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Stabilizing Ukraine

MADRID – Even Mikhail Gorbachev, who presided over the dissolution of the Soviet Union with scarcely a shot fired, has proclaimed his support for Russian President Vladimir Putin’s annexation of Crimea. The people of Crimea, he says, have corrected a historic Soviet error.

Gorbachev’s sentiment is widely shared in Russia. After the Soviet Union’s disintegration in 1991, Russia went from superpower to backwater. Three ex-Soviet republics joined the European Union and NATO, asserting their desire not only for democracy and prosperity, but also to avoid being part of Russia ever again. By moving to annex Crimea, Putin, supported massively – thus far – by domestic public opinion, seems to be ending the post-imperial frustration of the past two decades.

Since 1991, however, Russia explicitly recognized the territorial integrity of Ukraine on several occasions. Such recognition was part of the 1992 Yalta Agreement, which divided the Black Sea fleet, and of the 1997 leasing contract that allowed the fleet to remain in Sevastopol. Ukraine’s territorial integrity was also recognized in the 1994 denuclearization agreement, signed by the United Kingdom, Russia, and the United States, and again in April 2011, when then-President Viktor Yanukovych extended the Sevastopol lease.

The Ukrainian constitution prohibited the referendum on independence that was carried out in Crimea in the presence of Russian troops. With the vote to leave Ukraine and join the Russian Federation illegal by any reckoning, the international community, as the EU has declared, cannot accept the outcome.

Relations between the EU and Ukraine have always been complex. The Association Agreement that Yanukovych rejected last November – a decision that incited the popular protests that brought down his government – had been under negotiation since 2007. Essentially a free-trade treaty with additional political elements, its signing was postponed because of the imprisonment of former Prime Minister Yulia Tymoshenko. In the end, Yanukovych accepted Russia’s counter-offer: a 30% reduction in the price of Russian gas supplies and $15 billion to stave off default.

Russia needs Ukraine if it is to build the so-called Eurasian Union, the economic bloc that Putin is seeking with Kazakhstan and Belarus. Unlike the parties to a free-trade agreement, the members of a customs union like the one Putin envisages set trade policy with respect to third states through the establishment of common foreign tariffs. Thus, Ukraine’s incorporation would be incompatible with its EU Association Agreement.

Russia and Ukraine, however, already have a free-trade agreement, via the Commonwealth of Independent States free-trade agreement signed in October 2011, which is compatible with the proposed EU Association Agreement – in the same way that Mexico maintains free-trade treaties with the EU, as well as with the US and Canada. Ukraine thus could have maintained normal relations with its neighbors, with the EU, and with Russia.

But Russia needs Ukraine for nationalist as well as economic reasons. Russian nationalism has always considered Ukraine an extension of Russia itself, by virtue of it being home to places that are among the dearest to Russian identity. Putin has called Kyiv “the mother of all Russian cities.” Sevastopol, in turn, is a doubly heroic city: during the siege of the Crimean War in the nineteenth century and during World War II.

But understanding Russia’s frustrations and sentiments does not excuse invasion and annexation. The EU Association Agreement threatened none of Russia’s interests, whether economic or cultural. Relations between the EU and Russia cannot be based on zero-sum games or spheres of influence. Solutions must be found that enable all to win.

Moreover, Russia’s annexation of Crimea will likely damage its core interest: its political relationship with Ukraine, which it wants to keep far from Europe. So, for Europe, the most important priority now is to help to ensure stability and prosperity in the rest of Ukraine.

The first and most pressing issue is to stabilize the government in Kyiv. Ukraine’s presidential election on May 25 will be a key moment. The vote must be free and fair, according to democratic standards. Moreover, it is essential that the state respects national minorities’ linguistic and cultural rights and promotes social inclusion. European aid should be conditioned on Ukraine’s performance in this area.

Second, given that the risk of conflict is greatest in Ukraine’s Russophone east, an OSCE mission should be deployed there to ensure stability, security, and respect for minorities, and to condemn, if necessary, violations of specified commitments.

The third issue ‒ and perhaps the most important ‒ is the pressing need for economic aid. The EU has prepared an €11 billion ($15 billion) aid package, though it is subject to rules and conditions set by the International Monetary Fund, which is contributing part of the total. Though Ukraine’s economy is collapsing, the government maintains excessive spending on subsidies that are incompatible with IMF aid. At present, for example, the government spends as much as 16% of its budget to subsidize the price of energy for every citizen.

Russia will not skimp on spending after annexing Crimea, and Crimeans will benefit from that aid and access to cheap energy. Though the tourism industry is likely to be moribund for some time, Russian subsidies may leave Crimeans relatively better off, especially from the perspective of their ethnic kin in eastern Ukraine. EU and Western aid packages will need to take this into account.

The problem of Crimea will not be resolved quickly. Though Putin declared in his annexation speech that Crimea is an “inseparable part” of Russia, his behavior will turn against him. He and Russia will suffer international isolation, while Ukrainians are likely to become even more insistent on choosing their own path.