Eng_Donbass_ost.indd

in the publication reference to the publication is obligatory.

For information:
National Institute for Strategic Studies (NISS)
+38 044 234-5007, +38 044 286-1959, +38 044 286-2125
7-a Pyrogova st., Kyiv 01030
e-mail: info-niss@niss.gov.ua

Printed in Ukraine

Donbas and the Crimea: the value of return : monograph / under the General

Editorship of V.Horbulin, O.Vlasiuk, E.Libanova, O.Liashenko; translated into
English by A.Kvashuk – Kyiv: NISS, 2015. – 184 pages.

ISBN 978-966-554-261-2

Readers are invited to study complex issues of war in the Donbas and the

annexation of the Crimea. The research was carried out from the standpoint of
national security of Ukraine. Russia’s military aggression is seen as a stress test for
global and national security and a catalyst for rebooting Ukraine’s foreign policy.
This Research analyzes the reasons and consequences of the temporary loss of
control over some of Ukrainian territories. The book substantiates the position of
Ukraine and covers the approaches of the EU and Russia to resolving the Donbas
situation in the Minsk process. The conditions of reintegration and recovery
priorities of the Donbas are identified herein. Current publication outlines the
ways of overcoming the social consequences of Russia’s armed aggression against
Ukraine. The author provides forecast for further developments around the Donbas
and the Crimea and scenarios of the future of Ukraine in the globalized world.

The results of the research can be useful for politicians, political analysts,

senior state officials, scientists in the field of national and international security
and for all the people concerned about the future of Ukraine.

Reviewers

Editor in Chief

Editorial board

Yevhen Bersheda – Doctor
of Economy, Professor,
Corresponding Member of
the National Academy of
Sciences of Ukraine, Deputy
Director of the Legislation
Institute of the Verkhovna
Rada of Ukraine.
Volodymyr Ohryzko –
Ph.D., Extraordinary and
Plenipotentiary Ambassador
of Ukraine, Minister of
Foreign Affairs of Ukraine
(2007-2009).
Oleg Rafalski – Doctor
of History, Professor,
Corresponding Member of
NAPS of Ukraine, Director
of The Kuras Institute of
Political and Ethnic Studies
of NAS of Ukraine.

Volodymyr Horbulin –
Doctor of Engineering,
Professor, Academician
of The National Academy
of Sciences of Ukraine,
Director of the National
Institute for Strategic
Studies.

Olexandr Vlasiuk – Doctor
of Economy, Professor,
Corresponding Member
of the NAS of Ukraine,
First Deputy Director of
the National Institute for
Strategic Studies (Deputy
Editor in Chief).
Ella Libanova – Doctor
of Economy, Professor,
Academician of NAS
of Ukraine, Director of
Ptoukha Institute for
Demography and Social
Studies.
Olexandra Liashenko –
Doctor of Economy,
Professor, Scientific
Secretary of The National
Institute for Strategic
Studies.

CONTENTS

Foreword ....................................................................................................................................4
R

USSIAN

ARMED

AGRESSION

STRESS

TEST

FOR

GLOBAL

AND

NATIONAL

SECURITY

......................................................................................9

Section 1. Armed conflict in Ukraine in terms of geopolitics ................................. 11

1.1. The system of international relations in the terms of Russian threat ................... 16
1.2. The traps of geopolitical setbacks of West for the global security ...................... 21
1.3. The proactivity of Ukraine’s foreign policy

in opposition to armed aggression ............................................................................. 27

1.4. Challenges of the armed aggression as a catalyst

for restarting the foreign policy of Ukraine ............................................................ 32

Section 2. Counteraction instruments against annexation
of the Crimea and termporary occupation
of separate Donbas territories .......................................................................................... 37

2.1. Russian secret services in the Crimea and Donbas: ways of counteraction .......... 37
2.2. The features of conducting Anti-Terrorist Operation .......................................... 43
2.3. Media-manipulating technologies of Crimea annexation ................................... 49

Section 3. Ukraine, the EU and Russia in the Minsk process
of settling the situation in the Donbas........................................................................... 55
Section 4. The loss of resources due to the military actions ................................. 76
Section 5. Social consequences of Russian armed aggression
against Ukraine ..................................................................................................................... 85

5.1. Sociodemographic losses .............................................................................................. 86
5.2. Poblems of Internally Displaced Persons ................................................................. 89
5.3. External emmigration revitalization .......................................................................... 98

KRAINE

TESTING

ANNEXATION

THE

RIMEA

......................................................... 103

Section 6. Consequences of the Crimea annexation:
stagnation in development and international sanctions ....................................... 105
D

ONBAS

BACK

THE

FUTURE

............................................................................................. 113

Section 7. Conditions of reintegration
of the temporarily occupied territories of the Donbas ........................................... 115

7.1. Strategy for Donbas ................................................................................................... 115
7.2. Political and legal issues of restoring the rule of law .......................................... 121

Section 8. Institutional support of restoring the economic potential
of the uncontroled territories ........................................................................................... 134
Section 9. Social dimension of settlement scenarios
in the Donbas situation ..................................................................................................... 136
F

UTURE

THE

RIMEA

LONG

WAY

HOME

..................................................................... 141

Section 10. Scenario forecasts regarding the progress
of the situation around Crimea ....................................................................................... 143

10.1. Crimea: refusal or return? ...................................................................................... 143
10.2. Possible scenarios of returning Crimea ................................................................ 145
10.3. Principles of the economic policy of Ukraine

concerning the annexed Crimea ............................................................................. 157

SCENARIOS

THE

FUTURE

............................................................................................ 161

Afterword .............................................................................................................................. 179
Authors................................................................................................................................... 183

FOREWORD

Liberty is always dangerous, but it is the safest thing we have.

G. Fosdick

Responsibility is the price we pay for our power.

Winston Churchill

Since the time immemorial the life of people has been rich with problematic

issues, with crises and conflicts creating the most favorable conditions for their
greatest concentration. However, any number of problems can be reduced to
several most significant. On the one hand, the mankind has for centuries been
concerned about the security. The man’s desire to be safe is clear and natural,
as security is the necessary and essential condition of man’s existence, though
not the only one. On the other hand, it has been the freedom that ensured the
sufficient conditions for human life. Despite the fact that security and freedom
are complementary, they at the same time have many contradictions being in-
terrelated and interdependent categories.

The modern world becomes more secure but at the same time it continues

to develop. In spite of the diffusion of the processes of security and development
(which, in general, means the establishment of the balance between meeting the
needs of humanity and the protection of the interests of future generations),
these two processes may contradict each other.

Different approaches to security problems (whatever the object field may

be) may either coincide with the goals of sustainable development in different
ways or contradict these goals. What is the role of freedom here? Freedom
always creates a dynamic environment for development, but this environment
can be dangerous. Security also generates certain conditions for development,
but they are essentially static and, thus, restrain or even hinder the develop-
ment. Even if we consider security as a certain degree of freedom, such restric-
tive framework can be a sort of “checkpoint” of development, which, unfortu-
nately, does not protect it from barriers and obstacles

. Nevertheless, security

and freedom, as well as security and development do not strongly oppose each
other and are rather considered united with the manifestations of “outbreaks”
of the struggle between them at certain times. One of these modern “out-
breaks” made the eternal questions of security and freedom climax for Ukraine.

Юсуф Ш. Экономика развития сквозь десятилетия. Критический взгляд на

30 лет подготовки Докладов о мировом развитии. – М.: Изд-во «Весь Мир», 240
с.; Fundamental analysis of “Reports...” of the World Bank confirms thesis about con-
tradiction of development and safety (widely – providing peace).

Foreword

In a simplified consideration it may seem that now this climax focuses

only on several issues.

The Minsk negotiations: should they be prolonged till the next year, and

if so, what the reincarnation should be?

Local elections: how to make possible their legitimate and safe conduct

on the whole territory of Ukraine?

The question of all times about the “crime and punishment”: amnesty for

the leaders and members of terrorist groups.

The primary problem is not even whether there is any correct answer to at

least one of these questions. Despite blocking any decision to solve those issues,
the uncertainty about the measure of “correctness” of the solutions is not the
most crucial either. The problem is that the answers to these questions are not
focused on “today for today” regime. Their “target” is the future. Fluctuations
around the answers may lead either to the massive futurological shock or the
further fragile security of development of Ukraine and the whole world.

Those three seemingly simple questions provoke an entire network of new

questions, the answers to which can hardly be staffed even into the complex
decision tree. The answers to such questions cannot be univocal, indispu-
table and undoubtedly correct, so the subsequent research applies the scenar-
io approach to solving Ukraine’s crucial problems.

The monograph is fundamentally different from all previous attempts

made by the scientists in various fields of knowledge, journalists, and civil
activists to highlight the delicate topic of the annexation of the Crimea
and the war in Donbas.

The first difference of the research lies in its comprehensiveness reflected

in the unification of the Donbas and Crimea issues. The research is not eclec-
tic; it allows the reader to trace the common perquisites of two problems.

The second difference concerns the predictive focus of the study. In con-

trast to previous scientific and publicist works, this study is aimed not at the
retrospective but at the prospective analysis of the developments and trends
reflected in the description of possible scenarios to resolve them.

The last and the most significant difference is the approach to the studied

problems solely from the point of national security of Ukraine. That is why
the question of “unity and struggle” of security and freedom of plays a lead-
ing role in all the proposed scenarios for the future. Not the future of Donbas
itself. Not the future of the Crimea itself. But the future of security and free-
dom in Ukraine in the hazardous globalized world.

So what is the monograph “Donbas and the Crimea: the value of

return” about?

The unflagging primary problem for Ukraine is to ensure national se-

curity. Neither the annexed Crimea nor temporarily occupied territories of

Donbas and the Crimea: the value of return

Donbas should be considered a “thing-in-itself”. The first part of the mono-
graph, therefore, fairly highlights the issues of national security of Ukraine in
the context of the annexation of the Crimea and the temporary occupation of
certain territories of Donbas. The broad political analysis conducted in this
part will help to understand the place of Ukraine in the geopolitical context,
and how temporarily uncontrolled regions change its role. Balanced and ra-
tional (the vast majority of scientific publications do not provide the same)
view at the armed aggression of Russia against Ukraine clearly defines the
threats and challenges to national security. Significant attention is given to
the participation in the Minsk process of three states, namely Ukraine, the
EU and Russia.

Despite the fact that modern scientific, political and media space are full

of information about the losses incurred by Ukraine as a result of the annex-
ation of the Crimea and the temporary occupation of certain areas of Donbas,
such information usually appears to be fragmented and ascertaining rather
than analytical. In the second part of the monograph, the experts of the NISS
managed to cover and carefully analyze the social and economic consequenc-
es of the armed aggression of Russia in Donbas and the implications of the
annexation of the Crimea. For many of those who “boldly and loudly” but
completely groundlessly claimed that “having abandoned Donbas and given
away the Crimea, Ukraine did not lose anything,” the scale of the losses will
become evident. Resource losses will be found in industry and agriculture;
infrastructure losses will be seen in transport, energy, housing and public
services. Moreover, one will clearly see financial losses, damage from the en-
vironmental degradation, losses in science, education, culture, and medicine.
This is not a complete list of losses, and most of them are irreversible.

Instant attractive and relevant changes in the political regime quick-

ly become vague in the in human memory

. The complete opposite to this

maxim, perhaps the most important even despite the severity of many oth-
er losses for Ukraine, are the social consequences, engraved in the human
memory and subconscious. Ukraine has never before faced such challenges
in the social sphere plagued by problems. The monograph professionally and
convincingly analyzes the socio-demographic losses and challenges of the
displaced persons, the destruction of social infrastructure, the “victories and
betrayals” of the mobilization.

Considering the words of the outstanding politician of the last century,

the biggest lies are there during the war, before the election, and during the
hunt. In the present study, there is nothing that deals with some pessimis-

Аслунд А. Велике переродження: уроки перемоги капіталізму над кому-

нізмом / А. Аслунд, С. Дянков. – Львів: Вид-во старого Лева, 2015. – С. 5.

Foreword

tic keynotes like “Ukraine has lost the information war”. Instead, the study
exposes the entire chain of manipulative information technologies against
Ukraine and focuses on the ways to resist such technologies. It is often said
that the mind is the main battlefield, so this part of the monograph can be
considered “the arsenal of mind weapons”.

Everyone always wants to look into the future. It is clear that most of the

study focuses on the future. The future of Ukraine. Those who love to read
books “from the end” will find many surprises in the monograph. Scientific
research requires consistency and order, so it is better to go into the “future”
reading the book from the beginning, but with a clear understanding of the
cause-effect connections between the past and future of Ukraine. One can
get acquainted with the scenarios of reintegration and rehabilitation of Don-
bas and the return of the Crimea in future. “The politician must be able to
predict what will happen tomorrow, next week, next month, and in a year
later, and then explain why it did not happen” – Winston Churchill once
aptly noted. Despite the pluralism of thoughts, there is no alternative to the
preservation of Ukrainian statehood. This is the principal position of the au-
thors of the monograph.

Finally, the biggest question: what shall we do to make the future come

true? Here the politicians have to say their words. It is believed that politics is
no less interesting than the war but more dangerous. In war, one can be killed
only once while in politics this can happen many times.

Volodymir Gorbulin, the politician, and the scientist predicted the coor-

dinates for Ukraine to find its future yet in 2009: “Ukraine is already drawn
into the world whirlpool. Many factors determine Ukraine’s role in the new
division of the world and building of the new world order. But this participa-
tion can be either active or passive. And for Ukraine, this question may be the
most important precondition for the statehood development or, conversely,
of its stagnation ...”

The classical management concepts suggest that there are always three

ways of intervention in the functioning of the system based on the results of
diagnostics of its state: non-interference, change of the system or change of
the conditions in which the system operates.

It is obvious that by changing the system of its national security and

mechanisms of its maintenance, Ukraine will change the whole world.
Ukraine will never be the same it was before. Neither will be Donbas and
the Crimea. However, this cannot become an obstacle to the return of the
borders of 2013 Ukraine. And any “historical discourses” claiming that eve-
rything went “historically wrong” are obviously not appropriate if we speak

Горбулин В. П. Без права на покаяние / В. П. Горбулин. – Х., 2009. – С. 313.

Donbas and the Crimea: the value of return

about the modern history of independent Ukraine of the 1991 sample. This
story is just another new chronicle of struggle and unity of security and free-
dom, so there is no place for “non-interference” answer to the question of the
return of temporarily uncontrolled territories. Another thing is important
here, and that is the price of the issue.

The largest share of this price has the answer to the question of how to

“demine” consciousness?

Having chosen the European path, Ukraine strived

for freedom, but faced with the kind of thinking and perception of security,
which at the household level is associated with “striving for stability”. Those
who deliberately or involuntary live in Donbas and the Crimea now enjoy this
desired “stability”. Are those people safe? In their imagination – yes. Are they
free? This is a rhetorical question and a question-dilemma. However, it is at
least possible to try to find the answer to this question in the present study.

A more precise answer can be found if the coordinate system is entire-

ly changed. It is known that while operating, any system can dynamically
change its state in one of the two opposite directions. It can either move to-
wards the security and perfection or hazard and degradation. Under these
conditions, an adequate model of national security management will involve
the system and situational approaches that take into account two types of re-
sources: knowledge, which is inexhaustible and increasing while used, and the
time, which is a nonrenewable resource particularly important in the context
of rapid changes.

Thus, today the “price of return” directly depends on how quickly the

consciousness will be “demined” to solve the problem of national identity,
which, in its turn, should be made possible by the satisfaction of economic
and social interests of Ukrainian citizens. One cannot call for “demining” of
the consciousness of the citizens of the Crimea and Donbas without “disarm-
ing” of the brains of the residents of other regions of Ukraine.

To make this happen we need time, but we should once again recall Volo-

dymir Gorbulin’s predictions: “...At the turn of 2020–2025-s, Ukraine has
only two ways: either to become a strong state or to face the risk of absorp-
tion”

. It seems that the countdown has begun five years earlier.

The issue of national security of Ukraine almost entirely depends on the re-

sults of solving the problems of Donbas and the Crimea. Without such a solu-
tion, it will long remain the problem similar to the passage of a camel through
the eye of a needle. At the same time, the research in the field of national securi-
ty always requires careful attitude and concentration, which should determine
the style of the academic life. This research in incompatible with indifference.

Slogan of the short movie «Mina» – the first feature film from the ATO zone,

nominee of the film festival «Molodist» of the 2015 year.

Горбулин В. П. Без права на покаяние / В. П. Горбулин . – Х., 2009. – С. 315.

Section 1.

ARMED CONFLICT IN UKRAINE

IN TERMS OF GEOPOLITICS

The chessboard trembled and the

pieces moved on to different squares.

Paul Goble

Russian aggression against Ukraine, annexation of Crimea and the

de facto occupation of separate regions of Donbas have all ushered in a
new era of stimulated international conflicts, reinforced the influence of
the already present negative factors in the international security envi-
ronment and having violated international legal basis of the world order
launched additional destructive tendencies. In event of a return to the
“rule of force” in international relations (that is what Russia is trying to
accomplish under its revanchist policy) under the conditions of global-
ization emerges a risk of the international system collapse, the disinte-
gration process will cause further uncontrolled multiplication of threats.

Ukraine’s position on the world stage has suffered major chang-

es. It demands a thorough understanding and complete definition of
the key terms of foreign policy for our country. Ukraine needs a clear
foreign policy doctrine with the objective of ensuring national sover-
eignty and strategic territorial integrity aimed at reconstruction after
the annexation of Crimea and armed activity in Donbas region.

Processes following the end of cold war despite the hopes to settle

disputes have caused new challenges to the global security commun-
ity. Dissolution of the bipolar ideological scheme that determined the
world order has not eliminated the competition of the more advanced
and up-to-date doctrines and strategies capable of establishing their
own orders. Aggravation of the conflict between dominant models of
modern world interpretation leads to new disputed and furthermore
to new armed conflicts.

A modern vision of world order and nature of international relations

is determined by the fact that the world’s geopolitical space is divided

Donbas and the Crimea: the value of return

not so much between powerful countries and their areas of influence,
but more between internal stress-lines, between the areas of stability,
rule of national and international law, where human rights are a pri-
ority and between the areas of uncertainty with its disrespect for law,
multiple local conflicts, overgrowth of criminal forces, everything that
threatens security, stability and development of the human civilization.
In the East, the division line crossed former Soviet countries that after
the end of cold war came to be “buffer area” between Russia and the EU.

Stimulation of local conflicts is the reflection of the geopolitical

competition and fight between powerful states for resources and areas
of political influence. Though contemporary conflict is rather an in-
ternal matter of a country and the cause of it is usually inter-ethnic or
sectarian fighting, external intervention on behalf of powerful parties
very often escalates the conflict instead of settling it. This tendency
is brightly illustrated by the policy of the Russian Federation. Its ac-
tive mediation in settling conflicts all around former Soviet Union has
not had any success in any of the conflicts leading to escalation and
confrontation instead. Having remained present in the areas of con-
flicts Russia has gained additional levers of influence on the situation
in the respective former Soviet states. An attempt by Moscow to use
the same approach in Ukraine failed due to the lack of prerequisites for
inter-ethnic or sectarian depravity. This fact completely disclaims the
description of the Donbas conflict as an alleged civil war.

There still remains the threat of new conflicts emerging in the sur-

rounding areas around Ukraine as well as escalation of the simmering
conflicts, reinforced by the interest of illegal business and international
criminal organizations. A particular threat is the continuation of con-
flicts in Transnistria and Caucasus regions. Ukraine is located in imme-
diate proximity to these regions. These regions are sources of most of
the threats and under the conditions of Russian aggression this factor
becomes particularly dangerous.

A curve of uncontrolled area is forming from the Southern to the

Eastern flank, from Mosul to Donetsk. Within this ungoverned area,
separatists are carrying out uncontrollable force projection and traffick-
ing of military vehicles and smuggling. Existence of such unrecognized
and ungoverned territories in immediate geographical proximity creates
broad possibilities for futher escalation of the conflicts and illegal activi-
ty: drugs and weapons traffic, illegal migration. States located within the

Section 1. Armed conflict in Ukraine in terms of geopolitics

“curve of instability” are doomed to fight these challenges that threaten
their very existence and subdue their economical development thereby
causing their population to live in poverty. Putting together contra-
dictions in the Middle East, Caucasus and Eastern Europe in one knot
threatens with disruption of the situation in the neighboring regions as
well as engagement of the world major states in the confrontation.

On the Western flank, obviously the most stable conservative and

radical views are becoming more popular in the Central and Eastern
European countries (Hungary and Bulgaria particularly) amid unruly
migration of the refugees mainly from the Middle East and Central
Asia (from Syria the most). These trends are threatening the existence
of the Schengen zone and furthermore the very existence of the Euro-
pean Union as a political player and reanimation of the old ethnic and
territorial conflicts in Europe.

Globalization processes that make us better understand global uni-

ty principles and indivisibility of security demand the confrontation
model of international relations to be replaced with a different, more
civilized, system of the world order having at its basis not the opposi-
tion of the global power but their effective cooperation.

Nevertheless today things move in the opposite directions and glo-

balization sometimes becomes a factor enhancing the processes that
cause bigger chaos. In the past, Russian aggression wouldn’t have
drawn such attention, as it would have in the globalized world. In the
end, the system of European and global security turned out to be pow-
erless and ineffective, thus bringing into question the possibility of the
further sustainable development on the continent. Ukraine happened
to be in the midst of the global powers’ clash of interests.

The Military and political situation on the European continent com-

pletely satisfies major tendencies inherent to the global changes. Not so
long ago the particularity of the security environment in Europe was
determined by the fact that possibility of threat of full-scale military
conflict was assessed as “low”, while on the other hand it was considered
that combined effect of new so-called “soft” security threats relating to
globalization could have a devastating effect on the continent.

The world economic crisis has had a significant impact on the es-

tablishment of the European security environment, policy of the major
powers and international security organizations. Besides the internal
economical problems the agenda of multiple European countries in-

Donbas and the Crimea: the value of return

cludes the danger of political turmoil. All of the above creates, for Eu-
ropean countries, additional challenges that may tend aggravate even
more under the influence of external security threats especially amid
the decrease in security and defense expenditures.

Lowering the importance of “hard” security threats on the Europe-

an continent was premature. In light of events illustrated by Russian
aggression against Ukraine, these threats are now being re-examined.

The European security system had to undergo a test because of the

aggravation of the overall situation in the world. The process of build-
ing a larger Europe after the end of Cold war was accompanied by the
creation of new lines of division between the areas of stability and
the areas of uncertainty.

The crisis in the European security system is not a complete return

to the Cold War era. Today the force balance is different. Untill 1989
the major object of Soviet aggression was Western European countries.
Today the target for Russian aggression is Central and Eastern Euro-
pean countries, Baltic countries that are member-states of the EU and
NATO and so-called former-Soviet countries that starting in the 90’s
remained in the “grey” security area – Georgia, Moldova and Ukraine.

Central and Eastern European countries and Baltic countries im-

mediately after the collapse of the USSR determined their final vectors
for internal and foreign policy and having received tremendous eco-
nomical and political support started out their way to the European
and Euro-Atlantic organizations. Using the financial and structured
assitance there has been internal political and economical reforms. On
the other hand new independent states created within the Common-
wealth of Independent States in Eastern Europe, Caucasus and Central
Asia de facto happened to be in the area of political uncertainty, suffer-
ing from Russian pressure or being completely dependent on Russia.

The policies of the West regarding the CIS countries was ambiguous.

On the one hand democratic transformations were supported in these
countries, on the other hand the West tried to elaborate a special rela-
tions format for these countries, a format aimed at the particularity of
the transformation processes that were allegedly going on in the Russia.

As it has come clear countries of European and Euro-Atlantic com-

munity made a serious mistake drawing upon the assumption that Russia
was moving towards Western democracy. At the same time the differen-
tiation processes were underestimated on the former Soviet territory

Section 1. Armed conflict in Ukraine in terms of geopolitics

and as a result former Soviet states with European and Euro-Atlantic
aspirations like Ukraine and Georgia were regarded as the rest of the for-
mer Soviet countries with completely opposite foreign policy direction.

Conflicting values: state authoritarian system in Russia and a sys-

tem of democratic values in Ukraine laid the groundwork for confron-
tation and the critical situation in Ukraine. The Globalization factor
in conflict tensions is determined by the former Soviet states’ choice of
integration in the world macro-economical system: directly as sover-
eign states or indirectly through Moscow-led Eurasian regional model.

Denying the possibility of total US domination on the world stage

Russian federeation is advocating the neccesity of multipolar world or-
der without dictate of one single state or a group on states. In fact this
advocacy has in mind just one goal to outline and secure its own area
of domination in the so-called Eurasian region. The Russian Federation
still considers its immediate CIS neighbors the area of its exclusive geo-
political influence. Russian foreign policy doctrine allows forceful inter-
vention “to protect” Russian-speaking population in other countries of
the CIS and we’ve seen it demonstrated in the course of Russo-Georgian
conflict in the August of 2008 and during the aggression against Ukraine.

An inherent attribute of Russian foreign policy in today’s situation is

attempts to preserve geopolitical control over the situation in the former
Soviet countries of the CIS and these aspirations contradict the Europe-
an integration course of Ukraine and a series of countries of the region.

Aggressive nature of Russian foreign policy has not received proper

evaluation by the international community even after the Russo-Geor-
gian war. Reaction of the international community to the Russo-Geor-
gian war and the further occupation of some of the Georgian territory
was disproportionately weak. Both the U.S. and the EU intensified the
policy of “engaging Russia” ignoring the increasingly aggressive plans
and actions of Kremlin. Only today amid the events related to Russian
aggression against Ukraine has this perception started changing. The
EU has to put together a new concept of relations with the outside
environment in particular regarding its Eastern neighbors.

At the same time Russian aggression is creating a threatening inter-

national precedent that might be used by other powerful geopolitical
players to expand their areas of influence. Such points of confrontation
as the Middle East, Taiwan Strait, South China Sea and the Korean
Peninsula might burst at any moment now. The Crimean scenario could

Donbas and the Crimea: the value of return

become a model for escalation of these conflicts because of the simila-
rity of the key elements in the areas of potential instability: focus of the
leading states on the expansion of their areas of influence, existence of
ethnic divides on the crossings of the influence areas, presence of social,
rebel and terrorist groupings capable of being mobilized to accomplish
geopolitical objectives.

1.1. The system of international relations
in the terms of Russian threat

In the circumstances of post-bipolar world the economical stabili-

ty and prosperity of Western countries were supported by the present
system of international security. Starting the beginning of 2011 this
system faced with new challenges and threats. Events in the Middle
East and North Africa gave a kick-start to the security matters in Eu-
rope and in the world. In terms of the consequences and the scale they
have come to be proportionate to the terrorist attacks of the 9/11, 2001
in the U.S., to the financial crisis in 2008 and overall they have sig-
nificantly influenced the security situation in the world. These issues
have become a harsh test for the international community regarding
the ability to counter the emerging threats collectively.

However, this signal was not properly acknowledged and as a result

the Euro-Atlantic community turned out not to be ready for new strength
tests of the international security system created as a consequence of Rus-
sia’s actions. Russian aggression against Ukraine disrupted the system of
international relations that was built over decades, violated the basics of
regional and global security and therefore questioned the possibility of
further sustainable development on the European continent.

Russian intervention in Ukraine violates multiple international

agreements that supported peace and stability in Ukraine and Europe:
the Charter of the UN, Helsinki Final Act of 1975, the Budapest Mem-
orandum of 1994, the NATO-Russia Founding Act of 1997. In Decem-
ber 2009 the U.S. and the Russian Federation reaffirmed guarantees
of security for Ukraine as a non-nuclear state

nevertheless it had not

Совместное заявление Российской Федерации и Соединенных Штатов

Америки в связи с завершением срока действия Договора о сокращении и
ограничении стратегических наступательных вооружений, 4 декабря 2009 г. Re-
trieved from http://www.kremlin.ru/news/6243

Section 1. Armed conflict in Ukraine in terms of geopolitics

resloved the major problem of the international guarantees of security
meaning the assurance of efficiency and reliability.

However, the goals of Russia are not limited to Ukraine only. It is

not even the re-division of the spheres of influence on the former Soviet
territory. The consequences of the world order disruption have a much
larger scale. Relying on status of a nuclear state Russia strives for
global revenge.

Unpredictable behavior of a powerful nuclear state that refuses to

respect international law and changes state borders for its own bene-
fit has tremendously struck the world order established after WWII.
Such processes might lead to creation of a new geopolitical reality with
broken international relations and misbalance of the global political
system in general. Instead of the world order model they are mak-
ing a world chaos model, where someone is dreaming of control over
global destabilization processes. On the other hand Russia’s actions let
others re-examine their own liabilities before Russia. Possibilities of
such re-examinations go far beyond just legal aspects they touch upon
a wide range of strategic matters: military, financial, energy matters.

As a result of Russia’s actions, and by neglecting their own guarantees

given to Ukraine within the Budapest Memorandum, nuclear non-pro-
liferation is under threat. Since international guarantees given in the ex-
change for refusal of the nuclear status are not viable and the situation in
Ukraine clearly demonstrates it, every state comes to the conclusion
that it should only rely on its own and the most effective way to protect
oneself is to use nuclear deterrence. By possessing nuclear weapons a state
might be seduced to use it as a tool of imposing its will onto other states.

Uncontrollable proliferation of nuclear weapons and means of its

delivery is a threat for certain countries, entire regions and under
certain conditions for the whole system of the world order. In this
context Ukraine with its technogenical production factories (nuclear,
chemical, missile, etc.) might potentially become a target of interest for
international terrorists.

Ukraine as a state refused the nuclear weapons and suffered from the

consequences of the Chernobyl catastrophy and even in the circumstanc-
es of Russian aggresion is not willing to renew its nuclear status but as a
counter-action to these dangerous tendencies Ukraine wants to combine
efforts with other countries of the international community and insists on
more significant guarantees of its security on behalf of the nuclear states.

Donbas and the Crimea: the value of return

The problem of nuclear non-proliferation in circumstances of glo-

balization gains a particularly large scale. Unlike the times of Cold war
when the two superpowers possessed nuclear weapons and maintained
balance in the bipolar world, today in the times of multipolarity this
factor plays a rather destructive role.

Aggravation of this factor caused by the aspirations of certain regimes

to develop nuclear weapon (or its components) stimulates interest to
the nuclear development and specialists in the field in other countries.

The threat of WMD proliferation and nuclear weapons in partic-

ular has gained a very dangerous dimension in the context of events
happening with Ukraine. Our country has demonstrated that nucle-
ar disarmament does not provide considerable security guarantees.
This precedent might push so-called threshhold states towards faster
development of their own nuclear weapon as a tool of nuclear deter-
rence of potential aggressors.

International security organizations have found themselves not

ready for the situations developping in Ukraine. Key elements of Eu-
ropean and Euro-Atlantic security NATO, the EU, OSCE are now
looking for the ways to counter regional and global threats created as
a consequence of Russia’s actions. Any delay becomes a benefit for the
aggressor further aggravating the international security environment.

The inability to make timely and proportionate decisions for set-

tling critical situations in the region demonstrates low efficiency of
the present global and regional security mechanisms and adds to the
agenda the matter of their reformation and adjustment to the contem-
porary tendencies of the world development. It has become clear with
the example of UN Security Council whose activity was practically
blocked by Russia. This fact renders null any attempts to settle Rus-
so-Ukrainian crisis with international security mechanisms.

The current situation in the UNSC reproduces the situation in the

times of Cold War when the UN Security Council was not able to adopt
the resolution concerning invasion by the USSR-led Warsaw treaty
member-states to Czechoslovakia and USSR invasion to Afghanistan.
For now Russia is not only blocking the adoption of the UNSC reso-
lution regarding the crisis but it might as well become an obstacle in
making the decision to send peacekeepers to Eastern Ukraine in case of
necessity. Russia can also negatively influence the content of the man-
date should the decision be made.

Section 1. Armed conflict in Ukraine in terms of geopolitics

UN mechanisms for countering aggression turned out to be in-

efficient in particular in the situation when the aggressor is a ve-
to-wielding permanent member of the U.N. Security Council. At
the same time almost unanimous support for Ukraine on behalf of the
UN member-states and condemnation of the annexation of a part of its
territory has a significant impact on the establishment of international
isolation around the aggressor therefore creating a barrier for the out-
flow of disinformation and lies from the aggressor.

Regardless of the fact that UN mechanisms have very low efficiency

and acknowledging the impossibility to counter modern threats with-
in a single country, Ukraine has always reaffirmed itself as a respon-
sible member-state of the UN ever since the proclamation of its inde-
pendence. Our country remains one of the most active participants in
peacekeeping missions under the UN mandate. We will further active-
ly use all possible means of the UN to stand by our national interests.
Within the context of an actual war choosing Ukraine as one of the
temporary member-states of the UN SC for 2016

–

2017 will become a

new instrument of Ukrainian foreign policy and it will help in main-
taining the conflict with Russian within the focus of the international
political dialogue. This instrument will allow Ukraine to oppose the
aggressor at a very high level putting forward the issue of recognizing
Russia as a State Sponsor of terrorist, laying before the council the
question of depriving Russia of the veto right. Ukraine is not overesti-
mating the benefits provided by the temporary SC membership and is
completely aware of the readiness of the Russian delegation to use its
status to block Ukrainian initiatives unfavorable to Russia.

The current crisis has shown not only institutional weakness of the

UN SC, NATO, the EU and OSCE, but it also involves tactical and
strategic miscalculations in the estimates and perception of the post-bi-
polar security environment made by the above-mentioned organiza-
tions and key international players.

Russian aggression against Ukraine has disrupted the idea of con-

structing general european security system and nullified one of the ma-
jor acheivements put at the very foundation of OSCE – the Helsinki
Final Act declaring such international principles as:

• sovereign equality;
• respect for the rights inherent in sovereignty;
• refraining from the threat or use of force;

Donbas and the Crimea: the value of return

•  inviolability of frontiers;
•  territorial integrity of States;
•  peaceful settlement of disputes:
•  non-intervention in internal affairs;
•  respect for human rights and fundamental freedoms;
•  including the freedom of thought, conscience, religion or belief;
•  equal rights and self-determination of peoples;
•  co-operation among States;
•  fulfillment in good faith of obligations under international law.
The system crisis in OSCE relates to long-lasting disputes between

Russia and a series of other member-states year after year significantly
influencing the efficiency of the organization’s activity in the military
and political field. Russia has demonstrated that it is not willing to fol-
low OSCE demands, for instance regarding the extraction of its force
from Georgia and Transnistria according to the Istanbul agreement of
1999. Doing so Russia accused the OSCE of using double standards,
being unwilling to consider realities and particularities of certain coun-
tries and threatening to leave the organization.

Starting July 2007 Russia imposed a unilateral moratorium on the

implementation of the Treaty on Conventional Armed Forces in Eu-
rope. This action practically led to the destruction of the most efficient
mechanism of conventional arms control in Europe. A consensus still
has not been reached. It’s the absence of such control that has facilitat-
ed the aggression in Crimea and concentration of significant Russian
force on the Eastern Ukrainian border.

Separate countries being objects of criticism on behalf of the OSCE

(especially Russia, Belorus and some former Soviet countries) demon-
strate policy of complete disregard, counteraction and internaional de-
valuation of this organization.

Having annexed Crimea and conducting military aggression in the

East of Ukraine the Russian Fedreation violated the legal basis of the
OSCE existence. Today OSCE representatives take an active part in
settling conflicts and achieving peace according to the Minsk agree-
ments. Beginning of March, 2015 the leaders of Germany, France and
Russia aggreed to address OSCE for assistance in the implementation
of the latest cease-fire agreements.

OSCE representatives conduct observation, makes remarks and

recommendations regarding the situation in the occupied territory but

Section 1. Armed conflict in Ukraine in terms of geopolitics

these recommendations don’t have serious results for the successful
settlement of the problem. Overall, the experience has proven that the
capabilities of internationalization in settling crises by means of OSCE
has a very poor potential. Considerable improvements in the efficiency
of OSCE are possible only under condition of its complete restructur-
ing, development of its mandate, and significant support by the key in-
ternational players and other organizations.

On one hand, Ukraine and key organizations on the European con-

tinent have a large share of common interests in the field of security vi-
tal for most of the European countries. On the other hand, a dispropor-
tionately weak response of the West to Russian aggressive actions has
stimulated the latter for further, even more aggressive and impudent
actions, that have lead to a real war against Ukraine.

1.2. The traps of geopolitical setbacks
of West for the global security

Specifics of the current security crisis is largely determined by the

fact that it is developing under circumstances of globalization meaning
increasingly high mutual interdependence of actors on the world politi-
cal stage. It demands increased responsibilty from the actors of the in-
ternational relations system. On the other hand, neglecting internation-
al obligations especially by powerful states and groups of states leads to
dangerous consequences of regional and global scale disrupting possibi-
lities of sustainable economic and social development in the world.

Russian aggression has revealed ineffieciencies and weaknesses of

European Neighbourhood Policy that turned out to be incapable of pre-
venting or neutralizing the risks for Europe on both Mediterrainean and
East-European fronts. Events in Ukraine proved that instead of what was
predicted by European Neighbourhood Policy “circle of friends” border-
ing with the EU there has emerged rather a “fire circle” of armed conflicts

Aggressive behavior of the Russian Federation has also revealed in-

sufficient effectiveness of the respective bodies of the EU. The Europe-

How to be good neighbors. Retrieved from http://www.economist.com/news/

europe/21597948 ukraine biggest test eus policy towards countries its borderlands-
how be good; Popescu N. First lessons from the Ukrainian Crisis / Nicu Popescu.
Retrieved from http://www.iss.europa.eu/publications/detail/article/first lessons-
from the ukrainian crisis/

Donbas and the Crimea: the value of return

an Union has always been focused on using “soft” force but happened
to be not ready to act in the situation of exploiting “hard” force. It has
also not shown proper effectiveness in opposing aggressive Russian di-
plomacy aimed at formalizing the Crimea annexation. Neither has the
EU demonstrated effectiveness in counteraction to Russian attacks on
Ukraine’s sovereignty.

Defensive factor of the EU foreign policy and its present potential

do not envisage possibilites of rough and concrete actions in such si-
tuations. However the EU can be active in fighting unconventional re-
gional threats that are one of the pillars of Russian tactics in the region.
It is an issue of energy and economy, finance in particular.

For now the EU is resisting the aggressor by means of economic

sanctions that gradually become harder in response to new stages of
aggression.

The position of the European states regarding Ukraine is becoming

the most difficult test of their own capabilities. The EU member-states
have different foreign and economical priorities. Some of them are very
much dependent of economical and political relations with Russia. Sol-
id Ukraine supporters are Poland, the Baltic states and Great Britain.
Among the countries that are not satisfied to some extent with prolonga-
tion of the sanctions are Greece, Cypres, Hungary, Austria, Italy, Spain.

Disagreement does not only concern the attitude towards sanctions.

Stance toward the political isolation of the Putin regime is equally im-
portant. The leaders of Hungary, Italy and Greece violate the unity of
the EU by contacting the Russian president.

Germany’s stance deserves special attention. Germany acts a coor-

dinator within the EU and facilitates agreement in the trans-Atlantic
scale between the U.S. and the EU. Germany’s stance is pragmatic: it
proportionately touches upon the sanctions matter depending on the
implementation of the Minsk agreements. Germany retains solid posi-
tion regarding the Crimea occupation. Thus the position of Germany
in evaluating Russian role regarding Ukraine does also have the same
duality like the stance of the EU overall. Russia is decisively recognized
as the aggressor regarding the Crimea annexation, however the EU is
not so categorical regarding the armed conflict in the East of Ukraine.

A special issue is the EU response to information warfare threats from

Russia. Gradually the EU and NATO start to realize the importance
of this issue. In August 2015 the European Commission established an

Section 1. Armed conflict in Ukraine in terms of geopolitics

expert team with the purpose of taking concrete step in fighting pro-
paganda spread by Russian media onto the East European countries.
The team planned to develop information products, Russian language
inclusive, to provide support for independent Russian-speaking media.

Despite the fact that relations with East European coutries are a

very important direction of the foreign policy, the EU still does not
have a comprehensive strategic perception of its policy in the region.
Particularity of the East European direction is a balanced strategy of
relations with the East European countries on the one hand and with
Russia on the other, it is a serious challenge for the EU.

The lack of a concept for feasible Eastern policy keeps showing ever-

more. The EU “Eastern Partnership” initiative offered in 2009 within
the European Neighborhood Policy covers Ukraine, Georgia, Moldova,
Belarus, Armenia and Azerbaijan and is de facto oriented toward the
old concept of the unity of former Soviet territory despite all the obvi-
ous evidence of the opposite. Riga summit of 2015 proved that the EU
was not ready to embrace the new geopolitical realities in Europe
willing to maintain within the familiar framework. This fact makes it
more difficult for Ukraine to implement its European integration plans.

Today, and in the middle-term perspective, NATO will remain the

key element of the European security. In the circumstances of counter-
ing “hard” security threats NATO’s role in the European security grows
increasingly. The EU security oranizations including defense factor
will be subject for further development according to the Lisbon trea-
ty including protection guarantees for every member-state. These bo-
dies have to execute functions that would enhance and add up with the
NATO activity.

Starting in 2001 the Alliance’s attention is focused on the activity

beyond Europe (Afghanistan, Somalia, Lybia). The Russian military
threat has now moved the risk area back to the European continent.
The key state of the Alliance – the U.S. has to turn its foreign policy
attention to Europe and renew its traditional role of one of the most
important factors of European security.

The Russian Federation is not only trying to stop European inter-

gration of Ukraine but also strives to draw a divide between the West-
ern countries and render the EU and NATO powerless. So the ability
to counter Russian aggression is an operability resilience test for both
the EU and NATO.

Donbas and the Crimea: the value of return

Russian aggression has revealed a weak spot in the defence system of

the Alliance in Eastern Europe and makes it reconsider its capabilities in
the region. For now the estimates are rather negative. Total military ca-
pacity of NATO considerably exceeds one of Russia. However compared
with military strength of separate states of the Central and Eastern Eu-
rope and the Baltics, Russian military strength is way more powerful

With the exception of Estonia and Poland

, Central and Eastern

European states have cut down defense spendings amid the economical
crisis (regional average of 1.1 % of GDP with NATO standard level of
2.0 %). In case of the Washington treaty Chapter 5 collective defence
guarantee implementation these countries are not provided with the
necessary military capabilities.

As a consequence of the limitations made by the Alliance there has

emerged a dual strategic reality. NATO has 3 million people in the mil-
itary 1.5 million of them are in Europe and in Central and Eastern Eu-
rope NATO has only 10 % of its capabilities (300 000 people). Among 28
military bases in Europe 23 are in the Western and only 5 in the Central
and Eastern Europe and in the Baltics. American contingent is concen-
trated almost entirely in the Western Europe. Single Holland has more
American military than all the countries of the Central and Eastern Eu-
rope. Among the 200 units of non-strategic nuclear weapons not a single
one is present in the Central and Eastern Europe nor in the Baltics

Russian aggression has illustrated not only security and defense

vulnerability of our state but as well weakness in the Eastern frontier
of NATO. The Baltic states are vulnerable to similar aggression. They
have Russian speaking minorities and Russia can potentially apply its

Regular forces of RF constitute 1 mln people and the biggest army of CE Eu-

rope is in Poland constituting 100 thousand people, the Baltic state have from 5 to
10 thousand people. Overall regular military force in the region has 290 thousand
people meaning three times smaller than the Russian military. The key branch the
Airforce of Russia has considerable 1,793 combat aircraft against 112 in Poland and
327 in all the member-states of the region. This misproportion will further aggra-
vate amid the increasing defense spendings in Russia for modernization of the mili-
tary and actual disarmament in Europe.

Poland has launched a 10 year military modernization program investing $40

bln. Upon the completion of the program Poland will have the most powerful army
among the NATO member-states in Europe.

Central European Security After Crimea: The Case for Strengthening NATO's

Eastern Defenses 25 March 2014 : Report № 35 / E. Lucas, A. Wess Mitchell, P. B.
Doran, J. J. Grygiel [et. al.]. Retrieved from http://www.cepa.org/content/case-
strengthening natos eastern defenses

Section 1. Armed conflict in Ukraine in terms of geopolitics

“right to protect the compatriots” in these states. Crimea should be-
come a live example of what might happen if you neglect the Russian
threat for NATO member-states in Central, Eastern Europe and in the
Baltics. These threat tactics work, Western experts do not exclude im-
plementation of the same scenario in the Baltic states in particular.

Some other risks have aggravated as well. NATO needs a more

effiecient protection system from energy, economical and informatio-
nal warfare. These three factor make up the tactics of Russia in the re-
gion. New technological challenges have emerged for the Allies. One
of the challenges is finding a way to respond to A2/AD (anti-access/
area denial) strategy, the one Russia is oriented towards developing
its air-defence systems and deploying tactical missile systems along its
Western border.

The Russian maritime exercise that coincided with the peak of

Crimean events, threatening comments by Russian politicians and
experts “concerned” with the well-being of Russians in Estonia only
helped to heat up the situation. Poland and Romania having common
terrestrial border with Ukraine expect military and humanitarian con-
sequences in case of possible Russian invasion to continental Ukraine.

Intervention of Russian forces in Ukraine and annexation of part

of its teritory force to reconsider the strategic provisions of NATO
policy of the last decades.

It has become clear that NATO members’ security was guaranteed

by the faith in the strength of the completed agreements rather than
by military capabilities. NATO member-states in response to Russian
illegal intervention to Ukraine and Crimea annexation had to delay all
military and civilian cooperation with Russia

Russia turning from a partner into an opponent forces NATO to lay

aside the its obligations in order to create ground for implementation
of security guarantees for Central and Eastern Europe and the Baltic
states should such necessity come forth because of Russian aggressive
behavior. Refusal of the “three «no»” principle is strategically neces-
sary for correction of the force misproportion established in Eastern
Europe. It will be the source of long term consequences for the overall
force balance in the region and in the world on the one hand and on the
other for the future activity of the Alliance.

Statement by NATO Foreign Ministers, April 1, 2014. Retrieved from http://

www.nato.int/cps/en/natolive/news_108501.htm

Donbas and the Crimea: the value of return

As the summit in Wales demonstrated NATO wants to avoid ex-

cessive aggravation of the confrontation. At the same time NATO un-
derstands that Russia’s actions demand multidimensional responses: in
legal, operational, tactical dimension as well as in the dimension of a
search for new conceptual approaches to Transatlantic security main-
tenance. The Alliance is also looking new opportunities for cooperation
with the EU in the security field.

Given the rapidly changing global geopolitical situation the lead-

ing military and economical power of the world – the United States are
forced to reconsider the mechanisms of protecion of their geostrategic im-
peratives and to react more actively to attempts of separate regional ac-
tors achieve their geopolitical goals destabilizing the existing world order.

During the last decade the U.S. have been coordinating its foreign

political course for the benefit of agreements and multilateral compro-
mises regarding the security matters and stability trying to abstain
from the domination policy and confrontation with other key interna-
tional players.

This major trait of geopolitical transformation processes is the U.S.

global policy directed at reformating relations with PRC, RF, The Is-
lamic world and relations within Euroatlantic community. It influenc-
es the settlement of global disputes and therefore determines relations
of cooperation of the U.S. with other countries. In the new world order
the U.S. remain the leader in political processes but it tries to do it by
different, flexible methods relying not only on its own capabilities but
also on a wide engagement of other countries and integrated forma-
tions in accomplishing common tactical and strategic tasks.

The U.S. is focused on solving global problems trying to position

itself rather as a referee of stability international system than a partici-
pant of regional international relations. Over the last years of relations
between Russia and the U.S. we have seen many increasing tensions
regarding a series of international issues above all: NATO expansion,
construction of Anti-Missile Defence in Europe, Syrian problems and
all of this despite the proclaimed in 2009 “reset” policy. The U.S. does
not wish to recognize the Russian right for establishment of its own
spheres of “privileged interests” on the formet Soviet territory.

Changes in strategic environment in particular Russia revisionism

are listed in the National Military Strategy of the United States 2015 –
a fundamental defense document having empirical direction.

Section 1. Armed conflict in Ukraine in terms of geopolitics

The U.S. is ready to respond to new negative changes of the outside

environment, new threats and challenges of dynamic and asymmetrical
nature, in particular hybrid conflicts. Ever since the times of Cold War
the U.S. clearly personifies countries of the world trying to reconsider
key aspects of the world order. Their actions and increasing potential
in particular Iran’s and Russia’s endeavors to destabilize their regional
neighbors, ability of North Korea to threaten territories of the U.S. and
also “aggressive reclamation activity” of China in the South China sea
create threats for the interests and national security of the U.S. Los-
ing their undeniable technological advantage, possessing relatively old
nuclear arsenal the U.S. at the moment do not have significant and ef-
ficient deterrence instruments. However to maintain the force balance
it is going to exploit “preventive military presence” on the territories
threatened with escalation of conflicts. With this purpose the U.S. is
ready to optimize the old ones and make new coalitions.

1.3. The proactivity of Ukraine’s foreign policy
in opposition to armed aggression

New challenges to international security are not limited by political

borders and demand combined efforts of the international community.
The situation makes it a priority to build a flexible and differentiated
system of relations between Ukraine and key international actors. This
system must be able to meet the challenges of the globalized world and
to facilitate strengthening Ukraine’s role on the world stage.

The search for adequate international and national security model

for Ukraine becomes a priority task. One of effective mechanisms for
creating such model at the international level is strategic partnership,
its potential hasn’t been fully developed for our country.

The system of Ukraine’s foreign partnership follows the strategic

course for modernization of our state in accordance with current chal-
lenges of the globalized world. Sometimes the nature of these relations
gains a vital role for existence and development of our state.

Strength of strategic relations is being tested by deep global and

regional competition, aggravation of fights for markets, accumulation
of negative tendencies in financial field. Reorganization of forces in the
world, fast-moving development of new global actors amid displays of
recession in the U.S. and Europe pose additional challenges for activity

Donbas and the Crimea: the value of return

consolidation of the partner-countries and at the same time make op-
portunities for the new international partnership configuration.

Ukraine’s relations with its strategic partners is one of the key

provisions of its foreign activity. The fact that Ukraine is part of the
strategic relations with leading countries of the world demonstrates
its significance as an international actor. In the meantime one of the
priorities becomes proving Ukraine’s ability to be an effective partner
and adequately participate in function distribution within the system
of international relations and security. However today the major task
for mechanism of strategic partnership is international assistance to
Ukraine in countering the most important threat to its national se-
curity – the Russian aggression.

Ukraine should enhance relations within the present organizations

and in the meantime initiate the creation of temporary unions com-
posed of the countries vulnerable to violations of the international law.
The advantage of such unions is the fact that they can be created within
a short period of time and for accomplishment of specific tasks.

Strengthening international security guarantees, national sover-

eignty and territorial integrity are the key objectives of strategic rela-
tions of Ukraine with the global states the most valuable of which is the
relations with the United States.

In counteraction to the aggression Ukraine strives to engage the

current agreements with the U.S. in particular the Charter on Strategic
Partnership and use full spectrum of instruments for intensification of the
international dialogue, actively offer new fields of cooperation with the
purpose of engaging Ukraine in the global processes as a full-fledged actor.

Strategic format of bilateral relations between Ukraine and the

United States started with Common address by the presidents of the
countries of 04/04/2005

and formalised in the Charter on Strategic

Partnership of 12/19/2008

. This document has formalised the princi-

ples of bilateral relations, reaffirmed the importance of security guar-
antees of 1994 and determined ways of deepening defense and secu-

A New Century Agenda for the Ukrainian-American Strategic Partnership :

Common Statement by President George W. Bush and President Viktor Yush-
chenko, April 4, 2005. Retrieved from http://georgewbush whitehouse.archives.
gov/news/releases/2005/04/20050404 1.html

Хартія Україна – США про стратегічне партнерство : міжнар. док.

від 19.12.2008 р. Retrieved from http://zakon.rada.gov.ua/cgi

bin/laws/main.

cgi?nreg=840_140

Section 1. Armed conflict in Ukraine in terms of geopolitics

rity cooperation in particular in the fields of energy, economy, trade,
democracy, interpersonal contacts and cultural exchanges, it as well
provided provisions of implementing intensified security cooperation.

The United States has always been and remains Ukraine’s key

partner in fighting Russian armed aggression. In this regard our state
ought to set the achievement of new higher level of cooperation with
the United States as a priority task of our foreign policy in the short-
term perspective. Equally important is broadening possibilities of the
bilateral cooperation with the U.S. in the military field with further
achievement of Major non-NATO Ally status.

Ukraine can also count on its natural allies in Europe including

Great Britain, Poland and the Baltic states, it can obtain more signifi-
cant support on behalf of influencial European states in particular Ger-
many, France, Italy and act in the Transatlantic dimension relying on
its strategic partners – the U.S. and Canada.

Development of strategic partnership of Ukraine with Poland,

Romania, Turkey and a series of other states is essential for stability
in Central and Eastern Europe and in the Black Sea region. Georgia
and Moldova whose sovereignty has also been violated and who also
have signed the EU Association agreement have grounds for common
opposition to the new threats caused by Russian armed aggression.

Russian military aggression has created a unique opportunity for

actualisation of regional partnership in the military field. Ukraine
might act as initiator for expansion of GUAM cooperation to military
and political level, for engaging new partners in particular Romania,
Bulgaria, Turkey. Regarding a wider format establishing an informal
alliance (Ukraine and its responsible partners the Baltic states, Swe-
den, Poland, Slovakia, the Czech Republic, Romania) like Little En-
tente after the First World War for countries of the region having dif-
ferent development level but facing common threats for coordinated
policy regarding deterring aggression and enhancing security is useful
as well.

It is equally important for Ukraine to strengthen relations with

those countries of CIS that honestly do not share Russian aggressive
behavior and under certain circumstances might support our country.
These countries are Belarus and Kazakhstan having multiple “Rus-
sian-speaking” enclaves on their territories are already worried because
of unpredictable behavior of their declared ally.

Donbas and the Crimea: the value of return

China’s stance regarding the situation in Donbas is very import-

ant for the settlement of the crisis. Embracing China’s respect for the
choice Ukrainian people has made meaning the way of development,
sovereignty and territorial integrity, legislatively affixed provisions of
internal and foreign policy of our country, Ukrainian party is calling
upon China to facilitate by all means the settlement of the conflict and
hopes for China’s impartial, just and responsible stance in this matter.

Ukraine considers the European Union one of the major allies in

countering Russian aggression because the idea of European integra-
tion was the propelling force of the Revolution of Dignity. Overall the
EU actively supports our country in making reforms, economical de-
velopment, overcoming the consequences of the economical crisis and
enhancing defense capacity. Governing bodies of the EU and most of
its member-states support Ukraine on its difficult way to political set-
tlement of the Donbas crisis. It’s no coincidence that the two “engines”
of the EU are the mediators in signing the Minsk agreements a very
complicated process aimed at renewing peace in the Donbas region.
France’s contribution in maintaining the EU unity in sectorial sanc-
tions implementations and solid position regarding refusal to deliver
the two helicopter carriers “Mistral” cannot be overestimated.

At the present moment one of important tasks for Ukrainian diplo-

macy is moving the relations with allies to a more practical dimension,
developing cooperation not only in political field but as well in eco-
nomical, financial, military, technical, humanitarian and other fields.

Ukrainian national interests shall be rigorously stood up for on

different international forums, even those Ukraine does not partici-
pate in officially. It is very important to do because if a resolution is
adopted without condemnation of Crimea annexation and Russia’s
actions in the Donbas region Russian propaganda demonstrates it as
a quite agreement with Kremlin’s actions. For this to be done Ukraine
needs moral lobbyist-partners in all regions of the world. To create of
such a global network Ukraine can engage Ukrainian diasporas (the
Foreign Ministry and Diplomacy shall make an effective line of inter-
action with local Ukrainian communities and facilitate their activity)
as a key element of political friending and finding common interests
that would harmonize foreign policy courses of both Ukraine and the
partner-state (via analysis of national strategic documents, white
books, etc).

Section 1. Armed conflict in Ukraine in terms of geopolitics

In European organizations (the European Council, OSCE) Poland,

Lithuania and Sweden are traditional advocats of Ukrainian interests.
In Asian-Pacific format of economical cooperation particular relations
should be built with Australia and Japan and in Shanghai Cooperation
Oranization (hereinafter

–

SCO) with Kazakhstan. Russia will try to

use BRICS as a legitimate means of enhancing its foreign policy. This
fact is clearly demonstrated by simultaneous conduct of SCO and
BRICS forum in Ufa in 2015. In this regard South Africa in the mid-
dle-term perspective shall become a partner of integrity for Ukraine. It
is important to pay attention to the protection of Ukrainian interests in
such purely Moscow-orchestrated regional structures like CIS (Azer-
baijan, Moldova, Kazakhstan), Customs Union and Collective Securi-
ty Treaty Organization (Kazakhstan).

A very important form of international support for Ukraine in the

present circumstances is endeavors in elaborating common approach to
making further diplomatic and economical pressure on Russia.

Sanctions imposed on Russia by the international community are

unprecedented regarding the number of sanctions’ participants and
the scope of their actions. The crucial role here belongs to the sanc-
tions imposed by the EU and the U.S. At the same time one should
not underestimate sanctions imposed by Canada, Japan, Norway, Swit-
zerland, Austria, New Zealand (overall by about 40 countries), by the
Parliamentary Assembly of the CE. The list of sanctions covers per-
sonal sanctions regarding people who took part in aggression against
Ukraine; economical limitation in particular concerning access to
capital markets and suspension of financing international investments
and financial organizations of new projects on Russian territory; target
sanctions regarding cooperation with Crimea and Sebastopol; sectorial
sanctions regarding defense and energy sectors. Diplomatic sanctions
have equally important influence in particular the following: cancel-
lation of the 2014 G8 summit in Sochi, suspension of the negotiations
concerning Russian membership in the Organization for Economic Co-
operation and Development and International Energy Agency; cancel-
lation of the EU-RF summit and regular bilateral consultations at the
highest level; suspension of bilateral negotiations with Russia regard-
ing liberalization of the visa regime and signing new agreement about
the Free trade zone EU-RF; depriving Russia of trade preferences, pro-
vided by American Global System of Trade Preference, etc.

Donbas and the Crimea: the value of return

Sanctions significantly influence the Russian economy and this can

be proved by almost all the macroeconomical indices. According to Rus-
sian Ministry of Finance the outflow of capital from Russia in 2014 con-
stituted $151 billion. Russian experts stated that in 2015 Russia might
lose another $110

–

130 billion. Cut down on investments and the over-

all outflow of the capital from the country have already caused a loss of a
third of total capitalization of Russian Stock Market. Russian market is
losing credits and financial connections with the biggest Western finan-
cial groups, this fact naturally causes problems with the national curren-
cy. According to the Central Bank of Russia gold and foreign currency
reserves from the beginning of 2014 have decreased from $520 billion to
$360 billion as of the beginning of March, 2015 and by the projections of
experts by the end of 2015 the reserves might go down twofold.

Despite significant consequences of direct and indirect sanctions ac-

tion they are only a part of the full range of means used to put pressure
on Russia. The pressure keeps on growing creating unfavorable foreign
conjuncture for Russian economy suffering from system crisis today.

1.4. Challenges of the armed aggression
as a catalyst for restarting the foreign policy of Ukraine

The War in Donbas provoked by Russia has clear attributes of civ-

ilizational conflict. Advantageous geographical posiotion of Ukraine
as a big transit way, a sort of bridge between Europe and Russia over
the last two decades was seen as a significant political and economical
benefit but in the circumstances of global opposition it has become a
source of new problems.

Historically divided between spheres of influence of different em-

pires – Russian and Austro-Hungarian, even earlier between Moscow
and Polish-Lithuanian Commonwealth – in the 21

century Ukraine

has again become a target in the geopolitical game of powerful coun-
tries. On the one hand Western countries with liberal-democratic val-
ues, on the other – authoritarian Russia with its strive for restoration
of its traditional spheres of influence, revision of the current force bal-
ance makes a claim for leadership in the world politics. Ukraine is liter-
ally positioned between the rock and the hard place risking becoming
an arena for a long-lasting opposition between Russia and the U.S.-led
Western world.

Section 1. Armed conflict in Ukraine in terms of geopolitics

Z. Brzezinski counselor on national security to the U.S. presidential

administration of J.Carter. stated in the mid 1990s that Russia will not
be able to regain its status of Eurasian empire without Ukraine. At that
moment in his book “The Grand Chessboard” he forecasted a major con-
flict in Eastern Europe and former Soviet territory along the “Eurasian
Balkans”. Latent phase of this conflict grew longer because of Russia’s
economical and political weakness. However with renewal of Russia’s
expansionism it threatens not only Ukraine, Belarus, Moldova, states
of North Caucasus and Central Asia, meaning former Soviet territory,
traditional spheres of Russian influence, but also neighboring states of
Northern, Central and South-East Europe. Ideologists of the Russian
plans are Dugin, Panarin, Kara-Murza, Starikov, Kuniayev, Borodin
and a series of other partisans of “Neo-Eurasianism” whose works de-
scribed the current events at the beginning of the 2000s. There are good
reasons why Russian diplomats operate “fact” from the pseudo-historic
works of the mentioned people, creating a negative image for Europe in
the perception of Russians, appealing to the image of external enemy
“threatening the Motherland”, preparing the population for a great war
with the West for leadership in the world. Forced militarization of the
people’s minds is going on today in Russia, preparation for the global
war is taking place. Only war can change the force balance and move
the U.S. from the position of the world leader and “world’s policeman”.
Ukraine is the cornerstone of the future of Putin’s Russian empire, entire
Ukraine not only Donbas that is being used as a destabilization factor
only. With its own hands Russia is ready to start artificial conflicts, fos-
ter hatred, provoke rebellions, even rebellions allegedly targeting itself.

Revolution of Dignity destroyed this plan and became a catalyst for

deep changes in Eastern Europe. As a counterbalance to the autocratic
model promoted by Moscow on the former Soviet territory over the
last decade Ukraine has ultimately chosen the way of building liber-
al democratic state. An indicator of irreversibility of this choice is the
fact that civil society was the initiator of these changes. It also brought
“flexibility” in the institutional basis of the state and made it better
protected against external destructive influence. Thus, Ukraine has
demonstrated an example of civil readiness to independently choose
direction of foreign integration and possibility of forcing political elite
to execute the order. Like the population of Central Europe stood up to
join the EU and NATO vast majority of Ukraine has set joining Euro-

Donbas and the Crimea: the value of return

pean institutions as their goal. Our Western neighbors for a couple of
centuries had been a part of Europe and Ukraine can set example for
countries that used to be Central part of Russian Empire and Soviet
Union. The population of Russia and population of Ukraine just like all
the former Soviet countries have close family relations, humanitarian
and cultural connections. Presence of independent Ukrainian model
of development does not accord with ideological provisions of current
Russian regime building its legitimacy on the irreversibility of the cho-
sen by ruling party “special” way.

Kremlin aggression in Crimea and Donbas is Russian reaction to

the threat of Moscow monopoly on determining development model
on the former Soviet territory. Following the three states: Ukraine,
Moldova and Georgia that have signed the EU association agreement
the EU might be expected to start closing in on other states partici-
pants of current Russian integration projects. This process will not go
on fast. As any powerful state going down the descent trajectory the
Russian Federation is determined to use all of its arsenal, in particular
military strength. Closed political system and defense spending prior-
ity demonstrate that Moscow is getting ready for a long lasting con-
frontation. In the present situation Ukraine must realize that an open
conflict with Russia will remain a major challenge to its national secu-
rity for the upcoming decades and rely on unconventional instruments
of international policy that allow it to become independent democratic
European state unlike its authoritarian Eastern neighborhood.

In circumstances of destruction in current international security

system catalyzed by Russia with its aggressive foreign zeal Ukraine
must find its own way for effective assurance of its national interests.
The most important issues for Ukraine are state security, sovereignty
and restoration of its territorial integrity indices of the latter will be
reintegration of the occupied regions of Lugansk and Donetsk as well
as reintegration of the annexed Crimea. Natural allies in reaching the
above-mentioned objectives are our strategic partners in the West –
the EU states and the U.S. The most up-to-date and effective security
guarantees Ukraine can receive from NATO membership. It shall be-
come a priority strategic task for our state. In the future Ukraine has
to apply more actively all the available capabilities and instruments of
the special partnership with the Alliance to create with its help Armed
Forces capable of meeting modern requirements and satisfying modern

Section 1. Armed conflict in Ukraine in terms of geopolitics

warfare principles. Yearly national Ukraine – NATO programs shall be
reoriented towards adaptation of forces and capabilities of the nation-
al security and defense sector to the NATO standards. Programs shall
equally touch upon adjustment of other criteria enabling Ukraine to
join the collective defense system of the North-Atlantic Alliance.

A necessary interdependent condition of strong diplomacy is a

strong army. Functioning of the Armed Forces of Ukraine is actual-
ized by the on-going conflict, an actual war with a neighboring country
that’s being an aggressor.

Foreign policu of Ukraine should be based upon proactive but not

reactive response to external circumstances. Ukraine has to become a
full-fledged actor of the international relations system. Consecutive
foreign policy of our state must be based upon expansion of our own na-
tional (state, economical) interests and active protectionism. The cate-
gory of national interests must be simplified and clearly determined.

“Preserving sovereignty and territorial integrity” cannot be a na-

tional interest for our foreign policy, because it’s a weak position and
diplomacy shall be focused on expansion, not protection. Instead

Ukrainian diplomats have to carefully appeal to the notion of strategic
national culture. Ukraine has to finally stop trading its geopolitical lo-
cation of a transit-state and become a subject, not an object of interna-
tional relations and become obtain regional leadership.

In this regard Ukraine could absolutely be an initiator of widening

to military and political level the cooperation within the current re-
gional institutions. Of course such a decision demands political will of
the EU and the U.S., not only Ukrainians, because the possible reaction
of Moscow. Creating new regional alliances with Ukraine’s responsible
partners: Poland, Romania, the Baltic states, Sweden, the Czechk Re-
public, Slovakia, Bolgaria, Georgia, Moldova also has a good potential.
Within the framework of such alliances members will be able to coordi-
nate and regulate efforts in security and defense sector, organize com-
bined military exercises etc. It is important that the initiative to form
such alliances comes simultaneously from the most interested states –
Ukraine, Georgia, as well as NATO member-states: for instance Pola n d,
Lithuania, countries immediatedly threatened by Russia.

Correctly using different available international instruments, at-

tracting on its side the old (the EU and NATO) and building new
strong alliances in Europe, harmonizing its strategic priorities with the

Section 2.

COUNTERACTION INSTRUMENTS

AGAINST ANNEXATION OF THE CRIMEA

AND TERMPORARY OCCUPATION

OF SEPARATE DONBAS TERRITORIES

You can take the city and win the battle,

but you cannot conquer the entire nation.

George Bernard Shaw

We’re living in a time when all standards are turned upside-down...

Today the aggressor is the shepherd of peace, and the beaten

and hunted are the troublemakers of the world.

What’s more, there are whole races who believe it!

Erich Maria Remarque

2.1. Russian secret services in the Crimea
and Donbas: ways of counteraction

Russia has been thinking about the annexation of Crimea ever since

the collapse of Soviet Union. Even in the final years of the USSR and
in the course of so-called Novoagariovo process (Novoagariovo is pres-
idential residence near Moscow) they were implementing promotion
policies for autonomous republics. The Crimean region was trans-
formed into an autonomous republic of Crimea on March 22, 1991.
At that time it was planned that Crimea would sign the Treaty of the
Union of Sovereign States independently of the Ukrainian Soviet So-
cialist Republic. Falsification of Crimean history was carried out in the
media and popular mentality of Crimean and Russian people. They also
changed the demographic situation on the peninsula by relocating Rus-
sian retired military to Crimea and to Sebastopol in particular.

Local authorities implemented an active russification policy in Cri-

mea during the independence years as well. Its traits were creating ar-
tificial restrictions for getting education in state language (Ukrainian),
decreasing the number of Ukrainian educational institutions and es-
tablishments where language of teaching was Ukrainian.

Donbas and the Crimea: the value of return

This fact has created grounds for anti-Ukrainian and separatist atti-

tudes in Crimea and a favorable environment for Russian secret services
activity. The measures taken by the Security Service of Ukraine over
all this period were not sufficient to stop these destructive processes.

The Kremlin does not deny that the annexation operation of the

Ukrainian territory had been planned for a long time. The facts con-
cerning the preliminary preparation for the aggression and in partic-
ular, the adoption of specific strategic documents and a considerable
increase in the federal budget for development and re-equipping of the
army and the navy. The attack was made when Ukraine was weakened
by the political conflict and its defense capability was disrupted by the
treachery of Victor Yanukovych and his accomplices.

The first step in practical implementation of the Kremlin scenario

of dismembering Ukraine was the creation by Russian secret services of
the Russian “fifth column” that included politicians, officials, business-
men and social pro-Russian activists with the support of Yanukovych
regime’s ruling elite. Earlier war scenarios against Ukraine were deve-
loped only in theory and mostly by ideologists of Russian chauvinism:
Dugin, Kurginian, Prokhanov and others. Thanks to its agents of influ-
ence, Russia managed to assign its people to major posts in the security
field of Ukraine: Security Service (Alexandre Yakymenko), Ministry of
Defense (Pavlo Lebedev), Internal troops of the Ministry of the Inte-
rior (Stanislav Shuliak), the Navy (Denis Berezovskyi).

For many years Moscow through its secret services has been cre-

ating and financing pro-Russian parties and movements in Crimea

These parties and movements have played a crucial role in the anne-
xation of the part of Ukrainian territory. Its these very local deputies,
mayors and Party’s of Regions functionaries who formed the absolute
majority of the Crimean deputies when voting the annexation.

Russian secret services also paid attention to such peculiar or-

ganizations as “Night wolves” biker-club, sponsored from the fede-
ral budget. Its members were part of the so-called Crimea self-defense
batalion and played an active role in the events in Crimea of February,
2014. During the annexation they turned up on the peninsula with

“Russian Unity”, “Russian Block”, social organization “Russian commune of

Crimea”, “Union” party, “Slavic party”, National Front “Sebastopol-Crimea-Rus-
sia”, Crimean section of International youth front “Proryv”(Breakthrough), Rus-
sian Commune of Eupatoria, etc.

Section 2. Counteraction Instruments against annexation of the Crimea...

Russian flags, intimidated people who stood up against Russian inter-
vention. “Bikers” patrolled the roads, guarded buildings occupied by
the “little green men”, took part in the assault of gas-distribution plant
and the assault of Ukrainian Navy Headquarters in Sebastopol.

Russian propaganda movie “Crimea: The Way Home” demonstra-

ted on the first anniversary of the annexation, states that “Night wolves”
kidnapped and kept hostage one of Ukrainian military commanders.

Russian “bikers” assisted a group of former goverment officials in

secretly leaving Ukraine for Russia, they also facilitated recruitment of
guerrillas for LPR/DPR.

To create grounds for Crimea annexation and separatism in the

East of Ukraine Moscow widely used capabilities of Russian Ortho-
dox Church and its “network” in the Ukrainian Orthodox Church of
Moscow Patriarchate.

During the annexation and apart from a powerful agent network there

were also Russian regular troops present in Crimea, additional troops
were relocated there as well (overall 22,000 servicemen). Ukrainian
troops at the beginning of the conflict had only 18,800 servicemen. Rus-
sian and Ukrainian troops were relatively similar in number. However
the number of combat capable battalions of Russian Army was 4.4 times
higher than the number of the Ukrainian ones. In addition, Russian secret
services engaging criminal elements in the operation used disinformation,
blackmail, threats, pressure, bribery and intimidation of Ukrainian mili-
tary, law enforcement servicemen and their families residing in Crimea.
The above-listed led to treachery by a considerable number of them.

All of this became the factors in determining the flow of the conflict

in Crimea.

Secret services still actively operate on the temporarily occupied

territory of Ukraine. Starting with deploying terrorist groups and
mercenaries, inspiring separatist actions Russia later started exploiting
its own regular troops. The armed conflict was supplemented with an
unavoidable phenomenon – criminal element revitalization.

Insulting the language and culture of Ukrainian nation, dishono-

ring its heroes by state authorities of the Russian Federation, Russian
media and religious organizations are trying to destroy political iden-
tity of Ukrainian people, foster inter-ethnic and inter-religious hatred,
enroot in the minds of Ukrainian people the feeling of weakness and
national inferiority.

Donbas and the Crimea: the value of return

Russian secret services continue implementation of special opera-

tions against Ukraine aimed at discrediting Ukrainian state authority
and its policies, disruption of sociopolitical and socioeconomic stability
in the country and destruction of processes of democratic transforma-
tion. Imitation of democratic procedures on the temporarily occupied
and uncontrolled territories of Ukraine was meant to demonstrate illu-
sion of social support of Russian agents of influence and an attempt to
give them authority to represent people of separate regions of Ukraine.

The conflict de-escalation in the Donbas region will actualize the

task of finding adequate mechanisms for countering non-military
challenges and threats. The constant of this process must be uncon-
ditional provision of sovereignty and territorial integrity of Ukraine.

Basic conditions of overcoming both military(direct) and non-mili-

tary (hidden) threats and challenges to national security of Ukraine (in
particular state security sector) are the following:

• unconditional and comprehensive cease-fire in particular dis-

tricts of Donetsk and Luhansk regions;

• pullout of all heavy weapons by both parties;
• pullout of all foreign armed formations, military equipment, and

also mercenaries from the territory of Ukraine under OSCE supervi-
sion and

• restoration of control over the state border to the Ukrainian gov-

ernment under OSCE supervision;

All of the above-mentioned conditions are mandatory in accordance

with Minsk agreements

However, nonfulfillment of these conditions by DPR and LPR and

the delay of the peaceful settlement process will demand Ukraine to
take respective measures regarding:

• preparation of defense and law enforcement agencies for possible

intrusion by terrorists to the Ukraine-controlled territory;

• isolation of separatists on the temporarily occupied territory;
• revitalization of diplomatic representations concerning increasing

pressure on the Russia in regard to nonfulfillment of the Minsk agree-
ments and mobilization of providing foreign support to Ukraine; and

• improving mechanisms of Minsk agreements fulfilment and defi-

nition of adequate response measures in case of nonfulfillment;

Set of measures regarding fulfillment of Minsk agreements as of 02/12/2015.

Section 2. Counteraction Instruments against annexation of the Crimea...

It is worth mentioning that the temporarily uncontrolled by

Ukraine section of Ukrainian state border in the Donbas region cre-
ates channels of illegal migration and smuggling, in particular arms
and drugs trafficking, etc.

A considerable threat is presented by the activity of insurgent

groups in destabilisation of the situtation in other regions of Ukraine
(attacks, robberies, use of explosives, etc), it creates an atmosphere of
unprotectedness amongst the population.

Counteraction to the mentioned direct and hidden challenges has

to be provided by the following measures:

• revitalization of intelligence and counter-intelligence activity;
• equipment of the state border with contemporary protection and

control capabilities (“The Wall” project);

• territorial defense organization in regions of strategically im-

portant assets; and

• media countermeasures to Russian propaganda;
Russian aggression in the Donbas region has also created challenges

of a sociopsychological nature that will remain influencial over a long
period of time on the temporarily occupied territories. One of the most
important challenges, not only for Donetsk and Luhansk regions, but
for Ukrainian society in general is desocialization. Hybrid war con-
ducted by Russia has significantly influenced socioeconomic and so-
ciocultural processes in Ukraine. It concerns demobilized personnel of
the Armed Forces of Ukraine and National Guard of Ukraine and the
population of the temporarily occupied territories.

Today a considerable number of volunteers and mobilized personnel

do not have a full-time job or a stable legal source of income to support
their families. In circumstances where Donbas and the neighboring terri-
tories are oversaturated with weapons there is a threat that some of the
servicemen dismissed from law enforcement bodies as a result of power
purification might become dropouts(marginal elements) or join separat-
ists for financial remuneration. A serious task of state power is immediate
development and implementation of a series of measures for resocializa-
tion of the population in Donetsk and Luhansk regions and servicemen
from the Anti-Terrorist Operation area, meaning full-time jobs in areas
of permanent residency, medical service and psychological rehabilitation.

Another consequence of Russian aggression in the Donbas region

is poverty of the population. According to experts’ estimates of the

Donbas and the Crimea: the value of return

EU and OSCE about 30 % of the population on the temporarily occu-
pied territories live in absolute poverty: do not have even subsistence
wage. This category includes first of all senior people, large families
and disabled people. The only source of subsistence for them remains
humanitarian aid.

This situation is actively used by Russian secret services and

mass-media to increase protesting potential of the population with the
purpose of promoting anti-Ukrainian attitudes, hatred and further des-
tabilization of the situation in the region.

Crime situation in the ATO area remains tense. The number of

robberies, especially using firearms is going up. There is also a threat
that separate armed volunteer formations that have not agreed to fall
under Ministry of the Interior or Armed Forces subordination might
turn into extremist, criminal formations. Bloody events near the
Ukrainian Parliament on the 31

of August, 2015 have shown that

some of the political forces use the ATO fighters with the purpose of
destabilizing the internal political situation in the country.

Merging uncontrollable armed formations with radical political

forces threatens with creation of “second” front-line in the hybrid war
of Russian Federation against Ukraine, it would demand particular Se-
curity Service’s attention.

At present, operation of Ukrainian government authorities (Minis-

try of the Interior, Security Service of Ukraine, Prosecutor General’s
Office, courts, etc) is suspended, DPR and LPR are now responsible for
the security of the citizens of these separate districts.

New challenges and threats that Ukraine has been faced with

since the beginning of 2014 have a long lasting nature. In circum-
stances of the comprehensive nature of the aggression and wide range
of its influence on national security of Ukraine completion of the estab-
lishment of the security and defense sector and its further development
has a crucial value. The recently updated National Security Strategy
of Ukraine and Military Doctrine of Ukraine have determined major
directions of the respective reform. One of the crucial conditions of
successful countermeasures to aggressive Russian policy is well-coor-
dinated actions of all the members of the above mentioned functional
combination, and the effective use of their capabilities and resources.

In order to effectively respond to new non-military challenges and

threats it is important to take a series of measures:

Section 2. Counteraction Instruments against annexation of the Crimea...

• to update the legislation in the field of intelligence and counte-

rintelligence considering the experience gained in the course of ATO
on the territory of Donetsk and Luhansk regions;

• to create an effective intelligence community;
• to set up efficient cooperation and information exchange with

partner intelligence agencies regarding critical problems of Ukraine in
the context of the foreign political course of our country for European
integration and intensification of cooperation with NATO;

• to further revitalize intelligence activity of Ukrainian agencies

regarding Russian direction in the neighboring countries and on the
international arena;

• to reform effectively national law enforcement bodies and special

services;

• to stimulate development of defense industry and implement sci-

entific and technological potential of Ukraine; and

• to enforce anti-corruption efforts in the Armed Forces of Ukraine

and other defense and law enforcement agencies.

2.2. The features of conducting
Anti-Terrorist Operation

In April 2014, the region saw a violence escalation when armed groups

of pro-Russian activists started assaulting state administration and po-
lice buildings in towns of Donbas, in particular Sloviansk, Artemivsk and
Kramatorsk. At the same time there was a large concentration of Russian
troops (about 50,000 personnel and a considerable number of heavy ve-
hicles) and the actions of the armed groups proved that they were lead
by professional military and foreign secret services officers, and violating
Ukrainian territorial integrity (by creating “independent countries” or
by annexing Donbas) is one of their goals or establishing such status that
would enable them to have considerable influence on the decision-mak-
ing in foreign policy and in national security of Ukraine.

Such actions by the guerrillas in the circumstances of open external

aggression forced state authorities to take adequate measures with-
in the framework of Ukrainian legislation and international law for
provision of national security

, in particular deterrence and repelling

Конституція України. Retrieved from http://zakon2.rada.gov.ua/laws/

show/254%D0%BA/96 %D0%B2%D1%80/print1399360584630698

Donbas and the Crimea: the value of return

aggression

, protection of its constitutional order and territorial integ-

rity from attempts to forcefully change it, law enforcement, protection
and safeguard of life, health, freedoms and legal interests of citizens

fighting terrorism

, etc.

Guided by the Constitution of Ukraine, Law of Ukraine “On fight

against terrorism” Ukrainian authorities have adopted the decision
to conduct Anti-Terroris Operation on the territory of Donetsk and
Luhansk regions (

hereinafter – ATO) engaging with available forc-

es and capabilities of the Armed Forces of Ukraine (

hereinafter –

AF of Ukraine), National Guard and Security Service of Ukraine
(

hereinafter – SSU).

The initial stage of ATO revealed a series of problems regarding in-

sufficient effectiveness of state and law enforcement authorities con-
cerning prevention and countring the respective threats and problems
of poor organization and coordination of the authorities within ATO.

The particular problems included:
• lack of state authorities awareness regarding plans and intentions

of the RF concerning Ukraine (namely the possibility of direct armed
aggression), as a consequence none of the threats from the Russian side
was perceived as a real threat by state authorities of Ukraine;

• inconsistency between the legislation in the field of national se-

curity and fighting terrorism and the ongoing threats and challenges;

• lack of experience in the units of SSU and AF of Ukraine regard-

ing practical resistance in hybrid wars concept;

• low level of coordination from the single center;
• advantage of Russian reconnaissance-insurgent groups in train-

ing and special equipment (communication, reconnaissance, electronic
warfare);

• spread of separatist attitudes among representatives of local au-

thorities (for instance one of the deputies of Donetsk addressed central
authorities with a proposition to stop enforcement actions against ter-
rorists); and

Про Збройні Сили України : закон України від 06.12.1991 р. № 1934 -XII. –

Ст. 1, абз 2. Retrieved from http://zakon1.rada.gov.ua/laws/show/1934 12

Про Національну гвардію України : закон України від 13.03.2014 р. № 876-

VII. Retrieved from http://zakon4.rada.gov.ua/laws/show/876 18

Про боротьбу з тероризмом : закон України від 20.03.2003 р. № 638-

IV. Retrieved

from

http://zakon4.rada.gov.ua/laws/show/638 15/print 1 4 3 3-

7 45230225807

Section 2. Counteraction Instruments against annexation of the Crimea...

• territorial principle of manning and equipping the AF of Ukraine

and regional units of SSU that limited activity and efficiency of the
servicemen serving in the areas of residence of their families

Among the other significant factors that facilitated implementing

plans of pro-Russian guerrillas, mercenaries, units of the AF of Russia
and Russian secret services were:

• inconsistent policy in the field of national security of Ukraine

(namely reforms in the defense and law enforcement sector, carried out
with conjuncture in mind rather than the necessity to provide state
security);

• support of the guerrillas by Donbas local residents who under

the influence of Russian propaganda perceived Ukrainian servicemen
as “Kyiv junta”, “castigators”, etc;

• absence (especially at the initial stages) of any media response to

aggressive propaganda in the Donbas region.

Later, thanks to the success of Ukraine’s Armed Forces in the ATO

area and pressure of the leading Western countries

on Russia certain

de-escalation of the armed conflict was reached.

It’s worth mentioning that in the course of the conflict, terrorists

systematically received material and financial assistance from certain
Russian enterprises and institutions. Namely it has become known that
leadership of the “Republican guard of DPR” was granted 1.5 mln rubles
by “Trans-neft” for the purchase of uniform, sneakers, puffer jackets.
These and other actions of certain enterprises and leadership of Russia
has to be qualified as financing terrorism, which is a crime according
to national law and international conventions (namely International
Convention on Financing Terrorism, 1999). Leaders of DPR and LPR
regularly meet Russian officials, namely V.Surkov Russian president’s
advisor with the purse of reporting and receiving further instructions.
On the June, 25 2015 Surkov met “deputies of people’s council of DPR”
in Rostov-on-Don. They discussed local elections in Donbas, the open-
ing of “Putin’s reception office” and implementation of other events of
propagandist influence on the population of the region. It has also be-

Negative consequences of similar manning and equipping principle was one the

factors that facilitated fast Crimea occupation.

In this context an important factor is adoption Ukraine Freedom Support Act

by the Senate of the U.S. in December, 2014, this act invokes to provide military sup-
port to Ukraine and provides possibilities to impose new sanctions on Russia.

Donbas and the Crimea: the value of return

come known that Russian military recruitment offices have organized
special recruitment points for selecting and recruiting guerrillas from
Russian population and sending them to Donbas. They have organized
training camps within the AF of Russia facilities, engaging military in-
structors of the AF of RF. All these facts prove strong state support of
Russian Federation to the destructive processes in Ukraine. Financing
and active promotion of terrorism in Ukraine has become an integral
trait of the conflict in the Donbas region.

The improvement of the situation in the ATO area was facilitated

by the following measures:

• creating a War office in the National Security and Defense

Council, that includes not only state leadership, but also leadership of
the defense and law enforcement authorities

• intensified intelligence and coutnerintelligence activity on Rus-

sian direction;

• better financing and equipping of the defense and enforcement

units with special equipment and vehicles (mainly as a result of volun-
teers engagement);

• development of national manufacturing of military materiel and

armament;

• transfer of ATO forces coordination and command functions to

the General Staff of the AF of Ukraine and secorial commands;

• engagment in the ATO units of power-wielding agencies from

Western and Central regions;

• creation of territorial defense battalions

at regional state admin-

istration offices;

• introduction of amendments in the current legislation aimed at

broadening the respective powers of state authorities – actors of coun-
terterrorism; and

• changes in the approach to the organization of counterterrorist

measures (measures are planned depending on the level and scale of the

Положення про Воєнний кабінет Ради національної безпеки і оборони

України : указ Президента України від 12.03.2015 р. № 139/2015. Retrieved
from http://www.rnbo.gov.ua/documents/384279.html

Territorial Defense Battalions (BTrO/TDB) were created in May, 2014 in

accordance with Laws of Ukraine “On Defense of Ukraine” and “On Approval
of the Presidential Decree “On Partial mobilization” and according to the Presi-
dential Decree “On Approval of the territorial defense of Ukraine” of 09/02/2013
№ 471/2013.

Section 2. Counteraction Instruments against annexation of the Crimea...

real situation and present threats, improvement in interdepartmental
coordination and mutual understanding).

In June 2014 there were introduced a series of changes and additions

to the Law of Ukraine “On fight against terrorism”, the changes clarified
the definition of ATO as “a package of coordinated special measures
aimed at anticipation, prevention and suppression of terrorist activity,
liberation of hostages, provision of popular security, neutralization
of terrorists, minimization of terrorist activity consequences”

. The

Body of Interdepartmental Coordination Commission of Antiterrorist
Center (hereinafter – ATC) was enlarged, the head of ATC was given
authority to engage in full-scale operations in the region forces and
capabilities of all law enforcement and special agencies (under approval
of the respective chiefs of agencies).

Difficult operational situation in the ATO area in separate districts

of Donetsk and Luhansk regions has caused reconsideration of some
provisions in the Penal Code of Ukraine. It was suplemented with a
section that envisages special procedures of prejudicial investigation

Law enforcement bodies have gained authority for preventive arrests of
people related to terrorist activity

According to the Law of Ukraine “On fight against terrorism” ATC

of SSU is charged with ATO organization and conduct as well as coor-
dination of counterterrorist state authorities activity. For direct com-
mand of a particular ATO and forces and capabilities engaged in it an
operational staff shall be set up, it is headed by the SSU ATC chief

To increase the effeciency of interdepartmental response to terroristic

Про внесення змін до законів України щодо боротьби з тероризмом : закон

України від 05.06.2014 р. № 1313-18. Retrieved from http://zakon0.rada.gov.ua/
laws/show/1313 -18

Про внесення змін до Кримінального процесуального кодексу Ук раїни

щодо особливого режиму досудового розслідування в умовах воєнного,
надзвичайного стану або у районі проведення антитерористичної операції :
закон України від 12.08.2014 р. № 1631-VІІ. Retrieved from http://zakon3.rada.
gov.ua/laws/show/1631 18/print1444320291503828

Про внесення змін до Закону України “Про боротьбу з тероризмом” щодо

превентивного затримання у районі проведення антитерористичної операції
осіб, причетних до терористичної діяльності, на строк понад 72 години : закон
України від 12.08.2014 р. № 1630 -VІІ. Retrieved from http://zakon3.rada.gov.
ua/laws/show/1630 18

Про боротьбу з тероризмом : закон України від 20.03.2003 р. № 638 -IV.

Retrieved from http://zakon0.rada.gov.ua/laws/show/638

15/print 14443 1402

2604610

Donbas and the Crimea: the value of return

threats and the scale of terrorist displays it was determined that com-
mand of a particular ATO can be carried out by not only the ATC chief
(first deputy chief of SSU), but also his first or second deputy chief
of ATC

who can be a representative of a different state authority or

enforcement agency. Regarding the peculiarity of ATO in Donetsk and
Luhansk regions the post of ATO Commander since May, 2014 has
been taken by a Deputy Chief of General Staff of the AF of Ukraine.

In February 2015 a Law of Ukraine “On civil-military administra-

tions” was adopted. These administrations are temporary state author-
ities in villages, towns, districts and regions and operate within SSU
ATC. They perform functions of local authorities and provide Con-
stitutional power and law enforcement activity in accordance with
Ukrainian legislation, security provision, recovery of population’s daily
activity, activity regarding counteraction to insurgent displays and ter-
rorist actions, exclusion of humanitarian catastrophe in the ATO area

To put an end to the fires as soon as possible and for further post-con-

flict restoration of the temporarily occupied territories Ukraine can use
a scenario of gradual counteraction to Russian aggression including

•  Deterring and blocking the aggressor;
•  Extruding the invader;
•  transformation of Ukrainian society and former Soviet territo-

ries (possibly even the world order); and

• reaffirmation of Ukraine as a protector-peacekeeper on the for-

mer Soviet territory.

Implementation of the mentioned scenario demands respective tac-

tical techniques being formed today, such as:

• reverse tactics (or ricochet tactics of indirect action), when ob-

ject of the attack redirects the aggression energy on to the attacker,
disrupting him and destroying him from the inside;

• tactics of “conflictogenic ricochet” envisages activation inside

the aggressor-state of the same factors causing unrest inside the ob-

Про внесення змін до Закону України “Про боротьбу з тероризмом” : закон

України від 12.05.2015 р. № 378 -VІІІ. Retrieved from http://zakon3.rada.gov.ua/
laws/show/378 19/print1444320291503828

Про військово- цивільні адміністрації : закон України від 03.02.2015 р.

№ 141-

VІІІ. Retrieved from http://zakon0.rada.gov.ua/laws/show/141-19/

print1444314022604610

Горбулін В. П. Україна і Росія: дев’ятий вал чи Китайська стіна /

В. П. Горбулін, О. С. Власюк, С. В. Кононенко. – К. : НІСД, 2015. – 132 с.

Section 2. Counteraction Instruments against annexation of the Crimea...

ject-states suffering from aggression. Such technique is especially effec-
tive when the conflicting states are neighbors;

• “strangled by the victim” tactics demands from the victim-state

to demonstrate by all possible means the readiness, will and determi-
nation to return the annexed territories, it will force the aggressor to
spend considerable resources for their defense, exhausting financially
and mentally; and

• “selective destruction” tactics consists of causing the aggressor

to suffer from not only maximum number of losses in men, but also loss-
es in quality of men, meaning that people coming back from war back
to the aggressor-state must be antisocial, criminal elements these ele-
ments will promote cultural degradation and degradation of the human
capital of the country.

2.3. Media-manipulating technologies
of Crimea annexation

The first steps taken by the Russian Federation that later lead to

the Crimea annexation had large scale media support, that had all the
traits of being prepared and planned in terms of goals, measures and
consequences media and psychological special operation that targeted
Ukrainian above all, Russian and Western audience.

Major goals of this special operation are:
• Demoralization of Ukrainian population;
• Demoralization of personnel of the AF of Ukraine and represen-

tatives of defense and enforcement agencies, prompting them to com-
mit state treason and defect to the enemy side;

• Formation of distorted media perception of events in the minds

of Ukrainian and Russian population, depriving these events of real
reasons and cause-and-effect relationship; creation of impression
that Russian actions have strong support among the population of
South-Eastern regions of Ukraine;

• Psychological support of radical Russian integration accomplic-

es in the East and South of our country;

• These goals were accomplished through almost all the media

channels, in particular:

• Traditional mass-media: the press, radio;
• Electronic mass-media (TV);

Donbas and the Crimea: the value of return

• Internet mass-media (blogs, social networks).
• All the methods of informational-psychological warfare were

used starting with posting tendency information and half-truth finish-
ing with rendering public complete unhidden lies (fakes).

• In the course of preparation for Crimea annexation and estab-

lishment of occupational regime Russia actively used a considerable
arsenal of propaganda technologies and techniques.

Using technology as a media blockade aimed at creating a media

vacuum for Ukrainian mass-media in Crimea. In such manner covering
facts about events in Ukraine and Crimea had no alternative to providing
single possible interpretation of events. Obtaining media domination in
the region Russia used forbidden means. Concerning contextual blockade,
the blocking control of media space by Russian media included: names
control regarding names of events and facts (for instance calling the an-
nexation “return of Crimea”), that wipe out the perception of aggressive
nature of Russian actions; visual image control (no image of dissatistfied
with the annexation local citizens); control of the events interpretation
consistency (all the materials were subjective comments by Russian cor-
respondents, editors’ boards or edited separate opinions of experts with
phrases torn out of the context which practically is a kind of censorship).

Using mediators became very popular with Kremlin media. In dif-

ferent situations and for different social groups and layers they chose
different informal leaders, political actors, representatives of religious
confessions, cultural, scientific, art, sports, military figures – every po-
pulation category had its authority.

One of the most effective techniques of disorienting people was

technology of anonymous authority. Russian media quoted docu-
ments, announced expert estimates, report data and other materials
necessary for better persuasion, nevertheless the name of the authority
was not revealed.

Russian media used “Stop the thief” technique to discre

dit

Ukrainian state power. Russia creates a hype around a problem in
Ukraine and directs popular dissatisfaction at Ukraine.

The “halo effect” technique has been used multiple times, this tech-

nique envisages visits by Russian remarkable figures of cultural, sport
and political field to Crimea. It promoted the status of Russian efforts
regarding the return of Crimea and legalization of so-called Crimean
referendum.

Section 2. Counteraction Instruments against annexation of the Crimea...

Russian media met all requirements regarding response timing.

Thanks to affect of primacy, meaning that the first interpretation is al-
ways the major one and all the rest either support it or deny it (the more
time has passed after the first interpretation the more difficult it is to
deny it), they successfully shaped the wanted impression of the events.

Russian media often use participation effect for “on the spot reports”.

This effect lets the media distort reality broadcasting reports already
cut and edited in the desired way. Illusion of authenticity made strong
emotional influence and created the feeling of reality of the events.

Systematic repetition of the same definitions and phrases is an exa-

mple of classification technique. With the help of classifiers that de-
scribe objects and events, information is formatted in a special way for
the addressee to subconsciously perceive the imposed definition of the
situation. First of all it’s about words and word combinations descri-
bing “positive and meaningful position” (“restoring peace and stabili-
ty”, “our Russia-speaking brothers”, “great Slavic people”). Second, it’s
about “contrasting” words aimed at negatively describing the oppo-
nent (“fascist coup”, “Bandera state”, “Ukrainian extremist politicians”,
“Ukrainian nationalists”).

Feedback technique providing reaction of the receipients to certain

events was also largly present in the Russian media messages. Russian
media actively informed of multiple support demonstrations for Crimea
separation from Ukraine that were artificially staged. A bright example
of this technique is direct online communication of people with presi-
dent Putin; the so-called direct lines – were nothing but well-rehearsed
and well-staged performances. Another display of this technique is
pseudo-surveys; it is a way of shaping public opinion, but not its real
reflection. The questions are asked in a way to make a “correct” attitude
towards a problem.

The statement of facts technique was also widely applied by the

aggressors an aggresive media. A desired fact was covered by media as
an already finished action. This kind of manipulation is usually done in
the shape of news of surveys results to lessen the viewers’ critical think-
ing when perceiving this information. To supply some authenticity for
such messages, media often engaged leaders of thought: well-known
journalists, political experts, sociologists, etc.

An extremely popular ploy among Russian media was the “wit-

ness” technique, it was sometimes used to create emotional resonance.

Donbas and the Crimea: the value of return

Mass-media prepared a report based on polling random people using
their words the media constructed the necessary content and emotion-
al package. A particularly powerful influence was reached using com-
ments of regular people.

False analogy technique is based of the tendency among people

to think analogies/cause-reason cliches, to form their thinking upon
pseudological connections, Russian journalists paid generous attention
to this fact. As a result, the recipients extrapolated events from the past
onto other current events that had absolutely no relation to the first ones.

Emotional resonance technique was applied very actively to create

anti-Ukrainian attitudes among a wide audience. To enforce emotional
effectiveness of a message it was filled with particular details that are
easy to remember and digest. Kiselyov’s news show is an excellent exam-
ple of this technique, he uses the necessary intonation, commenting the
activity of Ukrainian officials and deliberatly causes indignation within
the audience aimed at the officials as a result of “emotional tuning”.

Applying the “psychological shock” technique Russian media

demostrated “violent” actions of Crimean Tatars against pro-Russian
citizens of Crimea. The goal of this technique is creating powerful in-
fluence on the subconscious of Russian-speaking population of Crimea
and poisoning their mind against Crimean Tatar minority. Multiple
attempts to destabilize the situation on the peninsula by inflaming an-
ti-Islamic attitudes have resulted in accusations of Spiritual adminis-
tration of Muslims of Crimea, Mejlis of the Crimean Tatar People and
other organizations in their financial and religious connections with
“radical Islamic organizations”.

Events commenting technique has found massive use in the media, it’s

purposed to create the necessary context with the help of selected facts
and comparisons. The meassage about a fact was always accompanied by
the commentor interpretation that provided the audience with “rational”
explanation of the fact or event. Facts selection was carried out to en-
hance/weaken expressions, comparisons provided enhanced importance
of the events, demostrated tendecies and large scale of the events progress.

“Outflanking” technique includes in the propaganda materials that

at the first look seem inconvenient for local audience and makes the
illusion of objectivity and impartiality.

“Routine story” technology was used to adjust people to explicitly

negative information. This technology allows mass-media to maintain

Section 2. Counteraction Instruments against annexation of the Crimea...

the illusion of objectivity, but at the same time it devalues the meaning
of certain “inconvenient” events, creates the impression that this
event has little significance and it’s not worth attention and moreover
public opinion.

Another manipulating technique that Russian media used was

diverting attention. Propaganda effectiveness grows when it is used
combined with entertainment element. Propagandist pieces in Russia
were broadcasted during entertainment shows for housewives, radio
shows for taxi-drivers in different countries of the world where the
myth of “non-Ukrainian Crimea” was constantly repeated.

The perspective technique used be Russian media provided the

right to speak only for one side of the conflict creating only one-si-
ded perspective. Almost all the messages by Russian media concerning
Ukraine had negative context and about regarding Russians and “little
green men” there was practically no negative context.

One of the most frequently used techniques accompanying the

Crimea annexation was constant repetition of the same statements. It
forms a habit in the population to perceive these statements as the only
truthful ones. In this case media influence is aimed not at ideological
position, but at daily conscious of the population.

Double standards are used in the substitution technique, it uses

substitutes with positive connotation (euphemisms) to name events
with explicitly negative meaning and vice versa. This technique was
mostly used for creating positive perception of the annexation act.

Breaking news was applied to increase nervosity and weaken psy-

chological protection of the Crimean residents. Since the feeling of
constant crisis strongly increases the external influence capacity and
diminishes the ability of critical thinking almost all the news blocks in
Russian media had a breaking news nature.

“Poisoned sandwich” allowed Russian media to cover positive in-

formation in between the negative information, for instance hiding de-
structive factors of the activity of pro-Russian “defenders” in Crimea.

Analysis of media support of the Crimea annexation, forces us to

pay special attention to president Putin’s eloquence. It perfectly
demonstrates the content evolution of his statements and the hidden
intentions behind them. First Putin (press conference 12/19/2013)
said that he was not going to project troops in Crimea or annex it to
Russia. The statements gradually change until the very admittance of

Section 3.

UKRAINE, THE EU AND RUSSIA

IN THE MINSK PROCESS OF SETTLING

THE SITUATION IN THE DONBAS

There’s a thousand ways of peacefully settling conflicts

between countries and only way of settling problems

through war if the peaceful ways under threat.

Aaron Vigushin

Circumstances of the Minsk process

In September 2014 and then in February 2015 Ukrainian state

power under active support by Western states (the U.S., France, Ger-
many) and the political leadership of NATO managed to acheive po-
litical agreements on consecutive steps towards peaceful settlement
of the situation in the East of Ukraine.

Despite the accusations in the “sell-out of national interests”, it

must be understood that Ukraine objectively needed it at that stage
of the situation. The country needed at least the time to build effec-
tive Armed Forces, reform the security and defense sector, to update
strategic documents in the field of national security and defense, re-
ceive foreign defense and financial support. The time gained as a re-
sult of the Minsk process and the chance to find political settlement
of the military problem relating to Russian aggression are the key re-
sults of the Minsk process and we have to use it effectively. While the
country is looking for political settlement it should also enhance its
defense capacity, develop border security (terrestrial, maritime and
aerial) and new model of the state existence in the circumstances of a
long-term military challenge, namely neighborhood with Russia.

We cannot omit the fact that the Minsk agreement process was

very complicated. The basic condition and the first issue of the agree-
ments is immediate and absolute cease-fire in separate districts of Do-
netsk and Luhansk regions. Nevertheless, backed by Russian regular

Donbas and the Crimea: the value of return

troops DPR/LPR representatives violated the cease-fire many times.
Until the early October, practically every day the ATO area suffered
casualties among the defense and law enforcement units. The agree-
ment on liberation and exchange of hostages and illegally detained
people is also not fulfilled; this agreement is based on “all-for-all”
principle (point 6 of the Minsk agreements). As of mid-May 2015 the
terrorists kept hostage 399 citizens of our country and 11 imprisoned
on the territory of Russia. These facts complicate the dialogue on oth-
er points of the agreement, that are directly dependent upon the ac-
complishment of these basic conditions.

It’s equally difficult not to mention systematic attempts of the gur-

rillas to undermine the general peaceful settlement logic (for instance
ignoring the fulfillment of basic conditions of the Minsk agreements).
On the other hand fulfillment of the conditions in the wrong order
will not solve problems of the confrontation, territorial intergrity and
state sovereignty, but will create more considerable threats to nation-
al security of Ukraine for a long time.

It’s obvious that Russian striving to ignore the reached agree-

ments in Minsk or attempts to interpret them arbitrarily is a result of
nonfulfillment of the Budapest memorandum on Security Assurances
of Ukraine and a result of impunity for aggression against Georgia in
2008. For almost a year of the conflict the atmosphere of mutual mis-
trust has been complicating the Minsk negotiations process.

Starting in October, the Minsk process has entered a more or less

meaningful phase. At the same time it is worth noticing that today the
fighting in the Donbas, that has been carried out for more than a year
is entering into a long-term latent phase. It is a phase where most of
participants have exhausted their resources and ideas regarding set-
tlement or further development of the conflict. Ukraine, the EU and
the RF are the key actors that can actively influence the settlement
process of this conflict. At the same time the conflict itself consid-
erably influences these actors, causing changes in their agendas and
behavior of the countries.

Russia

For Russia a military conflict in the Donbas, “a little victorious

war” turned into a geostrategic failure that practically dragged un-
prepared Russia into a new Cold War and became a reason for polit-

Section 3. Ukraine, the EU and Russia in the Minsk process of settling...

ical half-isolation of Russia. Russian experts informed that military
aggression against Ukraine demonstrated the completely opposite to
the results the Kremlin expected to achieve; it’s an obvious sign of
weakness of Russia as a state and of its ruling elite in particular, it’s
not a sign of power.

Hybrid warfare successfully tested in Crimea has shown its inef-

ficiency in the Donbas. Today Russian elite has only partially rec-
ognized this fact, but the feeling of a catastrophe is already there.
The economic blockade of temporarily occupied territories applied
by Ukraine, despite all the conditions and half-transparency demon-
strates results, – the responsibility, namely economic, for the territo-
ries is increasingly assumed by Russia. There is no doubt that these
separate “republics” have always lived for Russian money, however
until now they kept draining resources from Ukraine using their am-
biguous status.

The economic blockade has put guerrilla-“militia” and their Krem-

lin coordinator in a very harsh condition. Humanitarian convoys ini-
tially planned as a propagandist move, have suddenly turned into a
real need, because people require humanitarian aid. The regular con-
voys perfectly illustrate this fact. On the early stages there were 1
or 2 convoys a month, in 2015 there were from 3 to 4 humanitarian
convoys within the same period.

The problem is complicated by the fact that guerrillas themselves

(namely their leaders) systematically the convoys’ cargo. According
to a French journalist P.Sotreil the leadership of DPR/LPR robbed
almost 50 % of all the Russian humanitarian convoys.

DPR/LPR leaders were not prepared for the governance of the

territories they controlled; it was another problem for the Kremlin.
Moscow is forced to maintain a permanent contingent of not only its
military experts, but also officials-administrators. It’s worth mention-
ing that such problems with people on the spot occur, because Russia
is traditionally not choosy at all when it comes to selecting people and
means to conduct the Kremlin’s foreign operations.

Paternalistic behavior model of the Donbas residents also plays

against Russia. This model was brought up by Russian media and it
is strongly connected with deep belief that all major amenities must
be received from some transcendental “father” and Putin always has
this “father” image. The key condition for acquiring these “amenities”

Donbas and the Crimea: the value of return

is good behavior (“behave well” and “obey”). In this regard every-
one who supported the creation of DPR/LPR honestly think they
behaved well and will practically demand from Putin fulfillment of
his part of this informal agreement.

However these are only separate problems emerging amid more

systematic troubles of the Kremlin. One of such troubles is the trou-
ble of Russian “volunteers” (imaginary and real) who are fighting in
the Donbas right now. It is easy to notice that Russian leadership
has no more good attitude towards them, because one of the require-
ments Moscow systematically lays before the DPR/LPR leadership
is creating their own border guard troops. The task for these troops is
unexpectedly not the control of the line of division with Ukraine, but
the internal control of “internal” border with Russia. The main task is
not letting “volunteers” with Russian citizenship back to Russia. Ob-
viously, until now the RF has not found the way out of this problem,
but has had a few attempts. In the meantime these people, who have
combat experience, who know how to use weapons and want to use
weapons, who were shooting other people yesterday morning sudden-
ly are left with nothing to do. This fact might play against Russia (its
current political and economic situation) and its leadership (state-
ments of Strelkov-Girkin vividly illustrate this idea).

It’s not worth counting on an armed coup, however the possibility

of aggravation of the situation in the field of crime and inter-ethnic
relations is more than high. This will be also facilitated by the fact
that accent of Russian leadership is on Ukrainian crisis and search for
the way out of the foreign political zugzwang, maybe partially, but
it weakens attention to a series of internal Russian problems (for in-
stance problem of North Caucasus).

In previous years the Kremlin tried to settle disputes by addi-

tional funds infusion that came from over profitable energy resource
trade. Today this situation has changed for the worse, and it is a di-
rect consequence of the events in Crimea and Donbas. The economic
sanctions imposed on Russia by the West are efficient, no matter how
Moscow wants to convince its citizens of the opposite. Difficult ac-
cess to low-interest credits, hasty devaluation of ruble rate, economic
crisis in the RF, these are only the first consequences of the Western
counteractions to Russian uncivilized behavior on the world stage in
general and to its intrusion on our territory in particular.

Section 3. Ukraine, the EU and Russia in the Minsk process of settling...

In the meanwhile these problems will only become more serious,

because Russian economy without significant modernization (even
though it’s obvious that import substitution industrialization is noth-
ing, but another Potemkin village

) will further only exploit natural

resources of the country and remain dependent on the ever falling en-
ergy resources’ prices. Trade exchange between Russia and the EU (its
major trade partner) has decreased by a third. Attempts of Putin to
return the oligarchs’ funds back to the country has failed, in 2014 the
outflow of the capital from Russia set a record of $150 billion. From
March, 2014 till March 2015 currency reserve of Moscow decreased
from $475 billion to $360 billion

and it’s not over yet. This is the rea-

son why Russia is trying to do everything possible to lift the sanctions.

In general, this brings us to another macroproblem of Russia – its

relations with the West. It seems that Russian leadership strongly
believed that energy resources, nuclear weapons and important role
in settling a series of international porblems and crises (in Iran, Syria,
Lybia) made it a player untouchable for threats and pressure from Eu-
rope and the U.S. The reality was different, and this is what Russian
elite is now living through. The relations with the West are spoiled
so bad, that even Russian experts are saying about coercion to exist
in this new foreign reality as a long-term perspective without foresee-
able progress.

Experts of Russian Council on Foreign Affairs state that the

“simplest” for Russia settlement of the Donbas crisis (direct military
intervention to accelarate the process) will have catastrophic con-
sequences for foreign policy, because it will cause irrevocable destruc-
tion of foreign relations between Russia and the West. Therefore the
confrontation scenario is the riskies of all.

It’s worth considering that Russian attempts to re-orient from re-

lations focus with the West to relations focus with the East, namely

The phrase “Potemkin village” (also “Potyomkin village”) was originally used

to describe a fake portable village, built only to impress. According to the story,
Grigory Potemkin erected the fake portable settlement along the banks of the
Dnieper River in order to fool Empress Catherine II during her journey to Crimea
in 1787. Modern historians are divided on the degree of truth behind the Potemkin
village story.

Galbert S. A Year of Sanctions against Russia – Now What? / Simondde Gal-

bert. Retrieved from https://csis.org/files/publication/150929_deGalbert_Sanc-
tionsRussia_Web.pdf

Donbas and the Crimea: the value of return

PRC have not brought significant practical results. It was caused by
the fact that Russian share in the foreign PRC trade is big enough
(but 1–2 levels smaller than the share of the U.S.), unlike the Chinese
share in the foreign trade of Russia. The present effect from Western
sanctions against Russia: on the one hand China does not admit it
judicially, on the other is forced to consider.

China uses Russian weakness evermore and its lack of maneu-

ver capacity imposing Russia its own conditions. The deal-making
process around the energy transit project “Power of Siberia” is very
symptomatic, where with every statement of “Gazprom” it becomes
clear that Beijing has a very rough stance in the negotiations with an
explicitly weakened partner. It is preconditioned by the fact that giv-
en the long-lasting decline in GDP today Russia does not possess the
resources to invest in the promising pipelines, it considerably weak-
ens its position in geopolitical negotiations with the PRC.

Gas factor keeps on losing its unambiguity. Consecutive decrease

in gas procurement by Ukraine and Europe, China’s (developing its
technologies of shale gas production, decreasing overall energy im-
port) determination to use it, might lead to Russia reconsidering its
geostrategic doctrines where energy resources are practically for-
malised as a principle intrument of foreign policy and pressure.

However all the above-listed factors do not mean that Russia is

ready to refuse its policy in the Donbas. The Kremlin cannot afford
the military defeat of DPR/LPR, because it would mean the biggest
failure of Moscow on the former Soviet territory.This fact brings into
question all the further integration projects of Moscow regarding
Eurasia. DPR/LPR are a long-term destabilization factor that in syn-
ergy with other factors might loosen Ukraine and destroy it from the
inside.

For instance, an obvious task of “Novorussian militia” (the atti-

tude of Russian military experts to them is rather supercilious) is
to cause casualties of the AF of Ukraine, which weakens our army
and its morale, and further aggravates internal political situation and
social tensions in Ukraine overall. Despite the fact that Russia keeps
concentrating significant troops on the border with its subordinate
double enclave DPR/LPR, it is unlikely that it will go for a decisive
full-scale military intervention, because its consequences are very
ambiguous in both military field and foreign policy. Operation in Sy-

Section 3. Ukraine, the EU and Russia in the Minsk process of settling...

ria (that immediately took major focus in the Russian media space)
started by Russia should be considered a refusal from a fast military
settlement of the Donbas crisis.

In general, it can be stated that Russia has lost its pace and the

player role in provoking armed crisis on the territories of Ukraine, en-
tering a long-lasting game around status quo. Nevertheless even here
one might expect of Russia some extraordinary decisions that could
have some tactical succes. However such decisions traditionally cause
strategic weakening of Russia, which is a general problem of strategic
culture inherent to the day-before-yesterday’s Russian Empire, yes-
terday’s Soviet Union and today’s Russia Federation.

Despite this, today the main goal Russia is trying to implement

on the occupied territories of Donetsk and Luhansk regions is forcing
Ukraine to accept the “satelite” scenario, namely signing the de facto
separatist peace agreement with Russia under beneficial condition for
Russia, neglecting national interest of the Western partners, recogni-
tion of the Donbas authonomy, refusal from returning Crimea. Such
“reconciliation” would deprive Ukraine of much of its independence
and it would tie Ukraine’s historical destiny to the historical destiny
of the RF

An interesting fact is that in terms of the scenario regarding the

Donbas and the overall conflict, Russia has put itself in a very incon-
venient position with its own propagandist activity, especially inside
the country. Today we can partially observe the situation when the
“tail wags the dog” – significant “86 % of Russians” would not “under-
stand” Russian leadership in case of working out any other scenario
for the exception of “total victory”, which is the “satellite” scenario.

The European Union

Russia is not the only one feeling the influence of the conflict in the

Donbas. The EU is equally forced to balance its actions in this con-
flict. The key here is the fact that this conflict has pulled Europeans
out of sedate process of self-development. Crimea and Donbas have
forced them to become part of irrational (in their opinion) conflict
and refuse their policy of maneuvering towards ambiguous positions
and neutral estimates. It is vividly seen by the official statements

П’ять сценаріїв для україно -російських відносин. Retrieved from http://

gazeta.dt.ua/internal/p -yat- scenariyiv-dlya -ukrayino rosiyskih- vidnosin _.html

Donbas and the Crimea: the value of return

of the EU: starting with “concerns” and “disquietude” of European
political elite, today the EU regularly uses such notions as “Russian
aggression”, “Kremlin propaganda”, “annexation”, “court”.

The Donbas conflict has created a series of internal and exter-

nal troubles capable of influencing the EU overall and its separate
member-states. “with few exceptions, European governments do not
think or act strategically. And since they do neither, how then can
they have the ambition to shape foreign policy, especially on the EU
level?” – states Judy Dempsey, nonresident senior associate at Carn-
egie Europe and editor in chief of “Strategic Europe” blog. She points
out: “Another conclusion is that instead of the EU forging a common
strategic outlook, the union has achieved the opposite. Ambition, if
it exists at all, is inward looking and based on the national level, on
narrow interests, on short-term goals. Ambition seems to have little
to do with projecting a strong EU even though this is precisely what
the union should be doing”

Another problem is Russian anti-Western International. Europeans

with surprise start understanding that much of their multiple internal
conflicts, enhancement of radical political movements and other com-
plex situations is not simply “separate problems”, but a strictly coor-
dinated for over 10 years by the RF system of fighting the West on its
own territory. As a broadcaster of radio station “Svoboda” Alexandre
Genis states : “The Kremlin allocates considerable funds to parties and
movements in the West that are openly not loyal to the Western in-
stitutions and work on splitting them. However countries of residence
of the “splitter” parties do not take any legal countermeasures against
them, because the states do not consider the realtions between the par-
ty and Russia to be illegal. There is also an opinion that Russian finan-
cial and ideological support of radical opposition in the West might
compromise the opposition itself”

, Russia really created new “Com-

munist International” of European scale (similar to Stalin’s ComInt-
ern of 1930–1940), that significantly influences the policy of separate
countries and the EU overall. The outlines of this new “International”

Dempsey J. Europe’s Pathetic Lackof Foreign Policy Ambition // Judy

Dempsey’s Strategic Europe. – 2015. – Aug. 7. Retrieved from http://carnegieeu-
rope.eu/strategiceurope/?fa=60952

Новый Интернационал? Retrieved from http://www.svoboda.org/content/

transcript/27137843.html

Section 3. Ukraine, the EU and Russia in the Minsk process of settling...

are nor linear, as stated in the work of P.Pomerantsev and M.Weiss
“Menace of unreality: information, culture and money as the Kremlin
weapons”

, because in every important region or country Russia has a

different face (from rough authoritarism to “soft” engagement).

In this regard, in the Soviet times such intrusion to the West was

carried out within idelogical framework with the left political parties,
today the strateigc line of modern Russia is fundamentally different
from such “self-limiting” policy. Today the major focus is upon all the
spectrum of political movements – starting with fascist and neo-Nazi
movements and finishing with Eurosceptic and antiglobalist political
projects. Practically the only thing in common is the “Die EU!”-mot-
to and disintegration of the European community.

Moscow is not even trying to cover its role in these processes. In

March, 2015 in Saint-Petersburg an “International Conservative Rus-
sian Congress”

was held, it was a gathering of people considered by

their countries of residence to be neo-Nazi. Russian leadership not
only turned a blind eye on this fact, but even supported the organiza-
tion of this event (for instance Saint-Petersburg police broke up any
protests regarding this event, even one-man protests). Another signifi-
cant event happened in September of 2015 Moscow held international
expert discussion “Dialogue of Nations. Right for self-determination
and Construction of a multipolar world”, it was organized by An-
ti-Globalist movement of Russia that won a grant of 2 million rubles
from the National Charitable Fund. This event brought together rep-
resentatives of many countries who put goals of organizing separatist
movements in their respective countries. Undoubtedly these move-
ments are insignificant in political terms at the moment, but with the
Kremlin financial support the situation might change dramatically.

Only after events of 2014 and Russian attempts to influence East

European policy of Brussels we could see the scale of Moscow infil-
tration to the political elite of the EU, especially at the level of its
indicidual countries (from Greece or Czech Republic to France and
Germany). There is no doubt that Kremlin’s sympathy was known

Угроза нереальности: информация, культура и деньги как оружие Кремля.

Retrieved from https://openrussia.org/s/tmp/files/Menace -of -Unreality_RUS.pdf

Слeт “друзей России” в Петербурге возмутил антифашистов. Retrieved

from http://www.bbc.com/russian/russia/2015/03/150322_russian_conservative_
congress

Donbas and the Crimea: the value of return

well before that, but nobody could imagine the scale it was reach-
ing. The Kremlin invests significant funds in these projects direct-
ly or indirectly bribing the expert environment, former officials and
politicians from the European countries. Not only individual depu-
ties of the European Parliament, the whole political forces of some of
the countries (for instance “National Front” in France of “SYRIZA”
in Greece) turn out to be under intensive Moscow “care”. Since two
influential politicians (Marine Le Pen and Nicolas Sarkozy) with a
serious degree of public trust directly express their support to Putin,
for Moscow France is becoming almost the main launching ground in
these processes.

It is worth admitting that Brussels ostentatious desire to pretend

that the scale of this bribery is inconsiderable, comes not from some
rational given parameters. It seems that Europe, its political leaders
still perceive Russia as a reflection of the mid-1990 or a “reconstruct-
ed USSR”. Meaning that they still have bot realized how much Russia
has changed; but the very future of the European project will depend
on the quality and the speed of Europe’s reaction to this new reality.

The Donbas conflict is also an economic and social challenge for

the EU, who together with the U.S. assumed some sort of responsi-
bility for Ukraine. A massive conflict entering a long-lasting phase
undermines economic potential of Kyiv, demanding regular infusions
in Ukrainian economy, new tranches and loans. It is obvious that the
longer the conflict lasts, the higher is the price of the occupied terri-
tories’ reintegration in Ukraine. The state does not have “extra funds”
for restoration of a very problematic region and funds are not foreseen
even in the middle term perspective. Russia has never been interested
in the development of the Donbas region and it was demonstrated
within the first couple of month of the conflict when Moscow relocat-
ed all the more or less interesting enterprises of the region to Russia,
flooded mines, destroy infrastructure, etc.

In this regard the EU (in the context of Ukrainian crisis mostly

Germany) is facing more internal problems starting with debt obliga-
tions of Greece and finishing with Syrian refugees problem. All of this
will demand not only demonstration of unity of the member-states,
but also considerable funds infusions. When the listen problems “here
and now” influence the European life, the half-destroyed Donbas is a
rather distant problem.

Section 3. Ukraine, the EU and Russia in the Minsk process of settling...

Experts in German-Ukrainian relations state that foreign political

priorities of Germany are being reconsdered, regarding the way
and the scale of its participation in settling all sorts of international
crises: “Today Germans are rather sceptical reagarding the scope of
Germany’s participation in settling different international crises,
twenty years ago 37 % of Germans were against such participation and
62 % – supported it, nowadays the figures are completely opposit –
37 % – “for” and 60 % – “against” <…>. Putin remains an abstract
threat to most of Europeans, whereas Asad is not any more. <…>
there are different opinions concerning Ukraine. Some people think
that the most important is to settle the conflict and “pepper” the
Donbas conflict with at least some political measures, others are
convinced that this conflict should not distract Germany from the
rest of Ukraine and from the transformations that started, but haven’t
sustained yet”

In addition, the Donbas conflict is also a large-scale problem in

terms of number of displaced people. In this regard facing a sudden
influx of refugees from the Middle East and Africa, Europe can now
better understand the problem Ukraine has faced, not having the re-
spective funds and institutional capabilities to resolve these problems.
It’s no yet clear who should be sharing the experience in this case.

In the meanwhile the EU should realize that even though

Ukrainian displaced people are settling around Ukraine and Russia,
but at a certain moment they might also be moving to European coun-
tries. According to the data rendered public by Rzeczpospolita, only
within the first six month of 2015 about 411,000 Ukrainians found
employment in Poland: “It’s not a matter of will to hire foreigners,
it’s a necesity. For many companies, for instance, in manufacturing
and logistics workers from Ukraine are the only way to cover the lack
of personnel that appeared as a result of many Polish workers mov-
ing to Germany and Scandinavian countries to do the same job for
3–4 times as much money”, – explained K. Inglot an employee of an
Employment agency

Берлін сказав: “на вибори!”. Retrieved from http://gazeta.dt.ua/internation-

al/berlin skazav na vibori _.html

Zatrudnieniedla 400 tys. Pracownikówzza Bugaoferowały polskie firmy. To-

rekord. Retrieved from http://www4.rp.pl/Rynek- pracy/309309771 -Firmy chca -
Ukraincow.html

Donbas and the Crimea: the value of return

Another problem is internal disagreements of the EU regularly

emerging amid further perspecives of continuation and/or intensi-
fications of the imposed sanctions against Russia. Individual mem-
ber-states, whose economies are largly dependent on the trade with
Russia almost openly declare their unwillingness to participate in this
format of pressure, because it is being done at their cost. Prime-Minis-
ter of Slovenia M.Cerar believes that “the introduced trade limitation
cannot resolve the proble”

. Hungary is very careful when speaking

of the sanctions policy: “Sanctions will be on the agenda again at the
end of the year and I really hope the conflict will be settled and we
will start a new page. Because Europe needs pragmatic and strategic
relations with Russia, we will lose an incredibly important factor of
our strength and competitiveness”

, – stated Péter Szijjártó, Minister

of Foreign Affairs of Hungary in September of 2015. Even more con-
cise was the statement of Bulgarian Prime-Minister Boyko Borisov:
“The sanctions cannot give any good for either of the states … we’ve
become innocent victims, having no desire, and moreover having no
goal to make relations between Bulgaria and Russia chilly. I pray to
God that big leaders (of the EU and the U.S.) faster settle their busi-
ness and cancel the sanctions”.

So, naturally European companies (namely large), despite the

adopted political decisions are looking for ways to get around the
sanction confrontation between the EU and Russia. For instance, on
June,18 2015 “Gazprom”, E.ON, Shell and OMV signed a Memoran-
dum on intentions, that envisages the construction of to threads of
pipeline “Nord Stream II” with the capacity of 55 billion m

of gas a

year. The pipeline will go from Russian coast through the Baltic Sea
to the German coast. Another example: “Gazprom” and Shell have de-
cided to continue common development of Yuzhno-Kirinskoye gas
field that entered the U.S. sanction list in August

Similar situation is observed with the rest of powerful players on

the market. For example after Crimea annexation all the French net-
work stores of “Auchan” were simply transfered to “Auchan-Russia”:

Премьер- министр Словении высказался за отмену антироссийских

санкцій. Retrieved from http://lenta.ru/news/2015/07/27/anti_sanctions/

МИД Венгрии: Евросоюз проиграет в весе без партнерства с Россией. Re-

trieved from http://ria.ru/world/20150905/ 1231298886.html#ixzz3mwSxF8Fz

“Газпром” і Shell будуть освоювати шельф на Сахаліні, незважаючи на

санкції. Retrieved from http://www.pravda.com.ua/news/2015/09/30/7083090/

Section 3. Ukraine, the EU and Russia in the Minsk process of settling...

“it’s an internal matter. Crimea became Russian territory. “Auchan-
Ukraine” had no possibility to manage the stores. It’s no politics that
bothers us, it’s availability customers and employees”, – stated the
representatives of the company

So despite the “sanction war”, business remains business, even if

it’s done with an aggressor responsible for killing thousands of Ukrai-
nians and hundreds of Europeans (passengers of flight MH17 of Ma-
layasia Airlines). After the report of Dutch experts on the subject,
nobody can manage to deny this fact saying something like “it’s not
clear who shot it”.

In the meanwhile it’s impossible to turn a blind eye on the matter

that sanctions have become a significant subject for internal discus-
sions regarding the foreign political course of the EU.

In this regard, as stated by the European analysts

, sanctions

should not be a “barometer” of Russian behavior in Ukraine: “te-
nacity and firmness of the sanctions are more important than the in-
tensity in each of the point”. The goal of sanctions is not even the
change of regime in Moscow, because it is unlikely for the permanent-
ly empire-minded Russia to suddenly reconsider itself. The goal is to
demonstrate that the West is dissatisfied with Russian behavior and
as a result constricts its space for maneuver.

However this demonstration keeps on getting more complicated

(it can be seen by the behavior of leaders of individual countries and
business-organizations) and demands increasingly growing effort
from Brussels. In addition there are also complications of U.S.-EU
sanctions synchronization. As some American experts stated Europe
and Europeans feel they are losing more that they are gaining from
such policy, this fact make a field for conflicts: “Even as sanctions cost
Russia a lot, they are also impacting European economies significant-
ly. Europe-Russia trade – about €285 billion in 2014 and €326 billion
in 2013 in two-way trade – is expected to decline sharply in 2015: a
30 percent decline would be in line with the data available for the first
six months of the year. Europe-Russia trade could therefore shrink

В тылу санкционной войны: как иностранные компании выживают в

России. Retrieved from http://www.forbes.ru/kompanii/301647

tylu

sanktsion

noi voiny kak inostrannye kompanii vyzhivayut v rossii

Liik К. The limits and necessity of Europe’s Russia sanctions / Kadri Liik.

Retrieved from http://www.ecfr.eu/article/commentary_the_limits_and_neces-
sity_ of_europes_russia_sanctions3091

Donbas and the Crimea: the value of return

by about €80 billion in 2015 and cost Europe about €30 billion in
lost exports to Russia. Those amounts are significantly higher than
what Iran sanctions cost the European economy in the past decade,
and markedly greater than the cost to the U.S. economy of Russia
sanctions”

. The same experts state that the real goal of the sanctions

is “buying Ukraine time for domestic consolidation and reform”.
If Ukraine doesn’t use this chance in these very direction, it will get
only more difficult for the EU and the U.S. to maintain sanctions
against Russia: “The role of sanctions will be radically transformed if
Ukraine collapses, even becoming possibly pointless”

Ukraine

Ukraine has the chance to get out of this situation with dignity. It

can be stated that this problem does not have a military settlement or
practically doesn’t have. I does not mean that Ukraine should ignore
the Russian military threat. This threat is a real long-term reality of
our lives, realizing this problems will determine the survival of our
country in general, in particular considering the announced multibil-
lion modernization of the Russian Armed Forces adopted in Decem-
ber 2014 by the Military Doctrine of the Russian Federation.

Regardless of the beginning of the reforms in the security and de-

fense sector, Ukraine still has not formalized its vision of managing the
sector as a comprehensive system. It’s symbolic that one of the ma-
jor tasks of Ukrainian military policy (as it is defined in the Military
Doctrine) is “creating comprehensive security and defense sector as
the major element in the national security system and integrating its
components’ capacity for timely and effective response to current and
potential threats”. Meaning the problem is being realized by the state.

It is equally true for the “strategic culture” in general and in particu-

lar – interaction between the security and defense bodies (that are still
built according to the peace-time, not war-time). Regardless of the ef-
forts there still remain problems with the defense order, this fact pre-
vents a real large-scale equipment and rearmament of the AF of Ukraine.
At the same time given the efforts made over the last two years the cur-

Galbert S. A Year of Sanctions against Russia – Now What? / Simondde Gal-

bert Retrieved from https://csis.org/files/publication/150929_deGalbert Galbert _
SanctionsRussia_Web.pdf

Ibid.

Section 3. Ukraine, the EU and Russia in the Minsk process of settling...

rent condition of the AF allows it to repel almost any attack of guerrillas
as long as it is not a direct and full-scale Russian military intervention.

Russian aggression pulled Ukraine and our elites out of the “com-

fort zone” characterized by a set of illusionist and idealistic ideas
about world politics and pushed towards reconsidering itself in terms
of classical theories of realism and “real politics”.

“Future is thoroughly disarmed present”, – wrote brothers Ark-

ady and Boris Strugatsky. Ukrainian policy – foreign, internal, mili-
tary is roughly brushing off the unrealized irrationality of the “past”
and brings in the the realized rationality of the “future”. For instance,
the choice of NATO is no longer a subject for ideological discussion in
Ukraine; it is an increasingly deeper realized security need regarding
the real state of military and political situation. Ukraine will be as
rational and as conscious in resolving the conflict in the East from a
firm and pragmatic stance.

In certain matters this suprising pragmatism and rational firmness

become the biggest shock only for Russian leadership, but also for our
Western partners. The latter accept it, but Russia keeps holding up
for the image of Ukraine as some sort of “under-state” (as Putin once
said). However it does not allow Russia to see the real situation.

This is the reason for the clear and comprehensible Ukrainian

position: strategically not to go on the Kremlin leash and tactically
not to follow its scenario in the Donbas problem. It’s become already
clear that “return at any cost” is a dead-end position for Ukraine.
Undoubtedly, alternative radical scenarios (“let them go”) are also
far from being constructive. However, it’s clear that there will be no
Donbas reintegration under the Kremlin’s conditions.

The problem of the occupied
territories is in the terms “friend” – “foe”

From purely economic point of view these territories have already

lost significant interest for Ukraine. Practically we have learnt to
somehow manage (it’s not always easy) to build our economic strate-
gies without and implement trade, economic, financial and monetary
projects without there resource capacity.

The Donbas conflict had another serious psychotherapeutic

side-effect (a sort of trans-regional catharsis): the long-lasting, nur-

Donbas and the Crimea: the value of return

tured by regional elites and cherished by people myth of “who feeds
who” was busted by a rough clash with cruel reality. It’s increasingly
better understood by the population of the occupied territories.

The settlement in the Donbas as a problem of national scale is not

only about applicable matter of cease-fire, though it’s the most im-
portant task in the name of saving human lives. The time of war has
fundamentally changed the region, in particular its territorial seg-
ment that is being controlled by guerrillas with the help of weapons.
It’s difficult to imagine and even approximately list all the problems
Ukraine is about to face given a rather phantom division line. If here
Ukraine will try to manage all those problems, it is yet unclear who
will be managing the problems on the “separate districts of the Do-
netsk and Luhansk regions”, complicated by the “special status”.

It is worth realizing that the guerrillas will not bother taking care

of such problems, neither will Russia as it also has a whole set of prob-
lems derived from the Crimea and Donbas.

Among the challenges and threats created by the Donbas crisis we

must name a considerable redistribution of social roles and social val-
ue and weight of professions. For many years Ukrainian society had
an ambiguous attitude towards military. With the start of aggression
and creation of combat capable Armed Forces this matter practically
disappeared. However, as a result of shutdown of many enterprises and
whole branches (as a consequence of the warfare) Ukraine is going to
face a serious socio-class mutation. For instance, this matter touches
upon socioeconomic role and economic-social weight of “mining”, that
in a way all these years of independence has been a factor of the coun-
tries life, political life as well. Representatives of the so-called creative
class, whose financial and social position is tightly correlating with the
overall economic situation in the country and whose potential is in high
demand in developing economies might become victim to this tendency.

Problems relating to the overall increasing intolerance in society.

Classical positions “friend-or-foe” in the terms of the conflict very of-
ten switch places and sometimes traditional divisions make no sense.
In this regard the criteria for “friend” or “foe” very often lose tradi-
tional basis and become dynamic and subjective. Overall it enhances
disunity of the society and actualizes the necessity to reunite it.

The problems relting to displaced people are also in this list. It’s

not even about socioeconomic problems of their settlement “on the

Section 3. Ukraine, the EU and Russia in the Minsk process of settling...

spots”, but about the socio-psychological adaptation of the displaced
people and the population of the places they are coming to live. Ten-
sions on this ground periodically happen and it’s rather natural when
large numbers of people are displaced from their usual places of living
and traditional ways of existence, in the new surrounding they have
to “perceive themselves” in a new way.

Problems of senior people, increasing number of orphans and

homeless people (given the circumstances might lead to crime situ-
ation getting more difficult) are also worth considering (though it
is mostly true for the occupied territories). Another factor that esca-
lates this double problem is a whole set of problems relating to social-
ization of youth and re-socialization of those who had to undergo the
“furnace of war” (disabled people, etc.).

Another problem that should be mentioned is the communication

problem. Namely, it is the communication between “Ukraine” and
those pro-Ukrainian citizens on the occupied territories. Although
the prevailing opinion on the free of occupation territories is that all
the pro-Ukrainians have already left the occupied territories it is not
completely true. It is an opinion to keep one’s psychological state calm,
allowing not to notice an obvious fact: that there are many people left
there who sincerely love there country and do not wish to libe under oc-
cupational power. There are many educated and intelligent people with
critical thinking (teachers, scientists, cultural figures and other) who
must be kept in touch with, at least not to make them feel abandoned
by there country. We cannot afford losing citizens for the same reason
we cannot afford “giving away” territories to the aggressor-neighbor.

Under the negotiations pressure

We are facing the crossroads where interests of the participants of-

ten go in almost opposite directions, whereas each of them is pressed
by internal problems, caused by the Donbas conflict and sometimes,
no matter how strange it might seem, by the most promissing ways of
its settlement.

Ukraine in this matter keeps the most consistent stance. The

Minks agreements, given that they are completely fulfilled might
open the way for political settlement of the crisis. The problem is that
opponents want to fulfill the agreements in their own order, in the
way they feel comfortable about it. Ukraine has made a significant

Donbas and the Crimea: the value of return

contribution on the settlement of the crisis by agreeing to start a
group political discussion. It does not mean that the initial Minsk
agreements are forgotten. Accoding to the agreements first must be
achieved a cease-fire, pullout of heavy weapons and pullout of all for-
eign mecenaries and troops from the separate districts of Donetsk and
Luhansk regions. Without these steps chances to peacefully settle the
crisis are pretty foggy and blurred.

Of course no elections are possible without fulfillment of these

conditions. In strategic terms Ukraine has a much more realistic at-
titude towards the occupied territories than in used to be. There is
no doubt that we are not going to refuse our our territories, we will
stand by our territorial integrity till the very end, but it doesn’t mean
that we will play by someone else’s rules. So the only thing we might
talk about in the administrative and territorial terms is some pecu-
liarities of local municipality. Moscow still hopes that under cover of
the dialogue about a “special way” and “special status” it will manage
to force Kyiv to take care of all the economic consequences of the
Donbas restoration and Moscow would only determine its political
actions. However, it is the Kremlin’s even more serious mistake than
evaluating Ukraine by its 2013 capacity and not current.

In this regard Ukraine is ready to choose the roughest scenarios, in-

cluding the “Wall” scenario, where separatists and the Kremlin are left
one-on-one. It is against this scenario that all the political and propa-
gandist efforts are aimed today. Even if Ukraine held a referendum (it
would demand significant changes in national legislation and interna-
tional law) Moscow would be the first to protest. Taking responsibility
for DPR/LPR and assuming responsibility for the restoration of the
territories would be an economic suicide for Russia. Russia is not even
able to economically support Crimea annexed without a single shot in a
much better condition without any destructions: government subsidies
are regularly decreased, there are increasingly more dissatisfied people.

However, it’s not only Ukraine and Russia, there are other coun-

tries deeply engaged in the conflict and relations between these coun-
tries and there strategic tasks also influence the crisis settlement.
Ukraine is unconditionally grateful to the European contries for their
support and unity of their position regarding the Ukrainian matter
and clearly understands how difficult it might often get. Nevertheless
it is clearly seen that the EU is uncomfortable because of the sanction

Section 3. Ukraine, the EU and Russia in the Minsk process of settling...

campaign and it is trying to find ways to deescalate the tensions in
this regard tying it up to the Minsk process. However no deescalation
is possible until Russia continues its confrontational eloquence, sup-
porting separatists and refusing to take real steps towards peaceful
settlement. In the meanwhile even willing to implement peaceful sce-
nario Russia will demand guarantees regarding Crimea, but Europe
(and the rest of the civilized world) will not be able to provide them,
because “turning a blind eye” on such obvious violation of the key
international principles it’s difficult to count that anybody (for in-
stance Russia that has demonstrated its neo-imperialistic ambitions
of territorial nature) will respect them further on. Therefore, a serious
violator (in this case – Russia) must be seriously punished.

Thia contradiction between comprehebsible egoistic willingness

of the EU to settle relations with Russia and impossibility to leave
its legal stance relating to Crimea and the Donbas puts Brussels and
many European countries in a very complicated position.

At the same time this situation has some beneficial consequences.

For instance, timely and active European support of Ukrainian efforts in
harmonization of our practices with the respective European practices
in the field of territorial administration and the essence of constitutional
reform that Ukraine is conducting. Constitutional process and its very
important component – decentralization – are based on the classical
european vision of how the relations between the regions should work.

However here the EU and Kyiv are under high Moscow pressure

in its inherent manner – to impose Europe its rules and obtain conces-
sion in all the key issues (for instance regarding “special” conditions
for separate districts of Donetsk and Luhansk regions). It is actually
a traditional tactics of Soviet and Russian diplomacy, it’s essence is
uncompromising stand and standing by it till the end

. The purpose of

such “uncompromising stand” is to induce the opposite party to find
reasoning of proposition, that most of Russian counterparts first con-
sidered inacceptable. However such tactics nowadays leads only to
escalation of the confrontation between Russia and the West, there-
fore the new Cold War is becoming increaingly realistic.

Speaking of the Cold War, one should understand that both par-

ties (the West and Russia) approach the the emerging problems with

Шерр Дж. Жесткая дипломатия и мягкое принуждение: российское

влияние за рубежом : [пер. с англ.] / Дж. Шерр. – К. : Заповіт, 2013. – С. 69.

Donbas and the Crimea: the value of return

different vision of success in the current Cold War and with different
resources. Russian elites don’t make a big problem of it (at least at the
tactical level), hoping for a general geostrategic revanche

. They also

consider that the new Cold War will develop by the rules of the old
one, Russia assosiates itself with the USSR that has learnt lessons and
considered key mistakes.

However, such estimates are obviously mistaken. Russia is much

weaker that the USSR (namely in terms of resources and territories),
its dependence on the world economy is much higher than in case of
the Soviet Union, so the Western steps of economic pressure are more
effective. Apart from that Russian leadership is missing the most im-
portant: the USSR despite all its giant potential and resources lost the
war. Much of it was because of exhaustion from the arms race. Meaning
the exacte thing Russia is putting its bid on right now. It’s symbolic
that the only thing that Russia can oppose the economicly developed
West with, is regression towards ХІХ−ХХ century methods. At the
time when all the developed countries solve their conflicts and disputes
in different dimensions (economic, cultural, informational, human-
itarian), Russia has managed to counterpose only the deadborn idea
of “Russian world” that in its refined look might turn into orthodox
pan-Slavic fundamentalism, and at some stage become prohibited in
developed countries as nazi ideology and the threat to turn everything
into “radio-active dust” downgrading to the eloquence of North Korea.

In conclusion, all of it still comes down to the settlement of the

Donbas crisis and search for the ways our for all major actors, because
the situtation there remains extremely complicated. Reluctance
of Moscow and the separatists of DPR/LPR to conduct a rational
dialogue on peaceful settlement (gradually fulfilling the Minsk
agreements) creates a stalemate situation of an “endless dead-end”
that practically does not have a way out. However Ukraine is more
likely to benefit from this delay.

Nevertheless the problem is also in the fact that it escalates the

situation not only in the ATO area, but at the geostrategical level of
the new Cold War unfolding with ambiguous consequences for all of
its parties. Europe is still trying to believe that the situation can go

Горбулін В. П. “Гібридна війна” як ключовий інструмент російської гео-

стратегії реваншу / В. П. Горбулін // Стратегічні пріоритети. – 2014. – № 4. –
С. 5–12.

Section 3. Ukraine, the EU and Russia in the Minsk process of settling...

back to “as it was before”, but it’s impossible – over the past year and
a half Ukraine has lived through much and at a very high cost has
learnt this “real politic” lesson to go back.

There still might be raised a problem of what will happen after

January,1 2016, because the Minsk agreements are designed until
this very date, afterwards there’s vacuum of political agreements.
Recently regarding this matter Ukrainian president’s stance has been
clear enough

, but we still must have a concise, real and mutually

acceptable plan of actions for future. This plan (or strategy) has to
consider multiple options of the situation where political agreements
might seriously influence the settlement process of the crisis, however
this plan has to formalize key settlement priorities of our country.

Meanwhile this plan is impossible to make without a comprehen-

sive understanding of the condition the occupied territories are in,
how much damage has been caused to the communication between
them and the rest of the regions of our country. We still don’t com-
pletely understand what have we lost on the temporarily occupied
territories (in terms of economy, policy, information, security), we
only partially understand what policy should we conduct regarding
the temporarily occupied territories and we rarely think about the
problems these territories are facing because of Russian aggression.
Basically we are talking about a major inspection of the condition be-
fore the occupation and the current condition of the territories.

However it is still only a part of the answer. Another important

component is the strategy of getting back the territories and the
overall vision of how we are going to co-exist after their return under
Ukrainian control. It a matter of a large-scale vision on the temporar-
ily occupied territories in the full range of the problem’s aspects.

There is still no comprehensive approach to estimation of the cost of

reunion and problems we will face on our way to the reintegration and
after its successfull completion. So, not answering these questions it is
rather difficult to explain these perspectives on the occupied territories.

The political dialogue initiated in Minsk is only the beginning.

Not understanding its key issues and problematic “turns” it becomes
incredibly difficult to hope for its successful conclusion.

Мінські домовленості мають бути виконані у 2015 році – Петро Поро-

шенко. Retrieved from http://www.president.gov.ua/news/minski domovlenosti-
mayut buti vikonani u 2015 roci petro po 3597412359

Section 4.

THE LOSS OF RESOURCES

DUE TO THE MILITARY ACTIONS

Failure is simply the opportunity to begin again,

this time more intelligently.

Henry Ford

The distructive losses in resources caused by Russian aggression

against Ukraine shocked national economy that had already been en-
tering recession. It made our economic security considerably weaker,
deepened macroeconomic disbalances and critically decreased the dy-
namics of socioeconomic development.

Systematic and structural nature of the crisis enhanced by ex-

ternal aggression is proved by accelerated real GDP decline, start-
ing in 2

half of 2012, that by the results of 2

quarter of 2015 had

reached –14.6 % in yearly dimension. The fastest real GDP decrease
in 2

quarter of 2015 was recorded in construction (–25.6 %), mining

industry(–22.2 %), refining industry(–21.8 %), wholesale and retail
trade (–20.4 %).

Final consumption dynamics demonstrates a dangerous tendency,

it keeps decreasing since 2

quarter of 2014. As a result, real final con-

sumption expenditure decreased by 22.8 % in 2

quarter of 2015 com-

pared to the same period of 2014. It should be pointed out that even
in the conditions of GDP decrease in 2012–2013 we still observed an
increase of final cunsumption expenditure (Fig.).

Export capacity of Ukraine keeps rapidly going down and the sup-

ply of Ukrainian goods to foreign markets keeps dropping. This is a
consequence of rupture in the internal cooperation ties, the impossi-
bility to supply export products in terms of military conflict and so on.
Despite the fact that the reduction in real exports of goods and services
was first recorded in the 3

quarter of 2011, the beginning of large-

scale losses is associated with the 3

quarter of 2014, when the decline

Section 4. The loss of resources due to the military actions

rate was measured in double digits. Despite a slight slowdown in the
fall, it remains at a critically high level of –22.5 % in the 2

quarter of

2015 (see Fig.).

GDP

2.4

3.0

–1.3 –2.4 –1.3 –1.2 –1.1

3.4

–1.2 –4.5 –5.4 –14.8 –17.2 –14.6

Final consumption expenditure

6.1

10.0

9.8

4.0

5.2

6.6

5.0

4.3

0.4

–6.0 –12.7 –10.0 –15.4 –22.8

Export of goods and services

–7.4 –6.3 –1.8 –7.2 –7.4 –13.5 –6.8 –4.5 –5.8 –2.6 –16.8 –31.0 –26.2 –22.5

Fig. Dynamics of real GDP of Ukraine in 2012–2015, %

to the previous period

Source: State Statistics Service of Ukraine.

In terms of external aggression purchasing power of the population

reduced critically. The average monthly salary in Ukraine has been de-
creasing since the middle of 2014, in terms of high level of inflation
(49.9 % in the first 9 months of 2015) it undermines the purchasing
power and significantly worsens the living standards of the vast majori-
ty of population. The loss of income has increased significantly since
the beginning of 2015 due to sharp devaluation. In January-August
2014 the real salary decline rate was – 3.1 % compared to the corres-
ponding period of 2013, however, in January-August 2015 this process
accelerated to 23.2 %. An interesting example is the fact that in Janu-
ary-August 2015 decline rate in real salaries was the highest in the Lu-
hansk region –33.3 %, and the lowest – in the Donetsk region –11.4 %.

The pressure on employment is caused by downsizing of staff due

to the closure of many industrial companies, placing employees on un-
paid leave and unpaid salaries. It significantly increases social tension

–40

–30

–20

–10

III

2012

2013

2014

2015

Donbas and the Crimea: the value of return

and protests in the society. The total number of employed population
in Ukraine in 2014 decreased by 11.4 % in the Donetsk and Luhansk
regions – by 11.0 % and 13.3 % respectively. In the Donetsk region as of
July 1, 2015 the number of registered unemployed was 22,700 people,
and the load was 17 people per vacancy

Military threats, macroeconomic instability, sudden loss of purchas-

ing power of population, and of the corporate sector are basic factors of
folding investment activity. Thus, reduction of capital investment in
fixed assets in 2014 reached 24.1 % compared to 2013. In the first half
of 2015 this index continued to decrease and amounted to –9.2 % in
comparison to the already low index of 2014.

Forecasts of Ukraine's economic growth by international and na-

tional professional organizations keep getting worse. It is an indi-
cator of a significant decline in economic security. Its current state
is determined by the total impact of the economic recession, which
began before the Russian aggression, and the annexation of Crimea
together with the consequences of military conflict in the Donbas.
Obviously, we cannot divide the losses of the national economy
between these components, so let’s consider their combined effect,
mainly caused by Russian armed aggression in the Donbas. Thus, the
most significant challenges to the economic security of the state are
now the following.

1. Forced militarization of the economy. The government has no

alternative, but to maintain expenditure on defense at a level necessary
to strengthen the country's defense capacity and provide resistance to
the aggressor. Overall in 2015 about UAH 80 billion was directed for
security needs (compared to UAH 55.8 billion in 2014). This expendi-
ture accounts for almost 16.0 % of total state expenditures and about
5.0 % of GDP. Despite directing these resources not only to counter the
current threats, but also for the development of defense industry, there
remains a danger of deepening imbalance of the ratio between military
and civil sectors. Further increase in expenditures on security sector
can mean for Ukraine the establishment of wartime economy. The shift
of resources for defense needs restricts the development sources of ot-
her segments of the economy. Therefore, the allocation of significant fi-

Краткие итоги социально -экономического развития Донецкой области

за январь- июнь 2015 года. Retrieved from http://donoda.gov.ua/?lang=ru&sec=
04.01.03.04&iface=Public&cmd=view&args=id:29901

Section 4. The loss of resources due to the military actions

nancial, material, technical and human resources to the security sector
should be considered in civil economy development strategy.

2. Export capacity decrease. The activity index of major export-ori-

ented companies, located in the Donbas and launch of multiple restric-
tions on Russian market demonstrated the imperfection of the cur-
rent foreign economic model of Ukraine. In 2014 when total decrease
in Ukrainian foreign export of goods dropped by 13.5 % compared to
the corresponding period of the year before, in Donetsk it dropped
by 32.3 % and in Luhansk – by 46.3 %. In 2015 the situation became
even worse. In January-August 2015 Ukrainian export of goods dropped
by 39.9 % compared to the corresponding period of the year before,
the Donetsk export of goods dropped by 61.9 % and in Luhansk – by
94.4 %. In 2013 the Donetsk and Luhansk regions together provi ded
25.2 % of export of goods in the country, in 2014 it was only 19.1 % and
in 2015 it dropped to 10.6 % of the total export. The significant influ-
ence of these two regions is a result of high concentration of metallurgy,
machine industry and chemical industry enterprises that traditionally
make up the overwhelming share of Ukrainian foreign trade.

Russian policy of restrictions on certain kinds of goods

supplied

from Ukraine and active implementation of import substitution proj-
ects have caused a decrease in Ukrainian export to Russia in 2014 by
33.7 % and in January-August 2015 by 57.5 %. This fact negatively
influenced overall dynamics of foreign trade because of the weak geo-
graphical diversity of certain product groups

3. Incomes to budgets of all levels reduced due to downsizing of

the taxpayers base. The particular consequences of military aggres-
sion included:

•  the destruction and/or damage to fixed assets;
•  reducing in the number of entities and forced business idle time;
•  downsizing companies’ salaried staff;
•  reducing salaries and payroll;

In 2014–2015 Russia introduced restrictions for importing various goods

made in Ukraine in particular: candies, chocolate, dairy products, kitchen salt, al-
cohol beverages, canned vegetables, canned fruit and canned fish, household chem-
icals and other products; in addition Russia blocked the transit of Ukrainian sugar
to the Central Asia.

In January-August 2015 Ukraine exported 30.3 % of its total machinery indus-

trial products, 37.9 % of products by oil and chemical industry, 11 % of metallurgy
products.

Donbas and the Crimea: the value of return

• accumulation of tax arrears;
• relocation of taxpayers to other regions and so on.
According to expert estimates of the National Institute for Strategic

Studies, only direct losses of consolidated budget due to the annexation
of Crimea and occupation of the Donbas during the years 2013–2014
amounted to UAH 100 billion, including more than 80 billion in tax
revenue.

4. A massive increase in social expenditure is provoked by ex-

ternal eggression. Despite external and internal challenges the state
executed its social protection and social security functions. Today the
state provides social protection for citizens who were forced to leave the
occupied territories, in particular in 2015 there was UAH 3.4 billion for
direct financial support for internally displaced persons. However, due
to objective circumstances the amount of unpaid social support in 2014
constitutes UAH 19.6 billion in Donetsk region and UAH 14.6 billion
in Luhansk region. State budget for 2015 envisaged a subvention of
UAH 300 million for rehabilitation of infrastructure on controlled ter-
ritories of the Donbas.

According to the Ministry of Social Policy of Ukraine and the struc-

tural units of social protection of regional administrations and Kyiv
city administration, as of September 28, 2015 there has been registered
1,505,570 persons, or 1,183,079 families from the Donbas and Crimea.
534,830 families applied for financial aid, 505,425 of them were entitled
to such financial aid. Overall UAH 2.47 billion

was transferred to the

recipients of the financial aid.

According to the Pension Fund of Ukraine out of 1.2 million pen-

sioners living in temporarily uncontrolled territories of Ukraine,
1,060,000 were registered in social security agencies and addressed the
PFU to receive pension. Today, they have already started to receive
it on Ukraine-controlled territory

. A separate block of expenditure is

the social spending for social and health care protection and support-
ing ATO combatants and their families. The Budget of 2015 provided
UAH 2.6 billion for the ATO combatant benefits and support for IDPs,

Обліковано 1 505 570 переселенців. Retrieved from http://www.mlsp.gov.

ua/labour/control/uk/publish/article?art_id=182036 &cat_id=107177

Микола Шамбір: Питання про підвищення пенсійного віку не розгляда-

ється. Retrieved from http://www.rbc.ua/ukr/interview/nikolay shambir vopro s-
povyshenii pensionnogo 1438956192.html

Section 4. The loss of resources due to the military actions

another UAH 0.9 billion – to support displaced persons in interbudge-
tary transfers.

5. Decrease in domestic resource and raw materials potential of

the energy sector. There is a series of factors undermining Ukrainian
energy sector. These factors include the decrease in production of coal
in the Donbas, where over 80 % of Ukrainian coal mining is concentrat-
ed and some mines that produce valuable anthracite coals are occupied
by terrorists. These factors cause insufficiency of its resources at ther-
mal power plants, undermining the functionality of the whole energy
system of Ukraine. Ukraine is still forced to import coal: in 2013 the
share of coal in imports of mineral fuels accounted for 9.2 %, in 2014 –
11.7 % and in January-July 2015 – 16.4 %. Ukraine’s opportunities to
start production of shale gas and coalmine methane are significant-
ly limited. The development of such deposits could lead to complete
substitution of Russian imported gas within several years, which is a
priori ty of the national energy policy.

6. The slowdown in technical modernization of the real sector of

Ukraine’s economy happens due to the aggravation of the deficit in
domestic metallurgical and machinery products. The decline in pro-
duction of the metallurgical and machinery industries, much of which is
concentrated in the Donbas suffered significant damage and destruction
due to the hostilities. It slows down the modernization and restoration
of household networks and the gas transportation system, construction
of roads, bridges, rolling stock and road facilities of the “Ukrainian Rail-
roads”, and also old metal fund of other industries of Ukraine.

In addition metallurgy companies seriously lack raw materials due to

increasing export of scrap metal out of Ukraine. According to metallurgy
and mining industry trade union of Ukraine, the deficit in scrap metal in
the first 6 months of 2015 amounted to 445,000 tons (25 % of the need-
ed amount) and the export of scrap metal amounted to 800,000 tons. In
this situation the state budget receives less money. 1 ton of scrap metal
export contributes 10 euros to the budget, but a company melting 1 ton
of scrap metal into steel contributes 2100 UAH in taxes

7. Banking system destabilization as a result of:
• population deposits losses. In 2014 the total outflow of individu-

al entities’ funds from Ukrainian banks amounted to UAH 126 billion

Профсоюз металлургов просит остановить экспорт лома. Retrieved from

http://www.minprom.com.ua/news/192990.html

Donbas and the Crimea: the value of return

or 29 % of the sum at the beginning of the year, this amount includes
UAH 53 billion (-21 %) and USD 9 billion (–40 %)

. In January-Au-

gust 2015 the banking system lost UAH 24 billion of population’s de-
posits or 6 % of the sum they had at the beginning of the year. Rela-
tively positive dynamics (compared to the previous year) is explained
by single UAH rate fluctuations. Separate calculations in UAH and
USD

provide grounds to state a loss of 22 billion in national currency

(–11 %) and 3.6 billion in USD (–26 %) in private deposits.

Thus, reduction of the individual funds has slightly slowed down in

2015 compared to the previous year, however its pace remains threatening
for the stability of the banking system.

• frozen credit activity and reduction of the loan portfolio are

caused by decrease in banks’ resource potential. Separate calculations
in UAH and USD

give reasons to believe that in the first 8 months of

this year (2015), the banking system has reduced the loan portfolio by
UAH 53 billion (–10 %) and 4.4 billion dollars (–15.0 %).

In the situation of declining business activity, decline in industri-

al production, in exports and the overall GDP decline, the Ukrainian
economy requires a significant amount of credit, desirably long-term,
cheap and in local currency. However, in terms of reduction of bank lia-
bilities this goal cannot be achieved;

• decline in the loan portfolio quality. In conditions of hostilities in

the East, amid deteriorating foreign trade conjuncture and dropping
payment discipline of borrowers the share of overdue loans in the to-
tal loan portfolio is increasing. As of January 1, 2014, the figure in the
whole banking system amounted to 7.7 %, on January 1, 2015, it rose
up to the level of 13.5 %, and as of September 1, 2015 reached 18.6 %

Deteriorating loan portfolio quality immediately leads to two con-
sequences. First, borrowers stop paying interest on time on problem
loans, making bank earnings decrease. Second, it forces banks to cre-

Аналітична доповідь Національного інституту стратегічних досліджень

до Щорічного Послання Президента України до Верховної Ради України “Про
внутрішнє та зовнішнє становище України в 2015 році”. Retrieved from http://
www.niss.gov.ua/public/File/2015_book/POSLANNYA 2015_giper_new.pdf

Додаток до Макроекономічного та монетарного огляду за вересень

2015 р. Retrieved from http://www.bank.gov.ua/control/ uk/publish/article?art_
id=17608901&cat_id=58037

Ibid.

Основні показники діяльності банків України. Retrieved from http: // www.

bank. gov.ua/control/uk/publish/article?art_id=36807&cat_ id= 36798

Section 4. The loss of resources due to the military actions

ate additional insurance reserves for problem loans. These reserves are
made out of the bank’s expenses.

Thus, together with dropping income the banks expenses in-

crease. This fact causes the bank’s unprofitability in particular and
the banking system unprofitability in general. The financial result of
Ukrainian ban king system in 2014 is the lowest of all the observed
years and amounts to UAH 53 billion

. In 2015 the negative ten-

dency of unprofitabi lity in the banking system was not stopped. The
current los ses of the banking system in the first 8 months of 2015
amount to UAH 48 billion

• Increasing national currency volatility is a result of clients’ mistrust

in the banking system. According to a survey by Inmild only 11 % of re-
spondents keep the major share of their savings in banks, 7 % keep half
and 49 % keep an insignificant part of their savings in banks. So, a third
(33 %) of the respondents said that they had savings, but they didn’t trust
banks and kept the money not in banks

;

• inconsistency between the deposit rate and the inflation rate. Con-

sumer market price index reached 24.9 % in 2014. Despite the recorded
deflation in July and August, in the 9 month of 2015 the index used to
reach 41.4 %

. Inflation forecasts of different organizations and experts

considerably vary (in particular the National Bank of Ukraine forecas-
ted 44 % inflation rate)

, but in any case the rate will be higher than the

previous year. However, the deposit rates in Ukrainian banks fluctuate
in the range of 15–25 %, which is considerably lower than price growth
rate. Thus, when choosing an instrument for savings individuals do not
always prefer bank deposits, instead they keep their funds in cash, for-
eign currency, bank ingots, invest in real estate, etc.

Аналітична доповідь Національного інституту стратегічних досліджень

Основні показники діяльності банків України. Retrieved from http://www.

bank.gov.ua/control/uk/publish/article?art_id=3 6 807 &cat_id=36798

Треть населения Украины не держит сбережения в коммерческих банках.

Retrieved from http://interfax.com.ua/news/economic/292257.html

Індекси споживчих цін за регіонами у 2015 році. Retrieved from http://

www.ukrstat.gov.ua

Інфляційний звіт за вересень 2015 року. Retrieved from http://www.bank.

gov.ua/doccatalog/document?id=22249640

Donbas and the Crimea: the value of return

8. Dropping competitiveness of the national transport system

and rapid loss of Ukraine's transit potential. Deliberate destruction
of infrastructure in the Donbas and in the terrorist-controlled terri-
tories of Donetsk and Luhansk regions, including Russian-Ukrainian
border areas lead to further loss of transit potential of Ukraine, caus-
ing a decrease in export and import traffic, impede Ukraine's integra-
tion into European and global transport system. Ukraine is losing its
position as a transit country on the international market of interstate
and transnational routes services for cargo and passenger transport,
in particular the major one: Europe-Asia. Only in 2014 the volume of
transit goods by rail, which carried 81 % of transit goods in the coun-
try decreased by 13.3 % compared to 2013 (excluding the temporarily
occupied territory of Crimea and Sevastopol). In January-June 2015
decrease in rail transit amounted to 13.9 % compared to the same pe-
riod of 2014. However, the amount of processed transit cargo by the
mainland ports of Ukraine in 2014 decreased by 12.1 % compared to
2013 and in 9 months of 2015 it dropped by another 13.4 %.

Effective countermeasures against the above-mentioned chal-

lenges to economic security of the state is only possible if the na-
tion unites to fight foreign military and economic aggression. When
countering the aggressor, national economy considerably depends on
selfless work of millions of Ukrainians and their voluntary support.
It increases state responsibility for timely resolution of problems in
economic and social security.

Ukraine has already received significant support from international

financial organizations and individual states. However, given the scale
of the challenges and threats that Ukraine is countering for the sake of
international security, this aid is not enough. Loans by international
institutions demanding the standard cuts in public spending, including
social needs, do not consider Ukrainian realities. Critically low living
standards of most of Ukrainian population are caused by Russian mi-
litary aggression, and today it is impossible to reduce the living stan-
dards even more for humanitarian and moral reasons. It is also impor-
tant to understand that Ukraine demands not the money infusion for
restructuring financial liabilities, but a systematic investment plan of
assistance (such as “new Marshall Plan”) aimed at economic recovery
and modernization.

Section 5.

SOCIAL CONSEQUENCES

OF RUSSIAN ARMED AGGRESSION

AGAINST UKRAINE

[War] taxes both alike, and takes the blood of the men,

and the tears of the women.

William Thakeray

Social consequences of the annexation, the aggressio, the war are not

less important than political and economic, but definitely more painful
and they concern all without exception citizens of Ukraine: those who
are living on the occupied territories or fighting in the ATO and those
who keeps on living a regular life far from the battlefield.

War directly threatens lives and health of persons, destroys their

usual conditions of existence, deprives of property and sources of income,
increases the number of orphans, worsens the accessibility of education
and health care, causes forced migration. A major social challenge today
is sharp decrease in living standards of the population, this fact causes
high risk of poverty and social abruption, escalates inequalities.

Serious social problems the population is facing are not direct con-

sequences of war and they have not appeared just now. The problems
have been accumulated for years, however the war and economic cri-
sis considerably intensified them. In circumstances of war significant
human, financial and institutional resources are infused in sovereignty
protection and ensuring state integrity which practically makes it im-
possible to improve social and economic well-being of the population.
Besides this, external aggression has caused creation of new extremely
sharp problems in social field that add up with the already existing.

The most serious of these problems are obviously the problem

of internally displaced persons (hereinafter – IDPs), almost 3 % of
Ukrainian population are now IDPs and the living conditions of per-
sons residing on the territories where military actions took (are taking)
place. Physi cal losses in men brought by war add up with the risk of

Donbas and the Crimea: the value of return

migration outflow as a result of persons leaving dangerous regions to
escape war, to improve life conditions of their families working abroad.

In this regard social consequences of Russian aggression against

Ukraine include:

• direct losses of men and destruction in industry and social infra-

structure of the regions damaged by the military actions;

• consequences for Ukraine overall relating to large-scale dis-

placed persons migration;

• mobilization and social condition of persons participating in the

ATO.

5.1. Sociodemographic losses

Migration losses. Around 3 million persons live on the temporarily

uncontrolled territories of the Donbas. The total number of Ukrainian
citizens who left the ATO area for other regions according to the data
of late October 2015 was 973,100 persons

and it was made up of seve-

ral migratory waves directly proportionate to the periods and intensity
of warfare. On the Ukraine-controlled territories of Donetsk and Lu-
hansk regions there has been registered 350,000 IDPs, the rest IDPs
left the Donbas region. Establishment process of centralized IDPs reg-
istration system is still not completed, so the real figure might be higher.
In the meanwhile part of the registered persons continue living on the
occupied territories. Part of the displaced persons ask for asylum in for-
eign countries. According to UNHCR 353,500 Ukrai nians addressed
seven countries bordering Ukraine with refugee requests (mostly the
RF, Belarus and Poland), another 569,200 persons have other grounds

for residing in these countries.

Russian officials state much higher figures of persons displaced from

the Donbas to Russia, however this data is not confirmed. Persons who
have obtained or going to obtain legal basis for EU residence are not
likely to come back to Ukraine, persons who left for Russia will remain

Державна служба України з надзвичайних ситуацій. Міжвідомчий

координаційний штаб з питань соціального забезпечення громадян України, які
переміщуються з районів проведення антитерористичної операції та тимчасово
окупованих територій. Retrieved from http://www.mns.gov.ua/news/34232.html

Управління Верховного комісара ООН у справах біженців. Регіональне

представництво у Білорусі, Молдові та Україні. Retrieved from http://unhcr.
org.ua/en/2011 08 26 06 58 56/news archive/1244 internal displacement map

Section 5. Social consequences of Russian armed aggression against Ukraine

in the country. Persons who are most likely to leave and never come
back are the former Donbas residents who were born outside Ukraine
and their children.

Thus, confirmed migration losses of the Donbas in the period

2014 – mid-2015 are over 1.5 million persons, and several hundred
thousand IDPs are not registered. Uncertainty regarding the perspec-
tives of the hostilities and control over the occupied territories will
cause the scale of migration process to grow bigger.

Loss of job positions. The number of job positions in the economic

sector of the Donbas as of 2014 constituted:

• large enterprises – 573,000 (80.3 % in industry);
• middle enterprises – 405,000 (51.5 % – in industry, 7.3 % – in con-

struction);

• small enterprises – 213,000 (23.8 % – in commerce, 18.8 % – in

industry, 10.7 % – in construction, 8.8 % – in farming);

• private enterpreneurs – 401,000.
Lost job positions are estimated at about 50 % for large enterprises to

80–90 % for middle and small companies of the region. As a consequence
from 1.1 to 1.8 million able-bodied persons in Donetsk and Luhansk re-
gions partially or completely lest their jobs and means of existence

. In

February 2015 the number of salaried employees of all enterprises (not
considering micro companies) decreased by 952,200 people compared to
the same period of the year before. An inherent tendency was not em-
ploying new persons in the mining companies. Business and economic ac-
tivity sharply decreased, small and middle business are folding up, there
are increalingly more people who leave labor-market and refuse active job
search. It has already made 2 million of economicly inactive population.

Increasing poverty as a result of losing sources of income. Losing jobs

and respectively losing sources of income, complications in pension pay-
ments (or sometimes impossibility to receive it) have caused increasing-
ly growing poverty. Given the traditional income structure of house-
hold, loss of salary cannot be even partially compensated by incomes
from other kinds of labour activity. During 2014 the Ukraine-controlled
territories of Donetsk and Luhansk regions saw a sharp increase in the
scale of absolute poverty: Luhansk region 14.1 % (7.2 % in 2013) have

Гройсман В. Б. Першочергові завдання для вирішення проблем внут-

рішньо переміщених осіб та відновлення Донбасу / В. Б. Гройсман. Retrieved
from http://www.kmu.gov.ua/document/247598840/Donbas%20UKR_rew.ppt

Donbas and the Crimea: the value of return

income lower than the subsistence minimum, in Donetsk – 14.6 %
(4.4 % in 2013). Further decrease in real population’s income in 2015
and impossibility to quickly stabilize the socio-economic situation in
the Donbas region allow us to forecast further growth of absolute po-
verty

in these regions to 30–40 %.

Most of the Donbas Population (of those who left and of those who

stayed) lost momentarily everything they had: their jobs, homes, cars,
country houses. Only a part of Donetsk population (about 1 million
persons, meaning 22 %) and Luhansk population (300,000 persons,
meaning 16 %) had financial resources for more-or-less long-term
relocation. However because of impossibility to go back home or a
complete loss of property as a result of the hostilities even relatively
well-provided population happened to be in sudden poverty, and in
some cases suffered its extreme displays. Only 10 % of the fami lies from
the ATO area (no matter they left or stayed on the damaged territo-
ries) can maintain relatively stable financial state and do not require
social support. It is mostly families who managed to use their savings
(property, deposits, etc.) to change their accomodation or those who
managed to preserve their sources of income or successfully found jobs
on the employment market of the other regions. The other 90 % of
the population from the ATO area either have already become poor
or very vulnerable to this threat, because the actions unfolding in the
East can any munite deprive them of their little incomes or savings.

Increased load on the state social support system. Loss of income and

property, inability to substitute them with their own resources forces
households to address the state social support system for help. Under
reforms with the pupose of enhancing targeting and increasing financial
help an irreversible factor is a considerable increase in financial load on
the system, because the number of participants and the size of financial
help will increase simultaneously. Before the conflict recipients of
support to disadvantaged families in Donetsk and Luhansk regions
were 0.1 % and 1.3 % total recipients in the country. However, as a
result of reforms an average of about 3 % of the Ukrainian population
can become such recipients, 7–8 % in the Donbas region.

It will demand additional funds regarding that as of August 1, 2015

an average monthly financial aid per family was 2,350 UAH, the po-

Below the subsistence line.

Section 5. Social consequences of Russian armed aggression against Ukraine

pulation of Donetsk and Luhansk regions (Ukraine-controlled) is sup-
posed to get over 4 billion UAH a year in terms of Disadvantaged fami-
lies support program.

5.2. Poblems of Internally Displaced Persons

Probably the most important sociodemographic risks in Ukraine

are relating to unvoluntary displacement of hundreds of thousands
persons, who were forced to leave their usual places of leaving because
of the Crimea annexation and hostilities in the East of our country. Un-
voluntary migration is radically different from the voluntary migration
aimed at improving material and social status. Forced migration on the
contrary causes loss of social status and destroys the well-fare of popu-
lation. Victims of war and agression who not only lose home, property,
job, very often some of them also lose relatives and have to undergo
tough psychological stress.

The first wave of internally displaced persons started in spring 2014

as a result of Crimea annexation. Most of displaced persons left the
peninsula from March to August 2014. They were mostly politically
active citizens, journalists, religiuos community activists, students who
wanted to continue studying in Ukrainian universities and also persons
whose professional activity was closely related to or based on Ukrainian
licenses (lawyers, notaries, pharmasists, small business). Major motive
of displacement is unwillingness to stay on the occupied territory.

However, the beginning of the ATO in the Donetsk and Luhansk

regions caused a new much larger group of IDPs. The first IDPs
from the Donbas left it because of political views, not supporting the
self-proclaimed republics, but hostilities forced thousands more to
save there lives. According to the first data posted in June 2014, there
were 3,000 IDPs. Every wave of hostilities caused new larger in scale
waves of displacement. The largest displacement waves happened in
July-August, October 2014 and in January-February 2015. Persons left
the ATO area mostly spontaneously, with few personal belongings and
little money, often under risk to life.

According to governmental information as of October 23, 2015

there has been displaced 973,120 persons from the ATO area to other
regions of Ukraine. Among them:

• 951,891 persons from Donetsk and Luhansk regions;

Donbas and the Crimea: the value of return

• 21,229 persons from Crimea and Sebastopol;
• 162,717 children;
• 476,882 disabled and senior persons

According to the information of employment and social support

agencies the number of IDPs is higher than mentioned above. As of
September 25, 2015 they accepted 1,506,000 persons, among them
360,000 persons of work capable age, 888,000 pensioners, 190,000 chil-
dren and 63,000 disabled persons

Even though the intensity of displacement as a result of certain

peaceful settlement has decreased, however unreliability of the cease-fire
together with destuction of former places of residence still increase the
number of IDPs.

The state was not ready to resolve problems of internally displaced

persons. Though the Chernobyl catastrophe also caused massive displace-
ment of population, but it was of smaller (160,000 persons were displaced)
scale and financial and organizational capabilities were more powerful.

Over a short period of time our country had to organize IDPs re-

gistration, develop the necessary legislation and create infrastructure
purposed to give support to IDPs. We must admit that in the first and
most difficult period major responsibility was assumed by society, vo-
lunteer organizations and simple concerned people willing to help.

Complicated legislative process for determining the status and

rights of the IDPs clearly indicates state unreadiness to resolve IDPs
problems. The first edition of the respective Law on Internally dis-
placed persons adopted by the Parliament was vetoed by the president,
because according to the president it didn’t meet Constitution and in-
ternational standards of treating IDPs. The irrelevance of the law was
vividly demostrated by the definition IDPs as “internal migrants”.

The current Law of Ukraine on “Securing rights and freedoms of

internally displaced persons”

was adopted with a considerable delay

Державна служба України з надзвичайних ситуацій. Міжвідомчий

Щодо надання послуг службою зайнятості внутрішньо переміщеним особам.

Retrieved from http://www.dcz.gov.ua/statdatacatalog/document?id=351058

Про забезпечення прав і свобод внутрішньо переміщених осіб : закон України

від 20.10.2014 р. № 1706

-VII. Retrieved from http://zakon2.rada.gov.ua/laws/

show/1706 18

Section 5. Social consequences of Russian armed aggression against Ukraine

only in October 2014. It formalizes the registration algorithm of IDPs
and creation of Single database of this group of population. It guaran-
teed IDPs the following rights:

• right for employment including simplified registration system of

individual or legal entities);

• unemployment status;
• pension provision;
• social insurance;
• social services;
• education;
• voting right;
• conditions for temporary or long-term accomodation;
• programs for subsidized construction loan and accomodation

purchase loan;

• protection against discrimination;
• right for voluntary return to the previous places of residence and

others.

A series of governmental acts also have significant importance for

the IDPs’ situation. In particular, in July 2014, the Gouvernment al-
ready adopted simplified algorithm of obtaining status of unemployed
for IDPs

. There has been adopted mechanisms for allocating social fi-

nancial aid and pensions according to actual place of residence of IDP.
Starting on Octorber 1, 2014 there has been launched IDPs registra-
tion and it was also ordered to create a respective database of IDPs.
The gouvernment also adopted a Decree “On allocating monthly target
financial aid to persons displaced from temporarily occupied territo-
ries of Ukraine and area of ATO to cover accomodation expenses in-
cluding utility bills

”. The act envisages financial aid for the period of

6 monthd and extension for another 6 months in case of a substantial
need. The size of the financial aid cannot exceed 2,400 UAH per fami-

Про внесення змін до Порядку реєстрації, перереєстрації безробітних та

ведення обліку осіб, які шукають роботу : постанова Кабінету Міністрів Ук раїни
від 27.08.2014 р. № 403. Retrieved from http://www.kmu.gov.ua/control/ru/cardn-
pd?docid=248314703

Про надання щомісячної адресної допомоги особам, які переміщуються

з тимчасово окупованої території України та районів проведення
антитерористичної операції, для покриття витрат на проживання, у тому
числі на оплату житлово -комунальних послуг : постанова Кабінету Міністрів
України від 01.10.2014 р. № 505. Retrieved from http://zakon4.rada.gov.ua/
laws/show/505 2014 %D0%BF

Donbas and the Crimea: the value of return

ly, this sum equals two subsistence minimums and it’s obviously little.
The financial aid is not provided to IDPs who have accomodation in
other regions of Ukraine or a sum of 10 subsistence minimums or more.
Financial aid for able-bodied IDPs (for the exception of persons busy
looking after children, disabled or senior persons), who have not found
employment over a period of two month after the date of financial aid
registration is first decreased and then cancelled. In order to facilitate
employment of IDPs the Ministry of Social Policy of Ukraine has de-
veloped “2015–2016 Major guidance for resolving employment prob-
lems of internally displaced persons”

, adopted by the Parliament in

July 2015. The act also envisages creation of temporary jobs, targets
innovative approaches like not standard schedule, to stimulate enter-
preneur activity of IDPs. Special attention is paid to professional edu-
cation of in accordance with the demands of labor-market.

One shall admit that practically every single document of the

mentioned above aims at cooperation with international and non-
governmental organizations including the organizations uniting IDPs.
Society conducts expert evaluation of legal acts, follows the effectiveness
of their implementation, makes offers regarding changes and additions.
Cooperation international and non-governmental organizations
provides allocation of additional financial and organizational resources
for IDPs’ problem solving, incredibly scarce in terms crisis.

A crucial problem for IDPs remains the matter of accommodation.

According to the survey currently 90 % of IDPs a renting private ac-
commodation at their own expense. State financial aid at the moment
cannot cover the full cost of renting. Only lower than 10 % are using
state accommodation. For IDPs accommodation the state contribut-
ed state health resorts, care homes, camps, dormitories, etc. As of Sep-
tember 2015 there were 723 locations of 12,200 IDPs total capacity

obviously not enought given the situation. In the meanwhile another
serious problem is financing these locations and the fact that they are

Про затвердження Основних напрямів розв’язання проблем зайнятості

внутрішньо переміщених осіб на 2015–2016 роки : постанова Кабінету
Міністрів України від 08.07.2015 р. № 505. Retrieved from http://www.kmu.gov.
ua/control/ru/cardnpd?docid=248359035

Державна служба України з надзвичайних ситуацій. Міжвідомчий

Section 5. Social consequences of Russian armed aggression against Ukraine

not fit for long-term living, especially in the winter season. Accommo-
dation is often provided in rural areas, its quality is poor, little employ-
ment possibility, and lack of industrial and social infrastructure; given
that majority of IDPs are urban citizens they are mostly not willing to
go there.

Provision of state accommodation support for IDPs is determined

by the Law of Ukraine on “Securing rights and freedoms of internally
displaced persons”

, Chapter 9 of the law reads that IDPs have a right

for provision of proper conditions for temporary or permanent living;
a right for temporary free-of-charge accommodation (given that IDPs
are charged for utility bills) for the period of six month from the IDP
registration date, possibility to extend the period for multi-child fami-
lies, disabled persons, senior persons; assistance in return to the previ-
ous place of permanent residence.

According to the Ministry of Social Policy of Ukraine as of Septem-

ber 14, 2015 there has been allocated 2.2 billion UAH

of financial aid

to 490,500 IDPs or 94.4 % of the total number of families who applied
for help.

However, the mechanisms of implementing state obligations in the

field of providing state accomodation support to IDPs have an non-spe-
cific and limited nature. Criteria for selecting the target recipients of
the monthly target accomodation support are not specific enough. It’s
unjustifiable to limit IDPs right for free accommodation with the peri-
od of only 6 months, within this period IDP is supposed to find employ-
ment in order to provide their existence. Given the situation on the the
labor-markets it is a remote possibility. Circumstances forcing IDPs to
apply for help exist for a longer period.

Apart from the above-mentioned the potential of providing acco-

modation support in money cannot be used to its full scale because of
weak development of the rental accomodation market in the country.
Legal misregulation of the respective relations makes high risks for
both tenants and landlords. Prices for rental accommodation are too
high, supply is not transparent and inflexible. In Kharkiv, Cherkasy,
Zhytomyr, Lviv, Odesa the cost of one room apartment exceeds 100 %

Про забезпечення прав і свобод внутрішньо переміщених осіб : закон

України від 20.10.2014 р. № 1706 -VII. Retrieved from http://zakon4.rada.gov.ua

Дані Міністерства соціальної політики України. Retrieved from http://

www.mlsp.gov.ua

Donbas and the Crimea: the value of return

of the average salary in the region. There is not a single city where it is
less than 30 % of the average salary.

Another serious problem is employment. It important not only as a

source of income, but as the most important way of self-fulfillment and
adaptation to the new environment. The complications in employing
residents of the Donbas arise due to their professional field. The most
vulnerable in present situation are former employees of the coal and
metallurgy mining industry, which is not in much demand on the la-
bor-markets of other regions.

121 thousand IDPs reported that they needed employment when

receiving an IDP certificate. However as of September 2015, from the
moment of Crimea annexation and the beginning of the ATO only
47,900 IDPs applied to employment agencies for help. 12,600 IDPs
were successfully employed. 472,000 IDPs received prefessional ori-
entation support. 3,100 unemployed IDPs participated in professional
education assigned by the Employment agency, 6,800 took part in com-
munity work, 10,900 IDPs were still unemployed as of October 2015

On the one hand relatively low achievements is a result of low acti-

vity and organizational capabilities of the respective state services, but
on the other it is a result of low activity of the IDPs themselves.

A survey conducted by the employment service in September 2015

polled 2,500 IDPs and indicated that 53 % of IDPs who reported the
need in employment during the IDP registration are not planning to
look for a job with the help of State Employment Agency. 22 % of IDPs
had a job, 18 % were planning to return to the previous place of resi-
dence and did not wish to break their previous labor relations, 25 %
were planning to start the job search later, others reported their inabil-
ity to work regarding different reasons (health condition, child care,
studying, financial dependence, etc)

This situation has several reasons. They include the experienced

shock, disbelief in themselves, expecting a quick return home and to
some extent support-abuse attitudes spread in the IDPs’ community.
In any case these reasons demand thorough examination and consider-
ation. Obviously besides conventional work with society employment

Щодо надання послуг службою зайнятості внутрішньо переміщеним

особам. Retrieved from http://www.dcz.gov.ua/statdatacatalog/document?id=
351058

Ibid.

Section 5. Social consequences of Russian armed aggression against Ukraine

services should apply a wide range of capabilities, considering the pecu-
liarity of their situation and emotional state.

Another reason for IDPs not to be interested in the job hunt with the

help of state employment services is high salary requirements, because
of the need to resolve accommodation problem and pay rent. Consid-
ering the cost of 1-room appartment in different cities of Ukraine and
minimum package of necessary goods and services, according to our
calculations an IDPs family of two adults and a child has to spend from
3,966 to 8,500 UAH a month.

In particular, in Kharkiv – 6,400–6,800 UAH, Vinnytsa – 5,200–

6,200 UAH, Mykolaiv – 4,200–4,700 UAH, Ternopil – 4,500–
4,800 UAH, Chernihiv 3,900–4,300 UAH. At the same time in June
2015 the average salary in Ukraine was 4,299 UAH and only a third of
employees had a salary over 4,000 UAH.

One more factor complicating IDPs problems is their uneven

spread around the territory of Ukraine. Today the highest concentra-
tion of IDPs is in regions of Luhansk (229,174), Kharkiv (196,698),
Donetsk (117,162), Dnipropetrovsk (85,344), Zaporizhia (66,469),
Kyiv (44,639) and the city of Kyiv (39,047). The lowest IDPs concen-
tration is in the regions of Ternopil (2,681), Chernivtsi (2,736), Iva-
no-Frankivsk (3,651), Rivne (3,464), Zakarpattia (4,024) and Volyn
(4,325)

. IDPs mostly settled in the regions that are close to their pre-

vious places of residence, meaning intentions of many IDPs to go back
to the homes they had left

. In addition settling in developed industrial

centers is completely natural, here they have a higher possibility of em-
ployment and economic activity.

It is equally important to consider the fact that arrival of IDPs in-

crease local social problems, it can cause tensions in relations between
the displaced persons and local population. IDPs needs become a se-
rious burden for local budgets, create additional difficulties for local
citizens on the labor-market, in healthcare and education. The IDPs
have a right for health care, including medication for free or at re-

Державна служба України з надзвичайних ситуацій. Міжвідомчий

Вимушені переселенці: проаналізувати, зрозуміти, допомогти. Retrieved

from http://ukurier.gov.ua/uk/articles/vimusheni pereselenci proanalizuvati zrozu-
miti dop/

Donbas and the Crimea: the value of return

duced rates, just like all other local citizens. In practice it means that
healthcare institutions provide IDPs with services using the already
lacking resources and medication calculated for the permanent local
population. The same situation is observed in educational institutions,
where the IDPs children significantly increase workload on employees
(teachers, nursery teachers, school psychologists), the comfort of chil-
dren’s stay goes down. So it’s worth developing a financing mechanism
for healthcare, education and other needs of IDPs from a fund specially
created with this purpose, find ways to enlarge personnel who deliver
the respective services, consecutively explain the current situation to
the population.

Particular attention shall be paid to the problems of the most vul-

nerable categories of IDPs, namely children, who constituted 16.7 % of
all the IDPs as of October 2015

. Psychologists state that children of 3

to 15 years of age are suffering the most: younger children easier leave
their previous place of residence, and older children are able to com-
pletely rationally accept moving to a new place

. Children are prone

to mental health disorders (worsening of communication with the sur-
rounding people; irritability, aggression, anxiety, lack of trust in others;
a sense of loneliness, isolation and worthlessness; not understanding
adults); their process of socialization and resocialization is very compli-
cated, which leads to disruption of communicative behavior, pace and
quality of integration in the new environment, reduces the quality of
education and training (violation of school discipline, the emergence of
problems in education). In general, it negatively affects the individual.

As the Ukraine Parliament Commissioner for Human Rights stat-

, there are problems in registration of unaccompanied children as

Internally Displaced Persons and appointing legal representatives and
social support to such children.

Міжвідомчий координаційний штаб з питань соціального забезпечення

громадян України, які переміщуються з районів проведення антитерористичної
операції та тимчасово окупованої території. Retrieved from http://www.mns.
gov.ua/news/34232.html

Дети -переселенцы: как помочь адаптироваться. Retrieved from http://sun-

ny7.ua/semja/children/deti pereselentsy kak pomo ch adaptirovatsya

Питання захисту прав дітей в умовах збройного конфлікту – на контролі

Омбудсмена і громадськості. Retrieved from http://www.ombudsman.gov.
ua/ua/all news/all activity/6515 zn pitannya zaxistu prav ditej v umovax zbrojnogo-
konfliktu na kontroli/

Section 5. Social consequences of Russian armed aggression against Ukraine

With the beginning of a new school year there has arisen a question

of readiness of children-IDPs for the studying process. Even though
they are provided with studying facilities, but they desperately need
necessary things for school. As for pre-school children, parents among
IDPs are often unable to pay for the stay and meals of their children in
kindergartens. Support for IDPs children in education is mainly done
at the expense of personal reserves of teachers, parent committees, vol-
unteer organizations, and not from additional resources or local go-
vernment budgets

An important issue is the health of displaced children. Displaced

children who left the ATO area were entitled to rest and recreation
camps for children at the expense of state budget. However, the capac-
ity of these camps is too low therefore not all children of this category
have the opportunity to improve their health at reduced rates

There is a need to supplement the list of children categories who

demand additional attention and support with displaced children from
the temporarily occupied territories or the ATO area and combatants’
children. Such proposition was in a Draft Law “On ammendments to
some legal acts regarding organization of health improvement and rest
for children, and preservation of the child recreational and health facil-
ities network” of 05/20/2015 № 2917

Another important matter is readiness and professional qualifi-

cation of teachers and school psychologists for work with displaced
children. There is a need to organize proper training of educational
personnel for special attitude and work with internally displaced chil-
dren.

We must admit that despite all the efforts of the state and the pub-

lic regarding support of IDPs the results are still far from the desired
ones. According to the survey of January-February 2015, 44 % of IDPs
considered the state support they received to be insufficient. The gi-

Образовательные проблемы переселенцев решаются не за счет

государства – Эксперты. Retrieved from http://restoring donbass.com/novosti/
10565 10565/

Где бесплатно оздоровить ребенка: детей -переселенцев приглашают на

летний отдых. Retrieved from http://kp.ua/life/503628 hde besplatno ozdorovyt-
rebenka detei pereselentsev pryhlashauit na letnyi otdykh

Інформація стосовно оздоровлення та відпочинку дітей учасників АТО та

внутрішньо переміщених осіб. Retrieved from http://www.mlsp.gov.ua/labour/
control/uk/publish/article?art_id=178604&cat_id=138985

Donbas and the Crimea: the value of return

ven support didn’t meet the needs in all the parameters. Regarding the
accommodation and material resources it only satisfied less than a half
of the needed. Close to needs was only considered the support in paper-
work for pension provision and social payments, as well as registration
of the temporary residence

Provision of support to displaced persons faces with serious diffi-

culties as a result of objectively complicated situation in the country,
economic crisis, hostilities and destruction. Apart from this there are
disadvantages in the very approaches to the IDPs problems. The pol-
icy of the matter is formed and implemented by various departments,
international and volunteer organizations. It lacks coordination, and
more importantly the definition of the ultimate goal.

5.3. External emmigration revitalization

Under the influence of the military conflict in the Donbas signifi-

cantly increasing emigration attitudes of the population becomes an
additional challenge for the state. According to sociological monitor-
ing in 2014, held annually by the Institute of Sociology of NASU, 7.4 %
(2008 – 6.2 %) are soon ready to leave to work abroad, 15 % of respon-
dents are considering emigration for permanent residence.

Increase in the intensity of migration is accompanied by substan-

tial changes in its characteristics. First, there’s an acceleration in reori-
entation of migration flows from Ukraine. Former major direction for
emmigration the East is now less popular, the Western direction pre-
vails. Some people who used to go for work in the RF, now are looking
for earnings in other former Soviet states, including Kazakhstan and
Belarus. However, most Ukrainians will familiarize with the European
labor-market, especially if the EU grants Ukraine the planned visa-free
regime. The above-mentioned is vividly illustrated by the statistics of
2014. For instance, the rate of Ukrainian migrant-workers in Poland
has risen dramatically.

Poland used to be the second in number of Ukrainian migrant-work-

ers after Russia. In 2013 Polish employers informed local authorities
of employment of 134,000 season (not more than 6 months a year)

Оцінка потреб внутрішньо переміщених жінок та осіб похилого віку

в Україні : дослідження Укр. ін- ту соц. дослідж. ім. О. Яременка. Retrieved from
http://www.uisr.org.ua/news/104.html

Section 5. Social consequences of Russian armed aggression against Ukraine

workers from Ukraine, but in 2014 the figure almost tripled making
359,000 workers

However the shortening of labor migration to Russia and accelara-

ted reorientation towards the West only concerns the majority of
Ukrainians, but not the residents of the temporarily occupied territo-
ries, where the situation is completely different. For them employment
in Russia is the only way out. They will make up the vast majority of the
migrants flow to the neighboring country. Especially now when Rus-
sia is actively implementing the policy of “compatriots” resettlement.
According to the Federal Migration Service of Russia, 93,200 citizens
of Ukraine (including family members) applied to participate in the
Russian state voluntary compatriots resettlement assistance program
during 2014. If we compare these figures with those in 2013 (the com-
patriots resettlement assistance program in 2013 had only 34,700 par-
ticipants), it is because of the hostilities in Ukraine that Russia made
significant progress in attracting immigrants, in accordance with the
political documents approved at the highest-level it is the main task of
Russian migration policy

The model of migration behavior is expected to change in other

directions as well. The circulation model, where people go to a coun-
try for seasonal work of 3–6 months and then come back to Ukraine
where their families stay might transform into the resettlement model.
Such results are indicated by sharp increase of applications made by
Ukrainian citizens to the competent authorities of foreign countries
(Poland, Germany and others) regarding issuance of permits for tem-
porary or permanent residence. According to the Ministry of Internal
Affairs of Poland, in 2014 the number of applicants for permanent resi-
dence permits doubled, and the number of temporary residence permits
increased by 50 %

Raport na temat obywateli Ukrainy (w stanu na dzień 11.02.2015). Retrieved from

http://udsc.gov.pl/statystyki/raporty specjalne/biezaca sytuacja dotyczaca ukrainy/;
Огляд приватних грошових переказів в Україну. Retrieved from http://www.bank.
gov.ua/doccatalog/document?id=73841

Информация о ситуации в отношении граждан Украины и лиц без

гражданства, покинувших территорию страны в экстренном и массовом порядке.
Retrieved from http://www.fms.gov.ru/about/statistics/info_o_situatsii_v_otnosh-
enii_grazhdan_ukrainy/

Raport na temat obywateli Ukrainy (w stanu na dzień 11.02.2015 r.). Retrieved

from

http://udsc.gov.pl/statystyki/raporty specjal

ne/biezaca sytuacja dotyczaca-

ukrainy/

100

Donbas and the Crimea: the value of return

The dynamics of money transfer from migrants to their families

at home can be considered an indirect evidence of transformation of
temporary labor migration into resettlement. The money transfers
were quite significant and steady, and in 2013 according to the Natio-
nal Bank of Ukraine, they exceeded $8.5 billion. However, the money
transfers declined by 24 %

in 2014. Partly, it happened because of the

attempts by the National Bank of Ukraine to set the currency trans-
fers payment in UAH and at lower than market rates. Despite the fact
that this procedure lasted less than a month, it undermined the already
low migrants’ credibility to financial institutions of the state, forcing
many of them to refrain from transfers or use informal channels of mon-
ey transfer. However, transfers reduction has apparently also another
greater cause. Since the number of migrants has not decreased, but on
the contrary, probably increased, the mentioned reduction demon-
strates that migrants stay abroad longer, and even refuse to return
home, indicating that families come together in foreign countries. More
and more workers make savings to buy real estate not in Ukraine, but
abroad, this fact indicates a gradual migration of their vital interests to
foreign coutries

Modern migration transformation in circunstances of a deep eco-

nomic crisis and war can have a very negative component. If the as-
sumptions concerning the increase of migration are true, and given the
policies of destination countries that strictly control and limit the entry
of foreigners, especially unskilled workers, it is possible that Ukrainian
share of workers without proper permits might increase. Illegal em-
ployment is a serious situation with all the negative consequences.

Difficult political and economic situation in Ukraine has a negative

influence on immigration into the country as well. Obviously, in the
nearest future there no grounds to expect any noticeable repatriation
processes, labor migrant will be unwilling to come back, Ukraine will
become unattractive for foreigners, in particular for students. In the
meanwhile illegal migration to and through Ukraine might intensify
as a result of weak border control in the East of Ukraine. The number

Огляд приватних грошових переказів в Україну. Retrieved from http://

www.bank.gov.ua/doccatalog/document?id=73841

Малиновська О. Перекази мігрантів з-

за кордону: обсяги, канали,

соціально- економічне значення : аналіт. доп. / О. Малиновська. – К. : НІСД,
2014. – С. 47. – (Сер. “Економіка”, вип. 18).

101

Section 5. Social consequences of Russian armed aggression against Ukraine

of people looking for asylum will not decline, but can even increase,
because of people from CIS countries disagreeing with their countries
policies. Using Ukraine’s confrontation with Russia there can be people
requesting asylum, who left there countries not because of political (re-
ligious or ethnic) reasons, but because of commercial criminal reasons.

Thus, under conditions of political and military situation and eco-

nomic crisis intensity of emigration abroad and temporary migration
with employment purpose may rise. The probability of labor and intel-
lectual losses will rise as well.

Migration risks caused by the present situation have to be consi-

dered in the state developement strategy. Migration policy reform has
to become an integral part of the reform process in Ukraine. Enhance-
ment of migration control possibilites is also an obligatory condition of
further European integration of Ukraine.

* * *

As a result of Russian armed aggression against Ukraine, our country

has undergone losses caused by increased morbidity, mortality and mi-
gration. Caused by destruction and economic crisis job losses deprived
many people of income sources. Public well-fare dropped dramatically,
poverty risks have increased. Public access to educational and health ser-
vices deteriorated. Due to the destruction of social infrastructure in ar-
eas of hostilities the most vulnerable population: children, senior persons
and disabled persons happenned to be in a particularly difficult situation.
There are new categories of Ukrainian citizens in need of social support,
including internally displaced persons. There are acute problems of social
security for citizens who are directly involved in the ATO.

In addition to direct damage, the war also worsened economic con-

ditions for the implementation of social policy pushed to the unpopular
steps to reduce benefits, increase tariffs, increase tax, but leave salaries
and pensions the same. Appropriate response to contemporary social
challenges can only be found under condition of a lasting peace and
if we overcome the economic crisis, we must address the causes of the
situation. However, despite the realities of war, it is necessary today to
enhance the social orientation of the state, to find a balance between
economical measures and providing social guarantees.

The fact that the curent crisis coincided with a powerful public

demand of changes provides grounds for optimistic expectations re-

105

Section 6.

CONSEQUENCES OF THE CRIMEA

ANNEXATION: STAGNATION IN DEVELOPMENT

AND INTERNATIONAL SANCTIONS

Let our losses be our test, but not a torture.

Elchin Safarli

Today it is incredibly difficult to name “the cost of losing Crimea”,

because the formula of such cost consists of multiple components that
simply don’t have additive relations. Some components are explicit,
partly they have already been evaluated (including direct loss of as-
sets, losses from nationalization of a number of state-owned enterprises,
loss of profits, losses from declining trade, decline in budget revenues,
loss of transport infrastructure, etc.), but eventually their scale may in-
crease in unspecified ratio. Some losses are implicit (e.g. scientific and
educational potential), their volume is difficult to formalize not only in
the future, but even now. Calculating the losses from the Crimea an-
nexation, one hits the multicollinearity in attempts to calculate losses
suffered by Ukraine, and the losses suffered by the Crimea itself. For
example, the losses of individual entities are subjects to direct account-
ing calculation, however the volume of implicit losses that may be both
reversible and irreversible are much more difficult to determine.

Despite the above-mentioned in April 2014 Ukrainian authorities

announced the amount of UAH 1 billion. At the moment according to
preliminary estimates by Interdepartmental Work-Group On Collec

ting Debts Caused By The Occupation Of Crimea that currently works
at the Ministry of Justice of Ukraine, the total losses amount to UAH
1 trillion 200 billion

. There are also notifications that the figure might

double in the next 6 month

This sum does not include the lost profit from utilization of facilities and proper-

ty on the territory of Crimea, nor the data on the lost natural mineral deposits

Логвинський Г. Українська влада вдвічі збільшить суму збитку за анексію

Криму / Г. Логвинський. Retrieved from http://ua.krymr.com/content/news

106

Donbas and the Crimea: the value of return

So, what is this “snowball” of losses made of?
It has been generalised that the most significant are the following

losses.

1. Annexation of Crimea has caused damage to the defense capacity

of Ukraine (Ukraine’s Navy assets lost in Crimea reach UAH 1.5 billion).

2. The most significant loss of assets is caused by transfer of a series of

Ukrainian state-owned companies under Russian control. In particular
the companies are “Chornomornaftogas”, “Ukrtransgaz” and 17 Black
Sea shelf deposits, of which 11 are gas, 4 – gas condensate and 2 – oil.
Considerable damage for the economy of Ukraine is associated with the
loss of some important companies in the food, chemical and shipbuild-
ing industries (PrJSC “Crimean Titan”, PJSC “Crimean Soda Plant”).
However, significant negative effects of losses in shipbuilding capacity
does not mean that Ukraine is completely deprived of prospects for the
industry, because more than half of fixed assets in the shipbuilding indus-
try is concentrated in Mykolaiv.

3. Reduced production and significant losses were caused to

wine-making industry of Ukraine. Broken partnerships, lack of raw ma-
terials and lack of new markets forced wineries to switch to Russian stan-
dards of production technology, product design and trade.

4. The transport sector of Ukraine's economy lost 645 km of railways,

6,265 km of roads, 5 seaports Ukraine – Feodosia, Sevastopol, Yevpa-
toriya, Yalta and Kerch, and with them 10 % of total cargo handling,
and about 3–5 % of the total volume of rail freight. In addition, Russian
control over the Kerch Strait and the fighting in the east of Ukraine en-
danger the work of Mariupol and Berdyansk ports, that make up 12.6 %
of total cargo handling in Ukraine.

5. Loss of Kerch and Sevastopol fish ports and their two largest fish-

ing fleets (an approx. estimate of 70 % of the total fish catch in Ukraine)
is also a significant loss.

6. Loss of property and fixed assets, suffered by Ukraine in agricul-

ture, according to the Ministry of Agricultural Policy and Food Sup-
plies of Ukraine, amounts up to UAH 201.6 billion

7. Significant losses were caused in the banking system of Ukraine.

According to the National Bank of Ukraine, 1,022 local offices of
Ukrainian banks, 11 branches, 53 representative offices and two Crime-

Аннексия Крыма нанесла аграрному сектору Украины 201,6 млрд грн

убытков. Retrieved from http://hyser.com.ua/economics/anneksiya kryma nanesla

107

Section 6. Consequences of the Crimea annexation: stagnation...

an banks operated in Crimea. Assets of these banks are worth more than
UAH 22 billion, including UAH 16 billion of loan commitments.

8. Among the most serious losses for domestic science is one of the

well-known scientific centers of Europe – Crimean Astrophysical Ob-
servatory of Kyiv National Taras Shevchenko University. This fact has
greatly complicated the possibilities of Ukraine in fundamental astro-
physical research in physics of the Sun, stars, asteroids, etc. Equally no-
table for Ukrainian science is also a loss of the Kovalevsky Institute of
Biology of the Southern Seas, Marine hydrophysical institute, branch-
es of archeological and oriental studies institutes, Nikitsky Botanical
Garden, Karadag Nature Reserve. The uniqueness of these academic
institutions is determined by the geographical location and unique
natural resources, so their loss was irreparable for the national science.
There are about 100 institutes and universities overall in Crimea that
have worked successfully in important areas of research

, 22 scientific

institutions and organizations. Losses of domestic academic science in
the peninsula in their initial cost amount to several UAH billion

9. Another significant loss for Ukraine is the national tourist and

recreational potential of Crimea, estimated at a third of Ukrainian ove-
rall capacity: unique natural resources, 517 km of beaches, 14 deposits
of therapeutic mud, more than 100 sources of mineral waters, 154 na-
ture reserve facilities of total area of 146,200 ha, including 6 national
parks, 29 nature reserves, 100 attractive natural sites, 69 natural mon-
uments, 160 caves and more. Ukraine lost a network of health resorts
in Crimea – over 600 resorts and health institutions. Our country has
lost 11,500 monuments of history, culture and architecture belonging
to different historical eras, civilizations, religions and ethnic groups, of
which almost 150 historical and architectural sites listed in the UNES-
CO ca talogues.

Detailed losses should serve the purpose of prioritizing scenario-fore-

casts around the Crimea.

The Crimea annexation has had a negative impact on the socioeco-

nomic development of the peninsula and on the city of Sevastopol, in
particular regarding budget revenue of Crimea and local budgets.

Наукові установи Криму можуть перейти під управління російської академії

наук. Retrieved from http://life.pravda.com.ua/techno lo gy/ 2014/07/3/173964/

Суржик Л. Академія перед вибором(ами) / Лідія Суржик. Retrieved from

http://gazeta.dt.ua/science/akademiya pered html

108

Donbas and the Crimea: the value of return

Crimean budget subsidy need significantly increased. Given the fact

that in 2014 VAT revenues remained in Crimea and in 2015 they were
transferred to the federal budget, the subsidy need level of Crimean bud-
get in 2015 could reach 85 %

, which is comparable only with Ingushetia

(87 %) and Chechnya (82 %). In Ukraine budget of Crimea and Sevasto-
pol was subsidized from the state budget by an average of 60 %. Revenue
of the Crimean budget in 2015 was approved in the amount of 66.3 billion
rubles, of which 15.8 billion rubles are taxes and non-tax revenues and
50.5 billion rubles (76.2 % of local budgets) – grants, subsidies, subven-
tions from the federal budget. Expenditures are expected to be 66.5 billion
rubles

. In 2014, budget expenditures of Crimea in 9.5 months (since the

territory was annexed) amounted to 159 billion rubles (of which 125 bil-
lion rubles are transfers from the federal budget of the Russian Federa-
tion). Note that the budget surplus over the 9.5 months was 13.4 %, and
these funds could not be used. This significant amount of revenues can be
explained by the need for pension payment that in 2014 were made from
the budget, and not from the Pension fund. In 2015, there is a deficit bud-
get, since the benefits and pensions are paid from the Pension Fund, the
budget is 2.5 times smaller. Social expenditure is also significant.

The losses of major industrial enterprises, such as “Chornomornaf-

togaz” significantly increased. One of the largest Crimean enterprises
measured $1 billion of losses after purchasing two deep-drill installations
worth $800 million with several modern offshore vessels, together with
production losses of 2 billion cubic metres of gas (in 2014) and losses due
to the installation of mobile mining towers, laying of underwater pipe-
lines, construction of “Hlibovske” underground gas storage.

Tourist flow to Crimea declined. In 2015 (as of August 21, 2015)

compared to 2013 the number of tourists dropped from 5.9 million peop-
le to 3.4 million

The number of small and middle-size business dropped: by 5.6 times

compared to 2013. At the beginning of 2015 there were 12,100 entities.
The figure droped due to different reasons: re-registration on the main-

Сулейманов Д. Крым стал одним из самых дорогих регионов для федеральной

казны / Д. Сулейманов. Retrieved from http://www.vedomosti.ru/newspaper/

Парламент Крыма утвердил бюджет на 2015 год. Retrieved from http://

ukranews.com/news/149058.Parlament- Krimu -uhvaliv -byudzhet- na -2015 -rik

По официальным данным, Крым посетили 3,4 млн туристов / Крымская

служба новостей. Retrieved from http://news.allcrimea.net/news/2015/9/13/
po ofitsialnym dannym krym posetili 34 mln turistov 44924

109

Section 6. Consequences of the Crimea annexation: stagnation...

land of Ukraine, work in the “shadow” as a result of higher tax load of
Russian fiscal system compared to the Ukrainian one. However the ma-
jor reason for such a significant drop in small and middle business is the
above-mentioned decline in the number of tourists

. As a result, indica-

tors of economic activity decreased in the tourist field, in agriculture,
construction and repair services.

The vast majority of retailer networks registered in Ukraine have

stopped activity of their companies operating in Crimea and in Sevas-
topol. After the end of “transition period” provided by the Russian Fe-
deration for acquiring legal status of companies, on December 31, 2014
Russia announced the need to change the stock. Since that moment a
minimum of 50 % of the products must be from the Russian Federation.

Enterprises settled the question in different ways. In particular, the

company, re-registered in Crimea as Russian supplying goods to stores
as Russian under this quota. In addition, due to the difference in prices
between the Ukrainian and Russian goods (prices of goods produced in
Ukraine are 1.52 times lower) it became profitable for Crimea to resell
goods manufactured on the mainland of Ukraine to the Russian Federa-
tion through the Krasnodar region.

Experts ambiguously estimated the effects of the adopted Law of

Ukraine on “Crimea” free economic zone

. This law defined

the legal

principles for Ukrainian resident-enterprises remaining on the territory
of Crimea, and those Ukrainian businesses that still do business with en-
terprises of Ukraine registered in Crimea

. Legal entities established in

Tourist companies, that were oriented towards foreign tourists from Belarus,

Poland, Slovakia, Lithuania, Latvia, Hungary) completely lost the market as result of
special entry regime for foreigners, entering Crimea and Sevastopol. Companies ori-
ented towards Ukrainian citizens also suffered from a significant decline in the number
of tourists from Ukraine (according to different estimates from 4.5 million in 2013 to
100,000 in 2015). The companies focusing on Russian tourists equally suffer losses, be-
cause Russians mostly look for higher quality services provided by a restricted number
of hotels, health resorts and recreation homes. Instead minihotels, private homes offer-
ing tourist services remain empty, but they make up the foundation of Crimean small
and medium business.

Про створення вільної економічної зони “Крим” та про особливості

здійснення економічної діяльності на тимчасово окупованій території Украї ни :
закон України від 12.08.2014 р. № 1636 -VII. Retrieved from http://zakon2.rada.
gov.ua/laws/show/1636 18

Порошенко ініціював скасування вільної економічної зони в Криму. Re-

trieved from http://www.pravda.com.ua/news/2015/09/25/7082562/

Зануда А. Як далі працювати українським компаніям в Криму / А. Зануда.

Retrieved from http://www.bbc.com/ukrainian/business/2014/08/140812_crimea

110

Donbas and the Crimea: the value of return

the “Crimea” free economic zone and individuals who live in this area,
for tax purposes were defined as non-residents.

Accordingly, they do not report on their activities and paid taxes, ex-

cept customs fees and, therefore, the performance of their economic activ-
ity cannot be correctly evaluated. It will only be possible to evaluate for-
eign trade with the “Crimea” free economic zone after the report of 2015.

Another disadvantage of the “Crimea” free economic zone is im-

possibility to define which taxes and fees were charged and which were
paid. According to the Law on “Crimea” free economic zone, it is free
of general state taxes and fees. As a result the conditions in this free
economic zone promote revenues of Russian state budget and Crimean
budget, not controlled by Ukraine. As of January 1, 2015 3.4 billion
rubles was transferred to the federal budget in tax and non-tax revenues:
tax for natural resource development, VAT, etc., the overall sum
received in tax amounted to 7.2 billion rubles

. At the same time in the

forth quarter of 2014 only there was imported UAH 0.5 billion worth
of goods, total volume of Ukrainian goods shipped from the mainland
to the “Crimea free economic zone” amounted to 1,147,200 tons with
invoice value of $431.6 million, in January 2015 – 101,000 tons with
invoice value of $37.3 million

According to the State Statistics Service of Ukraine overall Crimean

import amounted to $545.3 million worth of products from Ukraine,
Ukrainian export from Crimea was 26 times smaller amounting to $21
million

As stated by State Fiscal Service of Ukraine in the period from Sep-

tember 27, 2014 (entering into force of the law on “Crimea” free economic
zone) to February 2015 there was shipped $526,339,000 worth of goods
to the peninsula

. So it is difficult to evaluate what are (or could have

been) the tax and fee revenue to the state and local budgets of Ukraine.

Минфин Крыма отчитался о деятельности в 2014 и начале 2015 гг. Retrieved

from http://crbc.pro/all/news/minfin_kryma_otchitalsya_o_deyatelnosti_v_2014_
kvartale_2015_goda/

Крым стал одним из самых дорогих регионов для федеральной казны. Re-

trieved from http://www.vedomosti.ru/newspaper/articles/2015/ 06/18/ 5968 48

В июле украинские компании завезли в Крым товара на 73 миллиона дол-

ларов / Центр журналистских расследований. Retrieved from http://investigator.
org.ua/news/164163/

За пять месяцев с материковой Украины в Крым ввезено товаров на пол-

миллиарда долларов / Центр журналистских расследований. Retrieved from
http://investigator.org.ua/news/152565/

111

Section 6. Consequences of the Crimea annexation: stagnation...

The Crimea annexation became a reason for major overhaul of po-

litical and economic relations on the international stage. Today Crimea
is under economic blockade caused by imposed sanctions mainly by the
U.S. and the EU.

Economic blockade of Crimea on behalf of the EU started after the

European Council adopted the decision on restricting measures and
new sanctions in response to illegal Crimea annexation. Thus, the res-
pective sanctions provide for prohibition of:

• import of goods to the EU from Crimea and Sevastopol;
• export of certain goods and technologies to Crimea in particular,

transport, telecommunication, energy (search, exploration and devel-
opment of oil, gas and mineral resources);

• technical support, brokerage services, construction, engineering

services relating to infrastructure of the above-mentioned sectors.

Legal or individual entities registered in the EU cannot purchase

real estate property or legal companies in Crimea, finance Crimean
companies or provide them associated services.

In its turn the U.S. has prohidited individual and legal entities

of the U.S. to import, receive services or transfer technologies from
Crimea; re-export, trade or ship any goods, services or technologies to
Crimea. It is equally prohibited for the U.S. entities to sign agreements,
finance or promote agreements concluded by persons who were put on
the sanction list. The respective executive order by the Secretary of the
Treasury of the U.S. provides sanctions against persons and companies
operating in Crimea.

In general restrictions by the U.S. and the EU touch upon import

of military and dual purpose products, financial, investment and tour-
istic activity, import and export of goods (over 200 stock items). The
responsibility imposed on the violators is formalized separately.

The sanction list includes 170 persons (151 person of December 18,

2014 and 19 persons of February 16, 2015) and 46 companies and or-
ganizations (37 and 9 respectivesly). Starting on July 30, 2015 the U.S.
separately supplemented its sectorial sanctions with companies and or-
ganizations of Crimea (mostly sea ports and infrastructural facilities)
and enlarged the personal sanctions list with 17 more persons (regard-
ing the crisis overall) who already were on the EU sanction list.

These sanctions have temporary character and they are review every

six month, the present sanctions remain in power till July 2016 for the

112

Donbas and the Crimea: the value of return

EU and till March 2016 for the U.S. It is worth noticing that Ukraine
was rather inert in joining international sanctions against Russia.
Ukraine joined the above-mentioned sanctions only in late July 2015,
despite the fact that the Law on Sanctions was adopted on August 8,
2014

. Based on the Law the government developed a series of sanction

propositions (first against 65 legal and 176 individual entities). How-
ever, the specific decisions were laid before the National Security and
Defense Council only in July 2015

Until this time the reaction was done depending on the situation in

cooperation format to implement NSDC decisions regarding aggres-
sion countermeasures

. Only reaction to a series of acute colateral prob-

lems was effective for example IDPs settlement, water supply, energy
supply etc.

The established international regulation of economic relations with

Crimea has already lead to reformating of economic flows and consid-
erably impeded economic development of Crimea and increasing need
in subsidies at a level higher than before annexation, technological
restraint of energy projects development on the Black Sea shelf, un-
derfinancing of the declared by the new power infrastructural projects
etc. We should also expect the remote effects of the imposed sanctions,
there are not visible today, but they will display in Crimean economy
in the nearest perspective.

If the present international sanctions package imposed on the Rus-

sian Federation in response to illegal annexation of Crimea continues
or exyends, the economic cost of keeping Crimea will be going up.

These processes will stimulate Russia to search for mechanisms to

internationally legalize the Crimean status in order to restore partner
relations with the Western countries, in particular with the U.S.

Про санкції : закон України від 14.08.2014 р. № 1644 -VII. Retrieved from

http://zakon4.rada.gov.ua/laws/show/1644 18

Про рішення Ради національної безпеки і оборони України від 20 липня

2015 року “Про стан реалізації заходів щодо захисту майнових прав та інтересів
держави Україна у зв’язку із тимчасовою окупацією частини території України” :
указ Президента України від 26.08.2015 р. № 514/2015. Retrieved from http://
www.president.gov.ua/documents/5142015 19371

Про рішення Ради національної безпеки і оборони України від 28 серпня

2014 року “Про невідкладні заходи щодо захисту України та зміцнення її
обороноздатності” : указ Президента України від 24.09.2014 р. № 744/2014. Re-
trieved from http://www.rnbo.gov.ua/documents/369.html

115

Section 7.

CONDITIONS OF REINTEGRATION

OF THE TEMPORARILY OCCUPIED TERRITORIES

OF THE DONBAS

The supreme art of war is to subdue

the enemy without fighting.

Sun Tzu

7.1. Strategy for Donbas

The foundation of the national strategy is restoring territorial in-

tegrity of Ukraine, restoring conrol over the occupied territories of the
Donbas and Crimea. There are several reasons, in particular:

• The occupied territories have significant economic, intellectual,

nature and demographic resources of the country;

• Restoring territorial integrity symbolises complete victory of

Ukraine over internal and external aggression;

• Overcoming the crisis will allow to launch large-scale economic

and political integration and investment projects;

In order to build a successful strategy of restituting the uncon-

trolled territories it is necessary to distinctively determine the given
conditions of the process and determine the terms. It is important to
distinguish the actual state of things and its political and legal inter-
pretation, which is an instrument of influence on the situation, made by
parties of the conflict with the purpose to achieve their goals.

In fact, there is armed aggression (intervention) by Russian Fede-

ration against Ukraine in the Donbas today. In this aggression the ini-
tiator is hidding the participation of its armed forces and conducts the
hostilities and control of the seized territories with the help of Ukrainian
citizens who defected to the enemy. With the purpose of legalizing the
control Russia set up puppet regimes DPR/LPR that are just a tool in
achieving political goals of Russian Federation in this conflict.

116

Donbas and the Crimea: the value of return

Ukraine in its turn is using tactics of armed deterrence of outnum-

bering forces of the enemy, taking strategic political and diplomatic
steps towards forcing the aggressor to refuse forceful control over the
occupied territories and create prerequisites for their reintegration in
Ukraine. Our goals are determined by the chosen tools of politics, in-
cluding legal definitions Ukrainian party is using in the interpretation
of the conflict such as “Anti-Terrorist Operation”, “individual districts
of Donetsk and Luhansk regions”. These definitions correspond to the
measures and nature of Ukrainian actions on the territories in consi-
tions of Russian troops and mercenaries retreat from Ukraine.

To certain extent these tactical and strategic objectives of Ukraine

correspond to the Minsk agreements that reflect actual compromise
settlement option of the conflict. It’s notable that Minsk agreements
is not an international legal act, therefore, firstly, it means that it can
be differently interpreted depending on the parties’ interest, secondly
its fulfillment is only determined by the parties’ good will and possib-
le negative consequences from undermining the peaceful negotiations
process.

The Minsk agreements outline a certain horizon of compromise de-

termined by the parties of the conflict; in the meanwhile the continue
using all the possible arsenal of diplomatic, economic, propagandist and
force arguments in achieving their goals. The Normandy Four meeting
in Paris on October 2, 2015 demonstrated that this horizon might be
moved depending on the changes in force correlation and goals of the
participants.

There are only two possible ways of the reintegration of the occu-

pied territories. The first is a military operation like the one condcuted
by Croatia with respect to the territories occupied by Serbs. The second
is an agreement with the party forcefully controlling the territories.

The choice of the way is the pivotal point for the whole implemen-

tation of the reintegration.

It’s imposibble to rely on the military solution of the Donbas prob-

lem and moreover of the Crimea problem, without a considerable weak-
ening of Russia; availability of large, professional and well-equipped
Armed Forces and internal political consolidation of society; condo-
ning attitude of the U.S. and the EU toward such actions; strong eco-
nomic reserve, necessary to “digest” the reintegrated territories. This is
not a complete list of necessary influencial factors.

117

Section 7. Conditions of reintegration of the temporarily...

The second way of reintegration is through reaching agreement

with the current party of the conflict, or whoever takes this place in
future is determined by another set of factors and conditions. Wea-
kening of Russia remains the foreign political condition. However for
agreement-based reintegration only the change in political course of
aggressor-state leadership would be enough. In relations wi the West
the agreement way of reintegration is already a consession on the
Ukrainian behalf, therefore it demands sustained political partnership
and guarantees of economic support and support in restoring reinte-
grated territories.

Economic component of the areement-based reintegration draft en-

visages common interest for Kyiv and Donetsk and guarantees provi-
ded to local elites regarding preservation of their assets and preference.

The choice of the reintegration scenario is complex decision and it

depends on a set of factors and condiotions. Thus, the scenarios shall
be analyzed for advantages and disadvantages for Ukraine and assessed
for probability of their successful implementation.

Based on the variability of agreement scenario of reintegration of the

Donbas, which may be conducted in the way of compromise with the exis-
ting negotiating party (DPR/LPR) or int he way of its replacement by
a more condoning to Ukraine leadership of the occupied territories, it is
necessary to consider the following three main scenarios of reintegration.

A) Conduct a military operation to free the occupied territories

(Croatian option).

Positive aspects of the decision:
• restoration of the territorial integrity of Ukraine and victory in

the war with external aggressor;

• the opportunity to bring to justice those guilty of treason, col-

laboration and terrorism;

• the opportunity to impose Ukrainian conditions on local and

regional elites.

Negative aspects of the decision:
• significant increase in spending for the needs of the region's pop-

ulation and restoration of its infrastructure;

• inability to control attitudes and political activity of large mass-

es of citizens of the region disloyal to power;

• the projected losses from further deterioration in relations with

Russia;

118

Donbas and the Crimea: the value of return

• the expected loss of moral support in the EU (as condemning

the party who preferred military means rather than diplomatic).

Domestic financial industrial group whose assets are partially on

the occupied territories are interested in this option. Under certain
circumstances, this scenario may be tacitly supported by Russia delib-
erately depriving DPR/LPR of military support or by acting out an
imaginary conflict with the nominal leadership of the “republics”. The
some West representative who want to stop the pressure on Russia and
reduce spending to support Ukraine may also be interested in the mil-
itary scenario. In fact, after Ukraine’s a demonstration of force the such
steps become morally justified.

B) Compromise with the representatives of DPR/LPR based on

Minsk agreements (Moldovan option).

Positive aspects of the decision:
• possibility to end the armed conflict in the Donbas;
• probability that the decision might be supported by the West,

Russia and the probability of making a new version of the Budapest
Memorandum (on safety guarantees);

• possibility of obtaining certain financial support for restoration

of the Donbas.

Negative aspects of the decision:
• de facto recognition of the conflict (and its causes) as internal

Ukrainian problem;

• recognition

DPR/LPR success in their war for “independence”;

• provoking a government crisis in Ukraine, as a result of antag-

onistic political forces: patriotic “party of war” on the one hand, and
anti-Maidan “party of revenge” – on the other entering the arena; a
conflict may take more than one electoral cycle and Ukraine would lose
time for real reform and national development;

• setting a precedent of autonomy through insurgency for other

regional elites;

• actual removal of the Crimean issue from the agenda of world

politics.

Beneficial forecast for this scenario is associated only with guaran-

tees of preserving (and growing) support for Ukraine by the West,
as well as a complete rejection of Russia to cause further pressure
on Ukraine and undermine its statehood. As such guarantees don’t
exist, this option should be considered as definitely losing.

119

Section 7. Conditions of reintegration of the temporarily...

Actors interested in this scenario are Western state that wish to

stop the pressure on Russia and reduce spendings to support Ukraine;
Ukrainian opposition of pro-Russian views; radical nationalist opposition.

C) Voluntary reintegration of the occupied territories on the

basis of the will of their citizens and on the basis of the organized
special negotiations with the political representatives of the region
(German option).

Positive aspects of the decision:
• Ukraine getting complete moral satisfaction in the conflict,

Russian propaganda theses on the causes of conflict are definitively dis-
proved, and integrity of the country is recognized the unifying value;

• creating exceptionally positive aftereffect for Ukraine's rela-

tions with the EU, former Soviet countries, opportunities to turn the
page in relations with Russia (on a positive basis for Ukraine);

• creating conditions for Ukraine to defend its economic and po-

litical conditions for reintegration, since it will hold a favorable nego-
tiating position;

• creating conditions for raising the issue of the return of Crimea

to Ukraine as a logical continuation of the process.

Negative aspects of the decision:
• partial acceptance of autonomy requirements of the territories;
• guarantees given to local elites on preserving their control over

economic and political processes;

• threat pro-Russian political forces might gain a role of promot-

er of the unification process, collecting political dividends and gaining
weight as a factor in national politics;

• possibility of social and economic difficulties as a consequence

reintegration, leading to another internal crisis and slowdown in re-
form and modernization process.

• actors interested in scenario are domestic financial industri-

al groups whose assets are on a partially on the occupied territories,
Ukraine's Western partners and potential investors in the economy of
the region.

The scenario of voluntary reintegration can be designed for the fu-

ture prospect of 5–7 years. Its implementation still looks rather uto-
pian, but since option B is losing and option A is unrealistic, so option
C should be taken as the base scenario for the national strategy of
the Donbas reintegration.

120

Donbas and the Crimea: the value of return

Its implementation should consider the interests of stakeholders

in the Donbas crisis:

• Russia: to prevent implementation options A and B perceived

by Russia as a geopolitical defeat and become a prelude to raising the
issue of the return of Crimea;

• DPR/LPR: to achieve the status of unrecognized republics

under the protection of Russia, as it enables virtually uncontrollably
use the resources of the territories hold the power by force, get sup-
port from Russia, to use their position for illegal economic activities.
There are reasons to believe that the DPR/LPR are afraid of option A
implementation, privately supported by Russia (under its pressure the
conflict is de-escalating and militarized groups are gaining control. But
in case of failure of option B profitable for the RF and unacceptable for
DPR/LPR leadership, Russia can follow the scenario of “surrender” of
the puppet “republics”);

• The West (in particular the EU): to stop the conflict, renew

the dialogue with Russia, make Ukraine responsible for overcoming the
crisis consequences (option B is the most acceptable).

Such correlation of the conflict parties’ interests make a stalemate

model of relations between them. Practically any party (for the excep-
tion of DPR/LPR) can block the unfavorable decision, however nei-
ther of them has the necessary influence to implement the favorable
one. Thus, we might expect a gradual freezing of the conflict amid dis-
cussions on the sequence and scale of the Minsk agreements fulfillment.

The conflict freezing scenario is most likely to have the following

sequence of event.

1. Ceasefire along all the frontline.
2. Relative stabilization of economic and social situation on the oc-

cupied territories.

3. Further internal legalization of the puppet regimes in DPR/LPR

by conducting unaccorded with Ukraine elections and other measures
aimed at souvereignization and/or inclusion as a part of the Russian
Federation (namely citizenship, passports, building interstate border
with Ukraine, international initiatives).

4. Actual and official representation of DPR/LPR interests by Rus-

sian Federation in international formats.

5. De facto change of the negotiations subject and the negotiations

format: instead of conditions of reintegration of the occupied territories

121

Section 7. Conditions of reintegration of the temporarily...

in Ukraine the subject changes for conditions of peace agreement
between Ukraine and Russia.

Economy will play a crucial role for the further development of

political situation around the occupied territories of the Donbas. If
Russia is forced for economic reasons to stop supporting terrorists in
the Donbas, the regimes of DPR/LPR will be doomed for destruction.
The Donetsk region is a completely unpromising independent entity of
global economy. It will neither become a useful component of Russian
economy. Therefore its return to Ukrainian economy will become only
a matter of time.

In addition there is a series of actual political matters demanding a

distinct state position and implementation of purposeful measures re-
garding minimization of the negative consequences from the conflict in
the East and occupation of a part of its territory.

The issue is about the key matters determined in the context of the

Minsk negotiation process:

•  status of the respective territories;
•  political representation of the territories;
•  criminal responsibility of the insurgency participants;
Resolving the above-listed matters falls into legal and political field

and therefore demands distinct formalization of state position, their
further interpretation in the internal legislation and foreign political
obligations.

7.2. Political and legal issues
of restoring the rule of law

Restoring the rule of law in the Donbas demands above all uncon-

ditional and full ceasefire in particular districts of Donetsk and Luhansk
regions. Without fulfillment of this basic condition it is impossible to
achieve further progress in political settlement of the conflict, that de-
mands implementation of a series of measures in compliance with the
Minsk agreements.

In particular it is a matter of legal regulation of the territories’

status out of control of Ukrainian authorites. It notable that Minsk
agreements do not formalize the requirements do definition of spe-
cial status of particular districts of the Donetsk and Luhansk regions
in the Constitution, but it formalizes the conduct of decentralization

122

Donbas and the Crimea: the value of return

with respect to the peculiarities of the territories. The special status of
the Donbas has to be determined by Ukrainian legislation.

Constitutional reform regarding decentralization has come up a

long time ago. Its implementation will allow to delegate a considerable
part of power to the authorities on-the-spot, promote the development
of local communities and enhancement of civil society in general. The
reform is above all an internal need of Ukraine, not a result of exter-
nal agreements, and therefore it is purposed to solve the development
problems all the regions of Ukraine, not only Donetsk and Luhansk.

Considering the peculiarity of the situation in the particular dist-

ricts of the Donetsk and Luhansk regions caused by armed aggression
and in compliance with the Minsk agreements, Ukrainian Parliament
adopted the Law of Ukraine “

On special order of the local government

in particular districts of the Donetsk and Luhansk regions

”.

In compliance with the Minsk agreements, UN Security Council

Resolution № 2202 of 02/17/2015 and the above-mentioned law the
Parliament of Ukraine distinctivly defined the particular districts,
towns, villages of the Donetsk and Luhansk regions where the

special

order of the local government is established in a Decree

№ 252-VIII of

March 17, 2015.

Neither the Minsk agreements not the mentioned law envisages the

existence of the so-called DPR/LPR, their leaders and legislation dif-
fering from the Ukrainian legislation. The issue is about the particular
districts of the Donetsk and Luhansk regions as a constituent part
of Ukraine.

On July 16, 2016 Ukrainian Parliament adopted the Law of Ukraine

“On amendments to the Constitution of Ukraine (regarding decentra-
lization of power)”, it considers the Minsk agreements about recog-
nition of particularities of the Donetsk and Luhansk regions. Thus,
Section II “Final and transitory clauses” of this law envisages that the
peculiarity of the local government in the particular districts of the Do-
netsk and Luhansk regions shall be determined by an individual law.

In order to obtain the conclusion regarding the respect by the men-

tioned law for Chapters 157 and 158 of the Consitution of Ukraine the
Parliament forwarded it to the Constitutional Court of Ukraine that
started the hearing on the case in written form on the July 27, 2015.

It’s clear that their decisions both the Constitutional Court and the

Parliament adopt within the established procedures and nased on the

123

Section 7. Conditions of reintegration of the temporarily...

national legislation and will of the citizens of Ukraine who delegated
their representatives to the Supreme legislative authority of the state.
The territorial structure of the state, its sovereignty, the powers of gov-
ernment are matters of national policy. They are not subject to interna-
tional negotiations or foreign obligations, since they depend on the will
of the people, not the decisions of state officials.

However, the issue of the uncontrolled territories status is not only

a matter of finding a mutually acceptable formula of regulation and en-
surance of the territorial integrity of Ukraine, but also a matter of the
wider context of the humanitarian crisis in the Donbas. The uncertainty
of the territories’ status in practice means vulnerability of the rights and
freedoms of millions of citizens who live on these territories.

National legislation distinctively defines the legal status of the tem-

porarily uncontrolled territory of the Crimean peninsula as occupied
by the Russian Federation. Such decision of the Ukrainian Parliament
completely respects The Laws and Customs of War on Land (The
Hague Convention) of October 18, 1907 and the Convention relative
to the Protection of Civilian Persons in Time of War of August 12, 1949.

The matter of legal status of the particular districts of the Donetsk

and Luhansk regions is determined differently. The Law of Ukraine
“

On special order of the local government in particular districts of the

Donetsk and Luhansk regions

” determined a temporary (for the peri-

od of three year after gaining power) order of local government orga-
nization, activity of local authorities in the particular districts of the
Donetsk and Luhansk regions with the purpose of the fastest norma-
lization of the situation, restoring the rule of law, constitutional right
and freedoms of the citizens as well as rights and lawful interests of le-
gal entities, creating conditions for displaced citizens to return to their
previous places of permanent residence, their reintegration, restoring
activities of daily living in the localities of Donetsk and Luhansk re-
gions and development of the territories

However this law does not have any indication that the territories

are recognized as occupied. If the negotiations process runs over time
and Ukraine is still not able to guarantee the citizens of the particular
districts of the Donetsk and Luhansk regions their rights and freedoms,

Про особливий порядок місцевого самоврядування в окремих районах

Донецької та Луганської областей : закон України від 16.09.2014 р. № 1680-
VII // Відомості Верховної Ради України. – 2014. – № 45. – Ст. 2043.

124

Donbas and the Crimea: the value of return

legal recognition of the occupation of these territories will be the only
way out of this legal collision.

An obstacle for legal formalization of the current status quo is still

the stance of the Russian Federation that denies its direct participation
in the armed conflict in Eastern Ukraine. However in case of breakdown
in fulfillment of the Minsk agreements by Russian party, in particular
its refusal to transfer under Ukrainian control the Russian-Ukrainian
border, our country will have to insist on implementing clauses of The
Convention on Laws and Customs of War on Land with respect to
transferring the responsibility for the provision of the rule of law on the
uncontrolled territories of the Donetsk and Luhansk regions. In order
for this stance of Ukraine to gain international support, it is necessary
to collect enough evidence of Russian participation in the armed conf-
lict, not its individual citizens (that is what Russian party insists on),
but regular Armed Forces active servicemen.

Another critical problem is conducting elections on the tempora-

rily occupied territories. In compliance with the Minsk memorandum
of September 19, 2014 and Package of Measures for the Implementa-
tion of the Minsk agreements of February 12, 2015 one of the stages
in normalizationof the situation in the Donbas was conducting local
elections in the particular districts of the Donetsk and Luhansk regions
in accordance with the legislation of Ukraine and OSCE standards.

Dialogue regarding the modality of the local elections in accordance

with the Ukrainian legislation and regarding the future regime of these
areas actually began with the adoption of the Law of Ukraine “On spe-
cial order of local government in particular districts of the Donetsk and
Luhansk regions” of September 16, 2014 № 1680-VII. Holding illegit-
imate elections on these territories on November 2, 2014 in violation
of Ukrainian law and OSCE requirements precluded further imple-
mentation of the Law, meaning that actions of the DPR/LPR blocked
the peace settlement process in accordance with the Minsk Protocol of
September 5, 2014.

Holding local elections in particular districts of the Donetsk and

Luhansk regions as on any other territory of Ukraine demands fulfill-
ment of a series of procedures formalized by the Law of Ukraine “On
local elections” of July 14, 2015 № 595-VIІІ.

Let us note that the Minsk agreements (hereinafter – MA) con-

dition regarding restoration of full control of state border to the

125

Section 7. Conditions of reintegration of the temporarily...

Ukrainian authority throughout thw whole area of conflict, that shall
come into effect on the first day after local elections (issue 9 of MA)
creates threats for the holding of such elections within Ukrainian le-
gislation, because the law enforcement authorities of Ukraine are pre-
cluded from executing their functions in regard of providing the rule of
law throughout the election process and preventing illegal movement
of people accross the border with the purpose of influencing the results
of the elections, etc.

Political motivation of the conflicting parties prevents holding of

the elections under the terms of the Minsk memorandum and the Pac-
kage of Measures for the Implementation of the Minsk agreements.

Firstly, the leaders of illegal armed groups are not interested in the

establishment of legitimate government in the Donbas. Minsk agree-
ments and the Law of Ukraine “On special order local governments...”
envisage the return of the occupied territories as constituent adminis-
trative parts of Donetsk and Luhansk regions, but with a few advanced
functions of local governments. So, in a similar manner the quasi-state
institutions shall be eliminated with their corresponding administra-
tions and legislation.

Secondly, the consequence of such interest is the difference in in-

terpretation as to the sequence of implementation of the provisions laid
down in Package of Measures for the Implementation of the Minsk
agreements.

The official position of Ukraine is that the final order of local go-

vernment in particular districts of Donetsk and Luhansk regions must
be determined after the election in the way of negotiations with repre-
sentatives of these areas. Instead, leaders and members of illegal armed
groups insist on identifying an acceptable status for controlled territo-
ries prior to the holding of elections under Ukrainian legislation.

Thus, the issue of fulfillment sequence of the Minsk agreements in re-

gard to holding elections on the occupied territories remains open and ac-
tually leads the political debate to a standstill. Ukraine can not agree with
the fact of holding the elections in the environment where state author-
ities do not control the entire state border and the guerrillas and Russia
do not agree to withdraw troops and to disarm illegal formations before
the elections, though it directly meets the documents signed in Minsk.

Clearly, the Package of Measures for the Implementation of the

Minsk agreements is a deficient document and the actual process of po-

126

Donbas and the Crimea: the value of return

litical settlement will require additional compromises and adjustments.
But so far the process is lacking the most important condition, the po-
litical will of the conflicting parties.

In addition, the absence of organizational structure of the majority of

Ukrainian political parties, absence of system of law enforcement author-
ities of Ukraine and Ukrainian mass-media on the temporarily occupied
territories precludes the conduct of the election process in accordance
with the Law of Ukraine “On local elections” in its current edition.

In this case the state is not able to guarantee the respect of the fol-

lowing foundamental principles of election process:

• legitimacy and prohibition of unlawful interference of anyone

with this process;

•  political pluralism and a multi-party system;
•  publicity and openness;
•  equality of all subjects of the election process before the law;
•  equal rights of all deputy candidates, and candidates for the posi-

tion of village, settlement, city mayors;

• freedom of election campaigning, equal access to the mass-media

regardless of ownership;

• impartiality of the state authorities, government bodies, local

government bodies, officers and officials thereof, heads of enterprises,
institutions and organizations with regard to local chapters of political
parties, deputy candidates and candidates for the position of village,
settlement, city mayors.

The fact that territories are not controlled by Ukraine raise a series

of issues regarding the fulfillment of the established procedure regard-
ing compilation of voter lists, their examination and correction thereof,
guaranteeing security of voters and observers, ballots transportation,
count of votes, etc.

Thus, the objectivity and integrity of the results of the election

and vote count correctness stay outside the competence of the central
government that will be unable to conduct a competitive election cam-
paign and real political competition in militarized DPR/LPR, but will
have to finance the holding of such elections from the state budget of
Ukraine.

In this regard, it is necessary to develop a law regulating the par-

ticularities of applying the Law of Ukraine “On local election” in the
particular districts of the Donetsk and Luhansk regions. The law shall

127

Section 7. Conditions of reintegration of the temporarily...

not only consider the particularities of the established situation in
the Donbas region, but above all it shall facilitate elimination of the
conditions precluding the fulfillment of the constitutional right of the
citizens residing on the mentioned territories to participate in election
processes.

Firstly, the voting process is to be proportionate to the provision of

prerequisites for free expression of the citizens’ will in accordance with
the legislation of Ukraine. It is a matter of creating safe environment
for the elections, with no threats to life and health of all the participants
of the election process including voters, candidates, electoral commis-
sions workers and official representatives. It can only be achieved by:

• demilitarization of the territories, this process involves;
• withdrawal of illegal armed groups outside the areas specified by

the Ukrainian Parliament Act № 252-VIII of March 17, 2015;

• the pullout of weapons and military vehicles and prevention of

their return to positions;

• disarmament and cessation of equipping the illegal armed forma-

tions;

• withdrawal of all foreign mercenaries from the territory of par-

ticular districts of the Donetsk and Luhansk regions. These steps
must be verified by a Special OSCE monitoring mission, which should
be granted full and unhindered access to all the areas in the conflict
zone, including those not currently controlled by the Government of
Ukraine;

• minesweeping of the territories and fulfillment by armed forma-

tions of prohibition on subversive and reconnaissance activity;

• at least partial functional recovery of Ukrainian law enforcement

authorities in order to protect public order and provide security of the
election process.

In order to implement the basic principles of democratic elections

(pluralism and multiparty system, free will and secret voting, proper
administration of the election process, transparent counting and estab-
lishment of the results) has to be done the following:

• recovery of all local branches of political parties of Ukraine on

the territories with the re-registration of the organizations in the Min-
istry of Justice of Ukraine in accordance with Ukrainian legislation,
which is the main condition for their participation in local elections in
Donbas;

128

Donbas and the Crimea: the value of return

• restoration of Ukrainian television and radio, as well as free cir-

culation of central printed publications to ensure freedoms of election
campaigning;

• functioning of the State Register of Voters of Ukraine, territorial

bodies of the State Treasury Service of Ukraine and the network of
banks sufficiently to ensure the election process;

• guaranteeing participation in observing all the stages of the election

process for official observers and international observers from the OSCE
Office for Democratic Institutions and Human Rights, the Congress of
Local and Regional Authorities of the Council of Europe, the European
Union and other international organizations and foreign countries.

Secondly, even given the specific situation in particular districts of

the Donetsk and Luhansk regions, under particular application of the
Law of Ukraine “On Local Elections” on these territories the perfor-
mance of the following rules should remain unchanged:

• the use of electoral systems for the respective categories of local

authorities, which are provided for other regions of Ukraine, ensur-
ing nomination of candidates by political parties and the procedure of
self-nomination;

• maintaining restrictions for candidates for elected positions and

candidates for the posts of members of election commissions (such per-
sons, in particular, should not have a criminal record);

• providing temporary immunity from criminal and administra-

tive responsibility for all the participants of the electoral process during
its course.

Thirdly, for the local elections in particular districts of the Donetsk

and Luhansk regions there should be provided the following peculia-
rities:

• data from the State Register of Voters of Ukraine dated Febru-

ary 20, 2014 shall be the basis for determining the fact of belonging
of the addresses of people to the particular territorial communities, it
enables to determine the citizens who have the right to vote in the elec-
tions in these districts;

• throughout the period of the election process passport of a citi-

zen of Ukraine should be recognized as the only document of identity
for election-related activities. This can be viewed as an increased de-
gree of protection from illegal participation of foreign nationals in the
election process;

129

Section 7. Conditions of reintegration of the temporarily...

• the right of electoral subjects for campaigning at the expense of

election funds should be implemented exclusively in the national elec-
tronic or printed mass-media broadcasted/distributed in the particular
districts of Donbas. This limitation will allow a more impartial attitude
of the media towards the political parties and candidates, it will equally
preclude the use of separatist rhetoric in the election campaign;

• precinct election commissions shall be formed similarly to the

formation of territorial election commissions, i.e. only out of represen-
tatives of political parties that in the first session of the Parliament of
Ukraine formed the parliamentary factions. These parties assign 2 can-
didates to each commission and other parties registered by the Min-
istry of Justice of Ukraine, 1 candidate according to the results of the
draw procedure. The exceptional role of national political parties in this
process is to reduce the risk of possible creation of privileged conditions
for candidates with separatist political orientations;

• the exclusive competence of the Central Election Commission

should include a part of authorities of territorial election commissions,
including:

– the announcement of the election process in the current snap

election;

– the formation of election commissions of lower level and precinct

election commissions;

– registration of candidates and international observers;

– tabulation of the voting results;

– general and special information support of elections.

Strengthening of the external administration is a safeguard measure

against attempts of illegal armed groups influencing decisions of elec-
tion commissions;

• the election process should provide for the opening of temporary

voting stations on Ukraine-controlled territory in places of concentra-
ted residence of internally displaced persons and residents of “neutral
territories” in order to ensure their right to vote;

• production of ballots should be done only at the Central Election

Commission order and only by enterprises determined by the Cabinet
of Ministers of Ukraine (and not territorial election commissions as
provided in the current edition of Article 75 of the Law of Ukraine “On
Local Elections”). In this way, the authorities can prevent printing of
ballots by companies belonging to persons interested in the election

130

Donbas and the Crimea: the value of return

process, and using ballots to make illegal influence on the tabulation
and recognition of the election results.

A complete release of the hostages should precede the elections in

the Donbas. Failure to fulfill this condition of the Minsk agreements
precludes practical decision on pardon and amnesty of persons under
Article 3 of the Law of Ukraine “On special order of local government
in particular districts of the Donetsk and Luhansk regions” of Septem-
ber 16, 2014 № 1680 -VII. It’s necessary to consider that the amnesty
procedure requires a clear definition of the time limits that will ensure
respect for the principle of applicability of legislation on criminal re-
sponsibility. Thus, the release of all hostages must be completed before
the amnesty period.

The issue of criminal responsibility of participants of the illegal

armed formations and officials of the self-proclaimed republics is an
important aspect of the Donbas crisis settlement and fulfillment of the
aggreements reached in Minsk.

Pardon and amnesty regarding the latter will be fulfilled with the law

that forbids to prosecute and punish people relating to the events that
took place in particular districts of the Donetsk and Luhansk regions.

In order to overcome the consequences of the armed aggression and

achieving peace in the country Ukraine has expressed its readiness

to take measures. In addition, there is a series of problems demanding
reso lution before the respective legal settlement.

Firstly, the issue of amnesty has to be settled prior to the adoption

of the decision regarding the elections in the particular districts of the
Donetsk and Luhansk regions, because its settlement might have a di-
rect relation with the process. It refers to the legal formalization of the
possibility (or its limitation) of passive voting right implementation
by persons, whose actions contain signs indicating their participation
in crimes envisaged in Section 1 of Special part of the Criminal Code
(hereinafter – CC) of Ukraine. The state should elaborate legal mecha-
nisms for depriving such people of the possibility of being appointed
to positions in the authorities of local government. Compromise op-

Протокол по результатам консультаций трехсторонней контактной группы

относительно совместных шагов, направленных на имплементацию мирного
плана Президента Украины Петра Порошенко и инициатив Президента России
Владимира Путина. Retrieved from http://www.osce.org/ru/home/123258?down-
load=true

131

Section 7. Conditions of reintegration of the temporarily...

tions might be used in such case. For instance, the state might envisage
mechanisms for relief of criminal penalty in the way of applying am-
nesty, but only regarding crimes foreseen in Section 1 (Crimes against
national security) Special Part of CC of Ukraine. The state should in-
troduce restrictions for such persons regarding the implementation of
their right to be elected in the Law of Ukraine “On local elections in
particular districts of the Donetsk and Luhansk regions”.

Secondly, the legal side of the matter is that in Ukraine amnesty

is declared by an amnesty law, which is adopted in accordance with
the Constitution of Ukraine, the Criminal Code of Ukraine and the
Law of Ukraine “On amnesty in Ukraine”. However, there are some re-
strictions on the amnesty for persons sentenced for example, for crimes
against national security of Ukraine, an act of terrorism, banditry, for
murder, torture, unlawful imprisonment or kidnapping, if it caused
death, or caused heavy physical injuries that resulted in death, etc.

It should be noted that the use of the institute of amnesty in this case

is very problematic, because according to the current Criminal Code of
Ukraine amnesty is a type of relief from criminal punishment, meaning
it cannot be applied at the pre-trial stage of the criminal process.

Thus, in order to be subject to the relief from criminal punishment

the person has to be:

•  found guilty of a crime but not convicted;
•  convicted of a crime, but not serving a sentence;
•  serving the sentence for the crime.
The possibility of applying the institution of pardon in this case is

even more problematic, because according to Article 87 of the Criminal
Code of Ukraine pardon by the President of Ukraine is granted indi-
vidually regarding each person. Act of pardon for a convicted person
can replace a court-appointed penalty of life imprisonment with impri-
sonment for a term not less than twenty-five years.

In addition, the above-mentioned measures should be examined in

cohesion with tasks of countering and preventing crimes against state
sovereignty and territorial intergrity of Ukraine. Exceptional value in
this context gains the establishment of an effective legal framework for
preventing and combating separatism in Ukraine.

On April 8, 2014 the Parliament of Ukraine has intensified criminal

punishment for intentional actions aimed at encroachment on territori-
al integrity and inviolability of Ukraine. Also, on June 16, 2014 the Par-

132

Donbas and the Crimea: the value of return

liament adopted the Law of Ukraine “On Amendments to the Criminal
Code of Ukraine on criminal liability for financing separatism”, which
established criminal liability for the financing of actions aimed at violent
change or overthrowing of the constitutional order or the seizure of state
power, changing the boundaries of the territory or state border of Ukraine.

At the same time creating an effective mechanism to combat and

prevent separatist movements in Ukraine, on the one hand, has to meet
the constitutional guarantees of rights and freedoms of Ukrainian citi-
zens, and on the other – to ensure the development and implementation
of the system of legal instruments, based not on dominating criminal
tools, but on such forms of legal influence as effective legal regulation of
regional development, effective regulation of ethnic sphere, etc.

Another important issue of legal political settlement of the situation

in the Donbas is protection of rights of peaceful civilians residing on
the occupied territory, internally displaced persons and servicemen of
the Armed Forces of Ukraine taking part in the ATO in the Donetsk
and Luhansk regions. Indeed, under Article 3 of the Constitution of
Ukraine “man, his life and health, honor and dignity, inviolability and
security are recognized in Ukraine as the highest social value. Human
rights and freedoms and their guarantees determine the content and
direction of the state activity. The state is responsible to the people for
its activity. Affirmation and ensurance of human rights and freedoms is
the main duty of the state”

In order to create appropriate conditions for the implementation of

rights and freedoms of the citizens, in 2014–2015 Ukraine adopted se-
veral pieces of legislation to resolve certain issues related to the occupa-
tion of Crimea by the Russian Federation, as well as socially dangerous
illegal activities of separatist and pro-Russian terrorist organizations
in the Donetsk and Luhansk regions. This applies, in particular, to the
laws of Ukraine “On the rights and freedoms of citizens and legal regime
on the temporarily occupied territory of Ukraine”; “On Amendments
to the Criminal Procedure Code of Ukraine regarding special proce-
dure of pre-trial investigation in martial law, state of emergency or in
the area of anti-terrorist operation”; “On the administration of justice
and criminal proceedings assiciated with the conduct of anti-terrorist
operation”; “On special order of local government in particular districts

Конституція України // Відомості Верховної Ради України. – 1996. –

№ 30. – Ст. 141.

133

Section 7. Conditions of reintegration of the temporarily...

of the Donetsk and Luhansk regions”; “On Amendments to the Law of
Ukraine “On Combating Terrorism” on preventive detention of per-
sons involved in terrorism in the area of anti-terrorist operations for the
term over 72 hours”; “On civil-military administrations”, and a series of
acts by Ukrainian Parliament

The process of legislative protection of rights and freedoms of ci-

tizens of Ukraine on the temporarily uncontrolled territory of the Do-
netsk and Luhansk regions continues. However, there are some signif-
icant problems. Solving these problems will improve the situation in
the field of public relations. We are talking primarily about the lack of
clear reasonable definition of legal status of the uncontrolled territo-
ries of the Donetsk and Luhansk regions and the difficulty of applying
the provisions of the Convention on the Laws and Customs of War on
Land of October 18, 1907

Thus, we have a situation where Ukrainian authorities for objective

reasons can not fully provide appropriate conditions for the implemen-
tation of citizens’ rights and freedoms on these territories.

Today the algorithm of diplomatic settlement of the Donbas crisis

is reflected in the Minsk agreements. The measures determined by the
agreements have a comprehensive, step-by-step, interconnected nature
and shall be fulfilled by all the parties. Violation of the algorithm of
peaceful settlement, failure to fulfill the basic conditions of the Minsk
agreements considerably complicates the process of restoring legitima-
cy and peaceful development of the regions. Violation of the sequence
of fulfilling the conditions can pose significant threats to national secu-
rity of Ukraine for a long term.

Clearly, the Package of Measures for the Implementation of the

Minsk agreements is a deficient document and the actual process of po-
litical settlement will require additional compromises and adjustments
and it will last longer than expected. In this regard, the practical steps
Ukraine is making towards gradual reintegration of the temporarily oc-
cupied territories gain increasingly more weight.

Речь идет о постановлениях Верховной Рады Украины № 129-VIII от

27.01.2015 г.; № 252-VIII от 17.03.2015 г .; № 254-VIII 17.03.2015 г .; № 337-VIII
от 21.04.2015 г .; № 462-19 от 21.05.2015 г.

Конвенція про закони і звичаї суходільної війни (IV Гаазька конвенція)

від 18.10.1907 р. Retrieved from http://zakon4.rada.gov.ua/laws/show/995_222

134

Section 8.

INSTITUTIONAL SUPPORT

OF RESTORING THE ECONOMIC POTENTIAL

OF THE UNCONTROLED TERRITORIES

Cuius periculum, eius commodum

Legal saying

Today we have to develop and introduce combined financial instru-

ments of the Donbas restoration. Such instruments should combine the
funds of international organizations, direct budget spendings, private
investments under state guarantees, stimulated use of funds of individ-
ual entities with further compensation, etc. Ukraine needs a national
plan of investment development and reconstruction of the Donbas that
would meet the Agreement’s requirements.

The Donbas is standing before the opening prospects to return

to the coordinate system in which the development of industrial ca-
pacity was carried out with the assistance of European intellectual,
technological, financial and human capital. Challenges formed by new
political and economic realities in Donbas, namely prolonged military
conflict, physical destruction of economic potential and infrastructure,
massive displacement of population, aggravation of social problems
demand reorganization of the government system of these territories.
However, response to these challenges must accorded with the general
principles of transformation of the system at the state level.

The Donbas restoration perspectives depend on successful develop-

ment of strong competititive economy. Comprehensive reorientation of
the region’s economy, not reincarnation of the old, uncompetitive and ob-
solete production must form new drivers for regional economic growth. In
this context, the priority is measures of enhancing international coopera-
tion and on this basis involve investments for promising projects; priority
development of public-private partnership; technological innovation and
modernization of industrial production; development of modern innova-

Who takes the risk gets the profit. – Latin.

135

Section 8. Institutional support of restoring the economic potential...

tion and investment infrastructure. Only on this basis the restructuring of
employment and creation of new jobs should happen.

Restoration of the Donbas envisages foreign and domestic in-

vestments, as well as obtaining donor and humanitarian assistance
from states and from legal entities, individuals, particularly within the
programs of international organizations (e.g. UN programs). A series of
measures taken within various mechanisms of state economic regulation
and legislative economic experiment in cooperation with the interna-
tional community aimed at restoring the Donbas should facilitate the
involvement of investments.

Investment and innovation potential of transformations in the econo-

my of the Donbas will significantly intensify stimulating measures, whose
grounds and procedure of application have to be envisaged within indi-
vidual legal acts. A priority is wide use of the advantages of public-private
partnership as organizational economic basis for investment model of re-
lations between the state and local governments with economic entities,
i.e. private partners in the industrial and social spheres of the region.

Donor humanitarian aid gains an important role in the economic

recovery of the Donbas. The obtained funds are allocated for the re-
covery of assets of institutions and organizations in particular districts
of the Donetsk and Luhansk regions, as well as for the purchase of equip-
ment necessary for educational, scientific, medical and other activities.
At the same time we have to improve the legal and organizational foun-
dation in the process of obtaining humanitarian aid. The state should
also apply systematic approach setting the basis and the procedure for
obtaining humanitarian aid, transparent accounting, reporting and dis-
tribution of acquired assets and funds and so on.

Restoration of the Donbas on modern technological basis re-

quires appropriate institutional environment, namely the creation
of appropriate public and private institutions increasing institutional
capacity of the government and public awareness about development
plans of a territory. These processes should actively engage scientific in-
stitutions, think tanks and international organizations with experience
in implementing complex projects involving a wide range of subjects
with various interest groups. At the state level, in particular using ana-
lytical, advisory and financial capacity of international organizations,
the authorities should establish a system of state guarantees to investors
that will improve the conditions and prospects of the projects.

136

Section 9.

SOCIAL DIMENSION

OF SETTLEMENT SCENARIOS

IN THE DONBAS SITUATION

War, oh war! Again blood rivers flowing!

Thunder of canons, saber’s ring,

Graves, orphans, cripples…

Retain the sadness of abandoned ruins.

Alexandre Oles

Government policy addressing the social consequences of Russian

military aggression in the Donbas should take into account the uncer-
tainty in scenarios of returning the occupied areas and staging of the
confrontation with Russia. The current situation of durable cease-fire,
apparently, is not the ending point of the conflict and therefore we have
several scenarios, each of them has its own social risks and threats, each
remains relevant. Therefore, developing a multichannel and variable
national strategy of adequate social response should become the basis
of the relevant public policy. Its effectiveness will be determined by
the ability to find the optimal path of social policy implementation in
terms of clear non-linearity, reversibility and mutual exclusiveness of
the factors of different scenarios.

The given data for the formulation of possible scenarios are the fol-

lowing:

• demographic structure of the population living in the conflict

area has a high proportion of pensioners and socially disadvantaged
people who need constant social support. At the same time there’s a
significant outflow of economically active population, there is also a
possibility of reverse flow of immigrants from Russia;

• the number of armed guerrillas remains large, Russian soldiers

and mercenaries, international “venturers”, criminals and others who
make their money doing war. Preserving the state of armed confron-
tation for a significant proportion of the population is an exceptional
way to ensure the material well-being and sociopsychological identity,

137

Section 9. Social dimension of settlement scenarios in the Donbas situation

and cultivating the culture of hostility to Ukraine is the main form of
legitimizing their own power;

• Russia avoids providing full social support in areas of conflict

and it also avoids supplying the resources necessary for the livelihood.
Russia promotes the flow of its currency to the occupied territories,
which enables to refocus the activities of attractive assets on the oc-
cupied territories of the Donbas in its favor. Obviously, unresolved
social issues and worsening humanitarian catastrophe on the occupied
territories are constantly used by the adversary to blackmail Ukraine
on the international arena, to stir up social and moral condemnation
of Ukrainian policy regarding the uncontrolled areas, to support the
hostile attitude of Russia towards Ukraine and on this basis to mobilize
forces for further military opposition;

• public consciousness of the population residing on the occu-

pied and neighboring territories is distorted regarding the founda-
tion, reasons and launch mechanisms of the tragedy evolving in the
region. The population is sensitive in perceiving political, civiliza-
tional and forceful steps of the conflicting parties through the prism
of their capability and willingness to solve social problems of the re-
gion’s population

Taking into account the scenarios the state’s actions in solving prob-

lems of social support of the population should comprise the following.

In case of “Croatian” scenario (liberating the Donbas militarily)

we should expect:

• increased outflow of the IDPs;
• revitalization of external migration, increased scale of social sup-

port for mobilized persons, servicemen and their families;

• increased need for emegrency healthcare, food provision and ac-

comodation support for civil population.

Such conditions of implementing concentrated, urgent and flexible

social policy demands the creation of a special coordination center that
would accord the efforts of authorized state bodies with the activity
of private charity, non-profit public organizations, international aid,
physical assistance of individuals, military authorities. There should
also be established non-market channels of material support of pop-

Нові реалії – нові сценарії. Донбас між сецесією та реінтеграцією. Retrieved

from http://newukraineinstitute.org/new/544

138

Donbas and the Crimea: the value of return

ulation and envisaged measures on accumulating additional financial
resources for the needs of the respective social policy.

There must be conducted a considerable redistribution of budget

funds, internal social borrowing, aggreement on international aid.

The mentioned scenario forsees a powerful spike in migration,

therefore we should prepare for the problems of internal (housing,
healthcare, education, employment) and external (measures targeted
at retaining qualified workforce and active able-bodied youth from em-
migration outside Ukraine) migration.

In middle-term we should be ready to settle the problem of pay-

ing the citizens of the occupied territories for the pensions and other
social transfers that they didn’t receive in full size. It will demand
a development of careful, balanced and differentiated social policy.
Ukraine has to find and legally formalize transparent mechanisms of
differentiating the real victims from those who shall not be entitled
to social support.

Scenario of compromise with the representatives of DPR/LPR

on the basis of the Minsk agreements (Moldovan option) practically
envisages refusal of Ukraine from the occupied territories, counting on
their return in undetermined perspective. In such terms the responsi-
bility for the social support of the population on the occupied territo-
ries falls on the separatist leaders and indirectly on Russia. However, it
doesn’t relief the neither the material nor the moral duties of the state
before its citizens who will be leaving or will be willing to leave the
occupied territories.

From the financial point of view such scenario is the most comfort-

able for the social policy. Absence of active hostilities will mean a low-
er need for mobilization of all sorts of resources, especially economic,
political and ideological. We shouldn’t forget that the Donetsk region
had the highest number of pensioners (895,400 people). The Luhansk
region had the 7th position by this indicator with 445,200 pensioners.
It’s clear that a part of the pensioners have not only registered as IDPs,
but also have practically left the occupied territories. However, a large
part of them remained on that side of the division “line”, therefore fi-
nancial duties of Ukraine decrease before this social group.

However, the main social consequence of this scenario is not even

the loss of territory, it’s the destruction of the social integrity fabric of
the Ukrainian state. In its turn, the idea that the social integrity of the

139

Section 9. Social dimension of settlement scenarios in the Donbas situation

Ukrainian society is not important for the state establishment, threat-
ens the destruction of national consciousness and patriotism, which is
indispensable for a successful state.

Development of the scenario of voluntary reintegration of the oc-

cupied territories on the basis of the will of their citizens and organi-
zation of the special negotiations with political representatives of the re-
gion (German option) will return them to the jurisdiction of Ukraine. In
this case, the planned reforms in the social sphere will be extended to the
occupied territories and will require additional funding, including the
funds for compensation to the citizens of the occupied territories for the
pension shortfall and for the implementation of other social transfers.

Scenario of freezing conflict, when Ukraine does not recognize the

alienation of part of its territory, but refuses to take military action to
return it, in social dimension it will mean the battle for citizens, not
for the territory, where appropriate conditions temporarily cannot be
made. In such case the social policy regarding the citizens of the occu-
pied territory should combine limitations and support principles. The
foundation of such policy should be personal reintegration of Ukrainian
citizens on the territory of complete Ukrainian jurisdiction and at the
same time restriction of access to social support for people who can be-
come obstacles for the perspectives of the Donbas return.

Economic and social links between these areas and free Ukraine

should also build on control and rationality. In particular, the econom-
ic and social burden of restoring the damaged areas of the Donbas for
Ukraine must be reasonable and proportionate. The policy of forced
social restrictions should be compensated by the launch of a number
of powerful programs for repatriation of disgruntled residents of the
occupied enclaves to Ukraine. It would be rational to launch targeted
projects on pension and social support for specific residents, who for
various reasons cannot leave the occupied enclaves. Necessary compo-
nents of such projects are targeting guarantees, provided through in-
ternational mediators and conditions of economic and infrastructural
support to the occupied territories.

An important element of such “conditional” social and econom-

ic policies should be projects agreed by the parties of the conflict, the
projects guaranteeing the property of the citizens Ukraine on the occu-
pied territories, ensuring the right of economic activity and the choice
of tax jurisdiction, as well as the possibility of visiting relatives.

140

Donbas and the Crimea: the value of return

Obviously, for any scenario in the Donbas the success of govern-

mental social policy is determined by the efficiency of solving social
problems on its controlled territory. Differences in social welfare be-
tween the occupied and unoccupied territories of the Donbas will be
the most effective means of differentiation of destructive and construc-
tive forces in the region. Otherwise, without administrative, econom-
ic and social reforms, the controlled areas of the Donbas will face the
threat of socioeconomic decline. Management dissociation of these ar-
eas, infrastructural and system deficiency, functional incompleteness
and overstrain of IDPs will create the situation of accumulated uncer-
tainty, nervousness and anger.

It is necessary to recognize that the mental, social and economic re-

turn of a significant number of residents of the controlled territories in
the Donbas to Ukraine has not happened yet and will not happen by
itself. In addition, the development of these areas must have a demon-
stration effect for the occupied territories in any scenario. And in the
short term, this effect will only have outlook and information value:
for residents of the occupied territories successes of other regions of
Ukraine will not be examples, and will be perceived in a hostile kind of
way, whatever they may be. All the achievements of social and econo-
mic development on the controlled territories of the Donbas will be
useful during the gradual reintegration of the currently occupied re-
gions back to Ukraine.

In this regard, even now it is advisable to develop and publicly ar-

ticulate national policy for the establishment of the Donbas territories
controlled by Ukraine as new regions of Ukraine. They have to become
complete administrative territorial units units, able to conduct regional
policy of social and economic reforms. In this case, the destructive for-
ces of the Donbas will not have the opportunity for revanche.

143

Section 10.

SCENARIO FORECASTS REGARDING

THE PROGRESS OF THE SITUATION AROUND CRIMEA

Crimea is a medal on the chest of planet Earth!

Pablo Neruda

10.1. Crimea: refusal or return?

The history of international relations shows that none of the coun-

tries is immune to territorial losses that can be prevented only through
the power of their own and efficiency of the world order. Such losses
can be more or less possible, but they are always painful. The willing-
ness of the state to defend its sovereignty and territorial integrity is the
evidence of statehood maturity and confirmation of the right and abil-
ity to be a full member of the world community. Therefore, striving to
regain the lost territory should be considered completely natural, since
it is not only about politics and economics, but also about prestige of
national honor and dignity on the international arena.

Thus, Germany was able to restore its territorial integrity, although

part of the land it lost forever, at least for now, as a result of the defeat
in World War II. Nobody knows when or how Korea will restore its
integrity. France has been preparing for decades to return the territo-
ries lost due to the Franco-Prussian war, cherishing the idea of revenge,
reaching it through the victory in World War II. Japan seeks to regain
control over the Kuriles, but it is unlikely to happen in the forseeable
perspective. Croatia promptly and decisively regained its lost territory,
while Serbia lost part of the historic lands. Thus, the history of inter-
national relations knows many successful and unsuccessful attempts to
restore territorial integrity.

Today, the idea of “returning Crimea” is objectively not in the fo-

cus of neither Ukrainian politics, nor its society. This is largely due to
the fact that the state potential of Ukraine is so much inferior in com-
parison with the Russian, that many Ukrainians even find it hard to

144

Donbas and the Crimea: the value of return

imagine a revenge, looking for new arguments in favor of the abdication
of the part of national territory. Undoubtedly, Ukraine will be able to
continue its historical path without Crimea. Moreover, getting rid of
the peninsula, Ukraine, apparently, gets rid of many economic, politi-
cal and even social and cultural problems, becoming more monolithic
in ethnic and patriotic terms, and more complete in geopolitical and
cultural terms. It also gets rid of the factors destabilizing internal polit-
ical life and distorted foreign policy. Crimean peninsula is difficult to
maintain and difficult to defend, and its alleged large geopolitical im-
portance (as “an unsinkable aircraft-carrier”) it has only in the bizarre
ideas about the modern world of Russian lea dership.

For Ukraine, the Crimean issue contains a number of moral issues,

humanitarian and historical aspects in importance not only inferior, but
superior to the political and economic aspects. One of the main prob-
lems is that on the mainland of Ukraine the majority of the population
feels betrayed by Crimean people because the latter practically did not
oppose Russian aggression, and sometimes even welcomed this aggres-
sion. The problem is hindered by the realization that resources created
by almost three generations of Ukrainians and invested in the develop-
ment of the peninsula, were spent for nothing, because of inadequacy,
corruption, criminality of local budget management and consumerism,
economic disability and weak enterprise. Revealing its almost complete
inability in productive economic and constructive political activity,
mentally post-Soviet population supported Russian aggression and oc-
cupation. Doing so, they were not even hiding that it was there way to
change the owner trying to maintain the status the dependent one. The
betrayal took place under soviet, imperial, monarchy and orthodox reli-
gious mottos and hype of repatriation that was actually seen as a return
in time – to the Soviet Union or the Romanov Empire.

Today one of the main arguments in favor of “refusal” to return

Crimea is that the majority of its population do not want to live in
Ukraine and have a negative attitude to everything relating to Ukraine.
However, this attitude has always been typical of the population on the
peninsula during all the years of modern Ukraine. It did not prevent
them from enjoying privileged autonomous status and from receiving
grants from the hated Kyiv. Obviously, without Russian aggression
and occupation Ukrainophobia of a part of Crimean population would
remain their regional feature and would not work against the sover-

145

Section 10. Scenario forecasts regarding the progress of the situation...

eignty of Ukraine. In the world there are almost no completely mono-
lithic societies and only the strength of the state matters in handling
internal ethnic, regional, class and many other divisions within nation-
al borders. Thus, sovereignty and territorial integrity of the state are
held by its power, and it is mostly weak states that become victims of
separatism and aggression.

There are many other arguments in favor of the “refusal” to return

Crimea. And some of these arguments are sensible enough, as they reflect
the reality that took place long before the annexation of the peninsula.
But it is also clear that without the Russian aggression, none of the ar-
guments in favor of “refusal” of the Crimea would gain relevance or even
would be considered an attack on the territorial integrity of Ukraine.

However, all the “arguments” appeared after the fact of the annex-

ation. And it is important to remember that whatever the motivation
of those who express the “arguments” (justified by fear of the aggressor
or a special democratic position), it is clear (even if it is not vocalized
by the subjects of international relations) that the state that does not
even attempt to regain its lost territory, can not be considered a full
and responsible member of the international community, recognizing
its inability to bear the burden of an independent foreign and domestic
policy at the necessary level.

Thus, the restoration of territorial integrity is an issue of national

importance and historical significance, the settlement of which must be
guided not by an emotional impulse of aftershock public opinion of the
country that became a victim of aggression, but by a strategic vision, his-
toric skill and deep understanding of national interests. The case of re-
vanche (and not revenge!) requires foresight and analytical, flexible mind.

10.2. Possible scenarios of returning Crimea

Only four possible scenarios of the return of Crimea could be out-

lined. However, it should be emphasized that the present Ukraine is
not ready to implement any of them and it takes time to achieve the
necessary readiness.

The scenario of armed reconquest (Reconquista). Now, this sce-

nario seems barely feasible and it is actually far from the focus of the
scenario-making process for Crimea. However, at present Russia, de-
spite all its global military capabilities has only demonstrated the abil-

146

Donbas and the Crimea: the value of return

ity for sabotage and propagandist activity, avoiding full-scale fighting
and retreating after facing serious armed resistance. Admittedly, the
annexation of the Crimea was not so much because of the overwhelm-
ing armed might of the RF, but because of the military weakness of
Ukraine at that moment, the sensitive political situation and reluc-
tance to intervene in the events that took place in the lives of a sig-
nificant part of the Crimean people. Actually largely “military might
of Russia” at the present stage is rather a product of really powerful
Russian propaganda than indisputable reality.

Immediately after the annexation, few could have predicted that

Ukraine would manage to create a powerful military grouping, which
is now holding back the aggressor in the Donbas. However, starting
an armed return of the Crimea would take at least three such group-
ings (in the North, East and South of Ukraine), and their technical and
professional level must be significantly higher than today. In a fairly
short time Ukraine has managed to create a more or less sufficient de-
terrent defensive military capability. However, the offensive potential
of the Armed Forces of Ukraine is still quite small and for the success-
ful operation of liberation of Crimea it clearly lacks the navy, air force,
and weaponry support from the Western allies (primarily the United
States). Clearly, the liberation of the peninsula solely by the ground
forces, without the support of sea and air would be extremely difficult.
Although rapid and effective raids of Ukrainian highly mobile airborne
troops in the Donbas give some reasons (at least at the exercise level)
to talk about such military operations in the area, for example, from
Dzhankoy to the Kerch Peninsula.

One should remember that no matter how powerful the Russian

military component seems in Crimea, it remains strategically vulner-
able because it does not have the logistic support system. Today the
troops are almost entirely closed on the peninsula deprived of the op-
portunity to establish a close communication with the continental
Russia is in a hostile international environment (in fact - in the entrap-
ment). Thus there have formed strategic premises for an unprecedent-
ed since the Second World War kettle for which it is enough to cross
the isthmus leading to the Kerch Peninsula; block Russian troops from
the sea; achieve air superiority. Obviously, the present Ukraine is not
capable of such a large-scale military operation, which, however, does
not exclude the possibility of its implementation in the future, or with

147

Section 10. Scenario forecasts regarding the progress of the situation...

serious international support. The historical example of the Crimean
War comes to mind, because the defeat in this war started the further
way of the Romanov empire until its collapse due to the more infamous
and stunning defeats in the Japanese and the First World War.

Undoubtedly, Russia has a powerful nuclear arsenal, this fact sig-

nificantly limits the possibility of warfare against it. However, the main
purpose of this arsenal is political, intimidation and deterrence of po-
tential adversaries and not nuking them. The use of nuclear weapons,
because of its destructive potential is extremely dangerous, if not sui-
cidal. By the way, the only state in history, that in limited quantities
used the nuclear weapons a long time ago, is entirely on the side of
Ukraine today. In addition, Ukraine having voluntarily given up its
nuclear weapons, has all the rights to be protected from nuclear black-
mail by an aggressive neighbor. It is therefore appropriate for Ukraine
to insist on the renewal of the Budapest Memorandum, but at different
provisions of security guarantees for Ukraine by the signatories (un-
conditionally, now without the participation of the RF). However, one
should not over-rely on such hopes, we have to operate exclusively on
our own and rely on ourselves only.

Increasing offensive potential of the Armed Forces of Ukraine will

take time, money and strategic indomitable will of victory. France’s
path to the restoration of its territorial integrity (after the defeat in the
Franco-Prussian war) lasted for ten years and ended with the victory
in World War I. So, despite the remoteness of historical perspective
in regard of the return of the lost territories, Ukraine (as France in its
time) may carry out preparations for the possible territorial revanche
in the future.

War is always blood, sufferings, losses, and this is the main draw-

back of the scenario for the armed return of Crimea. That is why the
implementation of this scenario should be avoided as long as possible.
Taking up arms should have strong reasons. The first is extreme case
(for example, if Russia tries to spread the aggression from the penin-
sula to the mainland Ukraine) using another act of aggression for a
counterattack and for moving the combat operations to the territory
of Crimea; second, the case of the maximum favorable coincidence of
circumstances where there is a possibility to liberate peninsula with
minimal casualties. There’s an obvious need for increasing military
readiness of Ukraine to operate in the Strategic Crimean theater not

148

Donbas and the Crimea: the value of return

only in defensive, but also in an offensive way. The willingness itself
is an important factor in liberating the captured areas and deterring
the invader from further progress as well as the diplomatic efforts of
Ukraine aimed at restoring territorial integrity peacefully. Given the
fact that Russia, apparently, is not going to abandon “war” as a way to
implement its aggressive plans and Ukraine should be ready to respond
to that challenge. Under such conditions, planning and restoring terri-
torial integrity in an armed manner is a natural thing. These actions do
not conflict with any international standards, though they would cre-
ate uncomfortable political environment for many European countries.

Overall, today there are no objective conditions for the im ple-

mentation of the scenario of an armed reconquest of the Crimea. It
is possible only under a number of factors: multiple qualitative and
quantitative growth of the Ukrainian military capabilities; weakening
of the corresponding RF capabilities; moral and resource readiness
of the Ukrainian society for war; armed support of the Euro-Atlantic
countries (especially the U.S.). Today, obviously, there are no such
conditions, but if they come to exist Ukraine and its armed forces must
be ready to use them.

The Reconquista path can be very long and last for decades, alter-

nating between military successes and military failures. Indeed, mili-
tary operations can always lead to victory in the armed struggle and to
the defeat as well.

Scenario of “people’s war”. It is about the restoration of territorial

integrity in the way of people’s diplomacy and people’s war through
civil attack on occupied Crimea that will happen without the support
of state institutions or with their covert assistance. Thus, civil society
assumes the responsibility for the return of the lost territories, using
a variety of methods, due to its structural diversity, flexibility, acting
informally, unexpectedly (almost in a hybrid way), using both violent
and peaceful means.

This refers to a wide range of social influence on the aggressor-state

from massive (as much as possible) peaceful march of concerned citi-
zens of Ukraine to Crimea, to guerilla warfare and clandestine struggle
on the occupied territories. Peace will remain at international level,
while at the basic social level and intersocial level there will be viscous,
diverse, formally uncertain struggle for liberation from the occupa-
tion. It will combine elements of national-liberating, hybrid, guerrilla

149

Section 10. Scenario forecasts regarding the progress of the situation...

warfare, clandestine activities of small groups and massive non-violent
movements.

The ongoing Crimea blockade by Ukrainian patriotic population

indicates the possibility of implementing a scenario of national-lib-
erating movement and people’s war for the return of the peninsula.
Today, the issue of the effectiveness of the blockade is not the most
important, because it is clear that in such a way it’s unlikely to defeat
the invader and return the peninsula. It might be a matter of creat-
ing more or less difficult circumstances for the occupying regime and
its supporters and for the RF itself a matter of increasing price of the
annexation and maintenance of annexed territories. Blockade of the
captured peninsula is especially important because this process shapes
the human potential for the future return of Crimea: the cohort of lib-
erators who can become the vanguard of the national movement for
liberation of the peninsula.

Scenario of restoring territorial integrity through national-liberat-

ing movement and people’s war is not perfect and in some aspects even
dangerous.

Firstly, any massive movement threatens with destabilization and

chaos in domestic policy as well and in the international environment,
it could generate extremism and easily slip out of control. Also today,
not all the citizens of Ukraine are ready to take part in such a movement
because there is no national consensus on how to return the peninsula
and on principles the efforts. Many Ukrainians generally do not want
to do it, because they believe that the return is politically and econom-
ically unfeasible and they feel moral disgust to the behavior of a part of
Crimean population or just beware of the consequences (especially the
reaction of the RF).

Secondly, there is a danger of freezing conflict on the peninsula, (for

instance, in Northern Ireland) where the movement of resistance to
Russian occupation, evolving into powerful clandestine and guerrilla
structures would remain (as the majority of population will remain loy-
al to the occupation regime) in this state for decades, facing an impasse
of a long, bloody and futile struggle.

Thirdly, mass movements have the ability to fade quickly, causing

extremism and terrorism or mass gloom.

Scenario of peaceful reintegration by means of social develop-

ment (involving social dynamics or progress). In modern Ukraine

150

Donbas and the Crimea: the value of return

fearing aggression and war, economic difficulties, political instability,
this scenario is considered the most desirable and attractive. Naturally,
Ukrainian majority seeks the implementation of this scenario, because
it accomplishes two strategic objectives at once: the country is develo-
ping, and the lost territories reintegrate, there is no need to shed blood.
Scenario of peaceful reintegration by means of social development is
the absolute opposite scenario to the armed reconquest of the Crimean
peninsula, attracting with its humanity, peaceableness, constructibi-
lity and the ability to postpone a complex and dangerous business of
returning Crimea till a happy some day in the future. The desire to get
rich, buy off enemies and attract former fellow citizens is quite natural
and humane, few would dare to oppose such a strategic plan, urging
countrymen to arms and warning them about illusions.

Successful development of the national economy plays a key role in

implementing the scenario of peaceful reintegration, but conside ring
this scenario purely economic in nature is not entirely correct. This
refers to a much wider historical perspective, it’s a complete re-estab-
lishment of the country, its transformation into something opposite of
what it used to be during the last almost twenty-five years.

This (largely utopian) Ukraine, which may become a source of

gradual soft power has to be:

• powerful, high-tech, energy-independent and export-oriented

economy, harmoniously inegrated into European and world market;

• balanced social structure with dynamic and influential middle

class;

• civilized democratic policy of mass participation operating ef-

fectively on the basis of European principles and within the European
institutions;

• viable state that has overcome the corruption and created a fair

legal system in which power belongs not only to the state, but also to
local communities and influential civil society;

• humanistic secular national culture, sincerely open to positive

va lue influences and constructive value sharing.

The scenario of peaceful reintegration of Crimea by means of so-

cial progress provides high-quality historic transformation (rebirth) of
Ukrainian society that progresses so intensively that creates a kind of
gravitational field around itself, pulling into the orbit of its influence not
only the lost territories, but also the bordering regions of neighboring

151

Section 10. Scenario forecasts regarding the progress of the situation...

states. Ukraine becomes a cultural role model and source of integration
attraction that can control the economic development of the surroun-
ding bordering lands (including the occupied), speeding up or slowing
down this development according to its national interests. In this sce-
nario, simultaneously under the international sanctions and due to de-
pletion of natural resources and shrinking sales markets, the inefficiency
of authoritarian control, accumulation of internal contradictions, the
burden of imperial militarism will cause a political, cultural, economic
degradation of the RF. Crimea becomes saturated with Russian arms
and entirely dependent on dynamic Ukrainian economy reservation. It
is incapable of self-development, the economic situation on the peninsu-
la is deteriorating, population is impoverished, the amount of subsidies
and financial assistance from the Russian Federation reduces. So the
only way out is to return to Ukraine, which might have already entered
the EU, and thus join the economically dynamic, politically stable, firm-
ly consolidated by common Euro-Atlantic security system, force center
of powerful global unipolar international community.

Living in a rich and happy country and return Crimea peacefully

is a dream of the vast majority of Ukrainians, and it is this dream that
Ukrainian public grasps. Scenario of peaceful reintegration of Crimea
by means of social dynamics is neither better nor worse than the other
three, it is no more and no less utopian than them and the prospects
for its implementation are also historically uncertain. The advantages
of this scenario are obvious, so it is advisable to focus on the disadvan-
tages.

Economic success is as difficult to achieve as the military one, no-

body is ensured from defeat and failure. Economic success requires al-
most the same qualities from the public as the military success. The
people, unable to win wars and defend themselves with arms are unlike-
ly to be particularly successful in the economy. The road to economic
success is just as long as the successful war path. It maybe even lon-
ger and more complex, because the Ukrainian Armed Forces and the
Ukrainian economy have been affected by almost identical problems
(corruption, indecision, lack of discipline and organization, low techno-
logical, professional, and management level, etc.). Today it is necessary
to realize that the restoration of territorial integrity by means of eco-
nomic progress and social evolution is not easier than the way of armed
Reconquista and perhaps even more complicated.

152

Donbas and the Crimea: the value of return

However, even such possible success does not guarantee the return

of the lost territories. This process cannot be automatic and completely
painless.

Firstly, the restoration of territorial integrity is a political act, which

is impossible to implement only by economic means, without using the
basic tools of foreign policy i.e. diplomacy, information influence and
armed forces. These instruments will be used at least on the final stages
of the reintegration (information influence must be used throughout
all the stages), because there are always those who will resist until the
end of this reintegration and for untempered condition, it involves the
use of weapons to neutralize extremist elements. In addition, the return
of the lost territories will inevitably raise a number of issues in the in-
ternational security field, requiring Ukraine to take considerable diplo-
matic efforts to back the military potential. In other words, no matter
which scenario of returning Crimea is chosen, the Armed Forces still
need strengthening.

Secondly, the achievement of Ukrainian society (especially its

economy), high level of development can play against the reintegration
of the Crimean peninsula, sharpening the economic, political, social
and cultural differences and turning the latter into an overwhelming
gap. Ukraine, existing and developing without the Crimea may change
so drastically that the return of the peninsula might become at least
very difficult, if not impossible. And the longer Crimea stays outside of
Ukraine, the harder it will be to return it and reintegration will actual-
ly cost more (which may be inappropriate for the future hypothetical
Ukrainian society). This is especially true for the social and cultural
differences that (are already pretty sharp) will only sharpen within the
period of separate existence.

Thirdly, the economic impact is one of the major, however not the

only motive of social behavior. Therefore, even economically strong
and dynamic country is not always attractive in political and socio-cul-
tural terms. Striking differences in economic growth and welfare be-
tween North and South Korea are currently not bringing closer the
historical perspective of their reunion due to non-economic factors of
political, ideological, military and strategic nature. Much of the inhab-
itants of Crimea may despise and hate Ukraine (which is inevitable in
terms of support and cherishing this hatred by the Russian propaganda
machine), even after Ukraine becomes a state of general welfare. The

153

Section 10. Scenario forecasts regarding the progress of the situation...

above-mentioned part of the Crimean citizens have some room to re-
main loyal to Russia and they will make use of it on the one hand and
on the other they’ll make use of the growth of the Ukrainian economy
(labor migration, smuggling or other semi-legal ways). Moreover, even
economically weakened and politically isolated Russia will remain mil-
itarily powerful for a long time, defending the territories it considers
its own.

Fourthly, a peaceful reintegration of Crimea by means of social

progress can be greatly hindered by a moral component that can ne-
gate the effect of economic factors. In the case of this scenario most of
Ukrainians will have to radically change their attitude to the inhabi-
tants of the Crimean Peninsula. If today this attitude is described by
such emotional characteristics as “treason”, “ukrainophobia” etc., for
the reintegration the estimates of Crimeans should evolve to the po-
sition of seeing them as neglected and poor citizens who should be re-
turned back to the country for higher standards of living with sincere
compassion and deeper understanding. But whether there will be pre-
conditions for such reconsideration is still unknown, especially in case
of Ukraine achieving a better level of economic development. Return-
ing back a “treacherous” and “unreliable” state and sharing the welfare
with its population will not be the idea shared by everyone, there will
be people not willing to do it.

Scenario of peaceful reintegration by diplomatic means. This

scenario refers to restoring the territorial integrity with the help of
negotiations by purely “cabinet” means at the highest level of the glob-
al politics. Today most of the efforts are taken in this scenario, even
though the general belief in the implementation of this scenario is in
accelerated decline. At the same time this scenario is not the most uto-
pian and not the least realistic than the other three. Successful imple-
mentation of this scenario by diplomatic means demands fulfilling a
series of conditions: the maximum multilaterality of the negotiations
process, expansion of the negotiations onto all of the former USSR,
suspension from the agenda of the issue of internal organization, in-
troduction of the new concept of “territory under international gov-
ernance”.

The return of Crimea by means of international diplomacy is only

possibly under multilaterality conditions, meaning that the negotia-
tions will comprise as many interested parties as possible. Expansion of

154

Donbas and the Crimea: the value of return

the negotiations circle will allow Ukraine to enlarge the space for dip-
lomatic maneuver; to involve more supporters of Ukraine in the nego-
tiations (the U.S. in particular), creating a more favorable environment
for the negotiations; to neutralize or at least to soften (“to smooth”) the
Russian pressure on Ukraine created in the course of negotiations; to
involve in the multilateral diplomatic negotiations all the interested
states, whose interests might be ignored in the Russian-Ukrainian ter-
ritorial conflict settlement leading to increasing further tensions and
misunderstanding; to create more favorable conditions for guarantees
and implementation of the collectively adopted decisions and reached
agreements.

Diplomatic settlement of the Crimean issue on bilateral basis by

means of separate negotiations with the Russian Federation is danger-
ous and unpromising. The Donbas conflict and the Crimea annexation
(Russian-Ukrainian armed confrontation) is only a part of general con-
flict network on the former Soviet territories. All these conflict situa-
tions have common causes and a similar development and consequen ces.
They are all powered by Russia i.e. one of the former Soviet countries
that has fell sick with imperial megalomania and unreasonably appoint-
ed itself for the role of regional leader. The attempts to negotiate with
the aggressor will cause either recognition of the aggression results
(namely the Crimea annexation) or partial recovery of the territorial
integrity at the cost of losing a large share of sovereignty and returning
back into the sphere of Russian influence with further participation in
the foreign political ventures of this former Soviet state.

It is unlikely to settle the Russian-Ukrainian armed conflict and re-

turn the annexed territories without a radical structural transformation
of the political system that has formed on the former Soviet territories
after the collapse. The armed conflict between Ukraine and Russia is
a part of the former Soviet conflict complex. Therefore, complete res-
olution of this confrontation and peaceful settlement of the conflict is
impossible without harmonizing the entire former Soviet Union, name-
ly without restoring territorial integrity of Georgia and Moldova. At-
tempts by all of the victims of Russian aggression to solve the problem
of lost territories separately, avoiding the complex issue of restructur-
ing the political system that emerged in the former Soviet Union have
shown their ineffectiveness and futility. However, the greatest threat
lies in the efforts to reach a separate agreement with the aggressor-state

155

Section 10. Scenario forecasts regarding the progress of the situation...

that will only encourage it to take further aggressive actions, making it
stronger for its foreign ventures.

Restoring the territorial integrity of Ukraine by diplomatic means

requires broad institutional context and regional localization. It is
about holding a peace conference for the former Soviet Union, where
all the concerned states would participate, and not just located in
this region. The initiators of the conference may be the victim-states
of Russian aggression, namely Moldova, Georgia, Ukraine. Today
there is an urgent need for the widest possible launch of a multilater-
al diplomatic dialogue for the successors of the Soviet Union and the
countries interested in establishing such a dialogue based on justice,
equality and constructive approach. In addition, such a conference
may turn into an institution later, becoming a relevant internation-
al organization that will make an effective contribution to peace and
security in the former Soviet Union, because all the organizations and
associations functioning within this region today can not cope with
these functions.

The return of Crimea is impossible without the participation of all

the states concerned about Ukrainian territorial integrity and inter-
national community in general. In addition, it’s clear that such a re-
turn is a long-lasting procedure and it will not happen momentarily.
Therefore, one of the possible diplomatic solutions for the period of
reintegration could be international governance of the annexed ter-
ritories. This way the territories can obtain international status, effec-
tive management, acceptable political and administrative conditions
for the return/reintegration that might vary in terms of duration. Such
international governance can be undertaken by temporary internation-
al administrations, created by combined efforts of international securi-
ty organizations (in particular OSCE, the UN) and trustworthy states
with peaceful foreign policy.

In order to prevent the Bosnia scenario the establishment and

functioning of such temporary international administrations should
be conducted in permanent coordination with the victim-states that
are supposed to reintegrate the territories. The staff of international
administrations together with the police forces is advisable to com-
prise international officials (employees of international organizations)
and representatives of neutral states. One of the main tasks of the tem-
porary international administrations is to prevent environmental and

156

Donbas and the Crimea: the value of return

humanitarian disasters; maintaining the proper level of political and
legal order and economic prosperity; demilitarization and decriminal-
ization. The main objective (and it should be legally regulated) must
be retur ning the annexed territories to the states. In general it’s about
a modified and adapted to the new historical conditions concept of
“mandated territories”, although the holders of the mandate to man-
age the transition areas should become international organizations
funding these areas.

Successful diplomatic settlement of the problem of territorial integ-

rity of Ukraine envisages removal of the issue of Ukrainian internal po-
litical structure from the agenda of the negotiations. It means that the
return of Crimea shall not happen at the cost of radical reconstruction
of Ukrainian political system for the benefit of other countries. The
fact that the issue of internal political and governmental structure of
Ukraine is turning into a subject for international negotiations and dip-
lomatic trade, both partners and adversaries of Ukraine gain a powe rful
means of influence and as a result the principle of state sovereignty and
the right of Ukrainian people to choose the best and the most suitable
political structure is violated. Let’s imagine Ukraine would go for seri-
ous foreign policy concessions, however it is necessary to avoid inter-
ference with the domestic policy and moreover introducing additional
perturbation factors caused by attitudes of different segments of soci-
ety to the issues of state and political system.

Scenario of peaceful reintegration of Crimea by diplomatic means

still has several drawbacks.

First, until now no serious international conflict was solved by means

of diplomacy only. Diplomacy proved to be effective mainly on the ini-
tial (crisis) and final (post-conflict) stages of the conflict evolution.

Second, diplomacy is a rather delicate tool (partly behind-the-

scenes), which may be of little use to address large-scale conflicts in-
volving substantial resources of powerful warring parties and covering
large areas with a large population.

Third, diplomatic efforts require not only cabinet silence, but a long

time, which can age the conflict, enrooting it in history and making it
permanent.

Fourth, diplomacy can not function effectively without the support

of a powerful state potential (economic, political, cultural) and two other
tools of foreign policy – strong armed forces and effective propaganda.

157

Section 10. Scenario forecasts regarding the progress of the situation...

Fifth, weak states easily become victims of diplomatic game of more

powerful states that in struggle for their interests may induce weaker
partners to make disadvantageous concessions, including territorial.

And finally, sixth: peaceful reintegration of Crimea by diplomatic

means requires mandatory presence of the RF in the process. Such a
presence is possible only in conditions of severe external pressure at
which the internal situation (economic, social) in Russia reaches the
level where the excess tension could no longer be clearly refocused by
exclusively propagandist measures.

10.3. Principles of the economic policy of Ukraine
concerning the annexed Crimea

Annexation of Crimea by Russia destroyed the legal basis for the

implementation of bilateral Ukrainian-Russian economic cooperation.
In terms of the abolition of the basic foundations of good neighborli-
ness the transformation of economic cooperation of Ukraine with Rus-
sia and Crimea, is inevitable.

For Ukraine after having lost a considerable part of its economic

potential and human capital assets due to the annexation of Crimea
there is a sharp need in reconsidering its economic policy regarding
the annexed territory. Conceptual approaches regarding the conduct
of economic activity with the peninsula vary between accordance with
the rules of such activity for foreign territories (meaning establishing
customs and currency control) and introduction of special rules adopt-
ed for the annexed territories and aggressor-states (i.e. general princi-
ples will apply to Crimea and Russia overall).

At the same time there is not doubt that in building economic poli-

cy regarding Crimea it is indispensable for Ukraine to accomplish the
following strategic and tactic landmarks.

Strategic level: maintaining peace, restoring territorial integrity of

Ukraine, full-fledged state sovereignty implementation and restoration
of the state border of Ukraine.

Tactical level: complete compensation of the losses caused by ob-

struction of implementation by the state, individuals and legal entities
of the ownership and property rights on the territory of Crimea; regu-
lation of the procedure for conducting critical economic cooperation
with the temporarily annexed territory (providing electricity, etc.);

158

Donbas and the Crimea: the value of return

prevention of economic subversion, military aggression and armed con-
flict organization from the temporarily annexed territory, etc.

Reconsideration of Ukrainian policy regarding the annexed Crimea

should be based on multi-level mechanism of economic deterrence of
aggression and ensurance of national economic interests. Application of
sanction packages should be proportionate to the progress of the con-
flict settlement between Russia and Ukraine and to the compensation
by Russia for the damage inflicted on Ukraine and its citizens. Sanction
packages should have different scope and intensity including the estab-
lishment of economic blockade of Crimea by Ukraine (maintaining the
humanitarian component).

The most extreme instrument of economic deterrence – the eco-

nomic blockade of the Crimea by Ukraine can include suspension or
significant restriction of movement of goods, people and capital assets,
revision of pricing policy regarding the supply of critical goods, water
and electricity, etc.

Less intense economic containment package should provide full

adherence of Ukraine to the economic sanctions imposed on Russia
relating to the annexation of Crimea (partly already accomplished). It
should, however, consider that since such restrictions will be selective
in nature, they can be challenged in the courts (including internatio-
nal) as discriminatory. It is necessary to envisage it in a special law or
in a supplement to the Law “On National Security”.

Certain legal acts such as “Trading with the Enemy Act” adopted in

the U.S. in 1917 and in Great Britain in 1914 still in legal force

might

become an example for the respective Ukrainian law.

At the beginning of the First World War a need for normalization of trade in

the new environment was pressing. Then, in 1914, the UK Parliament passed the Act
«On Trading with the Tnemy,» which prohibited business with an identified enemy.
In the current version of the Act of September 1939 for trading with the enemy during
the war, it provided for criminal liability in the form of imprisonment for 7 years. In
the United States in 1917 there was adopted a federal law of the same name, which
limited trade with countries hostile to the U.S. The Act gives the president the right
to oversee the trade with the country or restrict the trade between the U.S. and hostile
nations during the war. The Act on Erading with the Enemy has become a common
name for legislation that applies during war-time or in case of the state of emergency, its
is focused on establishing special rules for trade with enemy countries and individuals
of such countries as well as the prohibition of actions promoting such countries and it
also authorizes the head of state to determine his own trade regulations with hostile
countries. «The Trading with the Enemy Act» was used by the U.S. president Franklin
D. Roosevelt in 1933 for the legal justification of emergency economic situation.

159

Section 10. Scenario forecasts regarding the progress of the situation...

Such law in Ukraine in particular can:
• regulate economic relations with Russia as an aggressor-state

and the annexed Crimea in case of the conflict escalation;

• authorize the Cabinet of Ministers of Ukraine (based on the

decision of the National Security and Defense Council) to establish a
list of types of economic operations (trade, investment, etc.), goods,
services and individual projects whose purchase/sale or implementa-
tion in relations with Russia or Crimea is considered to be reasonable
in terms of national security interests and/or for humanitarian rea-
sons. Such list might be secret.

• provide the Cabinet of Ministers of Ukraine with the right to

issue special permits for economic transactions with Crimea and Rus-
sia, namely the permits for the conduct of economic transactions con-
cerning goods and services or within the projects mentioned in the
special list approved by the Cabinet of Ministers;

• authorize the Cabinet of Ministers of Ukraine to create, if need-

ed, a special state-owned institution to carry out economic transac-
tions with Russia and Crimea.

Ukraine can implement scenarios of economic cooperation with

Crimea and the city of Sevastopol in accordance with the principles of:

• “military economy” that foresees a complete stop of economic

cooperation. Under such option practical issue will touch upon the
settlement of legal aspects regarding formalization of rights for expro-
priated property, compensation of losses, etc.;

• “сollaborationist economy” with the recognition of the long-

term nature of the annexation of Crimea, it attempts to maximize the
opportunities of cooperation with Crimea. In this scenario the eco-
nomic relations are not limited, but are organized according to the
rules that apply to the Russian Federation;

• “еconomic condominium”, which envisages recognition of

Crimea as a “special territory” with quasi customs regulations (i.e.
with possible exceptions or preferences, for example for the enterpris-
es owned by residents of Ukraine and the restrictions or prohibition
for the enterprises targeted by the EU sanctions). This approach also
provides for collective solution of certain problems, particularly re-
lated to withdrawal of Ukrainian currency from the circulation, prob-
lems dealing with the activities of banks and financial institutions
(possibly based on dual licensing) and others.

160

Donbas and the Crimea: the value of return

It is important to mention that Ukrainian economic policy regard-

ing Crimea is a part of a larger process of reformatting economic co-
operation with Russia in general. In this regard the particular top-pri-
ority steps will comprise:

• improvements in legislative foundation for the application of

Ukrainian economic sanctions targeting the RF. In particular the
legislation should specify the risks and threats to economic coopera-
tion of Ukraine with Russia considering the factors of hybrid warfare
against Ukraine, sanction packages (in accordance with international
experience and national interest), stages of sanctions imposing, prin-
ciples of monitoring sanctions efficiency, definition of principles of
sanction application;

• development of a single conceptual approach regarding restric-

tions of the regulations in cooperation of Russian companies (companies
with Russian capital assets) with companies of the state sector, includ-
ing restrictions and prohibition for participation of such companies in
state procurement; privatization of state property; allocation of state
subsidies; purchase of corporate assets on the territory of Ukraine, etc.;

• development of loss calculation methods for individuals and le-

gal entities, it must be done in cooperation with international experts,
in particular world leading audit companies;

• initiative of creating an international mechanism for confirming

the losses inflicted on Ukraine, its individuals and legal entities by the
annexation of Crimea and creating a mechanism of compensating these
losses by Russia.

Therefore, Ukraine is walking a complicated path of transforming

economic relations with the Russian Federation after the annexation
of Ukrainian territories. The complexity of the situation lays in the
fact that the destruction of bilateral economic relations is accelerating,
these relations have been establishing for decades and their destruc-
tion causes significant losses for Ukrainian economy. At the same time
the economic losses are the price of civilization choice of Ukraine, the
price our nation is paying, the price that cannot be a subject of political
trade or economic calculation. Wide international support contributes
to Ukrainian confidence in the victory of civilization values and resto-
ration of justice on the basis of international law.

It is always easier to stick to a suggested scenario,

than create one’s own melody.

Oleg Roy

Attempts at least to look into or even design the future of Ukraine

are permanent. Unprecedented geopolitical, economic and social ambi-
guity has nearly led the country to the verge of turbulence, entailing
the development of future scenarios that are mainly pessimistic. Such
pessimism can be explained by three main factors: previous historical ex-
perience; present day difficulties; attempts to caution oneself against the
future problems and failures, having prepared one’s “soul and mind”. To
dream about the better and prepare for the worse is a quite reasonable
or even natural strategic guideline of a social person. Moreover, Ukrai-
nians got tired of the historical optimism of the communist times, which
totally contradicted the severe and ruthless reality of early Soviet total-
itarianism and then the absurd and invincible inefficiency of late one.

The history of Ukrainian people and its statehood provides few rea-

sons for optimism: wars, holodomors, economic and cultural crises en-
tailing killings and devastation of entire generations and various strata of
society, slowing down the process of creation of a state and nation. Ukrai-
nians even developed a specific culture of historical and social pessimism,
which is an integral part of their ethnic code and national identity. In
fact, it is precisely this culture that to a considerable degree explains the
skepticism of Ukrainian society about any authority and corresponding
policy– making problems. Therefore, it is quite natural that the majority
of future scenarios developed in Ukraine are generally pessimistic.

Over a period of last 25 years Ukrainian society never managed to

build a dynamic economy, effective democracy, fair legal system and
attractive culture. It is this society that remains poor, stratified and
helpless in the face of external and internal threats. Such difficult his-
torical situation resulted in an extremely unstable authority system –
ineffective and not legitimate enough. Ukrainian society is 2 turning
into the society of total corruption and permanent mass protest, where
optimistic prospects of development look artificial and unfounded.

164

Donbas and the Crimea: the value of return

Future scenarios must be backed at present: they are the outcome

of existing trends, not ungrounded suppositions and futurological fan-
tasies. There are few positive trends to make optimistic predictions in
modern Ukraine. Nowadays we can only talk about optimistic scenar-
ios for the day after tomorrow, but not for tomorrow. In addition, a
society cannot exist without sound alarmism, supporting a constant
readiness for new challenges and threats by means of their emphasizing
or even exaggerating. After all, fear of the future is human nature that
makes pessimistic scenarios more widespread.

All the negative moments must be emphasized and taken into ac-

count to predict future social conditions for greater adequacy and prac-
ticality. Thereby, all possible threats are taken into consideration and
the “event horizon” is defined: the bottom limit of possible developments
is fixed, over which different possible optimistic suppositions are built.
There is no sense in painting beautiful pictures of happy future, when
Ukrainian society faces so many threats. After all, it is much easier to
take advantage of success than overlook threats to overcome them later.

The future in the widest sense is subjective-objective time category

of reality perception that precedes forthcoming events, the realization
of which is subjected to laws of uncertainty. However, there are many
means, which allow “managing the uncertainty of the future”. The most
popular is the scenario means, according to which all scenarios are con-
sidered as equally possible in the future, corresponding to certain actual
trends. The scenario means of “managing the uncertainty of the future”
provides not only for the forming of the image of this future, but for sepa-
ration of grounds (objective possibilities) for its realization, development
of the system of means to contribute to it. Each scenario consists of three
main elements – ideal (image of the future), analytical (substantiation of
a possibility to implement a scenario) and practical (a system of suggest-
ed measures that might contribute to the implementation of a scenario).

Nowadays we can distinguish five main scenarios of the development

of events concerning Ukrainian-Russian relations in the scope of viola-
tion of territorial integrity of Ukraine

. There are five basic scenarios,

three of which are radical and the remaining two contain interim com-

Горбулін В. П. Україна і Росія: дев’ятий вал чи Китайська стіна / В. П. Горбу-

лін, О. С. Власюк, С. В. Кононенко. – К. : НІСД, 2015. – 132 с.; Горбулін В. П’ять
сценаріїв для україно -російських відносин / В. Горбулін. Retrieved from http://
gazeta.dt.ua/internal/p yat scenariyiv dlya ukrayino rosiyskih vidnosin _.html

165

The scenarios of the future

promise solutions. However, considering Ukrainian-Russian relations
not in a general, but in specified way concerning Crimea and the Donbas,
the range of scenarios can be expanded from a scenario of forced inac-
tion (actual for current relations or rather their absence with Crimea) to
a quite optimistic – scenario of territorial integrity and reconciliation.
Despite the realization of such a scenario remains nowadays “too good
to be true”, it cannot help being considered, since in any case five stated
basic scenarios are alternative-situational means to achieve the desired
peace. Therefore, five quite realistic scenarios “are placed” between the
two obvious scenarios, desirable for the passive majority, that provide
either for the expected inaction or inactive expectation.

It is also necessary to understand clearly that, firstly, each of the

whole range of scenarios must be considered in relation to the tempo-
rary occupation of separate territories of the Donbas and annexation
of Crimea and in different time horizons: in a short-term outlook con-
cerning the first case and in a long-term outlook as for the second one.
Along with this, unfortunately, it cannot be excluded that each of five
scenarios may be delayed concerning the Donbas, but be realized as
for Crimea. Secondly, it must be realized that the Minsk agreements
cannot be considered as a part of any scenario, it is just a necessary,
but insufficient precondition for a scenario approach to regulate the
situation both on the east and the south of the country. Certainly, the
importance of the Minsk agreements cannot be diminished, despite the
fact that, taking into account the statement “economy is a blood of pol-
itics”, the content of the Minsk agreements, as well as the process of
negotiations itself, can be considered to be “bloodless”. However now-
adays there is no alternative to the Minsk agreements. Obviously, if
the period of validity of the Minsk agreements is extended to 2016, its
economic component can be reinforced. But now what is at issue is that
“subtleties of diplomacy can overcome the brutality of military force”

So, concerning the scenario of forced inaction it is quite clear that

any actions as for the de-annexation of Crimea are non-topical, howev-
er it should be noted that now the “inaction” is not absolute. Certain
preliminary works have been initiated; particularly the President of
Ukraine signed a decree to implement the Resolution of National Secu-
rity and Defense Council of Ukraine “On the state of realization of mea-

Горбулин В. Без права на покаяние / В. Горбулін. – Харьков : Фолио,

2009. – 379 с.

166

Donbas and the Crimea: the value of return

sures to protect rights of property and interests of Ukraine considering
the temporary occupation of the part of the territory of Ukraine”

. Tak-

ing into account the necessity of additional measures as for the protec-
tion of rights and interests of Ukraine, the Cabinet of Ministers must
take urgent measures to activate the compensation for damages, caused
by the temporary occupation of the part of the territory of Ukraine.

In particular, the Government has to implement on a permanent

basis the specification of the extent of losses, caused by prevention of
implementation of the right of property and interests of Ukraine on the
territory of Crimea. The government also must take measures as for the
negotiations with Russian party to regulate the controversy between
Ukraine and Russian Federation concerning the interpretation and
implementation of the agreement between governments as for promo-
tion and mutual protection of investment. Ministry of Foreign Affairs
must urgently initiate a procedure of purchase of legal services for the
protection of rights and interests of Ukraine in order to regulate the
controversy between Ukraine and Russia concerning the interpreta-
tion and implementation of the stated agreement.

It is necessary to prepare the strategy of protecting rights and in-

terests of Ukraine concerning the interpretation and implementation
of the agreement jointly with the Ministry of Justice, Ministry of Eco-
nomic Development and Trade, Ministry of Energy and Coal Mining
and other concerned state bodies. The Ministry of Foreign Affairs must
engage experts to collect, analyze and prepare probative base, neces-
sary for the protection of rights and interests of our state. The Ministry
of Justice must provide legal aid for citizens, whose rights, including
rights of property, were violated because of the temporary occupation
of the part of the territory of Ukraine.

The Ministry of Foreign Affairs, Ministry of Energy and Coal Min-

ing jointly with the Ministry of Justice, Ministry of Defense, Ministry
of Infrastructure, Ministry of Agrarian Policy and Food, as well as Naf-
tohaz of Ukraine must engage qualified and competent legal councilors
in order to protect rights and interests of Ukraine, connected with the

Про рішення Ради національної безпеки і оборони України від 20 липня

2015 року “Про стан реалізації заходів щодо захисту майнових прав та інтересів
держави Україна у зв’язку із тимчасовою окупацією частини території України” :
указ Президента від 26.08.2015 р. № 514/2015. Retrieved from http://zakon4.rada.
gov.ua/laws/show/514/2015/paran2#n2

167

The scenarios of the future

loss, inability to use state property, with loss of income on the territo-
ry of Crimea because of the temporary occupation. Particularly, defense
materials of military units, institutions, establishments and organizations
of the Armed Forces of Ukraine, other military units, units of gas trans-
portation and energy systems, units of transport infrastructure, units of
fishery and fleet of fish industry. The General Prosecutor of Ukraine and
the Ministry of Justice must inform the public of the actions of Ukraine,
targeted at the protection of its rights of property and interests.

Special attention must be paid to such aspects:
• firstly, by now certain measures may be taken as for the state

property and loss of income on the territory of Crimea;

• secondly, it is necessary to stick to the correctness of formulation

concerning compensation for damages, caused by the temporary occu-
pation and annexation, not to recognize the fact that the property and
rights of property of Ukraine legally belong to the country-aggressor;

• thirdly, any procedures of compensation are yet subjected to

risks of impossibility of precise evaluation of irreversible, as well as
current losses because of incomplete use of property. Neglecting these
aspects will entail “Ukraine’s loss of important chess pieces on the
geopolitical chessboard”

After all, it is necessary to take account of a complete legal nihil-

ism of the Russian party and its arbitrary interpretation of the norms
of international law in its favor exclusively. Successful adoption and
implementation of international legal resolution demands consensus –
mutual agreement of countries-participants, concordance of their state
will. Therefore, this resolution very often only formalizes the state of
international affairs, attained in a different way – diplomatic, military
or economic.

The first (and the only one armed) radical scenario – the scenario

of total war – is possible if the Russian government decides to launch
open military aggression to obtain the land corridor to Crimea and free
access to its military contingent in Transnistria. In this case, Ukraine will
be deprived of choice of opportunities to settle the conflict in the Donbas
and will have to defend its independence, using all available resources.
Development of events according to such a scenario would entail a com-
plete militarization of Ukrainian society; economic, political, cultural,

Горбулин В. Без права на покаяние / В. Горбулін. – Харьков : Фолио, 2009. –

379 с.

168

Donbas and the Crimea: the value of return

ideological and propaganda mobilization; the establishment of martial
law; maximum reliance on its own strength, due to the inevitable inter-
national isolation at least in the early stages of the total war and a cor-
responding reduction of the external resources; focus on uncompromising
destruction of the enemy; attacks on critical infrast ructure of the enemy;
active partisan and sabotage activities; complete denial or minimizing the
diplomatic and foreign economic coope ration with the enemy state and its
satellites; complete subordination of diplomacy to the armed forces and
military propaganda.

Unfortunately, this scenario may also be implemented concerning

the Crimean issue; however, due to the fact that the modern world has
already passed the point of no return in its system of interdependence,
this means is fatal even despite a not very active role of Ukraine on
the international arena. At the same time, possible losses and victims
that can be entailed by the realization of the armed scenario are much
more serious arguments against its implementation than global inter-
dependence, which can even provoke conflicts in many cases, but not
eliminate them. Especially this concerns the case of asymmetrical inter-
dependence. Furthermore, even extremely high level of integration and
security interdependence of the modern world did not prevent Russia
from implementing aggressive and expansionist foreign policy not only
concerning its neighbors, but also in remote regions. Objective inter-
dependence should result in the international legal and socio-cultural
consensus – the willingness of all participants of international relations
to act according to general rules.

As for the total war for the Donbas, such scenario has already been

partially implemented. We can assume the possibility of a “take two”
format, but on the one hand, the “price” of the first take itself is al-
ready too high, and on the other hand, won over territories of current-
ly occupied Donbas cannot be considered liberated until “the fight for
the souls and hearts” is won or, in other words, until the mentality of
a “Soviet man” is won over. However, it is a different war, but in or-
der to win it is necessary to obtain as much resources, determination
and courage as one needs to win in the armed conflict and the defeat
may be even worse. Moreover, it is necessary to take into account
that the majority of these “souls and hearts” belong to inveterate col-
laborationists, ruthless and unprincipled terrorists and agents of the
aggressor-state.

169

The scenarios of the future

Doubtfulness of a “total success” of Ukraine in this war is confirmed

by a public opinion poll of citizens of Ukraine

, held by Kyiv Inter-

national Institute of Sociology (KIIS) and ordered by the NGO the
“Cent re for Strategic Studies” and the “Agency of nonviolent solu-
tions”. To the question “Which method of fighting against armed inva-
sion, carried out by the superior power of foreign enemy, do you consid-
er more effective?” respondents’ answers were as follows:

• 34.4 % chose the “armed struggle” variant;
• 34.7 % chose “nonviolent struggle (such as demonstrations,

protests, marches, boycotts, strikes, civil disobedience, refusal to co-
operate with the invader), headed by civilians”;

• 28.5 % undecided;
• 2.4 % refused to answer.
All in all, the stated scenario is the most heroic and sacrificial

, though

less likely. Neither Ukrainian nor Russian people have the desire to fight;
no one wants to lose the benefits of peaceful modern life for the sake of
the whims of a small number of political adventurers whose being in pow-
er also reflects the level of political culture and state of political system
within which they were able to lead their countries. The people unpre-
pared and unable to defend their country usually choose incompetent and
immoral people as their leaders. Wars burst out without asking citizens
whether they want to fight. In addition, aggression and proneness to con-
flict of the Russian population drastically surpass the same characteristics
of Ukrainian society, therefore it would not be correct enough to claim
that Ukrainians and Russians do not equally want war.

The second radical scenario – the scenario of a “cut-off” or a

“wall” – provides for a decisive rejection of Ukraine from the occupied
territories and a complete rupture with them. Further historical fate of these
territories will be of interest for Ukraine only in terms of ensuring its own
security, namely the power of defenses and sufficient isolation of these
territories. It will be necessary for the Ukrainian statehood to reformat and

Думки і погляди населення України стосовно методів опору інтервентам/

окупантам. Retrieved from http://www.kiis.com.ua/?lang=ukr&cat=reports&id=
546&page=1

According to opinion polls conducted by “Sofia” Centre for Social Studies ,

61.8 % of Ukrainians consider it necessary to cease hostilities in the Donbas, even if
you have to give up the occupied territories. (See: Резнікова О. Аналіз можливостей
зміни статусу Донбасу: сценарій “відтинання” // О. Резнікова, С. Дрьомов. Re-
trieved from www.viche.info/journal/4903/).

170

Donbas and the Crimea: the value of return

adapt to the new situation, however, the absence of regions with the domi-
nation of renegade and consumer sentiment, greater compactness and loy-
alty of Ukrainian society, favorable conditions to reform the country and
international assistance will be able to make the adaptation period more
or less painless. After all, we have the examples of Georgia and Moldova
that underwent territorial losses; Serbia continues to develop even without
the part of its historical territories. However, it should be noted that the
implementation of this scenario will inevitably entail the loss of prestige of
Ukraine on the international arena.

Incidentally, the international arena to some extent uses the Minsk

agreements to model their own landscape, urging Kyiv to consider the
special status of the Donbas

. However, the following questions still

remain open: “Does it correspond to the national interests of Ukraine
and the majority of the population?”; “What consequences will these
steps entail for the state in the long-term outlook?”; “Is it possible to
implement this requirement of the Minsk agreements during the gross
violation by the opposite party of the conflict of other conditions that
should have already been fulfilled?”; “Are there any other alternatives
to solve this problem?”.

However, recently Western partners and participants of the ne-

gotiating process have put intensified pressure on Ukraine concern-
ing the necessity to speed up the fulfillment of other conditions of
the Minsk agreements violating the logic of the process of peaceful
settlement. This applies to the special order of local government in
particular districts of the Donetsk and Luhansk regions and its for-
malization in the legislation of Ukraine, including the Constitution
(paragraph 11).

The fulfillment of these conditions in the curved sequence not only

will not solve the problems of armed confrontation, violation of terri-
torial integrity and state sovereignty of Ukraine, but, on the contrary,
will cause a serious threat to the national security of Ukraine for a long
time. Requirements of the opposite side of the conflict as for such sta-
tus actually have little to do with the concern for the needs of the lo-
cal population or the necessity to return these territories in the legal
framework of Ukraine.

Резнікова О. Аналіз можливостей зміни статусу Донбасу: сценарій

“відтинання” / О. Резнікова, С. Дрьомов. Retrieved from http://www.niss.gov.ua/
articles/1910/ або //www.viche.info/journal/4903/

171

The scenarios of the future

Another issue is the matter of justice. Do the territories with crim-

inal activities of guerrillas and invaders have the right to obtain the
status of new political entities of Ukraine that may significantly affect
the domestic and foreign policy, as opposed to the territories where the
majority of the population lives?

Obviously, the situation in the Donbas does not have a claim on

“sui generis”, as it is not unique or special. Is the situation in Crimea a
unique one then? Obviously, a sort of a “cut-off” can already be fixed,
but, fortunately, the process cannot be considered as irreversible. It is
clear that it is inappropriate to use food and energy blockade in this
context, as their “real” purpose, on the contrary, rather applies to draw-
ing attention to enabling the irreversible process of a cut-off. Of course,
speaking about a cut-off, one cannot help mentioning a rhetorical ques-
tion, who separated from whom today? Opinion of the population of
the so-called LPR and DPR and the Crimean peninsula is known, but a
simple calculation of losses (see previous sections) gives a clear answer
to this question. Moreover, if we rank the signs of the existing “cut-off”
according to their importance, the first place will go not to economic or
political reasons of separation, but socio-humanitarian ones.

The third radical scenario – the satellite scenario – involves find-

ing ways to conclude separate peace on beneficial terms for Russia, ig-
noring the interests of Western partners, recognizing the autonomy of the
Donbas and refusing to return Crimea. Such reconciliation would deprive
Ukraine’s foreign policy of independence and would tie its historical des-
tiny to the historical destiny of the Russian Federation. The future of both
countries, if it becomes common, is unlikely to show something different
from what has happened before in the history of the two peoples and the
path of losses, repressions and wars will happen again. Ukraine has too
many problems of its own to supplement them with Russia’s problems.

It should be noted that, despite the absolute risks and unacceptabil-

ity of this scenario, some its fragments can be traced during a short pe-
riod of time. An indirect evidence of this may be short-term complica-
tions during the Minsk negotiations, slight disregard of Crimean issue
etc. The main thesis of the unacceptability of such a scenario is based
on two pillars – prevention of the violation of territorial integrity and
of a permanent threat to the national security of Ukraine. The absolute
unacceptability of this scenario is defined by one of the conditions of
the Association Agreement with the EU.

172

Donbas and the Crimea: the value of return

The fourth scenario is the scenario of freezing – consists in freezing

of the conflict such as Transnistria, Abkhazia and South Ossetia. Such
solution is favorable for Russia (although the complete capitulation ac-
cording to the third scenario is even more favorable for it), as well as for
the part of EU countries and for the most conformist and pro-Russian
segments of European society. Such scenario provides for the fact that
the territories that suffered the most damages because of the conflict
(DPR and LPR) remain a part of Ukraine, perhaps in terms of giving
them special powers. Economic relations between these territories and
the rest of Ukraine should be renewed, and therefore Ukraine will have
to assume the economic burden of reconstruction of destroyed areas of
the Donbas. Meanwhile, the Donbas will be de facto governed by a pup-
pet regime controlled by Russia that will try to influence Ukrainian for-
eign and domestic policy, defending the interests of another state. Ob-
viously, the realization of this scenario will be an obstacle in Ukraine’s
way to Europe, as it will entail political instability and economic burden
of affected regions. The conflict will be prolonged, destabilizing the sit-
uation and me nacing to return to the active phase, so one should not
expect peaceful life.

Meanwhile, the cessation of active hostilities in the Donbas and “recon-

ciliation” according to such a scenario will give cause for European coun-
tries to lift the sanctions from the Russian Federation and its political lead-
ers, to resume the economic relations that will favour economic growth in
Russia. At the same time, European leaders will obtain the opportunity to
fully concentrate on solving problems within the EU, which will boost their
political ratings, as opposed to the rising “fatigue” of the extension of the
Russian-Ukrainian conflict. Although this scenario provides for quite rapid
cessation of active hostilities in the Donbas, as a result Ukraine will remain
unattractive country with endless crisis.

Frozen conflicts that are caused by poverty as a political phenom-

enon can be considered as a defeat for modern diplomacy, since their
emergence, though argued by rational goals, thus lays the ground for
conflicts in the future. It has become a model of resolving territorial
conflicts in geopolitics; so, their number is gradually increasing on the
modern map of Europe. In general, the suspension of conflict resolution
is unlikely to be considered as a solution at all, and the relationship
between the diplomatic competence and the level of well-being is re-
peatedly mediated.

173

The scenarios of the future

In the research of internal conflicts the relationship between eco-

nomic development and international security of the state (for ex-
ample, violation of territorial integrity) is poorly examined. It is the
economic aspect (or rather – socioeconomic) in the problems of inter-
national security of states that is not examined enough. Experts of the
Hague Centre for Strategic Studies discovered that the scientific lit-
erature focuses on the problem of the impact of international security
on the efficiency of economic activity. At the same time it is necessary
to keep in mind that even a complete commitment to economic de-
terminism does not necessarily lead to economic success, that is con-
firmed by the history of the former Soviet Union, the official ideology
of which was based on its ideas. These ideas were inherited by former
Soviet Ukraine because of their presence in populist ideologies, pol-
icies and practices of the majority of Ukrainian parties. In general,
economic determinism is very often considered as a narrow-minded
prejudice, which claims to have particularly deep wisdom.

In some countries, political instability (and as its consequence – a

violation of international security of a country) is a result of inconsis-
tent and ineffective economic policy. Therefore it is essential to fully
estimate a conflict situation and to develop a strategy according to so-
cio-economic and political peculiarities and needs. The problem lies in
the lack of connection between security and economy. Security (and
not only defensive capacity, but all other spheres of the development
of the country) is the result of a strong economy. Although the history
provides many examples when developed economies were defeated by
the less developed economies.

The nations with strong economies and a weak security system are

particularly disposed to the aggression – either open or hidden (hy-
brid). There are many strong economies with weak military power all
over the world. Ukraine, having an aggressive neighbor-invader, cannot
allow such a situation. It is also necessary to consider that conversion
of economic potential into the military and political one demands con-
siderable efforts from the state, which per se is a political institution.
Such conversion involves overcoming the value-conceptual as well as
practical and management restrictions of economic determinism and
developing a broader and more comprehensive view of one’s own coun-
try and its international environment that will include all the factors of
social and international life (geopolitical, civilizational, governmental

174

Donbas and the Crimea: the value of return

and power, economic, legal, military, diplomatic etc.) without artificial
isolation of one of them.

There can by only hypothetical answers to all the questions as

neither the reasons of conflicts on the basis of separatism nor the ap-
proaches to their solution have not changed. Crimea and artificially
created republics in the eastern part of Ukraine are gradually becoming
unrecognized entities on the map of Europe according to their poten-
tial and progress trend. However, it is important to understand that the
problem of frozen conflicts is the result not only of the “big geopolitical
game” of global players but also a consequence of the economic back-
wardness of these territories. It is difficult to imagine the problem of
separatism in Ukraine in the presence of a quality political system and
a stable economy as a result of successful reforms in the early 1990s (at
the same time the traces of separatism can be found in developed and
wealthy countries, including Catalonia, Northern Ireland, Scotland,
Quebec. In fact, most of the countries all over the world are threa tened
by separatism). Therefore, despite the nature of the conflict in the east
of the country and Crimea, for Ukraine (and for the international com-
munity as well) the solution of the Ukrainian problem is an opportuni-
ty of a reverse precedent, at least in the post-Soviet environment.

The fifth scenario is the scenario of neither war nor peace or of li-

mited war and permanent negotiations – provides for a limited and
deterrent war against Russia and collaborators in the east of the country
in order to cause them as much losses as possible; ongoing process of ne-
gotiations, but without the final fixing of results in the form of different
agreements and formats; increasing of military (primarily military-tech-
nological) potential of Ukraine and the gradual transition from blocking
the enemy to his exclusion – from passive defense to active one; increas-
ing intensity of international sanctions and diplomatic isolation of Russia;
consistent and radical reformation of Ukrainian society; rapprochement
with NATO and the EU, as well as forming a series of defense alliances
with a part of the post-Soviet and Central European countries. The realiza-
tion of this scenario would require political competence and moral tenac-
ity, actions of quick-reaction armed forces and forces of special purpose,
flexible, creative and sophisticated diplomacy.

It is necessary to note that currently we are dealing with this scenar-

io as for all temporarily uncontrolled territories of Ukraine. Obviously,
having a complementary nature, it will continue to play the role of me-

175

The scenarios of the future

diator between the other scenarios now as well as in the future, as its
function may be either positive (to gain time when required by reach-
ing a stable pause) or negative provided that such a pause is excessively
protracted. Thus, if the latter is currently necessary and appropriate
in negotiations as for the Donbas, the pause that was protracted con-
cerning the situation in Crimea has managed to cause the effect of the
problem of minor importance and a slight “disregard”.

Lastly, the final scenario is the scenario of territorial integrity and

reconciliation. The realization of this scenario will obviously involve
several iterations, for each problem separately, and for all of them in
general. The time factor plays a significant role here as well. There is
no doubt that the questions “How to save the Donbas?” and “How to
return Crimea?” are urgent not only for Ukraine.

Currently, the survey

results indicate the following possibilities re-

garding de-occupation and de-annexation. Respondents, who consider
the events in the Donbas to be the intervention of Russia, were asked
the question “How can Ukraine return the occupied Donbas?” Respon-
dents’ answers were the following:

• 25.3 % chose “using weapons” variant;
• 41.1 % – “negotiations”;
• 9.1 % – “non-military actions of non-violent resistance, which will

put obstacles in invaders’ way and which can obtain support of the local
population”;

• 3.5 % – “nothing”;
• 20.4 % – undecided;
• 0.5 % – refused to answer.
Respondents, who consider the annexation of Crimea to be the oc-

cupation, were asked a question “How can Ukraine return the occupied
Crimea?” The answers were the following:

• 14.3 % chose “using weapons” variant;
• 43.2 % – “negotiations”;
• 12.9 % – “non-military actions of non-violent resistance, which

will put obstacles in invaders’ way and which can obtain support of the
local population”;

• 8.8 % – “nothing”;

Думки і погляди населення України стосовно методів опору інтервен-

там /окупантам. Retrieved from http://www.kiis.com.ua/?lang=ukr&cat=re-
ports&id= 546&page=1

176

Donbas and the Crimea: the value of return

• 20.3 % – undecided;
• 0.5 % – refused to answer.
However, the international community plays a major role in achiev-

ing sustainable peace in Ukraine by means of non-violent harmonizing
of interests. It is clear that the disintegration of the Russian Empire
is the only but impossible way of “liberation” of Ukrainian territories.
However, analyzing the consequences of sanctions already imposed
upon Russia, one can find all the signs that they caused the effect of
“economic weapon”.

Although it is not fully defined, what is the impact of sanctions of

a number of countries, especially the US and EU, in controlling the
aggressive policy of the Russian Federation concerning Ukraine

, eco-

nomic sanctions started resulting in a gradual depletion of the economy
of the Russian Federation. This was also entailed by the deterioration
of the external markets for the main Russian exporters; maintaining of
high external creditor dependence of the internal market of the Russian
Federation (45.0 % of all loans) and deterioration of large state fuel and
energy corporations and their financial institutions, which are primari-
ly experienced the pressure of sanctions (forming 29.0 % of GDP of the
country)

According to the Financial Times, the amount of repayment of for-

eign loans and credits in the next 12 months by Russian state banks will
total 33 billion dollars, by nonfinancial sector – 41 billion, by private
companies and banks – 87 billion dollars

Therefore, even in the case of immediate lifting of sanctions, their

long-term impact on Russia will amount to 1.0–1.5 % of real GDP of
the country by 2020, according to the Moody’s

analytic agency. Ac-

cording to the Ministry of Finance of the Russian Federation, sanc-

Russia Monthly Economic Developments. Retrieved from http://pubdocs.

worldbank.org/pubdocs/public doc/ 2015/ 9/ 14731 442 405/ Russia Monthly-
Economic Developments September 2015 eng.pdf

Overall, the public sector in Russian economy generates 71.0% of its GDP, it

is extremely dependent on exports of raw materials (up 70.0% is fuel and energy re-
sources, of which 45.0% is crude oil).

Рекнагель Ч. Тяжкі наслідки нових санкцій для Росії / Ч. Рекнагель,

Ж. Безп’ятчук. Retrieved from http://www.radiosvoboda.org/content/article/
25476950.html

Russia, Government of: New Currency and Oil Price Drops Exacerbate Reces-

sion. Retrieved from https://www.moodys.com/credit ratings/Russia Government-
of credit rating 600018921

177

The scenarios of the future

tions resulted in a capital deficit in the domestic market of 40–50 bil-
lion dollars in 2014

. Long-term preservation of sanctions could lead to

cumulative losses in production in the medium term to 9.0 % of GDP,
due to the fact that the decrease in capital accumulation and transfer
of technologies lead to weakening of already low productivity growth

In general, economic containment of Russia by the international

community has already led to a considerable loss of economic dynamics
in Russia and entering of its economy into a recession, a significant re-
duction in gold and foreign currency reserves (by 134 billion dollars in
2014, or 27.7 % compared to 2013), the devaluation of the ruble (during
September 2014 – January 2015 the ruble devaluation amounted to
more than 85.0% in relation to the US dollar, only in February-March
2015 the Bank of Russia spent 24.6 billion dollars of international re-
serves to support the national currency), a significant decrease in stock
market indices, and acceleration in capital export (151.5 billion dollars
in 2014). In addition, it is necessary to mention the rapidly growing
deficit of the consolidated budget and extra-budgetary state funds (at
the end of 2014 the deficit was 3.0 % and in July 2015 it has more than
doubled to 7.0 %, while in July 2014 the surplus amounted to 8.5 %)

The consequences of the continuation and/or maintaining the sanc-

tions of the US and the EU, strengthening of their constituents and in-
creasing participation of Ukraine in the pressure on the Russian Feder-
ation in 2016 create the necessary prerequisites for development of
potentially catastrophic threats for the economy of Russia. Howe-
ver, expectations of that disaster and hope for the devastating impact
of sanctions on the Russian economy must not replace the implemen-
tation of radical steps to strengthen the national security of Ukraine
today. It is extremely unreasonable to delay these steps till the time of
prosperity of the Ukrainian economy, connecting the defense capabi-
lity of the country solely with its economic growth in the future. The
security needs are always urgent, while the economic problems require
long time to be overcome.

Russia extends olive branch to Greeks. Retrieved from http://www.cnbc.com/

2015/01/29/russia extends olive branch to greeks.html

МВФ оцінив збитки Росії від санкцій 9 % ВВП. Retrieved from http://dt.ua/

ECONOMICS/mvf ociniv zbitki rosiyi vid sankciy 9 vvp 180613_.html

Социально- экономическое положение России (январь -август 2015 г.). –

М. : Федеральная служба государственной статистики Российской Федерации,
2015. – С. 170.

179

AFTERWORD

To return means not to step back, but to step forward.

The Mentalist

Over the last two years, Ukraine has suffered the greatest losses since its

independence. And the calculation of those losses is not yet completed. Hav-
ing passed through a kind of “point of no return” on the way of its historical
development, Ukraine resisted the bifurcation. The vector of further move-
ment was chosen – Ukraine will return. The foremost thing is to decide that
it does not mean a mechanistic return of the lost lands and the restoration of
border control (although there is no doubt that it is a very important prereq-
uisite for the return. Unfortunately, this condition has not yet been satisfied).
We are speaking about Ukraine’s return to its historical future. This future lies
within the plane of Ukraine’s civilization choice, but it is not deterministic.
The dichotomy of this choice is between the existing historic pessimism and
optimism. Therefore, now when the country is in a state of multi-dimensional
fracture, it becomes reasonable not to look for anesthesia from the pain of loss,
but to choose a bitter medicine to enter the state of the plan implementation.

Everything has a value. The return as well. The issue of the value of re-

turn is definitely the most crucial, but the answer is very complex and rather
ambiguous. To answer to this question is far more difficult than to solve a
complex system of equations with many unknown variables.

Ukrainian foreign, domestic and military policy is being rather rigidly

deprived from the unconscious irrationality “of the past”, and instead there
comes the conscious rationality “of the future”. For example, the choice of
NATO is no longer the theme of ideological discourse for Ukraine; it is a per-
ceivable (taking into account the real state of the military-political situation)
necessary condition to achieve real security.

Ukraine should recognize not only the ways, but also the cost of the

return.

First, it should be decided what are the pros and cons of the return of

the Crimea to Ukraine or of Ukraine to the Crimea, of Donbas to Ukraine
or of Ukraine to Donbas. Who should pay the price for the return? And
finally, what is the value of the return, when and how it should be paid?

180

Donbas and the Crimea: the value of return

It makes sense to start with the last question, and proceed to the first one.

This “reverse motion” is very symbolic, since the vast majority of the process-
es that accompanied and the annexation of the Crimea and the temporary
occupation of Donbas were based not on the straight but on the reverse logic.
Therefore, taking into account the level of importance of those issues, let us
rank them in the reverse order.

What does “the value of the return” mean? As a rule, economists have a

clear answer to the question of what the price is; they see it as a monetary
expression of the value of goods or services. However, as soon as the clari-
fying questions emerge the precision of this answer immediately disappears.
As for the price of the return, the clarity of interpretation here is absent a
priori, but that does not mean that there are no methods to define it at all.
The answer may be found if we rely on the economic meaning of the two
basic ways of pricing, the cost-based and the market.

If to apply the cost-based approach also called “the costs plus”, the cost

of return should be calculated by summing up direct and indirect losses, mil-
itary spending etc., and adjusting them by the sum of the expected benefits
to be obtained through the restoration of the territorial integrity (the re-
turn). This method seems quite formalized and pragmatic from the econom-
ic point of view. However, its application will allow to calculate only “the
return” to previous (and undesirable) historical stage of the development of
Ukraine, which is now called “before the Maidan and the war”. Thus, when
we speak about the return to the future, the market approach is the only
way to determine “the price”. This approach takes into account not only
economic but also political, social, psychological, and many other factors.
Another argument in favor of choosing the market approach is the reputa-
tional component. This can be explained by the fact that many stakeholders
of the complicated process of return should be paid; in fact, they will create
a new country.

Of course, the market approach will leave many questions in the status of

rhetoric, for instance: how much does the security of the country cost. What
is the cost of freedom? Obviously, the answer to the last question lies far
beyond the Index of Economic Freedom

There is another very important question – when the price should be

paid? Appealing to the opinion of economists, one may see that have reason
to believe that “tomorrow’s money is always more expensive”. Obviously, this
statement can be somehow projected on “the cost of the return”. Despite the

The researchers from the American analytical center The Heritage Founda-

tion and The Wall Street Journal newspaper consider Ukraine a country with the
“repressed economy”. In the latest rating of the Index of Economic Freedom 2015
Ukraine is 162nd out of 178 countries; in the last year report Ukraine was 155th.

181

Afterword

significant differences in the form and content of Ukraine’s temporary loss of
the part of its southern and eastern territories, the common “denominator” is
their return. First, this return should be seen as the process and as the result.
Second, it is also the mechanism.

Since the “rejection” of the annexed and temporarily occupied territo-

ries of Ukraine took place in both cases with “hybrid” methods involved,
“the return” cannot be “squeezed” into the framework of purely political or
economic processes. This is similar to the medical methods of treatment of
associated injuries when the fast recovery depends on the successful com-
bination of different methods of treatment. In other words, the complexity
and integrity of “the return” mechanisms for both Donbas and the Crimea
is their second common feature. However, the fundamental differences in
the processes of return remain inherent to strategies, tactics, and the time of
return. The return of Donbas seems to be the sprint, while the return of the
Crimea is the stayers’ distance.

And finally, we have to find out who should pay “the value of the return”.

If to consider the planes of “Ukraine – Crimea” and “Ukraine – Donbas”
while answering this question, the answer becomes obvious – both sides
must pay the price. The key problem is the polarization or, at least, the di-
vergence of the understanding of the need to pay the price by both parties.
In the uncontrolled territories, this value is perceived as an “unjustified sac-
rifice” and lacks a clear understanding of “the benefits of the return” and a
quantitative expression of “the value”. The impossibility of determining the
“fixed” price level has already been considered. In these planes, the rhetoric
of the benefit from the return of Donbas and the Crimea becomes the main
“stumbling block”.

Based on the logic of the theory of wealth and poverty, a simple and ob-

vious to the “mainland” Ukraine “yes” answer can be accepted by everyone.
If the “poor” regions “disconnect” they will always lose (of course, if they
don’t get any external resources). However, the problem is much broader
than filling the budget of the Crimea and of the so-called DNR/LNR and the
search for the evidence of their “wealth”. The problem lies in the awareness
of the real extent of poverty, caused by the blocking of people’s minds with
myths about “untold riches” of the Crimea and Donbas, the “indomitable and
proud all-Ukrainian manger”

. The question the pros and cons of the return

becomes urgent. Obviously, the movement should be counter, but this is an

The most up-to-date evidence for that the poor regions should not be separated

may be Angus Deaton’s research, who in 2015 was awarded the Nobel Prize in eco-
nomics for the “analysis of consumption, poverty and welfare”. Deaton’s work helped
to transform microeconomics, macroeconomics and economics of development, as
well as to find the best ways to compare welfare in the context of time and countries.

182

Donbas and the Crimea: the value of return

ideal model. In practice, at least one of the parties should use the mechanisms
of the pros and cons regulation.

At the same time, when answering the question of who should pay the

price of the return, one cannot stop on the two-dimensional “flat” variant.
Since Ukraine is firmly mounted in the geopolitical space, the number of
stakeholders who have to pay “the price of the return” is initially placed in
the multi-dimensional (at least 3D) format. Both Europe and Russia are the
important stakeholders of “the value of the return”. It should be noted that
the price would be different “today” and “tomorrow”. But whatever the time
horizon may be, the price will be historical.

The historical “value of the return” of Ukraine to the future is extremely

important and extremely high. The importance lies within the fact that nev-
er before have the challenges for Ukraine’s national security been so severe,
and never before security has been valued so highly. This is the best price;
it brings “profits”. The exaltation of national interests, the revision of con-
ceptual foundations of national security in the context of all its components
(military, economic, financial, social, etc.), the paradigm shift of the military
doctrine are important and already existing signs of such “profitability”. At
the same time, the “weight” of the value is formed not only in Ukraine.

The national security of Russia ends where the national security of her

neighbors begins.

Until now, Russia’s national security has never been so vulnerable and

rusting, and its future horizons have never been so alarming. Despite the
losses caused by the armed conflict and surviving the “realism vaccination”,
Ukraine has never received such a solid European “clue”. And Russia has
never paid such a “losing price” choosing the path of strategic anti-European
isolation. Seems that elementary logic should suggest that the more losses
Russia suffers, the less will be “the price of the value” for Ukraine. Bur we
should not forget about the “embeddedness” of two states in the global space,
and that Russia should compensate all the damages it has brought to Ukraine
for many years; and it is always much harder for an impoverished state to pay
the bills. The main point for Ukraine is not to lose the chosen direction of its
return to the future, no matter how hard the challenges may seem.

183

AUTHORS

Horbulin Volodymyr (Foreword, Section 3, The scenarios of the

future, Afterword), Vlasiuk Oleksandr (Section 4, Section 8, Section 9),
Liashenko Oleksandra (Foreword, The scenarios of the future, Afterword).

Aleksandrov O. (1.1, 1.2, 1.3, 1.4), Bazyliuk Ya. (Section 4, Section 6,

10.3), Belashov E. (Section 4), Berezhnyi Ya. (Section 6), Belevskiy O. (5.2),
Valiushko I. (Section 8), Ventskovskyy D. (Section 8), Davydenko S.
(Section 4), Dromov S. (7.2), Dubov D. (Section 3, 2.3), Zhuk V. (Section 6),
Isakova T. (2.3), Karavaev V. (7.2), Karakuts A. (1.1, 1.2, 1.3, 1.4), Koval O.
(Section 9), Koviazina K. (5.2), Kononenko K. (1.1, 1.2, 1.3, 1.4), Kononenko S.
(10.1, 10.2, The scenarios of the future), Koren N. (Section 8), Kravchenko V.
(1.1, 1.2, 1.3, 1.4), Malynovska O. (5.2, 5.3), Makarov G. (7.2), Mernikov G.
(2.1, 2.2), Mykhailychenko K. (Section 4), Oliinyk D. (Section 6, Section 8),
Pavliuk A. (Section 8), Palivoda V. (2.1, 2.2), Parakhonskyi B. (1.1, 1.2, 1.3,
1.4), Reznikova O. (2.1, 2.2), Rozumny M. (7.1, 7.2), Rusan V. (Section 4),
Svergunov O. (2.1, 2.2), Sobkevych O. (Section 4), Tsyganov V. (Foreword,
Afterword), Tsymbal О. (5.1, Section 9), Us I. (10.3), Sharov O. (10.3),
Shevtsov A. (2.1, 2.2), Shevchenko A. (Section 4), Shevchenko O. (Section 6),
Shemayeva L. (Section 8), Yurchenko K. (Section 6), Yablonsky V. (10.2),
Yavorska H. (1.1, 1.2, 1.3, 1.4).

In the preparation of some subsections of the monograph contains

materials provided by a team of scientists of the Department of
Economics of NAS of Ukraine under the leadership of E. Libanova.