The $61-billion assistance to Ukraine, approved recently by the US Congress, provided a much-needed (and much-delayed) lifeline to a country facing a crisis of manpower, equipment and ammunition. It overcame an increasing scepticism (reflecting the public mood in sections of American society) about whether the funds could achieve the objective of defeating Russia. Serious political analysts, who had hitherto expressed unshakeable faith in a Ukraine victory, were hinting at the need for a negotiated settlement. The influential commentator Ian Bremmer of the Eurasia Group—by no means a sympathiser of Russia—has predicted a partitioned Ukraine by end-2024.
In the event, the bill for aid to Ukraine got the requisite votes. Though it is often said that only a small group of MAGA (Make America Great Again) acolytes of former President Donald Trump are opposed to Ukraine aid, about half the Republican representatives opposed the measure. It raises doubts about the prospects of future American assistance to Ukraine, and therefore the question whether the Europeans can step up to fill the gap.
This arms injection will ensure an immediate strengthening of Ukrainian resistance that will prolong the war, while other strategies are explored, to weaken Russia before it comes to the negotiating table. A concerted challenge to Russia’s hold on Crimea, and to its naval profile in the Black Sea, have been explicitly mentioned. The success of this and other strategies remain to be seen. Of importance to the Biden administration is that a setback in Ukraine does not happen before the November presidential elections.
Even as the American support has stuttered, European countries led by the UK, Baltic, Scandinavian and some Central European nations—with France now elbowing its way to the fore—advocate much stronger military and economic pressure to push Russia towards the strategic defeat that has been the West’s stated objective since April 2022. They have announced grandiose plans for rapidly upgrading their military capacity to assist Ukraine. So far, Europe’s economic assistance to Ukraine has somewhat plugged the gap caused by US delays, but its inability to meet the huge Ukrainian demand for equipment and ammunition remains a major concern.
Meanwhile, Ukraine continues its aggressive effort (backed by the US) to secure the broadest possible international support for the 10-point peace plan unveiled by President Zelenskyy in 2022. About half a dozen international meetings have been convened in various countries to promote this plan. They have been attended by representatives of about 80 countries (according to Ukraine), mostly at the level of officials. The most ambitious initiative is the proposed peace summit to be hosted by Switzerland in June.
A major drive is underway to attract the largest possible attendance of heads of state and foreign ministers, and to get them to sign off on a communiqué which, Ukraine hopes, would demonstrate the “diplomatic isolation” of Russia. A number of countries outside the Western world have attended these meetings, but have so far declined to be party to statements condemning Russia or explicitly supporting the peace plan. It would be interesting to see how much the Swiss initiative can move the needle.
It may be noted that the peace plan is not a blueprint for a negotiated settlement. Among its principal elements are a Russian withdrawal from all Ukrainian territory (including Crimea, annexed in 2014); a special international tribunal to try Russian officials for war crimes; and reparations by Russia for the damage caused by the invasion to the Ukrainian economy. These are essentially the terms of a Russian surrender. Given the current ground situation, it is difficult to see how Russia can be compelled to accept them, unless the military situation changes dramatically and/or developments outside the battlefield turn the tide in Ukraine’s favour.
One Ukraine-related piece of legislation would have implications beyond the current conflict. The Rebuilding Economic Prosperity and Opportunity for Ukrainians Act authorises the US President to confiscate sovereign Russian assets (Russia’s foreign exchange reserves in dollars) and transfer them to Ukraine for its reconstruction. These reserves were frozen in February 2022.
The amount involved, about $6 billion, is relatively small, but the principle involved is substantive. The UK, with an estimated $30-35 billion of Russian central bank assets, seems more than willing to follow suit. There is pressure on Europeans to do likewise, with the roughly $300 billion of Russian reserves in their jurisdictions.
The proposal should be viewed with considerable concern in much of the developing world, which is bound to see it as yet another coercive tool in the hands of the economically powerful to use against weaker powers that may cross their interests.
The European Central Bank has opposed this idea, as also the milder one of using the revenues from these assets—Euro 2.5 to 3 billion annually. The ECB fears that such moves may cause countries to reconsider the proportion of their reserves to be held in Euros, thereby undermining the currency. As the strongest global reserve currency, the US dollar may not be much dented by this action. But the euro may yield further ground to the dollar as a reserve currency.
The EU will be under considerable pressure from the US and some European supporters of Ukraine to follow the US example. Recent experience has shown that the G7 and Europe have been willing to sacrifice some of their interests for the Ukrainian cause; this will be another test of this proposition.
The point here is not to quibble about ‘punishing’ Russia for its actions. It is about the wider repercussions of precedents set by coercive economic actions. They would reinforce the belief in the Global South that the ‘rules-based order’, a ubiquitous term in multilateral documents today, will continue to mean rules set by the powerful, for compliance by the weak.
(Views are personal)
(raghavan.ps@gmail.com)
P S Raghavan | Distinguished Fellow, Vivekananda International Foundation, and a former diplomat