Apocalypse seems to have been postponed in Ukraine. In his press conference on Tuesday of last week Vladimir Putin seemed to rule out extending Russia’s occupation of Crimea to eastern Ukraine.
And he was correct in his calculation that the West’s response would be feeble.
The very limited package of measures agreed by the European Union (EU) last week would have been even milder were it not for the Crimean parliament’s decision to hold a referendum on independence on 16 March.
The timidity of the response reflects the close economic links between Europe and Russia. These go far beyond the fabled Mayfair mansions of the Russian oligarchs—although the City is a magnet for anyone interested in dodgy deals.
The EU is Russia’s biggest trading partner. Trade with Russia was worth £280 billion in 2012, while European companies account for 75 percent of the stock of foreign direct investment in Russia. By comparison US trade with Russia was a mere £24 billion, less than that of the Netherlands.
Not surprisingly, the Netherlands, along with Germany and Italy, actively opposed sanctions against Russia at last week’s summit. A similar pattern followed Russia’s war with Georgia in August 2008.
Of course, economic interdependence doesn’t stop states going to war with each other. Britain was Germany’s biggest export market in 1914. But there’s no sign of any real stomach for confrontation, even on the other side of the pond.
The Republicans in the US Congress may talk a good fight, but they aren’t suggesting anything very concrete that Barack Obama should do. Henry Kissinger weighed in last week to echo the call by Zbigniew Brzezinski, another ex-national security adviser, to propose that Ukraine is “Finlandised”—that is, even if it draws closer to the EU, it should remain geopolitically neutral and outside Nato.
The crisis underlines how dangerous the policy of expanding Nato towards Russia’s borders has been. Membership of Nato allows the ex-Soviet republics in the Baltic to call on US military support if threatened by Russia. At the weekend Obama issued a statement reaffirming “our enduring support for the security and democracy of our Baltic allies”.
Putin is no doubt seeking to discredit this policy through his intervention in Ukraine. More specifically, think tank director Ruslan Pukhov suggested in the New York Times last week, he will “strive to keep Crimea as part of Ukraine, but as a reinforced instrument of Russian influence over politics in Kiev—and a powerful example for pro-Russian populations in other regions”.
Pukhov also predicts that Putin will back Yulia Tymoshenko for Ukraine’s next president. Despite being an opposition heroine, she was Moscow’s preferred candidate in the last elections in 2010.
“The net result of yet another Ukrainian revolution will be de facto Russian control of Crimea, and a Kiev government commercially and personally bound to Mr Putin. A weaker and more destabilised Ukraine will continue zigzagging between East and West, until the next cycle of tumultuous Ukrainian politics arrives.”
Even more cynically, the Russian socialist Boris Kagarlitsky suggests that, “the authorities in Kiev are also satisfied. They are able to employ the ‘Russian threat’ to consolidate the new regime, to explain away economic difficulties as the result of external pressure, and in retrospect, to justify their own steps that have brought Ukraine to collapse. The present situation of ‘neither peace nor war’ thus suits both governments perfectly, at least for the moment.”
It’s easy to guess who will be the victims here. Ukraine is one of the poorest countries in Europe, with a nominal per capita income in 2012 of £2,329, less than that of Jamaica, Tunisia or Paraguay.
The new regime is entrenching the power of the oligarchs—for example, appointing them as provincial governors in eastern Ukraine. Acting prime minister, Arseniy Yatseniuk, a close ally of Tymoshenko, has already accepted of all the conditions demanded by the International Monetary Fund for financial aid—including drastic increases in consumer energy prices. War or no war, it will be ordinary people in Ukraine who pick up the bill for this crisis.