European Affairs

Special Section: Perspectives On Ukraine Crisis And The Road Ahead     Print Email

Vladimir Putin’s supposed orchestration of events in Ukraine has been taken by many as ominous evidence of his power and cunning.  In actuality, however,  his handling of Ukraine is a disaster for Russia’s interests.

An important question-- What will he do next?  No need to ask.   At a July session of Russia’s national security council, Putin “emphasized the need for a buffer zone with the western alliance [i.e. NATO],” according to a semi-official account, which then explained:    “Moscow views Ukraine as critical to its geo-strategic posture to maintain a buffer zone between the Russian Federation and countries bordering Russia that belong to NATO”.

In this crisis, both the US and the European Union bear their share of responsibilities. The U.S. pushed too hard to impose NATO too close to Russia. The EU  did not have a clear Ukrainian policy for years. It initiated association agreements with a firm intention to avoid Ukrainian membership in the E.U. and supported the Ukrainian revolution without planning to bear the costs of its follow up. In the continuing confrontation,  however, Europe has far more leverage than many credit.

Beyond a compromise, what to expect next?    Aside from Ukraine, the European States bordering Russia are Finland (neutral but impregnable), Belarus (safely under Moscow’s thumb) and three small states along the Baltic shore: Estonia, Latvia, Lithuania.    To Putin, bent on expelling western contagion from Russia’s borders, the three Balts (in analysts’ shorthand) are logical targets. 

So Europe faces a new challenge:  There are early warnings that Putin, accepting that for the moment he has been checked in Ukraine, has started to move against two of the Baltic states.  The struggle for Estonia and Latvia has likely begun


In  Putin’s parade of blunders in Ukraine hubris overwhelmed statecraft.   

Mikhail Gorbachev, last leader of the Soviet empire, accepted the Nobel Peace Prize for liberating Eastern Europe by pulling out Soviet occupation forces through 1989-1992.    To borrow Humphrey Bogart’s classic line, he was misinformed.   Gorbachev was responding to one imperative and one series of intelligence analyses.  The imperative was that by the late 1980s the Soviet economy was being eaten alive by military spending.  (Russian economists at the time reckoned at least one-third of Soviet GDP was going to its military --- the bleakest of their estimates said forty percent.)   Gorbachev saw only one way to lighten this crippling burden.   KGB intelligence estimates were that Moscow had, over the generations since 1945, installed such reliable Communist elites in its European satellites that Moscow would hold sway even if its tanks withdrew.   That, at any rate, was what Gorbachev claimed some years later.   There is no reason to doubt him. CIA analysts circulated the same prediction in Washington.   Both capitals were stunned by the precipitate collapse of Soviet power across eastern Europe after its forces pulled out. 
No escape from the Soviet orbit was more wounding to Moscow than Ukraine’s, emotionally and strategically.   History explains both.
 Assertions that Ukraine’s capital, Kiev, was long ago the first city of what became Russia owe more to romantic Russian nationalism than to rigorous history.   But from the late 1600s Ukraine was gradually --- and largely peaceably --- absorbed into Russia.   “Little Russia” the Russians fondly called it.  Tchaikovsky gave his second symphony that name because he incorporated Ukrainian folk-songs.   Mussorgsky had as the climax of his masterpiece, “Pictures at an Exhibition”, a majestic evocation of the Great Gate of Kiev.  Prokofiev, celebrated as another great Russian composer, was actually born in Donetsk in south-eastern Ukraine (now a center of pro-Russian resistance). Russian poets rhapsodized about Ukraine’s hectares of grain glowing to the horizon.  Ukraine was a beloved part of Russia, also its bread-basket, far longer than Texas has been part of the United States.  Imagine American public reaction if Texans were to vote overwhelmingly to return to Mexico.
So Ukraine’s 93 percent referendum vote in December 1991 in favor of independence stunned Moscow.   Ukraine was, after Russia itself, economically and politically the most important state in the Soviet Union.  Ancestral emotions aside, the vote doomed Gorbachev’s dream that some semblance of Russian condominium could yet be rebuilt from the wreckage of the Soviet empire.  Congratulating Ukraine on its independence, Gorbachev hoped wistfully that Ukraine would assist in this “formation of a union of sovereign states”.
That never happened.   But Moscow did retain sway over Ukraine through the next twenty years, propping up unfailingly corrupt and mostly ineffectual governments:  most relevant to the current imbroglio, by heavily subsidizing Ukraine’s imports of gas from Russia’s vast fields.


Three trends collided to explode that compliant relationship.
Freed from Soviet domination, Ukrainian nationalism --- suppressed but very far from extinct --- has steadily reasserted itself.  Haltingly, Ukraine has erected the scaffolding of a democratic state.  Propelling this progress are an increasingly sophisticated middle class and a parliament increasingly voicing their aspirations.    This middle class sees Ukraine’s future with Europe, not with Russia.  

Integration into the European Union has been Ukraine’s primary foreign policy goal almost since independence.   Negotiations with the European Union were glacially slow.  Shamefully slow, actually, dogged by Ukrainian recalcitrance to institute meaningful democratic reforms and the rule of law, and crack down on rampant corruption which has hollowed the nation’s economy. In addition the EU was wary of Russia’s reaction.    Entry into the EU of Poland, Hungary, Slovakia, the Czech Republic and the three Baltic states was one thing.   Those were independent nations overrun by Soviet forces in World War Two.    Ukraine was different:  a part of Russia’s patrimony.   Only in 2012 did European officials --- then only under pressure from some western governments --- finally nerve themselves to initial with Ukraine an agreement conferring free-trade and political association.  Even then, the  EU refused to ratify the deal unless and until Ukraine’s then-President Viktor Yanukovych pushed through requisite governance and democratic reforms, most notably the release from prison of his predecessor, Yulia Tymoshenko. He was given twelve months.  The historic EU/Ukraine agreement would be ratified at last at a summit in November 2013.  

The EU would have been so much wiser to do as NATO did.   “Bring them into the tent; polish the reforms once they’re inside,” Javier Solana used to say of former Warsaw Pact nations.   Solana, a canny Spanish politician who was then NATO’s secretary general, organized the entry into NATO in 1999 of the first trio of former Soviet satellites:  Poland, Hungary, Czech Republic.  (Two further batches of east European recruits joined NATO in 2004 and 2009.)    Solana saw the issue strategically. Construct an alliance of democratic states stretching down central Europe against the inevitable day when a resurgent Russia would seek to reclaim sway --- certainly political, possibly more --- over its lost dominions.
 EU officials, in fatal contrast, adopted  a far more cautious approach.   Association agreements have always been seen by Brussels as a Good Housekeeping medal for sound civic practices.   But the EU negotiators demanded more of Ukraine that they had from other candidates, even moving the goalposts as occasion demanded.   Additionally, concern about Russia’s reaction dogged their approach. “We mustn’t prod the sleeping bear,” a senior European official remarked at an off-the-record briefing in 2004.    The obvious response --- follow NATO and pull Ukraine into the EU before the bear wakes --- never surfaced in the EU’s negotiating stance.
 These --- nationalism and the shift westward --- explain why the third of the trends ignited the present crisis.   By November last year, when the EU  at long last proffered political and economic associate status to Ukraine,  the “sleeping bear” was thoroughly awake.

 Vladimir Putin, at Russia’s helm as president or prime minister since 1999, has a mission not merely to restore Russia’s standing as a superpower.  He sees Russia and its governance as an historic tradition, which is true, and as a model to rival the West, which is delusional.  Within Russia, he rules as Tsar with targeted repression protecting the crony-capitalist kleptocracy of a coterie of billionaire oligarchs largely created by him.  He has crushed revolts in Russia’s “near abroad” to the south.  Internationally, Putin has worked tirelessly to construct a foreign policy challenging America --- more broadly, the U.S. and its European allies --- at every step   This goes down well at home.  To distract from economic discontents, Putin has turned to a never-failing weapon: Russian nationalism. 
Any move to integrate Ukraine into the EU is, in Putin’s eyes, a Western assault on hallowed Russian soil.   His moves to prevent this ignited the present crisis.  What happened is that Putin botched what he had set in train.  Seen in sequence, Putin’s blunders over Ukraine forfeit him any claim to acumen in foreign policy.

As the November 2013 deadline approached for Ukraine to sign, at last, its historic agreement with the EU, Putin pressured President Yanukovych to repudiate it.   One week before the planned signing ceremony, Yanukovych gave in. He announced the abandonment of the pact.  

The roof fell in.   Both men grossly underestimated the uproar they would provoke --- also misunderstood it.    As protests across western Ukraine gained momentum through December, Putin consulted with Yanukovych and then offered what the pair presumably calculated would buy off the protesters.  Russia would purchase --- in effect, retire --- a  $15 billion slice of Ukraine’s sizeable national debt and slash by one-third the price of the Russian gas Ukraine relies upon for its energy needs.  

 The offer revealed how utterly Putin and Yanukovych failed to comprehend what they had unleashed.  The protesters’ fury wasn’t fuelled by pocket-book passions; they were nationalist: the future of Ukraine.    Tens of thousands -- mostly students in those early days ---- transformed Kiev’s vast central plaza, Independence Square --- Maidan, Ukrainians call it --- into a tent city   Others began to besiege and then occupy government buildings throughout western Ukraine.

Yanukovych tried repression, ramming through laws essentially suspending civil rights.   Leading members of the political opposition were abducted, tortured, some killed.

The protests metastasized, now drawing in older Ukrainians --- many of them middle-aged veterans of Soviet military conscription outraged by what was being done to their children.
Putin counseled Yanukovych to use strong measures.   (Berlin is whispered to have intercepts of their phone-conversations.  Even absent those, regime-controlled Russian newspapers urged force with a unanimity shouting Kremlin diktat.)    Yanukovych sent his paramilitaries into Independence Square.   The killings fanned the protesters’ fury.   Finally, through the night of February 20, at least 88 people were killed --- many shot down by uniformed snipers captured on video lining the roof of a government building beside the square with Ak-47 assault rifles.

Yanukovych --- Ukrainian born and bred, after all --- seems to have grasped that the massacre instantly cost him all legitimacy.   Putin refused to acknowledge this.   Europe dispatched to Kiev a trio of heavyweight mediators; Putin sent his ‘human rights commissioner’.  The deal they thrashed out --- restoring Ukraine’s 2004 constitution, which Yanukovych had trashed, and calling for elections by the year’s end --- signaled the slow-motion demise of Yanukovych’s regime    Exhausted, Yanukovych signed the deal.   Putin would not:  his emissary flew back to Moscow without putting signature to the document.
The Maidan multitudes denounced the deal with intensified fury: too little, too late.   Yanukovych’s nerve broke.   He abandoned the glitzy palace --- complete with private zoo --- that embezzled government funds had erected for him outside Kiev, and decamped to Russia.  He seems not to have warned Putin of his arrival.   Evidently stunned, Putin now demanded implementation of the negotiated deal his emissary had just refused to sign.  He also urged Yanukovych to return to Ukraine.   On both, he was ignored.   It was Putin’s culminating failure in a sequence of tumultuous events which, throughout, found Putin a day late and a ruble short.


Putin’s response was what Soviet leaders had always done in central Europe throughout the Cold War:  he turned to the military.    The coup taking over Crimea in the last days of February this year was not wholly unexpected by Russia hands in the West.  Sevastapol’s importance as the Russian navy’s Black Sea homeport -- its outlet to the Mediterranean and so through the Suez Canal to the southern oceans  ---  matches Pearl Harbor’s importance to America’s Pacific fleet.  Judged technically, the coup was a brilliantly executed politico-military operation.  

Whether Putin initially envisaged his seizure of Crimea as a lone salvaging from the wreckage of his Ukraine policy is unclear.   Whether the West’s hesitant response to his coup  --- minimal economic sanctions on Russia, even those only after much hand-wringing in Europe --- emboldened him is as unclear   Perhaps he was lured on by polls showing Russian public opinion ecstatically behind him. 
Putin doubled down.    He began covert support for the resistance in eastern Ukraine.   The resistance was genuine, though Russia’s hysterical denunciations of the interim government replacing Yanukovych in Kiev as “fascist” or even “Nazi” surely fanned it. 
Ukraine is in many respects two countries.   Those in the heavy industrial centers of the east are Russian-speaking, Orthodox worshippers, linked to Russia by networks of family ties.   Western Ukraine is Catholic, Ukrainian speaking, increasingly a part of Europe.    All Putin needed was to insert modest numbers of Russia’s able Special Forces to organize and arm the easterners’ self-generated resistance.  In the short-term, Putin succeeded.  Fantasies like the self-proclaimed People’s Republic of Donetsk took birth.

 To foreclose any NATO military response --- not that one was ever contemplated --- Putin massed along Ukraine’s eastern border rather more than 10,000 troops, most probably two of the Russian Army’s relatively new formations:  its “combined arms brigades”, created specifically to put down small-scale threats along Russia’s borders.  Satellite surveillance indicated that two more brigades were echeloned further back --- a second-wave assault force if one were needed.   Putin must have taken a NATO intervention seriously.   When he told European Commission president Jose Manuel Barroso at the end of August: “if I wanted to,  I could take Kiev in two weeks,“ he was being uncharacteristically modest.
Things started to go wrong so swiftly.    Denials of Russian involvement were demolished by journalists on the ground and by U.S. surveillance satellites’ coverage of Russia’s heavy-handed military build-up.   
Putin seems, even so, to have believed that --- a Western military response pre-empted --- he could now stave off damaging western economic sanctions.    As his likeliest ally,  he looked to German chancellor Angela Merkel.

He was wrong yet again.  It wasn’t an altogether stupid miscalculation.  Since reunification, successive German leaders have striven for a special relationship with Russia.    Immediately on leaving office, Merkel’s predecessor as chancellor, Gerhard Schroeder, accepted a lucrative position as chairman of a pipeline company majority-owned by Gazprom, Russia’s supplier of gas to Europe.   

Just as he had misread the demonstrators in Kiev,  Putin misread Merkel.  Merkel grew up in Soviet-controlled East Germany.  She has no illusions about Russia.   German officials add that Putin’s increasingly strident assertions of a right to protect Russian speakers beyond Russia’s borders --- thus his right to intervene in eastern Ukraine --- hold for Merkel toxic echoes of Hitler’s claims in the 1930s to protect German-speakers beyond Germany’s borders.   That led in 193, to the dismembering of Czechoslovakia; Britain’s acquiescence in this is now regarded as an act of shameful “appeasement.”   Merkel saw Putin’s pressures on another nation at Europe’s eastern margins posing the same temptation. This time, she determined,  Europe would resist    Through the past year,  Putin has placed more phone calls to Merkel than to any other Western leader.   In all of their discussions, she has been adamant:  Putin must cease his support for the separatists in eastern Ukraine.    She has not insisted, reportedly,  that he abandon Crimea; she acknowledges the strength of Russia’s historic ties to Ukraine.  But Ukraine’s future, she insists, has to be resolved by diplomacy not force.   As Putin resisted, Merkel became the flintiest European voice backing broader economic sanctions on Russia.   “One tough lady,” a very very senior Washington official observed admiringly.


Even so,  Putin might have averted a unified European response.  France’s President Francois Hollande, nursing a sclerotic economy, was especially reluctant to jeopardize French arms sales to Russia.
Fate took a hand.  Catastrophe struck.   Ukraine’s army was having a tough time trying to expel separatists from their strongholds in two eastern cities.   But Ukraine’s air force was striking separatist positions.  In a legacy of Soviet rule, however, Ukraine -- the Soviets’ Cold War front-line against NATO attack --- retains,  fifteen years later,  Europe’s densest air-defense network.   On June 29, three sources -- separatists in the south-eastern city of Donetsk, the Ukrainian military, and the Russian news-agency TASS --  reported that the base of Ukrainian air-defense unit A-1402 had been overrun by separatist militia from Donetsk and a battery of its SA-11 missiles captured.  Two weeks later, at approximately 4.25 p.m.  local time on a balmy July afternoon, Malaysia Airlines flight MH-17, on route from Amsterdam to Kuala Lumpur,  was destroyed 33,000 feet above Donetsk by what subsequent forensic examination of the debris found was high-velocity shrapnel consistent with the exploding warhead of an anti-aircraft-missile.
Moscow blustered, of course.  Ukraine’s own forces had launched the missile; the episode was a western plot, etc.  The effort was pro forma.  Gleeful separatists had implicated themselves.  Rejoicing that they had, as they thought, shot down a Ukrainian Antonov-26 military transport, the separatists posted on-line within hours a video from a mobile phone showing the plume of smoke from the aircraft’s fall to earth.  The accompanying commentary exulted:   “Just now the plane was hit…..It is going down now…..We are out now watching…..look at those black spots, those are the parts flying…..and it was a blast…”   Some of those “black spots” were probably bodies.   All 298 people on board MH-17 were killed;  only the fortunate died instantly.    The separatists were so sure they had downed a Ukrainian military transport that Russia’s organizer of the resistance in the east, a colonel in the GRU [Russian military intelligence] operating under the nom de guerre  Ivan Strelkov --  roughly, Ivan the Shooter --  posted a triumphant message on VKontakte,  Russia’s Facebook:  “In the area Torez we just hit down An-26…We warned you: Do not fly in our sky…”     As the truth became clear, Strelkov’s message was expunged. The video had already gone viral.

Nothing has emerged to suggest Putin was other than appalled by the incident   It is overwhelmingly likely, though, that he knew of the separatists’ acquisition of an SA-11 battery.  Telephone intercepts record that a GRU officer certainly knew.  The intercepts suggest his role was liaison with the separatists, so perhaps his news may not have gone up the line.   But Strelkov, Moscow’s man in eastern Ukraine and a veteran of previous GRU subversion operations, also knew;  and he would have been reporting directly to Moscow.   Most damningly, TASS news agency reported it.   Putin presumably reads the wires;  he is known to demand detailed briefings.  It stretches credulity to believe that Putin had not learned of the capture of the SA-11 battery.

The 1980s variant of the SA-11 captured by the separatists – its Russian designation is 9K37M1 --- will destroy aircraft well above 60,000 feet and more than twenty miles away.  It is an insanely lethal weapon to leave in the hands of a local militia.  Yet it is overwhelmingly likely that the SAM battery was not under the control of Russian troops.  The Russian army’s order-of-battle lists the crew of a single SAM battery of this type as thirty trained air-defense troops aboard four specially-equipped vehicles, two carrying the battery’s acquisition and targeting radars.   Had either been operating, they would have shown that MH-17 was passing overhead at routine commercial overflight altitude,  but three miles or more above any plausible height for an An-26 delivering troops or supplies to eastern Ukraine.
In failing to send Russian troops to take over that SA-11 battery, Putin handed control of events to the separatists.  It was a decision of utter folly.  That Putin did not intervene suggests how desperate he was to salvage his Ukrainian excursion --- but also how wary he was of further overt commitment.

A couple of days after the shoot-down, a video surfaced on the Internet showing a lone SAM launcher on a flat-bed hastening east from Donetsk towards the Russian border.  SAM batteries are self-propelled; flat-beds are faster.  The video recorded that two of the launcher’s four SAMs were missing.

Mistakes happen.   In July 1988, the U.S.Navy  Aegis cruiser USS Vincennes fired a pair of its SM-2NR missiles ---- directly comparable to Russia’s SA-11 --- and shot down Iran Air Flight 655 over the Persian Gulf, killing all 290 on board.    Questions of culpable negligence aside --- the U.S. eventually compensated the families of Flight 655’s victims ---   the destruction of MH-17 raised dramatically the costs of Putin’s adventures in eastern Ukraine.

The costs ballooned when the separatists prevented international salvage teams from searching local fields for bodies and body parts.    Dutch team members came to suspect that the separatists clung to some addled notion that forensic evidence would decompose along with the fallen bodies.   Not so.   British scientists finally got to examine fragments of MH-17’s Boeing 777 aluminum-alloy fuselage.   They found them riddled by shrapnel characteristic of an exploding missile warhead.   (Unrevealed was that minute trace-elements of explosive residue found on some of the shrapnel fragments still embedded in the fuselage matched the warhead of a Russian SA-11)

As the scale of the disaster sank in, Putin was defiant.  His July national security council meeting, at which he proclaimed his determination to secure a “buffer zone” between NATO and Russia, came only a week after the downing  of  MH-17.  Behind the scenes, though, Putin began to seek a settlement.

He had little choice.  Galvanized by the tragedy, European governments agreed to Washington’s push for sanctions against strategic sectors of Russia’s economy.  To growing effect as the weeks have passed.  The ruble spirals down; Russia’s growth has flat-lined; its Central Bank records a tsunami of capital flight.  Inward investment has tanked.  Russian bonds are now rated one notch above junk status, with a further downgrade threatened.  Four global oil giants --- their money, still more their technology, vital to Russia’s need to tap oil and gas reserves below the Arctic seabed -- have put their activities on hold.    Those future fields are vital to Russia’s economy as its current fields decline.   Meanwhile, the two biggest foreign banks operating in Russia, together running hundreds of branches, are cutting adrift their Russian subsidiaries:  instructions are to replace hard-currency funding from head-office with funding in Russian rubles.   Other foreign companies operating in Russia are poised to do the same.  Russian companies seeking finance are shut out from Western capital markets.  The foreign bank accounts of Putin’s cronies have been frozen.

Putin has retaliated. Well-publicized “consumer safety” inspections of more than 200 of McDonald’s chain of 440 hamburger joints across Russia, for example.  McDonald’s flagship outlet, in Moscow’s Pushkin Square, has been closed by the authorities. McDonald’s has been operating in Russia since 1990 to avid Russian customers. When its doors opened in Pushkin Square, the queue stretched round the block.   Petty in themselves, these antics are also self-destructive, serving only to dissuade Western businesses from operating in Russia.  But that, of course, may be Putin’s goal, if his goal is to eradicate Western contamination.

On Ukraine, what emerged through September, after several false starts, was a set of compromises: a ceasefire in eastern Ukraine, which has proved to be on-off;   a deal brokered by the EU to assure Ukraine a continued flow of Russian gas this winter -- the EU guaranteeing a World Bank loan to Ukraine to pay for this -- and, most sensitive, political concessions to Moscow.

Yanukovych’s successor as president, Petro Poroshenko, had signed in June that long-negotiated pact with the EU.   Now he announced that its free-trade provisions would not come into force until December 2015 ---- a year later than planned.    A senior EU official explained that the delay came after Putin threatened Ukraine with “a full-scale economic and trade war” on top of renewed military action.   Meanwhile, the parliament in Kiev voted to grant unspecified “special status” to the eastern separatist centers of Donetsk and Lugansk ----  while also adopting a resolution defiantly declaring that the newly-signed agreement cemented Ukraine’s course toward full membership of the EU.

The compromises have had critics. Certainly, this was no clear-cut triumph.    Actually, the compromises were ingenious, but there are still challenges ahead.


The immediate task has been to ensure that Ukraine has energy this coming winter.  That requires an uninterrupted flow of Russian gas.   The EU/World Bank guarantee paved the way for that.  The EU’s top energy official has said that he expects a deal to be wrapped up before the end of 2014.   

 Delaying, meanwhile, the free-trade provisions of the EU agreement actually helps Ukraine.  Under the new deal, Ukraine’s exports to the EU are freed from duties or tariffs through 2015, while Ukraine retains border tariffs against imports from the EU.   Ukraine’s near-derelict manufacturing base --- still largely state-owned and as badly managed as most Soviet enterprises were --- thus gets a year’s respite from European competition.  This is so sensible that several EU governments are already talking quietly of extending Ukraine’s one-way trade deal.      Helping Ukraine modernize its industrial and commercial base has to be a European priority.  Supporting Ukraine as it tackles this gargantuan task is a no-brainer.   The cost of one-way free-trade for Ukraine will amount to a rounding error in the EU’s $16 trillion a year economy.   Modernizing Ukraine’s industrial heartland will cost billions more --- but guarantees of further World Bank loans and the insertion of western know-how will pose no more than marginal costs.   Reassuringly, events of the past year seem finally to have convinced EU and IMF bureaucrats to view these issues from more than an auditor’s perspective.

The longer-term challenge is, of course, to reach an understanding with Putin that Ukraine’s sovereignty and territory will be respected.   A year’s delay bringing Ukraine into the EU’s common market buys time for diplomacy.   

Putin has dramatically moderated his demands.   Back in August he was calling for talks to discuss “statehood” for eastern Ukraine.    Now he is demanding merely “systemic adjustments of the [EU/Ukraine] association agreement” --- its political as well as trade provisions, in other words.  European Commission president Barroso has brusquely rejected even this demand, telling Putin that the agreement is a bilateral one:  “Any adaptations to it can only be made at the request of one of the parties and with the agreement of the other” --- a formulation carefully pre-empting Moscow pressure on Kiev.
 Even after Barroso’s nyet, Putin has begun to withdraw Russian forces from the border with Ukraine.   Ukraine’s customers are presently in Russia. Ukraine’s biggest manufacturer, maker of the giant Antonov transport aircraft fatally misidentified by the Donetsk separatists, looks to Russia as a supplier of sub-systems and its main customer.    Antonov builds unique heavy-lift aircraft: there could be a global market for them.  But transitioning Antonov to meet that market’s demands will take a painful decade.  However grueling this short-term, what prospects can Russia offer over the long-term ?  


Putin’s concerns for the political leanings of eastern Ukraine’s Russian adherents could be met, though.  Ukraine has signaled that it will cede a good deal of autonomy to its eastern region --- probably some sort of federal structure, details TBD.   

Would Putin accept this?    His foreign minister Sergei Lavrov’s session on Russia’s Channel Five at the end of September suggests Putin might.  Read carefully, Lavrov came as close as Russian/ Soviet officials ever do to hoisting a white flag.   Lavrov’s message:  “The main problem is that we’re absolutely interested in normalizing these relations [with the U.S.] but it wasn’t us who ruined them.  And now we need what the Americans will probably call a ‘reset’.”    Lavrov blamed NATO for the crisis:  “Look how quickly NATO switched to confrontation over the Ukraine crisis and started hurling serious yet completely unfounded and biased accusations at us.”    

NATO was irrelevant in western responses on Ukraine.   Sidelined by deliberate policy, NATO officials said as little as possible.  EU civilian governments had, with America, all the running.   Lavrov will know this.   He is an exceedingly able diplomat, trusted by Putin but with a legion of wary friends in western chancelleries.  Before Putin promoted him to the foreign ministry in 2004, Lavrov had spent a decade as Russian ambassador to the United Nations.   (His daughter graduated from Columbia and lived in New York until the Ukraine crisis made her return home earlier this year diplomatically desirable. Friends from Columbia  days say she has kept the lease of her apartment.)   Lavrov knows how to deliver messages.  His message in late September was plain:  Remove NATO from the equation.    Former Soviet leader Mikhail Gorbachev had given the same message a couple of weeks earlier:   “Western nations…should stop dragging Ukraine into NATO”, the Novaya Gazeta newspaper reported him opining

Russia’s fears of NATO are real.   Western politicians tend to dismiss them as propaganda, but that’s a failure of insight.  The NATO alliance decisively won the Cold War, while every village square in Russia bears its memorial mourning a generation killed by Germany’s invasion in 1941.   Of course Russians fear NATO.   That’s an emotional reality the West would be wise to recognize always and accommodate whenever possible.  

Lavrov’s  implicit offering ---take the prospect of Ukraine’s membership of NATO off the table and we might negotiate a deal --- is readily met.  Henry Kissinger has suggested that Ukraine be conferred --- through a treaty, perhaps --- a status like Austria’s or Finland’s through the Cold War:  democracies and free-market economies but formally neutral, certainly not members of NATO.    (NATO’s present ‘liaison office’ in Kiev would have to close.)

 NATO membership off the table, Europe’s hand in negotiations over Ukraine’s political future is so much stronger than many appear to credit.   Russia is already paying a high price for Putin’s aggressions: currency fall, capital flight, investment drought.  Europe can raise the price further.   

The key is Russia’s gas.  Europe meets a quarter of its energy needs with natural gas;   Russia supplies a quarter of that.    For a decade or more, European defense officials have quietly warned their governments that growing dependence on Russian energy is a strategic vulnerability.  One of the European Commission’s signal failures has been its near-passivity in face of those warnings.  Russian gas, cheap and plentiful, was too addictive.  Witness ex-Chancellor Schroeder’s acceptance of a cushy job with Russia’s gas monopoly, Gazprom.   

Putin’s actions in Ukraine --- threatening in June to shut off gas supplies --- have at last concentrated European minds.  It turns out that what is seen now as Europe’s vulnerability is, over a longer run, Russia’s.


The next decade will see two developments.   America will build terminals to export its stunningly abundant natural gas discoveries --- “the Saudi Arabia of natural gas,” one analyst called America’s new-found reserves.  But those exports won’t ramp up until 2017-2020.   

Meanwhile, Europe’s leverage is its power to hold Russia’s pipeline plans hostage. Russian gas supplies to Europe flow mostly through pipelines transiting Ukraine.  This bottleneck has given Kiev leverage. As a last resort, Ukraine can shut down Russia’s gas supplies to Europe.  Unsurprisingly, Russia has, for a decade, been laying down two arteries to bypass Ukraine.

Its pair of ‘North Stream’ pipelines run across the Baltic seabed from a Russian port to a German one.   They began sending gas in late 2011 and late 2012.   Russia’s planned third and fourth North Stream lines will transit the maritime zones of Estonia and Finland.   Russia needs their consent.  “Environmental studies” and the like could delay consent indefinitely. 
Far more important to Russia’s strategy to bypass Ukraine is its ‘South Stream’ pipeline.  Crucially, this is only partially-constructed.  It crosses beneath the Black Sea to the Bulgarian resort of Varna, thence divides to send gas northward into Austria, westward into Italy.   Construction of South Stream began at the end of 2012.    Approval by multiple European governments is needed for its onward routes.   In April the European Parliament, awakening at last to Ukraine’s strategic leverage as a pipeline hub, passed a resolution opposing South Stream and recommending that Europe seek non-Russian gas supplies.    A few days later, Bulgaria --- EU member since 2007 --- halted construction of the South Stream section through its territory.    The EU, meanwhile, has passed legislation banning gas producers (like Gazprom) from owning pipelines (like Gazprom).   Russia has complained to the World Trade Organization.  Those disputes can take years to resolve. 
 Long-term, Gazprom’s dominance of Europe’s energy needs will be challenged by gas supplies from other fields --- Iran or even northern Iraq --- pipelined through Turkey and thence into the South Stream line.   To pave the way for that, the EU is demanding one more condition to approving South Stream’s next phase:  the pipeline must be open to gas from non-Russian suppliers.
Construction of both North and South Streams has been financed largely by Western banks.  They and their governments realized that the pipelines would bypass Ukraine, depriving it of leverage against Russia.  Back then, who cared?   Some analysts assert that the EU’s reversal of stance is hypocritical and unwise.  Preserving the security of Europe’s energy supplies, they argue, outweighs the need to support Ukraine.   The issues are entwined.   As to hypocrisy:  that was then, this is now.  Policies respond to circumstances.  Ukraine has moved decisively towards Europe.  Anyway, sentiment aside, Europe now has no strategic option but to support Kiev.   If EU members were to demonstrate that energy security outweighs support for Ukraine, they would be handing Putin and his successors a weapon to dominate Europe hereafter.

Fortunately, Putin is unlikely to shut off gas supplies to Ukraine.  First casualties of a shutdown would be Ukraine’s antique energy-guzzling heavy industries in the east, the base of Russia’s support.    Nor is Putin likely to do anything to undermine Gazprom as a reliable supplier to Europe.   Europe is Gazprom’s cash cow.   Consuming 30 percent of Gazprom’s output, Europe generates 60 percent of its revenues.   Those revenues are bailing out Russia’s sodden economy.


If Putin is, for the moment, balked in Ukraine --- short of invasion and the crippling economic costs that would provoke --- where might he look next to re-assert Russian power over its old dominions? 
If Putin seeks, as he told his national security council, a “buffer zone” against NATO, his targets have to be the Baltic states, especially Estonia and Latvia.   He has a problem.   The Balts have been members of NATO since 2004.    Solana, who as NATO Secretary-General set in train the multiple steps to their membership, was clear-eyed about what he was doing.   He understood Russia’s visceral fears of a western military alliance along its frontiers.    But Solana’s priority was to protect European states --- especially peoples who, now liberated, chose to join the rest of Europe.    Of the Balts bordering Russia, he said simply:   “They are on Russia’s doorstep. Russia will one day want them back. They cannot defend themselves. Their only defense is NATO membership.”    The Balts are members of NATO because Solana foresaw the challenge Putin appears now to be mounting.

 At first glance, the Balts need have no fear.     Article Five of NATO’s founding charter says that an attack on one “shall be considered an attack against them all”.  

But Putin has an option besides military assault:  subversion from within.  Estonia and Latvia have sizeable Russian populations.   Perhaps a third of Estonia’s population are ethnically Russian; so are more than a quarter of Latvia’s.   In their cities, Russian representation is startlingly higher:  close to half the population of Riga, Latvia’s capital; well over a third of Estonia’s capital, Tallinn.   Along Estonia’s north-eastern border, its cities are overwhelmingly (more than 80 percent) Russian.
This is yet another baleful legacy of Stalin.  Fewer than one-in-ten of these Russians have ancestral ties in the Balts.   Almost all were imported by Stalin after World War Two to Russify his new conquests.   Local resistance fought a guerrilla war against Soviet occupation for close to a decade.  Stalin’s will was imposed with ferocity; the Russian immigrants were favored.

The Balts’ independence in 1991 thus left raw scars.  Dramatic changes inevitably followed.   None have been more emotional than issues of citizenship and language.     Explicitly to preserve the power of the native-born over those post-war Russian immigrants, Estonia and Latvia decreed that only citizens could vote.  (Many of the newcomers had opted to keep Russian citizenship so they could commute visa-free to jobs in Russia.)

That’s one source of the Russian immigrants’ grievances:  “I feel that I live as a second-class person,” the leader of Latvia’s “Non-Citizens Congress” said earlier this year.

The other source of grievance is the efforts of both governments to give Estonian and Latvian languages primacy over Russian in their schools.     Fluency in the native languages has been declared a pre-requisite for citizenship.

The gulf between the communities remains wide.  In Latvia’s Riga, its Russian inhabitants each year celebrate May 9 as the day World War Two ended.   Latvians do not celebrate:  that’s the day Soviet occupation began.  The Russians watch Russian TV;  the Latvians do not  The divisions in the Balts are ethnic, and while they may slowly erode --- a fifth of all marriages in Latvia now cross the ethnic lines --- the divide still cuts deep.  Romeo and Juliet live on.

The dilemma is scarcely unknown in America, grappling with a tidal wave of Hispanic immigrants.  Recall the efforts to make English the “official language” and to tighten the requirements for voting.  What’s different is that the Balts have a resentful superpower on their doorsteps

Russia has moved to exploit the discontents in the Balts, framing them first as a human rights issue.   Russia’s representative to NATO warned in March --- surely not coincidentally, as Putin took over Crimea --- that the Balts should “pay special attention to the problem of respect of human rights and get rid of the phenomenon of non-citizens”.  

In Latvia, enough Russians have become citizens that the avowedly pro-Russian Harmony party has topped the polls in two parliamentary elections, the most recent only two weeks ago.   Harmony has formal links with Putin’s United Russia group in Moscow and with the Chinese Communist party.    Harmony’s leader, Nils Usakov --- he is mayor of Riga --- remarked during the election campaign that Putin was “the best thing we can have at a moment”, a comment whose ambiguity did not allay Latvians’ fears.    After Harmony won a plurality of seats in Latvia’s parliament in 2011, three other parties combined to form a coalition.    The same outcome is being negotiated now. Latvian political analysts question how much longer Usakov can be denied a chance to form a government. 
In Estonia, things may be getting uglier.  These are early days, but a border incident in early September set nerves jangling.   The Estonian version of what happened is that a squad of Russian security men crossed into Estonia and kidnapped a member of its internal security service.    The Russian version is that he was arrested on Russian soil, having entered on a spying mission.    He is to stand trial in Moscow on espionage charges.

One strand of opinion within Estonia believes the timing of the incident is significant.    It came just a day after President Obama, on his way to a NATO summit, visited Tallinn and gave a ringing speech pledging that, as NATO members, the Balts would be defended.  Could Russia have been demonstrating that Obama’s speeches were just words, while Russia is on Estonia’s doorstep ?   

The last days of September brought a second border incident.  Two elderly Russians were picked up by border guards after they crossed by small boat over a river running along a remote stretch of Estonia’s border with Russia.  The pair said they had been fishing.  Both are former members of the KGB.    Whether their interrogations have revealed more, Estonian authorities have not said.

Even as NATO members, Estonians are not minded to take chances.  They have demanded NATO forces --- preferably American --- on their soil.   They are wise.  NATO’s famous Article Five doesn’t say close to what people commonly think it does.   Yes, Article Five says that an attack on one “shall be considered an attack against them all…”   But then?     Five commits its members to decide “by talking forthwith, individually and in concert with the other parties, such action as it deems necessary, including armed force, to secure and maintain the security of the North Atlantic area”.  That’s all. 
So, in the event Putin invades Estonia or its Baltic confreres, NATO’s Article Five would formally be satisfied by the imposing of economic and trade sanctions on Russia.   Article Five does not even explicitly require the liberation of any invaded territory.   

The charter’s wording enshrines America’s hesitations back in 1948, when it was signed.   The wording was the most that Senator Arthur H Vandenberg could coax through a Senate still dominated by isolationists.  The political reality now, of course, is that if NATO were not to defend the Balts, the alliance would collapse.  But the wording remains.  Deliberately, President Obama went beyond the charter when he said in his Tallinn speech that the defense of this and the other Baltic capitals was “just as important as the defense of Berlin or Paris or London.”    He pledged:  “We’ll be here for Estonia.  We’ll be here for Latvia.  We’ll be here for Lithuania.   You lost your independence once before.   With NATO you will never lose it again.”  

The NATO summit to which Obama then travelled took action to demonstrate that the alliance agreed.  A rapid-reaction force is being created, ready to intervene swiftly in any actions against the Balts;  and NATO troops will be permanently in the Balts as what the Pentagon felicitously calls “a persistent rotational presence”.    Some 600 American troops are already spread across Poland and the Balts.   Their “training exercises” will last into next year.   Meanwhile, the “Baltic air patrols”  --- fighter aircraft contributed by a rotating sequence of NAT0 air forces --- have been stepped-up.

 How Putin will respond is unclear.   Russia’s ambassador to Latvia, Aleksandr Veshnyakov, has warned of a “new arms race” in the region.  But Veshnyakov left wiggle-room: he specifically warned against new NATO bases --- which the “persistent rotational presence” is designed precisely to avoid.  
The bottom line is that Putin now faces the likelihood that any military incursions into the Balts would likely bring the deaths of American troops.  And that would be a game-changer.   Back in 1917, as the United States was debating whether to send troops to Europe,  the French commander Marshal Foch  is said to have remarked: “One will be enough.  I will send him to the front lines and make sure he is killed.”    Foch’s assessment was brutal but correct:  nothing galvanizes American ire more than the deaths of American citizens.   (As ISIL’s video-taped executions of two Americans recently demonstrated.)  NATO’s deployments to the Balts are in essence a calculation that Putin will not risk killing American soldiers.  

Whether Putin is willing to take that gamble is, of course, unknown.  The relevant question has to be: Why is Putin doing this at all ?    The Ukraine crisis was, in a sense, forced upon him.  But why what appear to be these probes against the Balts?   

One possible answer is deeply disquieting.  Is Putin acting now because he foresees the decline of Russia’s power?    He might.   Oil and gas revenues fill an ever larger hole in Russia’s budgets:  now probably around ten percent, by Western calculations.   To balance his budgets, Putin needs a world oil price above $100 a barrel --- $105 by conservative Western estimates, as much as $117 by outlier calculations.   Oil is currently trading in the mid-$90s.    As oil prices have dropped, giant oil-exporters like Saudi Arabia have apparently resolved to sustain revenues and market share by pumping however much oil that takes.   If this decision holds, the price of oil is unlikely to climb, anytime soon, to close to what Putin needs.

Since ancient Greece an enduring motive for war has been a perception of declining power:  the present looks more propitious than the future.   If Putin, beneath the bluster, even half-believes that then buckle up.   We are in for a scary ride.

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UMD Jean Monnet Research Project

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The Bertelsmann Foundation is an independent, nonpartisan and nonprofit think tank in Washington, DC with a transatlantic perspective on global challenges.

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