25 04 2014

Does the EU know what it is doing in Ukraine?

The story looks simple: The Ukrainian people, fed up with a corrupt and authoritarian government, revolts and chases the President out, reestablishing democracy. Unfortunately they have a big neighbour. Russia, governed by an authoritarian President, Vladimir Putin, who dreams of restoring the Tsarist-Soviet empire. So Ukraine is bullied, a Ukrainian Province (the Autonomous Republic of Crimea) is occupied by the Russians and now the Russians are starting to destabilize the country by all means, threatening to annex the South-Eastern part of the country. And isn't this exactly what Hitler did in 1938 when he annexed Sudetenland, part of Checoslovakia, and later on the rest of the country? As we all know, that led to the Second World War, because the rest of the World was not standing firm against Nazi-Germany at this crucial moment. The implications are straightforward.

The problem with this story telling is that it is too simplified, and the historic parallel is flawed.

Firstly, it is important to notice that Ukraine and Russia have a very long and intertwined history. Go 700 years back, and the Kiev-Rus was the centre and Moscow a small trade outpost. Russians and Ukrainians have a common ethnic origin, culture and language, as have the Spanish, the Portuguese and the Catalans, or the Danes, the Norwegians and the Swedes. They share a long and tumultuous story of battles with the mongols and tartars coming from East, wars with the Ottoman empire, struggle against Nazi-Germany during WWII. For the good or the bad, the people have had a shared destiny, millions of Ukrainian and Russians have intermarried, 1.9 million Ukrainians live and work in different parts of Russia and around 8 million Russians happen to live within the borders of Ukraine, mainly in the East.

There is nothing particular about this complicated relationship that we will find in many other parts of the world. But history tells us that this is a potentially very risky situation, if managed by nationalists, inept politicians and external powers with perceived or real geopolitical interests. The most recent experience is from the Balkans. The outcome was disastrous from a humanitarian point of view. Looked at as a geopolitical game it was a complete victory for NATO and the EU, as Yugoslavia was split up in 7 small countries, and most of these have now been, or are in process to be, absorbed into the EU and NATO.

It might be this perceived success that has inspired the EU strategy towards Ukraine. Looking at Ukraine as approximating dangerously to Russia, the EU has supported the Euro-Atlantic (this concept is new to me, but seems to mean EU-NATO-US) forces in the country, with the aim to integrate it with the EU and strengthen the shared European (as opposed to Asian-despotic) values.

But now the problems start. Firstly, the democratic credentials of the present Government, which by the mainstream press is not called transitional or self-elected, are thin. The present PM, Arseniy Yatsenyuk (or “Yats” as Victoria Nuland, the US Ass. Secretary of State for European and Eurasian Affairs lovingly calls him) went to the 2012 elections as part of the Fatherland front, which got 25% of the votes. The Deputy Prime Minister, Oleksandr Sych, is a member of the Svoboda party, which the World Jewish Congress called on the EU to consider banning last year. Svoboda took 10% in the 2012 elections. Svoboda and other ultra-right nationalist parties occupy around 25% of the Ministries in the present Ukrainian government. It requires some stretching to conciliate that with “European values”.

Secondly, there are strong differences between the East and the West of Ukraine, not only regarding the language they prefer to talk, but also regarding their economic characteristics. Eastern Ukraine, particularly the Donbass, is the most industrialized part of the country, and it is tightly integrated with the Russian Economy. Part of it is typically Rustbelt industry (steel, coal) that would quickly disappear if integrated with the EU, but other parts are closely linked up with more sophisticated parts of the Russian industry, e.g. aeronautics and defence. To reconvert these industries and integrate them with the EU instead, will require substantial funding, which it is not at all clear that the EU will be willing to provide. The present state of Bosnia, presently governed by the EU, where unrest flared up recently in the middle of the Ukrainian upheaval, indicates that the EU is not willing to pick up the bill to solve the social distress and the high unemployment (the unrest was ignited by the privatisation of 4 stateowned firms in Tuzla). If that is the case, then the EU should think twice what they are offering Ukraine, apart from lofty European values. That may back-fire. Remember the accelerated conversion of the ex-GDR economy during 1990ties, Treuhand, factory closures and all that. The cost was big, both in terms of unemployment and other humanitarian suffering and financially - almost bringing unified Germany to its knees.

Thirdly, regarding the need to stand up firmly to an expansionist Russia. It is not at all obvious that Russia would have opposed Ukraine having economic and political relations with both Russia and the EU. What Russia feared was a Ukraine firmly in the “Euro-Atlantic” camp, with perspectives of NATO membership, US bases, missile shields etc., as is the case in other Eastern European countries. What seems to have worried EU and the US more was the perspective of a closer integration of Ukraine with Russia (“Russia with Ukraine is an empire, Russia without Ukraine is just another country” as they like to say). There is no evidence that the Yanukovitch Government was actually interested in giving up relations to the EU – the Ukrainian Government seemed genuinely worried about the cost of the treaty with the EU in terms of austerity and industrial decline, at least in the short to medium run.

So what are the options now?

Scenario 1 is that Ukraine weathers the crisis as a unified Country (minus Crimea), and continues down the path of integration with the EU. The economic and political cost in particularly Eastern Ukraine will be high, unless the EU is willing to make a very heavy injection of funds to compensate for the closing down of Rustbelt industries and the loss of the Russian market. It is doable, but I doubt the political willingness is there in times of austerity in particularly Southern Europe. Unrest and disintegration is the most probable result, with or without destabilising efforts from Russia.

Scenario 2 is that Ukraine splits up in East and West, with the East as an independent country or simply joining Russia, hoping Russia will pick up the bill for the integration. How bad this will be depends very much on how it comes by. If it is by the way of Russia sending troops into the country, the result may practically be a new iron curtain between Western Ukraine and Russia, which will create much suffering and hardship for the Ukrainians and the Russian ending up on the wrong side of the divide, and for the many cross border families. It may have long lasting consequences for Russia's relations with EU and the US, damaging both parties. If it comes by as a result of – perceived or real - bullying of the East by the Kiev Government, to the point where the East revolts and secedes, the consequences will still be severe, but less so, unless it implies civil war.

Scenario 3 is a tripartite agreement between Ukraine, EU-US and Russia, by which it is agreed that Ukraine will maintain a non-aligned status, i.e. not join NATO, with economic and political relations to both Russia and the EU, and with constitutional guarantees for the Eastern Ukrainian population. This looks presently very unlikely. The present Ukrainian government seems to consider their relation to the East of the country as a purely internal matter, rejecting Russian “meddling in Ukraine's internal affairs”. Russia will probably require tangible guarantees, as it has received similar promises before that were not honoured, and the EU-US seem not to have arrived at this point of realism yet. Germany, which has most to lose from a conflict with Russia, could take the lead for such a solution, if the more bellicose countries as Poland, UK, France, Sweden and the Baltic countries can be sidelined.

A fourth, but unfortunately completely unrealistic scenario, is that inspiration is taken from some post World War I experiences. One of them is from Denmark. After World War I, the victorious allied countries offered Denmark that it could take back old Danish land lost to Germany in the 1864 war. Prudent politicians in Denmark reasoned that it would not be in the national interest to have a big German minority within the country, as Germany could not be expected to remain weak. So they decided to stand up against nationalist hotheads and chose to let the people decide in a plebiscite. The new border implied that there was still substantial national minorities on both sides of the border, and many Danes deplored the loss of the beautiful city of Flensborg, but in the long run the new border turned out to be a boon for everybody. A similar plebiscite was carried out in 1920 to draw the border between Slovenia and Austria (Kärnten-Koroška), and it has never been disputed since.

For small countries that have worryingly big neighbours, this type of plebiscites ought to be a tempting opportunity. Somebody should tell the Ukrainian nationalists. This would not be to do Russia a favour – it would be to do Ukraine (and the rest of the world) a favour. Separating in peace means that the two peoples should be able to live together afterwards with and open border.

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Thorbjorn Waagstein

Thorbjørn Waagstein, Economist, PhD, since 1999 working as international Development Consultant in Latin America, Africa and Asia.

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  • Thorbjorn Waagstein Thorbjorn Waagstein Says: Saturday, 26 April 2014 22:33

    For some reason plebiscites are not popular among international politicians. It would have been obvious in Ex-Yugoslavia, where a lot of people ended up on the "wrong side" of the border: Croatians and Serbians in Bosnia-Herzegovina (which simply seems not to be a viable country, still governed as it is by the EU now almost 20 years after the conflict), Serbians in Kosovo etc. Perhaps the fear is that redrawing borders opens a Pandora box in other European countries. Such fears seem to count more than common sense.

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  • Eric Buhl-Nielsen Eric Buhl-Nielsen Says: Saturday, 26 April 2014 18:03

    Option 4 has a lot going for it - what about a federal structure - actually Putin was calling for that earlier

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