June 30, 2015
By Rostislav Ishchenko
Translated from Russian by J.Hawk
On Oleg Marchenko’s request, I’m laying out my answers to my old friends questions provoked by one of my earlier articles. In the form it was earlier published on a facebook community page. I’d like to draw attention to the fact that we were discussing a hypothetical ability to do something in the past rather than plans for the future (which is something many don’t understand).
Dear Dima, welcome!
Please forgive me I am answering you in public but, as far as I understand, the questions you raised are also of interest to others. Therefore it’s all the same to you where you’ll read the answer, and it will save me the trouble of writing the same thing 20-30 times.
So, you wrote:
Greetings! Pardon my denseness, but I did not understand the logic of this paragraph: “Federated Ukraine with a new constitution and broad regional rights would not only acknowledge the transfer of Crimea to Russia (the new constitution would not mention Crimea as Ukraine’s territory), but it would also gradually integrate into the Customs Union and the Eurasian Union. It would simply have nowhere else to go. Neither US nor the EU are willing to support Ukraine.”
1. Why won’t Crimea be listed as Ukrainian territory in the new constitution?
2. Why a federated Ukraine? A unitary Ukraine would likewise have nowhere to go. In any event, it’s the center that decides the direction of foreign economic activity, even in a federated state.
P.S.: Those aren’t abstract questions for me. I’m not looking for an argument. There is a reason why I’m asking.
1. If we are to carefully examine Putin’s proposals aired in March and April 2014 as well as the text of Minsk Agreements, we see that the federation ought to take the form of a free association of territories which agreed to live together. In other words, the new federation constitution addresses the collapse of legitimacy which occurred after the legal government was overthrown, which in turn led to an armed confrontation among regions and a civil war. The constitution will be written by those regions who agreed to remain part of the reinvented Ukrainian state. This would be a reinvention–the old unitary system ends, the new federated one is established (just as France’s Second Empire was followed by the Third Republic, or the Soviet Republic after the Romanovs’ empire). Everything changes–the system of government, the institutions of government, and their legitimacy is no longer based on historical continuity through presidential and parliamentary elections, but on a new fundamental law. This constitution ought to be through a national referendum, because the old system which lacks legitimacy in the eyes of its people, cannot endow the new system with legitimacy. But even if it is adopted by a special constitutional assembly, one important aspect would remain the same. Government cannot rule over territories which did not participate in establishing that document. You can’t simply write in Russia’s constitution that it now includes Hokkaido and demand that Japan give up the island. Therefore the power of the new federated Ukrainian state could not extent to Crimea whose population not only would not participate in ratifying the new constitution or founding the new Ukraine, but which already clearly expressed its willingess to be part of Russia and which already was part of Russia.
This, of course, would not obviate the necessity to deal with the international legal aspect. The negotiations might be protracted and difficult, but you would not have a legal dead end in which Crimea is perfectly legally mentioned as a region of a country in two constitutions. Crimea would not be one of the lands founding the new Ukraine, therefore it could not be included in the new constitution.
2. The same applies to the Customs Union and Eurasian Union. Look. One of the demands posed before the process of founding a federated Ukrainian state was granting regions which we today call Norovossia not only rights, but also guarantees these rights would be respected, including own budget policy, own foreign economic policy, and even its own means of violence (it’s not important what they would be called–“people’s militia,” “republican guard”, or something along these lines). I’m sure Galicia would not allow Novorossia have more rights than it does. But that means Ukraine would no longer be a unitary state and not even a genuine federation. It would be more akin to confederation that calls itself a federation which has a central government but with limited power and dependent on the budget-forming regions.
And who is the engine of euro-integration? Galicia? No, the luckless hutsuls don’t have the power to subordinate the entire Ukraine without the support from the powerful center which suppressed the openly pro-Russian orientation of the majority of voters. This is why it was impossible to apply Russia’s “soft power” in Ukraine effectively. No matter which politician you approach, they’ll turn out to be in favor of euro-integration. You could have ten coups, and you’d still end up with euro-integrators in power. As soon as a regional pro-Russian politician finds himself on the national stage, he becomes imbued with the interests of the center, whose importance depends on its ability on redistributing Novorossia’s resources to Galicia’s benefit (this is incidentally what the civil war is about), and becomes a euro-integrator.
But in a soft federation (which would in fact be a confederation) the elected governor of Donetsk or Dnepropetrovsk would be ten times more important than the president, government, and parliament in Kiev no matter how many chambers it has. Whoever has the money has the power, and the money are in the regions. The capital loses its importance, which means its control also is of no interest to anyone. Everyone wants to be as close to the money as possible, which means remaining in the regions.
Its greater population and economic power means that Novorossia would enjoy a huge advantage. Not dependent on the center’s diktat, it would decide for itself how much money to allocate Galicia to prevent everyone from emigrating in search of work. I realize that there would be a residual tendency toward euro-integration. But when you, as a politician (district governor), are dependent on the will of the people live off contracts with Russia, you see the light pretty quickly. That precisely is the problem of the Kiev government. They got used to look for money not in manufacturing, but in the piggy bank called national budget. They could care less how money gets into the budget. Their job is to divide that money (mainly among themselves). But in the regions, if there is no manufacturing there is no money in the budget because customs revenue and suchlike belong solely to the center.
In that situation neither Kiev nor Galicia would have sufficient political weight to overcome the regions’ desire to make money. Rather the opposite, their well-being would now depend on the well-being of the regions.
In order to become independent of the regions, the central authorities would have to find alternative sources of budget financing. The only such source in the current situation are foreign loans. I won’t even mention the possibility of the constitution limiting the extent of the volume of such loans by requiring assent by the regional assembly (which means Novorossia could block any such loan). But let’s assume the center can borrow as much as it wants to. Who would give it money? We’re not talking about pitiful $5-10 billion a year, like right now, but $30-50 billion per year in order to balance the regions’ power. And it would have to be sustained. Loans against which guarantees, if the center has limited authority?
But Russia, crediting industries of interest, would provide Novorossia $15-20 billion over a period of 2-3 years, not counting private loans. It would be clear that the loans are mutually beneficial and repayable, and both sides would know how the loans would be repaid. That’s how Galicia would be brought into the Customs Union in 3-5 years without excessive theatrics, using a financial rope through the federation ring in the nose.
Naturally, this scenario contains a number of assumptions which might be invalid. But other scenarios have even more such assumptions, for example: “If we sent in the tanks in March, we’d have captured Lvov by April and all would be well.” Here the entire statement is one huge assumption based only on the wishful thinking of the person making the claim. And, finally, the fact that both the US and Kiev turned down Putin’s rather generous proposal: “Federalize, and all will be well, we’ll live with Poroshenko (even with Turchinov) like we did with Yanukovych” and instead launched a civil war which they could never win, also indirectly confirms what I’m writing. In the federalization scenario they would lose Ukraine, not as quickly or noticeably, but definitively and without unnecessary deaths and destruction.
J.Hawk’s Comment: I think here, too, Ishchenko hits the nail on the head. This is Russia’s endgame, has been from the beginning, and the strategy has been crafted with that particular endgame in mind. If you listen to Poroshenko, “federalization” is about the worst thing that could happen because, from his perspective, it would be the worst thing to happen. I mean, why fund the Maidan if you will become a figurehead president of a confederal Ukraine???