By Matthew Bryza
This article first appeared on Eastbook
and on the International Centre for Defence Studies (ICDS, Tallinn) blog page.
Last weekend’s
breathtaking triumph of those who seek a democratic, prosperous, and modern
future for Ukraine will remain fragile for months to come, even in a best-case
scenario. Assuming Ukraine succeeds in forming a new government, revising its Constitution,
and electing a new President, the country will remain vulnerable to two other
serious threats: strategic drift and economic collapse. Now is the critical
moment for the European Union and United States to act together as a
lighthouse, guiding Ukraine’s new ship of state toward a safe geopolitical
harbor where groundbreaking reforms will be rewarded with lifesaving economic
support.
Strategic drift
is perhaps the more urgent threat. Tension is likely to persist in pockets of eastern
and southern Ukraine, where sentiment runs strong for Ukraine to sustain its historical
closeness to Russia rather than Europe. Moscow is feeding these tensions: Foreign
Minister Lavrov has denigrated Yanukovych’s ouster as a coup d’état, while
Kremlin-controlled Russian media warn of possible civil war and partition. The
Russian government may step up the pressure by withdrawing promised economic
support, restricting imports of Ukrainian goods, manipulating natural gas
supplies and prices, issuing Russian passports to residents of eastern Ukraine
and Crimea, and supporting pro-Russian politicians (whether openly or
covertly). Such tactics have a twofold aim: to hamper the push by Ukraine’s new
leaders toward Europe; and to counter the West’s pull of Ukraine toward a
modern future outside Russia’s geostrategic orbit.
Moscow’s tactics
appear to be working in Washington. Since the dramatic events of Saturday,
February 22, the White House has claimed that Ukraine is not the object of an
East-West tug-of-war, despite a myriad of signs from Moscow to the contrary. The
White House seems to ignore that the genesis of these past three months of
popular unrest in Ukraine was Russian President Putin’s successful intimidation
of Yanukovych into abandoning the then-Ukrainian President’s own policy of signing
an Association Agreement with the EU last November at the EU’s Eastern
Partnership Summit in Vilnius. Moscow will now employ the growing range of
tactics outlined above to pursue President Putin’s most urgent geopolitical
goal: preventing Ukraine from aligning with the EU and sliding from Russia’s exclusive
geo-economic grip.
There is nothing
Washington can do to dissuade President Putin from his zero-sum approach, or to
convince him that the U.S. and EU did not somehow engineer Yanukovych’s ouster.
In fact, by pretending they do not have a profound and historic strategic
interest in Ukraine’s deeper integration with into the West, the U.S. and EU
risk tempting Russia to manipulate centrifugal political forces in eastern
Ukraine and Crimea with increasing intensity.
In reality, the
Kremlin does not seek civil war or the partition of Ukraine. On the contrary, as
President Putin contemplates a long-term plan to counter his humiliating defeat
in Kyiv, his fundamental goal remains—over time—to reintegrate a united Ukraine into Russia’s economic
and political orbit. President Putin’s greatest geopolitical project, the Eurasian
Union, can achieve genuine geopolitical and geo-economic heft only if all of
Ukraine—not just the eastern half—joins Russia, Belarus and Kazakhstan in this
embryonic bloc.
There is,
therefore, little to lose and everything to gain by Washington articulating
clearly and loudly the geostrategic truth: Ukraine’s closer alignment to the
European Union is a key strategic interest of the entire Euro-Atlantic
community. Such a rhetorical shift by the White House would provide both the
strategic guidance and shot-in-the-arm that Ukraine’s new government and the
brave protestors who got it there so urgently need.
At the same
time, the EU and U.S. should also demonstrate their readiness to help Ukraine
tackle its second serious vulnerability, economic collapse. The Ukrainian
economy is stalled, with zero percent GDP growth in 2013—and far worse expected
this year. The country’s huge debt burden is unserviceable absent serious
external help, with 25 percent of some $75 billion in external debt due within
the next 18 months. Meanwhile, Ukraine’s currency has been depreciating
sharply, thanks to rising prices for natural gas imports, decreasing prices for
Ukraine’s metal exports, and a flight toward the safety of international
currencies during political crisis; Ukraine’s foreign currency reserves can now
cover only two months of imports. Finally, Ukraine’s new government will not be
able to sustain the Yanukovych regime’s unrealistic budgetary promises in
pursuit of political stability, which included subsidies to inefficient heavy
industry and its oligarchs in the East and social welfare programs that eat up
50 percent of GDP. Cancelling these benefits will not boost the stability of
Ukraine’s next government.
Fortunately, the
EU and U.S. are scrambling to provide Ukraine a hefty bailout package, which EU
Economic Commissioner Olli Rehn said during the G20 meeting in Sydney “will
have to be measured in the billions rather than hundreds of millions.” Such
Western aid was unthinkable during Yanukovych’s criminally inept and kleptocratic
regime. Nor was it possible following the Orange Revolution of November 2004, the
first time when Yanukovych was ousted by mass protests, as Ukraine’s victorious
“reformers” disappointed their domestic and international supporters with their
inability to break the inefficient and corrupt practices stretching back to the
Soviet era, which continue to hamstring the Ukrainian economy to this day.
This time,
however, things could be different. The historical stakes seem higher today
than following the Orange Revolution in late 2004, given the loss of life and
the new generation of political leaders that have now emerged in Ukraine. If Ukraine’s
new leaders demonstrate the same commitment to groundbreaking reforms as did
their predecessors in neighboring Poland in 1989, they should enjoy similar aid
from the international community, including help from the IMF in restructuring
official debt, as well as technical assistance and budgetary support from the
World Bank and EU. Such resolve would be unprecedented in Ukraine’s political
history, but must remain a precondition for any international bailout. Otherwise,
Ukraine will likely return to the darkness that has plagued the country over
the past few months.
At the center of
any serious reform effort must be Ukraine’s natural gas sector, where massive
corruption has allowed Moscow’s favored Ukrainian political and business
leaders to become oligarchs; it has also perpetuated Ukraine’s vulnerability to
Russian gas cutoffs during disputes over Ukraine’s non-payment and exorbitant transit
fees to pump Russian gas to European markets.
Many American and European politicians now hope
that by soft-pedaling the geopolitical contest that has undeniably taken shape
over Ukraine, they can bring along Russia as a partner in stabilizing its big
neighbor. A litmus test of this approach’s integrity could be whether Moscow is
willing to abandon its hardball tactics on natural gas supplies to Ukraine and
instead partner with Brussels and Kyiv to develop a transparent and efficient
transit system for Russian natural gas to cross Ukraine and reach European
markets. Such a solution would mark a joint victory for Ukraine, the EU and
Russia itself. And, precisely because of its win-win nature, this option will
likely be rejected by Russia. Moscow will instead likely choose to stick with
its hardball tactics of gas cutoffs and gargantuan subsea pipelines like Nord
Stream and South Stream, each of which costs more than the entire Sochi
Olympics and drains the Russian treasury of resources that could be better
invested in the welfare of Russia’s own citizens.