The Steinmeier Formula: Ukrainian oligarchs are pushing country to the defeat. Will it be possible to avoid complete surrender, and what are the real interests of Russia, EU and US?

Whether they wanted it or not, but the voters of Volodymyr Zelensky, voted for fixing the defeat of Ukraine in its war on Donbas. The narratives of presidential candidate of that period were strongly based on the messages promoted by Russian propaganda. And it is not because Zelensky is a «Kremlin’s agent». It is because propaganda has turned out to be so effective; it really formulated the social attitudes, which were so easy to mobilize during the election campaign.

However, the defeats itself can be different.  In their time three former parts of Russian empire that gained their independence in 1918 — Lithuania, Poland and Finland — had failed to resist USSR. Lithuanians had completely lost their sovereignty; Poles had lost a significant part of it, while Finns were the only one who managed to maintain the independence though with some restrictions, mostly in foreign affairs and defense policy. So what should we do for our defeat not to become a catastrophe?

Voters of Zelensky have voted for fixing Ukraine’s defeat in the war on Donbas since the narratives of then-a-presidential-candidate were very close to messages promoted by Russian propaganda.

The parties and their interests

In order to understand and to influence the behavior of others, it is necessary to realize what they want.

Russia: short-term goal is to get rid of painful sanctions

Kremlin seems to be the easiest to speak about. Its goal is to get maximum, the most possible, control over Ukraine — like the one Moscow had over Ukrainian Soviet Republic, or, at least, like that over the countries of The Warsaw Treaty in the times of Soviet Union. Out of all possible political tools that can provide this maximum control the political division of our country is number one.

However, this goal is rather strategic and it does not mean that Kremlin wants to reach it right here and immediately. Furthermore, the five years sanctions period has had its consequences for Russia.

Although Russian authorities, taught by the collapse of the Soviet Union, try to provide the fiscal stability and to maximize the amount of foreign exchange reserves, but they do it at the cost of significant deterioration in living standards of its population. In their turn, Russians do not mind about «great victories», but not at their own cost. That means that massive riots and unrest inside the country are Kremlin’s only real threat. Moreover, the discontentment is already breaking through in the form of mass protests in Moscow this summer showing the potential price for the continued confrontation with the West.

MASSIVE INNER RIOTS ARE THE ONLY REAL THREAT TO KREMLIN.

Thus, Kremlin’s midterm goal is to get rid of the most painful sanctions while still saving the maximum of current achievements and keeping the «political springboards» for future offensives.

The surrender of so-called «Donbas republics» is too much of «losing the face». Therefore, even if Ukraine agrees to Russian actual control over the occupied territories of Donbas, under no circumstances there will be chances that the Russian authorities agree for even formal raising of the Ukrainian flag over Donetsk and Lugansk.

Another factor is the corruptive interest of Russian high-ranking «siloviki» or «siloviks» (politicians affiliated with institutions of force such as the police, ministry of defense, state security service etc.) who want to preserve current situation and their total control over local authorities at occupied territory. The «siloviks» will not accept even very pro-Russian, while legally elected, authorities since the latter might have the legalized influence on «militia of people republics» and thus to demand more of their share from the financial cash flow.

Actually, the maximum concession that Kremlin would agree to make is to stop the on-going fighting along the demarcation line. Moreover, Russian authorities will try to sell it at the highest price possible because Ukrainian politicians emphasize on «quickly ending the war». As for Russia, the time factor does not matter much to them.

France and Germany: demand for Russian resources

The positions of France and Germany aim primarily at protecting their own interests, which, quite expectedly, do not coincide with either the Russian or the Ukrainian ones. For them, Russia is a raw materials appendage of European Union and their cooperation with it is complicated due to sanctions imposed. The important role of this appendage becomes even more essential as the competition with USA increases and China struggles more eagerly for the raw resources. The latter stretches its influence onto African and Central Asian regions, which supplied previously, with assistance from Russia, most of its resources to Europe. In addition, Russia is getting involved in Chinese growing influence. Western media state that in ten years, Russia will become the satellite of China and this scenario is not in favor of Europe.

Yet, it does not mean that Germans and French totally support Putin. By no means are they interested in a big destabilization in Ukraine that might cause the heaviest crisis near the European borders. Europeans are not happy at all with the militarization of Putin’s Russia threatening with its armipotence and meddling into European affairs. EU itself, especially on its Eastern borders, depends on the US in the terms of protection from such meddling.

EUROPEAN INTEREST IS TO PRESERVE THE STATUTS QUO

With such conditions, Europeans are interested in preserving the status quo. The cessation of active fighting will stabilize the situation and become an appropriate, politically correct reason to cancel the part of sanctions limiting the cooperation with Russia.

USA: Ukrainian war is a cheap way of restraining Russia and EU

For the US Ukrainian-Russian war is an effective and quite cheap (comparing, for instance, US military aid to Ukraine and to Egypt) way of restraining Russia. It is also way to restrain EU in its access to Russian resources with a perspective of substituting some of them, such as gas or oil, with American ones.

Thus, the support Ukraine receives from USA is the most significant one. Still, the influence of such support is rather modest due to the fact that «Ukrainian question» is among the secondary ones for Americans. At the same time, other key players understand it and realize the fact that Americans will not play at the highest stakes.

Instead, given the serious impact on the IMF, the United States is able to influence the Ukrainian authorities by «screwing the tap» on financial assistance, without which it will be difficult to sustain.

Instead, given its serious impact on the IMF, the United States have the leverage to influence the Ukrainian authorities by «screwing the tap» of international financial aid, without which it will be difficult for the latters to stay sustainable.

Ukraine: The oligarchs want peace

And what about Ukrainian authorities? To understand how they function we can use the metaphor of a «join-stock company». The most visible, though not the only ones, stockholders in it are Kolomoysky and Pinchuk. The latter already in 2016 called for «painful compromises» with Russia. Ukrainian oligarchs really got tired of the war. Their incomes have suffered in terms of economics. At the same time, the real need to provide the defense capacity under the strict eye of international donors makes it hard to implement their «good old formula» of losses nationalization and profits privatization.

After all, real European integration means that Western enterprises will enter the Ukrainian market and it will be, putting it mildly, hard for Ukrainian oligarchical business to compete with them.

Well, if the war is an obstacle it should be stopped, even at the price of a concession to national interests.

However, the Ukrainian oligarchs, although ready to make concessions, have no illusions about their own future in the face of Russian control or widespread destabilization in Ukraine. Also, most likely, they understand that even under the best conditions, the return of occupied parts of the Donbas will entail huge costs on the part of the state. And these funds will not come into their pockets - because the state resources are not rubber.

However, though Ukrainian oligarchs are to ready make concessions, they have no illusions about their own future in case of Russian control or widespread destabilization in Ukraine. They also, most likely, understand the real price Ukraine will have to pay, even under the best possible conditions, for the return of occupied parts of Donbas. Moreover, those huge costs will bypass their pockets since the state budget resources are limited ones.

It is also important, that oligarchs themselves have closer ties with Ukraine. Of course, they have enough money to live luxury life elsewhere, but this type of living is a kind of pension, to go for when retired. Their assets and the ways of making money cannot be moved abroad. In addition, the fate of Ukrainian oligarch Dmytro Firtash is kind of a reminder about the risks of living abroad.

None of this, of course, guarantees their patriotism for 100%. They are not genuine geniuses and might «get caught while playing for too long», as it happened to Rinat Akhmetov in 2014 when he underestimated the threat of Russia-inspired unrests and lost his assets on Donbas. Moreover, the «opportunity window» of Ukrainian oligarchs is limited.

THERE WILL BE NO ECONOMIC BREAKTHROUGH

They are in a hurry while Zelensky still has his high political rating, because when he loses his popularity, he would not be able to promote and implement the decisions, to which active part of the society strongly oppose.

There will be no economic breakthrough, thus the high expectations of «not-from-the-old-system president» supporters soon will collide the bitter reality. Unpopular head of the state will not be able to let himself too much.

The boundaries of possibilities and the «red lines»

Thus, what the parties can «bargain for» is a ceasefire in exchange for canceling some part of sanctions. Limitations imposed on Russian military industry will remain, because Europeans are not interested in production of weapons that might threaten their interests. As well as the sanctions for the annexation of Crimea will be preserved.

Potential growth of Russian economy is a bad part of news for Ukraine since Kremlin will get more resources for its own aggressive politics. Still, the limitations imposed by Western partners have never really been a major problem for Russian economy.

Of course, this deal will be unofficial one, because all parties will refer to the Minsk agreements and the necessity of its implementation, which is politically impossible neither for Ukraine, not for Russia. Of course, mutual accusations on blocking the further progress will keep on going. However, if the shootings will not occur daily, but for example, just a couple of times in a year, nobody will really pay attention to such claims. New norm will be established.

Ukraine’s benefit

In this situation, besides a significant decrease of the amount of casualties among our soldiers, we can also benefit from a partial reduction in the financial costs we bear on Donbas.

In order not to turn the defeat into surrender

Yet, we should remember about the «safeguards» without which our defeat (let us get rid of the illusions that it is something else) might turn into surrender:

1. Keeping the government control over the demarcation line between the occupied territories and the rest of Ukraine — at least, until Kyiv gets the total control over the state border. Without it, the war on Donbas will truly be over, but only because it will move further to North and West of Ukraine — along with Russian weapons and gunmen.

2. No elections on the occupied territories should be recognized without providing proper security measures. No possible result of the elections in the now Russian-controlled Donbas territories will look good enough to us. Nevertheless, Kremlin is also afraid of any uncertainty and prefers just to appoint its «puppets» instead of legally elected authorities.

3. Troop’s withdrawal by both parties along the demarcation line must be a technical guaranty for a sustainable truce. Such withdrawal has to be performed simultaneously. Any attempts to move over to the positions left by Ukrainian army will signal about the immediate discontinuation of the process.

4. And finally, the amount of «contributions». It has already been announced about loosening of the control over pensions and other social payments to those who live on the occupied territories. In practice, it will increase even more the cash flow to the territories out of Ukrainian control. At the same time, it will make life much easier for the internally displaced persons who receive some state financial aid and who are not in very good health to cross the demarcation line regularly.

THUS, WE ARE ACTUALLY IN THE PROCESS OF BARGAINING

Either it is the restoration of social payments on the occupied territories or payment to Russia for delivering the energy there — those are the issues we can bargain about and count for some compromises. In any case, such steps need some careful calculations and, after all, we can figure out that the current way of restraining Russian-backed forces is cheaper.

If the so-called «Steinmeir Formula» corresponds to the one previously promulgated by Ukrainian Minister of foreign affairs, then it provides an explanation to just one paragraph of the Minsk agreements. Yet, it is not complete. Thus, we are actually in the process of bargaining. Even so, the bargain might fail and where will we be? Either at our current position or, at the worse scenario, at the same position, but with sanctions seriously reduced for Russia. What we really have to keep in mind is that the decision about whether to keep the sanctions depends on Europeans, not on us, but our own surviving depends strongly on our willingness to resist.

What are the signs of the «real treason»?

Up to this moment, the real «treason» looks rather unlikely. Yet, we have to be cautious and watch up for the «red lines». What are they in such an uncertain situation?

Let’s try to define:

1. Unilateral ceasefire by The Joint Forces Operation, no backfire in response to the attempts of occupational forces to take over the «grey zone».

2. The agreement to hold the elections without proper safety guarantee to Ukrainian parties, candidates and media.

Those are two key factors that must become a signal for high-powered social protests. This is the only chance to stop the surrender in a peaceful way.

Then what? Everything depends on who wins the peace

Only systematic crisis in Russia can make the latter to obey the achieved agreements and to withdrawal from Donbas (even while preserving its vassals and their ruling over the territory under the nominal sovereignty of Kyiv). Without such crisis, the scenario for an effective resolution of the conflict does not seem realistic.

Yet, if the negotiation process goes in this direction, we have to figure out the price that we are ready (or not) to pay for it. In any case, the process of actual integration of now occupied territories is not easy or fast.

To end the active fighting phase of the war, that is still going on, is also possible against the background of endless and unpromising negotiations over «formula of searching for modalities» that will actually cover up the fact of open occupation of Crimea and hybrid occupation of part of Donbas by Russia.

In this «Wheelchair Race to the Grave», Ukrainian oligarchic pluralistic regime might, quite likely, outrun Russian oligarchic autocratic regime. The latter has some extra safety margin due to its size and resources, its oil reserves, powerful institutions of force and, let’s be honest, to its more effective state apparatus.

If the systematic crisis continues in Ukraine, Russia will move further its offensive. The loss of Crimea and part of Donbas in 2014 can be compared historically to the first partition of Poland in 1772, after which came the second, and the third partitions that actually destroyed this state.

Only if Ukraine manages to provide a sustainable economic development and continues to spend sufficient resources on strengthening its defensive capability, will it reach the reliable guarantees to maintain as an independent state.

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