipped rebels in eastern Ukraine and enabled them to successfully fend off Ukrainian soldiers, while placing the entire financial burden of the roughly three million who live in the east on the shoulders of Ukraine. This is too large a burden for a country that is just barely remaining out of the grip of default, and undermines their military's position in the region. By ceding the region to Russia, the separatists will become Russian citizens; the three million that live there will look to Russia for financial support, and it will no longer be possible for Russia to wage conflict in Ukraine under the thin veil of the separatists being "Ukrainian citizens". Now, this is one belligerent nation attacking another - something that would garner a much swifter, and severe, response.

Ukraine will also be able to slowly allocate their meager finances elsewhere, such as industrial development (importantly, development that no longer relies on the fossil fuels Russia has stockpiles of), economic development, and independent energy supplies. This will be a long and difficult journey, but with the proper finesse, Ukraine can shift its economy and reach a modest stability that will allow for job growth and better ties with the eurozone. When (if) the conflict dies down entirely, foreign investment can accelerate this growth.

Courtesy of BBC

This is not a panacea, however. In the meantime, Ukraine and the rest of Europe must find alternative sources of energy in an effort to release themselves from the influence of Russian energy. Winter is far from over, and if Russia makes good on its promises to stanch the flow of natural gas, no amount of territory Ukraine cedes will save it from a humanitarian epidemic of unfathomable proportions. Energy must be sourced from Scandinavia, the U.S., and, if possible, the Middle East.

And finally, Europe and the U.S. must ramp up their support for Ukraine. There is a difference between neoconservatism and the war-mongering associated with it, and a calculated approach at how to support a struggling military that is defending itself against a truly existential threat. Great Britain pledged 75 military advisors to Ukraine, which is a great start. But until more arms are provided, and, more importantly, there is more humanitarian support from those who can afford it, Ukraine will continue to be on what appears to be the losing side of this conflict.

Ukraine has been at a crossroads for some time now. This conflict has killed thousands and is emerging as one of the greater crises Europe has seen since the breakup of Yugoslavia decades ago. The status quo is decidedly not working. Without a dramatic change in the strategy and overall goals of Ukraine and western Europe, nothing but a bleak 2015 (and probably longer) awaits, as Russia fortifies their foothold in Ukraine, potentially expands their aggression elsewhere, while the economies of the west erode.

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