• Sun
  • Sep 21, 2014
  • Updated: 11:31am
NewsWorld
UKRAINE: ANALYSIS

Putin the pragmatist keeps an eye on Russian economy in Ukraine dealings

Economic and political realities may lie behind pragmatism on Ukraine

PUBLISHED : Thursday, 08 May, 2014, 9:15pm
UPDATED : Thursday, 08 May, 2014, 9:15pm

Vladimir Putin's call for pro-Moscow separatists to postpone an independence referendum in eastern Ukraine shows the Russian president has achieved as much as he can for now without taking the potentially catastrophic step of sending in troops.

The Russian president's assertion that he has withdrawn forces from the Ukraine border - the White House says it has seen no evidence of this - was a clear sign that he wants to take the heat out of the worst East-West row since the cold war.

It sounds like de-escalation, and … Putin will agree to Western terms
MOSCOW TRADER AT WESTERN BANK

It may also indicate that the Russian economy, on the brink of recession, is feeling the pain of the Western sanctions imposed over the Ukraine crisis. Analysts predict the separatists will heed Putin's call for them to postpone Sunday's vote.

The greatest fear in the West, and in financial markets, was that Russia would send the 40,000 troops Nato says are massed on the border into Ukraine, biting another chunk out of the former Soviet republic following Moscow's March annexation of the largely Russian-speaking Crimean peninsula.

That seems to be off the agenda for now, and Russian markets soared in reaction to Putin's words.

"It sounds like there's de-escalation and that Putin will agree to Western terms," said a Moscow trader at a Western bank.

But did Putin blink?

On the plus side, he can point to the fact that separatists in eastern Ukraine, who declared a "people's republic" in the industrial region of Donetsk, are almost certain to be able to discuss their status with the Kiev government. Putin may feel his best bet for a chance to shape Ukraine's future without invading is to press Kiev for concessions in negotiations with pro-Russian forces in the east.

Putin also showed his wish to compromise in relatively conciliatory remarks about Ukraine's presidential election due on May 25, which Western governments hope will increase the legitimacy of the authorities in Kiev.

After weeks in which Russian officials have condemned the Ukrainian government as illegal and labelled it the "so-called Kiev authorities", Putin said the vote was a "move in the right direction". He added, however, that the election could decide nothing unless all citizens were sure their rights would be safeguarded, leaving the door open for Moscow to condemn the vote later and put the blame on Kiev.

Moscow-based foreign policy analyst Vladimir Frolov said Putin wants talks between the Ukrainian government and the separatists to lead to "a new Dayton, under which Kiev will be forced to accept the kind of Ukraine that Russia wants to see". The 1995 Dayton Agreement formalised the postwar division of Bosnia, and Frolov said Ukraine could end up divided.

On the minus side, Putin can have no certainty of how any talks between Kiev and the separatists will go.

He also risks alienating his supporters who have been fed a relentless diet in the Russian media of Ukrainian aggression against a peaceful population defending itself in the east.

Some analysts suggest Putin has been pushed into compromise by economic sanctions imposed on individuals and companies close to him.

Oleg Nemenski, senior analyst at the Russian Institute for Strategic Studies think tank in Moscow, suggested the prospect of further damage to economic and political ties with Europe was behind Putin's move.

"This would badly hit the Russian economy. Wise politics is to take into account one's own capabilities," he said.

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