September 22, 2017


Can Ukraine Survive? (Judith Miller, 9/22/17, )

[F]ormer CIA Director and Defense Secretary Robert Gates suggested at the YES meeting that Mr. Putin, in fact, may have overextended Russia through his invasion of Ukraine and concluded that it is not possible for him to modernize his military and expand his territory given his severely weakened economy - what Mr. Gates called Mr. Putin's "Soviet trap." Hence, he and others suggested, Putin might be seeking a way out of the sanctions that have suppressed Russia's growth. Mr. Gates noted that even in 2013 when Russian oil was selling at $107 per barrel, Russia managed to achieve a mere 1.4 percent growth.

Several diplomats were struck by Mr. Putin's recent embrace of a version of President Poroshenko's call for the introduction of "peacekeeping forces" in the disputed area. While Mr. Gates and former Secretary of State John Kerry rejected Mr. Putin's specific proposal, both endorsed direct talks to explore whether Mr. Putin might be willing to withdraw from part of the Donbas, Ukraine's eastern industrialized heartland, if not from Crimea. Russian diplomats have signaled through back-channels that Moscow might be willing to unload Donetsk, part of the Donbas region where Russian occupation is increasingly unpopular, even among native Russian-speaking Ukrainians who were initially sympathetic to the nostalgic appeal of a return to Mother Russia. Unemployment in some of the Russian-occupied areas is 60 percent.

Several participants added that if Mr. Putin did not relent, President Donald Trump might well approve the sale of lethal "defensive" weapons to Ukraine, as Mr. Poroshenko has long requested.

Apart from the issue of how best to handle Russia, conferees grappled with Ukraine's domestic politics and whether President Poroshenko was reforming his country quickly enough. Optimists like Anders Aslund, of the Atlantic Council in Washington, argued that Ukraine had done well in this year's first fiscal quarter, given its dire circumstances - with exports up by 25 percent, construction by 16 percent, and retail sales by eight percent. Ukraine's deficit was now "under control" and the country has begun to enjoy modest economic growth of some 2.5 percent.

Others were less sanguine, arguing that Mr. Poroshenko was unable or unwilling to implement reform at a sufficient pace and depth to satisfy his rapidly expanding critics, particularly younger Ukrainians, who accuse him of being corrupt and blocking reform. Critics blast his appointment of two former business partners to posts related to secret military spending, which now totals five percent of the country's gross domestic product. The proliferation of Mr. Poroshenko's "Roshen" chocolate shops throughout the capital, the product that help make him an oligarch and Ukraine's reigning chocolate king, has also been criticized.

Kurt Volker, the U.S. special envoy to Ukraine, recently urged him to focus on enhancing "the rule of law...on your own governance of the country, because Ukraine needs to be a successful country if it is going to withstand this kind of aggression from Russia."

The country's patience is clearly wearing thin. Birth rates are low and emigration is high. Ukraine's annual death rate exceeds the number of live births. Martin Schumacher, who heads Metro Cash and Carry in Ukraine, part of an international chain of wholesale stores, estimates that some five million Ukrainians have already left the country for work, and that some 200,000 emigrate each year. "There is virtually no immigration," he said. A worker can make three times his Ukrainian salary in Poland. Germany salaries on average are 10 times larger.

Posted by at September 22, 2017 8:32 AM