MUNICH – Ukraine faces two major threats to its future. On one side stands the risk of protracted conflict and the partition of its territory. On the other lurks the danger of bankruptcy and economic turmoil. Looming over them both is the country’s relationship with Russia. Addressing the challenges facing Ukraine will require policymakers inside and outside of the country to work together to stabilize the country’s economy, protect its territory, and create space for reforms, while seeking to improve cooperation with its powerful eastern neighbor.
Sending a clear military message remains essential. NATO rightly responded to Russia’s annexation of Crimea, ongoing support for separatists in eastern Ukraine, and mock attacks on Western countries with a program of political and military reassurance. Just as the alliance demonstrated solidarity with West Germany during the Cold War, it must now do the same with its eastern allies. This effort should be buttressed by a reversal in the downward trend in defense spending by many NATO members.
The European Union must also begin to put in place a more credible and capable defense policy. The time has come to realize fully the principle of European defense integration. Doing so would not only strengthen the EU’s ability to act, it would also send a powerful signal of resolve to the Kremlin. At the same time, the EU must advance its energy union, diversifying its oil and gas imports and lessening its dependence on Russia. Finally, given the threat a defenseless Ukraine poses to European stability, it would be a mistake to rule out the provision of military aid to the country.
In addition to the military response, an economic intervention will be necessary. Ukraine is in desperate need of financial assistance – a point that George Soros was among the first to recognize. Indeed, providing Ukraine with assistance is far more important than punishing Russia with sanctions. Just as European Central Bank President Mario Draghi’s declaration that “the ECB is ready to do whatever it takes to preserve the euro” calmed financial markets, so would a proclamation by the EU that it will do everything necessary to support Ukraine’s recovery.