President Volodymyr Zelensky and his government in Ukraine face two fundamental challenges: ending the conflict with Russia and implementing domestic reform. Overcoming these challenges appeared hard enough at the start of 2020. COVID-19 is only making that more difficult.

Ukraine finds itself in the seventh year of a war imposed on it by the Kremlin. Russian troops seized Crimea in March 2014, and Russian and Russian proxy forces have sustained a conflict in the eastern Ukrainian region of Donbas, which has claimed some 13,000 lives.

While Moscow has sought to draw Ukraine back into Russia’s orbit, there is little reason to believe that it will succeed. Nothing has done more than Kremlin policy over the past six years to push Ukraine toward the West and away from Russia. Moscow thus has used the Donbas conflict to destabilise Kyiv—to make it more difficult for Ukraine to succeed and pursue its goal of integrating with Europe.

As COVID-19 hit both Ukraine and Russia in March, some (this author included) hoped it might change some of the calculations in the Kremlin. Faced with a pandemic, falling prices for its energy exports, and an economy tumbling into recession, might Moscow rethink its policy in Donbas? A settlement would ease Russia’s political isolation and lead to a lifting of Western sanctions, which some economists estimate have cut Russian gross domestic product by 1.0-1.5% per year over the past six years.

As of June, however, Moscow’s policy appears unchanged. Russian and Russian proxy forces continue low-intensity fighting in Donbas. The appointment of a new Kremlin point-person on Ukraine did not visibly affect policy, which is determined by Vladimir Putin.

German Chancellor Angela Merkel and French President Emmanuel Macron, both grappling with COVID-19 and its economic consequences, have not followed up on the December ‘Normandy format’ summit with Zelensky and Putin. As the pandemic consumes the leaders’ attention, they and others – such as senior U.S. officials – show little bandwidth or readiness to press to change the cost-benefit calculation in the Kremlin and persuade Moscow to take up a different course that might bring peace in Donbas.

Therefore there is little reason to expect a diplomatic breakthrough, a fact that Zelensky and his team increasingly seem to recognise. The Ukrainian president has raised the idea of a “Plan B” if no progress is made by the end of the year. One suggested variant for a “Plan B” would entail virtually walling off the occupied part of Donbas and pushing the entire economic and social burden on to Russia.

The sad reality is the likely near-term scenario for Donbas is continuing simmering conflict. (As for Crimea, while not a hot conflict, it will burden Ukrainian-Russian and West-Russian relations for years if not decades to come.)

COVID-19 has made matters more complex, both for Zelensky politically on the domestic front as well as sinking the economy into recession. Kyiv recognised the need for an IMF stand-by program and access to low-interest credits. The Rada (parliament) enacted legislation to lift the moratorium on the sale of agricultural land and safeguard nationalised banks from efforts by former owners to regain control—both key conditions for an IMF stand-by agreement worth up to $5 bn. On June 9, the IMF executive board approved the agreement.

While the long-needed reforms on agricultural land and banking were most welcome, it was not clear whether their adoption reflected a genuine commitment to dramatic reform or, as with past Ukrainian leaders, the need to secure IMF credits. Both Ukrainians and the country’s friends in the West are looking for signs Zelensky will carry out the transformational agenda that carried him to an electoral landslide in April 2019, particularly with respect to curbing corruption.

Zelensky attaches priority to ending the conflict and restoring Ukrainian sovereignty in Donbas. But Kyiv cannot do that by itself. Moscow gets a vote, and the vote thus far favours keeping the conflict simmering. Whether Ukraine’s Western partners can mobilise additional pressure to change the Kremlin’s cost-benefit calculation at this point appears doubtful, at least in the near term.

If stalemated by Russia on Donbas, Zelensky can still take action on anti-corruption measures and other reforms to position the Ukrainian economy for strong growth as the pandemic eases. These are measures that he and his government control. To do so would deliver on the promises made to Ukrainian voters last year and solidify his reform credentials with his Western partners. Moreover, a more robust economy would bolster Zelensky’s position vis-à-vis the Kremlin, which hopes that domestic weakness will force him to compromise key Ukrainian principles and settle the Donbas conflict on Moscow’s terms.

Originally for Europe's World

Brett McGurk discusses the broad challenges in foreign policy making in an interview with Rodger Shanahan from The Interpreter. 

Watch interview at The Interpreter

The New START Treaty has come under fire in recent weeks. Marshall Billingslea, President Trump’s new special envoy for arms control, said the Obama administration negotiated a very weak verification regime, which is odd because Trump administration officials have repeatedly acknowledged the security benefits of New START.

Read full article at Bulletin of Atomic Scientists

Ten years ago, the United States and Russia signed the New START treaty—a nuclear arms control agreement that we, as the heads of our governments’ respective delegations, helped negotiate. Since then, New START has played a central role in keeping the peace and preventing a dangerous arms race between the two countries that together possess 90 percent of the world’s nuclear weapons.

Now, however, New START is in trouble: without action to extend it, the treaty will expire in February 2021. Its demise would have worrying implications for the security of the United States, of Russia, and of the world. It could bring a return to nuclear competition and spark mutual suspicion that would push the world to a level of nuclear risk unseen for decades.

Read full article at Foreign Affairs

In my line of work, you have to have a long memory. Periods of success in negotiations are followed by droughts, because of politics, military upheaval, arms buildups—yes, sometimes the weapons have to be built before they can be reduced—or a sense of complacency: “We have arms control treaties in place; let’s just focus on implementing them.” In those cases, new thinking and new negotiations may slow or even stop. Yet, the national security interest of the United States continues to drive the necessity for nuclear arms control.

Read full article at The Foreign Service Journal 

Early this year, Vladimir Putin had big plans for an excellent spring:  first, constitutional amendments approved by the legislative branch and public allowing him the opportunity to remain in power until 2036, followed by a huge patriotic celebration of the 75^th anniversary of the defeat of Nazi Germany.  Well, stuff happens—specifically, COVID-19.  Putin’s spring has turned out quite differently from what he had hoped.

Big Plans for the Spring

The president surprised Russians on January 15 in his annual speech to the Federal Assembly (the lower house of the Russian legislative branch).  He proposed amending the constitution to reduce the authority of the presidency, increase the power of the Federal Assembly, and provide a legal basis for a State Council.

The amendments prompted speculation that Putin, who likes to have options, sought to create ways to hold on to power after 2024, when term limits would require him to step down from the presidency.  He might become an empowered prime minister or head the State Council.

Then, on March 10, another surprise.  A Federal Assembly deputy proposed an additional amendment that would, in effect, allow Putin to run for president twice more, opening the possibility that he could remain in office until 2036.  He had consistently argued in the past against ending term limits.  However, according to the Kremlin spokesperson, Putin was so taken with the deputy’s justification that he changed his mind on the spot.

Things can move fast in Russia—especially when Putin wants them.  On March 11, the Federal Assembly approved the constitutional amendments by a vote of 383-0, and the Federal Council (Russia’s senate) gave its approval 160-1.  (Nothing like having a rubber-stamp legislative branch.)  Within two days, all 85 regional parliaments had approved the amendments.  The Constitutional Court worked over a weekend and, on March 16, unsurprisingly found the amendments consistent with the constitution.

All told, it took just six days to check the legal requirements for amending the constitution.  Putin, however, desired more.  He called in January for a nationwide referendum on April 22 to approve the package of amendments.  The constitution provides no requirement for such a vote.  Putin wanted it to further legitimize the changes to the constitution.  Popular endorsement would undercut any future challenge should he decide to run for reelection in 2024.

Topping off the spring would be the May 9 celebration of the 75^th anniversary of VE Day.  Putin has built this holiday up to rival New Year’s Day, traditionally the biggest holiday for Russians.  The celebration of World War II veterans and a large military parade on Red Square not only remind Russians of their country’s part in defeating Hitler, but they also play well to the themes of nationalism and Russia’s place as a great power on the world stage that Putin has embraced and perpetuated, particularly over the past eight years.

COVID-19 Intrudes

Alas for Putin, reality intruded.  The number of COVID-19 cases began to grow in mid-March.  As of April 21, the country reported over 52,000 cases, with more than half of those just in Moscow.  The number undoubtedly is understated—as in many countries—if for no other reason than some are asymptomatic or suffer mild symptoms.  There are also indications that local health authorities are underreporting cases.

Moscow’s mayor adopted a shelter-at-home policy, but with lots of exceptions.  While the mayor asserted that the city’s hospitals had sufficient capacity, medical staff described more difficult situations, and videos showed ambulances in line to wait hours to admit patients.  The health infrastructure outside of Moscow and other large cities is weaker, raising concern about the virus’s impact in rural areas.

Much like his American counterpart, Putin responded slowly to the mushrooming health crisis, leaving it to mayors and regional authorities to manage.  Sounding a lot like Donald Trump in February, Putin told Russians on April 19 (Orthodox Easter) “the situation is under full control.”  He has raised his public profile the past ten days, conducting videoconferences from his residence outside Moscow.  Russia, however, may be just beginning its COVID-19 trial.

As the number of cases grew in March, questions arose about the feasibility of the April 22 referendum.  Putin apparently very much desired it, and the Kremlin wanted a large turnout to bolster the referendum’s legitimacy.  Some suggested the referendum could be conducted over several days, allowing voters to space out visits to polling stations.  But the Kremlin bowed to reality and announced on March 25 that the referendum would be postponed.

Likewise, the Kremlin hoped that the May 9 commemoration could go forward, and troops began practicing for the military parade (one video showed thousands of soldiers in close formation with no masks).  However, the day’s heroes—World War II veterans now in their 90s—constitute an age-group very vulnerable to COVID-19.  Going forward with a celebration that could devastate their ranks hardly made sense.  On April 16, Putin announced a postponement.

The Economic Prognosis Looks Grim

Instead of a big public endorsement of his constitutional amendments and a patriotic gala on May 9, Putin faces a daunting challenge:  the combination of COVID-19 and an economy in trouble.  Under the virus’s impact, Russia’s already anemic economy is headed for recession.  The International Monetary Fund expects it to contract by 5.5 percent in 2020.

Complicating the economic picture for the Kremlin is continued application of Western sanctions due to Russia’s seizure of Crimea and its conflict with Ukraine in Donbas.  Economists estimate they cost Russia 1-1.5 percent of its gross domestic product.  While Russian officials downplay the effect, they miss few opportunities to ask for their removal.  For example, Putin used his intervention in the March 26 videoconference of G20 leaders to call for an end to all international sanctions.

COVID-19 has another negative impact on the Russian economy.  It has crashed global demand for oil, by far Russia’s most important export.  Perhaps not expecting the economic consequences of the virus, Russia on March 6 did not agree to an OPEC proposal to reduce production.  Igor Sechin, head of the Rosneft Oil Company and a close associate of Putin, reportedly wanted to drive the price down to push U.S. shale oil producers out of the market (their production has boosted the United States to supplant Russia and Saudi Arabia as the world’s largest oil producer).

The price dropped, more than Sechin might have anticipated.  Saudi Arabia responded to Russia’s refusal to cut production by boosting its own output and cutting the price.  On March 8, the price of oil fell 30 percent.  The resulting havoc hurt both sides.  On April 9, Russia and OPEC agreed to cut production by about 10 million barrels per day.

Whether that will suffice is uncertain.  The global economic slowdown has caused demand for oil to drop by 20-25 millions barrels per day.  On April 21, the price of a barrel of Brent oil fell below $20, a price not seen since 2002.  That was down from $74 one year earlier (the Russian government budget was designed to balance at a price of $42 per barrel).  The per barrel export duty collected by the Russian government fell to below $1, also the lowest since 2002.  Russia has to cut 2.5 million of barrels per day of production to meet its part of the April 9 agreement.  With oil storage facilities nearing capacity, there may well be further price drops before things turn around.

None of this is good news for the Russian economy, but how hard a hit it will take remains to be seen.  Thus far, the Kremlin has adopted a stimulus package to counter the COVID-19 economic consequences that is relatively modest, especially compared to programs being implemented by the United States, Germany, Britain and other industrial countries.

Managing the health crisis and its economic consequences, which could affect Putin’s approval rating—something to which the Kremlin pays extraordinarily close attention—is now the Russian president’s top preoccupation.  This is not anything like he anticipated three months ago.