MANOEUVRES ON A DANGEROUS LINE

The date for the referendum in the Autonomous Republic of Crimea (ARC), which is part of Ukraine, has twice been brought forward. The first time from the 25 May (the day of the presidential elections in Ukraine) to 30 March and then to the 16 March. Moreover the question on the ballot paper has also undergone change. To begin with, it was declared that the purpose of the referendum was to improve the Crimea's status, so that the rights to autonomy were guaranteed no matter what amendments the central authorities might make to the Constitution of the Ukraine. But on 2 March the speaker of the Crimean parliament, V. Konstantinov, stated that the main purpose of the referendum was to transfer Crimea from an autonomous regime to that of an independent state. As a result two questions would be on the ballot paper: "Should Crimea be part of the Russian Federation?" and "Should the ARC be part of Ukraine?"

In the state of affairs that has taken shape it is no good talking about self-determination for the Crimeans. It is clear to even a child that this is a confrontation between Russia and the West. As the rhetoric in the world centres of power has been cranked up, Simferopol's demands have changed. After the council of the Russian Federation voted to give Putin consent to use Russian armed forces in Ukraine and the West threatened Moscow with identical responses, the authorities in Crimea immediately brought forward the date of the referendum by two weeks and made it an issue of secession. 

When Washington introduced visa sanctions for Russian officials and ordinary persons who bear responsibility for "the threat to the sovereignty and territorial integrity of Ukraine" and the EU announced the suspension of talks with Russia on relaxing the visa regime and the concluding of a new basic treaty, the parliament in Crimea took the decision to hold the referendum on 16 March and applied to Moscow to be united with the Russian Federation.  Besides this, a declaration of the independence of Crimea and Sevastopol was adopted.  

Kiev and the West have pronounced the referendum and the declaration of the independence of the Autonomous Republic of Crimea to be unlawful, and Russia's actions a threat to the sovereignty and territorial integrity of Ukraine and contradictory to the norms of international law, which is quite reasonable. Moscow explains the steps it has taken by the violent overthrow of the legitimate authority in Ukraine and the danger thereby created to the lives of Russians and the Russian-speaking population. It is hard to refute Russia's logic to a certain extent, but one cannot help agreeing with the West that Moscow's actions are not in line with the international principles regarding respect for the territorial integrity of a sovereign state. However, the West's position is made vulnerable by the fact that on the issue of observing this principle, it is not always consistent and frequently acts, proceeding from its own geopolitical interests and political expediency. As a result, Ukraine has become a hostage of this policy; besides the Crimean problem, serious passions are seething in Donetsk, Kharkiv and Luhansk. Russia and the West are flexing their muscles right on the frontiers of Ukraine. 

At the same time, according to the forecasts of most experts, the matter will not get as far as a direct military conflict. But sanctions of a political nature will not have any substantial impact on Moscow's position. Incidentally, Ukraine's former prime minister, whose chances of winning the presidential elections are rated extremely highly, has stated that the international instruments that the world is using against Russia are ineffectual, and has called upon the USA and the European Union to use tougher economic levers.

But the problem is that Russia is very firmly integrated into the world financial and economic system and any economic sanctions against her will backfire, resulting in negative consequences for both sides, as Russian Federation President Vladimir Putin has noted. Moreover, it is not the USA whose trade turnover with Russia was 40bn dollars in 2012, but the EU countries that will suffer, should Moscow take identical steps in response. Yes, and in America itself it is hardly likely that tough economic sanctions against Russia would be to the liking of certain lobby groups. The fact is that such major American companies as General Electric, Caterpillar, John Deere, Ford, General Motors, Boeing and others have multi-billion dollar interests in the Russian market.

Russian and American companies have agreements on strategic co-operation on the joint exploitation of the Arctic shelf. In this sense, the EU may be faced with even more serious problems. Last year, according to various estimates, the trade turnover between Russia and the EU, was 410-440bn dollars. Russian companies have invested more than 80bn dollars in the EU economy, and the volume of investments in European companies in Russia amounts to 288bn dollars. German, French and Dutch companies are the main investors in the Russian economy and probably do not wish to put such huge capital investments at risk. The issue of European energy security is also a topical one.

Today Russia accounts for 34 per cent of the EU's imports of "blue fuel". If there were to be a serious deterioration in economic relations between the EU and Russia, the position of the former would become very vulnerable, especially as there are no alternative suppliers of natural gas to the Old world in the short-term or medium-term future. Moreover, Russia is sending 2.7m barrels of oil in a westward direction every day, which cannot be replaced on the world market for the moment.  The German-Russian economic co-operation in various spheres is a special issue. According to experts' estimates, 45 per cent of the German motor industry's exports go to the Russian market. Germany is the major European importer of gas. This is precisely why, although Chancellor Angela Merkel has been scathing in her rhetoric regarding Moscow, German Federal Minister for Foreign Affairs Frank-Walter Steinmeier has stated that he prefers diplomatic efforts in the dialogue with Russia. Former chancellor Gerhard Shroeder has condemned the EU's policy in Ukraine as being a mistake.

In either event, even with sanctions being applied by Russia and the West, the problem of saving Ukraine from economic collapse is a conundrum. If in its political support for Kiev, the West is more than eloquent, there does not seem to be much enthusiasm for this issue. According to Ukraine's minister of finance, the planned amount of macro-financial aid to Ukraine in 2014-2015 should be 35bn dollars. The US Senate Appropriations Committee has already approved a draft law on 1m-dollars-worth of aid to Ukraine. The World Bank has stated its readiness to grant Ukraine 3bn dollars. The International Monetary Fund can for its part grant a loan of up to 4bn dollars. Last week the European parliament approved a proposal of the European Commission on rendering to Ukraine 11bn-euros-worth of aid in the short term and medium term. But even such serious financial support is not a panacea for the Ukrainian economy.

The majority of experts assert that Ukraine will not be able to manage without feasible support from Russia. It is noteworthy that the West is calling upon Moscow to fully meet its commitments to Kiev regarding the granting to Ukraine of a 15bn-dollar loan, on which [Ukrainian President] Viktor Yanukovych signed an agreement. Russia, which assesses the events in Ukraine as a coup d'etat and does not recognised the legitimacy of the country's new leaders, has not only suspended payment of the loan to Kiev, but has also taken the decision to cancel the discount on Russian gas sold to Ukraine from 1 April. From now on, Moscow is only prepared to render financial and economic support to the Autonomous Republic of Crimea and the regions of the Ukraine which are expressing the desire to be transferred to Russia's patronage, no matter what the cost.

 The manner of saving Ukraine from economic collapse proposed by well-known American political scientist Zbigniew Brzezinski is noteworthy. He advised Brussels and Washington to convince dozens of Ukrainian oligarchs to sacrifice 1bn dollars each for the financial rehabilitation of the country. To all appearances, the practical advice that the patriarch of geopolitics has given was listened to. On 5 March, the EU Council adopted a decision to freeze the assets of 18 citizens of Ukraine suspected of the illegal acquisition of state finances and involvement in violations of human rights, among them V. Yanukovych, his sons and his retinue.

A similar decision regarding V. Yanukovych and his comrades-in-arms (a total of 20 people) was taken by the government of Switzerland back at the end of February. It is most likely that these funds will become the back-up guarantee in providing the loans that the West is granting to Ukraine. In the future some part of this money may be sent to Kiev in the form of loans. So, in this banal manner, the West will help the protesters of Maidan Square to find the necessary funds for Ukraine's economy. Incidentally, the Maidan protesters themselves have started to nationalise funds and business structures belonging to V. Yanukovych's family and the oligarchs close to him.

To all appearances, in their quests to come up with the necessary financing, Ukraine's new leaders are counting on feasible help from some Ukrainian oligarchs. It is hardly likely that the appointment of pro-Western oligarchs I. Kolomoyskiy and S. Taruta as the heads of Dnepropetrovsk and Donetsk regional state administrations is a chance step. But the greatest danger is that all this may turn out to be simply a dividing up of property and spheres of influence in the Ukrainian business community. But time will tell.