Misery continues

Ukraine’s currency touched record lows last week with violence in the rebel-held east fuelling pessimism about its economic future.

The crisis in Ukraine shows no signs of abating. Deputy US Secretary of State Tony Blinken has asserted that Moscow will have to pay for its “land grab” after pro-Russian rebels captured a strategic railway town earlier this week. Blinken said that Washington was working ‘very closely’ with European allies on ramping up economic pressure and noted the possibility of sanctions targeted at sensitive parts of Russia’s energy sector as a next step. This came as Ukraine’s currency touched record lows last week with continuing violence in the rebel-held east fuelling pessimism about the country’s economic future.

Pro-Russian rebels celebrated their recent victory at Debaltseve with a festive rally last week in Donetsk, the main city they control, where soldiers received medals in Lenin Square and the crowd cheered and waved Soviet flags. Ukraine's President Petro Poroshenko has said a "military threat from the east" will remain even if a ceasefire holds between government troops and pro-Russian rebels in the east. Poroshenko also asserted in a statement that the Ukrainian state will regain control over this temporarily occupied territory.

Both Ukraine and the rebels say they are now withdrawing their heavy weapons from the front line under the terms of the ceasefire agreed in Minsk, Belarus. The process is yet to be officially confirmed by international monitors from the Organisation for Security and Cooperation in Europe (OSCE).

The ceasefire came into effect on February 15 but the rebels seized the key town of Debaltseve just days later. Fighting began in Ukraine's eastern Donetsk and Luhansk regions - known as Donbas - last April, a month after Russia annexed the Crimea peninsula. Almost 5,800 people have died since then, the UN has estimated, although it believes the real figure could be considerably higher.

It is now being reported that Russia had plans to annex Crimea well before it invaded. A memo has come to light which lays out what it called the inevitable disintegration of Ukraine and suggested a series of logistical steps through which Russia could exploit the situation for its own good — steps not far from what actually occurred, though Russia has not annexed any territory in eastern Ukraine.

The West is struggling for an appropriate response. Europe is desperately trying to wean itself off Russian gas by announcing far-reaching scheme which would strengthen the power of Brussels against national energy regulators; boost consumer choice transnationally when buying electricity services; generate a bonanza in energy infrastructure investment; and integrate supply systems regionally and on an EU-wide scale.

Numerous times over the last decade Russia has cut off gas supplies to Ukraine – and in turn, western Europe – as a show of force. With the West considering new sanctions, Moscow is threatening to turn off the valves once more. The move marks the second time Russian strongman Vladimir Putin has thumbed his nose at the West in recent days. A week ago, Russia offered to sell advanced air-defence systems to Iran in defiance of pleas from Washington and its allies to avoid arming Tehran.

In response, Britain has decided to send military advisers to Ukraine even as the United States has put on a show of force in Estonia. Meanwhile, Ukraine is getting into the western weapons trade without NATO’s permission. The decision of the British government – announced last week but under consideration by the UK National Security Council since before Christmas – represents the first deployment of British troops to the country since the near civil war in eastern Ukraine began more than a year ago.

America’s show of force in Estonia was also intended to send a message. The armoured personnel carriers and other US Army vehicles that rolled through the streets of Narva, a border city separated by a narrow frontier from Russia, were a dramatic reminder of the new military confrontation in eastern Europe.

An uphill fight

Ukrainian officials met with US weapons manufacturers in Abu Dhabi during a major arms exhibition even though the American government has not cleared the firms to sell Kiev lethal weapons. Ukraine is not only seeking, but finding defence industry partners outside the region as it wages an uphill fight against Russian-backed separatists in eastern Ukraine. But there are some serious differences in the US on the need to supply weapons to Ukraine.

Air Force General Philip Breedlove, the NATO supreme allied commander, said the US military had a deep relationship with Ukraine even before the current conflict and had a good sense of what military assets it needed, including intelligence, communications and jamming and counter-battery. James Clapper Jr, the director of national intelligence, said providing weapons to Ukraine would likely trigger a ‘negative reaction’ from the Russian government, which Western officials are hoping will ensure that separatists stick to a European-brokered cease-fire that took effect this month.

The rebels certainly have made big gains, with the capture of Donetsk airport and the assault on Debaltseve. The airport gave them a strategic asset a few miles from the centre of Donetsk city, their biggest stronghold. It remains unclear what options Ukraine has to roll back these gains. The West, meanwhile, will have to reassess its own options. Posturing by either the West or Russia will only bring further misery to the people of Ukraine.

Russia's economy has been badly hit by a dramatic fall in oil prices and western sanctions over Moscow's role in Ukraine's crisis. The value of the Russian rouble has plunged against the dollar in recent months. Though Vladimir Putin’s personal popularity remains as high as ever, the economic decline in Russia is likely to further marginalise Russia from the global dynamic. This is something that Moscow will have to factor in as it decides its next course of action in Ukraine.

(The writer is Professor of International Relations,King's College London)