UkraineAlert

Editor’s Note: This article is a response to Stephen Blank’s essay, Putin’s Energy Strategy Is More Ambitious than You Think, which we published on January 4, 2019.  

Energy policy is a crucial part of Russia’s strategy to maximize its influence in Europe and divide the European Union. As highlighted by critics of Russia’s assertive energy strategy in Europe, the two flagship Russian-sponsored pipeline projects, Nord Stream 2 and TurkStream, are much more than business: they are also geopolitical tools aimed at increasing Russia’s leverage over Central and Eastern Europe. However, an increasing number of articles in the West falsely portray NATO member Hungary as a satellite state within Russian President Vladimir Putin’s grand European strategy. These claims are misplaced.

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"No other event has the same global appeal," commented Andy Christie, private jets director at Air Charter Service, predicting up to 1,500 individual private jets flights to be made in and out of this year’s Davos summit. Top global business leaders, political leaders, economists, celebrities, and journalists turn up year after year to the World Economic Forum to discuss the most pressing global issues.

Ukrainians came well prepared to Davos this year. Here are my five key takeaways from Davos 2019:

1. Ukrainians are getting their act together in marketing their country

Ukraine has changed, but it has struggled to convey the depth of change to the global business community. That now seems to be improving. This year at Davos, Ukraine was presented professionally and eloquently. It was some of the best investment promotion that I have seen Ukraine perform.

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Russia’s war against Ukraine is about to enter its sixth year, but many remain in denial over the true nature of the conflict. There is still widespread international reluctance to acknowledge the global significance of Vladimir Putin’s invasion, leading to a preference for the kind of euphemistic language that blurs the lines between victim and aggressor. This ostrich-like approach to the realities of the new Russian imperialism was on display during German Foreign Minister Heiko Maas’s recent visit to Kyiv, where he called on “all sides to contribute to de-escalation.”

Maas was apparently untroubled by the absurdity of urging Ukraine to de-escalate its own invasion and dismemberment. Indeed, it says much about the current climate that one of Europe’s top diplomats felt comfortable coming to the capital of a country fighting for its life and delivering a lecture on the need for moderation.

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Ukraine is a country of opportunity and talent. Home to one of the fastest-growing IT industries in the world, Ukraine has over 4,000 technology companies and about 2,000 startups. In 2018, investment in startups reached almost $300 million. Additionally, the country has roughly 184,000 software developers, and Ukrainians register over 12,000 patents annually for various inventions. There is no shortage of talent.

However, almost all of these people do work that boosts the economies of other countries. Rather than invest time and effort on their own initiatives, most IT workers are working on projects based outside of the country’s borders. The end products ultimately do not benefit Ukraine.

Why is this happening? There are many reasons, and some are economic or political. But the main problem resides in psychology.

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Pavlo Bukin has been on the job for nearly a year, and he’s in good spirits. It’s not the most enviable position: he’s the general director of Ukroboronprom, the state-owned defense company, and has been charged with cleaning up the company and making its business practices market friendly.

Ukroboronprom (UOP) has serious reputational issues. Ukraine’s leading anti-corruption watchdog calls it a monster. In 2017, Ukraine’s National Anticorruption Bureau accused company officials of stealing $6 million in a deal to supply aircraft parts to Iraq’s defense ministry. It also faced accusations of putting old engines in forty tanks in Lviv and selling them as new at full price. These schemes, especially during a time of war, do not endear the company to the public.  

When we met for coffee in Kyiv in late November 2018 and I mentioned these cases, Bukin didn’t get defensive. The straight-talking executive admitted that overhauling UOP is “not an easy task,” but said he’s got a plan and is already making progress.

He was upfront about corruption and explained that introducing market wages for executives and factory workers is the only solution. “The best remedy for corruption is a good level of wages,” he said.

Defense experts both in and outside of the country are cautiously optimistic.

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Boris Nemtsov was a good friend of mine. He was jollier and more outgoing than most. Unlike most of Russia’s reformers, he abstained from wealth, bravely choosing to live modestly as an opposition politician. He could work with anyone while maintaining good values. On February 27, 2015, he was murdered just off the Kremlin.

John B. Dunlop, a renowned historian of Russia at the Hoover Institution at Stanford University, has just published a book, The February 2015 Assassination of Boris Nemtsov and the Flawed Trial of His Alleged Killers. Dunlop meticulously describes and documents the investigation and the court proceedings over 191 pages.

The book starts with a presentation of the murder and its investigation, followed by a chapter about the trial. The remaining seven chapters offer different versions of what really happened. This structure is reminiscent of The Alexandria Quartet by Lawrence Durrell. Dunlop lets all sides speak in their own voice in long quotes. The book starts slowly and gains momentum. Nothing is what it first seems. The book’s ultimate insight is that careful study of available evidence offers great opportunities to understand what goes on in Putin’s Russia. This is Kremlinology at its best.

At first glance, the murder does not appear complicated.

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Transportation links provide advance warnings as to where a society is going physically and mentally.

Until five years ago, all of Ukraine’s roads led to Moscow. Now they go west.

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On January 14, the New York Times confirmed that President Donald Trump talked about pulling out of the North Atlantic Treaty Organization more than once in 2018.

But can the president quit NATO unilaterally?

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Ukraine’s problem is not that it hasn’t changed enough. It’s that it’s changed too much too fast, thereby raising popular expectations, undermining long-existing patterns of behavior, creating uncertainty, and thereby increasing the popularity of populists who argue that a return to the good old days is imperative.

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Ukraine’s anti-oligarchic forces have finally started the process of forming a broad pro-reform coalition in advance of the 2019 presidential and parliamentary elections. On January 11, a congress of various reformist groups announced its support for the presidential candidacy of former Minister of Defense Anatoliy Hrytsenko. While the meeting was largely an event of Hrytsenko’s Civic Position party, it included a number of small parties and civil movements which backed Hrytsenko as well. In addition, a number of prominent MPs from the well-known “Euro-Optimists” inter-factional group in parliament, including Svitlana Zalishchuk, Serhiy Leshchenko, and Mustafa Nayem, joined the congress.

Nayem called for a broader coalition of pro-reform politicians to work together, urging Lviv Mayor Andriy Sadovyi and the lead singer of the popular band “Okean Elzy” Sviatoslav Vakarchuk to back Hrytsenko. Nayem also touched upon the crucial question of the entire enterprise: Will the new alliance eventually become broad enough to exert real political influence?

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