The Bane of the Ukraine

 By Nathan Ausubel

               For the past year, Russia and Ukraine have engaged in a bitter struggle. The Ukrainian government, led by President Petro Poroshenko, wants to gravitate towards the European Union. Poroshenko realizes that an Association Agreement would bring much needed trade to the faltering Ukrainian economy, and he is eager to break free of Russian dependence. Unfortunately for him, Russian President Vladimir Putin stands in his way.

               Putin has grand plans for Russia. He wants to build Russian influence in the region by spearheading a new economic union called the Eurasian Economic Union. Russia desperately wants Ukraine to join this economic union. Putin will use any methods necessary to accomplish this goal, even stopping the gas pipes in Ukraine and refusing to pay off Russian debt to the gas company Gazprom.

               Ukraine finds itself in an unwieldy situation. Poroshenko needs to break his dependence on Russian gas, but he is faced with grim reality: according to the European Commission, as much as 66% of Ukraine’s natural gas came from Russia in 2006. If Gazprom fails to reach a gas agreement with the Kiev government, it can stop the pipes, which has immediate consequences for Ukraine and Eastern European countries. Gazprom carried through with this threat in January 2006 and January 2009, and Ukraine is certainly not eager to experience a similar situation in the future.

               To make matters worse, the European Union is reluctant to give a helping hand to Ukraine. European countries are just as dependant on Russian gas as Ukraine, if not more so, and they too face the threat of Gazprom stopping the gas. According to the European Commission, in 2007 Russia was the sole supplier of natural gas to several E.U. countries, including Estonia, Finland, Latvia, and Lithuania, according to the European Commission. Russia also supplied 98% of gas exports to Slovakia and 92% of exports to Bulgaria. European countries are afraid to take comprehensive steps against Russia when Gazprom can retaliate with economic penalties.

               The European Union is, of course, responsible for some economic sanctions. It has frozen the assets of leading Russian officials and businessmen, revoked their visas, and suspended trade with leading Russian businesses with close ties with the Kremlin, such as Bank Rossiya. These efforts are, unfortunately, halfhearted at best because the E.U. is heavily reliant on Russian trade.

               With the European Union concerned with Russian commerce, only the United States can stand up to Putin. The United States’ sanctions are still selective sanctions, but American diplomats have acted faster to condemn Russia’s annexation of Crimea and support for eastern separatists.

               Unfortunately, the United States’ sanctions campaign is almost certainly doomed to fail. In general, economists estimate that sanctions only have a 25% to 30% chance of success. The situation in Russia is no exception. Though the sanctions are a nuisance, Russia can bypass the sanctions by pursuing closer relations with China and Iran. Russia can also retaliate with its own sanctions. It has already banned European food products, and it is starting to seize American and European assets.

               Sanctions are failing to shift public opinion in Russia. From October 2013 to August 2014, Putin’s approval rating actually rose from 64% to 84%. Sanctions are failing to turn public opinion against the Russian government. The Russian people, more than ever, are firmly behind Putin’s foreign policy. With the Russian media leading many Russians to believe that Ukraine is led by a fascist, human rights-abusing government, Putin is finding little opposition on the home front.

               There is little more that the United States and European Union can hope to accomplish from sanctions. They rely too much on Russian trade and have too much to lose from a military confrontation to risk taking more severe measures against Russia. Ukraine will find little help from the Western world in coming days. Russia may have agreed to a cease fire, but Ukraine’s eastern regions are still under Russian de facto control. As long as Russian separatists control the eastern regions, and as long as Gazprom controls the supply of gas, Ukraine will never join the European Union.

Poroshenko’s dreams of a united Ukraine are over. With little doubt, Putin has scored a victory against the West.