About the Ukraine crisis: everyone loses

Everyone loses: The Ukraine crisis and the ruinous contest for post-Soviet Eurasia, by Samuel Charap and Timothy J.Colton. International Institute for Strategic Studies.

Recently rewed fighting between rebel and government forces in eastern Ukraine calls attention to the costs for all parties of their struggle for control of the territory. Samuel Charap is a Senior Fellow for Russia and Eurasia at the IISS. Timothy Colton a Professor of Government and Eurasian Studies at Harvard University. In their extensive and generally impartial appraisal, it helps to pick out examples.

For example:

In Ukraine itself

# While pro-Russian Crimeans ought have rejoiced in new-found freedom from the Ukrainian government, the peninsula’s status of a sub-unit of Russia remains internationally unrecognised.

# The Ukrainian authorities and the Russian-backed separatists have both held civilians in prolonged, arbitrary detention, without any contact with the outside world.

# Not only are Western firms forbidden from investing or trading in the region, but even Russian firms that do business in the US and the EU are barred from operating there. For the country as a whole, the economic burden of the conflict and the preceding revolution have been extremely heavy. The World Bank reports that Ukrainian GDP contracted by 7% in 2014, and by 10% in 2015. (In 2016 it grew by a mere 1% according to the best scenario.)

# A formidable source of economic distress has been the rupturing of commercial ties with neighbouring Russia . ( If and when the economy recovers , Ukraine will have little alternative to re-establishing the gas relationship with Russia, say the authors.)

# Several large enterprises, mainly in defence and the aircraft industry, which had only Russian clients before the crisis, have been kept afloat by subsidies and pre-existing contracts, and will soon either go bankrupt or be obliged to be retooled.

As for Russia

# Although the effect of the Ukraine crisis on the Russian economy is hard to quantify due to Putin’s avoidance of economic reform and the threefold collapse of oil prices between mid-2014 and mid-2015, one economic survey suggests that Western sanctions cost an average of 2% quarter -on-quarter drop in the period.

# The effective closure of international capital markets to Russian government debt has prevented the kind of pumping used in 208-09 to stave off deeper recession. It has also forced the authorities to tap reserve funds established in the years of bullish oil prices to cover budget shortfalls.

# The Kremlin has used the charged political atmosphere to implement legislation that curbs free expression and strictly limits non-governmental links to the West. Examples include stiffer fines for support of separatism and participating in unauthorised protests, and a provision allowing the prosecutor’s office to proscribe foreign NGOs that ‘threaten constitutional order, defence capabilities or national security’.

# Russia’s position in international relations has also worsened in that its allies in the neighbourhood, while outwardly compliant, worry that one of them might be the next target of Russian hostility. At the same time, further West, ‘countries that had previously been somewhat dovish about policy towards NATO and the EU now see it differently.’

As for the West

# Russia and the West have both been left worse off by the period of international relations that began in 2014. The Cold War-like climate has impeded co-operation on shared challenges, raised risks of a military clash, and transformed civil conflict into proxy hot wars in Ukraine and Syria. Canada, Germany and the UK now have troops in persistent rotation in the Baltic states.

# More broadly, the proto-cold war undermines the possibility of collective action to address global challenges.

# The international order ,’such as it is’, depends on a basic level of comity among members of the UN Security Council – but the level of comity between Russia and the West is gone and will not return for years, if not decades.

# Over and above the billions spent on defence and assistance to Ukraine, the sanctions war has taken a toll on the West, though less so than on Russia. One study finds that the sanctioning countries had lost USD$60.20bn in exports up to June 2015, or about US$3.2bn per month, as a result of the restrictions on trade and financing.


According to the authors, pursuing the status quo of unbridled competition is a recipe for continued insecurity, political dysfunction and economic backwardness within the region; negotiating new institutions for regional architecture in post-Soviet Asia would give the countries of the region a more decent chance than they have had at security , reform and prosperity.

But the uncomfortable truth is that today neither Russia nor the Wes believes that the other would be willing to accept a compromise.

Russia’s rulers are convinced that the West will forever push to extend its reach right up to Russia’s borders, and even inside them, while many Western policy-makers are convinced that Russia for its part is a predator state, absolutely committed to domination of its neighbours.

This does not deter Charap and Colton from pushing for a dialogue on remedial action, but their survey cannot fail to impress the reader with the difficulties.

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