Of mice and cheese - Explaining Ukraine’s stalemate

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The story in Ukraine moves on. After almost a month of demonstrations, ‘stalemate’ seems the most appropriate word. But in fact, the country is being sheered by contradictions between foreign policy, economic policy and domestic politics. The authorities and the protestors are even further apart.

The authorities’ foreign policy game has been sussed. They have been trying to leverage all sides with questionable figures and geopolitical blackmail. The EU has put a stop to talks on that basis, rather than to talks as such. So the authorities either had to change tactics or make the only possible deal, with Russia. But they are weaker with Russia too – Moscow is perfectly used to such tactics, but now knows the current authorities have nowhere else to go.

So the deal cut with Russia on Tuesday was aptly summarised by opposition leader Arseniy Yatseniuk: “the only place with free cheese is a mousetrap”. Trade restrictions will be reviewed. Russia will fund $15 billion of Ukrainian debt – eked out quarterly. The price of gas will fall to the level in Germany (plus transit), $268.5 per 1,000 cubic metres rather than $410. Just as importantly, all the key oligarchic groups are given a bone. The Yanukovych ‘family’ hopes to have a cut in gas transit; Ukraine’s beleaguered steel and pipe exporters are offered some relief; deals were cut for aircraft and shipbuilding.

The price will come in asset sales. The Ukrainians may end up selling more to the Russians than Belarus has. Yanukovych may even pass the tipping point where, instead of using his country as collateral in a positive-sum bargaining game between Russia and the West, he has to sell more and more at the margin simply in order to survive, especially as he will be more dependent on Russia first to get to and then to try and win the 2015 election.

Russia has cleverly made the deal medium-term. There is more than just immediate debt relief.  The long-term question of whether Ukraine joins the Russia-led Customs Union has been parked. Putin and Yanukovych know they cannot make the deal now, because of the reaction on the streets in Kiev. Russia is assuming that by parcelling out its assistance, Ukraine will grow ever more dependent. Because each individual oligarch will not want to see Russians make inroads in their empires; and in the long run they will remember they need Europe too.

Domestic politics had been looking like it was moving in the other direction. In the last week, since the second attempt to clear the Maidan on 11 December, there had been the outlines of a solution to the crisis. Defectors from the Party of Regions would provide the votes to oust the government and install a new national unity coalition. Now the oligarchs who might have provided the necessary extra votes seem to have got what they want – probably having used the threat of defection to get there.

In fact, the authorities have four more MPs. Five by-elections were held on Sunday, in seats where  the authorities had simply derailed he original counts in 2012 when opposition candidates were leading. The authorities used the same old ‘administrative methods’ of vote-buying and ballot-stuffing to win in four out of five. The opposition, which is divided and often leaderless, is therefore not even as strong as it looks – at least in the sense that they can’t derail the government machine. Protestors may dominate the streets of central Kiev, but one by-election was in Kiev and three were near Kiev. This of course may only radicalise the opposition, as they can only expect more of the same at the presidential election due in 2015. Yanukovych has also begun to purge the regions – twenty four heads of regional (raion ) administration were dismissed on 16 December, most notably in the western oblast of Ivano-Frankivsk, which has been one of the most oppositional in the current crisis.

The protestors have advantages, however. After several attempts to use violence against them, it seems unlikely the authorities would succeed at the next attempt – or they would pay an enormous cost. The authorities may have also shot themselves in the foot by dismissing some of those responsible for violence on 30 November; but not those highest in the chain of command. Who will do the authorities’ dirty work now?

So Ukraine faces a very specific type of deadlock. What will happen if the protestors remain solid over the winter, through December at least, while politics drifts away from them? A new government is still possible in January, but it might actually contain some more ‘pro-Russian’ members. 2014 may be a year of permanent crisis in Ukraine.

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