Bloomberg News

Putin’s Ukraine Ambition Unimpeded by West as Crimea Looms

March 14, 2014

Poster in Sevastopol

A man walks past a poster reading "On March 16 we will choose either... or..." and depicting Crimea in red with a swastika and covered in barbed wire, left, and Crimea with the colors of the Russian flag in Sevastopol on March 13, 2014. Photographer: Viktor Drachev/AFP/Getty Images

Western leaders are counting on the threat of wide-ranging sanctions to make Vladimir Putin pause for breath after swallowing Crimea. If they can’t, the Russian president may opt to move deeper into Ukraine.

Putin has yet to blink after sending in Russian troops to seize control of the Crimean peninsula last month, triggering the worst confrontation since the Cold War. Even as the U.S. and European governments step up their threats of punitive action, pro-Russian protests that are happening in the east of Ukraine, including deadly clashes last night, give him the pretext for further incursions.

“I wouldn’t rule out a Russian military operation in eastern Ukraine, though it’s not on the agenda at the moment,” Fyodor Lukyanov, head of the Moscow-based Council on Foreign and Defense Policy, said by phone March 12. “If the Ukrainian authorities repress these protests, Russia will respond.”

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Putin has to balance the risk of getting drawn into a protracted standoff and Iran-style isolation with his goal of sabotaging the West’s plans to draw Ukraine into its orbit. The next flashpoint is in two days, when the majority-Russian Crimea region holds a referendum on seceding from Ukraine, a ballot that President Barack Obama and Chancellor Angela Merkel have warned has no international legitimacy.

“A lot depends on how firm the signaling is to Putin at this stage,” Ian Bond, director of foreign policy at the London-based Center for European Reform, said by phone. “There is a risk he may think he can take more bits out of Ukraine.”

Military Standoff

Putin got parliament’s authorization to send troops to the former Soviet neighbor to protect Russian speakers in Crimea and other parts of southeastern Ukraine. While armed clashes between Russia and Ukraine have been avoided so far in Crimea, the broader military standoff threatens to escalate.

How the Crisis Began, Where It's Heading

Ukraine’s interim government, which took power after the overthrow of Moscow-backed President Viktor Yanukovych, said on March 12 that Russian forces were massing on the country’s eastern border. Acting Prime Minister Arseniy Yatsenyuk warned the same day after meeting Obama in Washington that Putin may move beyond Crimea, even as far as the capital Kiev.

The U.S. delivered a dozen F-16 warplanes to Ukraine’s neighbor Poland this week after deploying six F-15s last week to Lithuania. Six Russian fighter jets and three transport planes arrived in Ukraine’s northern neighbor, Belarus, for joint drills, the Defense Ministry there said.

‘Very Nervous’

The military buildup in and around some “very nervous” countries in central and eastern Europe probably won’t lead to armed conflict between Russia and the West, said Eugene Chausovsky, an analyst at Stratfor, a U.S.-based risk advisory group. Yet a Russian incursion into eastern Ukraine could spawn a “potentially destabilizing situation” and fighting, he said.

“They would face a lot more resistance from within Ukraine,” Chausovsky said by phone. “Ukraine’s military is there. It’s certainly much weaker than Russia’s, but it would be in a much better position to defend itself than in Crimea.”

Russian Foreign Minister Sergei Lavrov is to meet U.S. Secretary of State John Kerry in London today for talks aimed at a diplomatic solution. The U.S. has urged Russia to cancel or postpone the referendum in Crimea, or at least agree not to implement any annexation vote.

The U.S. and the European Union are brandishing the threat of escalating measures against Russia, with EU foreign ministers set to agree on visa bans and asset freezes aimed against Russian officials on March 17, the day after the referendum. The U.S., which has already enacted financial sanctions, plans to widen the measures.

Full-Scale Sanctions

Full-scale sanctions, which might include trade, banking and investment restrictions or even asset freezes according to London-based Standard Bank Group Ltd. and Macro Advisory in Moscow, would be triggered if Russia moves deeper into Ukraine.

The Western strategy is to confront Russia with the threat of “pretty stark” consequences should it conduct further incursions, Constanze Steltzenmueller, director of the German Marshall Fund, said by phone from Berlin. “Everything depends on what the Russians do after” Crimea, she said.

Violence erupted last night in Ukraine’s eastern city of Donetsk, with at least one person killed and more than a dozen injured in clashes between thousands of pro- and anti-Russian protesters. Putin said March 4 he reserved the right to use force to defend Russian-speakers in eastern Ukraine. “We retain the right to use all available means to protect those people. We believe this would be absolutely legitimate. This is our last resort,” he said.

Putin’s Acceleration

So far, the Russian leader has only accelerated his behavior when delivered with ultimatums.

The day after Obama said Russia would face “costs” if it intervenes in Ukraine, Putin got the parliamentary green light to deploy military forces in the country. The EU’s threat made on March 3 to suspend talks to deepen trade ties and ease European travel for Russian citizens was followed three days later by the announcement of Crimea’s secession vote.

Putin, a former KGB colonel who once described the 1991 breakup of the Soviet Union as the greatest geopolitical catastrophe of the 20th century, has repeatedly railed against the eastward expansion of NATO. In 2008, Russia fought a five-day war with Georgia, a U.S.-ally that was seeking to join the Western military alliance.

Western ‘Conspiracy’

“For Putin, he feels he has his back to the wall, pushed to this flashpoint in his mind by the western powers over a long period,” said Professor Hans-Henning Schroeder, a senior researcher at the Federal Institute for Russian, East European and International Studies in Cologne, Germany. “In his mind is ‘now they want to take Ukraine away and it’s plainly a conspiracy of western intelligence agencies.’ Putin feels he has to act and act militarily.”

As diplomacy has stalled, Germany has hardened its stance after initially urging the EU to hold off on sanctions to allow a negotiated outcome. German Foreign Minister Frank-Walter Steinmeier said that today’s U.S.-Russia meeting in London looks like the “last chance” to defuse the crisis before the Crimea referendum.

EU Accord

Raising the stakes, Yatsenyuk said at his March 12 meeting with Obama that Ukraine expects to sign a free trade agreement with the EU within the next 10 days.

Yanukovych’s decision to pull out of the EU association agreement under Russian pressure triggered three months of protests that led to his ouster.

Russia wants a new coalition government in Ukraine that includes members of the former Moscow-backed administration; a new Constitution giving the Russian language equal status to Ukrainian; and the postponement of elections until later in the year, according to Sergei Markov, an adviser to Putin’s staff.

The proposed EU-Ukraine accord should also be put on hold because no elected government is in place, Markov, who is vice rector of the Plekhanov Russian University of Economics in Moscow, said by phone yesterday.

“The West wants to talk to Russia only in the language of force,” said Markov. “OK, so we will talk in the language of force.”

Contagion Effect

As the West considers how to ratchet up its sanctions, the EU, which relies on Russia for 30 percent of its natural gas needs, can’t substitute its energy imports in the near-term, says Chris Weafer, a senior partner at Macro Advisory in Moscow.

To be sure, the West can cause damage to the already faltering Russian economy, which is growing at the slowest pace since a 2009 recession, by making it harder for Russian companies to access global financial markets, Weafer said in an e-mail. Wide-ranging sanctions though would have a negative contagion effect on several EU countries that rely on Russian spending and some high-profile U.S. and European companies with multibillion dollar investments in Russia, he said.

The strongest measure, U.S. military intervention, is unlikely, according to Jeff Mankoff, deputy director of the Russia and Eurasia Program at the Center for Strategic and International Studies and a former State Department official.

“The only thing that’s really going to dissuade them is if Putin and the people around him really felt a threat to their power,” Mankoff said by phone. “If there was a major economic crisis in Russia, you may see a change in their calculus,” he said. “But I don’t see that happening.”

To contact the reporter on this story: Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editors responsible for this story: Hellmuth Tromm at htromm@bloomberg.net; Balazs Penz at bpenz@bloomberg.net Alan Crawford


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