West must prise Ukraine from Putin’s claws

People attend a rally in Moscow to support the annexation of Ukraine’s Crimea to Russia. Photograph: Maxim Shemetov/Reuters

People attend a rally in Moscow to support the annexation of Ukraine’s Crimea to Russia. Photograph: Maxim Shemetov/Reuters

Wed, Mar 19, 2014, 08:08

‘A far-off country of which we know little” was Neville Chamberlain’s argument for doing nothing about Hitler’s 1938 annexation of Czechoslovakia. That annexation – carried out by a revanchist Nazi regime, allegedly in defence of ethnic Germans, is an unnerving parallel to Vladimir Putin’s annexation of Crimea. Russia’s president is using ethnic Russians as an excuse to restore Moscow’s old empire. Viktor Yanukovich, the ousted president of Ukraine, has even said: “I would like to ask those who cover for these dark forces in the West: are you blind? Have you forgotten what fascism is?” I really do hope not.

The West is not going to war with a nuclear-armed Russia. But outright annexation of a part of a smaller country strikes at the roots of the post-second World War European settlement. Angela Merkel, Germany’s chancellor, was right to say that Russia had resorted to the “law of the jungle”. This annexation cannot go unanswered. It is too dangerous a precedent.

Some argue that the West has already created the precedent by separating Kosovo from Serbia. But that was a response to Serbia’s brutality. Nothing like that had happened in Crimea. Nor did any western power annex Kosovo. A far better parallel is between Serbia’s actions in Kosovo and Russia’s forgotten brutality in Chechnya.

Russia complains that extension of Nato to its borders is an outrage. But Nato does not annex countries. Russia’s behaviour stoked the desire of its erstwhile possessions to join Nato. Why, Russians might now ask themselves, do people who have enjoyed the blessings of their rule wish to be defended against them?

Russian autocracy
Putin’s restored Russian autocracy is a revanchist power. This is depressing. But it is reality. The West must unite in response.

The essential points about western relations with Russia today are that the latter is relatively less powerful and relatively more economically intertwined than the old Soviet Union. This gives Russia weapons against us, but creates vulnerability.

So how should relations be managed? With carrots and sticks.

Start with Ukraine. The country rid itself of a predatory gangster. The West should not accept the lie that “fascists” drove this. But the West should state that if Russia does not threaten the integrity of the country, it will not offer Ukraine a defensive alliance. The priority must be Ukraine’s economic stabilisation. Whether Russia views that as in its own interests depends on whether it can be brought to view a stable, prosperous and democratic Ukraine as desirable or as a threat.

Oleksandr Turchynov, Ukraine’s acting president, has said: “What the Kremlin is most afraid of is a democratic, European, successful and prosperous Ukraine which we are today building . . . this is the real motive for their aggression.”

I fear Turchynov is right. Yet it would be vastly easier to stabilise Ukraine economically with Russian co-operation than without it: in the 12 months to October 2013, 24 per cent of Ukraine’s exports went to Russia and 30 per cent of its imports came from it. Russia is also the country’s biggest energy supplier.

IMF role
The International Monetary Fund is optimistic about the possibilities of agreeing a successful programme for Ukraine in April. Whatever Crimea’s political significance, it is only 4 per cent of the economy. The IMF has rightly worried about the overvaluation of the hryvnia, this being a way for the rich and powerful to obtain foreign assets at a subsidised rate. But that is now correcting, as it had to, given a current account deficit of 9 per cent of gross domestic product last year and the collapse in foreign currency reserves. Probably, the biggest issue is that any programme has to bind the next government. One with clear conditionality for tranched disbursements would be the best way to deliver this.

It is essential to distinguish the urgent from the vital. Stabilising the economy and correcting huge price distortions – including unaffordable low gas prices from which the corrupt benefit vastly more than the poor – is urgent. Deep institutional reform is vital. Ukraine has a third and possibly last chance (the previous ones being independence in 1991 and the Orange revolution in 1995) to achieve what Poland has done. It must move swiftly towards a more open and competitive economy and a more transparent and accountable government, as Anders Aslund of the Peterson Institute for International Economics argues. Signing the EU association agreement would help. Cleansing the Augean stable of corruption must be the condition for needed assistance.

A successful Ukraine would be far and away the best riposte to Russian revanchism. I can see no logical reason why it should be infeasible. But I can see two contingent ones.

The first is that Russia will dedicate itself to destroying this opportunity by breaking Ukraine up or seeking to conquer it. The answer to that must be that Russia would become a pariah and not just in the West. Few indeed are the countries prepared to contemplate such actions with equanimity. The desire to prevent a return to a world of military conquests is very powerful.

The second is that the West and, above all, Europe will be too frightened in their dealings with Moscow. The principal – though not only – reason is that Russia is such an important supplier of energy. Gas is the crucial commodity because it is far less easily tradeable than oil and coal. In 2011, Russia supplied 30 per cent of the EU’s imports of natural gas. But if one allows for domestic gas production, and the share of gas in the energy mix, then Russia probably supplied little more than one-20th of the EU’s energy. Could the EU dispense with that if it had to do so? The answer has to be yes, though it might have to reconsider popular policies, such as closing down nuclear power, while the US would also have to consider gas exports to the EU.

Help is vital
The West must not pretend that Ukraine is a far-off country of which it knows little. It could be Ukraine today and the EU itself tomorrow. Russia’s revanchism has to be stopped, even for Russia’s own sake. A stable and democratic Ukraine is not hostile to Russia’s true longer-term interests. The starting point has to be helping Ukraine, ideally with Russian co-operation, but without it if necessary. It will not be easy. But it will be worthwhile. – (Copyright The Financial Times Limited 2014)

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