Minsk-2: President Putin's Tactical Victory

Op-ed in in the RBC Daily, Moscow

February 13, 2015

After the Minsk-2 agreement on February 12, the financial markets said it all: The Russian stock market rose, while the Ukrainian market sank. The markets saw a weakening of the European will to sanction Russia and no solution to the Ukrainian economic crisis. The all-night meeting amounted to a significant tactical victory for President Vladimir Putin.

This was supposed to be a ceasefire agreement, but the Kremlin's obvious intention is to win a decisive victory in the battle of Debaltsevo—likely to be the bloodiest of the whole war in eastern Ukraine—before the agreement comes into force. Needless to say, it was Putin who demanded that war be given a chance. Is any ceasefire realistic after that?

The all-night meeting amounted to a significant tactical victory for President Vladimir Putin.

The agreement amounts to a big step toward transforming the occupied parts of Donbas into a new Transnistria, a lawless quasi-autonomous territory. The main difference between the Minsk-1 agreements of September 5 and 19, 2014, and the Minsk-2 agreement is that more conditions have been put on Ukraine in Donbas. The main concessions have been put into a footnote to the article on constitutional reform in Ukraine and special rights to the breakaway regions. In particular, the footnote hands over to the local authorities the right to appoint judges, prosecutors, and police.

Last November President Petro Poroshenko finally decided to stop providing Ukrainian financing for pensions and other social benefits to the occupied territories, which the Ukrainian government did not control and from which it could not collect taxes. Now, Ukraine is supposed to restore those payments, which will aggravate Ukraine's already severe economic crisis. Last year, Ukraine's GDP fell by 7 percent, and Donbas accounted for a fall of 5 percent because of flooded coalmines and steel mills at a standstill since the rebels blew up the railway bridges.

The jewel in Putin's crown was the trilateral declaration with France and Germany. While it was purportedly intended to implement the Minsk-2 agreement, half of it deals with the need for cooperation between Russia, Ukraine, and the European Union in energy and protection of Russian interests in the Ukrainian free trade agreement with the European Union. Ukraine has no interest in either of these two forms of cooperation. Minsk-2 has also greatly contributed to driving a wedge between the European Union and the United States as well as between Ukraine and the European Union.

So why did President Poroshenko sign this disadvantageous agreement? The sad fact is that he had little choice. The war has ravished the Ukrainian economy, and the country is in desperate need of a ceasefire and financing. Ukraine's currency reserves are running out, and the hryvnia has experienced another collapse in the last week. Without an agreement with the International Monetary Fund (IMF), a financial meltdown could be a fact within one or two months, and only after the Minsk-2 agreement had been signed did the IMF announce its agreement with Ukraine.

Finally, Putin managed to avoid binding himself through this agreement. It contains no obligations whatsoever for Russia, which is not even mentioned in the agreement. It was not even signed by Putin but by Mikhail Zurabov, Russia's ambassador to Ukraine. Presidential authority is missing.

For France and Germany, Minsk-2 can easily become Munich-2. President Francois Hollande made all too clear that he was not even part of the negotiations and only enjoyed being in attendance. He even sat for one hour without an interpreter in Russian-speaking company according to Novoe Vremya. It is worse for Chancellor Angela Merkel who left the table without any achievement whatsoever. For her, Minsk-2 amounts to a serious debacle.

Can Ukraine escape from this unfavorable agreement? Yes, it can. Local elections are supposed to be held based on Ukrainian law, and Ukrainian law is controlled by Kiev. Many of the Ukrainian concessions are supposed to come into force only after the local elections have been held, and it is all too obvious that the rebels are incapable of organizing democratic elections.

Strategically, however, Putin won no victory. Donbas will remain a bloody mess, and it will be Russia's mess. Donbas is far bigger than other lawless quasi-autonomous territories that Putin clearly favors, and it will cost Russia a great deal whether in blood or money.

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Anders Åslund Former Research Staff

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