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Winners and losers as Ukraine crisis eases toward its end

As stock markets moved sharply higher Tuesday, investors took note of the withdrawal of Russian troops from Ukraine's border a day before their maneuvers were to be over, and Monday's largely unreported statement by Russia's Foreign Minister on Russia's limited demand that the February 21 agreement between Russia and Ukraine be enforced and its ousted president returned to power. Now we have the latest, with Obama ceding to Angela Merkel "mediation" of this crisis, as presaged in my Monday article, and Russia meeting with NATO. (Wouldn't it be interesting if Russia were invited to join NATO?)

The bottomline today is that the Ukrainian crisis could be largely over by the next week. And that Putin, far from being the dunce made of him by the West, appears smarter than most recognize. His strategies are just starting. Russia may well return to its Soviet preeminence that he so misses, but in an economic, modern way.

If the crisis is over quickly, choosing winners and losers is important and could affect elections in a number of countries.

Coming off as silly and far more dangerous, the Republicans squandered their opportunity to fall in step with President Obama and have shaken up independents willing to consider voting for them this Fall.

Whatever their excuse, Republicans are the most vocal opponents of a reduction in the size of the Army, contending that events like that in Ukraine can be stopped through a huge US military ground force. In opposing Obama, these Republicans now appear the least rational of all, and most likely to end up fouling up foreign policy.

Clearly, such a force was not needed nor was it rational to raise US power in a conflict like the one in Ukraine. Indeed, this was a largely European matter, with all countries most affected in Europe, not "across the pond," as Putin put it in somewhat dated terminology.

Obama now appears far more capable than he appeared only a week ago. Watch for the polls to show that his popularity has at least bumped up and Republicans begin to fall, perhaps precipitously.

While this will be a win for Obama, Putin also wins. Unlike the crazy man the West says he is, he has laid out his case for the invasion of Crimea and has de-escalated the conflict just when it looked like it would go into a new phase in Ukraine. Putin's decision is likely to mean his military's assessment of the capability of the Ukrainian military was that it would not be easy to win quickly if resistance occurred without substantial capitulation or surrender before the conflict began. Just a look at the recently posted pictures of Putin with his military leaders strongly suggests this decision. But, taken in conjunction with the strategic importance of Ukraine and recent revelations concerning Russia's economic plans, it also means that his invasion had other objectives. Among those likely accomplished and sought by Putin's invasion are the following.

1. Ukraine, given its importance to Russia and the EU (especially Germany given its huge petroleum and natural gas relationship), will see more common discussion among the major players. While the US could gain in the short term due to its growing exports of these and other products, the long-term is far better served by stability in these and other natural resources markets.

2. Russia will no longer be treated as a bully, but instead as a partner. The objectives Obama sought to accomplish by fostering communications between the countries may not be set until 2016 with a new president given the apparent animosity between Putin and Obama. Yet, it is possible that both recognize the importance of cooperation more, and the need to let the EU lead in this relationship, making the changes more permanent and useful in the future.

3. The US provision of $1 billion to Ukraine (not the guarantee, but certainly a gift) should move the US to require more control in the legislature over the use of money allocations, rather than leaving this up to any president. The idea that $1 billion can be gifted to a foreign power without any say by one person is (or should be) anathema to any budgetary or democratic concept still alive here. This is yet another example of the power of the presidency that will be cut back in the future by specific legal means, including future legislation. In turn, less influence in the world through unrestricted expenditures giving the US little or nothing in return means that both the US and Russia win.

4. The balance of power in all matters European, for Russia is in Europe, will rest more and more in Europe, not the US. Making this first step in this direction will gradually rid the US of the idea that it must step up in any crisis. The US is neither in the position to lead here, nor in many other places. The public will gradually make this transition, leaving Republicans apart from Senator Paul and others who are more isolationist, appear left in a long-ago Cold War.

5. Putin has accomplished his goal of making Russia relevant again. As suggested by an article in Bloomberg Markets appearing in Bloomberg's website, Putin's goal is being pursued in a Soviet manner.

"Sechin’s back-to-the-future fascination with his country’s communist past is something he shares with Putin, who, soon after coming to power in 1999, restored the music (though not the lyrics) of the Soviet-era national anthem and later described the collapse of the USSR as the greatest geopolitical catastrophe of the 20th century."

With Ukraine mirroring Hungary in 1956 in some if not many ways, we can look at the invasion as a first return to influence. The difference will be that the influence will be exercised in a modern way. Do not look for any more troop invasions. They will not be needed. 

There are many other objectives within reach. These are a good start.

Obama's position on Ukraine intervention appropriate but Germany's Merkel needs to take lead

Better days? As these same players now work out a new situation, led by Angela Merkel (left), Vladimir Putin (next to her), and Barrack Obama, we need to remind ourselves of the Daily Mail's pictures including the one above, and their take on the last G-8 meeting, which suggests both who should lead this situation for the G-8 and who is closest to Putin.

Officially, it has been the greatest diplomatic shindig in the world. Unofficially? A stewpot of bubbling tensions, rivalries and downright loathing. G8 they call it. G-hate, more like.

Turn on Fox News, and almost nothing done by President Obama deserves anything but derison. The same can be said by the most vocal Republicans. They fault Obama, some going so far to claim that he is the cause of every major foreign conflagration faced by the world today.

Let's get a grip.

There is nothing done by Obama, including the small reduction in the Army, that has anything whatsoever to do with the current foreign relations issues, and the more the Republicans put on Obama the better he looks. Indeed, should Ukraine end up as anything at all significant to the United States other than what the Republicans apparently want, we would like to understand what that will be.

The biggest problem is that, to hear the Republicans speak, we should have troops on the Black Sea, aboard ships, waiting to invade the Crimea. Apart from that being a result that is totally crazy (what, we want a war with Russia?), it has no reality. 

At least one Republican talking point, that a huge Army, even bigger than now, would stop problems around the world by its sheer size is equally absurd. Most of the problems have involved self-determination, including the situation in Ukraine where the principal issue is the disposition of an autonomous republic inside Ukraine with a majority of the population of Russian descent who speak Russian.

Do we want to resurrect the Cold War for this?

While it is no answer to allow Russia any slack on their invasion, in reality Putin had no choice. Crimea is essential to Russia from a strategic standpoint, and Ukraine essential from an economic standpoint. It is far better to quiet the peace, and seek a mutually satisfactory solution rather than forcing Russia's hand by treating them as nuts or worse. In his impromptu news conference today, Obama said that he understood Russia's situation. But he also said the way what was done was entirely wrong.

In the end, we cannot accomplish much of anything with huge expenditures for our armed forces, spending money we need in other areas of our economy. And we also will be able to moderate the language coming from Russia with appropriate diplomacy.

The problem with Obama's approach is that he is not acting in a way that is sufficiently diplomatic.

Instead, in a position that Republicans may favor, he is going largely on his own. He may speak with EU leaders, but this is more likely to be through surrogates. He should not be sending Kerry into Ukraine. And, on this one, he needs to let Angela Merkel lead.

Germany has far more to lose in this situation, and needs to take the lead. If anything, it is unlikely that Putin has anywhere close to as good a relationship with Obama, as seen in this quite revealing photograph, than he has with Angela Merkel, who was consistently walking with Putin during the last G-8 meeting. 

It is unclear why John Kerry is in Ukraine today. However, according to Obama's ongoing press statements just released, part of that discussion involves the amount of financial aid needed by Ukraine. The US certainly should not give any money by itself.

In the end, the G-7 will make the important decisions. And aid should be offered only through the G-8, if that is at all possible.

Any actions by the US alone, even perhaps Kerry's trip to Kyiv, could undermine an overall strategy best for everyone involved.

Potter Group Consulting: If Ukraine closed its borders to Russia, would Rus...

Potter Group Consulting: If Ukraine closed its borders to Russia, would Rus...: We know little about the Ukraine, yet its importance to Russia is not just military. Indeed, while  Gazprom , the Russian gas producer an...

If Ukraine closed its borders to Russia, would Russia soon be bankrupt?

We know little about the Ukraine, yet its importance to Russia is not just military. Indeed, while Gazprom, the Russian gas producer and exporter, claims it is owed $1.5 billion, you might look at it quite differently. Ukraine is critical to Russia's economic future if not capable of making Russia's economy totally collapse.

Europe seems very far from Ukraine and the Black Sea. While easy to drive between almost all European countries in a day, driving through Ukraine east to west is farther than any European country other than Russia. And speaking of Russia and Ukraine in the same breath as Europe seems a bit removed from reality.

But this is how these countries are classified. As a continent stretching from the far East of Iceland (maybe Greenland if you counted it) and the eastern portion of Russia, whose feet are in both Europe and Asia.

The map below from East European Gas Analysis shows the importance of Russia's gas pipelines through Ukraine. In fact, the map emphasizes how important Ukraine is to both Russia and Europe.  

Without Ukraine, there would be no gas or oil going to Europe without much greater Russian costs. Russian energy represents a huge portion of that needed by Europe, especially in Germany, Poland and the other East European states. So this is a two-way street economically. 

The precise leverage here is clear. Without Ukraine pipelines, Russia and Europe are facing economic disaster. 

With control, either Ukraine or Russia are in the driver's seat relative to costs and profits. And over the past twenty years, numerous negotiations have occurred concerning the pricing of Russian oil and gas in Ukraine and over the pipelines. 

As the U.S. Energy Information Administration stated in its report on Russia amended in November 2013:

Russia is a major producer and exporter of oil and natural gas, and its economy largely depends on energy exports. Russia's economic growth continues to be driven by energy exports, given its high oil and gas production and the elevated prices for those commodities. Oil and gas revenues accounted for 52% of federal budget revenues and over 70% of total exports in 2012, according to PFC Energy.

So, if Ukraine stopped all pipeline operations, an act obviously unlikely to happen but one that might have been detected by Russia by some "ultranationalists," one can understand far better why occupation of all of Ukraine might occur. And the most likely trigger could be an act of terrorism against the pipelines. But even without an act, an EU leaning Ukrainian government has to be very scary indeed for Russia. 

The situation could have been much worse. The Gazprom website states the following risk factors.

Liberalization policy also provides for separation of gas production assets from transportation networks within EU. Lack of exemption from the above provision means that the Group is not able to own or exercise control over transport business that will impede the implementation of the investments projects in EU.

If Ukraine had become a part of the EU, this would have provided leverage for Ukraine not only to side with Europe politically, but to require the divestiture of the pipelines in Ukraine.

Talk about an incentive to require Ukraine to stay out of the EU and under at least quasi-Russian rule.

The fact is that there is a history of substantial disputes between Ukraine and Russia, particularly over 2005 and 2006 that resulted in Russia cutting off all gas supplies through Ukraine.

It appears that this would no longer be an option for Russia. Is this why we may see eventual Ukraine occupation by Russia? Almost certainly it is at the front of EU and Russian considerations. And almost certainly, a deal involving these points might end up being at least part of the result, especially assuming full occupation never occurs.

Could Russia - Ukraine be Russia - Hungary in 1956?

Most of us in the United States 65 years old or older watched the Soviet Union invade Hungary in 1956. The fifteen year old above was barely older than we were. The scenes from this invasion  became the first and still very rare live television coverage of war in history. From this invasion came our understanding of public demonstrations, and from them came many of our future demonstrations.

Would we have had public demonstrations in the 1960s without the example of the Hungarians, many young students, fighting against tanks with their hands, small arms, and Molotov cocktails? In scenes repeated for the next four decades, we have seen demonstrations and far worse in Indonesia, China, and many other countries which had a strong base from students.

Yet, the reality is that our own demonstrations and the many others did not have the impact of that first daily black and white series of transmissions from Hungary. Without this, the Soviet Union would have saved the world untold trillions of dollars and millions of lives lost in a Cold War no one could ever win.

Putin never saw the brilliant flash of freedom in Hungary. Soviet television may have showed snippets. But the propaganda certainly told a different story. Besides, he was about four years old at the time.

But the hard-liners who still populate the former Soviet Union have not forgotten. To them, the Russian empire was saved by Soviet might. That first glimmer of freedom let to thirty years of extreme repression by Russia and its sick form of communism that inspired the first "people led" government in history.

Those of us who watched those brave demonstrators, children ourselves, who had enured war as an end and objective for our entire lives, realized that the breaking point was Hungary. It proved to us in vivid images of bravery and thuggery that the evil empire existed in the Soviet Union.

Putin seeks a return to the glory days of military occupation and hard-line repression. The Russian "parliament,"as most news agencies call it, the ex-KGB and other Soviet puppets who put Putin into power told him to use force in Ukraine. They are from the same group that ordered Hungary invaded in 1956, ushering in decades of repression.

Make no mistake. There is no difference between the Russia of the late 1800's, under Stalin and today. They reign by terror, although it is more repressed today. And, perhaps worse, the former employees of the apparatus that kept the Soviet Union in line are now in control. The KGB, from which Putin and many others come, was a terrorist organization from the time of its founding, seeking to broaden fear and terror to such an extent that people spoke against their brother and sisters rather than face the basements of torture or the cold of Siberia.  Putin and his fraternity, for there were few if any women, ran the occupied countries through terror and torture. He is a thug, as are his fellow Russians.

We have a perfect storm with Ukraine. A chance to remind everyone of Hungary, which Russia still considers its Soviet zenith. And an opportunity to stop the continuing erosion of the Soviet empire and its "sphere of influence."

Our president is a man who finds political expediency outweighs judgment, and that his intellect allows him to achieve great ends without experience or much thought. He is currently having his heavy lifting done by his National Security Adviser Susan Rice, a woman who can lie repeatedly to the American public about what did not occur in Benghazi, and a woman who is so undiplomatic she says "F--- the EU." Our team surely will do the right thing!

As far as Putin is concerned, it is a given that at least Crimea is gone. Will he cross the isthmus, and invade Ukraine? Perhaps.

If that does not make you scared, what will?

The key to Hungary was that Eisenhower was in charge. He had no trust at all in the military industrial complex, and no appetite for war.

Can we say the same about Obama, with his acts of war in several countries, escalation of the Afghanistan war, and many bellicose Republicans?

Let's hope so.

You will understand what is happening in Ukraine if you imagine that Crimea is Puerto Rico

I readily admit, I am no historian or devotee of all things Ukrainian. I did know one Consul from Ukraine (Ukrainians hate people using "The Ukraine" I am told). And he was a very nice guy. But beyond that, and a photograph with this Consul and someone high in the Ukraine government years ago, until recently my knowledge of Ukraine was limited to my memories of Soviet history learned years ago.

Now we have a global conflict all of a sudden, when one can easily argue that Ukraine could and probably is well within the sphere of Russia's influence. After all, it not just borders Russia, but has been on and off for a hundred years, more or less, largely in Russian control or at least shadow. Of course, the exact relationship is difficult to see. Even our highest local Department of State official admitted to going it alone on some things, if not everything, by saying "F___ the EU" when talking about recent US involvement in Ukraine.

This is but the first way that you might understand Crimea. It is also useful to remember that old history of constant conflict here because Crimea (and for that matter Ukraine) is one of the most strategically important locations for the past centuries. You can learn this from the game Risk. But by just looking at it, you can see by its location on the Black Sea, as an entry point into that mass of land to its North, East and West that includes what people consider Europe and Asia with a narrow isthmus joining it to the mainland of Ukraine, that this is a very defensible and strategic jumping point for not only the land, but for any Navy seeking to move into Turkey, the Middle East and the Mediterranean.

If you ever go to war in the region, you need to control Crimea.

In reality, Crimea is not just the geographic location, but also a political location with a complex constitutional relationship with Ukraine and Russia. Crimea is an autonomous republic that is also part of Ukraine.  And one with various legal ties to the Russian fleet.

Although not singularly important to this review, it is worth noting that the history of Crimea is further complicated by the nature of its people and the number of different Soviet and Russian leaders who have been involved in this relationship.

Crimea is a part of Ukraine, but it is not fully integrated into Ukraine by any means.

With most of its citizens torn more toward Russia than Ukraine, and the difficulty of what "independence" really is for at least Crimea, the treatment of a Crimea take-over needs a lot more thought than given by many reporters.

In the end, we know what this is really like.

We have had a relationship with Puerto Rico for many years along similar lines, with no one certain as to its likely path for the future but consistent decisions not to make Puerto Rico a state. Indeed, one can make the same argument even of Ukraine, except that it is clearly independent at the moment.

So what if Ukraine again became a Russian satellite? Or what if Crimea (or Puerto Rico) suddenly decided to do something against the best interests of its long-time part-time partner?

Think of things this way, and you might begin to think differently about what is happening. And whether we belong there at all.