How will the Ukraine military confrontation end up?

How will the Ukraine military confrontation end up?

The background to this dispute between two closely connected countries is complicated. Ukraine became part of the Soviet Union in 1922. In the years that followed, there was a significant integration of the economies and populations of the two countries. At the present time some 40% of Ukraine contains mainly Russian speaking people. Gas, one of Russia’s primary exports, is piped across Ukraine to major customers in Europe. Ukraine is a large country, with 45m people, compared with 143m in Russia. When the Soviet Union collapsed in 1991, to many Russians (and Ukrainians), the separation felt more like splitting a country than the consequence of dismantling an empire.

In order to understand the war which is currently taking place in the Ukraine (it is indeed a war), it will be helpful to review the progress of both countries since 1991. In the 90s, the economies of both countries collapsed. The causes of this are not hard to find. 70 years of state control of the economy and insulation from the effects of the market had impoverished the population and extinguished normal market dynamics. Prices of basic services and commodities such as rent and foodstuffs had been frozen for decades. Consumer products beyond the absolute basic requirements for existence had disappeared from the shops. More than half the economy, such as remained, was devoted to defence spending.

From 1991, with the economies of both countries being run on free market principles, there was an immediate and wrenching adjustment. Hyperinflation continued for several years, as price levels adjusted to prevailing market levels. As funds dried up for paying government subsidies and defence spending, the economies of both countries fell by 1996 to roughly half the previous level. In 1998, Russia stopped payment on $40Bn of rouble denominated bonds.

Boris Yeltsin became president of Russia in 1991, succeeding Mikhail Gorbachev. He remained in this position until 1999. For much of his presidency he was very unpopular as a result of the economic crisis. He was an excessive drinker and suffered a number of heart attacks. In 1999 Yeltsin resigned having named Vladimir Putin as his successor.

President Putin’s 14 year period as the effective Russian leader has been highly successful in terms both of its economic impact (at least until 2014), and of the administrative improvements which he has achieved. His governance record has, however, increasingly reflected an autocratic approach and this, together with the impact of the 2014 military involvement in Ukraine, have severely damaged Russia’s international reputation.

Russia’s economy was transformed from 2001. Until 2007, annual GDP growth was 7%. Unemployment and poverty were both halved. Russia had assumed all of the Soviet Union’s foreign debts in 1991, but by 2005 all of these had been repaid. A new tax administration was established and a low, flat rate of profits tax introduced. Major police and military reforms were introduced, including the reduction of the army to 1m men. Very large investment in high tech industries was made, including $42Bn in the nuclear power industry.

Underpinning these changes was a focus on the exploitation of Russia’s energy resources as the key to the country’s economic revival. In view of Ukraine’s geographical position to the south west of Russia, most of the gas pipelines that carry gas to Europe, a major customer for Russian gas, transit Ukraine. Additional pipelines to Europe have been built that do not cross Ukraine territory, and others are under construction. However, over 60% of Russian gas supplied to Europe still transits via Ukraine.

In the east China is also a very important customer for Russian gas. A pipeline with an estimated cost of $77Bn to carry gas to China is under construction, and is claimed to be the largest construction project in the world. There has also been very large investment in the exploitation of Russia’s oil reserves, including significant foreign investment. The Russian economy declined in 2009 after the financial crash, but subsequently resumed growth.

Ukraine’s first post independence leader, President Kravchuk, was replaced in 1994 by President Kuchma. Kuchma became increasingly unpopular, he took few pains to conceal a significant level of corruption, including the 2004 acquisition at a very cheap price by his family of Krivorizhstal, Ukraine’s largest steel mill. Kuchma was replaced as president in 2004 by President Yushchenko, who was regarded by western observers as representing a more democratic approach than Kuchma. In the “Orange Revolution” election of 2006 Yushchenko combined with Yulia Tymoshenko in opposition to Victor Yanukovych, who represented the Russian speaking region of Ukraine in the east. In the 2010 election, Yanukovych was elected president. In 2011, Tymoshenko was jailed over her handling of the 2009 gas dispute with Russia.

Between 2001 and 2008, Ukraine’s economy achieved similar growth to Russia’s, around 7% pa GNP growth. In Ukraine’s case, this was largely based on its traditional industrial strategy of exploiting gas supplied very cheaply from Russia. In the case of certain former Soviet satellites, including Ukraine and Belarus, gas continued to be supplied at (very low) Russian consumer prices into the 2000s. Based on this, Ukraine continued to develop its large steel and metal manufacturing industries, as well as its successful agricultural industry. Ukraine also benefitted from transit fees for the transmission of the bulk of the Russian gas sold to European countries.

However, the impact of the 2008 financial crisis was far more severe in the Ukraine than in Russia. A collapse in the steel price was highly damaging to steel manufacturing, a key Ukraine industry. In 2010 the IMF offered to advance $15Bn to alleviate the financial crisis, although the offer was later withdrawn in the light of Ukraine’s refusal to raise domestic gas prices. Subsequently, the financial condition of the country continued to deteriorate.

The deterioration in Russia – Ukraine relations, and the present military conflict, can be traced back to the announcement by President Kuchma in 2002 that Ukraine wished to join NATO. This was followed by the supply in 2003 of Ukrainian troops in support of the US invasion of Iraq. In 2006, Russia briefly cut off supplies of gas to Ukraine after accusing Ukraine of diverting gas intended for the European Union (EU) to Ukraine domestic use. It also accused Ukraine of not paying for gas supplied. This was followed by a more serious dispute in 2009 following Russian accusations that large sums owing by Ukraine for gas remained unpaid. In addition, the gas price was disputed. Russia terminated gas supply for a 13 day period, during which neither Ukraine or a number of European countries were supplied with gas.

In late 2013, tens of thousands of protesters took to the streets to protest against President Yanukovych’s intention of abandoning a plan to sign an associate agreement with the EU, and in addition receive a $15Bn EU loan. Moscow responded with an offer to replace the $15Bn loan, and also proposed to reduce the price of gas supplied. This proposal was not taken forward, and in February 2015 President Yanukovych fled to Russia.

These events were the precursor to the outbreak war in Ukraine. In March, Russia invaded the Crimea, a Ukraine region located on a peninsula of land in the Black Sea containing predominantly Russian speaking people. Next month, separatists in the eastern Donetsk and Luhansk regions gained military occupation of parts of the area. Government forces responded with military operations. In May, businessman Petro Poroshenko was elected president, and shortly afterwards he signed the association agreement with the EU. In July, a Malaysian airliner containing 298 people was shot down by a missile fired from eastern Ukraine.

Fighting in eastern Ukraine has continued until the present. Ceasefires have been negotiated involving Ukraine and separatist negotiators, as well as the governments of France and Germany, but none has been effective in stopping the fighting, which has so far involved more than 5,000 deaths. There have been repeated accusations that Russian troops and weapons have been deployed in support of the separatists.

Before considering the likely outcome of the confrontation, let us consider the position of Vladimir Putin. He is entitled to considerable credit for his achievement in stabilising Russia both politically and economically since 2000. Until the impact of western sanctions in 2014, the country was placed on a sound economic footing. The investment in oil and gas development and in pipelines for transportation to customers in the west and east, has been highly effective. Other industries have grown to become substantial from a virtually zero base 25 years ago. Administrative institutions have been rebuilt or developed from scratch. The military forces have been reorganised.

Against this, Putin has received much criticism in the West for operating what is called “crony capitalism”. Huge financial power resides in the hands of a few oligarchs who became rich following the privatisation of major industries in the 90s. Like the Ukraine, the shadow (untaxed) economy is far larger than that of most western states. Television is state owned, which may partially account for Putin’s personal popularity in Russia, he currently has a more than 80% favourable rating. The response by western governments to the seizure of the Crimea was to eject Russia from the prestigious G8 group. Successive financial and trading sanctions have been applied by Europe, the USA, and other countries, involving bans on transactions and freezing of assets of many large Russian banks and other corporations, and specific individuals.

The sanctions have adversely affected the Russian economy, which has also been affected by the collapse in the oil price. GNP is expected to decline in 2015. The ruble declined sharply, and interest rates rose to 17%. In Germany, whose trade with Russia, both imports and exports, is the largest in Europe, the economy was adversely affected in late 2014 with a brief fall in GNP.

What will the outcome of this confrontation be? The newly elected Ukraine government is strongly resisting the military activities of the separatists. The economy remains weak, but financial support is being provided by the EU, together with the support offered by the associate agreement with the EU. President Obama, in spite of a reputation for being reluctant to interfere in the affairs of foreign countries, has been vocal in pressing his European counterparts to engage in sanctions. The US government has recently discussed offering military equipment to the Ukraine forces.

What are Putin’s objectives? He appears since at least 2002 to have been following a strategy of restraining Ukrainian independence, partly on the commercial front where Russia remains heavily dependent on Ukraine for reliable, low cost transit of Russian gas to European customers. He clearly also feels vulnerable to the threat of political or military links by Ukraine to the EU or to NATO. Russia has a recent history of military action against what it sees as recalcitrant former satellites in the south. In the 90s there was a lengthy military engagement against Chechenya. In 2008, Russian troops invaded Georgia in the dispute over South Ossetia.

Putin seems content for the time being to accept the financial impact of sanctions against the Russian economy and its people. While some oligarchs may be unhappy about the impact on their businesses, the Russian people seem to accept economic stress as a result of the return to a more aggressive stance for their country in international affairs. As long as Russia’s military involvement is limited, the financial and military cost of intervention should not reach the catastrophic level of the Russia / Afghanistan war of the 80s.

Putin seems unlikely to give up in Ukraine for the time being. If the war continues to drag on for two or more years, Putin may feel the need to escalate military activity and intervene with troops. What would be the western response? In 2016 the newly elected president may have a more aggressive stance in international affairs than Obama. Does that mean American and Russian troops will again be fighting in Europe, this time on opposite sides? America may feel that it would prefer to defend western interests in the Ukraine, and consequently reduce the chances of Russian aggression spreading to other former satellites, for instance, the Baltic States or Poland.

If there is indeed a serious escalation, the ultimate solution may be the partition of Ukraine into a western, pro west country, and an eastern, predominantly Russian speaking country. Such a solution would need to be secured by western guarantees, for instance the placing of United Nations troops in the country to protect it from attack.


德国的攻势终于由于将军住克博 (zhukov) 率领的那个很成功从旁边的打击。这个打击透过德国很长和弱的提供线。这个德国失败以后,德国军过俄国撤出,然后在卡克博 (Kharkov) 城市附近站住了。很多冲突在乌克兰的土地发生了。在卡克博反对的军总包含很多千坦克和飞机,也有几百万的兵员。这是历史上最大的战斗之一。结果再次是德国的失败。二年后五月1945,第二次世界大站爆结束了,结果是盟军的胜利。这时候苏联的领域从在西头东德国达到在东头西伯利亚, 也包括二十九千万人口。



1991年米哈伊尓戈尔巴乔夫辞职了以后,包里斯叶利钦成为俄国的总统。他直到1999保留过这个职位。由于经济危机,他总统任期的一大分上,他不是流行。但是总统普京自从2000年为俄国领导四十岁时期很成功,原因是经济发展得很快 (至少直到2014年),也是管理的重要进步。但是那些相关气的争议,也2014年在乌克兰上军事当事包括拿下他叫克里木的地区,很损害俄国的国际名誉。





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