John Bruton

Opinions & Ideas

Category: Russia

WILL EUROPE ALLOW A BANKRUPT UKRAINE TO FALL BACK UNDER RUSSIAN DOMINATION?

Ukraine is on the brink of financial collapse.

It is not able to meet interest payments it is due to make this week. Its GDP fell by 6.8% last year and is liable to fall by an even greater extent this year. Meanwhile it is having to defend itself against a neighbour which guaranteed its frontiers as recently as 1994.

Instead of stepping forward to help Ukraine financially, the EU and the United States are both leaving the job to the IMF. The IMF is offering Ukraine $40 billion whereas the EU says it can only manage $2 billion.

The European Union has already extended forty times as much credit to Greece, as it has given to Ukraine, whose population is four times that of Greece. If this ratio reflects the EU’s real priority, it is unbalanced. 

GDP per head in Greece is, after all, about three times that of Ukraine. Like Greece, Ukraine has a lot to do to create a functioning and efficient legal and administrative system, stamp out corruption, and collect taxes fully and fairly .But Ukraine is having to do this while  recovering  from the effects of a Communist system which was imposed on it from outside since 1919, whereas Greece has been the democratic shaper of its own policies for many years.

Greece is , of course, in the EU and the euro, and Ukraine is not, but both are in Europe, and both aspire to a democratic European future.

Furthermore Ukraine had it borders guaranteed in the Budapest declaration of 1994 by EU countries, including Britain and France, and by Russia and the US,  in return for Ukraine giving up nuclear weapons. 

Despite this, Ukraine was invaded, and portion of its territory annexed, last year by one of its guarantors, Russia, because Ukraine wanted to make a modest cooperation agreement with the EU.

Notwithstanding that, the EU is now being stingy in helping Ukraine in its financial crisis, and is fixated instead on the drama in Athens.

Ukrainians believe they have a European destiny, and are prepared to die for it.

The Russian leadership, on the other hand, believes that Ukraine, with its Russian speaking minority, is in their sphere of influence, and sees a link up of Ukraine with the EU as a form of foreign interference in their backyard. One would have to respond that this view is not in accord with Russia’s guarantee to Ukraine of 1994, nor with international law.

The entire post World War Two European security order rests on acceptance of international law.

Similarly, any prospect of voluntary nuclear disarmament in future must depend on solemn obligations, like the Budapest commitment given to Ukraine in 1994, being seen to be honoured.

In Ukraine’s case, all the EU is expected to do is provide financial help.

But if Ukraine falls, the Russian threat may move on to other countries, with Russian speaking minorities, like Latvia and Estonia, which are NATO members  and  to whom most EU countries (not Ireland) have a solemn Treaty based obligation to provide military help if their  territory is threatened.

Meanwhile the Greek government, while looking for new loans and debt write offs from the EU, is ostentatiously aligning itself to the very country that has invaded Ukraine,  Russia. It is looking for more credit from the EU, without implementing reforms that would generate the long term growth, which would enable those loans to be repaid.

In contrast, the new Ukrainian government is implementing painful reforms to increase the growth potential of its economy, for example by eliminating inefficient consumption subsidies, which have quadrupled gas prices paid by Ukrainian households. Parts of its reform programme are being delayed in its parliament by opposition figures, like Julia Timoshenko, once the darling of the western media and still part of the EPP family to which Fine Gael and the German CDU belong.

Ukraine’s financial situation is now so critical that President Putin believes that all he has to do is sit and wait, and Ukraine will collapse back into Russian control simply because, in the absence of large western credits, it will run out of money. 

If this happens, and if the EU has continues to do little or nothing to stop it beyond talk, that will a huge blow to confidence in the EU’s ability to defend its values and help its friends.  Other countries on Russia’s perimeter will feel they too will have to make a deal with Putin, rather than rely on the EU. 

In Ukraine’s case, European countries do not have a Treaty obligation to give military help . But, in their own interests, they should give generous financial help now, to ensure that a success in Ukraine does not embolden Russia to undermine countries like Latvia and Estonia, which also have Russian speaking minorities, but where most European countries do have a Treaty based military obligations to help.

When questioned in a recent Pew poll, as to whether they would be willing to use force to defend another neighbouring NATO country, that found itself in conflict with Russia, 51% of Italians, 53% of French people and 58% of Germans answered that they would not.

If that frightful dilemma is to be avoided, it would be wise for Europeans to draw the line in Ukraine now, by providing that country with enough financial help to build a properly functioning state, that can pay its way and look after itself, and be capable on its own of resisting intimidation by its big neighbour.


HOW WILL THE 21ST CENTURY TURN OUT?

In 2009, I read “The next 100 years – a forecast for the 21st century” by George Friedman
George Friedman is the founder of Stratfor, a Texas-based strategic intelligence consultancy advising many major US corporations. Although described as a conservative Republican, his views would mirror those of many foreign policy realists in both parties. 

He assumes that military and economic power will determine the future. As he puts it, “anger does not make history, power does”. 

Looking back at the book six years later, it appears to have been prescient in many respects. 

He argued in 2009  that the United States would remain the dominant global power for the rest of the 21st century, because of its huge natural resources of coal and oil, its geographic immunity from attack in its fortress of North America, and its control of the world’s seas and of space.

Just as England’s strategic goal, as an island nation and a naval power, was to prevent Europe’s unification under one power coalition, America will pursue a similar policy on the Eurasian land mass. It will not want any one coalition – be it of Russia, China, Turkey or Japan – to dominate that land mass.

He was critical of the way American politicians sometimes approached foreign policy. Because America is so powerful, it has a much bigger margin for error than others, and it sometimes overuses that luxury. He said America is “adolescent in its simplification of issues, and in its use of power”. In general, I do not think President Obama can be accused of this, but some of his Republican critics can.

Other less powerful countries have less  margin to make mistakes. 

Most significantly in light of current events, he argued back in 2009 that Russia, following the eastward expansion of NATO to within 100 miles of St. Petersburg, was “in an untenable political position” and “unless it exerts itself to create a sphere of influence, it could itself fragment”. This is a credible explanation, offered beforehand, of Putin’s present actions in Georgia and Ukraine.

Both China and Japan he saw as vulnerable, because they are export economies, and they rely on the all powerful US Navy to keep sea lanes open for their exports of goods and their imports of raw material. Since 2009, China has spent heavily on its navy so this prediction may be overturned.

Friedman said that the European Union was a schizophrenic entity, in that its “primary purpose is the creation of an integrated economy, while leaving sovereignty in the hands of individual nations”. The current economic crisis is putting this proposition to the test, and one hopes Friedman will be proven wrong. But he has a point. EU’s states often set ambitious common objectives for themselves, but fail to match them with the necessary central authority.

He argued that there is a divergence of interest between Germany and others who will want easy relations with Russia, and more easterly EU members, who will fear again being sucked into Russia’s sphere of influence. Chancellor Merkel does seem to confronting this dilemma, if reluctantly.

Surprisingly, Friedman did not see China becoming as a great power. This was  because of what he saw as its inefficient allocation of capital, its corruption, its profitless exports and its unhealthy reliance on US consumers to buy its goods. Its one child policy will also mean that it soon will be an ageing society. It appears that the current Chinese leadership in confronting these challenges, but reorienting its entire economy will be a very difficult process. 

Surprisingly, Friedman saw Japan emerging as the major Asian power, notwithstanding its lack of resources and its very elderly population.  I believe this is incredible.  An elderly country cannot be a powerful country.

He ignored India altogether. I believe this analysis of the long-term balance of power in Asia was quite unconvincing.

He saw Turkey emerging as the major power across all the former Ottoman lands from North Africa to Central Asia. Here his predictions are more robust in light of subsequent events.  He argued in 2009 that Islamic fundamentalism will run out of steam because its real target, the liberation of women, is irreversible. Since he wrote his book, Islamic fundamentalism has actually increased in strength, but he is probably right in the long term.

Friedman speculated about the likely conflicts of the twenty-first century – including its wars. He believed the wars will be conducted by unmanned aircraft using high precision weaponry and guided from space. They will be backed up by small numbers of highly equipped infantry. The aim will be to destroy the electricity generation capacity and close sea lanes of the enemy. There will be modest casualties. Wars, he believed, would be limited, and would end with negotiated treaties. Pursuit of unconditional surrender would be off the agenda, because nuclear weapons would make it too dangerous. All this is true of wars between the big nuclear powers, but are hardly true of what we have been seeing in Ukraine, Syria, Iraq and parts of Africa.

Although some of Friedman’s speculations had a touch of science fiction about them, its basic assumptions about the realities of military power, and it’s reach, are credible and sobering, especially for those who might think that neutrality would protect a country from military conflicts.

ARE WE SEEING A REPETITION OF 1938?

Adolf Hitler’s 1938 threats to, and eventual occupation of, Czechoslovakia bore some similarities to what is now happening between President Putin and Ukraine. 

In 1938,Hitler exaggerated, and stirred up, grievances over language rights in the German speaking part of Czechoslovakia. He directed the local German speaking leaders inside Czechoslovakia  to ensure that they did not reach any settlement with the Czech Government. He used the lack of an internal settlement as a basis for seeking to incorporate these areas in Germany, under the pretext of protecting the rights of the German speakers.

Western leaders tried to mediate and negotiate without success, culminating in the showdown at Munich, where Chamberlain abandoned Czechoslovakia in return for piece of paper signed by Hitler and himself in which both agreed on “the desire of our two peoples never to go to war again.”. 

Eventually, when Hitler broke his word and occupied the whole of Czechoslovakia in March 1939, trust broke down completely.
Hitler tried the same game with Poland in August 1939, possibly thinking he would get away with it again and the British and French would again huff and puff but do nothing. If that was his calculation, he was mistaken.

The crisis over the Sudetenland in 1938 played out more slowly than the one over Crimea. Putin has acted with much greater speed. In the former case, there was even time for a British Commission of Enquiry, the Runciman Commission, to spend a few weeks studying the situation on the ground in the Sudetenland and reporting back to London.

There is another important difference between the situation of Ukraine and that of Czechoslovakia. France had a Treaty of Mutual (military) Assistance with Czechoslovakia, which had been signed in 1925, guaranteeing Czech borders. Britain had no such Treaty but was drawn in because of its strategic commitment to France. That is why the Czechs feel, to this day, a particular grievance about France’s lack of action in 1938.

In contrast, Ukraine does not have a military alliance with any western country. It is not a member of NATO, and has no Treaty based military guarantees of its borders.
But, since 1994, Ukraine does have a general guarantee of its borders from Russia, the US, and Britain, given in return for giving up its nuclear weapons arsenal. According to this so called Budapest  memorandum, Russia, the U.S., and the UK confirmed, in recognition of Ukraine becoming a member of the nuclear non proliferation Treaty and in effect abandoning its nuclear arsenal to Russia, that they would,

+ respect Ukrainian independence and sovereignty within its existing borders,
+ refrain from the threat or use of force against Ukraine, and
+ refrain from using economic pressure on Ukraine in order to influence its politics.

This is hugely important, and creates a major moral obligation because one of the goals of global policy is to get countries with military nuclear capacity to give it up in return for guarantees. If such guarantees can be unilaterally abandoned without consequence, this strategy for  opposing nuclear proliferation breaks down.

President Putin may feel that Russia should not have agreed to that memorandum in 1994. But it did. Hitler certainly felt the then German Government should not have signed the Versailles Treaty. But it did. Indeed, German negotiators had much less choice, in signing the Versailles Treaty in 1919, than Russian negotiators had in 1994, in signing the Budapest Memorandum.

There was no duress in 1994.

What is happening to Ukraine, and in a different way what happened to Libya, will make it more difficult to get nuclear armed regimes to give up weapons in return for guarantees, however solemn. This is not just a matter of international law. It is one of practical politics and global security, for everybody including militarily neutral countries, like Ireland.
Unlike Ukraine, the Baltic States, Latvia and Estonia, which also have Russian speaking minorities, are members of NATO and do have military alliance guarantees.

It will be the existential test for NATO, if Russia makes or carries out threats on Latvia or Estonia, similar to the ones it has carried out on Ukraine.

UKRAINE NEEDS ECONOMIC REFORM AND A TRULY IMPARTIAL LEGAL SYSTEM

The economy of Ukraine is a mess. It’s income per head is only half that of Russia.

Yet it has a balance of payment deficit of 8% of GDP. In other words, even though it has a low standard of living, it is not earning enough to pay for what it consumes.

Its government also has a deficit of 8% of GDP. The Government  pays subsidies to its coal industry and subsidizes gas consumption. But its pension payments are in arrears and it has not the money to meet its immediate debt repayments. Tax collection is poor.

There has been substantial embezzlement of government funds, and public contracts have not been allocated to the lowest bidders.

These problems were there when the Mrs Timoshenko was in power, and were not tackled then.

They must be tackled now, or any aid the EU, the IMF or the US might give will simply go down a black hole. Any aid programme will involve tough conditions, which will further reduce living standards in the short term, and living standards are already low.

Much is made of the ethnic conflict between Russian speakers and Ukrainian speakers. This should be put in proportion. When Ukraine voted originally to leave the Soviet Union, the proposition got 90% support, so the pro independence voters included a lot of Russian speakers.  The issue should not be seen in Cold War terms, as a sort of “Russia versus the West” struggle.

I heard the new Ukrainian Prime Minister, Arseniy Yatsenyuk speak at a conference in Poland a few months ago.

He spoke out strongly for a truly independent Public Prosecutors office and an independent judiciary. He was against selective justice. He must live up to that now, and ensure that any prosecutions of members of the former regime are dictated solely by legally justifiable, and non political considerations, and that any law breaking by his own supporters is pursued with  similar vigour.

He also insisted that Russian should not be an official language of the country, alongside Ukrainian. Given that Russian is the first language of so many Ukrainian citizens, this seems to be an unproductive line to follow. Eastern Ukraine is Russian speaking, and the Crimea is predominantly ethnically Russian as well as Russian speaking.
It is also important to acknowledge that Russia may have some legitimate concerns of its own. For example, many Russians believe that Russian gas, transiting through Ukraine on the pipeline, is being stolen.

The  proposed  EU/Ukraine Association agreement is not a military alliance. Its value lies in the fact that  it will require Ukraine to overhaul its system of government in a way that will dramatically reduce corruption,  improve the rule of law, and improve growth prospects.  The Agreement does not prevent Ukraine  having a trade agreement with Russia, as well as with the EU.


There is no reason why the proposed EU/Ukraine Agreement should not benefit Russia too. A prosperous Ukraine will help the Russian economy, and  an unstable and impoverished Ukraine would be bad for ALL its neighbours.

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