Grokking upside scenarios in Crimea

As Ukraine prepares to evacuate its military from Crimea, I believe we should look at upside scenarios in Ukraine. Most of my commentary to date has been focused on risk assessment. But the pullout of Ukraine from Crimea is the first major sign of de-escalation I have seen in a while, which warrants a look at future positive outcomes. 

Here’s what I have been saying about the global backdrop:

• After the Soviet Union broke up, Russia’s global geo-strategic position declined
• The United States used this decline to increase its geo-strategic position to where many spoke of American global hegemony
• Specifically, the United States, allied with the EU via NATO, advanced its sphere of influence deep into eastern Europe
• Beginning around the turn of the century, post-Soviet American power peaked and post-Soviet Russia power bottomed
• Afterwards, America became ensconced in wars against terrorism and domestic economic crisis
• Meanwhile emerging market growth brought several new countries like India and China into play as potential regional rivals
• Growth in emerging markets increased natural resource prices, fuelling a resurgence in Russia

By the time we got to the Georgian – Russian war in South Ossetia, this was the geopolitical position.

The US was friendly to Russia only in a weakened and subservient position that did not threaten American hegemony. But when a revitalized Russia showed that they wanted to maintain influence in the so-called near abroad of former Soviet countries, the gloves were off and Russia again became an enemy state for many in the US military industrial complex. That is why the Georgian situation came to a head. The US/NATO/EU triumpharate was trying to reach as far east as possible into the former Soviet bloc and Putin’s Russia decided to make a stand.

Now I think Georgia and Ukraine are lost to Russia except via military conquest. These countries are going to eventually move into an association agreement with the EU. And I believe Russia understands this. The question is whether they will accept it or use force to prevent it. If the Russians accept it, then the Crimean crisis ends here. Ukraine has told us it does not want to engage Russia militarily the way Georgia did. It is too weak economically to do so. And so it has made a plan to evacuate its military from Crimea. There are 15,000 Ukrainian troops on Crimea versus 20,000 Russian troops. According to the Wall Street Journal, 25,000 places in mainland Ukraine have been prepared for the transfer of the Ukrainian troops and their families as they leave Crimea.

It could all end here then. Ukraine evacuates Crimea. Russia agrees to protect pro-Ukrainian citizens in Crimea and to maintain peace to prevent ethnic violence. Russia and Ukraine work out an agreement that allows Crimea to continue to receive energy supplies through Ukraine until a Russian energy route is well-established. And the two deal with issues surrounding government debt and compensation for lost territory. That is the upside scenario.

If Ukraine peacefully accepts the loss of Crimea and Russia regains unhindered access to Crimea, the land around its warm water port at Sevastopol, without the potential of it falling into NATO hands, this could be over. Eventually the sanctions would end.

But the damage here diplomatically is considerable. Russia will never view the West the same. Apparently, Putin has always harbored a deep resentment for the second-class status the West has given post-Soviet Russia. And only now are we realizing it. In my view, this is a case of clear overreach, particularly by the US. It is all fine and good for Ukraine to develop an association agreement with the EU independently of the US. But it is clear that the US has been agitating for this behind the scenes with money and advise. Diplomats from the US have been in contact with pro-Western Ukrainian leaders, trying to influence policy. Of course, Russia knows this. And of course, Russia was appalled. When Yanukovych was deposed, there had to be an aggressive response from the Russians. That much is clear.

The EU and the US though get it now. And I believe we are indeed in another Cold War. But this time, Russia is going to try to make allies: China, India, Pakistan and whoever else it can. The US has no one to blame for this disaster but itself. Had the US allowed events to unfold naturally, with countries in Russia’s near abroad making overtures to the EU independent of US encouragement, perhaps a new Cold War could have been avoided. But the US is still very much concerned with hegemonic and unbridled power. It is this over-reaching that has brought it antagonism in Russia, which will undo all of the entreaties toward detente. But at least, this outline presents a situation that isn’t a threat to the global economy.