Russia Looking for an Exit?

Russian President Vladimir Putin may be looking to ease the Ukraine crisis and restore relations with the West. US President Barack Obama has agreed to meet with Putin during his visit to the United States in late September. Credit: Official White House Photo by Pete Souza

Talking heads began to speculate that Russian President Vladimir Putin may be looking to ease the Ukraine crisis and restore relations with the West. Carnegie Endowment's Dmitri Trenin writes, "Moscow certainly hopes that cooperation with the United States and the West on Syria would blunt their confrontation over Ukraine." He goes on to say that it's "probably not a mere coincidence" that hostilities in the Donbas have died down when they did. Another possible reason for the timing is Putin's upcoming speech at the United Nations General Assembly on September 28. Reduced hostilities in Ukraine could lead to a blunting of the criticism he can expect from the world community. The strategy is paying off: President Obama has agreed to meet with Putin during his visit.

There are a number of factors for Russia's changing strategy in Ukraine. Despite Putin's bluster about restoring Russian greatness, it is in considerable economic difficulty. The state budget is highly dependent on the sale of oil and gas. Andrey Movchan reports that 60 percent of consolidated budget revenues come from taxes either directly or indirectly related to the oil and gas sector. The Russian government needs oil at $100 a barrel to balance its budget; with oil selling between $40 and $50 per barrel, it is running deep deficits. The Russian economy is projected to decline by three percent in 2015.

The future doesn't look any brighter for Russia's energy sector either. WhileRosneft planned to double its oil shipments to China, and Gazprom announced a doubling of the Nord Stream natural gas pipeline, the reality is quite different. Oil shipments to China have fallen below contracted levels (1.48 mt increase for 2015 instead of the contracted 5 million mt increase). Sanctions are preventing western participation in the Sakhalin II project. China is not providing the $25 billion financing to build the Power of Siberia pipeline and has refused to sign a decade-long anticipated contract for the Altai pipeline. In the West, the much ballyhooedTurkish Stream is also being held in abeyance. The Russian mega-energy deals of the last decade appear to be more propaganda than reality.

Economics is not the Russian President's only concern: the Russian people do not support deeper involvement in Ukraine. According to the Levada Center, 70 percent of Russians supported the takeover of Crimea as "Russian" land, and 80 percent say that retaking Crimea proves Russia's great power status. But when it comes to eastern Ukraine, the results are different. As of March 2015, 57 percent of Russians said the country should stay within its present borders, 64 percent said Russia should not try to keep former Soviet republics under control, and 55 percent said the country should focus on domestic issues. As the Russian economy continues to worsen, it's likely these isolationist sentiments will only increase.

Russia's continuing involvement in Ukraine is turning counterproductive for the Kremlin. Before 2014, Ukraine was leaning toward a more Western identity but nothing was solidified. That identity is no longer ambiguous, thanks to the Kremlin's overreach. Now there are US special forces on Ukrainian soil, training Ukrainian troops. The commander of US Army-Europe Lt. Gen. Ben Hodges said that those numbers may be expanded. In 2014, Ukraine signed an Association Agreement with the European Union, eliminating the possibility of it joining the Kremlin-led Eurasia Economic Union. Long divided NATO allies remain united over Russian sanctions, and for the first time in its post-Soviet history, a majority of Ukrainians want their country to join NATO.

Last week US Secretary of Defense Ashton Carter spoke with his Russian counterpart on ways deconflict Syria, but any cooperation between the two countries should not soften our Ukraine policy. The West may have only marginal influence on the worldwide energy market, but increasing pressure on pipeline routes, Russian public opinion, and negative geopolitical developments are taking their toll on the Kremlin's resolve.

James J. Coyle is a Research Fellow at the Atlantic Council and the Director of Global Education at Chapman University in Orange, CA.

This article originally appeared at Atlantic Council.