Russia's Choices

February 27, 2015

The Ukrainian uprising was not because the President of Ukraine refused to sign an agreement with the European Union and signed with the Russians instead.The uprising was a reaction against the blatant, extreme, open corruption of those in power.The Ukraine revolution could have destabilized Russia. It had corruption too. The unrest could spread to Russia the way the unrest in Tunis spread all over the Arab countries.For Putin this was a threat. But there was another development, even more serious, to which Putin had to react: the United States used the Ukraine revolution to attract Ukraine into NATO.As far as Russia was concerned it was a provocation. Putin could not bear to have NATO forces on the Russian border. He had to discourage the uprising from spreading into Russia and at least stop Eastern Ukraine from joining NATO. That is where ethnic Russians reside.What did he do? He demonized the Ukrainian uprising. Called its leaders Nazi collaborators and, by seizing Crimea, became a national hero. The Russian people consider Crimea to be Russian. They fought wars for Crimea. The lore is that Khrushchev, who was Ukrainian, gave it to Ukraine when he was drunk. Since it was still within the Soviet Union it was considered just an internal border adjustment.Kiev’s actions and Putin’s reaction galvanized the militants in Eastern Ukraine, which is populated by ethnic Russians, to revolt. They would not join NATO against mother Russia.Putin achieved his goal. His popularity scale topped eighty percent and the opposition could not copy the Maidan revolution; it would have been considered unpatriotic and the revolt in Eastern Ukraine was stopping Kiev, at least for the time being, of joining NATO. But all these developments led the West to impose sanctions on Russia and Putin is now in a political bind.To stop the sanctions, and if he abandons the Eastern Ukrainian Russians, NATO will be on Russia’s borders and he is not protecting fellow Russians. His leadership will be challenged for sure.If he assists the uprising against Kiev, the sanctions will continue or possibly increase in severity.If he enters Eastern Ukraine, the West might be pushed into a military confrontation to stop Russia’s expansion.The political problems are compounded by economic problems.The Russian economy is based on exporting oil and gas. Since the glut in oil created by the new technology of fracking will continue, the price of oil is not going to rise. Russia must restructure its economy and diversify it. For that it needs capital and capital is not flowing into the country. Quite the opposite. It is leaving the country because investors perceive Russia not to be safe. Khodorkovsky was sent to jail and his oil company assets given to the government owned oil company. Yevtushenkov also lost his oil company to the same government owned oil company. They might have been guilty, but nevertheless government actions discourage potential investors.There is more to it. As Russia has many overlapping laws and rules, legislated over the years by different regimes with different political orientations, from tsarist to soviet communist and now to a market economy orientation, entrepreneurs are guilty of something but they do not know what it is nor when the government might decide to prosecute.The result? A rapid exodus not only of financial capital but also of human entrepreneurial capital.And the crisis is getting worse by the day. Russia needs foreign currency to import what it does not produce, like food, but the revenues have halved due to the declining price of oil, and there is no investment coming in. Nor can Russia take out loans because of the sanctions. When I left Moscow on February 1, a Russian TV station announced the price of food had already increased by over 25 percent, and its foreign currency reserves are depleting fast.Russia is in crisis and will continue to be in crisis. This has the potential to create significant unrest which was what Putin wanted to avoid in the first place.What can he do or what might he do?One solution is for Putin to start playing ball with the West. Help the United States in delaying or disabling Iran from developing nuclear devices, stop supporting the Syrian government, totally pull out of Eastern Ukraine, and as far as Crimea is concerned, give its population dual citizenship: Ukrainian and Russian. With open borders and dual passports, the issue of whose country Crimea is becomes less problematic.The West in return should agree not to accept nor attempt to recruit Ukraine as a member of NATO, which is a thorn in the side of Russia.This I believe will stop the ethnic Russian uprising in Eastern Ukraine and cause Russia to withdraw its forces.If, on top of it, Crimea’s issue is calmed down, the West will have no reason for sanctions.Let us assume Putin is willing to do his share of this plan (the rumors have it he was offered this or something similar already). Will the West play ball?I suspect the West will not. They want Putin to fall. They welcome the crisis and will continue to aggravate it.The whole Ukrainian-Russian conflict is an undisclosed strategy by the West to topple Putin from power. It is not being publicly announced as such, but it is.How will Putin behave when his power gets threatened?As the Russian crisis does not subside and there is unrest, or potential for unrest, Putin might up the ante and invade Eastern Ukraine to project nationalistic fervor, be a hero, and in doing so keep in check the increasing internal turmoil. Furthermore, by invading East Ukraine, where ethnic Russians reside, he can prevent at least that part from joining NATO.Putin is being pushed to a corner. The West holds the cards to stop the emerging aggravated confrontation.The recent Minsk II agreement, in my opinion, is a band aid that will not work because it does not satisfy Western goals and strategy and does not deal with Putin’s need to defend Russian interests as well as his own.Just thinking.Ichak Kalderon Adizes

Written by
Dr. Ichak Adizes