Ukraine: Why the West Must Be Flexible

Present headlines about Syria obscure a major triumph for Western policy. Ukraine seems to be heading toward an informal settlement largely on European and U.S. terms. Yet, this success could threaten the very Western unity that brought it about.

Over the past three months, Ukraine has witnessed a stable cease-fire, partial withdrawal of military equipment, scheduling of federal instead of separatist elections as well as a plan to bolster OSCE monitoring.

Russian President Vladimir Putin seems resigned to pursue his aims primarily through economic and political means. In hardheaded “Kissingerian” terms, two years of conflict have shifted Ukraine from the Russian sphere of influence into the Western camp.

Putin’s actions in Crimea have failed to undermine the post-Cold War global order elsewhere in the world. This marks a considerable Western achievement. Of course, the result is not perfect. Crimea remains — and, realistically, will remain — Russian.

Ukraine continues to be economically vulnerable. Complex negotiations will be required to unfreeze the conflict in its eastern provinces — and they may fail. For the moment, however, facing a no-win situation, Putin is playing along.

Over the next six months, transatlantic and intra-European tensions may distract Western governments from the successful formula they have pursued, which stresses civilian power wielded by a German-led Europe. Three dangers loom.

Danger #1: Civilian power strategies will be deserted

The first is that Western governments will desert the civilian power strategy in favor of NATO military deterrence.

Today, a “coalition of the willing” favorable to more defense spending — the United States, United Kingdom, Poland, Sweden, and the Baltics — is focused on making “persistent but not permanent” military commitments to the eastern front.

This includes rapid deployment forces, pre-positioned military stockpiles, rotating mobile air and sea forces and intelligence assets.

As essential as defense is, enhancing NATO deterrence does little to alter the West’s strategic relationship with Russia or Ukraine. Few today expect Russia to attack Poland, the Baltics or any other NATO ally — and Western governments have ruled out intervention in Ukraine.

A bit more defense may seem harmless. Yet, it can sap attention, money and political will from more consequential policies. For example, last year just the marginal increase in Poland’s defense spending was more than 200 times the $5 million in development and humanitarian aid it gave Ukraine.

Danger #2: Inflexible on sanctions

The second risk is that sanctions, though they have been the key lever against Putin, may now split the West. The threat is not that sanctions will be relaxed too soon. The West has shown extraordinary solidarity and sanctions will surely be renewed in December. The danger is the opposite.

Over the next nine months, some governments may remain too rigidly attached to the demand that sanctions not be relaxed unless all Western demands concerning eastern Ukraine are met.

Such inflexibility may prove impractical and divisive. At some point, Russia is almost certain to refuse further concessions on implementing the Minsk Agreement without some interim Western quid pro quo.

The Ukrainian government may cloud things further by refusing to comply with its own obligations, which are ambiguous anyway. Achieving a (second-best) negotiating settlement would then require some Western concessions.

Most European governments would probably support flexibility. They pay much higher immediate costs for sanctions, which reduce their GDPs by 0.1% to 0.5% annually — about ten times what the United States pays.

Moreover, in the long term, they have to manage the social spillover of any renewed conflict in Ukraine. European policymakers don’t favor a long-term freeze in Russia-West relations.

Danger #3: Too stingy on economic assistance

The third and most important element of the West’s successful strategy has been direct economic assistance to Ukraine. The danger here is that where more is needed, less may come.

Western debt relief and economic aid have kept the country afloat — and permitted it to resist Russia. Even so, economic growth remains negative, foreign direct investment anemic, and economic reform sluggish. Debt restructuring has not stabilized external accounts.

The negotiations that decide Ukraine’s future will not be with Moscow, but with businesses, international organizations and governments in the West — with whom Ukraine has trade and debt imbalances many times larger than those with Russia.

As George Soros and others have argued, Ukraine will likely require much more economic support in the future than it has received to date — particularly if Putin makes good on threats to impose various sanctions.

Conditionality attached to Western programs, combined with European trading opportunities, is the only external instruments available to encourage reform of Ukraine’s oligarch-dominated economy and fragile democracy.

In each of these areas, continued success requires that all Western governments line up behind Germany, which has emerged as the indispensable Western power with regard to Russia.

The civilian strategy that is slowly succeeding is essentially a German-led EU strategy. With 75% of trade, investment and foreign aid, and almost all of the diplomatic engagement in the region, Europe is the decisive actor.

It is the diplomatic leader and if Ukraine ever finds a stable geopolitical home, it will be as a state associated in some form with the EU — which is what Putin fears most.

All this is as it should be, for continental Europeans have the most to gain by properly managing relations with Russia and Ukraine.

Editor’s Note: The article first appeared as a publication of the German Marshall Fund of the United States in GMF Transatlantic Take