The Kerry-Lavrov Meet
Focus today will be the meeting between John Kerry and his Russian counterpart, Sergei Lavrov, and I sense there won’t be as much good humor as in some of the recent meetings between the two men. Indeed, relations between the US and Russia have sunk to new post-Soviet lows over the current crisis, with Kerry threatening to isolate Russia economically, politically and diplomatically unless Moscow pulls its troops back from Crimea.
The stakes are high for both sides – with the Obama administration under some pressure from the hawks in Congress for being soft on Putin and Russia in the run-up to the current Ukraine crisis, and Putin himself needing a foreign policy victory now to distract from his humiliation by the Maidan protest movement in Ukraine and economic difficulties at home.
Western threats to impose economic/financial sanctions on Russia appear to have surprised Moscow, and the response has been fairly incoherent at times, suggesting that they are not quite sure themselves how they could impact the Russian economy. Russian politicians have tried to respond with bluster, threatening to retaliate with their own set of sanctions, and banging the line that this will hurt the West even more. The threat yesterday to specifically target Russian banks, and more rigorously enforce FATF-style standards was particularly telling, as this could have a very significant impact on the Russian financial system and broader Russian business interests at a time when the Russian economy is already looking very fragile.
So where is the room for compromise in all this? And can Kerry offer Putin a face-saving exit?
I guess from the Western perspective, the aim is to get Russian troops and irregulars off the streets of Crimea and back to barracks. The hope is also that Russia stops working to destabilize Ukraine more generally, and perhaps understands also that the West will block any Greater Russia strategy, if indeed there is one. There is also perhaps the faint hope that Moscow might just be a little more constructive in helping the fledging Yatseniuk administration address its difficult economic challenges.
So what does Russia want?
As a starting point, what is clear is that Moscow wants a halt still to Ukraine’s European integration process, and a delay (perhaps terminal) in the signing of the AA/DCFTA.
Moscow would probably also appreciate greater control/ownership of key business/strategic assets in Ukraine, particularly the gas transit system.
There is also some real concern to protect the safety and interests of ethnic Russians in Ukraine, the claim that this has been the number one driver for recent Russian intervention is, however, stretching the imagination somewhat.
In order to deliver on the above agenda, Moscow wants an administration in Kyiv to be formed which better represents its interests, perhaps a coalition government including elements of the Regions party.
With little evidence that any of these objectives were going to be delivered, Moscow’s strategy moved to trying to destabilize the Yatseniuk administration in Kyiv, and looking to extract leverage via direct intervention in Crimea, threats of intervention elsewhere in Eastern Ukraine, and perhaps beyond.
Perhaps now we could add to the list of Moscow’s objectives heading off the risk of economic and financial sanctions on Russia, which could be extremely painful for the Russian economy and government-connected elites.
Obviously the easiest one to deliver on for Kerry would be the last, i.e. if Moscow pulls back its troops from Crimea, and the threat of economic/financial sanctions could be lifted.
Moscow wants more though, as Putin would find such an outcome difficult to square with his attempt to sell himself at home, and abroad, as a strong leader.
On the issue of the GTS, PM Yatseniuk has hinted of the privatization of Naftogas, and presumably Russia could be a potential bidder. It is not yet clear though whether any such sale would include the all-important pipelines, and how this would still square with Ukraine’s commitments under the European Energy Charter. Still, a big ticket Russian investment in Naftogaz, in exchange for a pullback over Crimea, and maybe a less destructive role more generally from Russia towards the Ukrainian economy and reform effort might be a win-win. There seems to be wiggle room here.
The Yatseniuk administration has also hinted of trying to respond to fears over the erosion of minority rights in Ukraine, indicating some flexibility over changes to the language law which eroded the status of the Russian language. It also seems willing to offer some greater autonomy to regions.
It is difficult though to see the existing administration in Kyiv agreeing to reformulate the cabinet in Ukraine, under pressure now from Moscow. The chance therein was some weeks back, but including elements from Regions in a coalition government was just a non-starter, given that it could not be sold to the Maidan.
Perhaps Russia, and its interests in Ukraine, might be willing to focus on looming elections to secure better representation in government, i.e presidential elections on May 25, prospects still for early parliamentary elections, and the March 30 vote on greater autonomy for Crimea. However, at this point in time, it seems highly unlikely that any pro-Russian candidate will win the presidential elections, with one of the three main opposition candidates–Tymoshenko, Klitchko or Poroshenko–appearing poised still to win that vote. There is still no set date for parliamentary elections, but even therein, and assuming no change in the current electoral rules, we could well see a significant shift in parliament away from Regions and to a much more fractured parliament, including representatives of Maidan, but similarly hardly much more pro-Russian.
And, finally, on the March 30 election in Crimea: While this might bring a vote supportive of Moscow, the West and the government is Kyiv is hardly likely to take this seriously given that the vote will have been conducted at short notice, without a proper campaign/independent oversight and at Russian gunpoint. Suffice to say any result in Crimea will not be deemed fair or representative by Kyiv or the West.
So no near-term prospect of a pro-Moscow administration re-emerging in Kyiv – albeit it is not inconceivable that a year or two down the line, if economic reform policies fail, the Yatseniuk government might also be ousted and a new political mix might then emerge. But this is a long way off, and Moscow needs a few nearer term wins.
Kyiv and the EU seem willing to delay signing the AA/DCFTA until after presidential elections on May 25, if only to ensure any such signature, and government, is deemed legitimate. However, there seems zero appetite to bow to Russian pressure – again at gunpoint – and further delay the signing of the AA/DCFTA which was after all a key motivation for Maidan. Any delay I think would be seen as doing a disservice to those who lost their lives on Maidan.
The above leaves very little room herein for concessions to Moscow, perhaps only on the GTS, but therein I cannot see the Yatseniuk administration conceding ground without a Russian withdrawal in Crimea and further assurances in respect to non-intervention in the future.
For Moscow, assuming that the AA/DCFTA will now inevitably be signed, and hence ruling out membership of the CIS CU, they may just prefer to try and retain de facto control of Crimea, and bide their time for future opportunities to extend influence/control elsewhere in Ukraine, perhaps as the current and any future pro-Western administration fails. And, the assumption would be that Russia will maintain a less-than constructive approach towards any such administration with disruptions to trade, financing and gas pricing.
By Robert Bensh