Ukraine’s Grand Bargain

Russian soldiers on patrol in Crimea in 2014. Photo Credit: Getty Images

By: Alexander Begej 

Universal recognition of a Russian Crimea would benefit both Kyiv and Moscow. Russia would see annexation sanctions lifted from its economy, providing disgruntled Russians with much needed economic relief. Meanwhile, the Ukrainian government would be free from the shackles of an unwinnable military conflict, thus empowering it to pursue genuine governmental reform through its newly acquired sense of national purpose.

Times Are Tough

The war in the Donbas is now in its fifth year and has imposed severe costs on Ukrainians and Russians alike. According to the United Nations, the war has seen over 10,000 casualties, 3,035 of which were civilian, and over 24,000 injured since the fighting began.[i] Over 1.6 million internally displaced people are struggling to find safety, adequate housing, and access to employment in the struggling economies of Russia and Ukraine.[ii] Ukraine now spends approximately 20% of its GDP on the war in the Donbas[iii] while Russia has weakened its social safety net and raised the retirement age in order to help finance its adventurous foreign policy.[iv] [iv] Currently, 76% of Ukrainian respondents to a Rating Sociological Group survey say the country is headed in the wrong direction.[v] Similarly, over 40% of Russians feel the same way about Russia, and 58% believe that the government will not be able to improve the economic situation in the coming year.[vi] Perhaps the two states are ready for a grand bargain to end the war.

The Fate of Crimea

In late February 2014, Russia employed a series of hybrid measures to seize control of the Crimean Peninsula. It has since integrated the Crimean economy with Russia’s, appointed Kremlin loyalists to positions of governance, waged information operations, and populated the territory with Russians relocated from the motherland.[vii] The peninsula has been effectively ‘Russified,’ and it is highly unlikely that Russia will relinquish the strategically significant territory that it acquired at a great risk. The Ukrainians know this, even if they will not admit it.

The Terms

Instead of demanding Crimea be returned and sending troops into a conflict it cannot win, Ukraine must seek an alternative. Kyiv should propose a new peace deal recognizing the Crimean Peninsula as an official territory of the Russian Federation in exchange for a removal of Russian forces from Eastern Ukraine and the reintegration of Donetsk and Luhansk into the Ukrainian state. In addition, Russia should be required to contribute to the reconstruction efforts of war-torn Eastern Ukraine.

Moscow would be interested in such a proposition for two reasons. First, Western sanctions have imposed serious costs on the Russian economy and do not appear likely to abate. The three rounds of sanctions targeting Russian banks, energy companies, and prominent individuals close to Putin[viii] have caused the value of some Russian commodity firms to drop 50%.[ix] In addition, in a testimony before the Senate committee, US Secretary of State Mike Pompeo pledged that these sanctions would remain for the indefinite future “until Ukraine’s territorial integrity is restored.”[x] Furthermore, the EU stated that the aims of its sanctions… “are not punitive, but designed to bring about a change in policy or activity.”[xi] Therefore, if Moscow and Kyiv can agree to a lasting peace deal and maintain their territorial integrity, Washington and Brussels will feel compelled to drop Russian sanctions associated with Crimea and the Donbas. This will provide much needed economic relief to the disgruntled Russian people who are growing increasingly intolerant of the lack of economic opportunity under President Vladimir Putin’s rule.[xii]

Second, by contributing to the physical and economic reconstruction of Ukrainian regions devastated by conflict, Russia can cement its commercial and political interests in Ukraine and promote a more favorable image of Russia. In an attempt to block growing ties with the EU, Moscow sought to assert itself in Eastern Ukraine, thinking this would generate widespread support for closer Russian relations particularly among the elites.[xiii] In reality, Ukrainian public opinion in Ukraine shifted heavily against Russia. In an April 2017 public opinion survey conducted by Rating Group Ukraine, 57% of Ukrainians polled ex­pressed a very cold or cold attitude toward Russia as opposed to only 17 percent who expressed a very warm or warm attitude.[xiv] By rebuilding infrastructure, hospitals, churches, schools, and electrical grids, Moscow could improve relations with Ukraine while strategically investing in closer economic ties with its neighbor.

For Ukraine, this peace deal will put an end to an unwinnable war with Russia and allow policy makers in Kyiv to focus on addressing critical domestic issues such as corruption and economic growth. Corruption is now a top priority for those seeking to buttress Ukraine’s newly Western-oriented national image.[xv] If the time, resources, and political will that are spent on the civil war can be redirected to reforming the judiciary system, the aspiring EU member state could finally take major strides towards rooting out the lingering effects of post-Soviet politics. Economically, the war in the Donbas has significantly weakened the agriculture and mining sectors and delayed key reforms needed to strengthen investor confidence. Securing a peace deal will ensure macroeconomic stability and provide a platform for the faster growth needed to improve living standards for Ukrainians who continue to suffer.[xvi]

Ukraine’s central government has so far not demonstrated any interest in forfeiting Crimea to Moscow. In July 2018, the Ukrainian Foreign Ministry noted that no state possesses the right to change the borders of sovereign states by force. Be that as it may, it is unlikely that this conflict will conclude with Crimea and the Donbas back under Kyiv’s jurisdiction.










[i] “Report on the human rights situation in Ukraine,” United Nations Human Rights Watch, September 19, 2018, Accessed October 1, 2018.

[ii] “Uncertainty Lingers for Displaced Ukrainians,” United Nations Refugee Agency, August 11, 2017, accessed October 3, 2018.

[iii] “Global Peace Index 2018,” Institute for Economics and Peace, June 2018, accessed October 3, 2018.

[iv] Andrei Kolesnikov, “Why Putin’s Approval Ratings Are Declining Sharply,” Foreign Affairs, October 4, 2018, accessed October 1, 2018.

[v] “Most Ukrainians think country headed in the wrong direction Rating poll,” Interfax Ukraine News Agency, June 26, 2018, accessed October 3, 2018.

[vi] Kolesnikov, 2018.

[vii] Michael Kofman, Katya Migacheva, Brian Nichiporuk, Andrew Radin, Olesya Tkacheva, and Jenny Oberholtzer, “Lessons from Russia’s Operations in Crimea and Eastern Ukraine,” RAND Corporation. 2017, accessed October 2, 2018.

[viii] Tom Keatinge, “This time, sanctions on Russia are having the desired effect,” Financial Times, April 13, 2018, accessed October 4.

[ix] “Ukraine-Russia related Sanctions,” U.S. Department for the Treasury, accessed October 3, 2018.

[x] Mark Najarian, “U.S. Issues ‘Crimea Declaration’ Reaffirming Rejection Of Russia’s Annexation,” Radio Free Europe Radio Liberty, July 26, 2018, accessed October 2 2018.

[xi] “EU Restrictive Measures Fact Sheet,” Council of the European Union Press Office, April 26 2014, accessed October 3, 2018.

[xii] Kolesnikov, 2018.

[xiii] Kofman, et. al., 2018.

[xiv] Steven Pifer, “How Ukraine views Russia and the West,” The Brookings Institution, October 18, 2017, accessed October 2 2018.

[xv] “Public Opinion Survey of Residents of Ukraine,” Center for Insights and Survey Research, October 2017, accessed October 3, 2018.

[xvi] “Economic Growth of Ukraine Depends on Completing Pending Reforms Quickly,” The World Bank Press Release, April 10, 2018, accessed October 3, 2018.

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