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Editorial Last Updated: Mar 24, 2019 - 12:14:16 PM

The Diminishing Russian Military Threat To The Ukraine
By Dr. Gary K. Busch, 22/3/19
Mar 23, 2019 - 11:44:10 AM

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As Putin celebrates the annexation of Crimea into Russia in 2014, he continues to advance further threats to the Ukraine through his sponsored military conflict in Eastern Ukraine. In February 2014 Russian troops began their attack on the Ukraine, an attack which left most of Eastern Ukraine in the hands of ‘separatists’ and Russian soldiers; ostensibly creating independent separatist states in the Donetsk and Luhansk Oblasts; and later promoting a sham referendum on the return of Crimea to Russia.

Each day the Organization for Security and Co-operation in Europe (OSCE) Special Monitoring Mission reports of battles between the Ukrainian and Russian-sponsored troops in the Donetsk and Luhansk regions. Between 2014 and 2018, this military conflict between Ukrainian troops and Russian-backed separatists continued in eastern Ukraine, where more than 10,000 people have been killed and thousands displaced. On November 25, 2018, Russian ships attacked and boarded three Ukrainian vessels in the Crimean port of Azov near the Black Sea. It placed a freighter to block the port, saying that the Ukraine has violated Russian waters. As the conflicts continue the underlying treaties and protocols which had been agreed to regulate the relations between Russia and the Ukraine have been violated by the Russians at almost every opportunity.


In 1992, the USSR broke apart into the Russian Federation and a host of former territories once part of the USSR. These formerly allied states of the USSR were granted or asserted their autonomy and became independent states. Some joined NATO. The former Warsaw Pact nations were no longer in the thrall of Moscow and went their own way. It was only the Ukraine which was a problem.

In April 1991 Gorbachev had prepared a treaty recognising the breakup of the USSR into autonomous republics but was prevented from signing the treaty by the attempted coup against him in August of that year. On August 24, 1991 the coup had failed and Kravchuk, the head of the Ukrainian parliament, passed a motion declaring the independence of the Ukraine with him as its first leader. A referendum in December 1991 voted Kravchuk in as the first President of an independent Ukraine.

It was at that point that the U.S. became deeply involved in Ukrainian politics. The U.S.’s primary concern was strategic; the control of the Ukrainian nuclear weapons. At that time, the Ukraine was the third largest nuclear power in the world. The U.S. demanded that the Ukraine immediately remove its nuclear weapons to Russia where they would be destroyed; and they demanded that the Ukraine immediately sign the SALT 1 and the Nuclear Non-Proliferation Treaty (NPT).

In 1994 Ukraine's denuclearization was resolved with three important international treaties. First, on January 14, 1994, Yeltsin, Clinton, and Kravchuk signed the Trilateral Accord in Moscow, in which Ukraine committed itself to "the elimination of all nuclear weapons, including strategic offensive arms, located in its territory." The accord contained several paragraphs of American-Russian security guarantees. The United States and Russia stated that they “would reaffirm their commitment to Ukraine, in accordance with the principles of the CSCE [Conference on Security and Cooperation in Europe Final Act], to respect the independence and sovereignty and the existing borders of the CSCE member states and recognize that border changes can be made only by peaceful and consensual means; and reaffirmed their obligation to refrain from the threat or use of force against the territorial integrity or political independence of any state, and that none of their weapons will ever be used in self-defence or otherwise in accordance with the Charter of the United Nations.i

In a private letter to Clinton, Kravchuk promised that Ukraine would he nuclear free by June 1996. The three parties met again in Budapest with the U.K. on the 5th of December 1994 and signed the NPT; the Budapest Memorandum.

According to this Budapest Memorandum, Russia, the U.S., and the UK confirmed, in recognition of Ukraine becoming party to the Treaty on the Non-Proliferation of Nuclear Weapons and in effect abandoning its nuclear arsenal to Russia that they would:

1.  Respect Ukrainian independence and sovereignty and the existing borders.

2.  Refrain from the threat or use of force against Ukraine.

3.  Refrain from using economic pressure on Ukraine in order to influence its politics.

4.  Seek immediate United Nations Security Council action to provide assistance to Ukraine, "if Ukraine should become a victim of an act of aggression or an object of a threat of aggression in which nuclear weapons are used".

5.  Refrain from the use of nuclear arms against Ukraine.

6.  Consult with one another if questions arise regarding these commitments

The next area of concern was the division of the Soviet Black Sea Fleet. It has always been a key military concern of the Russian State (from the czars onward) to have access to a warm-water port for its navy. Unfortunately for the Russians the independence of the Ukrainian state left its key warm-water ports (Sevastopol, Odessa, and Nikolayev) entirely under Ukrainian control. The Russians were keen on maintaining their Black Sea Fleet in the Black Sea and operating the large Soviet naval fleet stationed there.

The Ukrainians entered into discussions with the Russians on the division of the fleet of warships in the Black Sea ports and the leasing of Ukrainian ports to the Russian Navy. This change in the status of the Soviet Navy was conducted within the framework of the Treaty On Conventional Armed Forces In Europe (CFE) which was being negotiated between NATO and the Warsaw Pact organisations. NATO, essentially a euphemism for the Pentagon, played an important role in advising the Ukrainians on its Black Sea Fleet issues. It also generated the creation of the Organisation for Security and CoOperation in Europe (OSCE) which, then and now, plays an important role in the relationship between NATO, the Ukraine and Russia.

In June 1993, Ukrainian President Leonid Kravchuk and Russian President Boris Yeltsin signed an agreement that essentially split the fleet in half, beginning in September 1993 and reaching completion in 1996. No sooner had this agreement been announced than it fell apart. Russian naval officers objected to any transfer, and Ukrainian military leaders objected to any loss of territory from the naval bases slated for transfer. The Black Sea Fleet agreement was renegotiated in September 1993 and again in April 1994. After nearly five years of controversy, on 28 May 1997, Moscow and

Kiev finally settled their dispute over the Black Sea Fleet, when Prime Ministers Chernomyrdin and Lazarenko signed three intergovernmental agreements. The two sides agreed to divide the fleet's assets and to lease port facilities in Sevastopol to the Russian Navy. Under the agreement the two nations split the fleet's ships evenly, though Russia agreed to buy back some of the more modern ships with cash. Thus, Russia ultimately received four-fifths of the Black Sea Fleet's warships, while Ukraine received about half of the facilities.

The two leaders agreed that Russia would rent three harbours for warships and two airfields for a twenty-year period, for a payment of about $100 million annually. Sevastopol, which had been partly under Russian control, was given to Ukraine.ii

A crisis developed in August 2008 when several Russian Black Sea Fleet warships dropped anchor off the Georgian coast during and after the August 2008 Russian armed conflict with Georgia over Abkhazia and South Ossetia. Ukraine, which sided with Georgia and NATO during the conflict, repeatedly said that Russian Black Sea combat ships regularly transported undeclared cargo to the Georgian enclaves and refused to submit customs declarations while crossing Ukrainian territorial waters. The U.S. intervened diplomatically for the Ukrainians to support them in their pressure on the Russians in the Crimea not to use their ships to intervene in the Georgian war. As a result, the then Ukrainian president Viktor Yushchenko announced that Ukraine would not extend the lease of the Sevastopol base beyond 2017,  and urged the Russian fleet to start preparations for a withdrawal.

The war in Georgia, which was supported by NATO and the European Union, and the threat by the Ukrainians that Russia would lose its warm-water naval bases in Crimea provoked the Russians to retaliate against both the Ukrainians and the European Union. The Russians threatened to cut off supplies of natural gas to the Ukraine and Western Europe. In January 2009 these threats were made real when the Russians reduced exports of gas to Europe by 60%. The Europeans pressed for some sort of a compromise. The dispute was framed as a commercial dispute over prices and payments but there were far more strategic concerns involved – the Black Sea Fleet. While the U.S. supported the Ukrainians in their defiance of the Russian threats the Europeans pressed for some sort of a compromise which would let the gas flow to their countries.

The Ukrainians were caught in the middle The Europeans were desperate for the Ukrainians to do whatever it took to assuage the Russian gas threat while the U.S. and its NATO allies pressed the Ukrainians to follow through on ending the Russian leases which allowed them a presence in the Black Sea. Despite the arguments brought forward in favour of each of these policies a realistic assessment of the situation was made that there was no substitute at that time for Russian gas so a compromise would have to be reached with the Russians.

After much discussion a compromise was reached and the Ukrainian and Russian parliaments, on 27 April 2010, ratified a deal to extend the lease on the Russian naval bases in the Ukraine for 25 years after the then current lease expired in 2017. In return, Ukraine received a 30% discount on Russian natural gas. The Europeans got their gas restored. The Europeans then began an accelerated process to bring the government of the Ukraine under its wing and control which could prevent further confrontations on the transport of gas. Although the Ukraine was not very interested at that time in joining NATO, it was interested in establishing a relationship within the aegis of the European Union. During her periods in office Tymoshenko met with the European Union under the terms of the European Neighbourhood Policy (ENP) which aimed to create a ring of friendly states allied, but not members, of the European Union. She became the voice of the Europeans in the Ukrainian leadership.

The U.S. policy was far more confrontational. The ‘neocons’ who dominated U.S. foreign policy towards the Ukraine were loath to lose the opportunity of denying the Russians the use of naval bases in the Black Sea; especially after the Georgian War. While vaguely sympathetic to the Europeans, their main enemy was seen as Russia, and any diminution of Russian power and influence was their man concern. Their key supporters within the Ukraine, Yuschenko and Tymoshenko had just lost control of the Ukraine in the national election of a new President, Victor Yanukovych who had taken office on the 25th of February 2010. Victor Yanukovych was the President from the Donbas region (mainly Russian-speaking) which the Yuschenko and Timoshenko governments had largely ignored or opposed during their presidencies. That meant that the ratification of the treaty extending Russian occupation of the naval bases was being considered by the Rada (Parliament) under a political majority controlled by Victor Yanukovych and his Party of the Regions.

The ratification process of the treaty in the Rada took place amid violent protests by the opposition, which called the deal an "act of treason." The former Ukrainian President, Viktor Yushchenko, criticised the new government for "trading sovereignty for gas." "What happened in the Supreme Rada is a military usurpation; I am convinced that this is not the end," he said at a media briefing.

Former Prime Minister Yuliya Tymoshenko called on citizens to rise against the current leadership. However, despite protests, the Rada ratified the treaty on 27th of April, 2010.

The European Union continued to encourage the Ukraine to move closer to EU accession. However, the first thing the Europeans wanted was to control Ukrainian energy policy so that they could protect the European-wide price of gas. In December 2009 the Energy Community Ministerial Council decided on the accession of Moldova and Ukraine to the EU. On December 15, 2010 the Ukraine ratified the Energy Community Treaty and Ukraine became a full Contracting Party of the Energy Community with a legal commitment to adopt EU energy, competition and environmental Directives.

In May 2010, President Victor Yanukovych promised to adopt the legislation necessary for creating a free trade zone between Ukraine and the European Union. Further discussions in the next year led to proposals for even closer bonds between the EU and the Ukraine. They were broken off when Yanukovych arrested and jailed Tymoshenko for corruption. The EU put the accession of the Ukraine on hold until Yanukovych freed Tymoshenko, Although the EU then agreed to accept the accession of Ukraine into the EU, the Rada decided that before they would sign there should be a three-way trade agreement which included Russia to prevent a crisis with gas with the Russians. On 28–29 November they said they were suspending the signature of the agreement with the EU.

This was not only a question of an argument about gas. Yanukovych refused to sign the agreement with the EU because his supporters, primarily in his Eastern heartland, were bitterly opposed to the terms of the accession to the EU as they came with a long list of economic austerity programs which were a part of the agreement. There was a great deal of upset within the Ukraine at the refusal of the government to sign the agreement and there was a repeat of the occupation by protestors of the Maidan Square (now called the Euro-Maidan).


A wave of demonstrations and civil unrest began on the night of 21 November 2013 with public protests in Independence Square in Kiev, demanding closer European integration. These protests expanded and became a movement for the resignation of President Viktor Yanukovych and his government – a parliamentary coup. There was a great deal of violence by the people in the square; by both the government and the various fascist nationalist parties who made up a substantial part of Yanukovych’s opposition. By 25 January 2014, the protests had been fuelled by the perception of

"widespread government corruption", "abuse of power", and "violation of human rights in Ukraine".iii

Violence intensified and there were shootings and beatings on all sides. There were about 80 dead and 600 wounded in the clashes at the square. On February 21 after negotiations between the president Yanukovych and representatives of the opposition and with mediation of representatives of the European Union and Russia the Agreement "About settlement of political crisis in Ukraine" was signed. The agreement provided return to the constitution of 2004, that is to a parliamentary presidential government, carrying out early elections of the president until the end of 2014 and formation of "the government of national trust". The Rada and the international partners agreed.

However, while this seemed generally acceptable as a compromise to the negotiators the protestors and the representatives of the U.S. government insisted on further concessions and the resignation of the President. The economic situation was dire. The Ukraine was running out of money. They turned first to their erstwhile partners in the EU. The Prime Minister asked for 20 billion Euros (US$27 billion) in loans and aid from the EU but the EU was only willing to offer 610 million euros (US$ 838 million) in loans; with harsh conditions on the Ukrainian economy which would have required heavy austerity and changes to the law. On the other hand, Russia offered US$ 15 billion in loans and cheaper gas prices without the onerous demands for an austerity program.

Later that day, the 21st of February 2014, the President felt that his time was up and that civil war was looming. He fled to Kharkiv and later to Russia, abandoning his post. The Rada met the next day to impeach Yanukovych for being unable to perform his duties. They set a date for new elections and, two days later, issued a warrant for the arrest of the ex-President for the “mass killings of civilians”iv With the ouster of Yanukovych, the Russians began supporting the rebelling regions of Donetsk and Luhansk who had supported the ousted Yanukovych. They sent arms, equipment and ‘irregular’ soldiers to fight against the Ukrainian army. In mid-March, NATO revealed satellite photos showing Russia's covert invasion of Ukraine's eastern border. An EU emergency meeting added further sanctions on Russia's oil and banking sectors. In April 2014, Russia supported local rebels who took over city halls and police stations throughout eastern entered without approval.

In July, Russia continued to strengthen its military force on the border. There were 19,000 to 21,000 troops, 14 advanced surface-to-air missile units, and 30 artillery batteries. It was clear that Russia could launch an attack into eastern Ukraine at a moment's notice. Russia had already launched rockets across the border in support of Ukrainian rebels.

In an effort to prevent further violence the parties formed the Trilateral Contact Group on Ukraine, which consisted of representatives from Ukraine, Russia, and the OSCE The group was established in June as a way to facilitate dialogue and resolution of the strife across eastern and southern Ukraine. Meetings of the group, along with informal representatives of the breakaway Donetsk and Lugansk

People's Republics, took place on 31 July, 26 August, 1 September, and 5 September. The details of the agreement, signed on 5 September, were called the Minsk Protocols. They agreed to twelve major points:

The text of the protocol consists of twelve points:v

1.       To ensure an immediate bilateral ceasefire.

2.       To ensure the monitoring and verification of the ceasefire by the OSCE .

3.       Decentralisation of power, including through the adoption of the Ukrainian law "On temporary Order of Local Self-Governance in Particular Districts of Donetsk and Luhansk Oblasts".

4.       To ensure the permanent monitoring of the Ukrainian-Russian border and verification by the OSCE with the creation of security zones in the border regions of Ukraine and the Russian Federation.

5.       Immediate release of all hostages and illegally detained persons.

6.       A law preventing the prosecution and punishment of persons in connection with the events that have taken place in some areas of Donetsk and Luhansk Oblasts.

7.       To continue the inclusive national dialogue.

8.       To take measures to improve the humanitarian situation in Donbass.

9.       To ensure early local elections in accordance with the Ukrainian law "On temporary Order of Local Self-Governance in Particular Districts of Donetsk and Luhansk Oblasts".

10.   To withdraw illegal armed groups and military equipment as well as fighters and mercenaries from the territory of Ukraine.

11.   To adopt a programme of economic recovery and reconstruction for the Donbass region.

12.   To provide personal security for participants in the consultations.

Despite the signing of the Minsk Protocols, skirmishes continued .Further talks took place in Minsk to try and resolve some of the issues which were continuing the violence. They signed a memorandum to the Minsk Protocols These included:vi

1.       To pull heavy weaponry 15 kilometres (9.3 mi) back on each side of the line of contact, creating a 30-kilometre (19 mi) buffer zone

2.       To ban offensive operations

3.       To ban flights by combat aircraft over the security zone

4.       To withdraw all foreign mercenaries from the conflict zone

5.       To set up an OSCE mission to monitor implementation of Minsk Protocol

Despite this, the battles continued and the Minsk Protocols were essentially irrelevant. In summary, the Russians have sent troops and equipment to carry on a war against the Ukraine using their own troops and their surrogates in the Donetsk and Luhansk. They have annexed Crimea. They have taken effective control of the Azov Sea. They have violated the terms of the Trilateral Accord , the  Conference on Security and Cooperation in Europe Final Act,  the Budapest Memorandum, the Agreement About Settlement of Political Crisis in Ukraine, and  the two Minsk Protocols. Now they are beefing up their troop levels and naval vessels around and on the Ukraine and are threatening further attacks, despite the ‘sanctions’ against Russia by the US and the EU.

Despite these apparent threats and despite the condonation of Russian behaviour by the Europeans desperate for Russian gas, there are several factors mitigating the success of Russia’s ambition. The Ukraine is in a far better place to defend itself against Russia militarily: it has had growing support from a more openly “neocon” foreign policy direction by the US; a diminishing reliance (despite Nord

Stream 2) by the Europeans for Russian gas; a formidable decline in Russia’s ability to afford or achieve the modernisation of it military equipment and lack of competent manpower; and, most of all, a growing relationship with its newest partner, China.


One of the major difficulties of the Russian military stance towards the Ukraine has been the fact that the most developed facilities for military production were located in the Ukraine. The Russian Army had been starved of new equipment for over twenty years and much of what they had available was built in the Ukraine. The military-industrial complex of Ukraine is the most advanced and developed branch of the state's sector of economy. It includes about 85 scientific organizations which are specialized in the development of armaments and military equipment for different usage. The air and space complex consists of 18 design bureaus and 64 enterprises. In order to design and build ships and armaments for the Ukrainian Navy, 15 research and development institutes, 40 design bureaus and 67 plants have been brought together. This complex is tasked to design heavy cruisers, build missile cruisers and big antisubmarine warfare (ASW) cruisers, and develop small ASW ships. Rocketry and missilery equipment, rockets, missiles, projectiles, and other munitions are designed and made at 6 design bureaus and 28 plants. Ukraine has its own scientific, technical and industrial capacities for the indigenous research, development and production of small arms. A number of scientific-industrial corporations have started R&D and production of small arms. The armour equipment is designed and manufactured at 3 design bureaus and 27 plants. The scientific and industrial potential of Ukraine makes it possible to create and produce modern technical means of military communications and automated control systems at 2 scientific-research institutes and 13 plants. A total of 2 scientificresearch institutes and 53 plants produce power supply batteries; 3 scientific-research institutes and 6 plants manufacture intelligence and radio-electronic warfare equipment; 4 design bureaus and 27 plants make engineer equipment and materiel.

Perhaps the best example is the company Motor Sich. It has been the sole producer of engines for the MI-8 and MI-24 helicopters. It produced these engines for the Russian helicopter industry and a wide range of other military components. The air firm Antonov is based in the Ukraine and is one of the major suppliers of aircraft for the Russian Air Force and for Russian arms exports. The ability of the Russian industry to fill its own needs is compounded by the fact that it needs Ukrainian parts and subassemblies for its exports and consumption. Losing control of the Eastern Ukraine has jeopardised Moscow’s ability to fulfil multibillion-dollar international contracts without Ukrainian inputs. Antonov also supplies the engines for the jointly-produced AN-148 planes. Ukraine and Russia had plans to produce 150 planes of this type worth $4.5 billion. Other exporters to Russia include Mykolayiv-based Zorya-Mashproekt, which sells several types of turbines to Russia, including those installed on military ships. Another is Kharkiv-based Haroun, which supplies the control systems for Russian missiles. The volume of Russian imports of major conventional weapons in 2009-2013 was 176 percent higher than for the previous five-year period of 2004-2008

The Yasumasa plant in Dnipropetrovsk is the only service provider for Satan missiles that Russia uses. The Ukrainians are also the main supplier of spare parts which its armed forces desperately need. Russia is scrambling to supply domestic factories with the technology needed to produce these components inside Russia. However, much of the higher inputs of technology, especially in the electromechanical area, are sourced in France, Germany, Britain and the U.S.; now effectively closed off to Russia by sanctions. Despite efforts by the Russian troops in the Eastern Ukraine many of the existing plants were attacked and damaged by the rebels of Donetsk and Lugansk. Additionally, the skill set of the Russian factories has been degraded by the demographic crisis of Russia and the ageing population.

Russia did not have the capacity to replicate the Ukrainian military-industrial complex inside the Russian borders overnight, despite its bluff and bluster to the contrary. When the Ukrainian Government decreed that it was banning all military sales to Russia it was a challenge to Putin and his generals. Where would they get the turbines for their ships, the missiles for their launchers, the transport aircraft for their soldiers, the engines for their helicopters, their spare parts, et al.? The Russian government  tallied up the costs of modernizing their aging military forces equipment and concluded that it will total about $800 billion. Putin campaigned for the Presidency by calling for a rejuvenated Russian military. He published an article in Rosicky Gazeta outlining the massive spending he was intending to pursue in building up the armed forces. Unfortunately, he didn’t have the money and the arms manufacturers were in no position to use the funds even if they got them, owing to their state of dereliction and the disappearance of skilled workers in the machine-tool industry. Not only was supply a problem; there were serious problems with quality. For example, Uralvagonzavod, the country's only tank manufacturer is a good case. Putin himself bowed to army pressure to place an order for 2,300 tanks to be built over the next 10 years despite a statement by General Staff head Nikolai Makarov that the military would not be purchasing any tanks in the next five years due to their substandard quality. In an article in RIA Novosti on 15 March 2012, Ground Forces Chief Col. Gen. Alexander Postnikov said that the most advanced weapon systems manufactured for Russia's ground forces are below NATO and even Chinese standards and are expensive; "The weapon models that are manufactured by our industry, including armour, artillery and small arms and light weapons, fail to meet the standards that exist in NATO and even China," He said that Russia's most advanced tank, the T-90, was in fact a modification of the Soviet-era T-72 tank [entered production in 1971] but cost 118 million rubbles (over $4 million) per unit. "It would be easier for us to buy three Leopards [Germany's main battle tanks] with this money," Postnikov said.

Military modernisation was a key priority of the Russians but made infinitely more challenging by the loss of Ukrainian facilities, technology and skilled workers; and, of course, international sanctions. Putin has consistently promised more funds for this endeavour but he has been hampered by several key problems, some of which he cannot control.

Russia has a severe demographic problem. There were about 1,599,316 (10.9/1,000) births in 2018, a decline of 5.4% relative to the 1,689,884 (11.5/1,000) births in 2017. There were about 1,817,710 (12.4/1,000) deaths in 2018, a decline of 0.4% relative to the 1,824,340 (12.4/1,000) deaths in 2017. Consequently, the rate of natural increase declined from -134,456 (-0.9/1,000) in 2017, to -218,394 in 2018. The population was estimated at 146,793,744 as of Jan 1, 2019, down from 146,880,432 exactly one year ago. This implies about 131,706 in long-term net immigration, down from 172,551 last year. If accurate, this would mark the first time since 2007 that the population of Russia has declined in absolute termsvii Most importantly there has been a mass migration of rural Russians in Siberia and the Russian East into the cities, leaving largely unpopulated regions and the influx of Asian migrants who have flooded into the East of Russia.

Global tables of male life expectancy put Russia in about the 160th place, below Bangladesh. Russia has the highest rate of absolute population loss in the world. The Russian population is aging, and Russia remains in the throes of a catastrophic demographic collapse. The population is expected to fall to 139 million by 2031 and could shrink 34 per cent to 107 million by 2050.  Russia is suffering from a mass emigration of its populace, especially among the educated. According to the State Statistics Service (SSS), approximately 4.5 million people moved out of Russia between 1989 and 2014. The smallest outflow occurred in 2009 when just 32,500 people emigrated, but the numbers began rising again after 2011, and in 2014 once again reached 1995 levels. Today, the situation is significantly worse. "Russian government statistics show a sharp upturn in emigration over the last four years…Almost 123,000 officially departed in 2012, rising to 186,000 in 2013, and accelerating to almost 309,000 in 2014 after the annexation of Crimea and even more in 2015.viii

It isn’t only the educated and the young who are leaving Russia; their money is leaving even faster. According to expert estimates, for all the years, about $ 3 trillion has been exported abroad.  “The net outflow of private sector capital from Russia in January-February 2019 amounted to $ 18.6 billion, which is 2.1 times more than the figure for the same period last year – $ 8.7 billion, the Russian Central Bank reports. According to Bloomberg’s estimates, over the past 25 years, about $ 750 billion have been taken out to offshore jurisdictions from Russia. Calculations of the MGIMO professor Valentin Katasonov show that about $ 3 trillion were withdrawn from the country since the collapse of the USSR.”ix

Bloomberg Economics’ calculations suggest some $750 billion in Russian assets moved offshore over the last 25 years. The bleeding appears to have slowed, though it’s unclear if this reflects tighter controls and mounting geopolitical risk, or if the flows have simply been getting harder to track. x

The cost of the continuing war in the Ukraine and the massive bleed of Russian military resources in Syria are taking a heavy toll on the Russian budget. The cost of rebuilding Syria will make a heavy dent in Russia’s economic well-being. However, it has committed itself to a wide range of improvements in its military capabilities, despite its lack of adequate shipyards, missile factories, available conscript manpower, essential electronic and guidance systems and subsystems blocked by sanctions, the burden of maintaining aged and decrepit equipment and an ever-expanding effort to extend its political reach into the Middle East, Africa and Latin America. Much of this is the traditional Russian policy of bluff and bluster but, with the official burial of the INF Treaty, it is engaged in some expansion of its intermediate range of its missile systems. Some of these efforts towards greater capability appear to be directed against the Ukraine as Russia is stepping up its threat level against the Ukraine as Ukraine prepares for its elections.


While the Ukraine has continued its daily confrontations with the forces of the Donetsk and Luhansk

Regions and the Russian forces along its littoral Black Sea and Sea of Azov coasts, the U.S. passed a

$47 million U.S. military-aid package for 2018 and confirmed in March 2018 that it had delivered to Kyiv 210 Javelin antitank missiles and 37 Javelin launchers as well as military trainers in their use and deployment. These had already had a marked effect on the deployment of tanks by the Russians and the rebels. However, the Russian pressure on the Ukraine has not ceased.

In mid-December 2018 the Russians moved military convoys north on the Simferopol-Armyansk highway toward the border between Kherson Oblast’ in Ukraine and Crimea. Later that month,  Russian submarines of the Black Sea Fleet conducted drills in the Black Sea to practice covert movements while submerged. Russia shifted fourteen Su-27 and Su-30 fighter jets to Belbek Airbase near Sevastopol. This was, presumably, to begin an assault on the Dnepr River canal which provided fresh water to the Crimea before the Ukrainians blocked it. The Russians built a bridge over the Kerch Strait to bring supplies to the Crimea; an unsteady bridge which is not expected to last too long because of the seismic conditions in the Strait, but low enough to block many of the commercial vessels shipping goods to and from the Ukrainian ports of Mariupol and Berdiansk. The U.S. and the Europeans have been pushing back against this attempt by Russia to strangle the Ukraine economically by sending vessels and missile cruisers to the area but the Russians haven’t stopped their continued pressure on the Ukraine.

However there is a new dimension to the power equation in the Ukraine with the arrival of a large Chinese presence. China has increased its involvement in Ukraine, using development assistance through its Belt and Road Initiative (BRI) as a rational for its efforts. China’s main goal is economic benefits for itself and as a foil for the brake on Russian aggression which would threaten the BRI. China is strengthening its position in Eastern Europe to gain an advantage in its relations with Russia, the EU and the U.S.

For China, Ukraine is an important BRI partner, while for Ukraine, China is its main Asian economic partner. In 2011, the countries signed a strategic partnership. Their previous cooperation, mostly economic, carried on with some difficulties. In January 2015, Ukrainian President Petro Poroshenko and Chinese leader Xi Jinping discussed increasing cooperation during the World Economic Forum in Davos, Switzerland. In September 2017, Ukraine’s foreign minister, Pawlo Klimkin, paid a visit to China, and then last December, Ma Kai, China’s vice premier, visited Kyiv. China’s activity in Ukraine fit into BRI mostly because of Ukraine’s transit-state position and its free-trade agreement with the European Union. One of the main elements of BRI is establishing new railway connections between China and Europe. In 2016, Ukraine launched a test of a new rail-ferry line transporting goods between the Black and Caspian seas, but using other connections that exclude Russian territory. xi

Chinese investment has proved to be much less onerous than the strict rules of the EU and the Bretton Woods agencies who insist on managing “Ukrainian corruption”. China aggressively competes with Ukraine’s Western partners for a strong foothold in this important frontier economy. While investment and aid from Europe and North America has a price-tag, China and Chinese companies have a huge pot of money that they're largely willing to spend without explicit conditions. A free trade agreement and visa-free regime has contributed to the European Union becoming Ukraine's largest bilateral trading partner - 30 billion euros ($35 billion) per year, with 27 percent year-on-year increases. Canada also has an FTA with Ukraine while trade with the United States is steady.

Chinese companies now compete with European rivals on tenders for big infrastructure projects. Their ability to come in under budget and complete large projects ahead of schedule means that, more often than not, they’re winning the big contracts.  While Beijing had pledged at least $7 billion for major Ukrainian infrastructure projects, Chinese companies have already been making their move. On the south-eastern Black Sea coast, the China Harbor Engineering company just completed a $40 million dredging operation to give bigger ships access to Yuzhny port. It’s predicted that other important ports in Odessa, Chornomorsk, and Izmail will receive similar Chinese attention. One Chinese company will soon break ground on a 200 kilometre cement coastal highway, built to withstand the burden of heavy, grain-laden trucks. Another company is investing in new grain silos and port elevators to help with quicker transportation and another plans to build a popular new ring road around Kiev. xii

China sees the Ukraine as a special area of interest, both for its location and for its agricultural productivity. Ukraine has access to the Danube River, the Black Sea and the Sea of Azov. It has 170,000 kilometres of road and 22,000 kilometres of interconnected railway to Europe. The Ukraine now supplies China with the bulk of its corn consumption. Bilateral trade exceeds US$7.6 billion a year.

China's Noble Agri, wholly owned by COFCO (China National Cereals, Oils and Foodstuffs Corporation), has two assets in Ukraine. The first is located in Mariupol. It is a sunflower seed processing complex with a daily crushing capacity of 1,500 metric tons and storage capacity of 180,000 metric tons. The second facility is a newly built Mykolaiv grain port terminal, which boasts transhipment capacity of 2.5 million tons per year and storage capacity of 125,000 tons. Ukraine is the only European country where Noble Agri has a presence, and is competing with such large US companies like Cargill, Monsanto, and Bunge. Moreover, Noble Agri sources bulk commodities from low cost regions and supplies them to high-growth demand markets, particularly in Asia and the Middle East. For instance, it is the leading supplier of corn and soybean meal in Saudi Arabia. Hence, in addition to securing agricultural products to China, the Noble Agri is also competing on the global market with other, mainly American companies.xiii

At the moment there is no open conflict between China and Russia over the Ukraine, although its is clear that the Chinese are opposing any expanded military initiatives between Russia and the Ukraine; especially those which close down its ports and rail lines. China has essentially economic interests in the Ukraine, interests which will disappear if hostilities break out between the two. The Chinese have grown to be a much more formidable military power than the Russians. Their military history is one which demonstrates the growth in Chinese power.

The most important conflict between the Russian military and Putin arose from Putin’s policy towards China. Putin has been making every effort to engage with the Chinese in asking their assistance to join with Russia as a consumer of its energy exports and as a builder of pipelines, ports, railroads and as a financial partner. This has put Putin in direct conflict with the Russian military who see the Chinese as a strategic enemy.

There has been an intense competition between the two nations in their border regions for decades; a competition which led to military confrontation between the two along the Ussuri River. In May 1962 60,000 ethnic Uighurs (the same people who are today blowing up Chinese cities in the West and killing Han Chinese), crossed from China’s Xinjiang Province into the Soviet Union where they received assistance and materiel for their separatist aims. In an effort to restore harmony the Chinese and the Soviets started talks to regularise the conflict.

In these talks it became apparent that there were long-standing Chinese grievances over the stripping and annexing of Chinese land by the Russian and Soviet states since the late 1890s from the weak Qing Dynasty. This included the land in the Pamir Mountains and the territory of Tajikistan. In addition, the Treaty of Beijing in 1900 had stripped away Outer Mongolia from China and drawn the riverine boundaries of the Argun, the Amur and the Ussuri Rivers so that the Chinese only controlled their own banks of these rivers. The Soviets controlled the water (not from the midlines of the river as usual) but the whole river and the islands in them.

On the Eastern Front, in March 1969, the Chinese PLA suddenly attacked the Soviet border guards on Zenbao (Damansky) Island, killing 59 soldiers. Chinese Marshal Lin Biao, Commander of the Shenyang Military District, generated the plan of attack in January 1969 under the code name “Retribution [Возмездие]” which was signed off by Mao Tze Tung. The key elements of the plan, was the factor of surprise along “with massive firepower . About three hundred PLA soldiers crossed over to the island on the night of March 2 and suddenly opened fire on the group of Russian border guards that had been sent to investigate at mid-morning, killing almost all of them. Out on the ice of the Ussuri River, the Russian unit evidently had no protection and was quickly destroyed. A larger fight then unfolded on March 14 in the same area.

After about two weeks the Soviet troops forced the Chinese off the island. In August 1969 there were further incidents; this time in the West, in Xinjiang. There, after a few scuffles, the Soviets crossed the border and killed around 30 Chinese soldiers in Tieleketi. The Soviet presence on the Chinese border was impressive, with 25 divisions, 1,200 aeroplanes, and 120 medium-range missiles. Not only were the Chinese concerned about the Soviets backing Uighur dissidents, they were worried about a Soviet attack on nearby Lop Nur, the site of China’s nuclear test facilities. Tensions were high and there was a danger of nuclear escalation. Fortunately this was avoided. There continued to be further incidents during the Cultural Revolution.

Negotiations were resumed in 1991 and a partial treaty signed on May 29, 1994. This was completed in November 1997 at a summit meeting in Beijing where Yeltsin and Jiang Zemin agreed a treaty establishing the border between the two countries.  Finally, in October 2004 the two nations signed a Complementary Agreement returning some territory to China. This was confirmed at a meeting of the two nations 2008. Relations have been strained since then as there is an increasing imbalance between the two sides; militarily, economically and in terms of manpower.

Russia has a very serious problem with China. There are too few Russians in the regions of Khabarovsk and Primorsky Krai to match the Chinese. Russia is being depopulated at a prodigious rate with many of those who lived in Siberia and the Russian East (Dalnevostok) moving West to the cities across the Urals. There are not enough Russians to conduct the business that will need to be done on a project as vast as the extraction of oil, the building of a pipeline and the establishment of roads, ports  and infrastructure in that region. Even the Russians admit that this work will be performed by Chinese labourers.

Russian companies do not have the manpower, the working capital or the inclination to perform this infrastructural work. It has not improved with the continuing depopulation of the region. The dependence on Chinese manpower has had an important effect on Russia’s purported tilt towards China.

The politicians may think it makes sense to shift their focus to co-operation with China but the Russian military has no such compulsions. The Russian military said that they were concerned for the naval bases in Sovetskaya Gavan and Bolshoi Kamen not far away. They were surprised that Putin worried more about NATO (6,000 miles away) than they worry about the Chinese with billions of people a quarter of a mile away across the Amur and the Ussuri Rivers. They fear that Russia would not be strong enough to protect itself if the Chinese decided to take back some of its lost lands in the Russian Far East. This issue has been compounded by the current Chinese military and economic expansion in the Arctic and the growth of China’s military exports to the world of products derived from Russian designs but improved upon by the Chinese.


The most important aspect of the Ukrainian response to the advances by China is in its militaryindustrial complex negotiations with the Chinese. China is trying to buy or control the vast military capability of the Ukraine which was denied to the Russians after their invasion of the Ukraine. One key area of interest is helicopter manufacturing and Ukraine has the firm, Motor Sich, that is a world leader in building helicopter engines and other components as well as turbine engines for warships. Ukrainians and its Western partners are not willing to allow what many consider a national treasure become Chinese owned.

China has been buying components from Motor Sich since the 1990s and wants to get access to their trade secrets and key personnel. The Ukrainians are wary but the Chinese are relentless. Russia is nervous as well because until 2014 Russia was also dependent on Motor Sich (and other Ukrainian firms) for some key aircraft and industrial components. As long as Russia is occupying Crimea and parts of Donbas those business relationships are blocked and Russia has not been successful in creating adequate Russian suppliers.

On the other hand, the Ukrainians feel a new door has been opened for them by the U.S. leaving the INF Treaty. In March 2019n President Petro Poroshenko  said that Ukraine was no longer bound with some limits regarding the missile range anymore and now the country seeks to develop highintermediate precision missiles. It has the technology and the tools for this already. Hartron produced all the guidance control systems for the Russian missiles for years. According to the president, the missile program should become a symbol of changes in the country. He recalled that in recent years, the efficiency of using anti-tank missile systems has increased, tests of Neptun cruise missiles have been conducted. “Look at how high-precision Vilha (Alder) rocket launcher system significantly increased its range,” Poroshenko said.xiv

“We are no longer bound by any limitations either on the range of our missiles, nor on their power – let the enemy know about it, too. We need high-precision missiles and we are not going to repeat the mistakes of the Budapest memorandum.

With the resurgence of the Ukrainian defence industries, the rise of a working relationship between the Ukraine and China, and the increasing active participation of the U.S. in supplying the Ukraine with increased lethality, there are limitations of Russia’s ability to project hard power against the Ukrainians. In no way does this diminish or impede the Russian efforts to use trolls, hackers and subterfuge to alter the political destiny of the Ukraine or its ability to fairly choose its leaders. That is a battle which will continue in the near future






i U.S. Department of State Dispatch:Trilateral Statement by the President of the United States, Russia and Ukraine in Moscow on January 14,1994 ii Memorandum on Security Assurances in connection with Ukraine's accession to the Treaty on the NPT, UNDOC S/1994/1399

iii “Yanukovych Offers Opposition Leaders Key Posts”, RFE/RL 25 January 2014

iv "A warrant out for Viktor Yanukovych's arrest, says Interior Minister", Guardian. 24 February 2014 v "Minsk Protocol" (Press release) (in Russian). Organization for Security and Co-operation in Europe.

5 September 2014 vi "Memorandum of 19 September 2014 outlining the parameters for the implementation of commitments of the Minsk Protocol" (Press release) (in Russian). Organization for Security and Cooperation in Europe. 19 September 2014

vii http://www.unz.com/akarlin/russian-demographics-in-2019/ viii Yelena Mukhametshina,  Russia Must Deal With Catastrophic Brain Drain , Moscow Times, October

7, 2016

ix Crime Russia, "Capital outflow from Russia doubles since beginning of 2019, exceeds $18 billion"


x https://www.bloomberg.com/opinion/articles/2019-03-12/u-s-is-no-1-in-arms-sales-as-russia-loses-market-share> xi Marcin Przychodniak, "China’s Involvement in Ukraine’s Economy Vis-à-vis Russia", PISM 22/1/18 xii Jack Laurenson, Ukraine: "China Flexes Its Investment Muscle", Diplomat,27/6/18 xiii Olena Mykal, "Why China Is Interested in Ukraine", Kyiv Post, 10/3/16 xiv Interfax-Ukraine, "Poroshenko: Ukraine has no plans to repeat mistakes of Budapest memo, country needs high-precision missiles", March 9, 2019

Source:Ocnus.net 2019

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