Escalating Ukraine Crises and Regional Instability

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In its nearly three decades of independence, Ukraine has sought to forge its own path as a sovereign state while looking to align more closely with Western institutions, including the European Union and the North Atlantic Treaty Organization (NATO). However, Kyiv has struggled to balance its foreign relations and to bridge deep internal divisions. A more nationalist, Ukrainian-speaking population in western parts of the country has generally supported greater integration with Europe, while a mostly Russian-speaking community in the east has favored closer ties with Russia. Ukraine went through two revolutions in 2005 and 2014, both times rejecting Russia’s supremacy and seeking a path to join the European Union and NATO. Russia is particularly enraged by the prospect of NATO bases next to its borders and Ukraine joining the US-led transatlantic alliance would mark the crossing of a red line for Russia. More than 10,000 people have been killed in eastern Ukraine by Russia-backed separatists since 2014 and this latest escalation is raising fears that the conflict between the former Soviet state and its prior head is heading towards an all-out war.

Western nations have thrown their support behind Ukraine, but some responses have been tougher than others. The US and UK have supplied weapons, while Germany plans to send a field medical facility but will not transfer military equipment. There has also been much talk of sanctions aimed at punishing Moscow. Publicly, the US and European allies have promised to hit Russia financially like never before if Putin does roll his military into Ukraine. Cutting Russia out of the SWIFT financial system, which moves money from bank to bank around the globe, would be one of the toughest financial steps they could take, damaging Russia’s economy immediately and in the long term. The move could cut Russia off from most international financial transactions, including international profits from oil and gas production, which accounts for more than 40 percent of the country’s revenue. The US also holds one of the most powerful financial weapons against Putin if he invades Ukraine – blocking Russia from access to the US dollar. Dollars still dominate in financial transactions around the world, with trillions of dollars in play daily.

What is expected is that the United States and EU continue to attempt in the near term to deter Moscow through the threat of additional sanctions against key sectors of the Russian economy. Such threats are not a magic bullet by any means, which raises the broader question of how effectively a divided West can mobilize a variety of tools to limit the new threat Russia poses to peace and stability in this important region. Ideally, and on an urgent basis, Russia should shift its conflict with Ukraine from one rooted in the logic of military power to the political terrain. This should include fully implementing the Minsk II agreements and in particular: Demilitarizing the eastern enclaves of Ukraine, including by ceasing its provision of military assistance, and agreeing to the monitoring of all cross-border traffic and entering into political dialogue with the authorities in Kyiv. In the absence of such steps on Russia’s part, Western powers should consider a ten-point strategy to contain Russia: The agenda for talks with Russia should include: the implementation and monitoring of the Minsk agreements (ceasefire and control of borders in particular); the status of eastern Ukraine; the status of Crimea; the geostrategic non-alignment of Ukraine; and joint support to Ukrainian reform, including the re-building of war-affected regions and the return of refugees.

On Ukraine’s geostrategic position, NATO could state explicitly that Ukraine would not become a member; meanwhile, the prospect of joining the EU remains the most powerful incentive for Ukraine to conduct necessary internal reforms and should remain open, though under any circumstances a lengthy period would be needed for Ukraine to carry out the reforms needed to qualify for membership. On aspects of reform, a long-term plan for the support of Ukraine, as well as help for border regions of Russia, could be discussed with the participation of the European Bank for Reconstruction and Development (EBRD). Western leaders should also engage more actively with other world powers, all of whom are impacted by deteriorating Russia-West relations. China in particular appears to have made the strategic calculation that the less it is involved the better. But China and other powers could play a critical role in supporting cooperative security and helping Russia and Western countries de-escalate the crisis. Their lack of engagement serves global peace and security poorly.

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