Ukraine Conflict Monitor, March 21-28, 2017

Ukraine 101:

  • No significant developments.

West’s leverage over Russia:

  • Europe’s highest court has upheld EU sanctions against Moscow over its interference in Ukraine in a case filed by Rosneft, the Russian state-controlled oil giant. (Financial Times, 03.28.17)
  • The European Union is prolonging its satellite imagery support to help observers monitor the conflict in eastern Ukraine. (AP, 03.24.17)

Russia’s leverage over West:

  • No significant developments.

Russia’s leverage over Ukraine:

  • No significant developments.

Casualties and costs for Russia, West and Ukraine:

  • A small Ukrainian military helicopter crashed in the east of the country on March 26, killing its two crew members and three passengers, Ukraine's defense ministry said. The ministry said it is most likely that the Mi-2 had flown into a power line. (Reuters, 03.26.17)
  • Alexei Chaliy, the pro-Moscow Crimean politician who signed a document handing control over the Ukrainian peninsula to Russia in March 2014, said the three years since had been a time of disappointment for many people in the region. While he has no regrets about the region becoming part of Russia, he is not pleased with the way the region has been run since. "If we're talking about changes linked to quality of life in the region, then here—we have to acknowledge—in a significant way things don't correspond to what was expected," Chaliy said. (Reuters, 03.27.17)

Impact of Russia’s actions vis-à-vis Ukraine on other countries:

  • France must curb its reliance on Russian and Ukrainian firms for its military support fleet to move troops and hardware to war zones, a French parliamentary report on March 28 found. The report's author said the reliance on Russian and Ukrainian operators was a "veritable Damocles sword" hanging over French forces and that Paris was vulnerable to deteriorating relations that "could totally paralyze its aerial deployment." In 2015, Flight Unit 224, a company linked to Russia's Defense Ministry, suspended its flights for France at the request of the Russian government as relations between the two countries cooled over the Ukrainian crisis. (Reuters, 03.28.17)

Red lines and tripwires:

  • The Polish defense minister has welcomed a multinational NATO battalion to Poland made up of troops from the United States, Britain and Romania, saying the deployment improves the region's security given the "threat from the East." (AP, 03.28.17)

Factors and scenarios that could cause resumption of large-scale hostilities or lead to accidents between Western and Russian forces in Europe:

  • Western military commanders are concerned that large-scale Russian military exercises near the Baltics in September pose heightened risks for a miscalculation that could lead to a crisis, allied officials said. The Russian exercises, which Western officials estimate will involve nearly 100,000 troops, will be the first to roll out after the new NATO force in the region reaches full strength. They will also take place at the same time as military drills by Western forces in Sweden, across the Baltic Sea. (Wall Street Journal, 03.28.17)
  • Ukrainian government troops and separatist fighters have drawn closer to each other at several places along the tense front line in eastern Ukraine, monitors say, raising the risk of violent flare-ups that could wreck a shaky ceasefire. At some points, the sides have drawn within shouting distance of each other. Alexander Hug, deputy head of the OSCE mission, said its monitors struggle to verify if the Minsk II accord is being respected because both sides refuse to disclose their units' locations and limit access to their positions. (Reuters, 03.24.17)
  • Around 20,000 people were evacuated March 23 in Ukraine’s Kharkov region near the border with Russia after a massive fire at a military arsenal. Ukrainian officials say a woman's body has been found under debris at the site. Ukraine suspects the Russian military or its separatist rebel proxies were responsible, Ukrainian Defense Minister Stepan Poltorak said. Ukraine did not provide evidence of Russian or rebel involvement. The Russian military did not immediately respond to a request for comment. (AP , 03.23.17, Reuters , 03.23.17, RFE/RL, 03.24.17)

Arming and training of Ukrainian forces by Western countries:

  • No significant developments.

Strategies and actions recommended:

  • Josh Cohen, a former U.S. Agency for International Development project officer, writes: “What Minsk II does not tackle, though, is the broader issue of Kiev’s basic geopolitical orientation. Ending the conflict once and for all therefore requires a deal explicitly addressing this issue, and above all how Russia, Ukraine and the West interact with one another.” (The Washington Post, 03.23.17)


  • Neil Buckley, a former Moscow bureau chief of the Financial Times, writes: Although the macroeconomic situation has stabilized, a bumpy week in Kiev shows that real stability—in terms of the political and security situation—remains elusive. The Kiev government is spending time on constant crisis management and political infighting when it desperately needs to focus on longer-term reforms to boost a nascent economic recovery and attract foreign investment. (Financial Times, 03.24.17)
  • Chris Weafer, a long-time Moscow-based financial analyst and now the senior partner at Macro-Advisory, a consultancy, writes: Ukraine equity indices and debt prices were among the best performing in the world last year and the positive momentum has continued in 2017. The question investors have to ask themselves after such a strong run is whether it is nearing an end or whether the indices have more to give? On the economic front the story is generally positive, albeit facing more headwinds this year. The main area of concern is politics. (Financial Times, 03.22.17)
  • Edward Fishman, a nonresident fellow at the Atlantic Council, writes: As one of the diplomats involved in creating the sanctions, I am not surprised they have endured. We designed them to be sustainable—to apply meaningful pressure on Russia without risking a short-term economic crisis or overly burdening any one constituency in the U.S. or Europe. (Wall Street Journal, 03.23.17)
  • Leonid Bershidsky, a long-time Russia watcher and Bloomberg View columnist, writes: The final severing of the remaining economic and cultural ties looks like preparation for an all-out war. Whether or not that's the case, the high-profile murder in Kiev is a direct warning from the Kremlin, which is showing that it can operate anywhere in Ukraine as though it were its own turf. (Bloomberg, 03.23.17)

Other important news:

  • Paul Manafort, President Trump’s former campaign chairman and a one-time adviser to ousted Ukrainian President Viktor Yanukovych, has volunteered to be interviewed before the House Intelligence Committee, which is investigating alleged ties between Trump campaign officials and Russia. (The Washington Post, 03.24.17)
    • Before signing up with Trump, Manafort secretly worked for Russian billionaire Oleg Deripaska with a plan to "greatly benefit the Putin Government," The Associated Press reported on March 22. The report quickly raised fresh alarms in Congress about Russian links to Trump associates. Manafort proposed in a confidential strategy plan as early as June 2005 that he would influence politics, business dealings and news coverage inside the U.S., Europe and former Soviet republics to benefit President Vladimir Putin's government. (AP, 03.22.17)
    • Russian billionaire Oleg Deripaska on March 28 took out paid advertisements in the Wall Street Journal and The Washington Post to denounce the AP’s reporting on this story. Deripaska pushes back against the AP’s contention that he contracted with Manafort to “greatly benefit the Putin government,” and writes, “I demand that any and all further dissemination of these allegations, by the AP or any other media outlet, must cease immediately.” (The Washington Post, 03.28.17)
    • The U.S. government investigation of Manafort crossed the Atlantic earlier this year to Cyprus, once known as a haven for money laundering by Russian billionaires. Treasury agents in recent months obtained information connected to Manafort's transactions from Cypriot authorities. The request was part of a federal anti-corruption probe into Manafort's work in Eastern Europe. (AP, 03.23.17)
    • A new investigation by WNYC has found that between 2006 and 2013—overlapping in time with his work for Yanukovych—Manafort bought three homes in New York City, following a pattern: Using shell companies, he purchased the homes in all-cash deals, then transferred the properties into his own name for no money and finally borrowed against them ($12 million in total) within the past few years, according to property records. (WNYC, 03.28.17)
  • A former Russian parliamentarian who fled to Ukraine and harshly criticized the Russian authorities has been shot dead in Kiev. Denis Voronenkov, formerly a Communist Party lawmaker in the State Duma, was killed outside Kiev's Premier Palace hotel March 23. Voronenkov was leaving the hotel with his bodyguard when he was shot. The bodyguard returned fire and wounded the shooter. The alleged assassin was subsequently taken to a Kiev hospital where he was pronounced dead. The bodyguard sustained injuries in the shootout. Ukrainian President Petro Poroshenko called the murder of Voronenkov an act of state terrorism by Russia. Poroshenko said it is "a matter of honor" to successfully investigate the killing. Russia's Kremlin said on March 23 that allegations from Ukrainian authorities that Moscow was behind the murder of a fugitive Russian MP in Kiev were absurd. Before fleeing Russia, Voronenkov was the target of a fraud investigation. Voronenkov and his wife were concerned about their security, specifically citing their conflict with Russia. (The Moscow Times, 03.23.17, The Washington Post, 03.23.17, Reuters, 03.23.17, RFE/RL, 03.24.17)
    • Less than 72 hours before he was killed, Voronenkov had given one of his final interviews, speaking about his decision to leave Russia, the corruption charges against him, his vote for the annexation of Crimea and life in Ukraine. He dodged questions about his current employment. (The Washington Post, 03.28.17)
    • The man seen shooting ex-Duma Deputy Denis Voronenkov and a bodyguard in security-camera footage has been identified as 28-year-old, Crimean-born Ukrainian national Pavlo Parshov, a Ukrainian Interior Ministry spokesman told RFE/RL. Ukraine’s security service, the SBU, has said Parshov served briefly in the country’s National Guard, according to TASS. (RFE/RL, 03.24.17, RBTH, 03.24.17)
  • NATO envoys will hold a formal meeting with Russia on March 30, their fourth since the 2014 crisis in Ukraine halted regular talks, although both sides continue to accuse each other of destabilizing Eastern Europe. The conflict in Ukraine will be on the agenda, as will troop movements by both NATO and Russia and Moscow's deployment of missiles to its Baltic exclave of Kaliningrad. Afghanistan will also be on the agenda, but it is not clear if NATO's top commander will address his suspicions that Russia may be supplying Taliban insurgents, a claim Moscow has rejected as a lie. (Reuters, 03.28.17)
  • The head of NATO's military committee recently held a telephone call with the chief of the Russian general staff, NATO Secretary General Jens Stoltenberg said on March 22. The Russian Defense Ministry said that Petr Pavel and Valery Gerasimov discussed security, the prospects of restoring military interaction, the prevention of incidents and the participation of the alliance's representatives in events held by Russia's Defense Ministry. “When tensions are high it's even more important that we talk together and that we have open lines of military and political communications," Stoltenberg said. (Reuters , 03.22.17, RFE/RL , 03.23.17)
  • A municipal court in the southern Russian town of Yessentuki has issued an arrest warrant for former Ukrainian Prime Minister Arseniy Yatsenyuk. According to the court's March 27 statement, an international warrant for Yatsenyuk's arrest has been in effect since Feb. 21. Russia wants to try him on charges of participating in an armed group in the Russian North Caucasus region of Chechnya in the mid-1990s and fighting against Russian troops. (RFE/RL, 03.27.17)
  • Activists in Kiev on March 28 started dismantling a cinder block wall that had been erected to blockade the central office of the local subsidiary of Sberbank, after news that the Russian state-owned bank had reached a preliminary agreement to exit the Ukrainian market. (Financial Times, 03.28.17)
    • New sanctions by Kiev on the Ukrainian subsidiaries of Russian state-owned banks came into effect March 23, banning the banks from taking money out of Ukraine. (Reuters, 03.23.17)
  • On March 22, Russia’s State Duma, the lower house of parliament, passed a law restricting money transfers from Russia to countries that restrict the operation of Russian payment systems on its territory. The new rule applies to financial transfers outside the banking system. The law is Moscow's response to Kiev's ban on Russian money wiring systems such as Colibri, Golden Crown and Unistream. (Vzglyad/RBTH, 03.24.17)
  • Most central bank governors do not expect to be threatened with physical violence in their office. But most central bank governors do not work in Ukraine. Valeria Gontareva has closed 87 ailing banks since President Petro Poroshenko asked her to chair the National Bank of Ukraine four months after Kiev’s pro-democracy revolution of 2014 began—as well as nationalizing the country’s biggest lender, PrivatBank, late last year. There has been “absolutely incredible pressure” from vested interests she confronted, Gontareva says. (Financial Times, 03.26.17)
  • The Eurovision song contest, nominally an apolitical festival of pop music confections and cheerfully tacky costumes, erupted into a political dispute March 22 after Ukraine banned Russia’s contestant, Yulia Samoylova, from entering the country. (AP , 03.22.17)
  • A postgraduate student at Moscow State University says he was beaten and interrogated by the Federal Security Service after he exposed a makeshift Ukrainian flag on the third anniversary of Russia's illegal annexation of Crimea. (RFE/RL , 03.21.17)
  • Russia's lower house of parliament has approved legislation to exempt Russians who are under Western sanctions from paying tax in Russia if they are registered as taxpayers in foreign countries. (RFE/RL, 03.22.17)
  • British Foreign Minister Boris Johnson has postponed a conciliatory trip to Moscow in order to attend a rearranged meeting with NATO foreign ministers on March 31. Johnson was due to become the first British foreign secretary to visit Russia in five years, in an attempt to address differences on issues such as Syria and Ukraine. (Financial Times, 03.27.17)
  • Chicago-born Natalie Jaresko, the former finance minister of Ukraine who steered the country through an International Monetary Fund program and debt restructuring, is now setting her sights on patching up the finances of Puerto Rico. (Financial Times, 03.24.17)