Forget Minsk Protocol, Ukraine Needs New Deal

The fighting in eastern Ukraine resumed back in early January. It is surprising the cease-fire lasted even that long considering that leaders could not even set a definite demarcation line between the warring parties. Also, neither side fulfilled its promise to withdraw heavy weaponry from the battlefield.

What's more, it is difficult to shake the impression that hostilities were purposely synchronized with maneuverings on the diplomatic front and elsewhere. For example, hope remained as recently as early January that officials from Russia, Germany, France and Ukraine would hold a "Normandy-style" summit in Astana on Jan. 15 that was supposed to have been a turning point in reaching a settlement on the Ukrainian crisis.

However, the resumption of hostilities scuttled those plans. Hostilities first broke out in a battle for control over the ruins of the Donetsk airport, from which separatists claimed Ukrainian forces were firing on residential areas of Donetsk.

Now attention is focused on a group of from 6,000 to 9,000 Ukrainian soldiers who are partially surrounded by separatists near Debaltseve, a town that the Minsk Protocol stated back in September would remain in the control of Ukrainian government forces.

Although the West continues to call on Moscow to observe the provisions of the Minsk Protocol and to punish Russia with sanctions for failure to do so, not only those provisions but more importantly, that very type of settlement has, in my opinion, lost all meaning. The resumption of fighting completely annulled whatever agreements leaders reached in Minsk.

And the subsequent meeting on Jan. 31 immediately hit a dead end because Kiev rejected the separatists' demands to set a new demarcation line replacing the one agreed to in September and that called on Ukraine to withdraw its artillery from the residential areas of Donetsk, Luhansk and Horlivka.

A new format for talks is needed. The Minsk format has outlived its usefulness. The real players need to sit at the negotiating table. They need to set a realistic agenda and establish feasible goals.

That includes Moscow's demand for discussions on the future of Ukraine as a neutral, non-NATO state that is not hostile toward Russia. On this the Kremlin is uncompromising. Without satisfactory guarantees on that question, Russia will not agree to any "settlement" in Ukraine and will continue to support the separatists in Ukraine's eastern and southern regions.

At the same time, the Kremlin has been adamant that, although the Western sanctions are causing painful damage to the Russian economy, they will not deter Moscow from its current course. In effect, Moscow is telling Kiev, "We might die tomorrow, but you will die today."

Of course, Kiev is counting on support from the European Union and the United States. However, despite escalating tensions in Ukraine, the meeting of the EU Council of Ministers on Jan. 19 did not come to a unified position regarding the imposition of new sanctions against Russia.

At the upcoming EU-Ukraine summit, Kiev would do better to present itself as a victim of aggression than as a country that has completely failed so far to implement the structural economic reforms required by its creditors and sponsors.

It has failed not only because "Russia has tied its hands," but also because Ukraine either cannot or will not make the necessary changes. In fact, the war in the Donbass has not had a devastating financial impact on the country and its economy lies in ruins largely due to other causes.

Under the relentless influence of official propaganda, the Russian people now believe that the United States leads a global conspiracy against this country.

Recent opinion polls indicate that they are also increasingly concerned about rising prices and the general worsening of the economic situation, but this has not led to an increase in opposition to Russia's military campaign in Ukraine.

To the contrary, the great majority of the Russian people believe that Moscow is correct in its position on Ukraine.

Russia's ruling elite is equally obsessed with a "conspiratorial vision" of the world in which practically every man, woman and child in the Western world is fixated on its hatred for Russia, to the exclusion of all other interests or pastimes. That belief in endless conspiracies prevents Russia's rulers from developing a strategic course of action and constantly tempts them to revert to primitive distortions of reality in an effort to thwart the machinations of the "conspirators."

On the other hand, with oil and gas revenues accounting for almost 60 percent of Russia's budgetary revenues, the sharp drop in the price of oil and the resultant damage to the Russian economy is fueling the view in the West that the pressure on Russia is "producing results" and that the West should therefore step up that pressure.

And if you ask the supporters of this hawkish approach what ultimate results they hope to achieve by applying such pressure, they are unlikely to respond with anything more than a vague statement to the effect that "Putin will eventually back down because the damage to the Russian economy will reach unacceptable levels."

What they fail to realize is that what Europeans and Americans consider "economically unacceptable," ordinary Russians for decades considered absolutely normal. Historically, the last two decades of relative prosperity were more the exception than the rule for Russia.

Both the Kremlin and Russian society tend to divorce economic considerations from the big political picture, such that it is completely impossible to imagine mass protests with demonstrators carrying empty cooking pots and chanting, "Putin, we want food: Give back Crimea!"

And if the West is ultimately counting on regime change in Russia, it should consider the possibility that the next Kremlin leader might be even more undesirable than Putin and could cater to an even more stridently anti-Western public mood than exists today.

A resolution to the current impasse remains out of reach. And this despite the fact that Moscow has not yet tried to force the situation. The possibility of a full-scale escalation of the conflict hangs in the air, but has not yet happened — although if no agreement on the Donbass is forthcoming, I do not rule out the open involvement of Russia's regular army sometime this year.

Complicating matters, Kiev has made no decision on how it can comply with Russia's demand to make early repayment on its debt of $3 billion, thus placing Ukraine at risk of economic default.

Moscow is still pretending that it is open to negotiating that debt with Ukrainian President Petro Poroshenko, whose hold on power might weaken if the economy breaks down or the situation in eastern and southern Ukraine worsens.

Last fall, it seemed that the Kremlin would not raise the stakes in this dangerous game any higher. Apparently, that was not the case.

The turning point could come in the spring, when the EU will decide to prolong, stiffen or partially rescind sanctions — although the chances of the latter are slight. That is, of course, if the current escalation in hostilities does not derail any long-term chance of a peaceful resolution to the crisis.