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Ukraine: An Opportunity for Reinforced European Diplomacy
Ukraine: An Opportunity for Reinforced European Diplomacy

Ukraine: Running out of Time

Ukraine needs a government of national unity that reaches out to its own people and tackles the country’s long overdue reforms; both Russia and Western powers should back a vision for the country as a bridge between East and West, not a geopolitical battleground.

Executive Summary

Ukraine’s provisional government faces an uphill struggle to make it to the 25 May presidential election. Shaken by separatist agitation and distracted by Russian troops on its borders, it has not asserted itself coherently and has lost control of the eastern oblasts (regions) of Donetsk and Luhansk, which have voted for independence in contentious referendums. It appears incapable of keeping order in much of the south east, where separatists, supported and encouraged by Moscow, threaten the state’s viability and unity. Kyiv and the presidential candidates should reach out to the south east, explaining plans for local self-government and minority rights, and for Ukraine to be a bridge between Russia and Europe, not a geopolitical battleground. With relations between Moscow and the West deeply chilled, the U.S. and EU should continue tough sanctions to show Russia it will pay an increasing cost for destabilising or dismembering its neighbour, while pursuing parallel, vigorous diplomacy to reach understandings that avoid the worst and respect mutual interest.

The situation has consistently worsened since late February, as much of the optimism from the Maidan protests that brought down the Yanukovych government has faded. Following Russia’s annexation of Crimea, “volunteers” and quite possibly special forces (Spetsnaz) dispatched by the Kremlin have seized the initiative in the south east. The separatists’ objective seems to be to provoke sufficient disruption and bloodshed so that President Vladimir Putin can assert, if he chooses, what he says is Moscow’s right to protect Russian speakers anywhere – in the worst case scenario by carving off what would in effect be a new autonomous entity embracing almost a third of the country and many of its most viable economic resources, which might eventually be absorbed into the Russian Federation. All this deepens the crisis between the West and Russia, making the rapproche­ment necessary to resolve it much more difficult.

The chaos in the south east seriously threatens the presidential election. The govern­­ment formed in February after months of street demonstrations and fighting barely functions, consists mostly of veterans of a discredited political system and new faces with little or no government experience. Communication within government institutions seems weak, with the public as a whole almost non-existent. Moscow’s depiction of a country in the thrall of a fascist coup, dominated by ultra-right militias, has persuaded the Russian public and for lack of alternatives has taken root in parts of Ukraine.

Kyiv must urgently talk to its own people, especially in the south east, where, unlike Crimea, ethnic Russians are not a majority, and even some leading members of the Yanukovych-era ruling party denounce calls to break up the country. Language, self-government and corruption – the latter of immense public concern – should be high on the government agenda and publicised as such. So too should preparing the population for the inevitable pain of deep reforms required to save an economy wrecked by two decades of endemic corruption and incompetence.

Military efforts to restore order in the south east have underlined both the government’s weakness and the pressing need for a solution through dialogue, not force. Such a solution is made more difficult by the competing prisms through which the crisis is viewed. For much of Ukraine and the West, a popular uprising in support of a more European-oriented Ukraine is being stymied by Russian revanchism; for Russia, the Maidan revolution was another calculated move, since the collapse of the Soviet Union, to surround and threaten Russia with enemies and humiliate it.

President Putin appears to consider that a West-leaning Ukraine government born of mass protests would set a dangerous example at home and thwart his ambition of establishing dominant Russian influence over as much of the former Soviet republics as possible. Russia is changing fast, and buoyed by overwhelming public support after the annexation of Crimea, Putin is rapidly creating an avowedly conservative ideology that consciously rejects many of the principles and concepts of Western democracy. In bringing Ukraine to its knees, however, Russia may also have lost its neighbour as a cultural and political ally in the long term.

A mid-April four-party – Russia, Kyiv, U.S., EU – Geneva agreement to calm the situation was ignored by the separatist forces, so is a dead letter. Nevertheless, the effort should be renewed as soon as possible. Ukrainian leaders – particularly presidential candidates – should commit to forming a post-election government of national unity with important representation from the south east and emphasise, as the guiding principle for rapprochement, that they want their country to link, not divide, Russia and Europe. They should also say forthrightly that they do not desire NATO membership and will guarantee continuation of Russia’s important defence industry and other ties to the south east, indeed to all Ukraine.

The dysfunction within the provisional government has complicated a slow and often fragmented Western response. The U.S. and EU need now to convey a consistent, firm, united and measured message, recognising – even if not accepting – Moscow’s take on the crisis’s origins. Its components should be political support for Kyiv to conduct elections, and political, financial and expert support for a national unity government to carry through the necessary stabilisation measures; measures to make Ukraine viable for foreign investment; further sanctions, to bite deeper into Russia’s economy if it does not change course; and quiet high-level talks with Moscow and facilitation of Kyiv-Moscow talks with a view to calming the situation and allowing Ukraine’s future to resolve itself organically over a period of years.

It is important to recognise that the new Russian readiness to use force to change borders, first evident a half-dozen years ago in Georgia, now clearly requires a firm deterrent response including sanctions and reassuring NATO members of the commitment to fulfil collective security obligations. Those actions must, however, be paralleled by diplomatic steps to lessen the confrontation. On the ground in Ukraine today, Russia has immediate advantages of escalation; over time, the West likely has the economic and soft-power edge. A successful, democratic Ukraine, substantially integrated economically in the West, but outside military alliances and a close cultural, linguistic and trading partner mindful of Russian interests would benefit all. Finally, as Kyiv and its international supporters look to the future, all should keep in the centre of their attention that Ukraine is a profoundly damaged country. This damage goes far beyond separatism and is the fruit of the poor governance and massive corruption that, over the past two decades, has all but destroyed it.

Ukraine: An Opportunity for Reinforced European Diplomacy

Ongoing clashes with Russian-backed separatists in eastern Ukraine combined with rampant corruption mean Ukraine is at a crossroads. In this excerpt from our Watch List 2018, Crisis Group recommends the EU to condition further technical and financial assistance while pursuing diplomatic engagement in Donbas.

This commentary on the oppurtunity for reinforcing European diplomacy in Ukraine is part of our annual early-warning report Watch List 2018.

Four years after the Maidan protests and the outbreak of hostilities in the eastern region of Donbas, Ukraine is at a crossroads. A war on two fronts has stalled on both. In the east, humanitarian conditions are worsening, with minimal progress made toward implementation of the Minsk agreements, which Kyiv’s Western allies and Russia maintain offer the only way out of the crisis. On the other front – Ukraine’s efforts to tackle pervasive corruption and misrule – the government is backsliding, neglecting many issues that brought throngs of Ukrainians into the streets four years ago. The EU, Ukraine’s key political ally, should be stricter in conditioning its vast financial and technical support for the country, while stepping up its diplomatic engagement in the Donbas.

The crisis in eastern Ukraine

The outlook in the east remains bleak. Violence over the past four years has killed some 10,500 and displaced 1.6 million within Ukraine. The UN’s relief efforts – 3.4 million Ukrainians require humanitarian aid – are underfunded even as cold weather sets in. While Russian interference remains the principal driver of the Donbas crisis, it is not the only problem: Ukrainian resistance to the Minsk agreements is growing. In this difficult arena, the EU and its member states should look to take advantage of even small openings.

One such opening might be Moscow’s circulation in September 2017 of a draft UN Security Council resolution on peacekeeping in the Donbas. There are good reasons to be suspicious of Russia’s motives, not least that the narrow mandate and lightly armed force its proposal envisages would more likely freeze the conflict than resolve it. Nonetheless, in a crisis with so few resolution opportunities, this one is worth testing.

For now, the U.S. has taken the lead, with its Special Envoy Kurt Volker pushing Moscow to accept a mission with a more robust mandate, notably including the deployment of peacekeepers along the Ukrainian-Russian border. The EU, however, largely has been missing in action on efforts to settle the conflict. It should assume a greater role and consider appointing an EU envoy or representative for Ukraine conflict issues.

Europe’s participation is important. The leverage afforded by the significant assistance it provides to Ukraine means it is well placed both to advance discussions on peacekeeping and encourage Kyiv to adopt a more constructive approach to Minsk. Brussels should continue to urge Moscow to withdraw fully from the Donbas, but in parallel urge Kyiv to develop a strategy to build consensus within Ukrainian political elites and society more broadly on how to eventually reintegrate separatist-held areas.

Restoring political support for Minsk in Ukraine is critical. Opposition has become a badge of honour for many Ukrainians, who believe the agreements, signed in the wake of two disastrous military defeats, reaffirm Russian and separatist gains in the conflict rather than guaranteeing a just resolution. But shelving Minsk does not appear to be a viable option. Instead, Kyiv should initiate a genuine debate on how, when security in the east improves, it can implement the agreements’ political provisions – such as amnesty for separatists and the devolution of power – without upsetting national cohesion or stability. The EU could use its influence in Kyiv to encourage such discussion, which is currently non-existent.

Kyiv must also work to improve the lives of Donbas residents affected by the conflict. Of particular concern is the practice of tying social payments to IDP status; because a large number of displaced cannot afford the higher rents in government-controlled areas, many of them return to separatist zones, in the process either losing IDP status and social payments or making frequent, arduous journeys across the line of separation. This predicament has fanned anger at Kyiv, as well as resentment between communities. Nor does the state have a housing program specifically geared toward IDPs or, for the most part, allow those with property in separatist areas to benefit from existing affordable housing. Many civil society experts say such policies sabotage prospects for reconciliation.

The EU should continue to push for stronger internally displaced person (IDP) rights protection and support for conflict-affected residents, including delinking social payments from IDP status. It should also scale up funding of affordable housing in conflict-affected areas, which would ideally be made available to both the most vulnerable IDPs and other disadvantaged residents.

Anti-corruption and civic engagement

Kyiv has made significant strides since Maidan, notably in macro-economic stabilisation, ongoing decentralisation reform and the creation of several new anti-corruption bodies. Yet much remains to be done, as domestic reformers and donors – including the EU – acknowledge. Lack of clear progress fighting corruption is exemplified by the late 2017 moves – led by the general prosecutor’s office and deputies from the ruling party – to undermine the National Anti-Corruption Bureau (NABU). It has provoked deep cynicism among many reform-minded Ukrainians, who question not only their leaders’ commitment to change but also the determination of Western governments to hold them accountable.

In this light, the EU was right – from a political, technical and public relations standpoint – to withhold the last tranche of its €1.8 billion Macro-Financial Assistance (MFA) package in December 2017, due to Kyiv’s failure to meet four conditions placed on those funds. The EU should adhere to strict conditionality in 2018, especially regarding anti-corruption reforms. In this regard, a recent EU report, which reviewed Ukraine’s and other countries’ fulfilment of their EU visa liberalisation requirements, called on Kyiv to take urgent steps to sustain anti-corruption reforms and recommended an independent and specialised anti-corruption court, was a welcome step.

The EU should adhere to strict conditionality in 2018, especially regarding anti-corruption reforms.

Decentralisation can be important in the fight against corruption, by opening opportunities for greater citizen political engagement and ushering in more accountable local leaders. The EU has several tools it can deploy in this respect. Along with member states, it should continue to fund the Ukraine-Local Empowerment, Accountability and Development Programme (U-LEAD), which provides material and training support to oblast-level decentralisation efforts. Brussels also should encourage Kyiv to overcome remaining roadblocks to decentralisation, including by clarifying procedures municipalities need to follow to merge administratively with neighbouring constituencies. The still-centralised locales include poor rural towns that would benefit from increased funding and latitude for budgetary planning if authority were decentralised. More broadly, the EU should consider supporting further outreach and training in oblasts that have been slower to decentralise.

Removing unnecessary barriers to reform should also be a priority. These obstacles include Kyiv’s refusal to greenlight local elections in areas near the conflict zone, ostensibly due to security concerns. While in many places concerns are real, local residents and experts claim officials also invoke them to avoid holding polls in areas where pro-Russia parties enjoy support. Locally elected and empowered municipal administrations with greater control over budgetary planning could more effectively identify and target local needs, such as repairing war-related infrastructure damage. By appearing to impede such efforts, Kyiv amplifies anti-Western voices.