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Win some, lose more…

The Economist

For all the celebrations in Kiev over ratifying the trade deal with Europe, it is the Russians who got most of what they wanted

HISTORIANS will struggle to put dates on Russia’s murky war against Ukraine. It had no official start and no formal end. Russia never admitted that it was in the conflict, which it fanned and fought both directly and through proxies, so has not celebrated victory as it did after the annexation of Crimea. Ukraine never formally declared itself under attack, so it cannot formally admit its defeat.

But that does not make defeat any less real. After six months of fighting, Ukraine has lost at least 3,000 men and control over a swathe of territory in the east, as well as being forced by Russia to delay the full implementation of its association agreement with the European Union.

Ukraine’s setback was masked by the fanfare of the simultaneous ratification of the agreement by the Ukrainian Rada and the European Parliament on September 16th (see Charlemagne). Petro Poroshenko, Ukraine’s president, called it an historic moment and led a chorus of MPs in the national anthem: “Ukraine is not dead yet”. After all, it was the decision by the former president, Viktor Yanukovych, to reject an earlier version of the deal a year ago that sparked the Maidan revolution.

Yet the agreement will not fully come into force at least until the end of 2015. The pause is meant to give Ukraine, Russia and the EU time to find a compromise. (During it, Ukraine will be able to export to Europe duty-free while European goods will still be taxed on their way into Ukraine.) This is precisely what Russia asked for before the start of the Ukrainian crisis, only to be told to keep out. Many Ukraine-watchers are worried that the association agreement could yet be further hollowed out.

That is why European officials were in despair when news of the delay emerged from the three-way talks between Ukraine, Russia and European Union. “It is Munich 1938,” one said. Yet Ukraine did not have much choice. Russia threatened the renewal of military action and a complete economic blockade if Ukraine did not postpone implementation. To make itself clear, Moscow is to increase its military presence in Crimea and introduce tariffs for Ukrainian exports to Russia that will be deferred so long as Ukraine does not implement the agreement with Europe. It is not just Ukraine’s free trade with Europe that is at stake, but its ability to reform and to make its own decisions about the future.

Ukrainian politicians have pledged to reform their economy despite the deferral of the EU agreement, but if the past 23 years are anything to go by the chances of their doing it are slim. Arseniy Yatseniuk, the prime minister, blames the war for lack of reform in the past few months, but it is unclear why the government could not have begun to remove wasteful energy subsidies, deregulate the economy or curb corruption. Even during the war, some in Ukraine’s defence ministry used intermediaries to charge money for hardware and guns being supplied to volunteers on their own side, according to Zerkalo Nedeli, a weekly. Private firms whose employees enlisted for military duty bought flak jackets from Ukrainian suppliers that turned out to be fakes.

On the same day the Rada ratified the association agreement, it passed a law granting special status to the part of the Donbas controlled by Russian-backed separatists, including the cities of Donetsk and Luhansk. The law gives these territories broad autonomy for three years, guarantees Russian-language rights and self-governance, and allows them to establish deeper ties with Russia—although it does not give the region a say in foreign or defence policy. Another law offers an amnesty to rebel fighters. Mr Poroshenko’s aides say this was the only way to save lives, but it poses uncomfortable questions. “What did our boys die for? Why did we not hold peace talks back in May?” asked Sergei Taruta, the Kiev-appointed governor of the Donetsk region.

Unlike the association agreement, the vote on special status was held in secret, with journalists barred and voting rolls concealed to avoid accusations of treachery. Even Mr Poroshenko’s supporters recoiled. As Mustafa Nayem, a journalist- turned-candidate from Mr Poroshenko’s bloc, says: “To pass such important laws without an open discussion, without any explanation to society, is barbaric.” Special status may establish a frozen conflict with no clear borders, a perfect environment for contraband and banditry.

Ukraine clearly cannot win a fight against Russia. But Mr Putin also faces limits. The Russian public does not support full-scale war with Ukraine. The killing of its own soldiers, who were not even meant to be involved, has been uncomfortable for the Kremlin. And for all Moscow’s bravado, Western sanctions have pushed Russia’s economy closer to recession. Alexei Kudrin, Russia’s former finance minister, talks of a 5% contraction in GDP if more sanctions are imposed. Russia has already tapped its rainy-day fund. The strain is being seen in infighting among Mr Putin’s entourage (see article).

Both Mr Putin and Mr Poroshenko have reasons to want a truce: Mr Putin to avoid more sanctions and questions from relatives of dead soldiers, and Mr Poroshenko ahead of a parliamentary election on October 26th. But this does not mean the end of Ukraine’s troubles and Russia’s adventurism. The Kremlin’s goal is not just to control two cities in eastern Ukraine, but to stop all of Ukraine from moving westward. Further violence in the east is possible as rebels try to capture more territory.

The biggest danger, however, is that the fragile truce will be followed by the usual political wrangling in Kiev and renewed Ukraine fatigue in the West. The only way Ukraine can realise its European aspirations is over many years, by building an economically and politically coherent state. That will take patience, money and time from the West and perseverance from Ukraine. But not to try would mean the ultimate defeat and betrayal of those who died for Ukraine’s sovereignty.

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