Thursday, September 3, 2020
Ukraine - Then and Now
Vital Interests: Steven, thanks for talking to us about Ukraine in the Vital Interests Forum . As a former Foreign Service officer you have expertise in this region and served as its Ambassador from 1998 to 2000 - a time when Ukraine was emerging as an independent nation. For our readers who aren't necessarily knowledgeable about Ukrainian history and geopolitics, can you provide some background?
Steven Pifer: Sure. I'd say the starting point actually goes back about 1,000 years. With Ukraine and Russia you have two countries whose history, culture, language, and religion are really intertwined. They both go back to the 10th Century, they both claim Kievan Rus’ as their founding state. Really, from 1654 until 1991, with the exception of a couple of very chaotic years after the end of World War I, Ukraine was part of the Russian empire.
When the Soviet Union broke up in 1991, the part that the Russians missed most was Ukraine. Russians referred to Ukrainians as “little Russians,” which was never very popular with Ukrainians, but many in Russia saw the two as a single country.
I remember a conversation I had with a Russian deputy foreign minister, probably in 1994 or 1995. This was a pretty modern guy. He understood things had changed, but said to me, "Up here in my head, I understand and I acknowledge that Ukraine is an independent country. Here in my heart, it's going to take a long time." I think that reflects the attitude of a lot of Russians, most importantly Vladimir Putin.
The tension that you now see between Russia and Ukraine is Russia trying to assert that sphere of influence and trying to pull Ukraine back into its orbit, whereas it's clear since the Maidan Revolution that the majority of Ukrainians see their future as a fully integrated European state.
The last time Mr. Putin was in Kviv was in July 2013. That was four months before the Maiden Revolution began. He was there to mark the 1025th anniversary of Kievan Rus’ accepting Christianity, which of course, had a huge impact on the Orthodox Church, both in Ukraine and in Russia. He gave a speech in which he said, "We are one people, we Russians and Ukrainians." That was really tone deaf; many Ukrainians heard that as denying their culture, their history, their language.
Part of this Russian approach is emotional for Mr. Putin and Russians - they didn't want to lose Ukraine. Part is a reflection of what we've seen particularly over the last 10 to 12 years: Russia actively trying to assert a sphere of influence in the post-Soviet space. I don't believe that Vladimir Putin wants to rebuild the Soviet Union, because Russia does not want to subsidize these other countries.
What Mr. Putin does want is a sphere of influence, or as Dmitry Medvedev, who was President back in 2008, called it, "A sphere of privileged interests in the post-Soviet space.” That means countries such as Ukraine, Belarus, Moldova and others in Central Asia should defer to Moscow on issues that Moscow considers key to Russian interests. That certainly means, how close you can get to institutions such as the European Union and NATO.
The tension that you now see between Russia and Ukraine is Russia trying to assert that sphere of influence and trying to pull Ukraine back into its orbit, whereas it's clear since the Maidan Revolution that the majority of Ukrainians see their future as a fully integrated European state.
VI: Before we get into these modern tensions, let's look at the relationship between Ukraine and the Russians within the Soviet sphere. Ukraine was one of the founding republics of the Soviet Union with many Ukrainians in Moscow serving in high positions in the Soviet government. Wasn’t Nikita Khrushchev a Ukrainian?
Steven Pifer: Yes, there are a lot of Soviet leaders who trace their roots back to Ukraine. Also, a large part of the Soviet military, the senior leadership, came from Ukraine. There's a lot of connections there. Back in 1990, as tensions began within the Soviet Union, a significant independence movement emerged within Ukraine as you saw elsewhere in the Soviet space such as the Baltic States.
VI: Wasn’t there a great trauma in Ukraine perpetrated by Joseph Stalin - the famine of 1932-33 which led to the death of six to eight million Ukranians? Alex DeWaal, who wrote a book on mass starvation and famine, documents that this was a man-made famine, not the result of natural causes. This is a national memory for all in Ukraine and must impact their attitudes toward Russia?
Mr. Yanukovych signed it, left the presidential administration building, and then disappeared and went AWOL. The next day there was a video showing him from some undisclosed location. It left the Ukrainian Parliament, the Rada, in limbo - what do they do? The constitution says, "This is what you do if the president dies or if he's impeached." It doesn't say what to do if he just disappears.
Steven Pifer: Ukrainians refer to it as the Holodomor, the hunger. Basically, it was an effort by Stalin and his inner circle to extract food from Ukraine, which was the breadbasket of the Soviet Union, to support industrialization. Ukraine's agriculture is incredibly productive. The Communist Party used it to feed the workers as Stalin pushed his industrialization project. Anywhere from 4 to 10 million Ukrainians starved to death.
It was a brutally ugly period and it is certainly remembered by Ukrainians today. You had that and then right after that came the Stalin purges, which affected a number of Ukrainians. Then you had World War II. Just because of geography, Ukraine along with Belarus really took the brunt of the German assault. On a per capita basis, more Ukrainians died than Russians.
VI: In modern-day Ukraine there have been a number of reform movements and political upheavals targeting governments that were deemed corrupt, ineffective, and taking the country in the wrong direction. One took place in 2004 and more recently in 2013- 2014 when a key issue was whether Ukraine would move more toward Europe or remain in the Russian sphere. How did that play out?
Steven Pifer: Well, two things. What you saw in the Orange Revolution in 2004, literally hundreds of thousands of Ukrainians took to the streets to protest an election that was stolen by Viktor Yanukovych, who was running against Victor Yushchenko. They stayed in the streets for about three weeks during the height of winter, and basically forced a redo of the run-off election that Mr. Yanukovych supposedly had won, but about which there were huge questions. In the closely monitored redo, Mr. Yushchenko won handily.
Then, in part because Mr. Yushchenko did not deliver on reform, Mr. Yanukovych came back and was elected president in 2010 in what was seen as a free and fair election. Unfortunately, Mr. Yanukovych then very quickly moved towards more authoritarian political practices. He was incredibly corrupt. Some estimate that he stole as much as $10 billion from the Ukrainian treasury in his four years as president.
On the plus side, his government had done the necessary homework to prepare an association agreement with the European Union, which included among other things a comprehensive free trade arrangement. What I heard at the time in Kyiv was that Mr. Yanukovych was working on this because his political advisers, including one Paul Manafort, told him, "If you do the association agreement with the European Union, you run for re-election in 2015 as the man who brought Ukraine into Europe."
This was the expectation in 2013: they had finished the association agreement, and the European Union was ready to sign. There was a summit scheduled in late November, but about a week before that summit, the Ukrainian government announced that they were going to postpone the signing. The Russians had been pushing hard against this and offered $15 billion in loans at very low interest to try to persuade Mr. Yanukovych not to go ahead. However, within hours of the announcement that the association agreement would not be signed, people were protesting in Kyiv, and then a week later there was a police crackdown. It put about 30 or 40 people in the hospital, which was more than went to the hospital during the entire Orange Revolution in 2004. The next day, by some reports, you had between half-a-million and three-quarters of a million people protesting on the streets of Kyiv.
The Russian ministry of defense put out a special commemorative medal for the “return of Crimea.” This was clearly a Russian military operation.
Those protests went on for about two-and-a-half months. They gradually morphed from a protest over Mr. Yanukovych's failure to sign the association agreement with the European Union into a more general protest against his corruption and authoritarian political practices. Things came to a head in late February 2014, when special police forces opened fire on demonstrators, killing about a hundred. They're now regarded as heroes in Kyiv.
The Polish, French, and German foreign ministers came to Kyiv, and there was also a representative from Russia, to try to broker some kind of agreement that would bridge the gap between Mr. Yanukovych and the demonstrators. Working overnight, several opposition leaders did conclude an agreement with Mr. Yanukovych.
The initial reaction from the people in the streets was not positive towards the agreement, because among other things it would have allowed Mr.Yanukovych to remain president until an early election by the end of 2014. That was not popular after a hundred people had been killed.
That said, the opposition leaders really didn't have much time to try to sell the agreement, because Mr. Yanukovych signed it, left the presidential administration building, and then disappeared and went AWOL. The next day there was a video showing him from some undisclosed location. It left the Ukrainian Parliament, the Rada, in limbo - what do they do? The constitution says, "This is what you do if the president dies or if he's impeached." It doesn't say what to do if he just disappears.
The Ukrainian military, however, stayed in their barracks - they did not oppose the Russian invasion for a combination of reasons. I think there was a decision in Kiev that, if there's going to be shooting, they wanted the world to clearly see it was the Russians who fired first.
All of the constitutional boxes probably were not properly checked, but the Rada basically said: "We need to have a president," and by large majorities appointed an acting president and an acting prime minister. Acting President Turchynov and Acting Prime Minister Yatsenyuk made very clear that their first foreign policy priority was to sign the association agreement and draw closer with the European Union.
Then, within a day or two, “Little Green Men” - the term used by Ukrainians - began showing up in Crimea. They were clearly professional soldiers, identifiable by the way they handled themselves, by their uniforms, and by their equipment but all of their identifying patches had been removed.
In early March (2014), there was a press conference that Vladimir Putin gave. A reporter asked him, "These Little Green Men - are those Russian soldiers?" Mr Putin said, "No, no, they're just local militia guys in Crimea." The reporter said, "Mr. President, they're wearing Russian combat fatigues," and he replies, "You can get those fatigues at any Army Navy store anywhere in the post-Soviet region."
Now, the reporter didn't have time or the sense to ask the followup question: "Do they get the tanks and the helicopters at those same Army Navy stores?" Five weeks later or so in mid-April, Mr. Putin came out and admitted they were Russian soldiers. He actually hosted their commanders in the Kremlin to give them commendations for the operation. The Russian ministry of defense put out a special commemorative medal for the “return of Crimea.” This was clearly a Russian military operation.
VI: How could this have been a surprise? Didn’t the United States and others that had satellite imagery notice the Russians staging military units along the Ukraine border?
Steven Pifer: The Russians were actually quite clever on this one. They organized a fairly major military exercise to the northeast of Ukraine. People were watching that. Then they slipped some additional forces into Crimea. Also, bear in mind that in Crimea there were already probably 10 to 15 thousand Russian military personnel. After the Soviet Union collapsed, within a couple of years, Russia and Ukraine had agreed on the division of the Soviet Black Sea Fleet. Ukraine, basically said, "We don't need a big part of the navy." I think they kept about a fifth of the ships and let the bulk go to Russia in exchange for some compensation.
The problem that Russia had, though, was that it did not have the port facilities in places like Novorossiysk, Russian ports on the Black Sea, to accommodate all these ships. There were agreements by which the Russians based the bulk of its Black Sea Fleet in places like Sevastopol and other facilities in Crimea.
So there were already quite a few Russian military personnel there. There were a significant number of Ukrainian military personnel there as well. The Ukrainian military, however, stayed in their barracks - they did not oppose the Russian invasion for a combination of reasons. I think there was a decision in Kiev that, if there's going to be shooting, they wanted the world to clearly see it was the Russians who fired first.
Moscow declared that annexation was “respecting the will of the Crimean people.” It was totally bogus. Few countries around the world have actually recognized Crimea’s illegal incorporation into Russia
There was a significant amount of pressure from the West, "Don't do anything rash." My guess also is that there was, on the part of the Ukrainian military commanders in Crimea, a lack of full confidence in their troops. Because the Ukrainian military practice at the time was to have enlisted personnel serve near their hometowns. A lot of their troops came from Crimea and my guess is, the commanders were not sure whether they were prepared to fight.
VI: How did the annexation of Crimea actually come about? The Russians said this was the will of the Crimean people, that they were more aligned with Russia, that they were Russian speakers.
Steven Pifer: A couple observations. Crimea was the only part of Ukraine where ethnic Russians constituted the majority. About 60% of the population of Crimea was ethnic Russian. Had there been a free and fair referendum, I don't exclude the possibility that a significant part of the population would have voted to join with Russia. That would have been driven mainly by economic considerations because at that point in time the Russian economy was doing better; people saw higher standards of living in Russia.
But there wasn't a free and fair referendum. The referendum itself was illegal under Ukrainian law. Moreover, when the Soviet Union broke up in 1991, all of the independent states that emerged from the wreckage agreed to accept and recognize the boundaries as they then existed. Crimea was then part of Ukraine. Russia acknowledged that fact in bilateral agreements with Ukraine, in the Budapest Memorandum which was concluded between the United States, Britain, Russia and Ukraine, so there was no real basis for this referendum.
The referendum itself was biased. It offered two choices: "Do you want to join Russia?" or "Do you want to revert to the Crimean constitution of 1993," which made Crimea all but an independent state. That constitution later was abandoned by Crimea.
VI: So there was no option three to choose to stay within Ukraine?
Steven Pifer: If someone wanted to stay part of Ukraine under the current constitutional arrangement, there was no box to check. Then, there was no serious election oversight there. There were lots of anecdotal reports by Russian journalists saying, "I was there and I showed my Russian passport and they let me vote." Then you got very Soviet-type numbers, 90% or whatever, reportedly having voted for joining Russia.
There was a slip up several months later when a member of Mr. Putin's human rights committee came out and acknowledged that there actually was very low turnout and the vote numbers came nowhere near the reported result. But Russia moved almost immediately after the referendum and annexed Crimea.
Moscow declared that annexation was “respecting the will of the Crimean people.” It was totally bogus. Few countries around the world have actually recognized Crimea’s illegal incorporation into Russia; it's places like South Ossetia, the breakaway region from Georgia, Abkhazia, another breakaway region. I think Syria has recognized it. Not a lot of serious countries have.
VI: So the annexation of Crimea took place but there is still military activity between Ukraine and Russia in the Donbas region. What is Putin trying to achieve there?
This conflict in Donbas has now been going on since 2014 and has taken some 13,000 lives.
Steven Pifer: Crimea was annexed in the middle of March of 2014, and then Little Green Men showed up in April in the Donbas - the Donetsk and Luhansk oblasts. Oblast is an administrative unit, somewhere in size between a state and a county. These armed groups portrayed themselves as separatists, but it quickly became evident that these guys were getting lots of support and direction from Moscow.
Leadership was coming from Moscow, heavy weapons from Moscow, ammunition from Moscow, support from Moscow. When they proclaimed the Donetsk and Luhansk “People's Republics,” if one looked at their government structures, most of the guys were Russians, not locals.
Now, after a while, they began to appoint more locals because they recognized the perception problem. And this time the Ukrainians decided they couldn’t sit in garrison, they had to resist. The Ukrainians launched military operations but at a point when the Ukrainian military was in a pretty weak state. Fighting continued, and in July of 2014, you had the horrible shoot down by Russian/Russian proxy forces of the Malaysian Air passenger plane coming out of Amsterdam.
The evidence is absolutely clear that this was a Russian-provided missile controlled by Russian and Russian proxy forces. However, by August 2014, the Ukrainians were beginning to make progress. In fact, they had divided occupied Donbas; they had broken it up into two pieces. People were beginning to think that within a couple of weeks, they would have driven the so-called "separatists" out and restored control.
Then around August 20, August 23, the Russian army intervened, crushing the Ukrainians and driving them back. There was a ceasefire hammered out in Minsk in September, but it never really took hold. Over subsequent months, the Russians and their proxy forces gradually occupied more and more territory.
In February 2015, German Chancellor Angela Merkel and French President Francois Hollande, met with Mr. Putin and then-Ukrainian President Petro Poroshenko, and tried to broker a settlement, called the Minsk-2 Agreement. Minsk-2’s first three steps were a ceasefire, a withdrawal of heavy weapons away from the line of contact, and the right for the Organization for Security and Co-operation in Europe [OSCE] monitoring teams to go anywhere to verify the ceasefire and the withdrawal of heavy weapons.
None of these conditions had ever been met for longer than four or five days at the time. Ceasefires get declared, they are breached, they get redeclared, they break down. The last one was launched July 27 and within two days, the Ukrainians reported they were under fire. It seems to be a little bit quieter now (in August 2020) but it's unclear if this is going to last. This conflict in Donbas has now been going on since 2014 and has taken some 13,000 lives.
The sanctions have had an impact. They haven't forced Russia to leave Ukraine yet, but I do think that they figure in Mr. Putin’s calculations.
VI: The reaction of the West to this Moscow-backed conflict has been to impose a strict sanction regime against Russia. Has this had any impact?
Steven Pifer: The United States and Europe worked together on that, with the really serious sanctions coming in the summer of 2014. They were related to Russian and Russian proxy forces fighting in Donbas. It appears that the Europeans were really triggered by the shoot-down of the Malaysian airliner and the bizarre denials that came out of Moscow. The sanctions target individuals for visas and asset freezes as well as certain sectors of the Russian economy.
For example, Western financial institutions cannot lend to Russia now. The sanctions targeted dual-use high-tech industries that could have military applications. Some sanctions target the energy sector. If Russia is looking to its future oil needs, it would want to develop oil fields in the far north of Russia, and also in the Arctic. Those are usually expensive endeavors, they require Western technology, and Russia's access has been pretty much closed off.
Russian officials tend to say the sanctions are not really a problem. Most economists say that the sanctions probably cost the Russian economy about one to one-and-a-quarter percent of its gross domestic product per year. One study that came out last year calculated that, in 2019, the Russian economy was about 10% smaller than it should have been as predicted in 2014, as a result of the sanctions.
The sanctions have had an impact. They haven't forced Russia to leave Ukraine yet, but I do think that they figure in Mr. Putin’s calculations. There were a couple of points, for example, in 2015, when there was a lot of concern that Russian and Russian proxy forces might move to seize Mariupol. This is a large port on the Sea of Azov. It's very close to the line of contact.
It didn't happen, in part because the Ukrainians did a lot to fortify the city. It was clear that it would have been an unusually expensive operation to take Mariupol. I believe there was also recognition in Moscow that that kind of overt attack would have brought even heavier sanctions. So sanctions may have a deterrent effect.
VI: Is this cost worth it to Putin? Is this part of his nationalist mythology that he's trying to create, that this part of Ukraine is important for Russia and there would be a loss of face for him if he gave in?
Steven Pifer: There's a number of factors at play here. First, bringing Crimea back to Russia was popular in Russia. Polls show that Russians were enthusiastic about that in a way that they don't show any enthusiasm for what's going on at Donbas. Donbas is not something that the Kremlin really wants. The Kremlin uses the conflict in Donbas as a mechanism to put pressure on Kyiv, to distract it, to disorient it, to make it harder for the government in Ukraine to do what it needs to do to succeed.
Donbas is not something that the Kremlin really wants. The Kremlin uses the conflict in Donbas as a mechanism to put pressure on Kyiv, to distract it, to disorient it, to make it harder for the government in Ukraine to do what it needs to do to succeed.
That gets back to a Kremlin fear - a successful Ukraine scares them. They're thinking, if Ukraine actually builds a functioning democracy, and Ukraine has a good record on democratic elections, there is real politics going on there in a way that you don't see in Russia. If Ukraine succeeds, and not only gets the politics right, but also begins to get the economics right and has as a growing economy, the Kremlin worries that Russian citizens will ask, "Well, wait, how can they get that in Ukraine and we can't have that kind of political freedom here?"
Now, having said that, Mr.Putin's strategy has backfired horribly, in that nothing has done more to push Ukraine towards the West and away from Russia than Russia's policy in the last six years. Moscow would like to draw Ukraine back into its orbit, but it's very hard to see that happening. I think that is impossible now.
Moscow’s plan B now is to pressure and keep Ukraine from becoming a successful state and, thus far, the Kremlin's calculation of the costs and benefits seems to be that they are prepared to bear the risk of political isolation, the condemnation, the sanctions and such. One of the things we want to think about in the West is, how do you change that calculation?
VI: So a presidential election took place in 2019 in Ukraine. It was a highly contested election with three main candidates, the current president, Poroshenko, a woman candidate who has been active in many elections, Yulia Tymoshenko, and then there was Volodymyr Zelensky, who was a filmmaker and comedian, who had popular show on TV where he played the president of the Ukraine.
Steven Pifer: Yes, Mr. Zelensky played a common man who suddenly finds himself the president in a very popular TV show that ran for three years in Ukraine. All of a sudden he's now in that situation for real. I believe he won largely because Mr. Poroshenko, the previous president, was seen as having failed to tackle corruption. To give him credit, Mr. Poroshenko did a lot in terms of reform and change in 2014, 2015, but these efforts began to slow down in 2016.
In particular on tackling corruption, tackling the oligarchs - this is something I still am surprised that the Poroshenko political people missed - that is, the growing frustration. I travel to Ukraine a couple of times a year and by 2016, you could just talk to Ukrainians and hear the frustration that Mr. Poroshenko was not doing more.
Mr. Zelensky played on that. This election had to go into a runoff because initially there were a number running for president, and no one got more than 50%. In the runoff, Mr. Zelensky faced just Mr. Poroshenko, and Mr. Zelensky got close to 73% of the votes, so a decisive win.
If Ukraine succeeds, and not only gets the politics right, but also begins to get the economics right and has as a growing economy, the Kremlin worries that Russian citizens will ask, "Well, wait, how can they get that in Ukraine and we can't have that kind of political freedom here?"
This is a good demonstration of the strength and depth of Ukrainian democracy: in the four presidential elections in Ukraine over the past 29 years, where the incumbent has run for reelection, the incumbent has lost three of those four times. That doesn't happen anywhere else in the post-Soviet space. When Mr. Zelensky came into office, he brought in an image of somebody who was going to deal with corruption, advance economic reform, and finally do the things needed to move Ukraine forward. His first priority was to try to end the conflict in Donbas.
VI: And that is related to the phone call with President Trump in July, 2019, about the funds for arms that had been allocated by Congress.
Steven Pifer: That is the one - the July 25 phone call, which President Trump even very recently, has called a "perfect” phone call. The White House has put out the record of that phone call. It's not quite a word-for-word transcript, but it's fairly close. If you read that record - it's five pages and only takes about seven or eight minutes - you'll see that President Trump did not ask for a single thing in America's interest.
He wasn't talking about better trade terms for U.S. exporters, he wasn't asking about the possibility of selling liquefied natural gas to Ukraine. He was asking for an investigation of the Bidens for a long-debunked theory regarding corruption, and another long-debunked theory that the Democratic National Committee server was somehow in Ukraine.
Later on, we learned the President was withholding arms from Ukraine. That came out in September, but there was also something else he was withholding. He had extended an invitation to Mr. Zelensky to visit the White House back in May of last year. They were withholding the specific date, and here we are now 15 months later, and Mr. Zelensky still has never been to the White House.
VI: Let's talk about the current situation in Ukraine. President Zelensky got elected on a reformist agenda. He's trying to clean up corruption and inefficiencies, trying to end the conflict with Russia. What is the state of the Ukrainian economy? You have mentioned that Ukraine used to be a major agricultural exporting country. While part of the Soviet Union, wasn’t Ukraine also known as a major arms manufacturer producing much of the heavy equipment for the Soviet army and exporting Kalashhinkovs, the AK-47 assault rifle, around the world?
Steven Pifer: Yes, Ukraine had a significant arms industry. There are still a lot of AK -47 factories and arms-related industries. One of the largest missile/rocket factories in the world is in Dnipropetrovsk, now called Dnipro, though it's not building nearly as much as it was back in Soviet times when it was producing some of the monster Intercontinental ballistic missiles that we used to worry about as well as space launch vehicles. They don't build ICBMs anymore. They do produce space launch vehicles, and they're some fairly good ones that the Ukranians produce.
One of the problems that Ukraine has that Poland didn't have is the oligarchs.
The Ukrainian economy is in difficult shape, in that it's underperforming. The yardstick I used to use when I was in Ukraine, was to look at Ukraine and Poland. There are significant differences, of course: when Ukraine was part of the Soviet Union, Poland was part of the Warsaw Pact - so different histories. If you go back to 1990, the year before the Soviet Union collapsed, and look at gross domestic product per capita in Poland, and in what was then the Ukrainian Soviet Socialist Republic, they were about equal.
Today, GDP per capita in Poland is probably four times that of Ukraine. That reflects the fact that Poland, in a relatively short period, enacted a whole lot of effective reforms. Ukraine has not fully implemented all the needed reforms. One of the problems that Ukraine has that Poland didn't have is the oligarchs. These are folks who maneuvered in that chaotic period of the 1990s to take over former state enterprises, in many cases resorting to illegal and corrupt methods.
They now are power brokers. They have significant economic power and they also have considerable political power. In many cases, they don't want to see the emergence of an open economy, because that won’t be good for their economic interests. And that holds Ukraine back.
VI: Are these oligarchs ethnic Ukrainians or Russians?
Steven Pifer: Some are ethnic Russians, but a lot of them are ethnic Ukrainians. Some have ties to Russia, but many are also totally working on their own in Ukraine. The one that has raised the most concern over the past year is a guy by the name of Ihor Kolomoisky. He owned the television channel that broadcast the Zelensky show - The Servant of the People - where his character was the president. Mr. Kolomoisky was living in Israel and Switzerland, but he returned to Ukraine soon after Mr. Zelensky became president. One of the big questions over the early months of Zelensky's presidency was “Is Kolomoisky pulling the strings?”
Now, there's a test that is still playing out. Mr. Kolomoisky was one of the main owners of PrivatBank - the largest private bank in Ukraine. In 2016, PrivatBank went through an extensive audit, and it was discovered that somewhere between $5 to $6 billion were missing, just gone.
Right now, there are a lot of questions about where Mr. Zelensky is going, in terms of dealing with corruption, and in terms of getting the reforms needed in place to get the economy doing what it should be doing.
Given the importance of the bank for Ukraine's financial system, the National Bank of Ukraine nationalized PrivatBank and pumped about five-and-a-half-billion dollars into the bank to keep it solvent. Mr. Kolomoisky has now filed lawsuits to try to get the bank, or to get compensation for what he claims were his losses.
Now, this has posed a major question: how will Mr. Zelensky behave on this issue? Zelensky's party did recently pass, with help from some other parties, legislation that would make it illegal to compensate or return the bank to private owners like Mr. Kolomoisky, although he's still fighting that in court. People thought that was an indication that maybe Mr. Zelensky is prepared to cut those links.
Another interesting development, of course, is last week the Department of Justice in the United States moved to file civil forfeiture actions against companies that are owned by Mr. Kolomoisky, and then seize property, I believe in Texas and Kentucky. There is some expectation that criminal indictments may come at some point against Mr. Kolomoisky, the charge being that these companies were bought with money he laundered out of Ukraine.
VI: Is Zelensky getting some help to implement his anti-corruption campaign? Do the Europeans still think that they can bring Ukraine more into their sphere? Does the relative prosperity of Poland have to do with the fact that it's in the EU and Ukraine is not?
Steven Pifer: Well, there is still a question about how hard Mr. Zelensky is prepared to push on reform. His first prime minister and cabinet were seen by everybody as honest, reform-minded, but not very experienced, and he fired them after six months for, he said, "Insufficient results." Most people would say, "Look, no. Six months is not a long time.”
Mr. Zelensky also fired a prosecutor general who had probably received the strongest reviews from anti-corruption NGOs in Ukraine and was held in very high regard by Western diplomats. This guy was going through and firing prosecutors whom he saw as corrupt. Then he was fired and replaced by somebody who has a connection to Mr. Zelensky. That raises concerns that the prosecutor general's office is now going to be used in a political way.
Then you've seen, unfortunately, some other steps in the last couple of months. Former officials of anti-corruption agencies have been fired and now find themselves under investigation. The president replaced the head of the National Bank of Ukraine, who received high marks from the International Monetary Fund and the World Bank for maintaining the central bank's independence. He resigned under political pressure the day after meeting with Mr. Zelensky.
Right now, there are a lot of questions about where Mr. Zelensky is going, in terms of dealing with corruption, and in terms of getting the reforms needed in place to get the economy doing what it should be doing. I wrote a piece for the Kiev Post last month saying, "We've seen this movie before." I worry it could be a rerun. For example, after the Orange Revolution Viktor Yushchenko came in, somebody with strong reform credentials and with a vision, but as it turned out, unable to implement that vision. It disappointed the Ukraine electorate so that five years later they elected Victor Yanukovych as president.
Vice President Biden was the point person on Ukraine during the Obama administration - he visited Kyiv six times. He understands the country. He was not only supportive, but he was prepared to be hard-nosed in support.
What I worry about is, if we see too many of these episodes of high hopes and disappointment, then at some point, particularly in Europe, you may see Ukraine fatigue. How many times does this country try and then fail to get things right? That's a potential threat to Ukraine, if Europe decides to give up, which is why Mr. Zelensky needs to be doing more on reform. Is also a threat to his political future. His popularity which was 70%, 80% back last September, is now down in the 30s. That still makes him the most popular politician in Ukraine, but the trend is decidedly negative.
VI: Steve, let's discuss Ukraine’s interesting neighborhood. It lies at a major geopolitical crossroads. It has a long border on the Black Sea which puts it in contact with Turkey and their ambitious leader Recep Tayyip Erdogan There is also Belarus, where the contested re-election of Alexander Lukashenko has resulted in massive popular demonstrations. What role does Ukraine play in this neighborhood?
Steven Pifer: Ukraine has worked hard on having a good relationship with Turkey. So far, that has been maintained. It's interesting that Mr. Erdoğan, for a variety of reasons, has tried to foster a close relationship with Mr. Putin, but he has never recognized Crimea’s annexation by the Russians. In fact, he has come out and specifically criticized it. Ukraine has managed to maintain that important relationship.
The relationship with Belarus was one that the Ukrainians always had a hard time figuring out. At this point, they're trying to figure what's going to happen in Belarus. On the one hand, my guess is they don't want to get out front pushing too hard for change in Belarus.
On the other hand, many Ukrainians, at the level of just everyday people, would say, "Why shouldn't the people of Belarus have more political space?" I suspect there's quite a bit of sympathy there, but the Ukrainian government is not going to insert itself in a major way into that political conflict.
VI: With regards to the United States, Ukraine now has a certain relationship with the Trump administration. There may be a new administration coming in next year. What should Ukraine look forward to from the United States - more of the same or perhaps a different level of support ?
Steven Pifer: Right now I would give the Trump administration policy towards Ukraine pretty good marks. They've maintained support for Ukraine. They've increased assistance to Ukraine. They've provided lethal military assistance in the form of Javelin anti-tank missiles, which the Obama administration was not willing to do. They've maintained sanctions on Russia, albeit under a lot of pressure from Congress.
I define that as the administration's policy. I don't see any evidence to suggest that President Trump personally believes in any of that. His focus on Ukraine was very clear last year: How can I use this for my political advantage? I'm comfortable with the administration’s policy toward Ukraine but I don’t believe that Mr. Trump believes in or instinctively agrees with the policy. I am still not understanding why the President is reluctant to criticize Vladimir Putin on virtually anything. So I don't think anybody in Ukraine can be particularly at ease with Donald Trump as president. That's one of many reasons why I hope there will be a new president come January of 2021.
Vice President Biden was the point person on Ukraine during the Obama administration - he visited Kyiv six times. He understands the country. He was not only supportive, but he was prepared to be hard-nosed in support. We saw that in his effort to get Prosecutor General Shokin fired. That, of course, has been pointed to by some Republicans as corrupt, as evidence he was just trying to protect his son, which is total nonsense.
It wasn't just the Vice President who wanted Mr. Shokin fired, it was the U.S. Congress, it was the European Union, the International Monetary Fund, the World Bank. Everybody saw Mr. Shokin as not doing anything about corruption. He was part of the problem, not part of the solution.
VI: We're coming to the end of our time. We have had a good conversation, providing our readers a concise overview of how Ukraine has developed over the decades and what prospects they have for the future. Thanks very much for participating in the Vital Interests forum
Steven Pifer: Happy to do it.
Steven Pifer is a William J. Perry fellow at Stanford’s Freeman Spogli Institute for International Studies (FSI), where he is affiliated with FSI’s Center for International Security and Cooperation and Europe Center. He is also a nonresident senior fellow with the Brookings Institution. Pifer’s research focuses on nuclear arms control, Ukraine, Russia and European security. He is the author of The Eagle and the Trident: U.S.- Ukraine Relations in Turbulent Times (Brookings Institution Press, 2017), and co-author of The Opportunity: Next Steps in Reducing Nuclear Arms (Brookings Institution Press, 2012). A retired Foreign Service officer, Pifer’s more than 25 years with the State Department focused on U.S. relations with the former Soviet Union and Europe, as well as arms control and security issues. He served as deputy assistant secretary of state in the Bureau of European and Eurasian Affairs with responsibilities for Russia and Ukraine (2001-2004), ambassador to Ukraine (1998-2000), and special assistant to the president and senior director for Russia, Ukraine and Eurasia on the National Security Council (1996-1997).