Igor Merheim-Eyre, Programme Coordinator at the Global Europe Centre, answered questions today on the on-going crisis in Ukraine for the Slovak daily Pravda. His commentary appeared in both the printed and online version of the newspaper on Tuesday 18th March.
A short version can be found on: http://spravy.pravda.sk/svet/clanok/311783-rusko-navrhuje-vznik-kontaktnej-skupiny-ziada-neutralnu-ukrajinu/.
Igor’s commentary can be found below:
Q – The sanctions against Russia are on the table, but many claim that the sanctions will hit also us. Would you say that Europe should in a longer term somehow look at all business relations with Russia to identify our vulnerabilities and we should work on changing it?
A – Sanctions will have an effect on both sides and no doubt many companies that have invested in Russia are worried about any sanctions, however, in the long-term Russia will be economically affected more than Europe – and I believe, disproportionately.
Russia is now a member of the WTO and, according to the UN it was the eighth biggest global investor in 2012. On the other hand, projects such as Skolkovo, Russia’s Silicon Valley, have been marred by corruption whilst income inequality has been seen a constant rising trend – in fact, according to statistics, between 2000 and 2010, this has risen by over one-fifth.
More importantly, inside Russia, there has been a general failure to diversify the economy and, as is widely known, the state treasury is dependent on oil and gas revenues. Therefore, diversification of oil and gas imports would, in the long-term will have significant effect on the state of Russia’s finances. EU-Russia trade in 2012 was worth almost 267bn euros; 76% of EU’s oils and gas comes from Russia – but the EU can afford to find new partners, including former Soviet countries like Azerbaijan; Russia cannot afford to simply lose such a huge market, but the EU will also be reluctant to simply close doors to the billions of euros worth of machinery and other products exported to Russia annually.
Yet, despite further sanctions, western investors will probably be increasingly reluctant to invest in Russia, which will come to be seen as unpredictable unless a normalisation of relations can take place – and that’s by simple de-escalation which, at the moment, is a distant prospect.
To conclude, targeted sanctions may no doubt, have an effect, but this will come in the long-term. To apply pressure, a better short-term strategy must also be sought. This, however, comes down to political willingness which, however, has so far not been shared by all Member States.
Q – Some experts suggest that the way forward out of the crisis would be neutral status of Ukraine. Would you agree it could help?
A – Neutral Ukraine is a fiction of past hopes. After the break-up of the Soviet Union, it was suggested by some observers that Ukraine should keep its own Nuclear Deterrent. Perhaps, now, those calls seem far more relevant than at the end of the Cold War. Back then an enemy was lost, now traditional rivalries are increasingly re-emerging.
Ukraine is unlikely to be neutral or, if you have it, a buffer zone between the EU and Russia. Both sides have been courting Ukraine, and neither will give up any closer association. The situation has now been geopoliticised, but the truth is that a neutral Ukraine never really existed, and it is doubtful that it ever will. This is as a consequence of external pressures as a result of being on the crossroads between Russia and the West. Ukraine’s political elite didn’t help either, because there was never an attempt at a more inclusive dialogue about the road Ukraine should choose.
Now, however, the situation has changed dramatically. Russia has acted as an aggressor, annexing Ukrainian territories. That creates further tension, and makes the impossibility of neutrality even more distant.