Since the Ukraine was a Hot POT last week I thought Herr Baier
would like this.  

(I get Stratfor's blessing if I keep the Adverts.)

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Date: Fri, 10 Dec 2004 17:28:05 -0600 (CST)
From: Strategic Forecasting <[log in to unmask]>
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Subject: Geopolitical Intelligence Report: Russia: After Ukraine

Geopolitical Intelligence Report: Russia: After Ukraine
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THE GEOPOLITICAL INTELLIGENCE REPORT

Russia: After Ukraine
December 10, 2004 1849 GMT

By Peter Zeihan

The Russian defeat in Ukraine is nearly complete.

In presidential runoff elections, the Ukrainian government's candidate, Prime
Minister Viktor Yanukovich, won the official ballot. However, protests
launched by opposition candidate Viktor Yushchenko over alleged election
fraud -- combined with strong international pressure -- caused the results to
be overturned. New elections will be held Dec. 26, and Yushchenko is widely
expected to win. Ukrainian President Leonid Kuchma, in an effort to deny
Yushchenko the powers that he himself has enjoyed, succeeded in forcing the
Ukrainian opposition to accept constitutional amendments that will transfer
some presidential powers to the Parliament, but these changes will take
effect only after the next parliamentary elections in 2006 -- elections in
which the opposition already is celebrating victory.

But the biggest loser in the election was not Yanukovich or Kuchma -- his
political master -- or even the oligarchic clans that sponsored him. It was
Russian President Vladimir Putin.

Not only has the Ukraine Supreme Court made a public mockery of Putin's
international proclamations of the election's "fair" nature, but Kuchma and
the oligarchic interests supporting him have all but abandoned Yanukovich.
That has left Russia as the only serious entity hanging a hope on the
now-"vacationing" Yanukovich.

Ukraine is not the only place where Putin has found geopolitical egg on his
face of late; Russian geopolitical defeats in the past four years have come
fast and furious.

Putin's desire not to be a focus of American rage after the Sept. 11 attacks
guided him to sanctioning a strong U.S. military presence in Central Asia --
a presence that is extremely unlikely ever to leave. Moscow's efforts to get
Washington to label the Chechens as terrorists were successful, but at the
price of the United States committing to taking care of the issue itself;
there are now U.S. military trainers indefinitely stationed in Georgia. In
the background, both the European Union and NATO have expanded their borders
steadily and now almost the entirety of the Central European roster of the
Warsaw Pact is safely within both organizations -- and out of Russia's reach.

All of this pales, however, in comparison to Ukraine, Russia's ancestral
home. The 10th- to 13th-century entity of Kievian Rus is widely considered to
the birthplace of today's Russia. But Moscow's queasiness over losing Ukraine
is far from merely the anxiety of emotional attachment.

Not to put too fine a point on it, but without Ukraine, Russia's political,
economic and military survivability are called into question:

* All but one of Russia's major infrastructure links to Europe pass through
Ukraine.
* Three-quarters of Russia's natural gas exports pass through Soviet-era
pipelines that cross Ukraine.
* In most years, Russia has imported food from Ukraine.
* Eastern Ukraine is geographically part of the Russian industrial heartland.
* The Dnieper River, the key transport route in Russia's Belarusian ally,
flows south through Ukraine -- not east Russia.
* With a population of just under 50 million, Ukraine is the only captive
market in the Russian orbit worth reintegrating with.
* The Black Sea fleet -- Russia's only true warm-water fleet -- remains at
Sevastopol on Ukraine's Crimean Peninsula because it is the only deep-water
port on the entire former Soviet Black Sea coast.
* A glance at a population density map indicates just how close Russia's
population centers are to the Ukrainian border, and how a hostile Ukraine
would pinch off easy Russian access to the volatile North Caucasus, a region
already rife with separatist tendencies.
* Moscow and Volgograd -- Russia's two defiant icons of World War II -- are
both less than 300 miles from the Ukrainian border.

It would not take a war to greatly damage Russian interests, simply a change
in Ukraine's geopolitical orientation. A Westernized Ukraine would not so
much be a dagger poised at the heart of Russia as it would be a jackhammer in
constant operation.

The significance of the loss only magnifies the humiliation. Like the failed
submarine-launched ballistic missile tests of Putin's re-election campaign,
this operation had Putin as its public face. He traveled twice to Ukraine to
personally -- if indirectly -- campaign for Yanukovich, and Kremlin spin
doctors who successfully ushered in Putin's second term provided much of the
brains behind the prime minister's political campaign.

Putin has lost more than face; he also has lost credibility at home in his
wider foreign and domestic policy goals. In the aftermath of the Sept. 11
attacks, Putin overruled opposition within Russia's national security
apparatus to align with Washington. The immediate costs included -- among
other things -- Russian pre-eminence in the Caucasus and Central Asia.

Putin anticipated -- and grudgingly accepted -- this loss in anticipation of
having time and U.S. sponsorship to trigger a Russian renaissance. Putin
needed the Americans to get off his back about things such as human rights,
press freedoms and Chechnya. The unofficial agreement was simple: Russia
would assist the United States in the war on terrorism, and in exchange U.S.
criticism of Russian domestic policies would be muted. It is a deal that
continues to this moment.

With the United States satisfied, Putin proceeded with his plan, the opening
stage of which was to establish himself as the unquestioned leader of Russia
as both a state and a civilization.

First, Putin defined the problem. Russia is in decline -- politically,
strategically, economically and demographically. The Commonwealth of
Independent States, the only international organization that Moscow can rely
upon to support it (and, incidentally, the only one it dominates) is moribund
because of lack of interest. The Americans are in Central Asia, and the other
former Soviet republics are squirming out from under Moscow's grasp. Talk of
a Russian-led Eurasian Economic Community that would reform the Soviet
economy remains largely talk. Everything from Russia's early warning
satellite system to its rank-and-file army is collapsing, with 90,000 troops
unable to pacify Chechnya even after five years of direct occupation. HIV and
tuberculosis are spreading like wildfire, and the death rate stubbornly
remains nearly double the birth rate, hampering Russia's ability even to
field a nominal army or maintain a conventional work force.

Second, Putin realized that before he could reverse the decline, he had to
consolidate control. One of Boris Yeltsin's greatest mistakes was that he
lacked the authority to implement change. More to the point, no one feared
Yeltsin, so the men who eventually became oligarchs robbed the state blind,
becoming power centers in and of themselves.

Putin spent the bulk of his first term reasserting control. The once-unruly
(and heavily oligarch-dominated) press has been subjugated to the state's
will. Regional governors are now appointed directly by the president. Nearly
all tax revenues flow into federal -- not regional -- coffers. The oligarchs,
particularly now that the Yukos drama is moving toward a resolution, are
falling over each other to pay homage to Putin (at least publicly).

Putin systematically has worked to consolidate political control in the
Kremlin as an institution and himself as a personality, using every
development along the way to formalize his control over all levels of
government and society. The result is a security state in which few dare
oppose the will of the president-turned-czar.

From here, Putin hoped to revamp Russia's economic, legal and governmental
structures sufficiently so that rule of law could take root, investors would
feel safe and the West would -- for its own reasons -- fund the modernization
of the Russian economy and state. Put another way, Putin was counting on his
pro-Western orientation to be the deciding factor in ushering in a flood of
Western investment to realize Russia's material riches and economic
potential.

Putin's problem is that revamping the country's political and economic
discourse required a massive amount of effort. The oligarchs, certainly not
at first, did not wish to go quietly into that good night, and the Yukos
crisis -- now in its 17th month -- soaked up much of the government's energy.
During this time the Kremlin turned introspective, understandably obsessed
with its effort to hammer domestic affairs into a more manageable form.
Moreover, as Putin made progress and fewer oligarchs and bureaucrats were
willing to challenge him, they also became too intimidated to act
autonomously. The result was an ever-shrinking pool of people willing to
speak up for fear of triggering Putin's wrath. The shrinking allotment of
bandwidth forced Russia largely to ignore international developments, nearly
collapsing its ability to monitor and protect its interests abroad.

This did not pass unnoticed.

Chinese penetration into the Russian Far East, European involvement in the
economies of Russia's near abroad and U.S. military cooperation with former
Soviet clients are at all-time highs. As Putin struggled to tame the Russian
bear, Moscow racked up foreign policy losses in Central Asia, the Baltics,
the Balkans and the Caucasus. Uzbekistan, Tajikistan and Kyrgyzstan all
became U.S. allies. Serbia formally left Russia's sphere of influence,
Georgia welcomed U.S. troops with open arms and ejected a Russian-backed
strongman from one of its separatist republics, and the three Baltic states
and the bulk of the Warsaw Pact joined both NATO and the European Union. And
now, Ukraine is about to take its first real steps away from Russia.

In short, Putin achieved the necessary focus to consolidate control, but the
cost was the loss of not just the empire, but with Ukraine, the chance of one
day rebuilding it.

More defeats are imminent. Once Ukraine adopts a less friendly relationship
with Russia, the Russian deployment to Transdniestria -- a tiny separatist
republic in Moldova kept alive only by Russian largesse -- will fade away.
Next on the list will be the remaining Russian forces at Georgian bases at
Akhalkalaki and Batumi. Georgia already has enacted an informal boycott on
visa paperwork for incoming soldiers, and the United States has begun linking
the Russian presence in Georgia and Transdniestria to broader Russian
security concerns.

Once these outposts fall, Russia's only true international "allies" will be
the relatively nonstrategic Belarus and Armenia, which the European Union and
United States can be counted upon to hammer relentlessly.

To say Russia is at a turning point is a gross understatement. Without
Ukraine, Russia is doomed to a painful slide into geopolitical obsolescence
and ultimately, perhaps even nonexistence.

Russia has three roads before it.

* Russia accepts the loss of Ukraine, soldiers on and hopes for the best.

Should Putin accept the loss of Ukraine quietly and do nothing, he invites
more encroachments -- primarily Western -- into Russia's dwindling sphere of
influence and ultimately into Russia itself, assigning the country to a
painful slide into strategic obsolescence. Never forget that Russia is a
state formed by an expansionary military policy. The Karelian Isthmus of
Russia's northwest once was Finnish territory, while the southern tier of the
Russian Far East was once Chinese. Deep within the Russian "motherland" are
the homelands of vibrant minorities such as the Tatars and the Bashkirs, who
theoretically could survive on their own. Of course the North Caucasus is a
region ripe for shattering; Chechens are not the only Muslims in the region
with separatist desires.

Geopolitically, playing dead is an unviable proposition; domestically it
could spell the end of the president. Putin rode to power on the nationalism
of the Chechen war. His efforts to implement a Reaganesque ideal of Russian
pride created a political movement that he has managed to harness, but never
quite control. If Russian nationalists feel that his Westernization efforts
have signed bit after bit of the empire away with nothing in return, he could
be overwhelmed by the creature he created. But Putin is a creature of logic
and planning.

Though it might be highly questionable whether Putin could survive as
Russia's leader if this path is chosen, the president's ironclad control of
the state and society at this point would make his removal in favor of
another path a complicated and perhaps protracted affair. With its economy,
infrastructure, military and influence waning by the day, time is one thing
Russia has precious little of.

* Russia reassesses its geopolitical levers and pushes back against the West.

Russia might have fallen a long way from its Soviet highs, but it still has a
large number of hefty tools it can use to influence global events.

If Putin is to make the West rethink its strategy of rolling back Russian
influence and options -- not to mention safeguard his own skin -- he will
have to act in a way to remind the West that Moscow still has fight left in
it and is far from out of options. And he will have to do it forcefully,
obviously and quickly.

The dependence upon Ukraine goes both ways. While Ukraine's south and east
are not majority Russian, those regions are heavily Russofied. Should a
Yushchenko-led Ukraine prove too hostile to Moscow, splitting a region that
is linguistically, culturally and economically integrated into Russia off
from Ukraine would not prove beyond Russia's means.

Also on the Ukrainian front, Russia has the energy card to play. Kiev's
primary source of income is transit fees on natural gas and oil. Russia
supplies about one-quarter of all European consumption. Tinkering with those
supplies -- or simply their delivery schedules -- would throw the European
economies into frenzy.

Russia could use its influence with Afghanistan's Northern Alliance to make
the United States' Afghan experience positively Russian. Sales of long-range
cruise missiles in India or Sovremenny destroyers complete with Sunburn
missiles to China would threaten U.S. control of the oceans. Weapons sales to
Latin America would undermine U.S. influence in its own backyard. The
occasional quiet message to North Korea could menace all U.S. policy in the
Koreas. And of course, there is still the Red Army. It might be a shadow of
its former self, but so are its potential European opponents.

All of these actions have side effects. The U.S. presence in Afghanistan
limits Islamist activities in Russia proper. India is no longer a Cold War
client; it is an independent power with its own ambitions which might soon
involve a partnership with the United States. Excessive weapons sales to
China could end with those weapons being used in support of an invasion of
the Russian Far East. Large-scale weapons sales to Latin America require
Latin American cash to underwrite them. Russian meddling in North Korea would
damage relations with China, Japan and South Korea as well as the West. And a
Russian military threat against Europe, if it could be mustered, would still
face the U.S. nuclear umbrella.

Such actions would also have consequences. The West might often -- and
vigorously -- disagree within itself, but there has not been a Western war in
nearly three generations. The West still tends to see Russia as the dangerous
"other," and by design or coincidence, Western policy toward the former
Soviet Union focuses on rolling back Russian influence, with Ukraine serving
as only the most recent example. Russian efforts to push back -- even in what
is perceived as self-defense -- would only provoke a concerted, if not
unified, response along Russia's entire economic, political and geographic
periphery.

Russia still might have options, but it did lose the Cold War and has fallen
in stature massively. In the years since the Cold War, Western options -- and
strength -- have only expanded. Even if Russian efforts were so successful
that they deflected all foreign attention from it, Russia would still be
doomed. Russia has degraded too far; simply buying time is not enough.

* Russia regenerates from within.

Unlike the United States, which has embraced change as part of daily life,
Russia is an earthquake society. It does not evolve. Pressures -- social,
political, economic -- build up within the country until it suffers a
massive, cataclysmic breakdown and then revival. It is not pleasant; often as
a result of Russia's spasms, millions of people die, and not always are they
all Russian. But in the rare instances when Russia does change, this is
invariably how it happens.

Ironically, the strength of the Soviet period has denied Russia the
possibility of foreign events triggering such a change. Russia, as the Union
of Soviet Socialist Republics' successor state, has nuclear weapons capable
of reaching any point on the globe. As such, a land invasion of Russia is
unthinkable.

That simple fact rules out a scenario such as what happened after World War
I. Massive defeat by the Central Powers might have triggered the Bolshevik
Revolution, but that did not directly result in the constitution of the
Soviet Union. Forging Russia into a new entity took another invasion on
multiple fronts. Foreign sponsorship of the White armies during Russia's
civil war -- and the direct involvement of hundreds of thousands of foreign
troops -- was necessary to instill a sense of besiegement sufficient to make
the Russians fight back and create a new country. The "mere" loss of Ukraine
during World War I was simply not enough. Russia did not merely need to be
defeated, humiliated and parsed -- Russia itself, not simply Ukraine, had to
be directly occupied.

As long as Russia has nukes, that cannot happen.

If Russia is to choose this third path, it must trigger its reformation by
itself from wholly domestic developments.

Perhaps it could be done by some sort of natural catastrophe, but to be
effective the catastrophe would need to be sufficient to mobilize the entire
Russian population. Russian society's muted response to the Beslan massacre
-- in which Chechen militants killed 350 Russian citizens, half of them
children -- indicates that terrorism will not be a sufficient stimulus.
Depopulation caused by HIV might prove a trigger, but by the time the effects
are obvious, there would not be much of a Russia left to revive.

That leaves the personal touch of a Russian leader to shake the state to its
very core.

Most likely, Putin is not the man for the job. He is, among all else, from
St. Petersburg. He's sees Russia's future in the West, particularly the
European West -- but only on Russia's terms. Of course, this is not how
realignment of civilizations works. Ask the Spanish (who took a leave of
absence from the West during the Franco years), or the Greeks (who have
shuttled between West and East), or the Poles (forced separation), or the
Romanians (never really in the West) or the Turks (wanting, but not too
desperately, to join), or -- in a few years -- the Ukrainians (who really
have no idea what they are signing up for). To join the West you must change;
the West does not change to join you.

Putin also is a gradualist. Russia cannot even attempt the necessary internal
renaissance until such time as the oligarchs are liquidated -- not merely
reshuffled, as is happening currently. That necessitates a Russian upheaval
on a scale for which Putin does not appear to have the stomach. Putin has
been in command for four years, and in that time he has liquidated four
oligarchs: Boris Berezovsky, Vladimir Gusinsky, Rem Vyakhirev and Mikhail
Khodorkovsky.

Four oligarchs in four years. Not exactly revolutionary.

Making matters worse, all the assets of these four have either been
expropriated to other private oligarchs or shuffled into the hands of a
growing class of state oligarchs such as Gazprom CEO Alexei Miller.

Actually eliminating the oligarchs as a class (which, incidentally, controls
nearly 70 percent of the country's economy) will require a massive national
spasm complete with a complete scrapping and reformation of the country's
legal structure, up to and including the constitution. Investors who have
been spooked by Russia's anti-oligarchic efforts have not seen anything yet.

But just because Putin is not the spy for the job does not mean Russia is not
capable. Russian leaders have done this before. Peter the Great did it. Ivan
the Terrible did it. Joseph Stalin did it. It tends not to be pretty.

(c) 2004 Strategic Forecasting, Inc. All rights reserved.

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