EEU = Soviet Lite

[Skywatcher]

Sara,

Thank you for taking the time to write an excellent synopsis of your views regarding unfolding events.

Here's wishing your family and you a happy(er) and safe new year. God knows your citizens deserve it.

Seconded, if I may.

[tantalus]

...the agreement with foreign investors to take a 'haircut' and delay further payments was crucial in this. Having said that the Putin regime of course has not agreed to the terms that other creditors have and so technically Ukraine will default on it's repayments to Moscow for it's bribes to Yanukovych today I believe. The IMF though have said they will not consider this a default per se so the loan programme will continue.

I had read that the dispute was blocking vital IMF loans to the Ukraine, and now the news is that Russia is suing The Ukraine over the matter. Is this likely to prove a major problem for the Ukraine in financing itself?

2015 has been bad for Ukraine in general but perhaps not as bad as 2014. I hope next year will be better still and that with a growing economy and continued Governmental reform at every level as well as an ever more better equipped and trained army we can finally look to the future with some confidence.

Reform is not easy I imagine, takes time, and requires the kind of patience that few people or institutions ever possess, so criticism that is unreasonable or impractical is inevitable throughout the process, but what is your feeling on the reforms and what are the key challenges?

The clear solution is the liberation of Belarus and I was pleased to see the EU drop sanctions against Lukashenka who understands that his real threat comes from the East not the West and hence has continued to block the proposed Muscovite airbase that would pose an even greater threat to 'Suwałki gap' if 'little green men' appeared in Estonia.

I know virtually nothing about the dictatorship in Belarus. Is this a case of taking the practical approach (from EU perspective) against Russia, or perhaps reform is better achieved with a carrot anyway?

[snapper]

I had read that the dispute was blocking vital IMF loans to the Ukraine, and now the news is that Russia is suing The Ukraine over the matter. Is this likely to prove a major problem for the Ukraine in financing itself?

Simply put no. The IMF will continue funding, Poland has given a $1bn loan guarantee and the EU will continue to fund piecemeal all dependent - rightfully - on the progress of reforms. The actual details of the Russian 'loan' and circumstances in which it was made have to be understood before you can understand why the IMF does not consider this a default that would prevent them making further loans. The deal was made on December 17th 2013 when Yankovych had failed to sign the EU Free Trade Agreement in Vilnius in November. It was in a way the carrot as opposed to the stick they had been using before - a form of trade embargo and gas prices were raised to $400 per 1,000 cubic metres. The EU wanted gas reform (effectively raising domestic bills by about 40%), the release of Yulia Tymoshenko etc etc and offered $635m at Vilnius; effectively they refused to get in the bidding game that Yanukovych was trying to play (much the same as Lukashenka has done for so long) so in some ways Yanukovych's plan failed - there was only one player. The carrot was that Tymoshenko didn't have to be released, gas wholesale prices fell to $268 per 1,000 cubic metres, the trade embargo ended and the Putin regime agreed to buy $15bn worth of Ukrainian bonds (in Eurobonds). Of course reform of the gas market inside Ukraine also went out of the window - corruption could continue. The first tranche of the $15bn purchase package was made on December 24th 2013 - and this is the $3bn currently under contention. Naturally following Yanukovych's departure no further purchases were made, gas was cut off amid claims that Naftogaz owed $billions, Crimea annexed and all the rest.

Then to move forward part of the new IMF loan package agreed in late 2014 was that Ukraine agree a 'haircut' deal with it's major creditors (whom it owed around $18bn). This deal was agree last August with the creditors taking a 20% haircut and a four year suspension of repayments in return for a higher interest rate after 2021. The Russians refused to agree to this deal and insisted that their purchase of Ukrainian bonds was a state to state agreement, which under the rules of the IMF it was not repayed would constitute a state debt default precluding further IMF loans. By IMF rules loans can continue if a country defaults to private investors as long as appropriate policies etc are in place but not if a country defaults to another country - or at least this was the case. The IMF now says that this 'strict adherence to the rule' so to speak does not apply in the Ukrainian case as long as parties continue to negotiate; in other words the Russians should have accepted the same deal as the other bondholders and to give Russia a better deal would be inappropriate as it is not clear that since the purchase was made by a Russian fund which supposedly is not state controlled there is also a questions as to whether the Russian state can be said to hold the debt. In December Ukraine announced a 'moritorium' on repaying the Russian debt and that, as far as I have been told, is where we are now. Sorry if it seems complicated but you may be interested in the whys and hows rather than the "Simply put no" I thought. Full statement of Ukraine on these issues (in English) here; http://minfin.gov.ua/en/news/view/za...ory=vsi-novini

As for Putin trying to sue in the London Courts... fine let him do his worst! Do you not think Ukraine is owed some compensation for Crimea or Donbass let alone the ongoing Naftogaz- Gazprom case currently under way in the Stockholm courts or other cases at the International Criminal Court or the outstanding claims of Yukos shareholders which the Russian Government seeks to appeal against payments of $50bn? But recently the Muscovite Duma (Parliament if there an opposition) has passed a law saying that no international or non national court decision is binding in Greater Muscovy. Why therefore should they expect Ukraine to pay Putin's bribe to Yanukovych? Make no mistake; Ukraine saw not a penny of it and will not be repaying it as long as Ukrainian territory is under Moskal occupation but everything else will carry on as normal with IMF, EU and others.

Reform is not easy I imagine, takes time, and requires the kind of patience that few people or institutions ever possess, so criticism that is unreasonable or impractical is inevitable throughout the process, but what is your feeling on the reforms and what are the key challenges?

I could think of many things that would take probably pages to explain but certainly as I mentioned judicial reform (wholesale sacking of the lot would be preferable in many peoples eyes - including Yatsenyuk's) is a priority. Added to that I would (personally) clear out the Ministry of Defence (in Kyiv) from top to bottom - they have had enough time to sort themselves out and largely failed so must go, the procurement system in particular needs oversight from the public. But the main problem is the middle to lower ranking Civil Servants who are low callibre 'careerists' payed low wages and therefore forced to rely on corrupt schemes and a form patronage; not all are 'bad' though some of course are but because of their low wages they cannot but indulge in these corrupt practices. In the end only clearing out the bad ones and getting the economy going works to solve these problems. Universities - or so called Universities - people who will sell you Phd in whatever and take Government grants for it remain a problem though many were closed down last year. The biggest problem was the gas problem and while Naftogaz have done well this last year the Firtash companies remain (Dmytro Firtash is a fugitive in Austria for whom the US seeks extradition). The EU also requires that the publicly owned gas companies be privatised and this presents a problem; how do you stop Muscovite proxies or Oligarchs buying them and everything then remaining the same? They need to get a real grip on inflation to help all these problems - inflation this year was around 43% and that is insane for the ordinary man on Kyiv omnibus. Longer term there are deeper political problems: The political parties are based around a person whether it be Poroshenko, Yatsenyuk or whoever - as I said Saakashvili, because of his self publicity, may try to get in on this game medium term. This evidently needs to change and political parties be recognised not for their personalities - at least not entirely - but for their basic 'ethos' as it were; conservative or liberal etc. I don't care who runs what party but I don't want parties based solely on people.

Having said all of that I do think alot has been done (see http://carnegieendowment.org/2015/10...ober-2015/iik7). There was an auction of state property at which I bought piece of farmland so can witness that myself. Currently housing IDPs/Donbass refugees on the property.

I know virtually nothing about the dictatorship in Belarus. Is this a case of taking the practical approach (from EU perspective) against Russia, or perhaps reform is better achieved with a carrot anyway?

I could tell you the whole history of Lukashenka and his odious mini Putin dictatorship but shall refrain from boring you. I think though, with respect, that your question is posing mistaken assumptions. There is NO "EU perspective" in general. Do you think the Portuguese care about Russian land grabs in Ukraine or Georgia? Or the Scottish Nationalists? Syriza in Greece and Front National in France as well as others such as Jobbik in Hungary positively want (partly because they funded directly or indirectly) by the Putin Mafiosi. I am pro European but the EU has failed as an institution in every way other than helping reform in the post Warsaw Pact nations in the past. There are too many cooks and no chef and the euro has proved to be a disaster for reasons many warned about. Unless major reforms are undertaken in the near future (and due to it's Byzantine construction this is almost impossible) it is a dying pigeon and the Russians know this - there is no one Boss of all Bosses and all are at odds and after their own share of the cake. The Putin regime seeks to exploit this division - Snowden was recruited long ago and his 'handy' revelations about the US tapping German telephones not coincidence before the launch of other schemes. The "European Union" doesn't exist except on paper (and many pages of it). The Russians are most surprised at Mrs Merkel's opposition as they believed Germany was 'in the bag' but how long will Mrs Merkel last?

With regard to Belarus I loathe the dictatorial Lukashenka regime in principle but the time is coming soon, given the Saudi, Gulf Arabs (and Israeli)/Iran, Syrian and Ukrainian situations who is your friend is all that matters and moral preferences matter less. Lukashenka or no Lukashenka is not the point, our side or theirs is. Before Vilnius in 2013 when Yanukovych was supposed to sign the EU Partnership Agreement I told them to buy him - and Ukraine. They'd spent $400bn on Greece alone and Yanukovych would have cost a fraction of that and been pushed out at the next election when reforms were not made; at Vilnius they offered him a paltry sum ($635m) and many have died and lost their homes since. Lukashenka will cost far less but that may not avoid the 'little green men' in Belarus when he decides to lean Westward so we must be ready to oppose the proxies with our own. I pray that I am wrong but I fear Ukraine 2 in Belarus in the not too distant future; already the Muscovite press say it is not a "real state" etc and Duma Deputies (MPs) call for "unification by any means". We must win Belarus to keep Ukraine and the Baltic nations but before we never reckoned on having Ukraine on our side. Ukraine is a great victory for the West, our 'values' and our system. We cannot tell what not only our enemy but the enemy of the Russian people will do next and to my mind it would be better to save lives rather than act offensively even in 'hybrid' manner, although it might mean aiding to defence. Also even if Lukashenka remains in power for the short term it does not neccessarily impede reform within Belarus - Yanukovych would have been obliged to move on reform had he signed the Free Trade Agreement. Most imporantly the gas interconnectors between Poland and Lithuania will have the ability to feed into Belarus but this just emphasises the growing need for resolution of the 'Suwałki gap' problem. Interestingly the Kaliningrad region of Russia did not elect a single member of Putin's 'United Russia' Party at the last local elections but Kaliningrad is in many ways a 'most favoured region' - after Moscow it has the second highest standard of living.

One other matter to note in regard to Belarus is that the Polish political party (PiS) which recently won power (both the Presidency and a majority in the Sejm) has a long standing agreement with the Belarus National Front and other pro 'Commonwealth' Belarus parties, where 'commonwealth' means looking more toward Warsawa, Vilnius and Kyiv rather than Moscow in Belarus terms. These Belarus Parties welcomed the PiS victories in Poland which heralds a return to 'Polityka Jagiellońska' (Jagiellonian Politics) as opposed 'Polityka Piastowska' (Piast Politics) in Polish terms, Jagiełło being the Grand Duke of Lithuania who baptised to Christianity when he married the Polish Queen Jadwiga in 13something thus forming the Polish - Lithuanian Commonwealth. Personally I am not impressed by the new Polish Government so far in regard to their domestic moves but there can be no doubt that they look more to the east and the 'central and eastern European neighbours' than the previous Government; "I am thinking about creation of the partner bloc starting from the Baltic Sea, and ending at the Black Sea – the Adriatic," said the Polish President last year - intermarium in old terms, ISTHMUS or Międzymorze in Polish terms but basically a new Commonwealth of some form is what he is speaking about. The winning of Ukraine and the increasing threat from Moscow to Belarus and all others - many Moldovans who have Romanian nationality, the Baltics and the Finns as well as the evidence of the failure and increasing divergence of the Brussels based 'European project' make the CEE alliance increasingly favourable to many. It is a Polish irony in many ways that the heirs of (semi nationalist) Roman Dmowski have taken on the foreign policy of his political (semi socialist) enemy Piłsudski but Polish politics has always had these contradictions; the right wing 'nationalists' want to lower retirement ages, increase benefits but look to their neighbours and the east more to oppose Russia while the central or leftists are more economically prudent and pro EU as a form of countering Russia.

I would say the deciding factor in all these schemes and plans and various 'theories of history' almost is whether Ukraine can be reformed and stabilised in a positive way. If Ukrainian GDP and democracy can grow as Polish GDP has done (in 1990 the GDPs were roughly the same and Poland's GDP is nearly $530bn while Ukrainian is around $175bn) then there is a fortune to be made in Ukraine - and this will have benefits for the entire neighbourhood and set an example that those living under the repressive Putin Mafiosi cannot ignore; this is what Putin fears most. The example to the Belarusians will be more tempting still when they are threatened from the east anyway. As it is they have been doing many things to help Ukraine that their friends in Moscow do not approve of - and other of which Moscow does not know. Winning Ukraine is a bit like what the Bush Jnr administration optimistically hoped for Iraq; provide an example of a working democractic state which flourishes and promotes change to those around it. Putin knows this and hopes to thwart it and that is what it's all about and that is why Ukraine must be won in every sense.

In other news I heard that General Igor Sergun, head of the GRU died, 58 and circumstances unknown. Not heard any theories about this yet as I am in the hills for Orthodox Christmas (today is Christmas Eve) and mostly incommunicado but no doubt there are scandal rumours and theories abounding.

Sorry for my late and long reply but if you want to understand the whole picture (which is constantly moving) you have to understand some of the back story and I don't know how much you are aware of.

[tantalus]

Great reply, thanks.

Why therefore should they expect Ukraine to pay Putin's bribe to Yanukovych? Make no mistake; Ukraine saw not a penny of it and will not be repaying it as long as Ukrainian territory is under Moskal occupation but everything else will carry on as normal with IMF, EU and others.

Sounds good to me

There is NO "EU perspective" in general. Do you think the Portuguese care about Russian land grabs in Ukraine or Georgia? Or the Scottish Nationalists? Syriza in Greece and Front National in France as well as others such as Jobbik in Hungary positively want (partly because they funded directly or indirectly) by the Putin Mafiosi. I am pro European but the EU has failed as an institution in every way other than helping reform in the post Warsaw Pact nations in the past. There are too many cooks and no chef and the euro has proved to be a disaster for reasons many warned about. Unless major reforms are undertaken in the near future (and due to it's Byzantine construction this is almost impossible) it is a dying pigeon and the Russians know this - there is no one Boss of all Bosses and all are at odds and after their own share of the cake. The Putin regime seeks to exploit this division - Snowden was recruited long ago and his 'handy' revelations about the US tapping German telephones not coincidence before the launch of other schemes. The "European Union" doesn't exist except on paper (and many pages of it). The Russians are most surprised at Mrs Merkel's opposition as they believed Germany was 'in the bag' but how long will Mrs Merkel last?

OK fair enough, I would agree with that. It does seem that the Ukraine, Poland et al. must form the united perspective. I have been impressed by Merkel, I hope she does last.

. Ukraine is a great victory for the West, our 'values' and our system. We cannot tell what not only our enemy but the enemy of the Russian people will do next and to my mind it would be better to save lives rather than act offensively even in 'hybrid' manner, although it might mean aiding to defence.

I had always guessed that not engaging putin more directly over the Ukraine was the best of a bad set of options. The Ukraine is further down the road a year later and I wonder if that is being vindicated?

I would say the deciding factor in all these schemes and plans and various 'theories of history' almost is whether Ukraine can be reformed and stabilised in a positive way. If Ukrainian GDP and democracy can grow as Polish GDP has done (in 1990 the GDPs were roughly the same and Poland's GDP is nearly $530bn while Ukrainian is around $175bn) then there is a fortune to be made in Ukraine - and this will have benefits for the entire neighbourhood and set an example that those living under the repressive Putin Mafiosi cannot ignore; this is what Putin fears most.
.

It doesnt look like the russian people are going to figure this out anytime soon, but I hope the Ukrainian people can follow in Poland's example. I have confidence that free market capitalism free from corruption, coupled with western values represents a very difficult hybrid force to stop. Unfortunately parts of the Ukraine will not experience this in full until a later date.

[snapper]

Putin interview with Bild: http://www.bild.de/politik/ausland/w...2656.bild.html

[Parihaka]

good lord no, i had no idea she was afraid of dogs....

[snapper]

A discussion on the 'meaning' of the Bild interview etc from Brian Whitmore's superb Power Vertical blog/podcast which I recommend to all would be "Russia watchers' http://www.rferl.org/content/putins-.../27490362.html Well worth listening to regularly if you want to understand the situation in Central and Eastern Europe without coming and getting involved.

For reference on the Yakunin comments see; http://www.bloomberg.com/news/articl...putin-insiders

[snapper]

It seems either new Rada/Parliamentary elections or an alternative Prime Minister and Cabinet may be moving closer in Kyiv after the resignation of Economy Minister Aivaras Abromavicius, followed by his deputies Yulia Klimenko and Maxim Nefedov, all citing 'special interests' at work within the Ukrainian Government. Abromavicius statement, issued by the Ministry of Economic Development and Trade says;

"It is more than the mere lack of support or political will. These are concrete actions aiming to paralyse our reform efforts, ranging from a sudden removal of my security detail to the pressure to appoint questionable individuals to my team or to key positions in state-owned enterprises.

I can only interpret these actions as a persistent attempt to exert control over the flow of money generated by the state-owned enterprises, especially NAK Naftogaz and the defence industry. I refuse to be part of this system. Neither me, nor my team are prepared to serve as a cover-up for the schemes, old or new, that have been set up in the private interest of particular political or business players."

http://www.me.gov.ua/News/Detail?lan...asAbromavicius

He names Igor Kononenko, an old business partner and deputy head of Poroshenko's Party in the Rada as being directly involved in putting pressure on his Ministry as well as taking control of Ukrhimtransammiak - a state owned amonia company.

Yulia Klimenko wrote (on fb);

"I'm getting a lot of questions, therefore I want to confirm: yes, I'm going to resign along with the minister... I completely support and share every word of the minister - not because I am his deputy, but because I am a responsible citizen and patriot of Ukraine. This is an absolutely balanced and pragmatic decision. And this is not a flight from the battlefield, because there has never been such a battle, but a constant imitation, which we have been deliberately roped into."

There are rumours among the Ukrainian diplomatic and military community here (in Warsawa) that Bloc Poroshenko (Poroshenko's Political Party) has been told to prepare for Rada elections in September.


So what is going on? Well these allegations against Igor Kononenko are far from the first. Valentyn Nalyvaichenko, formerly head of the SBU last October made allegations of money laundering at anti corruption committee linking Kononenko to an offshore company called Intraco Management Ltd registered in the British Virgin Islands. Why Nalyvaichenko was removed as head of the SBU to be replaced by Vasyl Hrytsak, who had previously been in charge of the 'ATO' during Ilovaisk (replacing Krutov on 8 July 2014), has never been clear. I personally was against that at the time but Nalyvaichenko is part of Yatsenyuk's party whereas Hrytsak is very much Poroshenko's creature.

Kononenko also owns a somewhat shady land company called Zelenbudservis-K that previously obtained two plots of land in a well to area of Kyiv allegedly for free. See the Radio Free Liberty 'investigation' (actually it's a report of an investigation carried out during Nalyvaichenko's time at the SBU in conjunction with the Ministry of the Interior - run by Avakov); http://www.rferl.org/content/ukraine.../27013945.html This implicates Poroshenko too as he owns one of the properties of that Zelenbudservis-K later sold to Ukrsel (another shell company) which then sold the plots to... Poroshenko and Kononenko.

Kononenko's comments on Abromavicius are nearly Muscovite level; "There have already been lots of statements about me, which were not subsequently confirmed. There were Nalyvaichenko's stories - where are they? Are there any questions? Is there just one international organisation have anything to respond with? Then there were Korban's accusations. Where is Korban now and where is his accusation, tell me?"

Hennadiy Korban is the leader of UKROP party and a close friend and 'business partner' of Ihor Kolomoyskiy, the former Governor of Dnipropetrovsk. Korban was arrested last November and accused of stealing $1.7 million from the National Defense Fund.

Nine Western Ambassadors issued a joint statement expressing "deep(ly) disappointed by the resignation of Minister for Economic Development and Trade, Aivaras Abromavicius, who has delivered real reform results for Ukraine."
http://www.unian.info/politics/12542....html?src=ilaw

So is Abromavicius the good guy and Kononenko the bad egg? Kononenko certainly should go but Abromavicius is not so clean himself. He is a former partner in a company called East Capital which has considerable investments in Russia. See for example his statements here; http://www.investmenteurope.net/regi...-abromavicius/ His links with East Capital previously available online have all been deleted (see http://www.eastcapital.com/en-US/Cor...s-Abromavicius). Does he still have money in Russia via East Capital? He says not but Bloomberg list him as a Partner still.

Of course Saakashvili seeks to use this rift which is essentially about Abromavicius accusations against Kononenko and by implication Poroshenko in his own feud against Avakov and Yatsenyuk. He claims he spoke to Abromavicius before his resignation adding that "I would like to confirm that all of our initiative for change managers of SOEs are blocked personally by the Prime Minister with the filing of one of the leaders of the faction PPO-Solidarity in the Parliament – Igor Kononenko and several groups of influence." Of course Saakashvili owes his position as Governor of Odessa not to the Government but to the President so he attempts portray Kononenko as linked to Yatsenyuk rather than Poroshenko.

NABU (the anti corruption Agency) then said it would start an investigation into Kononenko based on Abromavicius accusations; “We right now, today, register the criminal proceedings in this case. Public statements by the Minister for that is enough." Poroshenko called on Abromavicius not to resign but didn't mention Kononenko and Yatsenyuk urged Ministers not to "quit the battlefield". Of course Abromavicius resignation has to be accepted by the Rada and given the statements of Poroshenko and Yatsenyuk, who control the coalition in the Rada, his resignation is unlikely to be accepted.

Frankly I have never seen one of them ON the battle field and am increasingly in favour of sending the lot of them to the front where attacks are again peaking. It seems pretty clear to me that Poroshenko is far from clean but I never expected him to be whiter than white - he was just the 'least bad choice' - but he should have sold Roshen as he promised but still has yet to do. I do not think sadly we can get rid of Poroshenko until new Presidential elections are due (2019) but if Yatsenyuk is removed as PM the coalition will inevitably fall apart and new Rada elections may risk a backlash and the return of old Party Of Regions pro Muscovite influence. It seems likely therefore that despite these feuds the coalition will continue in some form with some weakening of Poroshenko's position and perhaps the removal of Kononenko and a strengthening of the reformists group. In short the whole 'dwama' of Abromavicius 'resignation' hastily followed by his Deputies and the statement of the Ambassadors looks to me a 'political manoeuvre' aimed precisely to strengthen the reformers hands within the Government. Abromavicius will win this one.

[snapper]

Predicted this morning Kononenko had no option and has resigned today. His statement goes;

"With respect to the current situation and the accusations put forward against me by Economic Development and Trade Minister Abromavicius, I should make the following statement: Yesterday, I filed and officially registered an application to the National Anti-Corruption Bureau concerning the charges against me, asking it to conduct an objective investigation and punish those responsible. Secondly, I suggest and insist we should pass a lie detector test together with Abromavicius in connection with the charges made by him against me."

It's normally the accused that takes the lie detector test I thought but the facts are already in regardless. Whoever orchestrated this 'dwama' has played it very well.

[snapper]

Should maybe go in the history bit but the details of the meeting of the Ukrainian National Defence and Security Council meeting on February 28, 2014 were just published. The discussion revolved around Crimea and whether or not to respond to Russian troops moving out of their base in Sevastapol and arriving from Russia. Full pdf of the notes in Ukrainian is here; http://www.rnbo.gov.ua/files/2016/stenogr.pdf For a basic overview of the dilemmas facing the then 'interim Government' as described by the notes of the meeting see http://www.rferl.org/content/ukraine.../27569836.html .

[snapper]

Word is the Yats is making way for Natalie Jaresko as PM in the near future. Yatsenyuk will resign and get the Chairmanship of the National Security and Defence Council and his Party will continue to support the Government. It is said that Natalie has insisted on having a much freer hand in Cabinet appointments and including more reformers (maybe Abromovicius return) but I suppose the proof will be in the pudding.

I feel very sorry for Yats who I think is a great guy trying to do almost impossible job. He himself said he'd been passed a suicidal job when he started. He has essentially become a scapegoat for El Chocky, the President, who sadly at present is indispensable.

[snapper]

Nadiya in court

An insane trial... Abducted from Ukraine while doing her duty as a soldier and tried in Russia for a crime allegedly committed in Ukraine in a conflict which Moscow says it's not involved in. I would like to think that in the same circumstances I would behave the same.

[snapper]

New SACEUR: General Curtis Scaparrotti (wiki: https://en.wikipedia.org/wiki/Curtis_Scaparrotti)

[citanon]

http://www.economist.com/node/21695003/print

Russian foreign policy
A hollow superpower

Don’t be fooled by Syria. Vladimir Putin’s foreign policy is born of weakness and made for television

Mar 19th 2016 | From the print edition

JUBILANT crowds waved Russian flags; homecoming pilots were given fresh-baked bread by women in traditional dress. Judging by the pictures on television, Vladimir Putin won a famous victory in Syria this week. After his unexpected declaration that the campaign is over, Mr Putin is claiming credit for a ceasefire and the start of peace talks. He has shown off his forces and, heedless of civilian lives, saved the regime of his ally, Bashar al-Assad (though Mr Assad himself may yet prove dispensable). He has “weaponised” refugees by scattering Syrians among his foes in the European Union. And he has outmanoeuvred Barack Obama, who has consistently failed to grasp the enormity of the Syrian civil war and the threat it poses to America’s allies in the Middle East and Europe.

Look closer, however, and Russia’s victory rings hollow. Islamic State (IS) remains. The peace is brittle. Even optimists doubt that diplomacy in Geneva will prosper (see article). Most important, Mr Putin has exhausted an important tool of propaganda. As our briefing explains, Russia’s president has generated stirring images of war to persuade his anxious citizens that their ailing country is once again a great power, first in Ukraine and recently over the skies of Aleppo. The big question for the West is where he will stage his next drama.

Make Russia great again

Mr Putin’s Russia is more fragile than he pretends. The economy is failing. The rise in oil prices after 2000, when Mr Putin first became president, provided $1.1 trillion of windfall export revenues for him to spend as he wished. But oil prices are three-quarters down from their peak. Russian belts have tightened further because of sanctions imposed after Mr Putin attacked Ukraine. Living standards have fallen for the past two years and are falling still. The average salary in January 2014 was $850 a month; a year later it was $450.

Mr Putin was losing legitimacy even before the economy shrivelled. Many Russians took to the streets in the winter of 2011-12 to demand that their country become a modern state with contested elections. Mr Putin responded by annexing Crimea and vowing to restore Russian greatness after the Soviet collapse—“the greatest geopolitical catastrophe” of the 20th century, he called it. Part of his plan has been to modernise the armed forces, with a $720 billion weapons-renewal programme in 2010; part to use the media to turn Russia into a fortress against a hostile West; and part to intervene abroad.

With action in Ukraine and Syria, he has made it appear that Russia is the equal—and rival—of America. That is not only popular among ordinary Russians but also contains a serious message. Mr Putin fears that Russia, in its weakened state, could be vulnerable to what he sees as America’s impulse to subvert regimes using the language of universal democracy. In both Ukraine and Syria, he believes, America recklessly encouraged the overthrow of governments without being able to contain the chaos that followed. He intervened partly because he fears that the revolutions there must be seen to fail—or Russia itself could one day suffer a revolution of its own.

So far his plans have worked. Beguiled by a pro-Kremlin broadcast media, ordinary Russians have been willing to trade material comfort for national pride. Mr Putin’s popularity ratings remain above 80%, far higher than most Western leaders’. But the narcotic of adventurism soon wears off. Since last October, the share of voters who feel the country is heading in the right direction has fallen from 61% to 51%. Russians tired of Ukraine; now Syria has peaked. Sooner or later, the cameras will crave action. Ukrainians are petrified once again.

What does this mean for the West? So far America, at least, has misunderstood Mr Putin’s aims. In the autumn Mr Obama predicted that Syria would be a Russian “quagmire”. Speaking to the Atlantic recently, he argued that Russia’s repeated resort to force is a sign of weakness. That is true, but not (as Mr Obama suggests) because it shows that Mr Putin cannot achieve his foreign-policy goals by persuasion. For him, military action is an end in itself. He needs footage of warplanes to fill his news bulletins. There will be no quagmire in Syria because the Kremlin is not in the business of nation-building.

Mr Obama thinks Russia should be left to its inevitable decline. Like a naughty child, Mr Putin is rewarded by American attentiveness, he believes. Yet, Syria shows how, when Mr Obama stands back in the hope that regional leaders will stop free-riding on American power and work together for the collective good, the vacuum is filled by disrupters like Iran and IS, and by Russia in its search for the next source of propaganda.

So the West needs to be prepared. It is welcome that America is strengthening its forces in Europe. NATO’s European members should show similar mettle by putting troops in the Baltic states—which will require a change of heart in countries, such as Italy, that see any display of resolve as needlessly provoking Russia. If there is trouble, NATO and the EU will need to respond immediately to show that Russia cannot prise open the collective-security guarantee that lies at the heart of NATO.

Carry on Kiev

The biggest test will be Ukraine—a focus of Russian attention and also the country most like Russia itself. If Ukraine can become a successful European state, it will show Russians that they have a path to liberal democracy. If, by contrast, Ukraine becomes a failed state, it will strengthen the Kremlin’s argument that Russia belongs to its own “orthodox” culture and that liberal democracy has nothing to teach it.

Alas, America and the EU have Kiev fatigue. Instead of doing everything in their power to help Ukraine, they expect Ukrainian politicians to prove that they are capable of reform on their own. That is a mistake. They should be offering financial help and technical advice. They should help root out corruption. And they should be patient.

Eventually, deep Russian decline will limit its aggression. For the time being, however, a nuclear-armed Mr Putin is bent on imposing himself in the old Soviet sphere of influence. In Mr Obama’s last year as president, Mr Putin, fresh from Syrian success, could yet test the West one more time.

From the print edition: Leaders

[snapper]

Interesting article but any 'Russian decline' is of course relative; if oil prices suddenly rise to $110per barrel (which I don't think is likely) then the 'appearance of prosperity' may be may maintained until the Mafia system collapses. It was much the same in the USSR - a fundamentally economic and political system maintained itself for a long time on oil exports. The relatively cheap price of oil in the 1980s is often cited as a cause for the need of the type reforms Gorbachev tried to introduce.

Secondly I would say while it is true that both financially (Italy has a higher GDP than Russia) and militarily Russia does not compare to either Europe as whole or the US that is not the whole story; as has been discussed in the 'Obama Doctrine' thread you can have all the cards in your hands but if you are not prepared to play them then you can lose. In these terms we simply do not know how far the Putin regime will go and thus do not know how 'strongly' they will play their limited cards. I remember some Ukrainians saying to me that the Putin would not invade Donbass in force before Ilovaisk... Clearly they were mistaken. Nor is Europe 'strong' in this regard - some would like to end sanctions etc so compared to Europe in terms of unity of decision making and how far you may be willing to go it is clear that Moscow has an advantage that it seeks to exploit.