international analysis and commentary

Ukraine, where only Putin has a plan

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Like many a flawed analyst, Barack Obama has the distressing intellectual tendency to assume that those who oppose him simply must not know what they are doing. Whether discussing Republicans in general (or more recently the protectionist Democratic congressional caucus), Israeli Prime Minister Benjamin Netanyahu, or real enemies like Vladimir Putin, the President’s refrain is the same: to be against me you must be misguided at best, or a dullard at worst.

But he is not alone in living in such an intellectually arrogant dreamland. Over the years, Europeans (especially those involved with Brussels) have come to believe the airy-fairy utopian nonsense that they are endlessly spouting: all right-thinking people are post-nationalist and thinking in terms of a country’s specific interests is a museum relic. Once again, using this metric, the Kremlin comes off as a Stone Age specimen of a bygone age.

But what if it is Putin, and not the self-satisfied West, that knows what he is doing? Increasingly, I fear that this is more likely to be the objective truth. Let’s go through the looking glass, assessing what the Russian President is really after in Ukraine, and looking at the one big bet he has made that underlies his whole strategy: That the West will simply never do enough to make Ukraine a success. Frankly, that is a wager he is well on his way to winning.

Putin’s strategic view

For the Russian President, the best possible outcome in his strategic backyard is for Ukraine to be a pliable, moderately successful client state, supporting the Kremlin’s overall efforts to dominate its “Near Abroad” without causing trouble on its own. After the overthrow (in early 2014) of the Russian puppet, former President Viktor Yanukovych, this ideal state of affairs is no longer on the cards.

However, as a firm believer in Russian national interests, the wily Russian President did not just skulk home, deferring to the will of the Maidan Square protestors. For Putin – despite what EU cheerleading fantasists might suppose – does not want Ukraine to join the EU, nor does he view it as a benign institution. Rather, the Kremlin clearly sees any possible EU expansion into the former Soviet space as a primary threat to Russian strategic interests, with Brussels functioning as merely an instrument in projecting European power to his very doorstep.

There is little doubt that the protestors who overthrew the corrupt Yanukovych wanted to ultimately join the EU, to change their country’s basic foreign policy orientation from a Moscow-centric to a Western-centric one. Whether naïve Europeans realized this or not, what was a stake here was a contest about power, something both the Ukrainian and Russian governments have acutely understood.

As such, Putin has opted for “Plan B.” If Ukraine will not be a subservient ally anymore, then the next best outcome for Russia is that it morphs into an economic and political basket case, serving as a constant reminder to other former Soviet states that deviating from a pro-Russian course carries dire consequences. Even better, from Putin’s point of view, Ukraine as a failed state reminds those countries surrounding Russia that the West is not a viable strategic alternative for them, as it has so copiously failed to come to Ukraine’s rescue when the chips were down.

It is this old Machiavellian form of realism school that makes eminent sense of the whole of Putin’s actions since the Ukraine crisis began. He annexed Crimea, locking in control of vital real estate to secure his Black Sea fleet. By incorporating an area with a dominant Russian-speaking population, he served notice to all the weaker countries around him that the Kremlin reserves the right to interfere there at will, under the guise of protecting Russian minorities. He has largely frozen the conflict in eastern Ukraine (much as he has earlier done in Georgia and Moldova), thus dooming those territories to perpetual political instability.

But the cagy Russian President has done one thing more – almost wholly unremarked-upon in the Western press – he has dared Europe and America to come to Ukraine’s economic rescue, gaming out that they simply would not do so. As of the present hour, the massive gamble has gone entirely Putin’s way.

Follow the money…

Putin has reasoned that as both Europe and the White House have (rightly) ruled out the use of military force in contending with Russia in the Ukraine crisis, the only major foreign policy tool left at their disposal was their mighty economic means to prop up the fragile, pro-Western Ukrainian government of Petro Poroshenko. If the West were able over time to make Kiev a showcase for economic success, it would ultimately carry the day, as Putin simply does not have the wherewithal to materially compete with a motivated Europe and America.

The demonstration effect of an economically successful Ukraine would amount to a direct threat to Russia, as the other states of the “Near Abroad” would be endlessly tempted to switch their overall strategic orientation westwards. The irony is that it is this economic contest – and not the day-to-day military action – that will determine who “wins” in Ukraine. But unlike the clueless White House and Europe, Putin both understands the strategic game afoot, and how to win it. Knowing that neither America nor Europe is prepared to do nearly enough to turn an economically flailing Kiev around, Putin has bet it all on the fact that – beyond lovely words – the West will quietly leave Ukraine to founder.

For by every economic yardstick, Ukraine is a disaster. Corruption is endemic, with Transparency International placing Ukraine 142nd in the world in its corruption index, very near the bottom of the global pile. As much as half the economy operates beyond the reach of the taxman. Inflation is galloping along at 60%. In the first Quarter of 2015, Ukraine’s GDP cratered by an incredible 18%, at an annualized rate; the people of the country are poorer today than when the USSR ended. Kiev’s public debt stands at a dangerous 100% of GDP, and is on a decidedly upward trajectory. The IMF baldly states that Ukraine needs about $40 billion of help in the form of debt relief and loans, though the true needs are quite probably higher still. This is a country on the edge of not functioning.

And what has the West promised to stabilize Kiev, bringing it into the fold? America has offered around $2 billion in loan guarantees, with the Europeans (rather incredibly) offering even less; by mid-May 2015 they had disbursed only around $1.8 billion in economic assistance. When confronted by these pitifully small numbers, in my mind’s eye I can see the Russian President, with just the ghost of a smile on his face. He is well on his way to winning his strategic bet, and in so doing illustrating the canyon between the West’s high-minded words and its laughably modest deeds over Ukraine.

If the West wants to make real use of the interminable summits it so likes to hold, a private discussion between President Obama and Chancellor Merkel is entirely in order, over the question of how much the West is really prepared to do to help secure Ukraine. If it is prepared to revitalize the place at great cost, now is the time to do so. If it is not (as seems far more likely) perhaps it is time to dial back the rhetoric about galloping to Kiev’s rescue. Such fatuous nonsense, if not backed up by concrete policy, makes Western leaders seem unworldly at best, and hypocritical at worst. I greatly fear Western leaders have it entirely back to front; it isn’t Vladimir Putin who doesn’t know what he is doing.