Home / World / Low oil prices make Russia seek compromise over the conflict in eastern Ukraine – Stratfor

Low oil prices make Russia seek compromise over the conflict in eastern Ukraine – Stratfor

The latest Stratfor’s analysis suggests that low oil prices will make Russia more open to advancing negotiations on the resolving the conflict in eastern Ukraine in the coming months
The U.S.-Russia talks over the standoff in Ukraine could advance - Stratfor

There are rumors of a political reshuffle in the separatist territories of Donetsk and Luhansk. Ukrainian and Russian media have even reported that a “secret deal” is in the works that would serve as a compromise between the political and security demands of the separatists and Moscow, on one hand, and Kyiv and its Western backers on the other, said in Stratfor’s report.

According to the report, there are plenty of reasons to be skeptical of such rumors. Ukrainian officials made it clear that there would be no political concessions from Kyiv until Moscow completely implemented the security provisions of last year’s Minsk agreement. These provisions include the withdrawal of all foreign — meaning Russian — troops in eastern Ukraine as well as the restoration of control of the border between the separatist territories and Russia to Ukraine. Meanwhile, Moscow has reiterated that Kiev must pass key constitutional changes that would grant greater autonomy to the separatist regions before the security components of Minsk are implemented.

The Ukrainian conflict has already had its fair share of fruitless negotiations and cease-fire breakdowns. Simply continuing the status quo would understandably be more likely. But the drop in global oil prices and the subsequent weakening of the Russian economy, as well as Russia’s extensive involvement in Syria, could be giving new life to negotiations among Kyiv, Moscow and the West. A grand bargain over Ukraine is far from near, but there may be room for compromise over what so far have been intractable issues.

Talk of a potential deal began when U.S. Assistant Secretary of State Victoria Nuland held an unannounced meeting with Russian presidential adviser Vladislav Surkov on January 15. Nuland, who was at the time in the middle of a tour of EU and NATO countries in Eastern Europe, flew to the border of Lithuania and the Russian exclave of Kaliningrad to meet with Surkov. The meeting, which reportedly lasted over four hours, immediately led to speculation of a “secret agreement” between the United States and Russia over Ukraine. The details of what the deal would entail have varied from source to source. Some outlets claimed the separatist Donbas region would formally be part of Ukraine’s territory but would be given special status and allowed to conduct its own foreign policy. Others reported that Russia would concede on granting Ukraine control of its border with the separatist territories. Some even suggested that Russia was considering replacing current leaders of the Donetsk and Luhansk separatist territories with figures who are more cooperative with Kyiv in a bid to move negotiations forward.

U.S. Secretary of State John Kerry then met with Russian Foreign Minister Sergei Lavrov in Zurich on Jan. 20. Just two days later, Kerry said at the World Economic Forum in Davos that U.S. sanctions against Russia could be lifted “within months” if the Minsk agreement were fully implemented. The statement was notable, since the United States has taken a hard line relative to European countries on maintaining sanctions against Russia. But while the European Union recently voted to extend sanctions on Russia for six months, several European officials have made it clear that they wish to lift EU sanctions on Russia when they come under review in July and have pressured Moscow and Kyiv to do more on implementing Minsk protocols.

For Russia, getting sanctions removed is paramount. The drastic drop in global oil prices has caused Russia’s budget, which depends on energy revenues, to shrink and its deficit to explode, and the ruble is becoming more volatile.

Another component that could drive negotiations is the ongoing conflict Syria. Russia has become involved in Syria on the side of President Bashar al Assad’s government, conflicting with U.S. and European support for certain rebel factions. But both Moscow and the West share a common enemy in Syria: the Islamic State, so their shared interest in containing the security threat of the Islamic State, which has struck both Europe and Russia, presents an opportunity for cooperation on other issues.

However, Moscow is unlikely to completely surrender on Ukraine. The Kremlin traditionally prioritizes Russia’s national security interests over its economic development. Putin is aware that giving away major concessions on Ukraine without anything to show for them could be more disastrous for his political position than the economic pain that Russia has had to endure.

The issue of local elections in the separatist territories appears to have been a focus in recent diplomatic talks. Holding local polls in Donetsk and Luhansk could lessen the more prickly political differences over the status and autonomy of the breakaway territories. However, for local elections to be held, Russia and the separatists would have to cooperate by completely observing the cease-fire, removing heavy weaponry from the front lines and granting Organization for Security and Co-operation in Europe observers access to the warzone.