11:02 AM Tuesday, October 16, 2018
Peace in Ukraine by the Backdoor
Could a backroom grand bargain between the U.S. and Russia benefit Ukraine?
image/svg+xml Kyiv Lutsk Rivne Zhytomyr Lviv Ternopil Khmelnytskyi Uzhgorod Chernivtsi Vinnytsia Chernigiv Sumy Kharkiv Poltava Cherkasy Kirovohrad Lugansk Dnipropetrovsk Donetsk Zaporizhzhia Mykolaiv Odesa Kherson Simferopol Sevastopol Ivano- Frankivsk

NEW YORK -- A week before Michael T. Flynn resigned as national security adviser, a sealed proposal was hand-delivered to his office, outlining a way for President Trump to lift sanctions against Russia.

Mr. Flynn is gone, having been caught lying about his own discussion of sanctions with the Russian ambassador.

But the proposal, a peace plan for Ukraine and Russia, remains, along with those pushing it: Michael D. Cohen, the president's personal lawyer, who delivered the document; Felix H. Sater, a business associate who helped Mr. Trump scout deals in Russia; and a Ukrainian lawmaker trying to rise in a political opposition movement shaped in part by Mr. Trump's former campaign manager Paul Manafort.

At a time when Mr. Trump's ties to Russia, and the people connected to him, are under heightened scrutiny -- with investigations by American intelligence agencies, the F.B.I. and Congress -- some of his associates remain willing and eager to wade into Russia-related efforts behind the scenes.

You can read the rest of this article at The New York Times.

Timothy Ash

LONDON -- No chance that this will win support in Ukraine - if anything it could create more problems for Poroshenko domestically, destabilising the domestic political mix as nationalists, and indeed many ordinary Ukrainians, would view this as a sell out. Maybe that is the ultimate aim from Moscow, as domestic political flux would bring prospects of "regime change" which Moscow might think would be more inclined towards Russia. Ultimately Moscow can live with a scenario where the government in Kyiv is less inclined Westwards, but willing to fall more in Russia's sphere of influence. The problem is that the bulk of Ukraine's population simply don't want that - and a significant part of the population have proven willing to fight for their Western orientation.

I guess any longer term lease of Crimea to Russia would also have to entail massive compensation payments from Russia to Ukraine - cannot see the Ukrainians accepting anything less than 100bn, given losses from the annexation of Crimea, and also the conflict in Donbas and broader impacts on the economy (USD GDP dropped from USD178bn in 2013 to around USD90bn now as a direct result of the conflict with Russia over Crimea, then Donbas). That kind of number would also be a lot for the Russian economy to bear (7-8% of GDP). And I guess it is a lot, when Russia might argue that Crimea is now a part of Russia - so why go back to signing a lease agreement.

The Ukrainians might also argue what would a lease agreement be worth anyway - given there was a long term 40-odd year lease already for the Sebastopol naval base, and that was not worth the paper it was written on anyway - as was the case also with the Budapest memorandum of 1994 where Russia, France, the USA, UK, China, guaranteed Ukraine's territorial integrity in exchange for Ukraine surrendering its then substantial nuclear weapons capability.

I guess in the end any deal has to be workable and saleable in Ukraine - and this deal is not in my view, as it will make Ukraine less, not more, stable.

Timothy Ash is a senior sovereign strategist at BlueBay Asset Management, London

Posted Feb. 20, 2017

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