Friday

21st Sep 2018

Opinion

Russian tactics on Ukraine likely to backfire

  • Reforms demanded by the IMF will see a tripling in the price of natural gas (Photo: International Monetary Fund/Cliff Owen)

While the media’s attention was focused on the tragic events that led to the first airplane crash on French soil since the tragic 2000 Concorde accident, the US and Russia tested a total of three inter continental ballistic missiles in what is definitely the most shocking example of sabre rattling since the end of the Cold War.

Trapped by their own rhetoric and hot on the heels of the simmering Ukrainian crisis, both Moscow and Washington have so far escalated the crisis with each new week to dangerous levels.

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  • Russia’s long shadow should force the Ukraine’s political class to work together (Photo: Dennis Jarvis)

While for some commentators Russia’s aggressive rhetoric is cause for alarm and signals the dawn of a ‘new normal’ where the ideals of a peaceful European continent have been more or less quashed, a more measured approach would point out that Moscow’s brazen efforts are nothing more than signs of desperation.

Indeed, Russia seems to be running out of options in Ukraine, resorting to brute force to intimidate Western governments, knowing full well that it cannot impose sanctions or cut off gas supplies without mothballing its own flagging economy.

According to this line of thought, the more aggressive Russia becomes, the greater the desperation within the Kremlin for a quick way out – in a world where wars are costly affairs, the paper tiger roars harder than it can bite.

Moreover, the Kremlin knows that obtaining a sphere of influence should not cost it the very capacity to exert power over it.

If one were to give credence to the second school of thought, then it means that soon we will reach a stalemate on the chessboard of Europe, where both parties will be unable or unwilling to make the mistake of taking their bellicose rhetoric to its ultimate logical conclusion.

What should we expect?

With a bit of wishful thinking, Alexander Motyl, a Ukrainian-American commentator, noted a few months ago that “some combination of cold war, cold peace, and hot war will transform Ukraine into a South Korea, Taiwan, or Israel”, a nation living under the looming spectre of imminent war but endowed with strong institutions and a healthy democratic system.

Indeed, violence and the persistent fear of violence have usually acted as a catalyst for states to enhance their security, providing the banner underneath which the various actors can unite and spearhead economic and political development.

The other side of the coin in the Ukraine crisis is that Russia’s long shadow should force the country’s political class to work together in order to weaken the Kremlin’s grip.

Post-Budapest reality

Ukraine’s security and territorial integrity used to be based on the guarantees hashed out in the 1994 Budapest Memorandum, where the US, Russia and the UK extended security guarantees to Kiev in exchange for its nuclear arsenal.

As the memorandum was essentially shredded after the annexation of Crimea, Ukraine is in a rather delicate spot. Since the West is locked in a game of cat and mouse with Russia, where the extent of support offered to Ukraine is conditioned on the Kremlin’s moves, it’s obvious that Ukraine must stand on its own two feet and muster the strength to help itself.

The $17.5 billion financial package offered by the International Monetary Fund (IMF), albeit necessary, comes with painful strings attached.

Starting from April, the centrepiece of the reforms demanded by the IMF will see a tripling in the price of natural gas in an effort to wean the consumers away from costly government subsidies.

Unfortunately, even with a social safety net in place, the hike will slash consumer spending, lower standards of living and increase the disconnect between the Kiev government and an already impoverished population. A weak or otherwise unpopular government lacks the capacity to implement meaningful reforms, such as the thorny Minsk II agreement that calls for a new Ukrainian constitution.

What Ukraine needs is a country strategy, a serious inner reflection of how to crawl out of the economic hole in which geopolitical struggles have thrown it into in the past year.

The austerity-driven, one-size-fits-all policies of the IMF have therefore to be complemented by the tailored and innovative ideas that the private sector would champion.

For example, on 30 March, the financier George Soros announced that he would be ready to invest $1 billion in Ukraine in profit orientated “agriculture and infrastructure projects”, if the West would offer risk assurances and outlined steps for a $50 billion financing package.

Indeed, foreign direct investments could jump start much needed economic growth, a topic not addressed by the structural reforms demanded by the IMF.

Firtash

A bolder initiative came from Ukrainian billionaire Dmitry Firtash and his Agency for the Modernisation of Ukraine (AMU), a body devoted to developing sectorial policy recommendations meant to restart growth.

Counting on an impressive list of members, such as staunchly anti-Russian French philosopher Bernard-Henry Levy, the former French foreign minister Bernard Kouchner, former German finance minister Peer Steinbrueck and Nobel Peace Prize winner Ferdinand de Klerk, the AMU aims to come up with concrete proposals within 200 days.

Firtash, bemoaning the lack of progress made by the Kiev administration, argued that Ukraine needs to attract $300 billion in investment funds for its immediate reconstruction and to stabilise the economy.

Some have pointed to Firtash’s checkered past and his current case for extradition to the US on bribery charges to question the viability of the AMU.

But this would be a somewhat reductionist approach which would turn the AMU into one man’s affair.

For starters, the program is supported by a wide array of influential Western political figures with the same goal in mind – to reform Ukraine’s economy and trade policies, build a platform to battle corruption, and attract investment into a country that has seen foreign investor flee at record speed.

The bottom line, and one often ignored by pundits, is that Russia’s aggressive actions will strengthen Ukraine in the long run.

Laudable initiatives such as Firtash’s AMU or Soros’ pledges could prove to be a boon for Ukraine’s future and provide the impetus needed to reform the country from the ground up.

The road ahead is definitely long and arduous, but Kiev should forge its own path. It is the only way it will ever manage to break free from the whims of its neighbours.

Rob Edens is a US-origin writer on European affairs, previously published in OpenDemocracy, Real Clear World and Digital Journal

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