Everyone Loses

^{CHAPTER THREE} Breaking point

With all the fundamental disputes lurking just beneath the surface, the period of deceptive calm in the regional contestation could not last long. It came to an end in spectacular fashion in Ukraine, by far the largest and most strategically significant of the In-Betweens. Enmity over Ukraine set the stage for a crisis that drew in the great powers and transformed relations among them.

Ukraine is more populous than the other five In-Betweens taken together, second only to Russia among the former Soviet republics. The word Ukraine literally means ‘borderland’, and that is what it had again become by this time: surrounded by members of EU and NATO to the west and the EEU and CSTO to the north and east. The relatively Russia-friendly Viktor Yanukovych had replaced the Western-leaning Viktor Yushchenko as president in 2010, and shored up frayed ties with Moscow. But Yanukovych was not eager to throw his country unqualifiedly into Russia’s embrace, preferring to walk a tightrope between it and the West and collect as much rent as possible in the process. The rub was that both external patrons were now seeking irreconcilable commitments from him.

The election of Yanukovych muted geopolitical competition regarding Ukraine, particularly as it concerned NATO membership. But his early concessions to Moscow – the commitment to non-bloc status and the lease extension for the Russian Black Sea Fleet base – did not satisfy the Kremlin. It became clear in the first year of his presidency that Russia was going to advance on another front, geo-economics, seeking much greater sway over Ukraine than Yanukovych was prepared to give.

Despite the sizeable discount on gas Yanukovych obtained from the 2010 Black Sea Fleet deal, Ukraine was still paying more for gas than it could afford. After another contract dispute in the winter of 2008–09 that ended in a cut-off and Ukraine once again diverting supplies meant for Europe, Russia, unlike in 2006, had held firm for two weeks in the middle of a frigid winter. There was significant collateral damage – several East Central European countries had difficulty heating and powering their cities – but when the dust settled Kyiv had signed the first contract free of subsidised pricing, which by that point had cost Russia more than US$16bn.[1] The trouble was that Ukraine would need an overhaul of its energy-intensive industries and wasteful public utilities to be able to afford the price in that 2009 contract (even with the fleet-deal discount, Kyiv was paying double the 2008 cost in 2010).

Since such politically risky market reforms were not Yanukovych’s cup of tea, Moscow had leverage over the new president and was prepared to use it. Just weeks after the Black Sea Fleet deal, the Kremlin was said to have put on the table a proposal for Gazprom to acquire Naftohaz, Ukraine’s state-owned gas monopoly, in return for another discount.[2] Naftohaz is a cash cow for plugging holes in the government budget and lining the pockets of insiders. It has also been the tie that binds the EU to Ukraine, since it manages the transit of Russian gas heading across Ukraine to Europe. Yanukovych was not about to give that away. He did, though, sign early cooperation agreements with Moscow in the steel, chemical, shipbuilding, aviation and nuclear-power sectors. The Russians were pushing him very hard; Medvedev met him seven times in the first 100 days of his term. After the seventh meeting, an exhausted Yanukovych said, ‘we can’t go on like this’. Medvedev shot back, ‘maybe we can’t, but we must’.[3]

Most significant geo-economically, Moscow importuned Ukraine under its new leadership to become a member of the nascent Customs Union. Then-prime minister Putin did not mince words on this score during his first meeting with Yanukovych, issuing a public entreaty for Ukraine to ‘join the Customs Union’.[4] The Russian demand significantly upped the ante, as the Customs Union was much more far-reaching and binding than any of the previous Russia-led regional endeavours, most recently the SES. Partly this was about timing: the Customs Union got up and running the month of Yanukovych’s election. But Russia’s impatience seemed to be driven more by the growing geo-economic contest with the EU in the region. The Eastern Partnership had just been unveiled, and Ukraine had by now negotiated much of the text for an AA and the DCFTA within it. Locking in Ukraine’s Customs Union membership would have boosted Russia’s pet project and blocked Ukraine from proceeding with the EU deal. Moscow was not interested in allowing the Ukrainians to have their cake and eat it. The Kremlin meant to thwart the EU’s geo-economic expansion by expanding its own geo-economic sphere. Hence the Customs Union offer was presented as a binary choice – in or out – unlike prior initiatives that gave Ukraine a menu of options.

When Yanukovych rejected the offer, Moscow put forth tantalising carrots – a further discount on gas prices, and tariff benefits for key industries – at a time when the Ukrainian economy was still reeling from the 2008 economic crisis and the gas-price hike stemming from the 2009 contract.[5] Russian officials also frequently cited studies showing major economic benefits for Ukraine from Customs Union membership, and made claims that the DCFTA would cause it grievous economic harm.[6] In April 2011, Yanukovych tried to meet Moscow halfway, proposing a ‘3+1’ formula for the relationship.[7] Russia rejected the idea out of hand. As the head of the Customs Union Commission, Sergei Glaziev, said, ‘Outside of the Customs Union it will be impossible to make progress…. The only option for Ukraine is full participation in the work of the Customs Union. All other formulas have no basis to them.’[8] Kyiv was to halt its talks with Brussels in favour of immersion in Russia’s most ambitious geo-economic initiative since the collapse of the Soviet Union.

The Ukrainian leadership was unmoved. It initialled the AA in March 2012, leaving only technical and legal formalities before the signing ceremony. But on a political level, Ukraine’s relationship with the EU had begun to sour. A particular irritant was the sentencing of Tymoshenko, the former prime minister and Yanukovych’s arch-foe, to a seven-year prison term, on trumped-up charges. As EU rebukes for this blatant abuse of power grew vociferous, Ukraine seemed to waver in its preference for the AA over Customs Union membership. ‘Today’, the Ukrainian ambassador to Moscow said in November 2012, ‘we don’t say either yes or no [to Customs Union membership]’. But, he added, if Ukraine’s trade with the bloc grows, and the EU’s economic woes deepen, ‘the answer will more likely be yes than no’.[9]

Yanukovych’s government was divided on the issue. The president seemed to be mindful that the treatment of Tymoshenko had become a litmus test for the EU, and wanted to buttress his bargaining position with Brussels by demonstrating that he had other options, in keeping with the Ukrainian tradition of playing one party off the other. Some lesser officials, often those linked to industries that exported mostly to the EU, ruled out Customs Union membership, while others suggested it could be possible in the future.[10] Ukraine’s economic circumstances were on a downward slide, and Yanukovych and his ministers still coveted an extra gas discount from Russia to relieve the pain.

More important than these tactical considerations, Yanukovych’s waffling reflected the bedrock economic realities of his country. Ukraine’s trade was divided almost evenly between the EU and Russia. So Yanukovych’s attempt to avoid a binary choice between them was understandable, even if other motives were also in play. Unfortunately, neither the EU nor Russia offered him a way to do so. Speaking for the EU in December 2012, one official pronounced it ‘impossible for Ukraine to align with both [the EU and the Customs Union] at the same time. Ukraine should choose which path to take…. Even partial accession to the Customs Union… would be problematic.’[11] The next month, a senior Russian diplomat used more colourful language to make the same point from Moscow’s angle: ‘Ukraine wants to simultaneously maintain two vectors: both to join the EU [sic]… and to participate in the Customs Union, but only in those areas where it stands to gain. But things don’t work that way. You cannot be a little bit pregnant.’[12] A geo-economic confrontation was in the offing. Both the EU and Russia were less interested in preventing it than in prevailing in it.

Russia seemed to soften its position in May 2013, when Ukraine, while in the last stages of negotiations with the EU on the AA, signed a memorandum on cooperation with the EEC, granting Kyiv observer status. Yanukovych called European Commission president José Manuel Barroso the same day to reassure him that the memorandum did not contradict the AA. But Russia was not content with Yanukovych’s plan to integrate only to the extent that Ukraine’s EU commitments allowed. The very day the memorandum was signed, Glaziev said ‘Observer status is only granted to states that want to join our integration project…. Since we agreed to give Ukraine observer status… that means Ukraine intends to join our union.’[13] Ukraine had never spoken of such an intention.

Moscow was still pushing hard on Yanukovych – but its bottom line seemed to have shifted. Some observers claimed that Russia would still accept nothing less than full Ukrainian membership of the Customs Union (and subsequently the EEU). Certainly that was Moscow’s preferred outcome, but by 2013 it was no longer issuing ultimatums to Ukraine to join straight away. The heavy-handed pressure that began that summer came in the context of the impending signing of the AA, planned for the November summit of the EU and the In-Betweens (in EU-speak, the Eastern Partnership countries) in Vilnius. And if that went ahead, Ukraine would be forever lost for Russia-led integration efforts. Russia was now primarily concerned with forestalling that outcome and keeping the prospect of eventual integration open, rather than demanding immediate Ukrainian membership.

The instrument Moscow deployed was characteristically blunt. Beginning in July 2013, Russia imposed trade sanctions on Ukraine, first by cutting off imports of confectionery products, fruit, vegetables and poultry. It then hit steel manufacturers and other exporters with cumbersome new customs procedures. ‘De facto, there is a complete halt on Ukrainian exports’, the Ukrainian manufacturers trade group reported.[14] For several days the next month, the Russian authorities applied extensive customs checks to all Ukrainian imports, all but totally blocking them.

Although normal trade resumed in less than a week, the message of these actions was clear: if Kyiv were to proceed with the AA, it should expect a disruption in bilateral trade with Russia.[15] Specifically, Moscow threatened to scrap Ukraine’s trade preferences under the CIS’s extant free-trade pact, an effective increase in average tariffs of more than ten percentage points. It was estimated that this would have reduced Ukrainian exports to Russia by 17% per year, shaving off 1.7% of Ukraine’s GDP annually.[16] Russian spokesmen used a spurious economic argument to justify this threat as something other than crude coercion: they claimed that European goods would enter Ukraine duty free under the DCFTA, and then ‘flood’ the Russian market by exploiting CIS free-trade rules governing Russia–Ukraine commerce. As Putin said, ‘We say, it’s your choice… but keep in mind that we will be forced to defend our market.’[17] Perhaps such a risk existed on the margins, but rules of origin – the globally accepted benchmarks for determining the national source of a product – would have allowed the Russian customs authorities to distinguish between EU and Ukrainian goods in the vast majority of cases. Why repeatedly make an argument that most trade experts considered facetious? A charitable explanation is that many in Moscow made worst-case assumptions about the AA and DCFTA due to the lack of dialogue with Ukraine and the EU on the subject. Or, more likely, this talking point could have been a cover story for Moscow’s efforts to block the AA, which would certainly have redirected Ukraine’s trade away from Russia in the long term.

The Russian squeeze on Ukraine’s economy did not stop Yanukovych from pushing ahead with the AA; his government formally approved the final draft on 18 September. But furious wheeling and dealing was ongoing away from public view. Yanukovych knew that the EU was keen to have the AA signed at the November Vilnius summit and angled for concessions from Brussels in the final weeks. Despite voluminous evidence that Ukraine’s politics were becoming more authoritarian and its political economy increasingly monopolised by Yanukovych’s family and inner circle, the EU was still ready to sign the AA with Kyiv if it allowed Tymoshenko to leave prison for medical treatment in Germany.

The EU’s focus on the Tymoshenko case had blown its significance out of proportion. Her imprisonment after a politically motivated prosecution was just one example of broader failings in Ukrainian democratic governance that had become more acute under Yanukovych but long predated him. A weak judicial system was chronically subject to manipulation by patrons in the executive branch and the business elite. But Brussels’ need to emerge victorious in what was now an open geo-economic bidding war with Moscow trumped the principle that greater integration should only be offered in return for reform. The conditionality for signing the AA was thus reduced to a single symbolically rich but systemically insignificant step.

Brussels even dropped that residual demand in the end. In the weeks before the Vilnius summit, Yanukovych seized on the EU’s visible eagerness to move ahead, with the apparent expectation not only that Brussels would give up on Tymoshenko, but that it would also provide financial compensation to offset the cost of Moscow’s expected retaliation, which he claimed would amount to US$160bn. While the EU declined to pay the financial ransom, it relented on Tymoshenko. Poland had pushed for the concession, arguing that if Ukraine did not sign the AA, it was just a matter of time before Moscow re-established control over the country. ‘Never again do we want to have a common border with Russia’, the Polish president is said to have informed Chancellor Merkel.[18]

But that was not enough for Yanukovych. Despite the EU’s last-minute concession on Tymoshenko, the Ukrainian cabinet issued an order suspending preparations to sign the AA just a week before Vilnius. The same order called for the establishment of a trilateral commission with Russia and the EU to discuss trade relations and the renewal of active dialogue with the countries of the Customs Union on trade and economic issues. While Yanukovych did not stop proclaiming his commitment to European integration, it was clear that the AA would not be signed at Vilnius.

The EU refused to back down. Barroso and the president of the European Council, Herman Van Rompuy, brought two copies of the AA to Vilnius in a last-ditch attempt to seal the deal in person with Yanukovych.[19] When even that could not deliver Yanukovych’s signature, European leaders publicly browbeat him during the evening reception, with the cameras rolling. These awkward moves created the distinct impression that motives other than reform and integration were driving EU policy. Washington, having observed the AA negotiations from the sidelines, was in no position to prevent this train wreck.

A few weeks after the meltdown at Vilnius, Putin received Yanukovych in Moscow to celebrate his apparent triumph over the EU. It was an enormously expensive victory: Russia promised to purchase US$15bn in Ukrainian eurobonds and to cut the gas price for Ukraine by more than US$130 per thousand cubic metres, or roughly one-third. At a press conference following the meeting, Putin said, ‘To reassure everyone: we did not discuss the issue of Ukraine joining the Customs Union.’[20] Having pushed for full Ukrainian membership of the Customs Union several years earlier, Russia now was prepared to pay a high price just to block the EU agreement and keep the door open for the future.

Yanukovych’s calculus remains murky. Perhaps he never intended to sign the AA and simply wanted to garner as many concessions as possible from Russia.[21] A less cynical take is that he did want to go ahead with the AA – until Moscow made it clear that there would be a price to pay for doing so and the EU refused to pick up the tab. Despite the crudeness of Yanukovych’s horse-trading, his predicament was ultimately a product of zero-sum jousting between Russia and the EU, which led them to pose a binary choice to his country. Kyiv made plain that it did not want to choose, but was ignored. Even its public call for trilateral talks went unanswered until much later.

Russia’s victory was short-lived. Yanukovych returned from Moscow to find a large crowd occupying Kyiv’s central Maidan nezalezhnosti (Independence Square), the epicentre of the Orange Revolution in 2004. A group first gathered there in the days following Vilnius to protest Yanukovych’s about-face on the AA. But neither that agreement, a highly technical, 2,100-page document that mostly covers distinctly uninspiring subjects such as fishery regulations, nor even a desire to join the EU (supported by only 37% of the population at the time), would have produced the crowds that subsequently emerged.[22] Had Yanukovych allowed those small, peaceful demonstrations to run their course, they would probably have petered out and the protesters returned home. However, his interior ministry moved to disperse the crowd forcefully; the riot police were particularly hard on students camped out on the square. The scenes of brutality inspired more than 500,000 people to take to the streets the next day. Despite the multitude of EU flags on display, the focus of the protests was now on ousting Yanukovych.

In the subsequent weeks, the government and a far-right nationalist vanguard among the protesters, who, unlike the peaceful majority of the diverse crowd, had taken up firearms, Molotov cocktails and improvised weapons, escalated the violence. As pandemonium unfolded in Kyiv, Russia and the West, reverting to type, sought to influence events to gain advantage in their contest over Ukraine, with both geo-economics and geopolitics now in play. The Kremlin pushed Yanukovych to crack down harder on the protesters. Its hand could be detected in a packet of repressive laws he rammed through parliament in mid-January, many of them modelled on analogous Russian legislation.

US and EU leaders and diplomats met with and called Yanukovych and his senior ministers dozens of times to urge them to compromise with the Western-leaning opposition and avoid mayhem on the Maidan. US officials were deeply involved in trying to forge a settlement to the crisis; a leaked recording of a conversation between two of them exposed an effort to pick which opposition politicians would sit in a new government. The officials tried to seal the deal, which in the end fell through, before Russia had time to react.[23] Given that the recording was, in all likelihood, made and leaked by Russian operatives, it is safe to assume that the Kremlin believed the US was mounting another regime-change operation, that is, regional geopolitics as usual. Brussels tried to take advantage of the pro-EU leanings of the protesters, mounting a rearguard action to give Yanukovych another chance to sign the AA (on the premise that doing so would satisfy the crowds), and this time dangling the financial assistance it had denied him two months earlier.[24]

After a particularly gory series of clashes between protesters and police that left dozens dead in mid-February 2014, the Ukrainians and the outside powers took a step back from the abyss. Talks between Yanukovych and the nominal leaders of the Maidan protest movement – it would become clear later that they were not in fact leading the crowds, but being led by them – began in earnest. During three days of negotiations, Yanukovych and three opposition leaders – Oleh Tyahnybok, Vitaliy Klichko and Arseniy Yatsenyuk – hammered out an agreement mediated by the French, Polish and German foreign ministers and a Russian presidential representative. Signed on 21 February, the pact stated that the 2004 amendments to the constitution, which placed limits on the president’s powers and had been revoked in 2010, would be restored within 48 hours; a national unity government would be formed within ten days; all illegal weapons were to be surrendered; presidential elections would be held under reformed electoral laws no later than December 2014; and the occupations of streets and buildings would end.[25] Participants reported that Putin called Yanukovych during the talks to urge him to agree to the deal.[26] In what looked like a Russia–West truce, Putin and US President Obama spoke on the phone that night and agreed on the need to implement the arrangement in full and without delay.[27] On paper, the 21 February agreement had elements of a ‘pacted’ transition, a form of political transformation that is generally more peaceful and democratic than forcing incumbents out of office. It also had the benefit of endorsement by the external powers that had spent much of the previous six months locked in a tug of war over Ukraine.

However, the agreement collapsed immediately, largely due to domestic factors, and became another settlement-that-wasn’t. Within hours of the signing, Yanukovych’s authority buckled, as police deserted their posts throughout the capital. Protesters freely entered government buildings that riot police had secured hours earlier. Yanukovych fled Kyiv the next day and parliament voted 328–0 to remove him from office – an extra-constitutional act since there had been no statutory impeachment process – and to call new elections. Several days later, he surfaced in Russia.

The Maidan Revolution upended the balance of power among the macroregions of Ukraine. Of Yanukovych’s ministers, 75% hailed from the southern and eastern oblasts (provinces); in the new government, 60% came from the four westernmost oblasts (where only 12% of Ukraine’s population resides) and only two ministers were from the south and east.[28] The speaker of the Verkhovna Rada (the parliament), a prominent Yanukovych ally, quit, and Oleksandr Turchynov, an MP known for his hard-line nationalist positions (and an associate of Tymoshenko, who was released from prison on 21 February), was selected to replace him. As speaker, he by law became acting head of state until a new president was elected. Within days, the Rada confirmed a government headed by Yatsenyuk, a Western-oriented politician; the other ministerial portfolios were divvied up among his party, Tyahnybok’s far-right Svoboda party and representatives of the Maidan protesters. The first steps of the post-revolutionary Rada merely reinforced the impression that southern and eastern Ukraine (with their sizeable Russian-speaking minorities), and not just Yanukovych, had been pushed out of power. Two days after Yanukovych’s fall, the Rada unwisely voted to repeal a 2012 law that allowed oblasts under certain conditions to use Russian or any other of Ukraine’s minority languages for official business, in addition to Ukrainian. Although Turchynov did not sign the repeal in the end, its passage alienated a substantial portion of the population.

Western leaders neither voiced concerns about these developments nor sought a new accord to replace the 21 February agreement, some provisions of which had now been overtaken by events. The day after the change in power, the US declared its ‘strong support’ for the new authorities.[29] The EU foreign-policy chief, Catherine Ashton, travelled to Kyiv and stated that ‘the situation has moved on’ and therefore the 21 February pact could be disregarded.[30] Behind the scenes, some Western officials were celebrating the change in government in Kyiv, and saw no need to deal Moscow in, as they had on 21 February when Yanukovych was still in power. The then-US ambassador to Russia, Michael McFaul, later said he received numerous ‘high-five emails’ from colleagues in the days after the revolution.[31]

The cause for jubilation in Western capitals was their seeming come-from-behind victory in the contest with Russia over Ukraine. The new government was bent on reversing Yanukovych’s relatively Russia-friendly foreign policy and resurrecting the EU AA. The elements of the 21 February pact that remained relevant, particularly the formation of a national unity government, the clearing out of protesters from occupied buildings and the confiscation of unregistered firearms, fell by the wayside. Moreover, no high-level outreach with Russia was attempted in the critical days following Yanukovych’s fall; Obama did not call Putin again until 1 March. After the interlude of cooperation on 21 February, the zero-sum dynamic was once again ascendant.

Unlike in the West, there were no high fives in the corridors of power in Moscow. Russian leaders insisted on the implementation of the 21 February agreement and cast aspersions on the new government as illegitimate and put in place by an unconstitutional coup d’état.[32] The Russian ambassador to Ukraine was withdrawn. Putin and his advisers seem to have concluded that the collapse of the 21 February agreement resulted in part from a Western plot to install a loyal government in Kyiv that would move Ukraine toward the EU and even NATO. While no Western conspiracy in this simplistic form existed, the truth was not much better for Russia: individuals from the customary hotbeds of Ukrainian ethno-nationalism dominated the new administration; one in three ministers belonged to the far-right (and virulently anti-Russia) Svoboda party, and these authorities had come to power thanks in part to armed nationalist groups that still controlled government buildings in central Kyiv.

Within days, Russia struck back with a vengeance, as Putin set out to pry victory from the jaws of defeat by challenging the political order that had emerged after the Maidan Revolution. He had by this time run through all the standard plays in Russia’s foreign-policy playbook with Ukraine: economic coercion (the trade war in July–September), lavish economic assistance (US$15bn in assistance for Yanukovych in December) and diplomacy with the West (the 21 February agreement). None of these had worked. So Putin reached for the only tool he had yet to deploy. To force the new Ukrainian authorities and the West to take Russia’s interests into account, he decided to use the Russian military, now battle-ready after intensive reform and modernisation.

On or around 25 February 2014, special forces, paratroopers, and other men and materiel arrived in Crimea to bolster the sizeable contingent stationed there as part of the Black Sea Fleet, while other Russian forces deployed near the long land border with Ukraine and began large-scale drills. Russian commandos, the insignias removed from their uniforms, fanned out across the Crimean peninsula and began taking over Ukrainian military facilities and government buildings, including the Crimean parliament in the provincial capital of Simferopol, and setting up roadblocks.[33] On 1 March, Putin obtained unanimous approval from the upper house of Russia’s parliament to deploy the armed forces on the territory of Ukraine ‘until the normalisation of the socio-political situation’ there.

If Putin had expected the invasion of Crimea and build-up along the border to force a return to something like the 21 February agreement, he was disappointed. Although the government in Kyiv was terrified, it refused a compromise on Russia’s terms. When the speaker of the Russian lower house, Sergei Naryshkin, called Turchynov to convey an ultimatum from Putin, the acting Ukrainian president responded by calling Naryshkin a war criminal, rather than agreeing to concessions.[34] While holding out for the prospect of an ‘off-ramp’ (i.e., de-escalation) if Moscow pulled back its forces, Western governments focused on condemning Russian violations of Ukrainian borders and threatening consequences, eschewing high-level diplomacy with the Kremlin that might have defused the crisis.

Russia’s incursion into Crimea had a raft of other unintended effects, setting off potent forces that among other things constrained its own policy. It emboldened pro-Russian politicians in Crimea and evoked latent separatist sentiment among the majority of the population on the peninsula. It also brought to the fore Russians’ attachment to Crimea; surveys in 2013 had shown that more than half of Russian citizens considered Crimea to be part of Russia, not Ukraine.[35]

This combination of knock-on effects of the invasion led to an improvised annexation operation. In late February, the Crimean authorities, defying Kyiv, called a referendum on greater autonomy, to be held in May. Within less than a week, the date was moved forward twice and the question on the ballot changed. Voters were now asked whether they preferred to join Russia or remain part of Ukraine with enhanced prerogatives. While Putin had publicly reaffirmed Ukraine’s territorial integrity as late as 4 March, within days the forces unleashed by the invasion left him with a choice of capitulation or annexation.[36]

In a hastily organised plebiscite conducted on 16 March with Russian special forces on guard near ballot stations, 97% of voters allegedly supported the option to join Russia, a result so preposterously lopsided as to further discredit the referendum, which was held in flagrant violation of the Ukrainian constitution. Moscow then moved quickly to incorporate the peninsula into Russia’s federal system. Obama declared that the referendum would ‘never be recognized by the United States and the international community’, a statement that echoed widespread sentiment in the West.[37]

On 18 March, Putin delivered a blistering speech before a gathering of parliamentarians and political luminaries to announce Crimea’s ‘reunification’ with Russia. He argued that the Soviet government’s transfer of the peninsula to Ukrainian jurisdiction in 1954 had been illegal and arbitrary. In 1991, when Crimea became part of independent Ukraine, ‘Russia felt that it was not simply robbed, it was plundered’. Russia, he said, had ‘hung its head and resigned itself to this situation, swallowing its pride. Our country was going through such hard times then that it was incapable of protecting its interests. However, the people could not reconcile themselves to this outrageous historical injustice.’ For years, the Russian government ignored their pleas. But, he said, ‘everything has its limits’. After ‘nationalists, neo-Nazis, Russophobes, and anti-Semites’, with approval from the West, took power during the ‘coup’ in Kyiv, Russia had to act:

Putin then launched into a diatribe against Western policies since the end of the Cold War, particularly the approach toward Russia and its neighbourhood:

The Russian president had thrown down a gauntlet. Within a week, the ink was dry on the legal formalities of the annexation and all armed forces still loyal to Ukraine had left the peninsula (as many as two-thirds, beginning with the commander of the Ukrainian fleet there, defected to Russia).[39] In one fell swoop, Russia had rewritten the rules of the regional contestation, casting doubt on its broader relationship with the West and ties with its neighbours.

Whereas in the past it had allowed for notes of ambiguity and compromise, Russia now presented Western interlocutors with rough-edged demands. In crisis talks on 15 March, on the eve of the Crimea referendum, Foreign Minister Lavrov gave US Secretary of State John Kerry a draft text of a ‘Friends of Ukraine’ international action plan.[40] The document contained five actionable points: the fulfilment of the pledges contained in the 21 February agreement to disband armed groups and de-occupy buildings; a new constitutional order for Ukraine, providing for, inter alia, neutrality, federalism and the direct election of oblast governments with significant new powers (including on economic policy and trade links with neighbouring countries); the elevation of Russian as an official state language along with Ukrainian; a new round of regional and national elections to take place after the constitutional reform; and recognition of the right to self-determination of the people of Crimea ‘in accordance with the freely expressed will of its population as manifest in the 16 March referendum’. There were to be EU, US and Russian guarantees of all the above, which was to be codified in a resolution of the UN Security Council. The core objectives – neutrality, undisturbed economic ties with Russia and ‘federalisation’ of Ukraine to ensure the pro-Russian oblasts have a veto over decision-making in Kyiv – have remained unchanged ever since. The Russians now wanted ironclad guarantees regarding Ukraine’s geopolitical and geo-economic future. Rejecting the West’s geo-ideational emphasis on the unalloyed right to choose, Russia wanted the deal clinched by the great powers and imposed on Ukraine.

In the wake of the Crimea annexation, the West and Russia effectively doubled down on the very policies that had precipitated the crisis in the first place. The annexation had failed to further Moscow’s objectives as set out in Lavrov’s action plan of 15 March 2014. So Russia seized on a wave of anti-Maidan, anti-government protests that were now breaking out across southern and eastern Ukraine. After local activists, many of them voicing separatist slogans, seized administrative buildings in Donetsk, Luhansk and several smaller towns in the two eponymous oblasts, declaring themselves the Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LNR), the Ukrainian government ordered a military assault on them under the banner of an ‘anti-terrorist operation’. Initially, it was haphazard and underpowered, leaving volunteer paramilitary battalions to take the lead. A motley crew of Russian civilian volunteers along with special forces and operatives streamed across the border, adding fuel to the fire. The Kremlin also turned up the economic heat by rescinding not only the gas discount accorded to Yanukovych in December but the earlier price cut traded for the extension of the lease on the Black Sea Fleet base in 2010, and demanding prepayment for the following month’s gas delivery.

Russia continued playing the military card. The border-area drills were transformed into a sustained build-up of a strike force estimated at the better part of 50,000 strong. Russia could now invade its neighbour at a moment’s notice. It also sent more sophisticated weapons across the border. Anti-aircraft systems proved particularly lethal, leading to the grounding of the Ukrainian air force after several planes were shot down. Russia was resorting to increasingly destructive means to get its way.

Kremlin statements telegraphed an interest in sowing chaos. In mid-April, Putin declared, ‘We believe that we ought to do everything we can to help these people [in southern and eastern Ukraine] defend their rights and independently determine their fate…. The essential issue is how to ensure the legitimate rights and interests of ethnic Russians and Russian speakers in the south and east of Ukraine.’ He ‘reminded’ the audience that the Donbas and other oblasts were part of the Russian Empire, and ‘were given to Ukraine in the 1920s by the Soviet government. Why they did this, God only knows.’[41] Russia was unsubtly egging on anti-Maidan sentiment and encouraging destabilisation. Given the implications of Putin’s questioning of ownership rights over much of Ukraine’s south and east, the build-up on the border, and the lightning-fast evolution of the Crimea operation, neither Kyiv nor Western capitals could have any degree of certainty about Moscow’s next move.

In the meantime, the US and the EU stepped up support for the newly installed authorities in Kyiv. Days after the revolution, NATO agreed on measures to bolster its partnership with Ukraine. Obama received Yatsenyuk at the White House, a first for a Ukrainian prime minister, and pledged backing for his government, including a US$1bn loan guarantee and nearly US$200m in aid. Vice President Biden soon flew to Kyiv, the first of several visits, to reinforce US support for Ukraine as the government mounted the counter-attack against the separatists.

The EU granted Ukraine preferential access to its markets, a unilateral implementation of the EU’s commitments to lower tariffs under the DCFTA. By removing 95% of EU customs duties on imports of industrial goods from Ukraine and all tariffs on agricultural produce, Brussels was effectively granting hundreds of millions of euros of assistance. The EU also provided significant transfers to the Ukrainian government budget. By the end of June, Kyiv had signed the AA. Most importantly, the International Monetary Fund (IMF) approved US$17bn in loans for Ukraine.[42] A first instalment of more than US$3bn was made available immediately, shoring up the country’s accounts.

The declared strategic goal of all of this support was to create a reformed, secure and Western-integrated Ukraine. In other words, the plan was to deepen previous policies in order to create what the Kremlin would inevitably consider a geopolitical and geo-economic defeat in Ukraine. From the Kremlin’s perspective, in the aftermath of the Crimean annexation the US and EU had declared their intention to recreate the very conditions that led Moscow to invade the peninsula in late February.

Concurrently, the West and Russia began a sanctions war. There was a diplomatic push to isolate Russia, including by kicking the country out of the G8 grouping, shutting down the NATO–Russia Council and suspending EU–Russia summits. The day after the Crimea referendum, the US and the EU (followed soon afterwards by Norway, Switzerland, Canada and Australia) began the first in a series of economic-sanction designations for individuals and corporate entities.[43] The individuals’ assets were frozen, transactions with them were made unlawful and they were banned from travel to the sanctioning country or group of countries. The individuals sanctioned included several groups: a range of Russian officials, military officers, MPs and tycoons considered close to Putin; Russian-appointed functionaries in Crimea; members of the former Yanukovych government; and leaders of the DNR and LNR. Sanctioned entities – initially Crimea-based firms and a range of companies, including several banks, majority-owned by sanctioned individuals – had their assets frozen, and sanctioning-country-based firms were barred from doing business with them. The list of sanctioned individuals and entities grew into the triple digits by 2016. Within a week of the first sanctions announcement, the now G7 and the EU threatened to move to general sector-wide restrictions on Russia if Moscow continued to destabilise eastern Ukraine.[44] Markets and investors were forced to price in the risk that governments would act on the threat. The rouble and the Russian stock-market index dropped precipitously. The US subsequently announced a suspension of licensing for exports and re-exports to Russia of defence and dual-use items.[45]

The stated purpose of these salvos was, Obama said, ‘not to punish Russia; the goal is to give them an incentive to choose the better course, and that is to resolve these issues diplomatically’.[46] From the Kremlin, the sanctions looked more like economic warfare intended to inflict pain and even destabilise the country. It was true that some of the choices of targets were hard to square with Obama’s dictum. The very first US sanctions list included, in addition to Ukrainians and Russians involved in the crisis, the MP who authored a notorious 2012 law banning the adoption of Russian children by Americans but had nothing to do with Ukraine. The belligerent language some US officials used cemented the view in Moscow that Washington wanted to hurt Russia, not help Ukraine. In testimony before the US Senate about the sanctions, Assistant Secretary of State Victoria Nuland warned that ‘unless Putin changes course, at some point in the not-too-distant future, the current nationalistic fever will break in Russia’. ‘When it does’, she went on, ‘it will give way to a sweaty and harsh realization of the economic costs…. Russia’s citizens will ask: What have we really achieved? Instead of funding schools, hospitals, science, and prosperity at home in Russia, we have squandered our national wealth on adventurism, interventionism, and the ambitions of a leader who cares more about empire than his own citizens.’[47] Many in the Russian elite, as Sergei Karaganov of the Higher School of Economics in Moscow put it, considered this ‘a de facto declaration of political war’.[48]

As the conflict in eastern Ukraine intensified, the US imposed sanctions that were harsher and more sophisticated than previous measures. In July 2014, the Treasury Department prohibited the financing of debt with a maturity of more than 90 days for several large Russian banks. It was initially unclear whether Brussels would follow suit, as Europe’s extensive economic ties with Russia meant that the blowback from sanctions would be significantly greater for EU member states. Yet the downing of a Malaysia Airlines passenger jet over the Donbas on 17 July altered the political dynamic in Europe. As best we know, flight MH17 was shot down either by a Russian army unit or by rebels who thought they were targeting a Ukrainian military plane.

Putin’s lack of contrition and the various denials of culpability by the Russian government forced the EU governments’ hand. A week after the crash, Brussels imposed similar limits on Russian financial institutions’ access to European capital markets, banning the export of defence and dual-use technology to Russia and keeping the country from acquiring ‘sensitive technologies’ in the oil sector. Over the following weeks, the US and the EU added several financial institutions to the debt-maturity limits list and tightened the limits from 90 to 30 days. The US also issued a supplementary directive forbidding the export of goods, services and technology ‘in support of exploration or production for deepwater, Arctic offshore, or shale projects’ in Russia.[49] The EU soon matched this step. As a result, ExxonMobil announced in September that it would wind down its operations in the Kara Sea, where the company had been participating in a joint venture with Russian state-owned energy company Rosneft. Economic ties between Russia and the West built up meticulously over 25 years were rent asunder in a matter of months.

On 7 August 2014, Russia reacted with an import ban on agricultural goods and foodstuffs from the US, the EU and other countries that had imposed restrictive measures on it. These sanctions were enacted under the aegis of ‘import substitution’, an idea that became a rallying cry for Russian officialdom with the domestic audience. While the ban provided new opportunities for some Russian producers, its main effect in the short term was inflationary. It also hit the bottom line of the politically well-connected agricultural sector in Europe.

Much like the interaction in the region between Russia and the West before 2014, the diplomatic response to the Ukraine crisis was almost an afterthought. Following their meeting in March, Kerry and Lavrov did not reconvene until a month later when, with the EU’s Ashton and the acting Ukrainian foreign minister, they issued a joint statement in Geneva calling for an end to the carnage in the Donbas.[50] Regrettably, the statement had no impact on the fighting. With the exception of leader-level and minister-level phone calls, the only events during the next four months that resembled negotiations were side meetings during the 70th anniversary of D-Day in early June.

When talks did occur, little progress was made. Western leaders, pushing their geo-ideational case, argued that the root cause of the crisis was Russia’s aggression against Ukraine that had begun in late February when its people made their choice for a new political order. The West demanded an end to Russia’s belligerence and expected it to respect the will of the Ukrainian people. There was no appetite to negotiate with Moscow about that. As Obama said in July 2014:

He and the Europeans insisted on a cessation of Russian aid to the rebels and a pullback of the Russian troops now deployed along the border. While legally and morally justified, this demand was not a viable basis for talks; Moscow was not going to comply, since doing so would have allowed Ukrainian government forces to crush the insurgency. Russia was not prepared to permit the restoration of government control in the Donbas until it got a deal along the lines of the 15 March document. And neither the West nor Kyiv was willing to negotiate on these terms. While abjuring such a compromise, the West was also – understandably – not ready to escalate to the level required to shake Russia’s determination to pursue its objectives.

Russia’s actions in this period constituted a major roadblock to a diplomatic resolution of the crisis. The annexation of Crimea and stoking of the insurgency in eastern Ukraine not only made dealing with Moscow an order of magnitude more politically fraught; it also forced a reassessment of Russia’s intentions in the West. Western leaders began to question whether Putin’s ambitions extended beyond Ukraine; Russia’s unpredictability was now seen as a huge security problem for the West itself. Uncertainty about Russia’s intentions was compounded by the cognitive dissonance in the interactions between Russian officials and their Western counterparts. By late spring, it became clear that talks at the ministerial level were largely pointless. Two days after signing the Geneva joint statement in April, Lavrov repudiated the document and his Western negotiating partners in an English-language interview.[52] US officials drew the conclusion that his ‘wings had been clipped’ because he had not been given a clear mandate and had unwittingly crossed a red line.[53] A similar scenario unfolded after Economic Development Minister Aleksei Ulyukaev made a concession in talks on Ukraine’s DCFTA that autumn.[54] Putin had reduced the decision-making group on Ukraine to himself and a few close advisers.

But talking directly to Putin also yielded little. The Ukrainian, US and EU leaders wanted to discuss a pull-out of Russian troops and an end to the conflict in the Donbas; Putin consistently denied that there were any Russian soldiers in Ukraine. He was likely doing so to maintain the veneer of legality and to give himself a way of withdrawing without retreating. Putin’s two main opposite numbers, Obama and Merkel, were infuriated by what they saw as his lies and penchant for long-winded tirades. Both are result-oriented, pragmatic politicians. So when Obama’s phone calls with Putin were dominated by complaints about threats to Russian speakers in eastern Ukraine from what the Russian president called the ‘fascists’ in Kyiv, and Merkel’s tête-à-tête with him at a G20 meeting began with a two-hour litany of Western betrayals, both began to lose interest in further dialogue.[55] However, Putin was not simply being obstructionist. He wanted to talk to Obama and Merkel about a new geopolitical and geo-economic settlement for Ukraine, and perhaps the regional architecture more broadly. They wanted Russia out of Ukraine. In other words, there was no common ground.

With other leaders, Putin was outspoken and even thuggish. In August, he told Ukrainian President Petro Poroshenko (who had been inaugurated in June) that ‘if he really wanted to invade, he had 1.2m soldiers armed with the world’s most sophisticated weaponry. They could be in Kyiv in two days – or in Tallinn, Vilnius, Riga, and Bucharest.’[56] In a call with Barroso the following month, he employed similarly inflammatory rhetoric, reportedly saying he could ‘take Kyiv in two weeks’ if he wanted to do so.[57] While there was some truth to Putin’s statements, and one can sense the frustration that must have prompted them, the effect was to aggravate tensions.

Without the prospect of a diplomatic resolution, Moscow had to significantly increase its involvement on the battlefield, since its rebel proxies in the Donbas were increasingly outmanned and outgunned. By the end of August, the Ukrainians were about to encircle the two oblast capitals and retake border crossings, which would have finished off the insurgency. The US administration was split between those who feared Russia would respond to such a move with overwhelming force and others who were ‘saying [the Ukrainian forces] should take one of those towns and then sue for peace, to prove to [Putin] that he can’t win’.[58] While the debate between these groups raged inside the Washington Beltway, the US was effectively sitting on the sidelines, neither deploying its significant leverage to push the Ukrainians to end the offensive nor encouraging them to continue it.

Just as the separatist forces seemed on their last legs, Russia intervened more directly. Backed by the Russian military, including artillery shelling from across the border and a 3,000-troop reinforcement, the separatists counter-attacked, moving south and capturing towns and cities towards the Sea of Azov. Ukraine’s army suffered a calamitous setback in the town of Ilovaisk, when its forces were caught in a pincer by units wielding advanced weaponry, widely assumed to be Russian regulars. Hundreds of Ukrainian soldiers were killed or went missing.

The Russian hammer blow made it clear to Kyiv that outright military victory over the separatists was impossible. It more than anything drove the Ukrainians to the negotiating table – or, strictly speaking, the long-distance telephone, as Poroshenko and Putin hashed out a deal in several hours-long conversations in late August and early September. It was formalised in a 12-point protocol signed in Minsk on 5 September. The agreement called for, inter alia, a ceasefire monitored by the OSCE; the decentralisation of power within Ukraine, one point of which would be a law on ‘special status’ for rebel-held areas of the Donbas, giving them powers similar to those called for in the document of 15 March; a permanent OSCE presence along the Ukraine–Russia border; release of all hostages and prisoners; an amnesty law for combatants; early local elections in rebel-held areas; and the withdrawal of unauthorised armed groups and equipment. Together with a more detailed memorandum signed later that month, this set of arrangements came to be known as Minsk I. The basic trade was peace and withdrawal for Ukraine’s acceptance of the central demands of the Russian 15 March document.

Although many of the provisions of Minsk I were never put into effect, it did prompt a sharp decline in violence, from 756 fatalities, or 42 people per day, in the 18 days before the agreement was signed, to 331 deaths in the month following, or about 11 per day.[59] Hundreds of captives were also exchanged. Nonetheless, fighting continued in hotspots like the Donetsk airport, and both sides used the respite to reinforce their positions on the front lines. None of the political components of the deal were implemented, while endless diplomatic conclaves debated the meaning of the vague commitments that had been made. Moscow decided to force the issue again in early 2015, when the separatists, backed by a second direct Russian intervention, once again forced Ukrainian government troops to flee. By early February the separatists had gained control over an additional 300 sq km of terrain, including what was left of the Donetsk airport.

In a bid to end the renewed violence and avert a broader war, Merkel and French President François Hollande visited Kyiv and Moscow in early February to lay the groundwork for new talks, which were held in Minsk on 11–12 February. After 16 hours of non-stop negotiations, Poroshenko, Putin, Merkel and Hollande finalised a list of ‘implementing measures’ to enact the principles of Minsk I. This 13-point document came to be known as Minsk II.

The new deal overlapped significantly with Minsk I. But it reflected the separatists’ and Russians’ gains on the battlefield, which Putin used to garner several key concessions from Poroshenko. Reform of the Ukrainian constitution was made the lynchpin of the peace process. Furthermore, the agreement was much more specific than the earlier document about how to sequence the provisions. In particular, Russia would only have to return control of rebel-held areas of the border after Ukraine ratified the constitutional amendments.

Minsk II had serious shortcomings. In the field, the most significant were the lack of an agreed armistice line and an effective instrument to enforce the ceasefire and weapons withdrawal. The OSCE monitoring effort was, by design, not a peacekeeping mission, in contrast with initiatives in analogous conflict zones. Staffed by unarmed civilians and not uniformed military personnel, it was unable to ensure compliance.

These shortcomings manifested themselves almost immediately in the battle for Debaltseve, a transportation hub between Donetsk and Luhansk cities. Five days after Minsk II, Ukrainian government troops took heavy losses in a haphazard exit from the town. Estimates of casualties varied, ranging from one dozen to hundreds, and 100 or more Ukrainian soldiers were taken prisoner. The UN reported that 500 civilians were found dead in their homes.[60] Following the capture of Debaltseve and surrounding territory by the separatists, there has been a stable ‘line of contact’ demarcating rebel-controlled from government-controlled areas. It is a jagged semicircle bounded by the Russian border to the east and tracing far north of Luhansk city, northwest of Horlivka and Donetsk city, and west of Novoazovsk, on the Sea of Azov (see map 4: Separatist-controlled territory in eastern Ukraine, November 2016). It marked off slightly less than one-third of the territory of the two oblasts.

While violence did subsequently subside, the conflict-resolution process soon stalled. The stalemate resulted from divergent understandings of where the process should lead. For the Kremlin, Minsk II represented the practical implementation of Moscow’s stated objective of reworking Ukraine’s institutions in order to cement Russian influence over Kyiv, thereby denying the West geopolitical, geo-economic and geo-ideational victory. Minsk II itemised the enhanced rights for the separatist areas (such as circumscribing Kyiv’s control over law enforcement there) and compelled Kyiv to negotiate a constitutional reform with the separatists that codifies autonomy for their fiefdoms inside Ukraine. Based on the published version of the constitutional amendments proposed by the separatist negotiators, all of the same demands in the 15 March document, including neutrality and enhanced status for the Russian language, were still alive.[61]

Ukraine, having committed through its president to some form of this outcome at Minsk, has refused to follow through on it. Only the parliamentary opposition, mostly one-time members of Yanukovych’s Party of Regions, has voiced support for fulfilling Minsk II in its entirety. Denunciations of the agreement as unsatisfactory or even treasonous have been far more commonplace among the political elite. Some favoured biding time until the Donbas can be retaken by force, a scenario referred to as the ‘Croatian option’, a reference to Croatia’s forceful retaking of the Srpska Krajina in 1995. Others said Ukraine should press forward with some elements of Minsk II, but only enough to disprove claims that Kyiv is responsible for its failure.[62]

In the short term, Kyiv’s tacit preference was for a frozen conflict: dodging the political aspects of Minsk II, but ending the active fighting while severing rebel-held Donbas from the rest of the polity. In this scenario, the line of contact would become a de facto border, like the inner German border during the Cold War. The influence of the Donbas over politics in the capital would be eliminated, and thus Moscow’s sway over Kyiv would be minimised. Russia would have to foot the bill for the reconstruction effort and for the costs of preventing a socio-economic implosion in its new protectorate.

The problem for Kyiv is that this frozen-conflict scenario is a non-starter for Moscow. As an authoritative Russian political insider put it, ‘To get Donbas and lose Ukraine represents a defeat for the Kremlin. In that case, it would be better not to have started [supporting the insurgency] in the first place.’[63] Following this logic, Russia has kept up its support for the armed rebels in the Donbas – and for the region’s civilians – while increasing its command and control. This led, as of late 2016, to a conflict more aptly described as simmering than frozen, defined by continuous low-level fighting punctuated by periodic upticks in violence. The ensuing security challenge overloaded the Ukrainian government’s political bandwidth and absorbed a disproportionate share of an already hard-pressed budget. As a result, the Ukrainian economy remained in disarray, and few investors had the fortitude to return. But Moscow calibrated the fighting so as not to spark an all-out war or a more forceful Western response.

By supporting the Donbas insurgency, Russia has effectively been able to keep Ukraine off-kilter. But it is no closer to getting the political settlement it wants. Despite several follow-up Russia–France–Germany–Ukraine summits and numerous ministerial meetings, the most concrete result since the signing of Minsk II was an agreement in December 2015 to extend the deadline for implementation of the deal into 2016. The package of constitutional reforms that would partially fulfil the central political requirement has not made it through the Ukrainian parliament and there is no agreement on procedures for conducting local elections in the conflict zone. Moreover, the amnesty provision has not been passed, and Kyiv has enforced an economic blockade of separatist territory, as well as severe restrictions on freedom of movement across the line of contact. An embattled Poroshenko is loath to expend political capital on unpopular steps that would end up empowering the Donbas, the traditional stronghold of his political opponents.

The domestic stalemate in Ukraine resonates with an international stalemate. The war and Kyiv’s dysfunction have nullified any immediate risk to Russia of losing Ukraine to the West, the worst-case scenario that had driven its behaviour. Yet neither Russia nor the West has made a good-faith effort to find common ground on the geopolitical and geo-economic conflict over Ukraine’s trajectory. US and European officials continue to declare their support for Ukraine’s ‘European future’, while the NATO and EU bureaucracies busily deepen integration with Kyiv. While there is no momentum for formal membership offers in the short term from either organisation, the possibility of such an offer in the future is explicitly still in play, even if that future is a distant one. Moscow, of course, seeks to rule out such a possibility and roll back the integration that has already occurred. Therefore, even if Minsk II can somehow be implemented, the core contestation between Russia and the West over Ukraine will be no closer to resolution.

Neither side has sought an inclusive, negotiated settlement. The negotiations that did take place concerned the minutiae of the several Minsk agreements. But disputes over details such as the rules governing local elections in the Donbas are really proxies for the broader conflict that remains unaddressed. At an October 2014 meeting of EU leaders, Poroshenko and Putin in Milan (after Minsk I but before Minsk II), Merkel pushed the Russian president to commit to hold local elections under Ukrainian law, silence the rebel guns and hand back control over the border. Putin balked, claiming that both sides were failing to make good on their commitments. Poroshenko objected, and the EU leaders took his side. Predictably, the meeting ended in failure, with the EU and Russia blaming each other.[64] Barring a high-level effort to address the first-order issues, such meetings cannot produce breakthroughs. Even full implementation of Minsk II would in effect allow the conflict to continue without the use of military force.

Indeed, in parallel to the war in the east, the geo-economic contest between the EU and Russia over Ukraine continued in meeting chambers in various capital cities. On 26 August 2014, just before the first direct Russian intervention in the Donbas, EU leaders gathered with the presidents of Russia, Ukraine, Kazakhstan and Belarus for talks in Minsk. The formal agenda of the meeting was to address the conflict over Ukraine’s DCFTA with the EU. Putin kept many of his public remarks focused on this very point, alleging grave consequences from the DCFTA for Russia–Ukraine trade ties. He said:

He went on to explain that Moscow would take steps to protect its economy should these concerns go unaddressed.

Once the cameras were off, Putin made his position clear: besides altering the standards, 2,340 tariff lines in the DCFTA would have to be changed. The EU trade commissioner, Karel De Gucht, repeatedly rebutted Putin’s arguments about the injury Russia would suffer from the DCFTA.[66] He and other EU leaders were sure that Putin’s demands were a ploy to scuttle the deal.[67] They also had a parochial bureaucratic interest in rejecting Putin’s arguments. Altering just one tariff line – let alone 2,340 – would require the Commission to obtain a new mandate, necessitating a painstaking renegotiation among the 28 member states. This rigidity is a common feature of the EU’s international trade negotiations. It creates strong disincentives to amend course midstream, even when doing so would be sensible, as it was in this case.

Later, Putin asked Poroshenko to put off ratification of the deal in order to allow more time for talks. Poroshenko agreed to talks, but stood his ground on proceeding with ratification less than a month later. The Russian military’s assault on his forces that ended in the defeat at Ilovaisk on 2 September 2014 changed Poroshenko’s mind. In addition to agreeing to Minsk I, he also conceded to Putin’s demand to reopen the text of the AA to change the DCFTA. He presented this compromise to NATO leaders at their summit in Wales a few days later. ‘Mr Obama responded first, according to a person in the room. Was this something Ukraine wanted, or Mr Putin wanted? Mr Poroshenko made clear he was the one seeking it. Mr Obama turned to Ms Merkel: if the Ukrainians want it, why not? She agreed.’ But even Obama and Merkel were not prepared to take on the EU’s institutional unwillingness to revisit the AA. When they presented the compromise to Barroso, he was ‘incredulous’. ‘Barroso was, like, WTF?’ a US official recalled. Invoking the Maidan Revolution as evidence of what could happen if Poroshenko agreed to a renegotiation, Barroso, ‘desperate to find a way to keep the [AA] on track’, talked Obama and Merkel into renouncing the Ukrainian president’s deal with Putin and allowing ratification of the agreement to proceed.[68] In place of a renegotiation, the EU would ratify the AA but offer Russia a 15-month pause in implementation of the trade-related parts of the agreement, during which time fuller explanations and technical tweaks would be possible, but not substantive amendments.

EU commissioner De Gucht was to present this modified deal to Russia the following week. In the run-up to the meeting, the Russian government sent Brussels and Kyiv its proposals for the talks, which the latter duly leaked to a Ukrainian newspaper. The 59-page document called for extensive changes to the DCFTA, in accordance with Putin’s earlier demands, not trifling misunderstandings about the text that the EU could simply clarify.[69]

The EU, in short, was fully aware that Moscow was expecting a renegotiation when the Russian minister Ulyukaev arrived in Brussels for the talks. De Gucht rejected the Russian proposal categorically and aired the 15-month pause offer. He told Ulyukaev that ‘the decision was simple: either we have a deal on the 15-month plan or we don’t. There would be no further compromise.’ Ulyukaev, in a move that would see him reprimanded upon his return home, agreed. One EU official involved in the talks celebrated the result: ‘[Russia’s] purpose was to delay the thing until doomsday and break it open on substance. On both counts, they failed.’[70] The two sides were still locked into their zero-sum geo-economic competition.

Moscow quickly walked back Ulyukaev’s concession. Putin wrote in a letter to EU officials that they could either agree to renegotiation of the DCFTA, or else Moscow would follow through on its threat to suspend the CIS free-trade arrangements and hike tariffs on Ukrainian exports to Russia. ‘We still believe that only systemic adjustments of the [DCFTA], which take into account the full range of risks to Russian–Ukrainian economic ties and to the whole Russian economy arising from implementation of the agreement, will allow [us] to retain [the] existing trade and economic [regime] between the Russian Federation and Ukraine’, he wrote.[71] The 15-month hiatus was a ‘period of clarification’, as the EU’s De Gucht put it, the purpose of which was to allow the EU to demonstrate to Russia that it had no reason to worry.[72] Russia and the EU were seeking geo-economic victory, not a compromise solution.

After 12 rounds of negotiations over 15 months, the talks unsurprisingly broke down at a final meeting in late December 2015. Russia reiterated its demand for a legally binding document to address its concerns and stated its intention to suspend the CIS trade arrangements vis-à-vis Ukraine. The EU accused Russia of putting forth ‘requests that were not substantiated’ and ruled out further talks until Moscow committed to holding tariffs on Ukraine steady. The Commission also issued a document in order to debunk ‘certain myths’ – that is, Russia’s objections to the DCFTA. The EU further reminded Russia that it never intended to compromise: ‘As has been conveyed from the beginning of the talks… the DCFTA cannot be amended – neither directly nor indirectly.’ In Putin’s account, the Russian delegation was told, ‘“The game is up”. [The EU delegation] then left [the room] and issued a press release [saying] that the Russian side broke off the talks’, a step he lamented as ‘not very European’.[73]

A number of Western analysts have joined the EU’s trade negotiators in pronouncing the concerns Russia raised during the trilateral talks groundless, and concluding that therefore Moscow must have other, hidden motives.[74] This explanation, while not necessarily inaccurate, relies on inference rather than evidence; the Russian negotiators could have been sincere but mistaken. The broader point is that the EU and Ukraine wanted to deepen their geo-economic integration without Russian involvement, and Moscow was not prepared to continue to extend preferential trade arrangements to Ukraine under these circumstances. While it seemed as if Ukraine’s president was prepared for a compromise on the DCFTA when he arrived at the Wales summit, the EU – for institutional-bureaucratic reasons – insisted the text could not be altered.

When the DCFTA went into effect on 1 January 2016, Russia suspended the CIS trade preferences accorded to Ukraine, effectively instituting a punitive tariff hike. Moscow also placed an embargo on Ukrainian agricultural imports similar to its countersanctions against the G7. In response, Kyiv banned a variety of Russian imports including meat, fish, vegetables, fruit, dairy and alcohol products. Taken together with tit-for-tat sanctions that cut direct air links between the countries (affecting up to 70,000 passengers per month), by 2016 Russian–Ukrainian economic ties had been almost completely severed. And the geo-economic stalemate was more intractable than ever.