Russian Entente Nears as Allies Give Ukraine Sanctions Hint

(Bloomberg – bloomberg.com – January 26, 2016)

After almost two years on the outside, signs are growing that Russia may soon be invited in from the cold.

The worsening of crises from Syria to Libya are forcing the international community to reconsider sanctions slapped on President Vladimir Putin’s government over Ukraine as a way of getting a key diplomatic power broker on board. Of late, a flurry of senior officials from the U.S. and the European Union have suggested a thaw is within reach.

“There have been clear signs of a ‘pacification’ process recently,” said Simon Quijano-Evans, chief emerging markets strategist at Commerzbank AG. “It does look as though all sides are starting to push more markedly for resolutions to the current geopolitical mess.”

Since Russia’s 2014 annexation of Crimea, restrictions and bans against the largest exporter of oil and natural gas to Europe have tightened and Putin was booted from the Group of Eight. Setting the scene for an end to its isolation are France and Germany, which are now running out of patience with Ukraine’s inability to live up to its own obligations of a peace deal they helped put together.

Testing Waters

Secretary of State John Kerry used Davos, Switzerland, as a high-profile platform to raise the prospect that the U.S. may consider lifting sanctions later this year, assuming the terms of the so-called Minsk accord are implemented. Since then, there has been a flurry of voices echoing that sentiment.

German Finance Minister Wolfgang Schaeuble wrote in the Frankfurter Allgemeine Zeitung newspaper Monday that the EU should forge closer ties with Russia to help resolve the civil war in Syria and reduce tension in the Middle East between Sunni and Shia Muslims. That came on the heels of Economy Minister Emmanuel Macron telling his country’s businessmen in Moscow that France would like to see sanctions lifted by the summer.

“Kerry is holding the possibility of lifting the sanctions but Russia has to do certain things, like cooperate on Ukraine and Syria and then the U.S. would reverse some sanctions,” said Mark Katz, a professor of government and politics at George Mason University in Fairfax, Virginia.

Appease Europe?

Katz, a Soviet expert, added that the top U.S. diplomat was also seeking to “appease those European allies who are not happy with sanctions.”

Europe has a long-standing reliance on Russia’s gas supply and is struggling to cope with the throngs of migrants bleeding into its borders from Syria. With Syrian peace talks planned to start Jan. 29 — and Russia a key player at that negotiating table — the Ukraine crisis is no longer the only consideration for policy makers.

While Russia was never fully excluded from international affairs — it played a critical role in the talks that last July led to a deal on Iran’s nuclear program — relations with the West have suffered, especially over Syria where Putin has militarily backed the regime of Bashar al-Assad, whom the U.S. and France have been trying to push out of power.

Putin’s Priority

Calls for better relations with Russia show Putin’s success at convincing them that he’s interested in conflict resolution, even when that’s not necessarily the case, said James Nixey, head of the Russia and Eurasia program at the U.K.’s Chatham House think tank.

“The West’s priority is Syria, Russia’s priority is Ukraine; their interests are substantially different from ours,” Nixey said in an interview. “Putin can say, ‘If you do me a deal on Ukraine and give me a Syria influence, then I’ll turn around the direction of my bombers and I’ll do more to come onside,’ which is attractive for the West whose primary problem is not Russia but Islamic fundamentalism.”

The road to rehabilitation is not without big obstacles. On Jan. 21, a U.K. report ruled that Putin “probably” approved the murder of former Russian spy Alexander Litvinenko by two government agents a decade ago. Adam Szubin, who oversees U.S. Treasury sanctions, told BBC Panorama, a current affairs television program, that Putin is corrupt and that the U.S. government has known this for a long time.

The deadline for the Minsk accord — agreed by the leaders of Ukraine, Russia, France and Germany — was extended into this year as both sides blame the other for delays in implementation. In the meantime, U.S. and EU curbs have contributed to a steep slide in the ruble, which has been exacerbated by tumbling oil prices. That creates an incentive for Putin also to be more forthcoming.

France and Germany may hold talks with Russia and Ukraine on Feb. 8 to try to break the deadlock over Ukraine, Russian Foreign Minister Sergei Lavrov told a news conference in Moscow on Tuesday. “More and more of our partners are coming to understand that it can’t go on like this any more and it’s harming their interests,” he said.

Schaeuble, for one, believes a meeting of the minds with Russia is possible.

“If I correctly understand Russia’s security interests with respect to Islamist terrorism, it rather has a problem with ambitions grounded in Sunni Islam,” Schaeuble wrote in the op-ed. “Why should we not be able to develop a joint strategy with Russia to defuse tensions between a Saudi-led Sunni coalition and an Iran-led Shia coalition?”

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