The Crisis in Ukraine Unfolded

Over the past days and weeks the situation in Ukraine has escalated rapidly with protests all over the country intensifying, president Yanukovych fleeing Ukraine, Russia invading Crimea, the US becoming involved in negotiations and the increase in gas bills by the Russian state-owned energy company Gazprom.

It is alarming to see that Ukraine, a country that was close to joining the European Union, now has a new government and is facing huge debts and political and social instability. Some describe current events as being the most serious tension in Europe since the cold war ended.

But how did it start?

The crisis in Ukraine began in November 2013 when president Viktor Yanukovych decided not to sign an agreement with the European Union and to strengthen its ties with Russia, leading to widespread protests. In December 2013 around 800,000 demonstrators occupied Independence square and the city hall in the Ukrainian capital Kiev. By mid-December Russia agreed to buy $15bn of Ukrainian debt and to reduce gas prices by a third.

In January 2014 Ukraine’s Prime Minister Mykola Azarov resigned as the situation escalated with the first protestors being killed as government buildings and offices became occupied. In February violence increased drastically; many more people were wounded and killed. At this point, the EU decided to intervene and sent out three foreign ministers to try and reach an agreement. Russia also sent a representative. On the 21^st of February, president Yanukovych signed an agreement with the leaders of the opposition that would hand powers back to the parliament so that a new government could be formed.

One day after signing the agreement, Yanukovych disappeared, reappearing a few days later in Russia. In the meantime, Olexander Turchynov was appointed as temporary president of the new government. One of their first actions was to issue a warrant for the arrest of Yanukovych.

Crimea

Crimea is a peninsula located in the south of Ukraine and on the northern coast of the Black Sea. It is an autonomous republic where most of the population consider themselves as being ethnically Russian. Russian is also the dominant spoken language in the region. Crimea was once a part of Russia, having been annexed by the country in 1783, until it was transferred to Ukraine in 1954 under the regime of the Soviet Union.

On the 27^th of February, similar protests over the EU–Russia deals broke out in Crimea. On the same day, Pro-Russian gunmen took advantage of the chaos and took control of key buildings in the Crimean capital Simferopol. The situation in Crimea escalated significantly as Ukraine’s interim president Oleksandr Turchynov advised Russia not to interfere in the area, since the Russian Black Sea fleet is located in the port of Sevastopol near Simferopol.

The majority of the population in Crimea backs the ousted president Yanukovych believing that he was a victim of a coup. This subsequently encouraged separatists within the parliament to vote for becoming a part of Russia once again. On the 6^th of March, the parliament scheduled a referendum for the 16^th of March.

Diplomatic Tensions

The United States warned Russia that any military intervention would be a mistake. But Russia on the other hand stated that it would defend the rights of its citizens and that violations to human rights would not be tolerated.

Despite the warnings, Russian president Vladimir Putin sent an appeal to the Russian parliament requesting permission to mobilize Russian forces in Ukraine. Putin wrote “I’m submitting a request for using the armed forces of the Russian Federation on the territory of Ukraine pending the normalization of the socio-political situation in that country”. On the 1^st of March, the parliament approved his request.

As a result, interim president Turchynov told Ukraine’s army to be prepared. In a phone call to president Putin, US president Barack Obama demanded Russian forces be pulled out of Ukraine but Putin stood his ground by asserting that Russia has the right to defend its interests as well as Ukraine’s Russian speakers.

Economic Repercussions

In addition to the diplomatic tensions caused by the Russian involvement in Ukraine, economists warned that it could also have serious economic consequences for Russia, especially after the Sochi winter Olympics, becoming another drain on its resources. Further economic loss is also predicted due to the strained relations between Russia and western countries. Such consequences were seen on the 3^rd of March, which became known as ‘Black Monday’ as the Russian Stock market fell 10% as a result of the military intervention.

Gazprom

Ukraine is going through turbulent times with the formation of a new government, and with debts continuously increasing and a stagnant economy. To add to this pressure, the Russian company Gazprom implied that gas prices would increase starting next month since the Ukraine did not pay what it owed to the company for the month of February. Overall, Ukraine owes Gazprom $1.55bn in unpaid debts. President Putin claimed that the increase in gas prices had ‘nothing to do’ with the situation in Crimea. He stated: “We gave them money. They failed to deliver.”

The increase in gas prices will put a further strain on Ukraine’s economy and also increase the necessity of an international bailout. The new Ukrainian government requested the support of the International Monetary Fund (IMF) and claimed that they will need around $35bn for the next two years so that a default can be avoided.

The United States plans to offer $1bn in loan guarantees to Ukraine to assist the country in its recovery and the European Union has also offered the new government financial assistance worth 11bn euros for the following years once Kiev reaches an agreement with the IMF. Germany has also stated that it would provide bilateral financial assistance to Ukraine.

No end in sight?

On the 5^th of March talks to reach an agreement between Russia and Western countries were held in Paris but no agreement was reached. Just as Obama called Russia’s actions in Crimea a mistake, the foreign secretary of the UK, William Hague, echoed his remark calling it a “big miscalculation”. To some extent they may be right. If no diplomatic agreement between Ukraine and Russia is reached, Western countries might implement economic sanctions against Russia and annexing Crimea would, without doubt, damage diplomatic ties with the West. Effects of this can be seen already as the EU halted its negotiations with Russia concerning visa-free travel for Russian citizens in Europe. More importantly for Putin, European leaders are also considering reducing the import of gas from Russia and have expressed intentions to import more of it from the US. This would have a huge impact on the Russian economy and its diplomatic leverage but it is yet to be seen if these are simply empty threats. Regardless, Putin should consider his options carefully as just one wrong move might irrevocably jeopardize Russia’s economy and severely set back diplomatic relations with Western countries.

*Cover image ‘IMG_6187‘ by Sasha Maksymenko