The Road Ahead in Ukraine

7 April, 2015

By Dr Rowan Allport – Senior Fellow

Current hopes for an end to the war in the east of Ukraine rest with the Minsk II agreement, which was reached in its namesake Belarussian city in February 2015. The key points of the deal include the implementation of a general ceasefire; the withdrawal of heavy weapons by both sides to positions behind the front line from which they cannot be utilised; moves towards and implementation of self-governance in rebel territories; the disarmament of rebel groups; and the restoration – by the end of 2015 – of Ukrainian government control over its eastern border with Russia. Ignoring for a moment that the rebels violated the agreement almost immediately with their capture of the city of Debaltseve, the ceasefire, heavy weapons withdrawal and the political component of a move towards regional autonomy have all so far been implemented with a limited degree of success. But uncertainty over whether such halting progress can be maintained means that a major effort by the Ukrainian state, its population and its allies, will be required if the country is to both successfully emerge from the current crisis and continue its broader geopolitical realignment towards the West.

Militarily, Ukraine’s main immediate priority is to prevent any further territorial losses to a renewed rebel/Russian offensive. Geographically, all eyes are currently focused on the port city of Mariupol, a target that would have to be captured if Russia wishes to acquire land access to the Crimea. To the east and north of the city, Ukrainian forces are digging in for what they expect to be an imminent attack, and the US Director of National Intelligence has stated that he expects an offensive to begin within weeks. Reports of additional Russian weapons deliveries to separatists give the impression of a pre-assault build-up, and even rebel commanders are speaking of plans to take the city. However, there is also reason to believe that an offensive may not be inevitable: the amount of time Ukrainian forces have had to prepare defences likely means that Mariupol would be an extremely difficult target for rebels to capture without blatant large-scale Russian involvement. Whilst it might have been possible for Russia to support such an operation late last year against the backdrop of a wider war, going on the offensive now would almost certainly trigger a crippling new round of sanctions – possibly including the country’s expulsion from the SWIFT international banking system. Given the impact of the recent oil price crash on Russia’s economy, many of the country’s economic elite are loathed to give the EU and its allies motivation to ratchet up the embargo still further, particularly given the trade bloc’s apparent decision to sustain those sanctions already in place until the Minsk II deal is fully implemented. However, like many political leaders of his ilk, there is a risk that Putin may feel that he has the ability – if not divine obligation – to try to defy economic gravity in the name of a greater purpose.

Prior to the current unrest, the Ukrainian military was desperately under resourced: at the opening of hostilities in the east of the country in March 2014, the then Defence Minister told parliament that only 6,000 of the country’s 41,000 ground troops were combat ready. Given this, it is hardly surprising that the entire force almost collapsed during the early stages of the war. However, after improvising their way through the first phase of the conflict via a number of initiatives – including the deployment of privately formed (and occasionally far-right) Territorial Defence Battalions and the crowdfunding of army equipment – a series of successful Ukrainian government counteroffensives allowed Kiev to regain the initiative. Whilst support from Russia turned the tide in favour of the rebels once more, culminating in the fall of Donetsk Airport in early 2015, by this time Ukraine had already begun the process of reorganising for the long term. The autumn of 2014 saw the Ukrainian government announce that defence and internal security spending would rise to $3.7bn per year, or 5 per cent of GDP. Although not a huge amount of money (the UK currently spends around $51bn, or 1.9 per cent of GDP, on defence), this near doubling of expenditure represents a marked improvement on the pre-war situation. It was also announced that the strength of the armed forces would rise to 250,000 personnel.

However, whilst it has been in part a lack of money and low numerical strength that helped the Ukrainian military sink into its present dilapidated condition, fixing these issues alone will not solve all the problems it faces.  A shortage of key weapons systems, inadequate training and poor leadership all plague the force. The armaments situation has been made worse by the extensive loss of equipment in the last year of fighting. Whilst it is impossible to find accurate figures, armoured vehicle losses alone suffered by the Ukrainian Army so far are likely to amount to over two hundred tanks and in excess of four hundred armoured personnel carriers and infantry fighting vehicles. Looking at the army’s inventory of equipment, this may seem relatively manageable, but given that much of it was inoperable when the conflict began, the losses suffered are likely to represent a large fraction of the assets which actually functioned. The Ukrainian Air Force has also suffered substantial attrition, with at least twenty aircraft, including fighters, helicopters and transport planes, having been shot down and many others captured. Existing army and air force equipment is being refurbished, and increased tank and armoured vehicle production is being promised via the utilisation of manufacturing facilities inherited from the Soviet era.  But whilst hundreds of ‘big ticket’ items like these are vital in the medium to long term, such equipment will take years to procure and integrate into Ukraine’s military, and the force’s more immediate focus is now on how to stop a renewed rebel/Russian offensive that could begin at any time.

As demonstrated by Russia in the 2008 Russia-Georgia conflict and Hezbollah during the 2006 Lebanon War, the most efficient way of stopping advancing armour – aside from through air power – is by means of the use of modern infantry-operated anti-tank missiles. However, with the current Ukrainian Army stockpiles of such systems largely past their use-by date and incapable of defeating modern Russian reactive armour, Kiev is in desperate need of current generation weapons. A report by the Brookings Institute published in February 2015 recommended that the US deliver Javelin anti-tank weapons to fill this requirement. The missile has already been purchased by Estonia and Lithuania, two NATO states which also face the threat of a Russian armoured tsunami. So far, however, Western efforts to provide military assistance to Ukraine have been limited to non-lethal aid. Whilst many have disparaged such deliveries, it is easy to miss the point that in general terms, weapons are not in short supply in Ukraine. Indeed, anti-tank missiles were the only lethal system the Brookings Institute report explicitly recommended for delivery. Instead, the type of equipment Ukraine lacks is more specialised – notably counter-battery radars (which identify the firing locations of enemy mortars, artillery and rocket launchers), unmanned aerial vehicles, secure communications systems and high-mobility armoured vehicles. The US has already provided or declared an intent to supply such systems in limited quantities: deliveries of twenty counter-mortar radars began late last year; and last month the Obama administration announced that it would provide Ukraine with hand-launched Raven surveillance drones, secure communications equipment, thirty armoured Humvees and two hundred other Humvees.

Training is another area that, after much delay, the Western powers are now beginning to address. Unexpectedly, it was the UK that was the first to actually put training teams on the ground in the country – although this was in large part due to the Obama administration’s by now trademark decision making paralysis delaying the planned US mission, which was originally announced in August 2014. The deployment is now scheduled to begin this month. Poland and Canada are also considering their own missions to Ukraine. Initially at least, allied efforts will be modest: the UK is sending 75 personnel, whilst the US is deploying 290 paratroopers to train three Ukrainian National Guard battalions. However, it is hoped that the training – particularly the British plans to aid the country’s intelligence and medical support services – will have a significant force multiplier effect.

But almost regardless of the capabilities of the soldiers and other personnel on the Ukrainian front line, it will all come to very little if the leadership of the military is not performing to a high standard. In the aftermath of the fall of the Ukrainian city of Debaltseve in February 2015, Semyon Semyonchenko, a Ukrainian MP and National Guard battalion commander, blamed the military command for the defeat, saying: “We had enough men and material… the problem was with the leadership and coordination of actions”. With this in mind, arguably the most important impact the US and its allies can have is on the command and policy level. Ukraine’s key military establishments have yet to undergo the type of reforms that allowed former Warsaw Pact states to rise to NATO standards, and are still too dependent on Soviet doctrine and institutional thinking. There is also an endemic corruption problem. To this end, the US is embedding advisors within the Ukrainian Ministry of Defence to help to form a coherent long-term security strategy. NATO is also participating in efforts through its Defence Education Enhancement Programme (DEEP) to support military education reform, as well as using a number of other initiatives concerning logistics, C4 and cyber security.

Ukraine’s problems do, of course, go far beyond issues of military security. Even prior to the war, Ukraine had a deeply dysfunctional economy, and was in need of substantial assistance. Indeed, it was the decision by then President Yanukovich to attempt to address Ukraine’s financial issues (and save his own political skin) by dropping the plan for an Association Agreement with the EU and instead accept a $15bn loan from Russia that triggered the protests that overthrew him. The war has cost Ukraine a huge proportion of its economy, with a fall in GDP of 6.9 per cent in 2014 and a further reduction of 5.5 per cent or more expected this year. National debt is expected to reach 98 per cent of GDP by the end of 2015 – a figure compounded by the $8m per day cost to Ukraine of fighting the war. Ukraine’s currency has lost around 70 per cent of its value since the beginning of 2014, and inflation is unofficially running at 272 per cent.

Efforts to counter the current economic crisis centre upon a five-pronged approach of IMF loans, debt restructuring, domestic reform, foreign investment and anti-corruption measures. March 2015 saw the IMF approve a $17.5bn loan, and the current holders of Ukrainian bonds are expected to take ‘haircuts’ to the value of the assets they hold. However, the IMF loan comes with conditions attached, notably the phasing out of lavishly subsidised energy prices that have bled the economy for decades: this year will see household gas prices increase by 280 per cent.

Beyond an immediate financial rescue, longer-term investment is also required. To this end, attempts have been made to arrange an international conference of donors to provide economic support. However, there are now calls for the meeting to be delayed to allow time for both a more comprehensive assessment of Ukraine’s requirements to take place and for anti-corruption measures to take hold in order to prevent the money falling into a “bottomless pit”. On paper at least, Ukraine is making some progress in terms of legislative measures to counter corruption and is attempting to go further, particularly with regards to judicial reform. Perhaps the most fascinating initiative has been the appointment of several foreign technocrats to senior government posts – most notably Chicago-born Natalie Jaresko, who is now the country’s finance minister. The last few weeks have also seen the Ukrainian government make some limited moves against the oligarchs that dominate much of the country. However, much remains to be done, and with Ukraine currently ranked 142nd out of 175 countries on Transparency International’s Corruption Perceptions Index, international donors and investors may be wise not to part with their money just yet.

In the longer run, Ukraine has announced that it has set a date of 2020 for the submission of its EU membership application. In the meantime, however, there is little shortage of further work to be done with regards to European integration. The much delayed free trade element of the Association Agreement between the EU and Ukraine will provisionally come into force at the end of 2015. Beyond that, the Ukrainian government has published ‘Strategy 2020’, a five year development plan which is designed to ready the country for EU membership. Whether the EU will be ready for Ukraine is, of course, another matter entirely.

Ultimately, however, all the money, good governance and reforms in the world will come to little if Ukraine is dismembered by Russia and its allies in the east of the country. In many ways, Ukraine has been unfortunate in that the point at which the country has picked to attempt to transform itself has coincided with both a period of weak Western leadership and post-empire Kremlin thuggery. However, it can at least be said that this crisis has served to give Ukraine and its allies an impetus to undertake the type of actions that would have been unlikely in more benevolent circumstances. The smart thing for Vladimir Putin to have done following Yanukovich’s ousting would have been to sit back and let the new Ukrainian government collapse in the face of mutual recriminations, public disenchantment and international indifference, as happened following the Orange Revolution in 2005. His decision to do otherwise may be one from which he never recovers.