Crimea Update 3/13/2014

Crimea Update:


Commentary: The protests in Eastern Ukraine (in Donetsk – where I was an election observer in 2004) have resulted in their first death. This lays the groundwork for Putin to potentially enter Eastern Ukraine using the same pretext he used to enter Crimea.


The West continues to underestimate Putin and misunderstand his objectives. For example, contrary to the commonly held assumption that Putin’s annexation of Crimea was just because of a new hostile government in Ukraine, some commentators have suggested that Putin had been planning to annex Crimea since the Georgian war in 2008 and the chaos gave him the opportunity. A plausible hypothesis with broad implications if true.


Since the West has signaled military options are off the table, I do not believe Putin will respond to soft power threats. In the most mild scenario economists are already projecting that Russia will enter into a recession this year and with more sanctions things may get worse. But this may not affect Putin as much as the West hopes. Putin controls the media in Russia, he will be able to spin the economic downturn in Russia to be the West’s fault. As mentioned in a previous update, his approval rate stands near 80%.


Putin will likely only stop if he is hit hard and left reeling – heavy sanctions now, with pressure off if he behaves. If the West does not have a strong response after Sunday’s referendum, expect Putin to move into Eastern Ukraine.



  • Just for fun here is my scenario analysis for how this plays out:
  • 1) 2% Putin bows to Russian pressure and returns Crimea to Ukraine
  • 2) 38% Deescalation after Crimea votes to join Russia (with potential for Putin to move in over long term)
  • 3) 38% Putin makes annexation moves into Eastern Ukraine Short Term capitalizing on unrest
  • 4) 20% Limited War Scenario – Ukraine or Russia is aggressor – no NATO involvement
  • 5) 2% Large Scale War Scenario – Large Scale NATO involvement

On vacation for the next 10 days – updates will be intermittent. 


Crimea Update 3/10/2014-3/12/2014

Upate 3/10/14:

  • What does Putin want (negotiating points):
  •  Stall signing of EU Association Agreement
  •  Greater control over gas transit to EU
  •  Genuine concern over safety of ethnic Russians (although threat exaggureated)
  •  Coalition government in Kyiv with pro-moscow representatio
  •  Head off economic sanctons
  •  Putin viewed as strong leader
  •  Privitization of Naftogas w/ Russia as a bidder?
  •  Repeal language law which eroded Russian language status

Crimea Update 3/11/14

  • Economic sanctions may not be enough if Putin becomes isolationist. Putin’s domestic approval rating is at a two year high due to the invasion of Crimea. A Western political model is approval though economic development; Putin may run the Russian economy into the ground, but keep civilians under his thumb by projecting that he is increasing Russia’s influence as an international power:

Crimea Update:


Crimea Updates 3/6/2014-3/9/2014

3/6/2014 Update

  • Crimean Parliament asks to join Ukraine (The new pro-Russian Crimean authorities, who took power on 27 February, were established at gunpoint.Despite Putin’s rhetoric about a ‘coup’ in Kiev, the real coup was in Crimea. After the Crimean Parliament had rallied FOR unity with Ukraine, the Crimean Assembly building was taken over by Berkut militia and ‘irregulars.’ Many of these ‘irregulars’ were allegedly fleeing from their crimes against demonstrators in Kiev. A referendum will take place on March 16th, it is unlikely to be a free and fair election. It is also unconstiutional as only a national referendum would allow for the nations borders to change.)
  • The new Parliament in Kyiv had been criticized for passing a law that makes Ukrainian the official language of Ukraine as harmful to the Russian minority. This linguistic map demonstrates that there is no imminent threat to Russian speakers in Ukraine. Most of Ukraine is Russian, or a Russian/Ukrainian mix or creole, thus ensuring that Russian speakers will be will preserved. Linguistic map of Ukraine
    Linguistic map of Ukraine
  • Russian state owned Gazprom to cancel contractual subsidies on Ukranian Gas imports (Aside from military action, this is Russia’s big stick against Ukraine. The end of Ukrainian reliance on Russian gas supplies may be a huge boon for Ukraine’s long term economic reform because Russia is ending subsidies that Ukrainian politicians have been unable to end due to political unpopularity.)


Summary of the Crimean Crisis 3/7/2014 & 3/8/2014:

  • Although the situation seemed to be deescalating earlier in the week and the news cycle has moved on to the Malaysian jet crash, over the last few days the amount of uncertainty has increased. 

Summary of Crimean Crisis 3/9/14:

  • Freindly guide to debunking Russian propaganda:

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Crimea Updates 3/3/2014-3/5/2014

3/3/14 Summary of the current situation in Ukraine (with my commentary in brackets):


  • Russia’s Black Sea Fleet has given Ukrainian forces in Crimea until 5:00 local time (03:00 GMT) on Tuesday to surrender or face an all-out assault. (There are reports that Putin may be using Russian special forces as provocateurs to incite violence that would then be used as a justification for a military incursion. If successful in Crimea it is likely that Putin would engage in a larger incursion into the rest of Ukraine
  • Poland has invoked Article 4 of NATO’s founding treaty, under which consultations can be requested when an ally feels their security is threatened. The Polish President has said that while the Ukraine crisis is not a direct threat to Poland, meetings should be held to discuss Ukraine’s stablization. (This is the 4th time in NATO’s history that Article IV has been invoked. The last time it was invoked was in 2012 when Syria shot down a Turkish fighter plane.) (Russia and China are in broad agreement on Ukraine. Turkey says it will likely not take action to protect the Crimean Turkish minority, the Crimean Tartars.)
  • In his speech from Russia, ousted Ukrainian President Viktor Yanukovych said to Vladimir Putin: “In view of this [events in Ukraine], I ask Putin, to use the Armed Forces of the Russian Federation to restore legality, peace, law and order and stability, and to protect the population of Ukraine,” (Thus providing Putin with pretext for a full scale invasion).
  • The US envoy to the UN, Samantha Power, says there’s “no evidence” that ethnic Russians and Russian speakers in Ukraine are under threat. Moscow has repeatedly stated that ethnic Russians are under threat in Ukraine and that it is duty-bound to protect them.
  • Ukraine’s envoy to the UN, Yuriy Sergeyev, to Russia: “You call it a coup, in the democratic world we call it a revolution of dignity“. (Refering to the Protests that ousted the former Ukrainian President)
  • The US says observers from the Organization for Security and Co-operation in Europe (OSCE) will deploy in Crimea tonight, and calls upon Russia to “ensure that their access is not impeded”.
  • The costs to Putin of a full scale war will be high: Moscow’s stock markets have recorded sharp losses (11-13% or about $50BN in market capitalization, more than the cost of the Sochi Olympics) as investors take fright over the consequences of Russian military action in Ukraine. Russia’s central bank also raised its main interest rate to 7% from 5.5%.
  • Speaking to reporters after the UN Security Council meeting, French envoy Gerard Araud urges the world to “let the Ukrainians to decide their own fate”, in a reference to planned presidential elections on 25 May. (This, along with a Crimean referendum, is a possible diplomatic solution to the crisis.)


3/4/14 Updates throughout the day (with my comments in parentheses):

  • (A phone campaign has been started against NYU Professor Stephen F. Cohen, who is a Putin apologist: (212) 998-8289)

3/5/14 Updates throughout the day (with my comments in parenthesis):

  • (While many commentators suggest that if Putin declares war on Ukraine NATO should not intervene, the US, UK and Russia guaranteed Ukraine’s territorial soverigenty in the 1994 Budapest Memorandum in exchange for Ukraine’s denuclearization. The credibility of international agreements, nuclear agreements in particular, is at stake. How can the United States make promises to Iran on a nuclear agreement, if it does not uphold its commitments to Ukraine?)
  • Obama facing criticism from Hawks in Congress. (Had the US/EU taken a stronger approach back in December and earlier after the Orange Revolution it is very possible that the Crimean crisis could have been wholly avoided.) Source: Timothy Ash Standard Bank PLC Research Report
  • (There are Presidental elections planned on May 25th, a vote in Crimea for greater independence on March 30th, but no scheduled Parliamentary elections. If the Russian occupation continues, the Crimean elections will likely not be viewed as free and fair.)
  • (The Putin Narrative: An unpopular and ineffective but democratically elected politician was removed from power by a mob of facist and neo-nazi protestors, and the new unelected parliament rush through a law that says Ukrainian is the only official language of the country threatening Russian minorities. The new government wants to join the EU and NATO, which might bring missles to Russia’s borders. In addition the new government may not honor the naval lease agreement for Russia’s Black Sea fleet, the crown jewel of its navy. The best lies are half truths.)
  • A phone call between Estonia’s Foreign Minister and Catherine Ashton that took place on February 25th was leaked and indicated the Maidan organizers might be implicated in part for the use of snipers on February 22nd. (A good example of Putin’s propaganda machine trying to feed the above narrative. Had this phone call taken place today, it might be more credible, but the conversation took place on the 25th, when details of the crisis were still being discovered. After reviewing all of the evidence, including plans by Yanukovych to BRUTALLY crush the opposition’s FM responded and said the clip is dubious. Recent investigations show a “third party force (Russia/Putin)” may be behind the snipers.