Military parade, Red Square with Kremlin in the background, May 2020. Once upon a time photos just like this were essential for any discussion of Russian military risk. After a hiatus, they are back.
The Backdrop – January 2022
The world has stepped back in time. It is 1970s all over again. Last week in Geneva there were talks between Russian and US representatives, followed by more with the OSCE and NATO, after a video chat between Presidents Biden (U.S.) and Putin (Russia). The net result was a round of US State Department warnings on the weekend that Russia was ‘laying the groundwork’ for an attack on Ukraine, and suggestions out of Moscow that maybe some Latin American states would like Russian military support, and ominous warnings all round amidst the comments that Europe was closer to war than its been in generations. US President Joe Biden thinks Russia will ‘move in’ to Ukraine but says there will be a ‘heavy price‘ for that, amidst questions about whether everyone is on the same page.
To help set the scene, and remind everyone of what is in play, all major nations with scope for doing so jointly declared last week that a nuclear war should only be fought in self defence, and would be preferably avoided altogether. Just to throw a curve ball into the mix, Kazakhstan descended into the type of anarchy all of the region’s leaders abhor, and Russian (and other CIS) troops were sent in to help the Kazakh government tone things down. The presence of Russian troops was questioned by the US, even though it was only 5 days, as though Kazakhstan has a range of alternatives when asking friends in to support the government. Imagine the howls of protest if they had asked the Chinese for help.
That’s right. China is also a factor in all this. The same China winging flights over Taiwan will be pretty interested in how the EU and US play Russia in Ukraine, and maybe even impressed by the way Russia got Crimea back inside its borders. And Ukraine is just one of a number of issues – including Belarus, Armenia-Azerbaijan, Georgia, Abkhazia and Ossetia, Belarus, TransDnistria, now Kazakhstan, and the ever febrile Ferghana Valley regions of Central Asia – which could blow up at any moment if everyone isn’t careful. But right here in late January 2022 it is Ukraine and Russia that the US State Department is issuing warnings about, with those warnings being carried across the media of the English speaking world.
Russia wants agreement on a few issues and is rattling the cage with, depending on who you ask, more than 100 thousand troops poised to invade Ukraine. The Russian bear is on the loose and the people of Ukraine had better look out.
That may be the case. But it is far more likely Vladimir Putin is shaping his position before going to the Russian Presidential elections in 2024, and firming up his position with Russians who will vote in that election and beyond. Bombs going off in the Moscow Metro or body bags bringing Russians home from action elsewhere are unlikely to cement that already strong electoral support. What will, is bringing home the bacon on some issues ordinary Russians think is right, while making sure the neighbourhood doesn’t go up in flames.
If Putin can pull this off then he will become arguably the Greatest Russian of all. If he can’t then there may well be some military action, almost certainly something firmer than Ukrainians wearing yellow and blue clothing on their trips to Red Square, but likely a more strategic parting between Russia and the ‘West’ and a firmer turn to China. There is a lot of global implication here.
History’s Greatest Russian leaders
The pantheon of Russian leaders has Peter the Great at the very top.
An initially shaky Tsar who forced Russia to modernise, learned from the nations to Russia’s west about what that entailed, crafted the jewel of St Petersburg on lands which had historically been only marginally Russian, fought and won wars with traditional enemies, and set the path to Eastward expansion which ended beyond the Pacific. He decided that Russia needed production and technologies, and that Russians needed educations, science, systems of communication, and armies which could poke chests. He made it happen. He died of a gangrenous bladder at the age of 52, having had a 25 year shot at making Russia run his way.
‘Peter the Great’, Jean-Marc Nattie, 1717, Hermitage Museum, St Petersburg
After him comes Iosif Vissarionovich Stalin – Joseph to much of the world.
It wasn’t pretty, and he wasn’t Russian. But Stalin took control of a revolution which ceased being global and became all about making the revolution work in one country, and the country was Russia. He was paranoid, but he took the chaos which had seized power in Russia, and consolidated it into something workable, and which could run a nation state. It was he who decided the Soviet Union (Russia) needed technology, science, systems and armies, all over again. He murdered millions of Russians but he hung in there to not only withstand, but ultimately prevail against Hitler, and subjugate Eastern Europe under firm Moscow control. Stalin laid the the basis for a system of government the rest of the world loathed continuing for 35 years after his demise – in a pool of his own urine, following a stroke after a drinking binge in the early 1950s, at the age of 74 – after just under 30 years calling the shots.
Joseph Stalin circa 1950
The only reason the above is worth mentioning in 2022 is because Vladimir Vladimirovich Putin has a vision, and VVP is the current President of Russia.
VVP has been running Russia for 22 years, and will soon be 69. He will win the 2024 Russian Presidential election in a canter at the age of 71, and have another 6 years as President, which will take him through to being President at 77 Years of age. That is disturbingly old for a nation where the average male is lucky if they make it to their late 60s. He will hand over in that term provided the right person is there to hand over to. VVP wants every person in Russia drinking a toast to his bequest and Russian history books slotting him in just above Peter the Great and Iosif Vissarionovich Stalin in terms of delivering memorable outcomes for the Russian people: VVP wants to be the ‘Greatest Russian’.
The only reason any of the above is worth mentioning is because he is highly likely to do precisely that, and that, when all is said and done, is what all the troops, and current talk of war, and the gas price surges in Europe, is all about. VVP is going to make himself a legend with the Russian people by telling the United States and European Union where to get off on heavying Russia, and impose an ‘agreement’ on them which recognises Russia’s ‘rights’.
And all that brings us to the here and now along the Russia-Ukraine border, and the price of gas at the height of the European winter.
VVP – Vladimir Vladimirovich Putin
What Russians think of the world they see about them
A lot of quite liberal, tolerant and rational Russians tend to the view the ‘West’ is keen to make sure the ‘West’ can shoot at Russia without Russia shooting anything back, the moment Russia looks like being a hassle for the European Union or the United States. This thought has grown and become more obvious to Russians since the 1990s. And a lot of Russians aren’t very comfortable with that concept.
In the years after promises were supposedly given to Mikhail Gorbachev and Boris Yeltsin about NATO not expanding any closer to Russia, quite a lot of Russians – including plenty who dislike Putin quite intensely – would observe that the North Atlantic Treaty Organization is almost solely about having the ability to muscle the Russians. VVP has made a great play of beefing up Russia’s military capability to address what plenty of Russians identify is a ‘threat’ to them stemming from NATO missile placements in particular. In this he is easily able to capitalise on the historical observation that when Russia is military weak, then some of its neighbors get ‘ideas’. For the sizeable numbers of Russians who like a nationalist feel to their politics this is perfectly obvious. When VVP calls this out there will be plenty of fist pumps, of complete agreement, in Mother Russia. When he proposes doing something about it he is building bridges with Russian voters.
A lot of Russians tend to see the world in a similar way to that depicted in this diagram, with a lot of NATO hardware aimed at them. That is, a lot more hardware aimed at them than they aim anywhere.
Ukraine as a factor in the thought processes of Russians
When Russians think about how the rest of the world, which is aiming a lot of military hardware at them, would like Russia to be, they think a lot about Ukraine.
Ukraine is a lot like what Russia might have become if VVP hadn’t been slotted into power by a batch of Oligarchs who thought him beholden to them, and then subsequently made Russia do things his way, rather than theirs. A nation so corrupted by the 1% that nothing in their parliament ever really works for Ukrainians all that well, and where the bureaucracy is equally compromised by corruption, and where every last large business is either owned by an oligarch or being shaken down on a monthly basis by an oligarch. Where journalists are murdered, just for who they inconvenience with their reporting, along with plenty of others looking for change. Where the entire economy is immersed in debt, where investment is feeble, and where an eminently capable people are held captive in relative poverty, ransomed to the miasma and corruption which shapes their strategic hopes. It doesn’t actually matter if much of the preceding few sentences may be true of Russia when seen from London, New York, or even Melbourne, most Russians think it more true of Ukraine. The national debt greater, the investment feebler, the bureaucracy more corrupt, more journalists whacked, more corruption, more poverty, the polity more subordinate to the interests of the Oligarchs – the 1% who generally get a wonderful reception in Europe and the US, buying mansions, football clubs, basketball teams and driving around in nice cars with models on their arms en-route to Monaco or their super yachts.
A large number of Russians think they have had a better deal. When VVP or the Russian administration refer to Ukraine, they are playing for a home audience, where they can point to the scoreboard, first and foremost, and rightly claim that Russia has delivered results where Ukraine hasn’t. Even if those results don’t appear to be all that much to people elsewhere, or the process by which they’ve been achieved a touch dodgy, VVP, the Putin administration, a probable majority of Russians, and even a probable majority of Ukrainians would be thinking they are ‘results’. Very large numbers of people in Russia and Ukraine tend to think that quality of life for ordinary people is better in Russia than it is in Ukraine.
When VVP refers to Ukraine he is, for Russians, reminding them of that they might have been.
The major issues fueling tensions between Russia and Ukraine
There are four major issues between Russia and Ukraine where every mention of the issue firms up VVP’s relationship with the Russian people. They are:-
- Eastern Ukraine,
- Gas, and
- NATO expansion and the prospect of having missiles aimed at Russia positioned in Ukraine.
Crimea, Donetsk and Lugansk. Festering sores of the Russia-Ukraine relationship, all once comfortably run within the Soviet Union
The first of these is by far the easiest to explain.
Crimea was a stronghold of the Ottoman empire (Turkey) up until the mid 1700s. It was the Russian forces of Peter the Great and his successors who pushed the Turks (and their Crimean Tatar vassals) back into Crimea in the mid 1700s -from where they had historically controlled the Black Sea and inland to the North – leading to the incorporation of Crimea into the Russian empire in 1783. It remained in Russian control for the rest of the Russian empire and became part of Russia in the Soviet Union. It was the Russians who fought the British French and Turks there during the Crimean War, the Russian Whites held out here with British and French support against the Bolsheviks during the Russian civil war, and it was the scene of epic defensive campaigns by both the Soviets and the Germans yet again during World War 2. It has been the home of the Russian Black Sea Fleet since the late 1700s, with the Naval Base at Sevastopol the largest employer in the region.
In 1954 Nikita Khrushchev, the Soviet Leader after Stalin, transferred the Peninsula from the Russian Soviet Federative Socialist Republic to the Ukraine Soviet Socialist Republic – a transfer from Russia to Ukraine within the Soviet Union. Nobody has ever articulated the rationale for doing so. When the Soviet Union disintegrated, 35 years later, into Russia and Ukraine, Crimea was with the latter, but there were plenty on all sides asking if it should be. Those doubts continued with a pair of votes suggesting the Crimeans weren’t all that keen on continuing as part of Ukraine and were keen on being part of Russia. That unsettled situation continued right through to the Ukraine Maidan demonstrations of 2014 which booted out former Ukraine President Yanukovych, when, certainly egged on by Russia and Putin, and certainly helped along by Russian troops who shouldn’t have been there, the Crimeans decided they had had enough and voted first for independence from Ukraine and then for annexation by a welcoming Russia.
Most Russians, and most Crimeans, think this is right.
That annexation by/return to Russia has never been recognised by the global community. This became the basis for financial sanctions against Russian entities which continue to this day.
Eastern Ukraine and the Russians therein
The estimated Russian speaking population of Ukraine, 2001. There isnt much difference between the two languages but this map also represents a good guide to the political divide of Ukraine as well – with the North and West of Ukraine more hostile towards Russia than the East and South.
The next major avenue for disharmony between the Ukrainians and Russians are the peoples of particularly the far East of Ukraine, but more generally the very large numbers of people in Ukraine who still consider themselves, in a range of ways, Russian.
The differences and links between Russians and Ukrainians are the subject of whole libraries. As an outsider quite familiar with the peoples and the countries I would observe there is a bit of language – though Russians and Ukrainians tend to understand each other perfectly – and a bit of religion – though working through differences in Orthodox church dogma does get abstruse when applied to real life – and after that it is all economics and politics. The lived experience of most people – from the grimy Krushchevka apartment blocks many live in, to the trains and cars they move about in, the Soviet era infrastructure and public buildings they both share, the trees in the parks, the painted guttering, the foods they eat, the things they drink – is not radically different. With the caveat that the better quality, with better price and more reliable access is probably on the Russian side.
In addition to that are the vast numbers of Ukrainians and Russians who have close contacts on the other side of the border. There are millions of Russians with Ukrainian relatives and friends, the same as there are millions of Ukrainians with Russian relatives and friends. For a bit of historical reference, Mikhail Gorbachev, Leonid Brezhnev and Nikita Krushchev (Soviet leaders from 1954 to 1991) all had one parent from, were born in, or lived in Ukraine for large parts of their lives. Data from September 2021 suggest that the same linguistic map shown above is still in play, with more Ukrainians posting in Russian than in Ukrainian.
The obvious reason for this is the circumstances in which the Ottomans were pushed out of the steppes to the North of the Black Sea. For hundreds of years the Ottomans would send large mobile military forces into the steppes, from Crimea, to round up any villagers. The men would be killed or sold off as slaves, the children would be sent off to become Janissaries, and the women (by far the most valuable loot) entered the households of the more influential or were otherwise sold off as slaves. There are villages in Africa and the Middle East with significant genetic traces of Russia, testament to the practice. This meant that the steppes to the North of Crimea were lightly inhabited until one moved further out of range of the Turks by the Black Sea and in Crimea.
‘Reply of the Zaporozhian Cossacks’ Ilya Repin, State Russian Museum, St Petersburg, 1891
At this time Ukraine was largely a ‘no mans land’ between the Turks on the Black Sea, the Poles, Swedes and Austrians to the North West closer to the Baltic, and the Russians, further away to the North East, closer to the upper Volga. It was essentially run as a series of Cossack ‘hosts’ located along the Dnepr River and to the West who would effectively take runaways from any of the powers around them and had a rugged individualism which liked giving the fingers to the Ottoman Sultan, though both the Russians and the Poles laid claim to some sort of suzerainty. In the late 1600s a treaty between the Russian rulers and the Cossack Hetman linked them more formally, and in the 1680s a treaty between Russia and Poland handed Russia everything East of the Dnepr (current Eastern Ukraine). To the Turks facing them the Ukrainians and Russians spoke the same language, and were generally allied. In the 1700s it was the Russians moving in from the North East who displaced the Turks on the coast, to the South of those Ukrainians, as well as in Crimea. As the risk of Turkish slaving raids diminished Russian settlers moved in. This is seen in the linguistic map of those who see themselves as Russian speakers – notwithstanding the difference between Russian and Ukrainian is roughly akin to someone from Brisbane speaking English to someone from Glasgow or Milwaukee – with the process helped along by Stalin’s inclination for moving populations he was suspicious of to Central Asia or Siberia, and his reservations about the non Russian inhabitants of Crimea. Those seeing themselves as Russian were heaviest in the East, and spread South West along the coast of the Black Sea. Another gift from Iosif Stalin is the borders of Western Ukraine which include peoples and regions which not that long ago were part of, inter alia, Poland and the Austro-Hungarian empires, which tends to give them a closer affinity to the peoples to their West, and underpins a fiercer dislike of Russia and Russians.
The further East one travels in Ukraine, the more overtly pro-Russian it becomes. In the wake of the Maidan inspired disintegration of the Ukraine State in 2014 two cities – Lugansk and Donetsk – and their surrounding regions took their autonomy into their own hands, and took up arms against whoever was running the show in Kiev. Of course they have been heavily backed with Russian military and financial support. Very large numbers of people in Eastern Ukraine have Russian, as opposed to Ukrainian, passports. Most Russians think supporting people just like them and speaking their language, living lives like theirs, are well worthy of support. VVP is playing a parochial home crowd in supporting Eastern Ukraine and its ongoing dispute with the Ukraine government in Kiev.
The support for the Eastern Ukraine cities by Russia anchors in support for the financial sanctions Russia faces, and is a key part – mainly courtesy of the 2014 shooting down of MH17, a Malaysian airliner en-route from Holland to Malaysia (with a large number of Australians on board) by Russian forces using advanced missile technology – of the effective pariah status Russia has.
An older map of gas pipelines from Russia to Europe. Ukraine had a stranglehold.
In the 1960s and 1970s, when the Soviet Union discovered it had gas and oil, policymakers rapidly concluded the game plan was to be able to get the gas (in particular) to consumers in Europe, and laid out a pipeline network to make that happen. To the intense chagrin of their Russian descendants that pipeline system sent more than 90% of the gas going into Europe from Russia through Ukraine.
The idea was presumably that Russia and Ukraine were that close that sending all the gas through Ukraine was a safer bet for the Soviet era. Unfortunately as soon as the Soviet Union ended it started to come apart, as the historical bequest to Ukraine from the Soviets was one of the least energy efficient economies on the planet, dependent on Russian gas. Recognising this, Russia and Germany commenced constuction of the Yamal-Europe pipeline in the 1990s to bring gas through Belarus and into Europe through Poland, also historically strongly anti-Russian. Then after the election of Viktor Yushchenko as Ukrainian President in 2004 it all went bad. Over the next ten years there were tense midwinter gas shutdowns nearly every winter, which trashed Russia’s reputation as a supplier in Europe – its largest customer – and has subsequently seen Russia spend billions on building new gas pathways into Europe around Ukraine and Poland – notably the Nord Stream 1 & 2 pipelines directly across the Baltic from Russia to Germany. The politics of getting Nord Stream 1 operational in the face of opposition from a number of European states who liked having a pipeline threat to deal with Russia, was an achievement in itself.
A 2019 diagram showing the magnitude of Russia’s gas importance to Europe, and the importance placed by Russia on not being held to ransom by gas transit across Ukraine. Worth noting that while the EU is dependent on the gas, Russia would certainly notice the revenue cut if it stops.
The essential issue in all this was (and is) that the most lucrative pie to have their fingers in for Ukraine’s Oligarch set is anything to do with either the shipment of Russian gas across Ukraine into Europe, and the attendant ability to influence gas prices and consumption, or ensure supply, in Ukraine. And one fuel type, gas, in one pipeline network, going to two different customers, Ukraine and Europe, with two different prices, opened up some superb arbitrage opportunities. This fuels corruption in Ukraine and provided, and provides still, some mighty fine revenues for the uber rich of Ukraine.
The real issue is that the process of de-USSRing Ukraine was even more rapacious than in Russia, and gave rise to a very select group of Oligarchs who essentially control every last field of economic endeavour and who are legendarily corrupt. There are pro Russian ones and pro Europe ones, but the one factor uniting them is their obvious prioritisation of their own greed first, holding an entire nation to ransom to enable their greed, and their regular use of violence and corruption to maintain their rentier positions over the Ukraine economy. That discourages investment from outside, stifles small business and any form of entrepreneurialism, and keeps Ukrainians poor – poorer than their Russian counterparts.
Ukraine was bequeathed a well developed economy from the Soviet system, with well watered arable land, mineral resources and a solid industrial sector, and a well educated population. But Ukraine came out of the Soviet Union as the second largest independent economy, and proceeded to go backwards for a decade, with weaker post USSR economic growth than anywhere other than Tajikistan. It is the Oligarch infested politics of the place which makes it almost uninvestable. This alone underpins the disenchantment a number of Ukrainians have with their own politicians, and it makes the inclination, by Crimea and the regions of Eastern Ukraine, to look at a different road more explicable.
In the course of trying to resolve a generations worth of gas supply issues to Europe which were inextricably bound to gas consumption in Ukraine a regular refrain from observers was that with two historically close states with two state owned gas companies calling the shots ‘why isnt there a simple government deal?’. The simple answer was the epic level of corruption, involving a range of players in Ukraine close to politics, combined with more open corruption within Naftogaz of Ukraine (the state owned gas transmission system operator). While nobody should think for a second there wasn’t Russian involvement, Russia had a national interest in trying to ensure supply across Ukraine to consumers in Europe. That failed on repeated occasions over the years from 2004-2015, leading ultimately to a cessation of Russian gas going through Ukraine, mired in claims of who owes who for past supply, bogged down in a range of European courts, involving a range of colourful Ukraine political, business, and criminal identities. This provides the backdrop for Russia Ukraine relations in the early 2000s.
Russia has spent billions creating pipelines to get gas to Europe which cant be held to ransom by hostile nations between the source and the end user. The business case for building the Nord Stream pipeline directly between Russia and Germany was underlined – to the point where a second Nord Stream has recently been completed, which takes Ukraine off the table as a factor in the supply of Russian gas to Europe, and potentially makes any imbroglio between Ukraine, Russia and Gas solely now about Ukraine consumption – a far lesser issue.
At this point the entire issue of Russia supplying gas to Europe comes into question because gas is a fossil fuel, it does have carbon implications, and Europe is looking to get out. Although that would once have been painful for Russia, it is far less of an issue if Russia can supply China. The pipelines to supply China are already being built, some completed already, and they will be big and China will be buying plenty. That places VVP and Russia in a position of being able to think ‘If the Europeans don’t want it, just send it to China.’ This is what Russia is now essentially doing. If Europe does still want Russian gas then it can still easily be supplied, via two very large pipelines through the Baltic, and Russia will almost certainly supply gas contracted by Europe. But the nub is that Russia doesn’t have to supply Europe.
But the experience of trying to organise a national level agreement on the handling of gas transit to Europe has left its mark on Ukraine-Russia relations, which is magnified with the last major issue between the two nations, as well as replicated in many former Soviet and Warsaw Pact nations now inside NATO and the European Union. It boils down to trust – They don’t particularly trust the Russians, and the Russians don’t particularly trust them. And if Russia cant come to a deal with a state to whom it was closely allied not long ago, and Russians cannot strike a deal with peoples with whom they share a range of cultural and social ties, over an issue as straightforward as making sure Europe gets its gas, then can Russia come to a deal with the nations to its West about anything – especially military engagements and the deployment of military assets – and have confidence in the deal?
NATO Expansion and the prospect of Missiles being sited in Ukraine aimed at Russia
The fourth major issue involving Ukraine and Russia is the proposed expansion of NATO to include Ukraine and Georgia.
A series of charts showing the major factors shaping Foreign Investors thoughts about Ukraine. Those thoughts embed near poverty for millions of Ukrainians. Corruption and Oligarchs are far more central to the lived experience than Russian influence, or getting away from it. ‘Reducing Grand Corruption in Ukraine’ European Court of Auditors, September 2021.
The European Court of Auditors Report released in September 2021, ‘Reducing Grand Corruption in Ukraine’ goes to the nub of the matter less than 6 months ago. Weak central government, powerful elites, resistance to reform, harms democratic process, costs billions.
Corruption in Ukraine
04 Ukraine has a long history of corruption, and faces both petty and grand corruption. Petty corruption is widespread, and is accepted as almost inevitable by a large part of the population. Citizens “often justify their participation in such petty corruption by noting that high-level officials and oligarchs are involved in graft on a much grander scale”. Experts have estimated that huge amounts – in the tens of billions of dollars – are lost annually as a result of corruption in Ukraine.
05 Transparency International defines grand corruption as “the abuse of high-level power that benefits the few at the expense of the many, and causes serious and widespread harm to individuals and society”. In Ukraine, it is based on informal connections between government officials, members of parliament, prosecutors, judges, law enforcement agencies (LEAs), managers of State Owned Enterprises (SOEs) and politically connected individuals/companies (see Figure 1). There are around 3 500 SOEs at central level and 11 000 at municipal level.
06 “State capture” by blocks of powerful political and economic elites that are pyramidal in structure and entrenched throughout public institutions and the economy has been seen as a specific feature of Ukraine’s corruption. Both the International Monetary Fund (IMF) and Ukraine’s government acknowledged the resistance that vested interests had shown to structural reforms. Grand corruption resulting from weak rule of law and widespread oligarchic influence runs counter to EU values, and is a major obstacle to Ukraine’s development. Grand or high-level corruption hinders competition and growth in the country, harms the democratic process, and is the basis for wide-scale petty corruption.
07 Furthermore, investigative journalists have regularly published articles about oligarchs’ illicit financial flows (including money-laundering abroad), even in the EU. A report estimates the cost of tax avoidance through offshores at least one billion euros annually.
08 From 2016 to 2020, the three major obstacles to foreign investment in Ukraine remained the same: widespread corruption, a lack of trust in the judiciary, and market monopolisation and state capture by oligarchs (see Figure 2). In recent years, foreign direct investment in Ukraine has remained below the 2016 level (see Annex I).
How the Oligarchs operate in Ukraine. The moment any EU or US funding or military support pours into Ukraine they can be sure a tithe of that will be going to the Oligarchy. ‘Reducing Grand Corruption in Ukraine’ European Court of Auditors, September 2021.
The President’s son, the Oligarch, the political and security identities, $50 thousand a month, and a Ukraine gas company Board
Both the EU and US are acutely aware of the issues with Ukraine’s Oligarchs. Ukraine’s Oligarchs (like Oligarchs everywhere) have been buying real estate, football clubs, companies, luxury yachts and cars, paintings and passports off them for a generation. More to the point plenty of EU and US elite types have been joining in on the Oligarch fun in Ukraine. To take one prominent example of many, as former US President Donald Trump asked of current US President Joe Biden ‘What was Hunter Biden doing on the Board of a Ukrainian gas producer?’
Yes, The son of the current US President was on the board of a Ukrainian gas producer, Registered in Cyprus, which has been investigated for money laundering in the UK, and accused of major corrupt practice in Ukraine, and is controlled by a former Ukraine government Minister, who now lives in Monaco. He was on the Board of Directors with a former G.W. Bush era CIA official, Joseph Cofer Black, and an ex-Polish President, Alexander Kwasniewski, and earned 50 thousand US dollars a month, for his 5 year tenure. Like, even if he was doing nothing more malevolent than overseeing the ESG committee and Carbon emissions or Gender balance reports you would think he may have talked about something to pass the time with his fellow Board members, and that maybe questions like ‘where does all this money come from?’ or ‘what’s your background?’ or ‘what do you make of the Russians?’ could have occurred.
Mykola Zlochevsky, former Ukraine Government Minister, who formed Burisma, a gas company, and placed Joseph Cofer Black, Alexander Kwasniewski and Hunter Biden on the board, paying the latter $50 thousand USD per month. Zlochevsky is now believed to live in Monaco.
A screenshot of the Burisma Board of Directors in 2017. Apter is a 25 year Investment Banking veteran, Kwasniewski a 10 year Polish President, and Cofer Black an ex CIA, Blackstone and TotalIntel identity. Biden, son of the current US President, was paid $50 thousand per month over 5 years to 2019, with no relevant experience whatsoever. According to a US Senate report Biden likely blew some of that wad on prostitution.
After absorbing that it would be worth thinking that this is not an isolated phenomena. Corruption in Ukraine pervades virtually all large business, all regulatory authorities, and much of the judiciary. There is an entire subculture of particularly Eastern European politicians and administrative officials who find themselves embedded in nice little earners working in Ukraine. In banks, in logistics firms and energy companies, in the media, telecoms and consulting – just to start with – all with a nice coterie group of well remunerated European and American advisors, board members, lobbyists, financiers, and media spruikers.
Are the interests of the people closer to the interests of the state or the interests of an oligarchy
Against this backdrop, much of Ukraine’s population make ends meet in near despair
Ukraine’s quest towards establishing a “just society” is in a state of purgatory. Its politics and form of governance are in a state of stasis, or middle ground – in essence, a political purgatory. It is bereft of the promise for fundamental change, hope already having been severely dissipated and becoming non-existent. The country’s psychological state is careening towards the uncertainty of growing political anger, though it has been restrained largely by the COVID epidemic and the country’s sorry economic condition. Its state of mind is bordering on frustration and despair and endemic cynicism.
The current type and form of political leadership in Ukraine remains juvenile and amateurish. This is disappointing because of both the assumption and expectation that if the country, more specifically its political component, would have “reformed” itself, then Ukraine would have gone further in its quest to become a European state.
Ukraine cannot and will not become a member of the European family of states if it does not challenge its existential and governing assumptions that still remain after decades of Communism and its legacy of a corrupt and repulsive political culture manifests itself on society like a decaying basket of apples.
This task, based on the practice since the Maidan Revolution, seems insurmountable.
……And supporters of this cesspit want to heavy Russia with lectures about ‘rule of law’, ‘markets’ and ‘democratic freedoms’.
The difference between the two states in this sense is that although both are spectacularly corrupt, Russia has an observable ‘Interest of the State’ which VVP has overtly placed above the interests of any Oligarchs, and which the Oligarchs uphold, however begrudgingly – In Ukraine it appears that the interests of the Oligarchs are the ‘Interests of the State’ and that the State is kept permanently weakened to uphold the primacy of the Oligarchs, meaning that ordinary Ukrainians looking for a better life have to either get permission from, buy out, or embed a future rentier position for some Oligarch.
Why would there be talk of war, again?
Do the EU and US wish to provoke a war with Russia to uphold this? Do the EU and US expect to be able to embed military assets within this state and expect the state whom those assets are directed against to accept that those assets are in any way ‘controlled’ or that there is a ‘command structure’ determining how they are used?
Much has been said of Putin’s assertion in 2021 that the Russians and Ukrainians are ‘one people’ and the implication that they should be ‘one state’. He may well have that view and there may be plenty of history to support it, but VVP would be only too aware that many of those in the West of Ukraine are certainly not ‘one people’ with Russia and that any attempt to impose that would be profoundly bloody. If Russian forces were to set on the Western bank of the Dnepr then they could expect increasingly stiff resistance – and Russian forces would face expensive and bloody operations against a Ukrainian people who would certainly be provided arms and financial support to wage the struggle.
Equally, the EU and US, as well as the Ukraine government, would almost certainly be acutely aware that Russian forces could potentially move into parts of Eastern Ukraine and be welcomed by local residents, who have already demonstrated an armed preparedness to flout Kiev.
One avenue potentially able to get at Russia, to nudge VVP away from military involvement in Ukraine and potentially to a broader deal, is being able to undermine VVP’s allies. The first cab off the rank would be Aleksandr Lukashenko in Belarus. He is widely despised by his own impoverished people, has weathered recent widespread civil protest, is profoundly corrupt, and he does have Russian bases on his soil. The Lithuanians and Poles certainly do support the protest movements and shelter exiles. Any sense of the regime being truly undermined would almost certainly necessitate Russian military intervention. VVP would be loathe to be engaged in both Belarus and Ukraine at the same time. The only problem with that is that more than once both Lukashenko and VVP have suggested that Belarus may be better of returning to be a part of Russia, and being run from Moscow, and the idea has plausible support from the people of Belarus as well as popular support in Russia. Any sense of that idea being dusted off again, and the people of Eastern Ukraine may start making enquiries if they can have the same deal – and that would presumably have a lot of popular support in Eastern Ukraine and be very difficult to back out of – and would start to look like the dismemberment of Ukraine.
Both the EU and the US have warned about new more substantial economic sanctions if there is any Russian military action. As things currently stand Russian corporates cannot borrow on global capital markets, a range of Russians have sanctions against their personal finances, and many Russians would note getting visas for travel anywhere in the developed world is often inordinately difficult – though it should be noted the splashing about of Novichok to poison those outside Russia critical of the Putin administration gives that difficulty a lot of logic.
The poisonings of Sergei and Yulia Skripal in Salisbury UK, and the similar poisoning of Alexander Litvinenko in the UK, both obviously involving the Russian state, and both obviously dismissive of public safety, one involving radioactive isotopes found across Europe, have done nothing for public sentiment towards VVP’s Russia.
Russia has been shifting its currency reserves away from US dollar holdings for the best part of ten years, and has been a major buyer of gold – and is believed to have significant amounts of gold ‘off books’. For sure the US and EU could ban Russian exports, but these are mainly energy related, and the first major impact of banning Russian gas or oil exports would be to provide a bonus for a range of Arab states, or Iran. They would also run the risk of making lots of Europeans cold in the coming months. There would also be blowback in the form of presumable Russian sanctions against major EU suppliers of particularly agricultural goods – which would have some unwelcome implications for Greek, Romanian or Spanish fruit growers, French or Italian winemakers, or French cheesemakers, and the electorates they influence.
Of course the most effective way to pressure VVP and Russia would be to create a prosperous Ukraine economy, which would be the one way of delivering outcomes for Ukrainians and improving their living standards, and having them become their own best defence of their system. But to do that the EU and US would need to dismantle the Oligarch festooned Ukraine polity that currently is, that Ukrainians aren’t that interested in, which often has them identifying better living standards over the border in Russia. That isn’t likely to be a prospect any time soon, though it would certainly pressure Russia.
Georgia & the Caucasus
Other pressure points abound – not just for Russia or NATO or Ukraine either. It isn’t just Ukraine that Russia is concerned about joining NATO. It is Georgia too, and once we are thinking about Georgia we are into the Caucasus. Unlike Ukraine, Georgia has managed to lift itself out of Oligarch riddled decision making and is a far better cultural fit for EU (if not NATO) membership – not perfect, but better than Ukraine. Like Ukraine, Georgia has two ‘frozen conflicts’ which see regions of the country effectively running themselves, funded by Moscow as separatist states. Georgia’s problem is geography. Georgia isn’t really contiguous to the rest of Europe and its communications and supply – in the event of any real tension or conflict – would need to come through Turkey. Turkey is a key NATO member, but it has been rebuffed from joining the EU, on largely cultural and ethnic grounds. But a real issue with Georgia is that it would bring the Caucasus into NATO and the EU, and about 2 thousand years of recorded history tells us that can be ‘complex’.
The Caucasus. If you want geopolitical complexity it has the lot. Two frozen separatist states in Georgia, a freshly reheated dispute between Armenia and Azerbaijan, Historical Genocides, Russian arms deals, oil and gas pipelines, oligarchs, Orthodoxy & devout Christianity, Mullahs & Islamic fundamentalists, mountain passes, Iranian, Turkish and Russian jostling for a thousand years, genetics going back beyond recorded history, the worlds oldest viticulture, and cultures where nobody has ever forgotten a thing, where the Old Testament tends to underpin thoughts processes for dealing with neighbours, and where every man Jack of them will take up arms if things get out of hand, and, of course, the odd psychopath who likes torture and violence. It offers the world’s choicest quality complex armed populace disharmony experience.
Georgia has Abkhazia and South Ossetia as separatist states within what it and the rest of the world see as its borders – both backed by Russia. The peoples in both see themselves as ethnically different to the people in the next region – and this is a recurring theme in the Caucasus. Georgia is right next door to Armenia and Azerbaijan. Armenia also has a large Russian military base on its soil. It gets on reasonably fine with both, but they have just had another round of hostilities which saw Azerbaijan reclaim a lot of land which Armenia had taken control of in the 1990s. The Turks and Israelis supported the Azerbaijanis, the Iranians quietly supported the Armenians, the Russians were the major arms providers for both sides, the Azerbaijanis deployed some Islamic fundamentalists brought up from Northern Iraq and Syria. They also deployed some Turkish drones against Russian made tanks to interesting effect, well enough to find enthusiastic buyers in Ukraine. It is a complexity rich environment. And these people have seen off the Romans, the Persians, the Byzantines and the Abbasids, the Ottomans, the Mongols, and the Soviets, as well as a post World War 1 cameo from the British which included Australians.
The 2020 renewal of armed conflict saw Azerbaijan prevail, and get back territory they had lost in the early 1990s, after VVP had been on the line to new US President Biden, and subsequently had a chat with the Armenians and the Azerbaijanis before all sides had cobbled together a deal minimising the risk of a major conflagration. That deal has Russian troops manning a land route between Armenia proper and Artsakh (home of ethnic Armenians surrounded by Azerbaijan). Any military action in Eastern Ukraine may have some side effects in the heating up of issues in the Caucasus. And if things heat up in the Caucasus there is no telling where it ends up or who may get involved.
Beyond the Caucasus
Just the other side of the Caspian sea from Azerbaijan is Turkmenistan. Turkmenistan borders Iran, and is strongly Islamic. It is also a very major gas supplier to China and the far end of a pipeline system which runs through Central Asia into China through Xinjiang. Proposals have been floated for the Iranians to plug into that pipeline system which crosses Uzbekistan and then Kazakhstan. When the Chinese stopped buying Australian LNG amidst rising tensions in 2019, it was the Turkmen they turned to for more. Turkmenistan and Iran both border Afghanistan. That pipeline crosses the mouth of the Fergana Valley and the Syr Darya river. And there would be people in that region, which tends to use Russian as a lingua franca, thinking their counterparts in the Caucasus could do with some assertiveness sessions, and need to brush up on their small arms skills. The Fergana Valley is home to a number of enclaves and exclaves of Tajiks, Uzbeks and Kyrgyz, with the border between these nations amongst the most tortured and torturous on the planet.
Once in that part of the world one finds that Tajikstan and Kyrgyzstan have had a little bit of conflict within the last year, of course, Afghanistan has been in a near permanent state of insurrection for twenty years prior to NATO forces getting out in a hurry in mid 2021, and only last week the revolt in Kazakhstan – which most Russians assure is the peaceful moderate face of Islam in the Central Asian region – saw police personnel beheaded. It isn’t that long ago that the Uzbeks and Kyrgyz had their issues.
There are a range of Russian bases across the region, and local popular opinion about the Russians is generally positive in the face of suspicions about the U.S and China. If Russia wasn’t the local military protector of the status quo, the only plausible alternative for the locals would be China, which given the events in Xinjiang would cause global consternation. Russia’s major concern with the region is the potential for Islamic extremism to be imported to Russia (which has numerous migrants from these nations) via young men radicalised in either Afghanistan or further afield in Pakistan or Iraq. China is keeping an eye on precisely the same issue, while drawing increasing global condemnation for its treatment of Islamic Uyghur peoples in what it refers to as Xinjiang.
Any sort of military activity involving Russia could have unforeseen outcomes in this part of the world too.
What nobody wants
Both the EU and US would be loathe to commit troops to the ground in Ukraine to fight against Russian forces, let alone the Caucasus. They have just come away from the chastening experience of having their morality handed to them on an expensive plate by the Taliban in Afghanistan. Any more, to seriously commit troops would come under close examination for what exactly they were supporting and any association with Ukrainian oligarchs would not be a good look. Possibly some of the NATO allies in Eastern Europe may look at putting small numbers of boots on the ground, but even this would be doubtful. They would be acutely aware of the odiousness of the Ukraine polity and the way that any funding would be clipped. They would be sensitive to the refugee implications if things went awry.
That would leave them looking at providing Ukraine technology and funding a fight, and even that would be straightened by the outlays related to Covid and widespread poverty and economic precariousness in the EU and US. But it would leave the fighting largely in the hands of the Ukrainians. No doubt these would be brave and motivated, and the actual poverty in Ukraine would add to the impetus to join in. The fighting in Eastern Ukraine since 2014 – notably Slavyansk and Debaltsevo – suggests that they would stand and die, and extract a heavy toll of any military deployed against them. But they would likely be heavily outnumbered, against a much better armed adversary.
Eastern Ukraine in particular is largely flat rolling plains. Both the Germans and the Soviets during World War 2 found it ideal for armoured formations, and tactical airpower supporting infantry. But both the Germans and the Soviets also discovered that it could be utter carnage. That doesn’t bode well for Ukraine, and doesn’t bode all that well for prospects of any Russian military action either. About the only people it does bode well for would be the arms suppliers and their agents. Even worse, for both Ukrainians and Russians, would be the prospect of becoming bogged down in a protracted guerilla or urban warfare environment.
Completely destroyed Donetsk Airport, Eastern Ukraine. The people on the ground – both sides – would presumably prefer their infrastructure didn’t end up like this, and that their lives could not just go back to normal, but offer scope for improved economic circumstances for themselves and their families. The real question is whether the Russians, Ukrainians, NATO, EU and US are committed to making that happen.
So that brings everyone back to needing a deal. Not just any deal, but a grand deal. They dont need a deal which puts off hostilities until the expiry of the deal. They need something to circuit break and set the scene for a better future. Not just a deal about troops and missile locations, or gas volumes and supply, but a real deal. One which shapes a generations worth of thinking and lightens up the mood for people in Russia and Ukraine, as well as for plenty of people elsewhere. Not just a deal which one side can force upon another, but a deal where both sides give themselves a bit of wiggle room, maybe even accommodate each other. That looks profoundly optimistic but anything less will just mean a hardening of positions.
Russia has already circulated a list of demands.
- A guarantee Ukraine doesn’t join NATO
- Removal of NATO missiles and miltary deployments from former Warsaw Pact NATO members in Eastern Europe
- A ban on NATO missiles within striking distance of Russia
- Autonomy for Eastern Ukraine
Note the fairly obvious focus on Russian security. That says a lot about what is driving events.
The EU, US and NATO haven’t circulated any lists, and would presumably be more than comfortable with the status quo of doing as they please, whenever they felt like it. As they have done for about thirty years since the end of the USSR. They certainly don’t want anything written down with a Russia feeling aggrieved by what wasn’t written down at the end of the USSR, and like much of the managerial and political elite the world over seems to view writing things down as being somehow inherently socialist. But they are likely to have to do just that. Getting them to write down anything would almost be seen as a win by a lot of Russians.
The Western world needs a deal to preserve Ukraine, as a sovereign state able to determine its own fate (as opposed to being a teat for Oligarchs), and to turn the prospect of any Russian military threat off, for Ukraine and elsewhere in Eastern Europe. Russia needs a deal to remove the risk of Ukraine, and Eastern Europe, being the base for missiles aimed at it. More than that, it needs to remove the sense that NATO, and NATO expansion, is about confronting Russia. Because if NATO is about confronting Russia, then the only logical position Russia can adopt is to prepare to confront NATO. And if Russia does need to confront NATO then Ukraine would be a logical place to start – there are a lot of Russians already there, the administration that is there isn’t all that credible with Ukrainians, and it is the closest threat to Russia.
Russia wants guarantees for the cities and regions of Eastern Ukraine – that is already largely agreed. All of Ukraine could do with a deal which set it on the path of freedom from corruption – but it wont get it. Ukraine needs a deal to avoid miring a disillusioned public in a bloody war, and to avoid becoming a battlefield testing location for the next generation of military kit.
The European Union would certainly like some sort of undertaking from Russia not to facilitate the poisoning of Russian dissidents in the EU, maybe an all embracing commitment to ease back on the use of nerve toxins or radioactive isotopes of any sort being splashed about airlines, airports and tourists venues. There would be plausible logic on some guarantees for gas supply. A number of Eastern European states in particular would probably like some guarantees on not hacking into critical infrastructure, which might potentially be desired by the United States also. It would presumably be a bridge too far to expect Russia to extradite persons for judicial investigation where crime has occurred in the EU, and almost certainly expecting European or British law to send back former Russian business identities who happen to arrive in their jurisdictions with large amounts of money which is claimed to be proceeds of corruption would be a tough ask too. Maybe they could come to a deal about the handling of illegal migrants and refugees from third countries.
Beyond that there may also be scope for some sort of acknowledgement of Crimea being back as part of Russia, or a commitment to the current border of Ukraine. While they are at it maybe they could spend a little on sorting out the issues in TransDnistria, or maybe even come out with a ‘road map’ to sorting out the frozen conflicts in Georgia and Azerbaijan as well. But that is all pie in the sky, and all dependent on Russia and NATO not primarily seeing each other as a threat.
The announcement of new financial sanctions announced by the US Treasury on January 20, 2022 contains reference to the possibility that there is some dealing taking place. In the sanctioning of 4 Ukraine nationals the announcement referred to one, Vladimir Sivkovich, as:-
Sivkovich worked with a network of Russian intelligence actors to carry out influence operations that attempted to build support for Ukraine to officially cede Crimea to Russia in exchange for a drawdown of Russian-backed forces in the Donbas, where separatists continue to receive support from Russia.
That would appear to suggest that tradeoffs are being considered.
And what if there is no deal?
There is a lot of kit ready for a hitout in Eastern Europe
What happens if there is no deal? What happens if nobody says or does anything. If NATO or the US or EU assume that this will blow over, or that it is just another game of geopolitical chicken VVP is playing? Or if Russia backs into quietude after having raised its issues again?
There are two real choices. Either precisely the same issues will be back again, next month or next year or in ten years, or there is some sort of military conflict to sort out where everyone really stands.
The same issues coming back will presume that nothing substantial happens and that the NATO states which feel threatened by Russia and Russia feeling threatened by NATO will continue to generate solid increases in military outlays, which provides a useful prism through which misperceptions and falsehoods will continue to flow. Russian gas will remain an issue. Now that Ukraine can be marginalised as a conduit expect that more debate will be about the use of Nord Stream II. The festering sores of Eastern Ukraine, as well as the unpicked ones in TransDnistria and Georgia will remain as they are. In the case of Ukraine it means the intermittent shelling and snipers on both sides will continue taking lives and the blood will likely continue. Russia will continue to see most interactions with Europe as an attempt to get one up on them, and Europeans will continue to see Russia as a threat. Other global events will be seen as opportunities to present the other side with a fait accompli.
The military angle is a one-sided affair. The EU, US and NATO are unlikely to spark a military engagement except in defence. Russia has the troops, in Russia around the border of Ukraine, Russia can easily supply them. It is VVP, on behalf of Russia, effectively saying ‘enough is enough’ and floating a threat. It is VVP stating unambiguously that Russia feels threatened enough to countenance that.
Any Russian military action would most likely be East of the Dnepr (Dnieper) and more likely in the South than the North.
A military affair looks a relatively straightforward exercise in pressuring the remoter Eastern regions of Ukraine. Much of the Ukraine army is held West of the Dnepr closer to Europe. The East would be a focus, but the presence of significant Russian forces in Crimea, more Russian forces in TransDnistria, and inside Russia near where the borders of Ukraine Belarus and Russia meet would pose a very serious risk to any Ukrainian notion of sending what it can East of the Dnepr to support the East of the country.
There have been some suggestions in the Russian media that a land bridge between Donetsk and the isthmus linking Crimea to Ukraine would be a focus. The significant Azov shore city of Mariupol is believed to be very heavily defended, which could bode alarmingly for the prospect of civilian casualties and the prospect of ugly urban warfare. Russia would presumably be keen to avoid that, as well as any strongly antipathetic locals, and probably also keen to deal with Oligarch funded private militias – believed based near Dnipropetrovsk and Zaporozhia. The Ukrainian forces would probably have some plan to revert to guerilla warfare in the event of a Russian military incursion. Any attempt to claim Kharkov or Sumy, in the North of Ukraine, close to the Russian border, may face very spirited public resistance – of the sort which may galvanise public opinion in the rest of the world.
Suffice it to say it could all get horribly messy for all concerned.
Any sort of military action would presumably send the price of oil and gas sky-high for some time, which may generate the inflationary pressures much of the world is looking for. With both Russian and Ukraine significant grain producers, and particularly in Eastern Ukraine, Rye, Barley and Wheat could become volatile markets. Markets may need to adjust to having embargoes on Russia which the developed world would be applying, which may provide an upside for China – that would be all sorts of commodities, from energy to timber, but also metals, and even diamonds. European goods – notably cars – would probably be harder to sell in Russia, and this could swing the entire market towards China, and US and EU service providers, from Internet giants to telephony as well as FMCG would likely go the same way. With any sort of outbreak of hostilities in Ukraine, China could also find an excuse to up the ante on Taiwan
For VVP the implication is that he gets to underline his place in Russian history. He gets a place in history if he goes as a war leader. Presumably in circumstances where Russia could be expected to get a head start in any military engagement, and be successful in the opening hostilities. He will also get a place in history too if he comes away from negotiations with the ‘West’ which he has brought on, with a piece of paper clarifying Russia’s role in the region and what it can expect of the region, and almost certainly – if there is to be a piece of paper – reducing the risk to Russia.
Over the longer term that implies significant potential cost to Russia and a major strategic break from Europe which would see the EU, in particular spend and focus on its own defence. Over time that would be difficult for Russia to counter, and would again simply lay the basis for another round of hostilities down the track.
Every nation party to this should be looking for a deal.
Russia may look like a military threat, and it may be. But it shares a land border with more nations than any other, and is larger than any other, and on both a per capita and straight out basis there are bigger spenders on military kit.