The news out of Ukraine has dominated the news headlines and for good reason, the situation there is troubling to describe it lightly. The use of aggression by the Russian military is worrisome for the stability of the region and for the potential response of the United States in this situation. It reminds me of a return of the Cold War days, a stand-off between the United States and Russia which is not a scenario any of us want to see a reprisal of at any point.
Yesterday, AFP reported that members of the Russian cabinet are threatening to sanction the U.S. if sanctions are placed on Russia regarding the situation in Ukraine. These members are threatening to stop using the U.S. dollar in their international banking transactions, and Russian banks would not return loans from American financial companies.
These steps would be taken by Russia, the dignitaries have stated in order to attempt to “crash” the U.S. financial markets. In effect, that would create volatility throughout the global financial system.
The Russian response would not be limited to just the U.S., this same report claims that the Russian cabinet has discussed actions against the E.U. which include stopping the exports of gasoline and other energy resources.
The E.U. has not been willing to institute real sanctions because they are reluctant to risk the loss of the gasoline exports they rely so heavily upon. According to Reuters, the major players in the E.U. have a lot at stake with Russia: France has a proposed deal with Russia to sell warships to Moscow, British banks are heavily involved in Russian investments which have provided increased profitability, and German owned companies have $22 billion invested in Russia.
Same strategy
Russian President Vladimir Putin is using the same strategy he employed in the invasion of the Republic of Georgia in 2008 to legitimize his actions in Ukraine by claiming “threats to Russian citizens”. The Russian military occupation of the Crimean peninsula has major international repercussions.
Moscow’s interest in Crimea is largely driven by the access to the Black Sea. The news reports today are that the Crimean parliament has voted to join the Russian Federation, effectively splitting Ukraine in two pieces. The current Ukrainian government has not recognized this vote in Crimea.
President Obama called the events today in Crimea a violation of international law. Both the President and Secretary of State John Kerry are hopeful that they can maneuver Russia into peace talks with the current government in Ukraine to settle this matter diplomatically.
End Game
I am deeply concerned about the situation in Ukraine at this point, and I feel that the vote today in the Crimean parliament, whether legitimate or not, raises the tensions in the region. The region of Crimea is largely populated by Russian nationals who tend to be loyal to Moscow. The rest of Ukraine tends to a large degree to be inclined toward achieving greatness in a Ukraine that joins the European Union in order to bolster its future.
These dividing lines were of course the same rift which caused the weeks of street protests which culminated in the ouster of former Ukrainian President Yanukovich on February 22. One path toward staying with Russia, and the other path toward joining the European Union.
Some people would say the path toward staying closely aligned with Russia is the way of the past, and that the path to E.U. membership is the way of the future. All I know is that a country that severely divided either ends up in a civil war, or ends up fracturing into smaller pieces. In the case of the former Yugoslavia, they had the civil war, and then broke apart into smaller independent states. I fear that Ukraine is headed on this same course, and then complicating matters, Russia is directly involved in this scenario as well.
The Russian economy has already seen a backlash to the activity in Ukraine. Some experts believe that Putin’s strategy there will backfire, and others believe that he has put the international community in a very precarious position. This is shaping up to become the biggest issue between Russia and the West since the end of the Cold War.
In the event that Russia continues to push further into Ukrainian territory, I fear the consequences of that activity could lead to U.S. involvement in the region. I have consulted with others on this issue in the past few days, and the consensus is that Russia cannot afford to alienate the U.S. or the West at this point with the state of their economy currently. The ruble continues to be negatively affected by the events in Ukraine.
However, I hope that a diplomatic and peaceful solution can be achieved which will recognize the sovereignty of the new government in Ukraine and provide those people with what all people deserve: the right to determine their own future. Only time will tell whether that peaceful resolution can be obtained.