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Saturday, Aug 23, 2014

Editorial: Putin caught in economic vise


The situation in Ukraine has always been murky, and with Sunday’s controversial referendum in two of the nation’s eastern provinces and Vladimir Putin’s surprise decision to recalibrate Russia’s approach to the situation, it’s even more muddled.

In Moscow, the government was surprisingly restrained in its reaction to Sunday’s voting, although the results appeared to reflect the wishes of the separatists who want their Russian-speaking provinces linked politically, as they are culturally, to Russia rather than to Ukraine. The Kremlin merely suggested talks between the various groups may be a good idea.

That’s a far cry from Russia’s earlier tone, which strongly suggested that if the central government of Ukraine prevented the Russian-speaking people in eastern Ukraine from aligning themselves with Moscow then there almost certainly would be military intervention.

Under Putin’s leadership, Russia had already taken Crimea away from Ukraine in a move widely denounced in Washington and other Western capitals (although well received by a majority of the Crimeans, most of whom speak Russian rather than Ukrainian).

For a while it appeared certain Putin planned to replicate the process in Ukraine’s eastern provinces, but a week ago his approach took a surprise turn away from that strategy as he ordered Russian troops to pull back from the Ukrainian border and declared he would give diplomacy a chance.

Putin also urged Ukrainian separatists to cancel Sunday’s voting — they paid him no heed — and, in another surprise, said he was not opposed to the Ukrainian government in Kiev holding its presidential election on May 25.

However, he attached an ominous warning: “Let me stress that the presidential election the Kiev authorities plan to hold is a step in the right direction, but it will not solve anything unless all of Ukraine’s people first understand how their rights will be guaranteed once the election has taken place.”

He meant that the many Ukrainians who speak Russian and favor a closer relationship with Moscow rather than aligning the nation’s interests with the West — by far the more popular position in large parts of the country — must not face any sanctions by the newly elected government.

Assuming Putin is not simply trying to mislead his critics, why would the bellicose Russian leader seem to back away from his obvious goal of bringing eastern Ukraine under the Kremlin’s direct influence?

The answer would appear to lie in Russia’s worsening economic woes.

On April 30, the International Monetary Fund predicted the nation’s growth will slow to 0.2 percent this year, down from a dismal 1.3 percent last year.

Russia’s economic health is heavily dependent upon its energy production but, the IMF observed, “this growth framework has reached its limits.”

“More integration with the world economy should help close the productivity gap with other countries, foster investment and diversification, and enhance growth,” the IMF added, but a chastened Putin may have to concede that his brazen behavior regarding Ukraine may seriously impede that integration.

The economic sanctions imposed by the United States and the European Union, while relatively mild so far, may also have influenced Putin’s about-face.

Before the dust settles — or the military battles rage — there may be many more twists and turns in the sad saga of Ukraine’s search for stability.

One thing is certain: Putin is looking out for Putin, and the economic repercussions may have gotten his attention. Like many of his predecessors in the Kremlin, Putin is neither statesman, diplomat, nor visionary. The West must remain extremely vigilant.