BNE: Ukraine update

(Business New Europe – bne.eu – Tim Ash, Standard Bank – August 5, 2014) On the front line in the Donbas both sides appear to be squaring up for the final push.

Ukrainian forces have reportedly now encircled Donetsk, and all but encircled Luhansk, with the area now controlled by separatists shrinking by at least half since the latest offensive began. The Ukrainian military is reportedly calling up more heavy weaponry and has called for the residents of Donetsk (1 million) and Luhansk (400k) to evacuate their cities. Press reports suggest that at least half of the two cities’ inhabitants have already fled. Both cities are now reporting loss of power supplies, and with food supplies running short.

Rebels still control a 60 km stretch of the border with Russia where re-supply is still possible. The fluid situation on the ground was evident yesterday from the report of 300-400 Ukrainian troops being forced to flee across the border to escape a separatist advance. There is a BBC video report from inside Russia which is worth seeing. Russia claims that the Ukrainian troops are generally disgruntled with the situation in Ukraine, and many want to seek Russian citizenship – few of the troops in the BBC clip wanted to speak on camera, but Moscow has admitted that close to half want to return to Ukraine. Suffice to say though that losing so many troops across the border was a major military and PR set back for the Ukrainian side.

Russia, meanwhile, continues to run exercises across the border, with around 160 aircraft partaking in the latest set of war games across the border, and upwards of 30,000 troops. Presumably all this is aimed at keeping the Ukrainian military on its toes – while Russia continues to pursue such manoeuvres, the Ukrainian military has to deploy troops along its border to counter the threat of a Russian invasion, and hence diverting scarce troops away from their on-going offensive in the Donbas.

Of concern, there is little in the way of negotiations taking place over a ceasefire or a longer term peace – the Minsk process seems to be going nowhere, with Russia seeming reluctant to allow President Lukashenko any kudos from any such process – Belarus’ announcement that it was willing to supply fuel to Ukraine is hardly likely to have gone down well in Moscow. Both sides’ positions remain far apart, and both appear willing still to let the military campaign run its course.

Reviewing the Russian media there seems to be little evidence of moderation or compromise in the tone of reports – last week there was one suggestion from a prominent, pro-Kremlin journalist that Moscow was looking for a compromise solution, but there has been little follow up on this. Rather my take still is that Moscow is still looking to drag the conflict out, hopeful that the Ukrainian military offensive in Donbas will fail, and Kyiv and the West will then be forced to send envoys to Moscow to sue for peace and thereby still allowing Russia to secure its long term objectives with respect to Ukraine. Russia might think that the West will ultimately tire of rolling out ever more sanctions in support of Ukraine. Therein there may well be understanding that the Ukrainian military face a huge task still in retaking the cities of Donetsk and Luhansk, where urban street warfare could impose a huge cost on the still inexperienced Ukrainian military. And, evidence suggests still that the separatist ranks have been swelled by veterans from hard fought conflicts in Chechnya, Georgia, and even the Balkans. Moscow’s strategy hence might be to continue to supply separatists ready for the final battle, again in the hope that the Ukrainian offensive will eventually fail and Kyiv will be forced to sue for some kind of peace. Russia hence may now be playing for a war of attrition with Ukraine and indeed the West therein.

Moscow nevertheless still has the option of sending troops across the border, albeit it remains unclear in what guise this will be. One option still is for a Russian peacekeeping force to be deployed, either with or without a UN mandate. Any such near term initiative to secure a UN mandate will likely be blocked by the West. But Moscow perhaps would still risk deploying a Russian force, under the guise of peacekeeping, and without UN backing, in a scenario where separatists were at risk of suffering a final defeat. This would create a conundrum for the Ukrainian military – would they take on any such Russian force and thereby risk a fuller-blown conflict with Russia. But if they do nothing, and allow Russian “peacekeepers” to occupy large swathes of the Donbas they risk allowing for a “frozen conflict” within Ukraine’s territory, and would then give Moscow perhaps a decisive negotiating chip both with Kyiv and the West.

Cynics would no doubt link the upsurge in fighting across the Armenia – Azerbaijan border to broader regional FSU developments. For Moscow the timing is prescient as it underlines Moscow’s important position still in the region as a guarantor of peace and stability – the message perhaps from Moscow to the West is “undermine the post Soviet order at your peril”. Note in respect to the conflict over Nagorno-Karabakh, Moscow is a key player in the Minsk group (formed to try and bring a solution over the issue of Nagorno-Karabakh), but also provides a security guarantee/umbrella to Armenia. Security concerns were no doubt one reason why Armenia surprising opted pre-Vilnius to side with Russia, and sign up to join the CIS CU and to spurn signing a AA/DCFTA with the EU. But the rumbling conflict over Nagorno-Karabakh has the potential to provoke a broader regional conflagration including Russia on the side of Armenia, against Azerbaijan backed by Turkey and therein dragging in NATO. As if to further underscore its pre-eminent position in post Soviet space, Moscow has also threatened to revoke a free trade agreement with Georgia – and therein to cool the recent normalisation in relations between Moscow and Tbilisi after the fall of the Saakashvili administration.