The Ukraine crisis, though temporarily out of
the headlines, is at a critical stage. There is no better opportunity than now
through the next several months to forge a deal with Russia advantageous to
American interests. The Europeans may very well not extend sanctions after the
first half of 2016, even as Russia is now in a near-disastrous economic
position. The confluence of the two trends calls for dramatic diplomatic
action. This is not a deal for a deal's sake, but a way to get Russia
effectively out of eastern Ukraine.
The constraining factor for the United States in
Ukraine has always been Europe. Europe, principally (though not entirely)
because of its appetite for Russian energy, has throughout the Ukraine crisis
demonstrated less appetite than the United States for a harsh policy toward
Moscow. This is especially true of the Germans, who historically have looked
both east and west.
And now that Europe is reeling
under a massive refugee deluge, coupled with its own economic crisis that
after half-a-decade shows few pivotal signs of improvement, the influential
European business community craves the lifting of sanctions with Russia as a
means to spur commerce. EU-Russian trade was down nearly 30 per cent in the
first half of this year, compared to the same period in 2014, and the European
Commission has estimated that Russia sanctions shaved off a third of a point of
the EU’s tepid GDP last year and this year. Consequently, some Europeans
rationalize that the current ceasefire in Eastern Ukraine and the cancellation
of Russian-backed separatist elections there justifies a discontinuation of the
sanctions.
Europe, in other words, is losing whatever nerve
it had. This comes while opinion toward Russia, especially because of its
intervention in Syria, is hardening in the United States.
At the same time, however, partly due to low
energy prices and the sanctions that lock Russia out of European and U. S.
capital markets, the Russian economy is imploding. Growth in Russia will
actually contract by as much as four per cent this year. The credit crunch will
worsen, demand for both consumer and industrial goods will shrink, and progress
on mega energy projects will continue to slow in this weak oil market. Except
for the Europeans, who may extend sanctions for only the first or second
quarter of 2016, there is no one to throw Russia a life-line. Chinese
financiers, who many assumed would have been the natural partners for Russia,
have been restrained in their lending to Russian companies. China, to put it mildly,
has its own economic problems, with growth shrinking from double-digits a few
years ago to an official 6.9 per cent, with a real figure that is
no doubt lower.
Russian business elites, tied inextricably to
the West through investors, shareholders, and stock market listings, now see
President Vladimir Putin's greatest anxiety as the state of the Russian
economy. As a matter of political survival, he is accelerating new trade
and tax measures to grab more revenue for the state and stem the alarming
outpouring of deposits and investments. Putin is not curbing defense
spending or the social spending critical to his popularity, so relief from
sanctions is now crucial to his short-term strategy.
Therefore, crafting a diplomatic approach that
offers measurable sanctions relief in return for measurable Russian concessions
on Ukraine, could keep Europeans on the same page as the United States, while
also providing a better context for negotiating with Russia over Syria. Like it
or not, the Russians arein Syria, even as the Obama Administration
is not about to actively work to topple Syrian President Bashar al-Assad. Defeating ISIS takes priority over that.
As we've said, the danger of refusing to explore
a deal with the Russians over Ukraine may provide Putin with just the opening
he needs to split Europe off from the United States, given how desperate both
Russia and some in Europe are for a deal over sanctions. Syria works to Putin's
advantage in this regard: in the United States, the Russian military campaign
there is seen as toppling whatever remained of an American-order in the Middle
East going back to Henry Kissinger's shuttle diplomacy in the mid-1970s. It
thus has an entirely negative connotation. But among some Europeans, because of
Russia's attempts to forge a diplomatic settlement in Syria, even as it's
military is involved in the fighting there, Putin is seen as perhaps the last
best hope to quell a crisis that is sending so many refugees to Europe.
To be sure, the Obama Administration has pursued
a confusing, ineffectual strategy in the Levant and has floundered in the
effort to project both sufficient power and a sense of mission in Central and
Eastern Europe. But this has created a situation where the best way out may be
a partial deal over Ukraine that happens before Europe deserts us. A deal
should involve material and internationally recognized Russian progress toward
its Minsk commitments, in exchange for relief from some financial sanctions.
In such a deal, internationally validated local
elections must occur in Eastern Ukraine, Russia must remove arms and troops
from Eastern Ukraine, and it must return hostages and detainees. Upon
successfully meeting these benchmarks, the EU and the United States should
temporarily waive some financial market sanctions, expanding the number of days
of maturity for available debt instruments. This will allow for some more
Russian debt servicing or borrowing in Western markets. If Russia allows
Ukraine to gain full control of its Eastern border within six months of meeting
these benchmarks, sanctions should be fully waived. If Russia falls short of
this deadline or reverses course, the United States and the EU should immediately
re-impose all sanctions that were waived and return to the current status quo.
They could also contemplate further, financial sanctions measures.
This will not be an easy deal for either side,
and it will certainly relegate Crimea to the realm of prolonged, frozen
conflict. However it will offer a crucial economic opening to Russian
companies and accomplish key Western benchmarks toward restoring security in
Ukraine.
Such a partial deal must be accompanied by more
robust U.S. and NATO military deployments from the Baltic States south to
Bulgaria. And it must also include greater U.S. and EU economic support
and technical assistance to Ukraine, and other countries in Russia’s near
abroad to bolster them against coercive Russian political or commodity supply
arrangements.
As distasteful as it may be to contemplate a
partial deal with Russia over Ukraine, unraveling transatlantic disunity is
worse. Euro-American unity is fundamental to addressing Syria, ISIS, and the
threat of foreign fighters in our homelands; it is also the bedrock of a
liberal world order. Now is the time to show pragmatic leadership to compel a
deal with Russia, demonstrate powerful American leadership, and keep Europe in
our corner.
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