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The Ukraine Crisis In A Nutshell

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The Ukraine Crisis In A Nutshell

Political leaders at the signing of the Minsk 2 agreement in February '15.

Political leaders at the signing of the Minsk 2 agreement in February ’15.

It’s been over a year since the conflict in Ukraine began and Putin has now declared that Russia will be adding 40 ICBMs to its nuclear arsenal. Here’s the crisis explained in a nutshell.

 

In November 2013, faced with an ailing economy, Ukraine’s pro-Russian President Viktor Yanukovych refused to sign an Agreement of Association with the European Union, choosing instead to accept a bail-out package from Russia. This led to massive anti-Russia protests across the country which culminated in Ukrainian MPs voting to remove Yanukovych from power forcing him to flee to Russia.

 

Pro-Russia protests emerged in Eastern Ukraine at the same time and in February 2014, soldiers in unmarked uniforms began taking over buildings and offices in Ukraine’s Crimean peninsula in support of Russia. Crimean politicians held a referendum to decide if they should stay with Ukraine and over 90% voted to join Russia.

 

The EU and the United States have termed the elections a farce and have declared Russia’s occupation of Crimea illegal. The conflict has since become a flashpoint exacerbating tensions between Russia, the EU and NATO.

 

Russian President Vladimir Putin has now raised the stakes by declaring that Russia would have inducted 40 new intercontinental ballistic missiles to its nuclear arsenal by the end of the year. At this critical juncture, a look back at the events that unfolded gives much needed perspective to understand this complex conflict.

 

Geography:

 

Ukraine is the largest country that lies fully within Europe and has a population of over 45 million, of which roughly 17% are ethnic Russians. Historically Ukraine has been an agrarian economy, however in recent history Ukraine has emerged as a formidable industrial player as well.

 

Ethnolingusitic_map_of_ukraine

(Picture courtesy: Wikipedia Commons)

History:

 

Ukraine’s relationship with Russia dates back to the time of the Tzars. After the Russian revolution in 1917, Ukraine enjoyed a short stint of independence, until it was taken over by the Soviet Union in 1922. In 1941, Nazi Germany invaded Ukraine but the fall of the Nazi empire saw Ukraine fall back under Soviet control.

 

In 1991, a referendum held in Ukraine witnessed over 90% of the country’s population voting to break off from the USSR. The fall of the Soviet Union ultimately led to complete independence of Ukraine. However Ukraine remained divided between the Russian speaking Eastern Ukraine and Western Ukraine which was pro-EU.

 

RussianUseEn

(Picture courtesy: Wikipedia Commons)

The Build Up:

 

Years of economic and political turmoil ensued, and a majority of the Ukrainian population turned towards Europe. However the ethnic Russian speaking population still supported closer ties with Russia. In November 2013, The Ukrainian President Viktor Yanukovych rejected a trade deal with the European Union, choosing instead to get a bail-out package from Russia. This led to massive protests across the country as the people viewed the EU trade deal as a vital step toward gaining access and membership to the EU.

 

The situation turned violent as Ukrainian security forces began cracking down on the protesters, leading to the death of several citizens. The government ultimately removed Yanukovych from office in February 2014, calling for fresh elections. Petro Poroshenko, one of Ukraine’s most influential politicians and a prominent supporter of the protests emerged as the new President in May, 2014. As the pro-EU protests wound down in Western Ukraine, pro-Russian protests continued to gain momentum in Eastern Ukraine most significantly in the Crimean peninsula.

 

Flashpoint:

 

Over 77% of the population in Crimea speak Russian. As pro-Russia protests gained momentum in the region, soldiers in unmarked uniforms began taking over buildings and offices in Crimea in support of Russia in February, 2014, around the same time that pro-Russian President Yanukovych was removed from office. Crimean politicians decided to put the idea of separation from Ukraine to vote, and more than 90% of the population voted to join Russia.

 

Vladimir Putin subsequently welcomed the merger of Crimea with Russia in an official announcement in March 2104. NATO and Western European leaders called the elections a farce and termed Russia’s actions in the region and invasion. This event became the flashpoint of the current crisis in the region.

 

Heavy fighting has spread across many parts of Eastern Ukraine since, including in Donetsk, Debaltseve, and Sevastopol. An alarming outcome of this fighting was the shooting down of Malaysian Airlines flight MH17, allegedly by pro-Russian rebels in July 2014. The incident was a gruesome reminder of the enormous risk of civilian casualties in the conflict. While the rebel groups officially deny any involvement in the matter, many reports suggest that it was a case of mistaken identity that led to the fateful incident.

 

What Is At Stake:

 

What makes Ukraine an important to Europe as well as Russia is the fact that it serves as a crucial junction for pipelines that supply natural gas from Russia to Europe. Russia exports about 150 billion cubic metres per annum to European markets, the equivalent of roughly 30 per cent of the continent’s gas needs.

 

These supplies pass through three routes: pipelines via Ukraine, pipelines via Poland and Belarus and pipelines via the Baltic Sea. Almost 40-50% of Russia’s gas supplies to the EU pass through Ukraine. For Russia, losing political influence in Ukraine would endanger the comfortable position they enjoy in European gas markets. These supplies to Europe are one of the most important sources of revenue for Moscow, and Europe sees Russia’s virtual monopoly in their gas markets as an economic threat.

 

(Picture courtesy: www.eegas.com)

(Picture courtesy: www.eegas.com)

Russian interests in Crimea and Sevastopol also stem from the fact that it would be a crucial region to ensure their Black Sea fleet’s access to the Mediterranean Sea and further to the Atlantic Ocean. NATO’s aggressive posturing towards the Ukrainian crisis has fuelled Russia’s actions further.

 

UKRAINE_MAP (1)

 

The Current Situation:

 

In December 2013, Russia loaned $3 billion to Ukraine by buying Ukrainian Eurobonds. President Poroshenko termed the loan a ‘bribe’ paid to former President Yanukovych to refrain from signing the Association Agreement with the EU.

 

In January 2015, Russia alleged that the Ukrainian government has violated the terms of the loan agreement and was considering demanding early repayment. Ukraine’s Finance Minister Natalia Jaresko recently stated that Ukraine would make payment of $75 million on the $3 billion debt on June 22, 2015 and that $39 million of interest on the loan has already been paid in the last week. Russia however has demanded that full repayment of the bond’s principal amount be made by December 2015, when the bond matures.

 

On September 5, 2014 a ceasefire agreement was signed in Minsk between Ukrainian government officials and separatist leaders. The ceasefire broke down within days and fierce fighting resumed.

 

In February 2015, the Minsk 2 ceasefire agreement was signed between the leaders of Ukraine, Russia, Germany and France. However this agreement failed to hold the truce as well and fighting has resumed.

 

In light of these events, the United States and the European Union have imposed diplomatic and economic sanctions on Russia for its role in the crisis. The US, EU and NATO have begun staging war exercises close to Russian positions. NATO bombers have also begun flying regular sorties around Russian airspace. The US also sent its advanced stealth B2 bombers and F22 Raptors to Europe in response to Russian aggression.

 

In response, Russia has begun beefing up its naval positions in the Black Sea. President Vladimir Putin also announced last week that Russia would add 40 ICBMs to its nuclear arsenal by the end of the year.

 

Sanctions:

 

The EU has decided to extend the current economic sanctions on Russia for another six months until January 2016. The United States has also imposed its own set of unilateral sanctions targeting Russia’s economic interests with the aim of severely hampering economic growth in Russia.

 

EU Sanctions:

 

The European Union has imposed a slew of measures aimed at slowing down Russia’s economic growth. These include Diplomatic measures such as hosting a G7 meeting excluding Russia instead of the G8 meeting that happens in Brussels.

 

Restrictive measures include banning of Visas for several Russian individuals linked to the Kremlin, reducing Russian government officials from travelling to the region for trade/commerce and political purposes.

 

The sanctions also include the freezing of the financial and proprietary assets of individuals linked to Russia’s actions in Ukraine. These sanctions aim to put pressure on the Russian government and its officials to hamper its economic growth.

 

The EU has also issued restrictions on five Russian national banks, three Russian defence companies and three Russian energy companies. These restrict the level of interaction between these companies and their subsidiaries with entities in the European Union.

 

The EU has also imposed trade restrictions on Crimea, since they refuse to acknowledge Russia’s claims on the peninsula. The restrictions entail a ban on imports originating from Crimea unless accompanied by a certificate of origin from Ukraine. Similarly, EU entities are banned from making investments and exporting technology related to transport, communication and energy in Crimea. These actions severely curtail the development of the Crimean economy.

 

US Sanctions:

 

US President Barack Obama, through a series of executive orders, has imposed severe sanctions on individuals and entities connected with Russia’s actions in Ukraine. The sanctions impose travel bans on certain individuals and entities and extend to trade bans as well. They were imposed by adopting Executive Order 13660 and Executive Order 13661.

 

An extension of these sanctions was imposed through the Executive Order “Blocking Property of Additional Persons Contributing to the Situation in Ukraine”. The order imposes restriction on 14 Russian Defence Companies, 6 of Russia’s largest banks, 4 top energy companies in Russia. They also specifically target businessmen and politicians known to be close to Russian President Vladimir Putin, freezing their financial and proprietary assets outside Russia and imposing visa and travel bans on them.

 

The bulk of the sanctions target the financing of the Russian oil and gas industry in their exploration and drilling activities in deepwater, Arctic offshore and shale projects. The sanctions, though adopted unilaterally by the US have been done in co-ordination with the EU sanctions for maximum effect.

 

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