Written by:
Paco Litonjua, Year 12
In recent weeks, rising tensions regarding Russia’s military and political involvement in the Ukrainian territory of Crimea have propagated widespread concern in the international community. Thus far attempts at negotiation have failed to achieve stability in the region, with Russia’s foreign minister citing the “lack of common ground” with Western powers as a major hindrance to tangible progress. Under the support of Moscow, an interim Crimean government has set forth plans to hold a national referendum to determine whether the region will ultimately join Russia as a federal subject or remain as an autonomous territory of Ukraine. Within the next few days, it is expected that Crimeans, the majority of whom align themselves with pro-Russian sentiments, will vote in favour of the referendum and usher in the most dramatic redrawing of the European map since the hard won independence of Kosovo from Yugoslavia in 1999.
Historically, the political sovereignty of the Crimean Peninsula has been the subject of constant dispute. As a strategic sea link between Eastern Europe and the Mediterranean, the region has remained under the rule of foreign powers for well over 2000 years. Since 700 BC, the peninsula has changed hands well over a dozen times, having been controlled by the Romans, Ottomans, and Russians to name but a few. From such civilizations the region has, over the centuries, assimilated numerous cultures and ethnicities into its society. Today, it ranks amongst the most culturally diverse regions in Europe, with over a quarter of the population comprising of ethnic minority groups. Most recently, the region was subjugated under the rule of the Russian Empire and the subsequent Soviet Union. Widespread immigration by Russian peoples during this period left much of the population strongly supportive of Russian policies, even after the official annexation of the territory under Ukraine after the fall of the Soviet Union in 1991. For over 20 years, the Slavic majority in the Crimean peninsula have continually pushed for greater economic, territorial and political integration with Russia – what many there refer to as the ‘true motherland’.
With the recent political instability in the Ukraine, following the impeachment of its pro-Russian President Viktor Yanukovych, many Crimeans are worried that the region will become increasingly marginalized as the newly instated government pushes for greater integration with the EU. In the regional capital of Simferopol, the news of Russian military intervention in Crimea has been greeted by the ethnic Russian majority with great applause and fervor. Despite strong international pressure, Russia has remained adamant in reestablishing control over the former Soviet territory, which it believes ‘must be protected from the recent instability in Ukraine’. At a recent UN Security Council vote held on Saturday morning, a US-backed draft resolution condemning this referendum as ‘illegal and unconstitutional’ was vetoed by Russia despite overwhelming support from 13 of the 15 incumbent Security Council members. Even China, often regarded as one of Russia’s staunchest allies, abstained from the voting procedure – leaving Russia diplomatically and politically isolated in a way the nation has not experienced since the days of Cold War. In the face of strong international pressure from the West with threats of sanctions and a possible removal of Russia from groups such as the G8, President Vladimir Putin has remained steadfast in his determination to annex the Crimean Peninsula under Russian control. The aggressive and expansionist policies adopted by Moscow in recent months have exacerbated the already deep divide between Russia and her Western counterparts. With the window for diplomatic compromise quickly deteriorating, many political analysts have concluded military intervention by the West as the only way in which Russian territorial expansion may be halted. However, such a step may prove to be the catalyst of a global conflict of near apocalyptic proportions. Over 20 years after the collapse of the Iron Curtain, will the world once again live in fear of conflict between the superpowers of East and West?
Whatever the outcome of this complicated and divisive situation, it is clear that neither Russia nor the West will yield their political ambitions without contention. Each side of the conflict takes strong opinions on the matter – allowing little political flexibility to negotiate compromises or agreements. In a way that eerily resembles the political climate of the Cold War, the major powers of the East and the West are once again divided in a bitter struggle of military showmanship and political rhetoric that leave many concerned over the future of global security.
Currently, Russia is the world's largest natural gas and oil producer; the production is currently worth about $160bn annually. Most of these products are exported to various European countries who are reliant on Russia for energy needs. Because of the Crimean Crisis, this energy dependence may cripple Europe. In retaliation to the 'illegal' annexation of Crimea by Russia, the EU and US have imposed hefty sanctions on prominent Russian individuals and institutions. I think that this may cause trade relations, particularly in the energy sector, to deteriorate. As a result, Europe may see widespread energy shortages in the coming years. Furthermore, these sanctions may paralyse the Russian economy, a catastrophe that would send ripples around the world, potentially devastating the global economy.
ReplyDeleteAs of now, the EU and US are staunchly maintaining the sanctions (even threatening to impose more) despite the obvious economic collateral damage.
Paco, do you believe that the US and EU should continue to endanger the economic well-being of the world so that they can prove their point?
What will happen to US companies heavily invested in Russia (e.g. GE and Boeing) if US and EU decide to place harsher economic sanctions?
ReplyDeleteAs Russia is a member of the World Trade Organization, will Putin accept that Russia must be integrated into an international economy to prevent economic collapse or will he severe economic ties with foreign nations, believing that Russia has enough resources (e.g. oil, gas, minerals) to go into economic isolationism?
Reading more into the topic, I found that the Crimeans are not only divided between joining Russia as a federal subject and remaining as an autonomous territory of Ukraine, but it is also deciding whether becoming completely independent from both nations is an option. There would be advantages and disadvantages for all three options but with the superpowers in the East and West not willing to backdown from their stances, would you think it best from an economic standpoint to go with the last option even if it would mean great costs to undergo political and legal structures to gain autonomy?
ReplyDeleteBeyond the stated Russian-dominant population in the Crimean Peninsula, it can be argued that Russia had several valid reasons for annexing Crimea and opposing the Ukranian integration into the EU. For one, with Ukraine under its new government, the country would inevitably tend itself towards greater integration with the EU, and thus separation from Russian affiliation. As a result, several key assets possessed by Ukraine, particularly in the Crimean Peninsula, would be lost to Russia as the country aligned itself further from Russian interests. In particular, the naval base at Sevastopol in Crimea is the only warm water naval base that Russia has access to, and is critical in order for Russia to extend its influence into the Mediterranean. With the loss of Ukraine, and thus Crimea, to the interests of the EU, Russia could stand to be severely economically and politically damaged by the loss of such a critical asset. As such, the Russian annexation of a territory so strategically critical to their interests (and ostensibly predominantly in favour of the annexation) may be seen as a reasonable step for Russia.
ReplyDeleteFurthermore, the Ukraine has always served as a barrier between Russia and the EU. Literally meaning 'borderland', Ukraine has long been a buffer between the two world powers. However, with the revolution and establishment of the pro-EU Ukranian government, Russia potentially stood to lose the only major barrier between the Russian motherland and the EU. Indeed, with the potential for an EU integrated Ukraine to be used as a staging point for NATO missiles directly along Russian borders, which can easily be seen as a significant threat to Russian security and interests, Russia's 'peaceful' invasion of the Crimea could be seen as a means of curbing any potential repercussions that the new Ukrainian government could have.
As such, with such strong arguments in defense of Putin's actions, despite the predominantly negative dispositions of the rest of the world towards Russia currently, do you think that such negative feedback is necessarily warranted? Or are Russian reasons invalidated and the annexation truly 'illegal'?
Besides the obvious political repercussions of this conflict, there are also significant economic implications which result.
ReplyDeleteOne issue would have to be the shift in currency from the previously used Ukrainian hryvnia to the the Russian Ruble. This change would undoubtedly have great effects on trade both domestic and international, so what possible measures can Russia take in order to ease this transition?
Also, the economic sanctions that the West has placed on Russia as a result of its defiance may proceed to take its toll on local business owners and industry leaders. Though many of them have remained steadfast in their support for Putin and his cause, to what extent can they carry on with this? How long can Russia sustain itself without Western finances?
I have also read that the occupation of another country through force is illegal in the international court. This has caused the G8 to kick Russia out.
ReplyDeleteThere are serious economic implications into play as the US is deciding to sell their oil reserves comprised of 5 million barrels in order to send a message to Russia.
By doing this they are causing oil prices to decline due to an increase in supply. This is causing Russia, one of the largest energy suppliers on oil, to gain less profit from the sale of oil.
Many foreign investors are going to pull out of any possible investments. Depending on the severity of the situation in Ukraine, the Russian financial system could come screeching to a halt. It’s a given that many of these decisions impacting Russia’s economy will be made in haste and without a sober calculation of costs and befits, but investors often overreact to political events and they will certainly overreact to a military invasion of a neighboring country, as history has shown us. Russia’s economy has already been slowing down for the past several quarters, and the absolute last thing that it needs at the moment is a huge acceleration in capital flight. The ruble is also going to suffer, and while a cheaper ruble could eventually be good for domestic manufacturers in the short term, a much weaker ruble is likely to spark inflation.
ReplyDeleteK O
ReplyDeleteSo many good words I can't even understand lol. Much good, so Confucius, very success.
More seriously, I believe that the authorities of Russia are pushing their limits way too hard, all for their own geopolitical gain. After reading this article, what strikes me as a repeating pattern with Russia, and by Russia I mean her leader Putin, is her reluctancy to come to agreements and a real consensus. Putin constantly pushes through with whatever he desires, which was evident in the Snowden case, where the information hacker Snowden was provided asylum in Russia despite Obama's call to detain him. Thus, I believe that the country is headed for societal failure, if it is not already. What needs to change in my opinion is the perspective of Russia's leader, Putin, and his ability to negotiate. I believe it would be best for all if he were able to make compromises rather than forcefully act on his own will or what he believes to be the will of his country.
From a more economic standpoint, I believe that the annexation of Crimea will only lead to greater economic losses for Russia. I believe that Russian authorities are trying to regain faith from Russia's people by providing it an economic boost from the benefits of re-owning Crimea, which is basically closer trading and interaction with the European Union and the UK. Strategically, this is quite a smart idea as it could really help benefit Russia's failing economy. I believe that if Russia does not seek change from its leaders, outcomes similar to the Sochi Olympic games may occur. According to online news articles, the costs of the Sochi Games were estimated to be around $50 billion. Putin was planning on taking risks by investing such a large sum and reaping the benefits, but it didn't turn out that way. In the end, much of the revenue dissipated and was lost due to corruption and mismanagement of the event. This is a clear demonstration of X inefficiency resulting from such a large scale investment, where the marginal return is less than the marginal cost (diminishing returns to scale). Thus, I believe that similar outcomes will occur if Putin is not willing to make better managerial decisions and organise things in a better manner.