Europe, Russia & Ukraine: Stumbling Waltz

Ukraine, much in the news, is essentially a failed (failing?) state. Yet everyone wants to have a dance with her. Who will be on the card?

The EU still seeks an association agreement after Ukrainian President Yanukovich’s last minute rejection at the altar. He faced severe Russian coercion and is inherently pre-disposed to Moscow and Putin’s neo-Soviet “Customs Union”. After pro-EU riots broke out in Kiev, the Russians declared it all pre-planned foreign manipulation.

Ukraine’s economy is a wreck. Its contraction during the 2008-09 global economic crisis the highest percent in the world. Its leading export is commodity steel. Yanukovich’s government has no love for economic reforms as demanded by the IMF as a precondition to financial support. Ukraine’s government is almost as dysfunctional as Washington. Yanukovich’s political position in parliament hangs by a thread. Demographically, Ukraine is also a quasi-basket case.

Why All The Dancing

Like all real estate, though, it’s location, baby. (And then the bodies, however fewer). Centrally located between the EU and Russia, Ukraine borders on 7 different countries. Ukraine is, in fact, the largest single political body from Russia to the Atlantic. Russia supplies 50% of European gas through Ukraine although work arounds are in progress. Major elements of the former Soviet defense industrial base are still in Ukraine, from jet engines to tanks. Russians complain bitterly about being undercut with cheaper Ukrainian technology during sales with Beijing and others.

For the Russians, Ukraine in a ‘Customs Union’ turns Moscow convincingly again into a true Great Power. Perhaps something more. For the reasons noted above. Russia without Ukraine remains a marginalized geographic player. Her options? Eventually knocking for EU membership herself or throwing her lot in as Beijing’s vassal. One can see why the Russians are playing for keeps.

Plus, the Russians want bodies. Sizable numbers of ethnic Russians live in eastern Ukraine. And Ukrainians over all are demographically and culturally close to Russians in many ways. (Arguably, the modern Russian State came from Kiev long ago). This joint cultural affinity fires Moscow’s vision for a Slavic civilization as alternative to Beijing or Brussels.

Some claim Russia is not experiencing a demographic crisis. Moscow doesn’t see it that way. The basic birth rate percent has recovered from earlier calamity. It’s also not the point. Even at a recovering, somewhat stable European norm (Russia isn’t) she would need almost 40 years to replace the lost cohorts. Compounding Russia’s problem? The few children born during the trough years of 1991-1996 are just now entering child bearing years. Meaning a double dip trough of fewer 1991-1996 kids producing fewer kids.

All this leads to Moscow’s political psychology fearing immigrants (read from the ‘Stans) impinging on Slavic existence. Not just in Moscow but across the vast land. Russia herself is home to many different nationalities such as Tartars, etc. — the ‘immigrants’ from the ‘Stans exacerbate fears. The recent Russian riots at a Moscow market over immigrants with over 1,200 detained merely an example. It’s all certainly existential in many Russians’ thinking. So Ukraine’s declining population still is a shot in the arm. A faster net add to the Russian/Slav demographic than hoping for 80 years of birth rate compound interest.

For the EU, population matters, too. Their Eastern Partnership concept always had a economic component. The Russians are keen to highlight that agenda in Ukraine. But Europeans collectively also are not growing (statistically at the macro level). Population growth matters, too. And there is a link with geo-economic priorities. In the New Economy, new customer acquisition is in some ways as important as a cry from a crib. Body count psychology drives EU expansion as well.

Still, the EU is also ambivalent. The Eastern Partnership, begun in 2008, provides a vague process for EU integration. It tempts Ukraine with promises of EU affluence but the conversation avoids hard questions of how. On important cultural issues in demographically split Ukraine, the silence is deafening. Just how much does the EU want to dance with Kiev?

The American Response Should Be To Keep Them Dancing

We’ve written before here that the EU began as a European answer to feared American ascendancy. Today’s EU began over a 110 years ago. The then Great European Powers fretted about the coming American century riding on her unique continental market and economies of scale. The German answer was a unified Continental Power with customers and population to rival the North American colossus. One fringe German group enacted their own twist to catastrophic, criminal effect. The fundamental geopolitical analysis remained widely shared in financial, industrial, business and other circles. Outside Germany as well.

Don’t forget, today’s EU did not emerge from Maastricht. Brussels bureaucracy and the eventual sanctimonious tone began in fetal form during WW II. Under Speer’s tutelage, Occupied European industrial integration began in 1943 for steel, coal and even aircraft components among French, German and other European suppliers. That’s where today’s EU began. These wartime international linkages gave birth to 1950’s European Coal and Steel Community, the first non-military European integration. Most of European anti-American economic history before 1939 and the collaboration if not support for German integration has been successfully airbrushed away. It’s all rather inconvenient. But there for those who want to see.

The EU’s great error? The belief that economic integration could replace or would lead to political integration. Given its genesis from WW II and pre-war desires to rival American influence, perhaps the EU Project had no other path. Europeans needed Americans to run NATO and keep the Soviets out. Work on EU political integration as an American rival simply verboten and subordinate to the Soviet threat. European conversation on integration focused on economic integration and process. The resulting EU construct is awkward. EU political stumbling post-Maastricht and its continued reliance still on the American order rankles.

Putin and others in Moscow correctly see the EU’s flaw and draw the right historical lessons. Putin when discussing his common ‘space’ alternative, has always stressed the need for political collaboration (read direction) at the outset. Which means Ukrainian integration into the Russian project would have more meaningful political consequences more quickly.

If America were smart, she would encourage the EU and Russians to continue their cadavers’ dance over Ukraine. Ukraine joining either camp is not in America’s interest. The priority must be to ensure the end game is not an augmented Russia.

The EU wasn’t designed to be an ally of the American Century. It’s not just the French appalled at American “hyper-power.” The European Project is to be an economic and political counterweight to American influence. The Russian variant differs in degree significantly and how aggressively disruptive. China’s rise complicates things still further.

In an ideal world, adroit diplomacy would encourage Kiev dancing. While providing some assistance to stabilize Ukraine. Ukraine in the EU is better than an augmented Russia; neither is an immediate American win. Creative American thinking would encourage a transition with a tangible ask from Brussels on an issue of prime American concern. We can help the aspirations of the Ukrainian people. We can pursue American interests, too. Play music for the EU and Russian dance but for our interests. And Ukraine’s.

Make lemonade.