Atlantic Council DINU PATRICIU EURASIA CENTER A Roadmap for Ukraine Delivering on the Promise of the Maidan A Roadmap for Ukraine Delivering on the Promise of the Maidan

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July 2014 FOREWORD

Last fall, as Ukrainians massed on the Maidan to build a “Team Ukraine.” We quickly buttressed our effort demand a better government and closer ties to Europe, by bringing on board former US Ambassador to Ukraine the Atlantic Council began to mobilize on Ukraine. An Atlantic Council delegation visited Warsaw and Kyiv Center and the leader of our Ukraine in Europe Initiative. in March to map out our strategy, and during the visit John Herbst as the director of the Dinu Patriciu Eurasia of Ukrainian Prime Minister Arseniy Yatsenyuk to the Deputy Director David Koranyi played an instrumental Council that same month, we launched a one hundred- role serving both as acting director of our Dinu Patriciu day campaign to galvanize the transatlantic community Eurasia Center while also leading our energy tiger team behind Ukraine’s democratic future in Europe. on Ukraine. Brent Scowcroft Center on International Security Senior Fellow Ian Brzezinski, who once worked As the crisis worsened, we convened at the highest in Ukraine’s parliament as well as the US Congress, levels, making vital connections between Ukrainian, led our security-focused policy team. Board Director American, and European policymakers and thought and former Undersecretary of Defense Walt Slocombe leaders. We deployed our substantial expertise to led our red team exercises with the support of US launch “red team” exercises that anticipated Russia’s Navy Senior Fellow Chris Musselman. Irena Chalupa, actions and outlined strategies to respond to likely the former head of the Ukrainian service at Radio scenarios. Our rapid response working groups (“tiger Free Europe/Radio Liberty, joined as an editor of the teams”) made recommendations on issues fundamental UkraineAlert and coordinator of our public diplomacy to Ukraine’s success. An Atlantic Council delegation reported on and from Ukraine for the Washington Post, together, to Prime Minister Yatsenyuk and other leaders tigerwrote team. and edited Our online a tremendous editor Jim number Rupert, ofwho insightful once delivered this report, which brings all of these findings articles and blogs for the UkraineAlert. And throughout, shared with American and European policymakers. Senior Adviser Diane Zeleny has provided strategic in Kyiv the first week of July. The findings are also being guidance to help magnify the impact of our work. The Council’s enduring commitment to Europe and the transatlantic relationship has been the focal point of None of this would have been possible without the generous support of the Atlantic Council Board of Europe Initiative to harness the opportunities Ukraine ournow work has to this become year. Ina sovereign,June, we launched prosperous, the Ukraineand united in to his fellow board members to support the Council’s Directors,response to especially historic developmentsGeorge Lund, whoin Europe’s issued anEast. appeal Kerry, and many Congressional and European leaders nation.have selected Vice President the Atlantic Joe CouncilBiden, Secretary as a platform of State to reach John Americans and Europeans concerned about the setbacks We offer a special thanks to George and his colleagues Adrienne Arsht, Robert Gelbard, Paula Dobriansky, Julie in Poland, we honored the people of the Maidan with Finley,Andrew Bahaa Prozes, Hariri, and W.Ian DeVier Hague, Pierson Stephen for Hadley, their support.Brian ina Freedom the region. Award, At our which fifth annualwas accepted Wrocław by Globaldemocracy Forum Henderson, Martin van Heuven, Alexander Mirtchev, activists Ruslana Lyzhychko and Kateryna Kruk. To keep Our Ukraine work will be sustained beyond this report Ukraine on the agenda in Western capitals, we launched by the generous support of many others including a high-impact biweekly newsletter, UkraineAlert, which has become a must-read for its thoughtful, in-depth analysis of developments on the ground. theFurthermore, Smith Richardson the Council Foundation, is working the to George expand the Chopivskyimpact and Foundation, reach of our James Ukraine C. Temerty, in Europe and Initiative Chevron. To accomplish all of this, we turned to a committed and by working more closely with the Ukrainian World talented team. Executive Vice President Damon Wilson Congress. and Senior Fellow Adrian Karatnycky, who both have long experience dealing with Ukraine, joined forces With the support of these friends, the Atlantic Council to launch the Council’s new initiative, connecting our is doing its part to help Ukraine succeed and to ensure knowledge of the situation on the ground with our North American and European policy plays an effective ability to navigate policy circles in Washington and supporting role. Through this work, the Council Europe. Building on the Ukraine work initiated by Vice continues to mark our commitment to a vibrant, effective President Fran Burwell in previous years, we set out to transatlantic community and a Europe whole, free, and at peace.

Frederick Kempe President & CEO Atlantic Council TABLE OF CONTENTS

INTRODUCTION...... 1

ENSURING UKRAINE’S PROSPEROUS FUTURE...... 2

STRENGTHENING UKRAINE’S NATIONAL DEFENSE...... 4

SECURING UKRAINE’S ENERGY SECTOR...... 7

TELLING UKRAINE’S STORY AT HOME AND ABROAD ...... 11

UKRAINE CRISIS RED TEAM EXERCISES ...... 15

UKRAINE CRISIS RED TEAM OVERVIEW ...... 15

OVERT SCENARIO...... 16

COVERT/DENIABLE SCENARIO ...... 18

OSTENSIBLY LEGITIMATE SCENARIO...... 20

DELAY/DE-ESCALATE SCENARIO ...... 22 A Roadmap for Ukraine

INTRODUCTION

Ukraine is once again at a potential turning point relationships and a Europe whole, free, and at peace, the in its young history. It missed the opportunity at Council is uniquely positioned to address this critical independence and during the Orange Revolution to make issue and provide the necessary guidance and expertise a decisive break with an authoritarian past and move for these ends. decisively toward an open, market-oriented society. Yet Ukrainian civil society remained vibrant and late last year once again spoke out against the country’s UKRAINE IS authoritarian and corrupt leaders. As a result of the protests from an enraged citizenry, then-President ONCE AGAIN AT

ViktorAt that Yanukovychpoint, a severe fled domestic the country crisis for in Russia. Ukraine became A POTENTIAL an international one. Angry that its preferred Ukrainian politician was no longer in power, the Kremlin took steps TURNING POINT IN that was done, Moscow began an insurgency in Ukraine’s to seize Crimea, first clandestinely and then openly. Once ITS YOUNG HISTORY . Ukrainian volunteers to take up the struggle against their Broadly speaking, the new Ukrainian government of owneast. government,Having trouble the finding Kremlin a sufficient sent in special number forces of and President Petro Poroshenko must do two things to intelligence operatives to run an insurgency and to hire create a secure, democratic, and market-based society. any locals willing to join. When those numbers did not First, the new government must stave off the Russian prove adequate, Moscow sent in its own mercenaries. aggression and take back full control of eastern Ukraine, while continuing to call the world’s attention to Russia’s The Russian aggression against Ukraine was a major “annexation” of Crimea. Second, it must undertake the violation of the post-Cold War order in Europe. It explicitly major reforms needed to end corruption and remove the violated Russia’s obligation in the 1994 Budapest oppressive hand of government on the economy, and to Memorandum—under which Ukraine gave up its nuclear ensure the rule of law and the unobstructed activities of weapons—to respect Ukraine’s territorial integrity. This a wide spectrum of political parties and civil society. prompted the United States and the European Union (EU) to level limited sanctions on Russia and to threaten major To help Ukraine in this effort, the Council assembled sanctions against whole sectors of the Russian economy if an eminent group of experts to look at key problems the Kremlin’s aggression continued. facing Poroshenko. The papers on the economy, energy sector, the security sector, public diplomacy, The Atlantic Council was drawn to this issue not just by and various scenarios for Russian activities in Ukraine the inspiring story of a still young nation trying to throw presented in this report are the result of their work. off the shackles of its past and face down a much larger These papers serve as an invitation to a dialogue with and more powerful neighbor, but also by the geopolitical implications of Russian President Vladimir Putin’s United States with the intention of promoting Ukraine’s freedomthe governments and protecting of Ukraine, the post-Cold Germany, War the EU,order. and For the Ukraine by asserting his right to protect ethnic Russians Ukraine to succeed in transforming itself, Kyiv must anddangerous Russian game. speakers Putin outside justified of hisRussia. intervention As applied in in Ukraine, this principle threatens nations across assistance for that reform and to help Kyiv resist Kremlin Eurasia, including our NATO allies in Estonia, Latvia, and aggression.undertake difficult This report reform, will and be followed the West by must future provide Lithuania. What that means is that Ukraine is currently Council publications and ongoing dialogue on the status the front line in a potentially broader challenge by a of Poroshenko’s efforts to defend Ukraine’s territorial revanchist Russia. integrity and to institute the necessary reforms and how the West might help. Early in 2014, the Council launched its Ukraine in Europe Initiative. The purpose was to draw attention Director, Dinu Patriciu Eurasia Center to help Ukraine choose its own political destiny. As AtlanticJohn Herbst, Council anto theorganization crisis in Ukraine, committed its global to strong ramifications, transatlantic and

ATLANTIC COUNCIL 1 A Roadmap for Ukraine

ENSURING UKRAINE’S PROSPEROUS FUTURE

The crisis with Russia hit Ukraine’s economy at a vulnerable time in late 2013. The country’s growth was percent in 2016. a loose fiscal policy, this fiscal deficit should drop to 3 percent drop in 2009 because of the global recession, flat in 2012 and 2013. (The economy sustained a 15 to the US dollar, has led to a 50 percent depreciation, percent in the following two years.) Public sector debt whichLetting will the help hryvna exports float andfreely, reduce after imports,years of beingaddressing tied but gross domestic product (GDP) grew at 5 and then 4 2013. This made the government of former President at 5.5 percent for 2014, despite the increase in the price Viktor(internal Yanukovych and external) vulnerable rose to to40 the percent Kremlin of GDP offer in to ofthe gas current from Russia,account which deficit. is Thatjumping deficit from is now the $268 projected per drop the trade association agreement with the European 1,000 cubic meters under the deal Russian President Union (EU) in exchange for $15 billion in loans and Vladimir Putin offered Yanukovych in December to approximately $485. The signing of the free trade lower gas prices. The current account deficit also this by stimulating exports. reachedThe internal $16 turmoilbillion in and 2013, the orcrisis 9 percent with Russia of GDP. was a agreement with the EU this June should contribute to body blow to the economy. The disruption of industrial The Task for President Poroshenko and His production, especially in eastern Ukraine, and Russian Team: Security First trade restrictions led to a slump in production. Most Thanks to the good work of the interim government, economists are predicting a 4 percent decline in the macroeconomic situation in the country has started to stabilize. But this stability is still at risk due to the ongoing turmoil in the east of Ukraine. Ukrainian Ukraine’s GDP this year. Russia’s seizure of Crimea, President Petro Poroshenko has been quick to announce ofwhich Ukraine’s accounted $83.5 for billion 3 percent exports of Ukraine’sin 2013 were GDP, sent will toalso Russia.lower Ukraine’s Estimates output that Russia in 2014. will Twenty-five cut its imports percent from Luhansk. This is the pre-condition not just for protecting Ukraine by 50 percent lead to projections that exports thethat country’s his first priority territorial is to integrity restore butorder for in establishing Donetsk and will slump to $77 billion this year. an environment in which the economy can prosper. The Donetsk and Luhansk oblasts were responsible for The Good Work of the Interim Government nearly a quarter of Ukraine’s exports in 2013. If the economy seemed in a parlous state when then- The Ukrainian security forces’ successful retaking of half of February, the overall picture has improved since the Donetsk airport from the separatists days after President Yanukovych fled for Russia in the second the election was a good sign that this mission can be technocrat Arseniy Yatsenyuk became the acting prime accomplished. But much more will be necessary in the ministerdespite the at thatfighting time, in and eastern working Ukraine. with Competentthen-Acting weeks ahead. President Oleksandr Turchynov and the International Build on the Macroeconomic Policies of the Monetary Fund (IMF), instituted a number of Interim Government and the IMF macroeconomic reforms designed to cut government The interim government has already done the hard expenditures, raise government revenues, cut the part, cutting government expenditures and raising revenues in order to alleviate Ukraine’s massive public adeficit, standby reduce agreement the country’s with the current IMF that account brought imbalance, the Poroshenko follow and even enhance these measures. countryand meet as short-term much as $17 fiscal billion obligations. in emergency The result funding. was Forsector example, deficits while and trade raising deficits. tariffs Iton is natural essential gas, that the The measures taken by the interim government have Ukrainian government still provides gas at a subsidy rate already produced a good result. Thanks to higher for heavy industry. Reducing this subsidy will not only taxes, an increase in the price the government charges for gas, and reductions in government employment, competitiveness.help maintain fiscal discipline but force heavy industry to make energy-efficient changes that will enhance their Perhaps the single most effective step taken by the willexpenditures instead fall will from drop. 7 percent As a result, last theyear fiscal to 4.5 budget percent indeficit 2014. that If the looked new to government skyrocket todoes 10 notpercent lapse of back GDP to interim government to fix its current account deficit was to float the hryvna. 2 ATLANTIC COUNCIL A Roadmap for Ukraine

Transforming the Economy Poroshenko’s decisive victory in the presidential Such privileging has been the source of much corruption elections gives him the political capital to take on the inUkrainian the past, firms for instance should notin the be saleprivileged of Kryvorizhstal in this process. in arduous task of introducing the structural reforms 2004. necessary to transform the economy. The intention is to get the parasitic and cumbersome Ukrainian state Corruption in the Tax Administration should be apparatus off the back of business. The lack of political addressed not just by changing personnel but by changes in the early years of independence meant that reducing substantially the number of items to be taxed. the proper economic institutions never developed in Taxes should be transparent and all tax bills itemized. Ukraine. It has taken too long to get to the point that The Energy Sector place these reforms. ensuring that public revenues are not diverted to private Ukraine is at now, and it’s a fleeting opportunity to put in Getting the energy sector right—reducing subsidies, This starts with the new president and his government team announcing a clean break with the statist system transforming the Ukrainian economy. pockets, reducing energy inefficiency—is essential to of the past. The new personnel appointments by the president need to make this clear. The good news is POROSHENKO AND that Poroshenko has asked Yatsenyuk, an experienced reformer, to stay on as prime minister. YATSENYUK WILL HAVE THEIR HANDS FULL MANAGING THE The government now needs to make clear the inevitability of reform by placing reformers as new cabinet ministers RUSSIAN-LED INSURGENCY and subministers. These appointees need to have the AS THEY PUSH FOR MAJOR authority to make lower-level personnel changes and to ECONOMIC REFORM . of corruption—especially in the Tax Administration, Customs,ensure that and the the reform police—need policies areto be implemented. cleaned out. HotbedsFormer Encouraging Government Reform Ukraine’s relationship with the IMF will help keep changes in the police drastically reduced corruption Poroshenko and his team on the right path. But it throughoutGeorgian President the country Mikheil and Saakashvili’sset the stage wholesalefor the structural will also be important for other credible outsiders to provide advice and feedback on the progress of police force and used the military police tax substitutes structural reform. Such an effort would give Poroshenko whilereforms he that hired followed. new policemen. Indeed, Saakashvili fired the whole an additional set of eyes and possibly help explain the need for reform in Ukrainian elite circles, for instance to Administrative changes are the fastest way to effect businessmen no longer receiving government subsidies. reform, but this can be followed by new regulations. It is very important that the thrust of the regulations Poroshenko and Yatsenyuk will have their hands full should reduce the intrusiveness of the government managing the Russian-led insurgency in eastern Ukraine in the economy. At the end of the day, the number of as they push for major economic reform. The oligarchs regulations in force should decrease dramatically. are not likely to simply accept an end to the gravy train that made them rich. So the new president is likely to Proper legislation is perhaps the best guarantee for face constant push back to real reform. establishing a stable market economy. Right to own private property, including in agriculture, must be This means that international friends of Ukraine will enshrined in the constitution and law. This right must be need to stay closely engaged in the process, both to keep protected against the possible abuse of government and Poroshenko and Yatsenyuk on track, and to help them police and tax powers. with the well-heeled opponents of reform. Oligarchs like Rinat Akhmetov and Victor Pinchuk understand Attacking Corruption that their future lies in Europe and this choice entails Corruption is arguably the greatest obstacle to the changes in the way business is conducted in Ukraine. economic transformation of Ukraine, and it needs to Close attention from outside experts may prove useful be attacked in several directions. As mentioned above, in limiting the opposition of the country’s big business a wholesale cleaning of corrupt personnel is a priority. interests. This is particularly true in the courts. Establishing a legal culture of transparency will also help greatly. A start can Acknowledgements: John Herbst thanks Anders Aslund, be made here by passing a law requiring transparent and Edilberto Segura, Christopher A. Hartwell, Oksana competitive bids in the sale of government assets. And Nesterenko, and Nazar Kholod for their insights and contributions to this paper.

ATLANTIC COUNCIL 3 A Roadmap for Ukraine

STRENGTHENING UKRAINE’S NATIONAL DEFENSE

Secure borders and internal peace are important leveraging special operations forces, paramilitary foundation blocks upon which to drive economic and units, and intelligence operatives; and political reform in Ukraine. Russia has invaded Ukraine and occupies Crimea, supports an internal insurgency, the threat of a Russian-generated, -sustained and has massed military forces on Ukraine’s eastern and -directed insurgency with the aim to foment and northern frontiers. This undercuts, if not precludes, ◊ separatism. Kyiv’s ability to drive forward the challenging reforms • Interagency coordination. Russia’s aggression necessary to enhance the freedom and prosperity of its highlights the power that can be leveraged through citizens and to effectuate their desire to integrate into the integration of political, military, civil, economic, the community of European democracies. intelligence, information, and other elements of Russia’s aggression has highlighted the failure of Kyiv’s national power. The new national security strategy previous governments to build requisite security must provide the conceptual and organizational and defense institutions and capabilities. The new foundation for Ukraine’s National Security and government inherits a security establishment that is in a Defense Council (NSDC) to effectively coordinate the state of disrepair. The Ukrainian defense establishment Ukrainian government’s civil and military assets and is hampered by obsolete weapons and equipment, oversee comprehensive programs for governmental inadequate training, corruption, and strategic guidance modernization and reform. that lacks clarity of mission and objectives tailored to contemporary and foreseeable realities. • Geopolitical vision. The new national security strategy should clearly reassert Ukraine’s Nevertheless, Ukraine’s military and security determination to deepen and institutionalize its establishment offers the potential necessary to confront relationship with the democracies of Europe and the country’s pressing challenges. Over two decades of the transatlantic community, Ukraine’s readiness independence have instilled a stronger sense of national to develop cooperative relations with a Russia that identity. Ukraine’s cooperation with NATO and NATO respects its territorial and political sovereignty, allies dates back to 1991, and in 1994, it became one and its recognition that these are not inherently mutually exclusive goals. for Peace program. Collaboration has included allied exercisesof the first in countries Ukraine andto join Ukrainian the Alliance’s contributions Partnership to National Defense Strategy and Structure transatlantic military operations around the globe, all of The Ministry of Defense should initiate a Strategic which have helped the Ukrainian security establishment shed some of its Soviet-era legacies and attain useful series. In the interim, the Defense Ministry should issue operational experience. aDefense defense Review and military (SDR) guidanceto be the firstdocument in a quadrennial bridging the existing SDR and a future one that takes into Russia’s aggression provides an opportunity of strategic consideration current circumstances, including Russia’s clarity and urgency that should be used to expedite building a robust, modern, and capable Ukrainian the pending constitutional reforms in Ukraine, and defense and security establishment. Ukraine’sinvasion, the aspirations Ukrainian for government’s European integration. fiscal capacities, National Security Strategy Core components of this interim strategic guidance On May 13, the government in Kyiv initiated a strategic document should include: review of the security sector, in essence an update of the 2012 National Security Strategy, the obsolescence of • Territorial defense. Ukraine should revise its which is underscored by Russia’s invasion. pre-crisis territorial defense strategy. This strategy should focus on the following strategic objectives: • Challenges. The new strategy should clearly to deter aggression; to defend Ukraine from identify the principal challenges confronting the conventional attack when deterrence fails; and to security of Ukraine to include: isolate and defeat insurgency. Territorial defense strategies can maximize the potential of inexpensive the threat of Russian military intervention not weapons. Successfully executed, a territorial only by conventional combined arms attack defense strategy will impose disproportionately ◊ but also through unconventional operations

4 ATLANTIC COUNCIL A Roadmap for Ukraine

Pro-Russian separatists march in Donetsk. Photo credit: Andrew Butko. high costs on an opponent despite the aggressor’s contribute to the shift of Ukraine’s defense industry substantial numerical and material advantages. away from Russian buyers and toward new Capabilities generated through such a strategy, opportunities in the international defense market. when complemented by rapid maneuver capacity, increased intelligence, surveillance and • National Guard. reconnaissance assets, and special forces, can should be placed under the Ministry of Interior and support other national and local security forces trained as a national The military emerging police National force Guard akin to the acting to neutralize illegal armed formations. than as a traditional military reserve). It should be • Revitalized defense reform measures. Leveraging developedFrance’s Gendarmerie as an active andvoluntary Italy’s reserve,Carabinieri capable (rather the progress made in past defense reform efforts of reinforcing the strategy of territorial defense in Ukraine and central Europe, efforts should be against both external aggression and internal illegal made to reenergize reform in the following priority elements. areas: defense planning review, defense budget and resource management and accountability; • International collaboration. Recognizing current training and education; and personnel management. Improving the professional ethos and loyalty of the crisis, Ukraine’s defense establishment should Ukrainian military is a must in the current security seekfiscal opportunities restraints and to the expand demands its engagement of the current

and enlisted personnel desirable career paths with education, training, and exercises both abroad and environment. This will require providing its officers atwith home those and of contributions the Euro-Atlantic to Euro-Atlantic community. Jointmilitary based advancement, and the training and resources operations will reinforce Ukraine’s position as a de necessarycompetitive for compensation operational success. and benefits, merit- facto member of that community. They will provide useful operational experience and expertise, and • NATO standards. Ukraine’s defense establishment foster the development and sustainment of valuable should implement previous pledges to adopt institutional and personal relationships. NATO operational standards and to adopt NATO equipment standards across the Ukrainian military, • Foreign military and defense advisers. Ukraine should leverage Western experience by integrating interaction with European and North American Western advisers into its ministry of defense, militaryas financially establishments. feasible. Doing Interoperability so will help facilitatecan be general staff, and key training and operational units an important driver of constructive institutional to help facilitate the process of defense and military change. And, adopting NATO standards could reform and modernization.

ATLANTIC COUNCIL 5 A Roadmap for Ukraine

Defense Industry and accountability of its defense and security Ukraine’s defense industry represents a strategic asset, establishments. yet its mismanagement has created opportunity cost for the country’s economy and contributed to the nation’s • Intelligence. The West should increase its continued dependence upon the Russian market. To intelligence cooperation with Ukraine. The reform and integrate Ukraine’s defense industry into the objectives should be to enhance Kyiv’s situational global market, the new government should articulate awareness of internal and external threats through, a comprehensive defense industrial strategy the key for example, sharing of intelligence and provision principles and objectives of which include: of training in intelligence collection, analysis and dissemination. The West can also help reinforce the • maximizing the lessons learned and experience of operational and personnel integrity and capability of European and North American efforts to rationalize the Ukrainian intelligence community. national defense industries; • NATO cooperation. NATO should offer Ukraine • promoting foreign investment on a case-by-case the opportunity to joint review and update the basis in Ukraine’s defense industry; panoply of agreements and institutions created to manage their relationship, including the NATO- • fostering cooperation in research and development Ukraine Charter, the NATO-Ukraine Commission, the initiatives and joint production;

• strengthening external oversight and transparency, EducationJoint Working Enhancement Group on Defense Program. Reform, NATO shouldthe Joint be including transforming state-owned enterprises into preparedWorking Group to provide on Armaments, assistance toand Ukraine’s the Defense Strategic publically traded companies; and Defense Review. • aligning Ukraine’s export control polices with those NATO and NATO member states in Europe and North America. • Military exercises. should offer to expand and expedite a program of Recommendations for the West exercises with the Ukrainian military both in and The West should provide Kyiv with military and security outside of Ukraine. Exercises are a means to enhance assistance and engagement that will increase Ukraine’s the capabilities and readiness of the Ukrainian armed forces and to demonstrate Western interest The assistance program should, given the current crisis, in Ukraine’s security and sovereignty. focusconfidence on what and can capability be achieved to provide in the fornear its term self-defense. rather Regional security than on efforts with long time lines. • Regional cooperation. cooperation with Ukraine should be encouraged, • Military equipment. The West should expedite activated, supported, and strengthened. North and expand the provision to Ukraine of equipment American and Western European NATO allies should that will increase its armed forces: mobility; reinforce bilateral and multilateral collaboration intelligence, surveillance, and reconnaissance between, for example, Ukraine, Poland, Lithuania, capacities; logistical structures; and command, and Romania. control, and communication capacities. Weapons to assist Ukraine’s territorial defense should also be • Defense industrial collaboration/major non- provided including anti-tank and tactical air-defense NATO ally status. European and North American weapons. Such assistance is needed to rapidly states should grant Ukraine the necessary legal reinforce Ukraine’s ability to deter and defend status that will enable their deeper engagement against a foreign invasion and to contain and defeat with Ukraine’s defense industry. For example, the violent separatists. United States should offer Ukraine Major Non- NATO Ally status. This would open opportunities • Military trainers/defense advisers. The West for cooperative defense research and development should offer Kyiv military and civilian trainers projects, allow Ukrainian enterprises to bid on and advisers who can be embedded in Ukrainian certain US defense contracts, and make Ukraine defense and security institutions to facilitate the eligible for expedited processing of export licenses assimilation of new equipment and methods, of military and dual equipment and services. improve their operational capacities, and further develop the processes of modernization and Acknowledgements: Ian Brzezinski thanks Robert Gramer, reform. Special effort should be directed to assisting Simona Kordosova, Robert Nurick, Marianna Kozintseva, Ukraine modernize and reform the human capital Maksym Bugriy, Walter Slocombe, Oleksiy Melnyk, Chris Mussselman, Leonid Polyiakov, John Herbst, and Jim Greene for their insights and contributions to this paper. management and the financial management

6 ATLANTIC COUNCIL A Roadmap for Ukraine

SECURING UKRAINE’S ENERGY SECTOR

Energy represents one of Ukraine’s greatest adopt the EU’s energy acquis. The Treaty stipulates vulnerabilities and sources of potential strength, energy sector reforms and regulates third-party and must be central to a broader effective and access to the energy grids as well as the unbundling of comprehensive economic reform plan. transmission and generation assets. Even though the EU has tried to give concrete assistance, such as the Energy is the linchpin of Ukraine’s dependence on 2009 agreement on renovating Ukraine’s gas pipelines, Russia. The Kremlin has used energy as a weapon not progress on these reforms has been very slow. The only to exert leverage over Ukraine, but to control its International Monetary Fund (IMF) has also tried to leaders and key power players who are personally push reform on the domestic gas market in order to enriched via opaque energy deals with Russia. eliminate the gas subsidies tanking the national budget.

As such, the energy sector is a critical pillar to building Furthermore, Russia is fundamentally opposed to reform an effective, stable national security and economic efforts establishing greater transparency. As Moscow strategy for Ukraine. wants to formalize its control of the gas transit system, it prefers its murky deals with Ukraine. By putting in This strategy must be long-term in scope yet also place a new and transparent regime for the transit one that will have an immediate positive impact. The arrangements with Russia, the Ukrainian government Atlantic Council has developed this roadmap for the new can help ensure that these funds are not misused administration in Kyiv to clean up, reform, and liberalize Ukraine’s energy sector and integrate it with European recalibrate the balance between the maintenance of its Union’s energy market. transitfor personal status, gains. on the Going one hand,forward, and Ukraine developing should its own The Challenges domestic resources and diversifying its outside supplies, Despite its energy resources, the country’s economy on the other. itself is far from optimal. Successive rounds of systemic The new presidential administration must seize the theft and mismanagement left Ukraine’s government opportunity to implement new measures to build a more coffers chronically cash-strapped. Furthermore, external independent, secure, and sustainable energy system for political pressure and inertia of previous governments Ukraine. left Ukraine with a ruinous gas contract with Russia. The country is not only in an asymmetric war, but also in an Recommendations for the Ukrainian economic war with Russia, resulting in negative growth, Government especially in its eastern regions. Steps taken to reform the country’s energy sector in the Lack of transparency and the misuse of energy rents to lessen Ukraine’s dependence on Russia and clean up have paralyzed the political system and bolstered the next one hundred days will be crucial, first and foremost country’s oligarchy. It has also weakened legitimacy of urgency, the new Ukrainian leadership should undertake the state and people’s trust in the government, and its thea corrupt following and steps:inefficient energy system. As a matter of ability to stand up to Russian pressure and aggression, especially in eastern Ukraine. Priority 1: Transparency. Injecting transparency and eliminating rents is the sine qua non of energy sector In sum, Ukraine’s energy situation is unsustainable, as reform in Ukraine. Furthermore, such transparency is spent on natural gas subsidies. This will only be currently 7 percent of gross domestic product (GDP) government’s legitimacy. slightly helped by the current increase of gas and utility will serve to bolster the population’s confidence in the prices, as close to half of the increase has already been Hold an independent technical and financial audit consumed by the 25 percent depreciation of the hryvna of the energy sector. Ukraine needs to conduct an against the US dollar. independent audit of the hydrocarbon extraction and distribution sectors. This should include a transparent The European Union (EU) has tried to foster reforms public inventory of all extraction wells with disclosure of in Ukraine through different instruments and with their owners and distribution networks of the resources, limited success. Central to the efforts was the Energy as well as of the ownership of distribution networks. Community Treaty, which requires member states to

ATLANTIC COUNCIL 7 A Roadmap for Ukraine

Conduct a governance and regulatory reform to Priority 2: Liberalization of the energy sector. increase transparency and efficiency. Legislation must Ukraine’s new leadership must set in motion legislation be put in place to increase transparency, streamline that will help create a competitive energy sector. A regulations and the tax code, and ensure that all liberalized energy sector will attract investments, regulatory bodies have power and credibility. The energy regulator (NKRE) and the antitrust agencies in dependency on Russia as a natural gas supplier through particular need to be fully independent and empowered increase competition and efficiency, and reduce in accordance with the law and international best are ensured at market entry to encourage and facilitate practices with special regard to the Extractive Industry diversification efforts. It is imperative that fair prices Transparency Initiative (EITI). A streamlined and supplyEnact pricing diversification. reform, finding the balance between transparent mechanism of public procurements are social costs and economic costs. The new presidential alsosimplified a must. licensing Equal treatment and taxation of domestic system, and aforeign administration must maintain political legitimacy and investors should be ensured by the state, enshrined in ensure that the roadmap is followed through. The social law and observed in practice. costs of end-consumer energy prices must be dealt with proactively, otherwise this could lead to even greater Improve information about gas flows. There is a need social discontent and political instability. That said, Ukraine should formulate a non-gradualist approach through the installment of gas metering stations at the Russianfor improved border. information Ukrtransgaz about needs gas to flows, establish especially a real market reality at every level. A step-by-step approach is moreto gas likely market to reform.be derailed The ingas its price implementation. should reflect Market the over the main lines should be controlled. This will requiredispatching negotiations center, by with which Moscow gas flows that and the informationEuropean system.1 Union should to assist with. There is a need to introduce prices will drive efficiency of an extraordinarily wasteful total accounting and control of movement and usage of Introduce a targeted subsidy system. Ukraine should gas by the principle “from wellhead to burner tip.” set up a system in which gas subsidies are tied to lower consumption. For example, consumers should pay

should also fully compensate the price increase to THE NEW marketlower prices levels on (about the first 5.5 250times cm/month. for gas and The three leadership times for heating) for low-income households by handing PRESIDENTIAL out “energy vouchers” worth the value of the average price differential for gas and heating per person. Even if ADMINISTRATION half of the population would receive such a subsidy, the current cost of subsidies would be cut in half, amounting MUST SEIZE THE to about $6 billion. A pricing reform along these lines would preserve social peace and put the bulk of the

OPPORTUNITY arbitrageurs. It also should allow the government to phaseburden out on all the the more other affluent energy and subsidies. the current The system’sgoal is not TO IMPLEMENT to eliminate “fossil fuel subsidies” for the population NEW MEASURES at once but to detach them from consumption, thereby out the subsidy in cash is that this is a considerable TO BUILD A MORE enhancing energy efficiency. The advantage of paying increase popular demand for changes to the heating INDEPENDENT, andstimulus gas delivery for energy system. efficiency. The cost It would of the dramatically subsidy would improvements. SECURE, AND be reduced year by year, in line with energy efficiency Initiate an energy savings program. Ukraine has huge SUSTAINABLE potential for energy savings through the realization of domestic gas production and unconventional gas ENERGY SYSTEM FOR extraction,energy efficiency this will programs. ideally allow Together the country with increasing to

UKRAINE . 1 An average Ukrainian household consumes 800 cma of gas directly plus almost 1,000 cma via district heating and warm water.

8 ATLANTIC COUNCIL A Roadmap for Ukraine dramatically lessen its energy import dependence in vigorously, Russia will remain an important supplier and the medium term. Ukraine should aim to further reduce transit partner for the foreseeable future. Thus, Russia gas consumption to 40 bcm from the current 50-52 and Ukraine need to stabilize their relationship and bcm per year already by 2017-2018. Corresponding agree on a transparent, credible gas purchase contract and transit regime. A prudent and well-prepared the regional level, including utilization of local fuel negotiation strategy that focuses on the long-term andenergy energy efficiency sources programs for heat shouldgeneration. be introduced The state on sustainability instead of short-term political gains is a must. Involvement of the European Union and outside industry expertise in the negotiations would facilitate (replacementshould introduce of roofs, a set doors,of financial windows, incentives and boilers). instead outcomes that conform to modern international Settingof subsidies up a microcreditto enhance households’ system with energy the help efficiency of this renegotiation, responsibility should be placed directlybusiness in practices. the hands Given of the the prime strategic minister importance or president. of international financial institutions (IFIs) to facilitate the It should be recognized that the technical competency domesticinvestment energy into efficiency market. Billing transition has towill be help changed to reduce on of incumbents in the Ukrainian energy sector is needed basisconsumption of the energy and enhancing delivered efficiencyand not on in the Ukraine’s basis of for the negotiations, but some of these individuals have the energy produced in the heating central. This will business practices in the past. The continual gas debt to Russiaalso been must barriers be resolved to reform once and and benefited for all with from the corrupt help of encourageIncrease domestic heating companies conventional to invest gas production. in efficiency. the international community. Liberalizing wellhead prices, providing fair access to market, simplifying licensing procedures, and removing Recommendations for the Transatlantic other barriers to investment could substantially increase Community domestic gas production, further reducing the need for Close scrutiny of Gazprom’s monopolistic Russian gas supplies. contractual practices. The European Union and the Energy Community should redouble and speed up efforts Complete the restructuring of Naftogaz. Restructuring and reforming Naftogaz by breaking it and create a more competitive and liquid European up into independent subsidiaries and privatizing its energyto crack market. down on These Gazprom’s are also monopolistic crucial for Ukraine practices in its nonessential functions should be a top priority for the negotiations with Russia and to better access reverse new presidential administration. A reform plan should be adopted by the cabinet of ministers as a matter of urgency. flowsSupport through Ukraine’s Slovakia, team Hungary, in negotiations and Poland. with Gazprom. Although the primary responsibility to Priority 3: Diversify energy supplies and integrate stabilize its energy relationship with Russia lies with into the European energy market. Ukraine should Ukraine, the EU shall pro-actively participate in the integrate its energy infrastructure into the European negotiations to ensure coherence and compliance energy market as a matter of urgency through with European rules and regulations. The EU can interconnections with the regional energy platform help Ukraine boost its leverage by providing a team

lawyers, and energy market professionals—to be in the Pipeline,of the Visegrad must be Group prioritized (V4). Diversification and facilitated projects, through both “backof experts—including room” with Ukrainian economists, decision-makers financial experts, during Europeanincluding reversefunding flow and boldon the steps Brotherhood/Bratstvo by Ukraine toward the adoption of a more transparent and stable Ukrainian gas sector. Expanding the Polish-Ukrainian interconnector talksFully withutilize Russian international leaders and governance Gazprom. institutions. and building up the necessary pipeline infrastructure To build momentum and a better negotiating position vis-á-vis Russia, Ukraine needs to vigorously pursue enlarging the northern interconnector with Romania its use of international governance instruments, shouldto access be the carefully Swinoujcie considered, LNG terminal with the in use Poland of EU and funding (Projects of Common Interest). offensive should include the Stockholm Arbitrage Court, mediationespecially inoffered light of by Gazprom’s the Energy inflated Charter, demands. and the World This Trade Organization (WTO). Swift action is also needed to suppliesIn addition and to expanding natural gas cooperation supply diversification, in the nuclear Ukraine Russia in Crimea at all available international courts. sectorshall also with consider non-Russian diversification companies. of the nuclear fuel demand compensation for energy assets confiscated by

Priority 4: Stabilize the gas relationship with active international involvement is required through Russia. To meet the demand for energy efficiency improvements, Even as diversification efforts must be pursued ATLANTIC COUNCIL 9 A Roadmap for Ukraine specialized programs and expertise. The focus of the Strengthen the European Energy Community. The European Bank for Reconstruction and Development European Energy Community Treaty should be further strengthened by forming a court and upgrading the laudable and should be stepped up. Yet the EBRD secretariat with executive functions that would be able still(EBRD) lends on too concrete much toenergy Russia, efficiency and the projectsbulk of that is to enforce antitrust law, state aid, and merger rules. The funding could be redirected to Ukraine. The European Community Secretariat should also assist Ukraine in Investment Bank should also step up funding for Ukraine preparing documents for arbitration in Stockholm. toward handing out credit lines to other banks. One Medium- and Long-term Tasks for Ukraine centraland redirect improvement more toward is to energyinstall heating efficiency and and electricity less and the Transatlantic Community meters on a house or entrance (pod’ezd) basis, as Medium- and long-term priorities for Ukraine’s energy programs should include: meters). Donating these meters and overseeing their • developing natural gas production from implementationwell as on each heating should elementbe a priority. in the flats (calorific unconventional sources and on the Black Sea waters by involving leading American and European energy companies;

• balanced expansion of the renewable energies RUSSIA AND (biomass, wind, and solar energy) on a transparent basis;

UKRAINE NEED TO • enhancing security of the critical infrastructure STABILIZE THEIR according to best EU and NATO practices; • creating strategic fuel reserves in cooperation with RELATIONSHIP neighboring EU member states; • completing implementation of the EU energy packages in the context of the obligations under the AND AGREE ON Energy Community Treaty;

• modernizing the Ukrainian gas transit system in A TRANSPARENT, close cooperation with the EU; CREDIBLE GAS • transitioning to the European system of natural gas

PURCHASE • accountingmodernizing by the its nationalquality indicators electric power (calorific engineering value); system with its parallel synchronization to the EU; CONTRACT AND and • establishing strategic stocks of oil and petroleum products in accordance with the requirements of the TRANSIT REGIME . EU and the International Energy Agency (IEA).

Acknowledgements: The roadmap has been developed by a group of Ukrainian and international experts, Set up a “twinning” program. A twinning program coordinated by Atlantic Council Dinu Patriciu Eurasia between the public administrations of EU member Center Deputy Director David Koranyi in the framework of states and Ukraine’s new administration could be a vital the Council’s Ukraine in Europe Initiative. Koranyi thanks instrument for cooperation. A twinning program will Margarita Balcameda, Konstantin Borodin, Edward Chow, allow European counterparts to provide support for Michael Gonchar, Anita Orbán, and John Roberts for their the transposition, implementation, and enforcement insights and contributions to this paper. of EU legislation to bring Ukraine closer to the European community. Counterparts will share good practices developed within the EU and foster long-term relationships. European experts with special regard to the Visegrad Four need to be included as advisers in the management of Ukrainian public energy companies.

10 ATLANTIC COUNCIL A Roadmap for Ukraine

TELLING UKRAINE’S STORY AT HOME AND ABROAD

Since the Orange Revolution, Russian anti-Ukrainian Reinforce Independent Media and Remove propaganda has helped to lay the groundwork for the Political Controls Kremlin’s annexation of Crimea and intervention in One of the most effective ways to counter Russian eastern Ukraine. This campaign has been ubiquitous, disinformation and propaganda inside Ukraine is with effective, and largely unchallenged, and it continues to good journalism, which means delivering high-quality, present a distorted and untrue picture of Ukraine to fact-based content and analysis. At this turbulent time in Russian and Western publics as well as Ukraine’s own its history, Ukraine’s media has been an integral part of people. the story. As tensions mounted and protests grew, new media covered almost every moment, Internet television In the battle for global public opinion, the Kremlin came into its own. Social networks became critical to spends millions on Internet, newspapers, television, the effort to communicate internally and with the world and an army of pundits and journalists around the beyond. world. Russian President Vladimir Putin described the Kremlin’s purpose perfectly: “to break the monopoly • The current situation provides a unique opportunity of the Anglo-Saxon mass media.”1 To this end, Moscow to create a real independent public broadcaster invests some $136 million annually just in Russian- and combining existing state infrastructure and the English-language media abroad. strong on ideas and attitude, weak on storytelling Since the Maidan protests began last autumn, Russia’s andHromadske original conceptcontent. and Ukrainian initiative. state Hromadske television is is strong in infrastructure and technical support, weak attempting to discredit the demonstrators as rabid on original programming. Leadership and a clear nationalistsfocused information and fascists campaign who are has being intensified, cynically program plan could combine the strengths of the manipulated by the West, the United States in particular. Russian state television endlessly asserts that Kyiv’s product. government is a junta made up of “fascists” who oppress two and finally launch a viable and lasting media Russian-speaking Ukrainians. Kyiv’s military operation • Legislation should be crafted outlining the against pro-Russian militants who have seized cities in eastern Ukraine is portrayed as an illegitimate and editorial independence following other successful punitive war against its own people. publicrelationship models between such as financing, the BBC and production, PBS. As the and Recent polling shows that the majority of people in most widely viewed channel in the country, the state-run Channel One is poised to be the platform the conversation in the east is currently hijacked by a for the delivery of a new public television product. eastern Ukraine do not want to join Russia. However, Break the Monopoly of the Oligarch- a way to get support to the silent majority so they have controlled Media vocal, pro-Russia minority. Domestically, Kyiv must find their voice heard too. These efforts need to be local Ukraine’s media, particularly television, is controlled by and genuine to be credible. Following the peaceful and opaque media holdings owned by business magnates. successful election that brought Petro Poroshenko to These oligarchs often use their television stations, power, the Ukrainian government has a compelling story websites, and newspapers for their own interests— to tell about democracy under pressure. No opportunity whether to obtain a business or political advantage, should be lost to tell this story. curry favor from the government, or simply malign a The following recommendations represent the views of a political adversary. group of experts who came together as part of the Atlantic • Ukraine urgently needs to begin a tradition of Council’s Ukraine in Europe Initiative to propose concrete distancing the media from politics and corruption. measures that the Ukrainian government, civil society, Legislation must be enacted guaranteeing and media can take in order to better serve Ukrainian transparency of ownership, clearly identifying citizens and safeguard truthful, objective information. relationship in such a way that editorial integrity conflicts of interest and defining the ownership must divest from their media holdings. 1 Paul Sonne, “Putin Moves to Break into Western News ‘Monopoly,’” Wall and independence are guaranteed. Elected officials Street Journal, December 9, 2013.

ATLANTIC COUNCIL 11 A Roadmap for Ukraine

Safeguard Independence, Objectivity and the “émigré journalist” who spoofs Ukrainian Professionalism in the Media political realities in his Nice News satire program, Although Ukraine has a dedicated core of independent journalists, too often there is a symbiotic relationship daily satire program of Russian news broadcasts on between politics and media, whereby journalists nationalis frequently Ukrainian aired ontelevision Hromadske would TV. be A aweekly/ powerful become players in the political process. Professionalism, instrument in countering and disarming Russian falsehoods and instilling a healthy skepticism in the strengthened to improve public trust in the media. minds of the viewing public. specifically in regard to journalistic ethics, must be • Raise the level of journalistic professionalism through exchanges and cooperation with Western ALTHOUGH UKRAINE media, expanded media internships in the United States and Europe, journalism school partnerships, HAS A DEDICATED and Ukrainian-Western media collaboration. CORE OF INDEPENDENT • Invite Western media specialists to deliver lectures/ master classes in Ukraine on ethics in journalism and JOURNALISTS, use existing platforms such as TED talks to establish and solidify journalistic best practices. TOO OFTEN THERE Dispel Russian Myths and Propaganda Russian disinformation too often remains unchallenged IS A SYMBIOTIC in Ukraine. A dedicated program that tracks distortions and lies and works to dispel them is needed. The RELATIONSHIP Kyiv Mohyla StopFake initiative does this in a limited capacity on the web. The media watchdog Telekritika BETWEEN POLITICS Mythbusters also monitors Russian media myths. AND MEDIA, WHEREBY The power of humor should become an instrument in the battle against Russian propaganda. Satirical news JOURNALISTS BECOME programs such as the Daily Show with Jon Stewart and the Colbert Report address current events with an PLAYERS IN THE irreverent, skeptical approach, pushing boundaries and encouraging critical consideration. POLITICAL PROCESS .

• Use the StopFake and Telekritika initiatives to Kyiv’s Inclusive National Message to Its launch a regular television program on national TV People: One Ukraine, Diverse and Unique to report and dispel the most egregious Russian The Maidan was an inspiration to millions, creating a propaganda claims. wave of sympathy and support for Ukraine’s people and • Ukraine’s Ministry of Foreign Affairs (MFA) should their cause across the world. Ukraine’s new government sponsor a well-produced, solidly presented, is taking the helm at a time of extreme crisis, and the Russian-driven separatist dirty war must not become an excuse for business as usual. It is imperative that accurate, and compelling documentary film on President Petro Poroshenko and his team channel that festivals,Russian propaganda. and disseminate Air the it to film Western on Ukrainian television positive global sentiment into a clear, positive message networks.national television, present it at documentary film to their own people, particularly in the eastern regions of the country, and to the world. • The most egregious Russian media should be held Ukraine’s government must show its people that it accountable for hate speech and incitement to represents the interests of all regions—north and violence. Media nongovernmental organizations south, east and west. The leadership must engage in a direct dialogue with the people of the east and compel (NGOs) should collect required data, and Ukraine Ukrainians to begin talking and listening to one another. • shouldUkrainian pursue popular a case culture in Strasbourg has a great or traditionthe Hague. of The inclusive national conversation should underscore satire and irony. The comedy program 95th Quarter commonalities over differences, underscore shared regularly attracts huge crowds to its tapings, the values and histories, and look to a common future where puppet program Skazochnaya Rus satirizes both every citizen has a stake. Ukrainian and Russian politicians. “Michael Shchur,”

12 ATLANTIC COUNCIL A Roadmap for Ukraine

• Poroshenko should embark on a listening tour speakers inhumanely. Western media report on these of the country, conducting a series of televised statements. Ukraine’s government stays largely silent, town hall meetings in all regional centers, starting thus delivering a tacit victory to Russia’s disinformation with eastern Ukraine. These should be frank campaign. Ukraine must wrest its narrative from Russia conversations, spontaneous and authentic, and not and craft a comprehensive strategy to get its message to orchestrated Soviet-style shows.

• The government should make itself accessible to the the• world.Ukraine But needs first, a it short must history develop of that the message.country that would become required reading for every foreign press conferences, conducted in an open and frank visitor, correspondent, and politician. Solicit a manner.media and Issuing the public statements through and regular posting briefings them on and respected, popular historian to write this one government websites is not enough. An articulate, hundred-page volume that debunks Russian myths multilingual spokesperson who understands media about ancient and contemporary Ukrainian history.

this mission. • More direct support for the Maidan Media Crisis should be identified and tasked with implementing Center is needed. The center must get out of crisis • Enlist people who are respected in Ukraine to be mode and start talking about the future, including ambassadors for the country. This can include nation-building. The Center should be a must-do football players, musicians, writers, and actors. Enlist Russian celebrities who speak out against the Kremlin’s propaganda to take part in this effort. • firstThe government’sstop for all incoming message foreign machine, media. once in place, should regularly promote the reforms of the new • Launch a series of collaborative programs government, its plans to root out corruption, and between the east and west of the country. Look for improve the investment climate. Successes, no opportunities to build bridges between Kyiv and the matter how small, should be highlighted. regions by focusing on common problems that can be discussed calmly, such as health care, energy and • Ukraine should promote its greatest talent abroad. Writers such as Yuriy Andrukhovych, Oksana empowerment. Zabuzhko, and Serhiy Zhadan, who know English, food prices, inflation, pensions, education, and local • Partner Ukrainian independent media with Russian in a roster of cultural events at key Ukrainian counterparts such as TV Rain and Echo Moskvy embassiesGerman, and in otherthe West. languages, should be featured radio to produce selected programming aimed at improving mutual understanding and information • exchange. Find common themes such as building government should tap the business community to Although financial resources are scarce, the Ukrainian an open society, battling brain drain, education, job launch a series of Ukrainian cultural centers, based creation, community activism, mixed marriage, and Francaise in major Western capitals to promote on Germany’s Goethe Haus or France’s Alliance and mutual understanding. Ukraine’s unique culture and language. cultural identification that will advance tolerance • Find ways to support grassroots activism in the east • Friends of Ukraine should host a global counter- through communities, churches, and libraries. Look propaganda conference in London and Berlin to at local, low tech, and trusted sources of information, rally an international lobby against the tsunami of use online conduits to generate and share this propaganda deployed by the Kremlin. A Public Diplomacy Strategy for Ukraine Public diplomacy is a means by which a country • informationThrough the offline.Ministry of Education launch a series of exchange programs between schools and communicates its values, culture, and policies to the universities in the country. These intra-Ukrainian exchanges will provide students with an opportunity diplomacy to help shape the image and understanding people of other countries. Governments use public to get to know and understand their country in a of their country abroad. The crisis in Ukraine, however, thoughtful and encouraging manner. requires that the new government consider a “concentric public diplomacy plan” that targets not just regional and Ukraine’s Message to the World international audiences but a domestic audience as well. In recent months, Russian Foreign Minister Sergey To start, the new government will need assistance Lavrov and Putin have made many pronouncements in setting up a public diplomacy structure. There are accusing Ukraine of waging a war against its citizens, two sides to public diplomacy: the 24/7 media and creating a humanitarian crisis, and treating Russian communications side and the long-term relationship-

ATLANTIC COUNCIL 13 A Roadmap for Ukraine building side. Each is important, and each is more successful if both are well developed. Currently, much of and outreach programs through “outposts” along the Ukraine’s public diplomacy is based on cultural outreach conceptareas need line to of be embassies identified or for consulates. specific communications Normally, this and tourism, and there is no central entity planning would be the natural role of regional governments, but the furtherance of foreign policy goals through public in some Ukrainian regions it might be better to start diplomacy. by creating outposts based on networks of trusted individuals. Suggestions include: Suggestions include: • A high-level public diplomacy position that works with or within the Ministry of Foreign Affairs and • Identify “outposts” in each area as if they were embassies or consulates. In some areas, this might need to be virtual due to the dangers that visibility • theThe President’s MFA needs Office.to adopt a content management would entail. system (CMS) so that key information can be put up in Kyiv that is automatically on all embassy websites. • Networks would be created of trusted individuals, with a solid public diplomacy record and • Embassies need assistance in strategic use of their international experience, who would play leadership websites. For example, many embassies have images roles. or maps of the host country but not of Ukraine. CMS would help improve many websites. • The purpose of the outposts would be to assist with both the 24/7 media and communications as well as • Diplomats should be given courses on the long-term relationship building. communications, media and public diplomacy as part of their training at Ukraine’s Diplomatic • Academy. Training at embassies is also needed. what messaging is most effective locally, so too locals To the extent that allies can reach out to assist shouldJust as foreignbe empowered diplomats by needKyiv to developbe trusted messages to know in training and teaching in the immediate future and means—within guidance structures—that they this would be helpful. So, for example, the public believe will be most effective in their area.

Department in Washington, DC, could set up a Regional Ring sessiondiplomacy for deskkey personnel officer for from Ukraine the Ukrainianat the US State Targeting key regional countries on a priority basis Embassy in Washington to learn about the US currently has Russia and the United States equally at Embassy in Washington and other embassies that needs to be considered. For example, German media havestructure, strong training, public diplomacyand methods. and The communications German does not support sanctions or further sanctions on structures could offer a similar session. This could Russia,fault over and Ukraine. this affects The ChancellorGerman population, Angela Merkel’s therefore, be replicated in key European capitals. country in the regional and international rings. ability to impose them. Germany would be a priority UKRAINE MUST WREST ITS International Ring Outreach, communications, and focus in the NARRATIVE FROM RUSSIA AND international ring needs to be prioritized based on CRAFT A STRATEGY TO GET ITS strategic aims as well. With limited funds and personnel, thought needs to be given as to which countries to MESSAGE TO THE WORLD . BUT target—NATO allies? Security Council countries? Trading partners that could be potential substitutes for Russia FIRST, IT MUST DEVELOP THAT (currently Ukraine’s largest trading partner)? Building MESSAGE . a strong public diplomacy center within the MFA in Kyiv will greatly assist with capacity issues by pushing out the Concentric Public Diplomacy messaging, content, and programs. The current crisis requires that the new government in Acknowledgements: Irena Chalupa thanks Kurt Volker, Kyiv consider a public diplomacy plan based on three Colleen Graffy, Kevin Klose, Marjorie Rouse, Gennadiy concentric circles: domestic, regional, and international. Kurochka, Oleg Voloshyn, Constantin Kostenko, Edward Domestic Ring Lucas, Kateryna Myasnykova, and Timothy Snyder for their insights and contributions to this paper. country as if it were an international landscape. Different The first circle, the “domestic ring,” needs to view the

14 ATLANTIC COUNCIL A Roadmap for Ukraine

UKRAINE CRISIS RED TEAM OVERVIEW

The Atlantic Council Red Team • Overt. Seek to produce a clear, quick success. The Atlantic Council, as part of its Ukraine in Europe Initiative to galvanize the transatlantic community, explicit threat of the use of overt force. Defined broadly by evident Russian use of force, or and thought leaders to conduct a series of exercises that • Covert/deniable. Achieve relatively speedy success seekconvened to identify a group Russia’s of experts, possible former next senior steps officials,in Ukraine without openly showing Russia’s hand through the over the next year. Chaired by the Council board member use of militias, pro-Russian activists, intelligence Walter B. Slocombe, this Red Team exercise developed operatives, special forces, provocateurs, and propaganda. prevent Ukraine from becoming an independent nation Attempt to build a more four broadly defined scenarios in which Russia could • Ostensibly legitimate. with the ability to determine its own future, become a or less genuine pro-Russian constituency inside more democratic and less corrupt state, and integrate Ukraine through the use of seemingly legitimate into Europe. The Red Team’s goal was to develop the political, economic, legal, and information actions. most effective strategies and policies to either deter or counter possible Russian actions. • Delay and de-escalate. Count on Ukraine’s inherent problems to be so substantial that, with a little Russia annexed Crimea as a means to an end, not an patience, the country will fragment in ways that end in itself. For Russian President Vladimir Putin, the achieve Russia’s goals. annexation of Crimea was an opportunity to maintain his power base, signal Russia as a global power, prevent The Red Team’s products include a detailed description further Ukrainian integration into Western institutions, of the Russian approach and methods to achieve the assist in securing Russia’s interests in Ukraine, and policies Russia may evoke along with responses that failure to develop an alternative European security eitherobjective. the EachWest scenarioor the new provides Ukrainian specific government actions and might architectureextend his own over nationalist the past decade, agenda. Putin Given remains Russia’s an take in response. opportunist and will seize upon the present conditions. to seek ostensibly legitimate actions, undoubtedly a revanchist Russia and an uncertain Europe. Decisions complementedHe will not stop by at overtCrimea. and Instead, deniable he actions, will continue in the takenUkraine in facesthe coming an inflection weeks, point months, as it and teeters years between by military, political, and economic spheres to avoid Ukraine’s new leaders, civil society, media, and youth— being pushed out of Ukraine by the West, maintain a along with the transatlantic community—will determine buffer with NATO, and secure a degree of control over whether Ukraine survives and the conditions under Ukrainian industry and politics. which it emerges. The Council’s Red Team exercise seeks to provide actionable recommendations and advice The Scenarios to policymakers and senior leaders in Washington, The Red Team examined four plausible scenarios Brussels, national capitals, and beyond at this crucial moment for the transatlantic community. political, and economic outcomes with the goal of identifyingthrough the both lens Westernof Russia’s and ability Ukrainian to influence options military, to Acknowledgements: Walter B. Slocombe and the defeat, deter, mitigate, or respond. The Red Team Atlantic Council thank Jorge Benitez, Erik Brattburg, Kim assumed Russia’s goal for Ukraine is, at best, a weak Campbell, Isabella François, Chris Musselman, Magnus central government, an autonomous eastern region Nordenman, Barry Pavel, Mark Revor, Maria Stephan, and Olena Tregub for their insights and contributions to Ukraine’s integration with Western institutions. The these papers. The members of the Red Team helped shape Team’sunder heavy scenarios Russian did notinfluence, consider and possible prevention Russian of these papers’ scope, findings, and recommendations but objectives adjacent to Ukraine or attempts to pursue do not necessarily agree with all of their conclusions or other regional or global aspirations. recommendations.

The four scenarios—which are best thought of as points on a continuum, not wholly distinct compartments—that were developed by the Team are:

ATLANTIC COUNCIL 15 A Roadmap for Ukraine

OVERT SCENARIO

Russian Interests leaders will provide Moscow with intelligence and Emboldened by his success in using covert Russian disrupt Ukraine’s defense and intelligences forces. It will burden even loyal members of the Ukrainian government of Crimea and then destabilize much of eastern Ukraine and military to have to work in an environment of andmilitary Odessa, forces Putin and decides local militants to launch to anfirst overt seize military control suspicion and uncertainty. According to Supreme Allied invasion of Ukraine. This overt option differs from the others in that it seeks to establish direct Russian control military could launch an invasion just twelve hours after theCommander order is given Europe and Gen. “could Philip accomplish Breedlove, its the objectives Russian in objectives with the other three scenarios: strengthening 1 Putin’sof all or support part of Ukraine.and control However, within it Russia, shares preventing the following Ukraine from deepening relationship with NATO and Besidesbetween the three probability and five days.”of overwhelming defeat of the European Union (EU), protecting Russian control the Ukrainian military in battle, Ukraine’s political of energy pipelines to Europe and Russia’s access leaders should expect catastrophic loss of command, to strategic Ukrainian resources, returning Russian control, and communications with their military forces. expatriates to Rodina, and promoting division within In the words of Breedlove, Russia will “decapitate” the West. Its principal advantage, from Moscow’s point Ukrainian forces (as it did in Crimea) by blocking of view, is that it offers a prospect of a quick, clear, all communications with senior leadership through 2 and decisive victory. All of the other scenarios require combination of kinetic, cyber, and electronic warfare. more time than an overt invasion, but the after effect Western Actions (open military occupation of all or a substantial part of Although this scenario provides Putin with the quickest Ukraine) will require a long-term investment of troops option to achieve his objectives, it will also provoke the and resources. The possibility exists that, instead of strongest Western response. It is certain that Western full-scale invasion of Ukraine, Putin opts for a “creeping sanctions on Russia will be increased, though the invasion” of incrementally “liberating” separatist severity of new sanctions is uncertain. The United States strongholds. If Putin can achieve Russian control of and Europe should reach agreement before this scenario areas east of the Dnieper River and the southern land corridor from Russia to Transnistria, he may consider his against Russia. This would allow the West to act in unity immediate objectives achieved, and avoid attacking Kyiv asoccurs soon on as thepossible specific to measuresa Russian invasionto be implemented of Ukraine. and western Ukraine, defying Kyiv and the West to act. Military Actions Political Actions Measured by both quantity and quality (at least in An overt Russian invasion will be the most direct threat the sense of equipment), Russia has a considerable to the survival of an independent Ukraine. A military advantage. The effectiveness of some Russian units has

Putin’s political power in Russia, just as his seizure of and the Russian military has become much more skilled victory over Ukraine would also significantly strengthen Crimea brought him considerable popular support. atincreased combined significantly operations. since They the are conflict not yet in at Chechnya the level Furthermore, military success in creating a fait accompli of NATO forces, but Russian forces have demonstrated on the ground, combined with intense information through their ZAPAD exercises and their performance warfare aimed at Western audiences, would incite a

This debate over the Russian threat would expose anin Georgiaindependent and Crimea military that analyst they arein Moscow, much better “Russia than now fierce debate within the West over how best to respond. existing divisions within the Alliance, both over how to hasthey absolute were ten superiority years ago. Accordingover any country to Aleksandr in the post-Golts, respond to Russia’s actions and over the future role of Soviet space.”3 the Alliance. It may also seriously poison relationships between members. 1 Adrian Croft, “Russia Could Achieve Ukraine Incursion in 3-5 Days,” Reuters, Kyiv’s response to the overt scenario will be limited by April 2, 2014, http://www.reuters.com/article/2014/04/02/us-ukraine- crisis-breedlove-idUSBREA310PP20140402. and open military confrontation and will be further 2 Ibid. underminedthe significant by advantages the extent toRussia which would Ukraine have has in beena direct Rebooted Army,” New York Times, April 2, 2014, http://www.nytimes. penetrated by Russia. Numerous political and military 3 C.J.com/2014/04/03/world/europe/crimea-offers-showcase-for-russias- Chivers and David M. Herszenhorn, “In Crimea, Russia Showcases a rebooted-military.html.

16 ATLANTIC COUNCIL A Roadmap for Ukraine

To be sure, while there is ample data on the quantity of several factories in Ukraine to supply its military with forces Russia and Ukraine can use in the overt scenario, key parts and equipment. While the Russian military will there is always uncertainty over how a direct military not be impacted by this soon, the leadership is certainly engagement would develop. Russia’s main advantages aware of the need to get the production lines back under will be in its elite units and in achieving air superiority. Russian control. These factors are, however, more likely

Russia has only a limited number of experienced, overt invasion than on the outcome if he does. professional units. Putin would probably choose to to be significant in determining whether Putin elects an concentrate these forces for an overt invasion, at some Bleak as Ukrainian prospects are today, there long-term risk to reduced capabilities on other fronts. Russia actions available to make this option less attractive to relies on conscripts who lack training, equipment, and combat experience. Their performance in an invasion of and its Defense Minister Irakli Alasania has offered a territory as large as Ukraine is unknown, particularly if Moscow. Georgia was the victim of a Russian invasion Ukraine managed to mount a serious resistance. Russia’s offensive capabilities. These recommendations willspecific be valuable steps based to defend on his Ukraine, country’s unless experience the Russians with OVERT INVASION WILL PROVOKE dominate Ukrainian resistance and capture urban

THE STRONGEST WESTERN to make counterintelligence a priority. As soon as RESPONSE . possible,centers. The Kyiv first needs recommendation to develop and is implement for Ukraine a

The second recommendation is to focus on removing 60 percent of the Ukrainian military are conscripts. molescounterintelligence within the military campaign and securityagainst Russian services. influence. Alasania Furthermore,However, Ukraine the Ukrainianalso relies military on conscripts. is worse In equippedfact, and has far fewer elite units than Russia. The Ukrainian Ukrainerecommends should placing greatly young, expand pro-Western its use of alternative officers in key irregular separatists in eastern Ukraine. Thus, it would communicationjobs, while phasing assets, out suchofficers as unencryptedtrained in Russia. cellphones, Finally, army has proven mostly ineffectual in fighting the to minimize Russian disruption of command, control, and of which is less experienced and poorly trained and equippedbe very difficult (and in for any the case Ukrainian heavily military,outnumbered), the majority to from western equipment—lethal and nonlethal—and defeat the conventional forces of Russia. trainingcommunications. assistance Ukraine’s through securityboth exercises forces andwould advisers. benefit Another important consideration is time. It is likely that Western Actions the Ukrainian defenders will have little warning of a NATO allies are unlikely to agree on a military response Russian invasion and may be overwhelmed quickly. If to a Russian invasion of Ukraine. Nevertheless, Ukraine would probably receive bilateral military support from ally for Kyiv. Russia has improved its military to do well individual NATO members. Whether such assistance the conflict is not over quickly, however, time may be an proved effective would depend largely on how long the seizure of Crimea, but has been less successful with Ukrainian forces could sustain a defense. Military in short-term conflicts such as the war with Georgia and supplies may be provided overtly or covertly, but covert intelligence assets are also likely to be deployed in In this overt scenario, Ukraine should respond to an protracted conflicts such as Chechnya. Ukraine. Nearby NATO members may also host key invasion by targeting two key Russian weaknesses. One elements of Ukraine’s resistance leadership and forces. weakness will be the logistical vulnerability of Russian forces. The greatest danger to the Russian military may Conclusion There are at least three potential outcomes to this forces in semi- and nonpermissive environments. Even scenario. One, Russian military dominance overcomes minimalbe how expensive interruption and of difficult Russian it suppliesis to supply by Ukrainianlarge-scale most Ukrainian resistance. Russia’s quick and effective security forces or partisan resistance, which is likely use of overwhelming force to capture urban centers to increase as Russian force advance westward, would limits organized resistance and results in lower decrease the effectiveness of Russian units and increase occupation costs. Two, Russian military defeats the drain on Moscow’s limited resources. Ukrainian military but faces increased partisan resistance with westward advancement. Russia wins Another major weakness is the vulnerability of Russia’s conventional victory but is challenged by brutal and critical nonmilitary infrastructure in Ukraine. The protracted guerilla warfare with high occupation costs. Three, Ukrainian resistance and strategic depth of sector. Any damage to the pipelines transporting Russian terrain incrementally slow Russian advance and prevent energyRussian through economy Ukraine is dependent will hurt on Moscow profits from more its than energy quick conventional victory for Moscow. the destruction of tanks or aircraft. Russia also relies on

ATLANTIC COUNCIL 17 A Roadmap for Ukraine

COVERT/DENIABLE SCENARIO

Russian Interests in Kyiv has to follow through on constitutional reform, Russia would choose this course as a means to genuine decentralization, and economic progress. Even destabilize eastern and southern Ukraine by sustained if it does, success is not assured: creating an effective and highly active covert or otherwise deniable efforts. guerrilla or civil resistance is a challenging task. Even if Putin nominally decreases the most recognizable methods currently in use, such as highly active and A combined use of limited security pushback, genuine visible Russian intelligence operatives and special forces, reconciliation, and building local popular resistance he could continue to exert pressure through more subtle could be used to keep separatist militia and its Russian but still direct means to support pro-Russian elements, supporters off-balance and mobilize the local population including the dispatch of thinly veiled special forces and though unarmed opposition. This strategy holds greater promise than a military strategy for saving civilian lives and material support to separatists, and substantial and preserving the country’s infrastructure while at the incentivessecurity elements, both positive use of and agents negative of influence, to the local financial same time imposing considerable costs on Russia. This population to side with the separatists. In this scenario, strategy is also more apt to awaken and mobilize those Moscow would continue to maintain that it is not giving in eastern and southern Ukraine who are now apathetic, active and direct support to the separatists, but would fearful, and disengaged. enlist its information operations instruments to sustain Military Actions the narrative that the separatists are a legitimate force, Russia would continue to introduce and support special forces and intelligence operatives, organizing defending the rights of a linguistic minority. the pro-Russian movement while acknowledging but fighting extreme nationalist forces in Kyiv, and only Political Actions In the event Russia opts for this course of robust but Ukraine. In addition, Russia would likely: not publically encouraging Chechen fighters in eastern nominally deniable support to pro-Russian separatists, • supply advanced weaponry to defend pro-Russian the Ukrainian government should continue efforts by activities and territorial gains, and expand areas its security forces to confront and defeat the separatists under separatist control; where there is a reasonable prospect of success. They should also enact a political strategy to exploit Russia’s • train pro-Russian elements in small-unit offensive greatest problem in its effort—the fact that while the and defensive maneuvers and provide secure Russian-speaking population has real grievances and communications equipment and leadership; distrusts the Ukrainian government, support for Russian occupation or even domination is limited. To meet this • recruit Ukrainians with access to local and national scenario, the Ukrainian government should prepare for government leaders and institute a program of and execute a national strategy of reconciliation with mental and physical intimidation, blackmail, the legitimate concerns of the people in the east and south with promotion of civil resistance to Moscow’s agents. The Ukrainian security services need to continue and coercion to exert a degree of influence over to push back where they have the means to do so, but • Ukrainiandeploy peaceful government pro-Russian officials; protesters to they need not attack the adversary where it is strongest population centers in western Ukraine, including or where Russia can counter by increasing the scale of Kyiv, to instill a degree of uncertainty of western its intervention. Where there is mobilizable popular Ukraine’s support for the Ukrainian government; support, Kyiv should encourage mass civil disobedience and and noncooperation that targets Moscow’s and the • establish shadow pro-Russian governments in areas separatists’ political, economic, social, and military under separatist control and provide basic services resources. The successful nonviolent takeover of to the population and co-opt the local security forces Mariupol and parts of eastern Ukraine by steelworkers to remain neutral and unresponsive to separatist and miners is an example of this approach. Resistance actions and violence. should be combined with a civic mobilization strategy and with genuine engagement of civic society in the Russia will likely maintain a credible conventional east that advances national unity and counters Russian ground-based military force within quick striking propaganda. For this approach to work, the government distance of Ukraine to intimidate local populations loyal

18 ATLANTIC COUNCIL A Roadmap for Ukraine to Ukraine, the government in Kyiv, and Western publics. for Ukraine and embark on a much more active training, It will also increase numbers, proximity, and activity supply, and advisory campaign. are limited in their effectiveness by Ukrainian military Economic Actions actions.if pro-Russian elements lose territory or influence, or Because the response to Russian action under this scenario is essentially to mobilize popular support, Western Actions These responses are consistent with the premise that government would be to reduce corruption and direct Western military intervention is not a realistic improveone of the economic most difficult performance tasks of inthe an new effort Ukrainian to increase option, and are designed with three objectives in legitimacy. Putin would likely make efforts to maintain a mind: improve Ukraine’s general military readiness, level of corruption within the Ukrainian parliament and improve the Ukrainian military’s ability to wrest terrain security establishment, sowing distrust in the Ukrainian away from separatists with limited casualties, and people’s view of the new government. demonstrate Ukrainian and Western resolve and support for shared values. Recommended actions include: Unless the Ukrainian military unexpectedly were to succeed in actions to wrest back separatist-held • increase the number and complexity of regional buildings and facilities in the east, Russia would continue military exercises involving Ukrainian military forces to seek opportunities to legitimize the separatist forces while providing lethal and nonlethal equipment; through separatist leaders and to alienate the population • utilize NATO/US special forces to train Ukrainian fromby providing the government local services in Kyiv. and To economic make Kyiv’s benefits economic special units in neighboring countries focusing on point raids and tactics to reduce the likeliness of by increasing tariffs, limiting or terminating imports civilian casualties and create a train-the-trainer thattask havemore no difficult, other short-term Russia may market, evoke a and trade blocking war of sorts program; or restricting trade with other countries, all while leveraging energy supplies and prices as strategic levers. • establish an intelligence fusion center in Ukraine that serves as the central point for intelligence dissemination and coordination of collection efforts and military operations, with the ability to both THE WEST CAN CONTINUE receive from and disseminate to nongovernment entities working on behalf of the Ukrainian TO INJECT UNCERTAINTY government; INTO AN ALREADY • authorize a covert action to train Ukrainian intelligence operatives and provide new and VOLATILE INVESTMENT advanced like-type weapons and ammunition to CLIMATE IN RUSSIA Ukrainian forces; and THROUGH THREATS OF • send NATO/US military advisers to integrate at the division and brigade level, but who do not ADDITIONAL SANCTIONS . forward deploy with maneuver forces, and establish communications with forward elements to permit the advisers the ability to advise during military Western Actions operations. The West’s economic strategy would combine economic support for Ukraine with imposing economic costs on Sending military personnel into Ukraine, even in a Russia. The West, and the United States in particular, training and advisory capacity or to conduct exercises could continue to inject uncertainty into an already volatile investment climate in Russia through threats a hotly debated issue despite being consistent with of additional sanctions. Additionally, in coordination ainside basic Ukraine policy of away no direct from militarythe conflict intervention. areas, would One be with Europe, the United States could agree to approach that would strengthen Ukrainian capabilities periodically assess the need for additional sanctions while limiting entanglement would be to continue those should Russia not uphold international agreements exercises scheduled prior to the crisis, Rapid Trident, made to discontinue active (though nominally denied) for example, and planning future exercises to take place intervention inside Ukraine. Subsequent measures outside Ukraine. At some point, there would likely be pressures, both from Ukraine and outside, for the West to reexamine the policy of very limited military support ormay an include embargo broader on select financial Russian sanctions exports. that prohibit significant Russian companies from US financial markets

ATLANTIC COUNCIL 19 A Roadmap for Ukraine

OSTENSIBLY LEGITIMATE SCENARIO

Russian Interests The ostensibly legitimate scenario would see Russia respect of the right to self-determination for the people reduce direct intervention and military intimidation in ofRussian Crimea. as Russiaan official might state well language offer acceptance in Ukraine; of andthe new the belief a more subtle approach would win support Ukraine government and a halt in separatist efforts in in eastern and southern Ukraine. Assessed to have return for a de facto pledge of no NATO membership— achieved a suitable level of destabilization in Ukraine, potentially through a referendum in which eastern Russia’s actions would include military redeployments, oblasts possess an effective veto. rebels, publicly supporting Ukrainian elections, and Western Actions voicinga significant a willingness reduction to in negotiate detectable an supportend to the to crisis.the In the short term, the West should continue to publicly These actions, combined with Ukrainian and Western expose Russian political maneuvering and support for governments’ overtures for Russian participation in the separatists while assisting Kyiv in exploiting the fact roundtable talks, may have convinced Russia that it has that the majority of Ukrainians, including in southern and eastern parts of the country, are not enthusiastic can afford to forego more forceful instruments. Russia’s about being controlled by Russia. Instead, they want actionsreached would the desired also seek level to of avoid influence further in Ukrainesanctions and security and economic growth, and they believe that the and encourage Western governments, companies, and new Ukrainian government can achieve this by fostering investors to return to business as usual. relationships with both Russia and Europe. Appropriate regional representation of southern and eastern oblasts Pursuing this scenario would, in a way, be Putin in the future government, along with protection of attempting to win by applying “soft power” (of which minority language rights and genuine decentralization, Russia already has a great deal to exercise in Ukraine should be parts of a reconciliation effort. While the main given its economic importance); genuine links to a action is political, Ukrainian security forces would need to continue to make efforts to confront the separatists, of political, security, and economic elites. Moscow wouldsignificant continue part ofto theclaim population; that it supports and heavy no more penetration than increase capability through Western equipment and “federalization” and a role for all groups in constitutional training.project confidence by attacking their weak points, and reform, has no annexationist ambitions, and does not interfere in Ukraine. Military Actions In this scenario, Russia would make substantial Political Actions genuine reductions in the buildup of military forces The Kremlin would, even in this scenario, exert all near the Ukrainian border and limit the more visible and objectionable aspects of its support for separatist negotiation, political, and diplomatic forums to achieve forces while excusing their actions and disclaiming all possible influence at the roundtable and in other responsibility for them. Russia would likely continue by Moscow, including de facto separation from control military exercises to demonstrate resolve and its option byfederalization Kyiv and extensive of Ukraine’s links easternto Russia. oblasts Putin as may defined to increase pressure on Kyiv if and when it chooses to. conclude, based on the existing level of disruption and Expect Russia to use the deployment of these forces and lack of security in eastern Ukraine, that an ostensible continued, if covert, support for separatist militias to willingness to work with the new Ukrainian president extract additional concessions from Kyiv and the West may provide an opening to achieve his aims at less cost during the roundtable talks and other political efforts. and risk. This is particularly the case if Putin becomes convinced that despite some success by Ukrainian Special forces and intelligence operatives would military campaigns to defeat the rebels, Kyiv is unable continue to operate under direction from the Kremlin. to put Ukraine as a whole on course, much less reliably Inconsistencies between Russia’s conciliatory rhetoric secure or govern the east. Expect Russia to insist upon and assertive actions, as well as between elements of the a new federal constitutional order for Ukraine based Russian strategy, would remain part and parcel of Putin’s on neutrality (to be approved by popular referendum); approach as he moves to begin negotiations. elections of regional governments with a wide range of Western Actions powers currently held in Kyiv, including conducting their The transatlantic alliance is likely to regard the crisis as own foreign affairs with their immediate neighbors; essentially over and to forego any military action beyond

20 ATLANTIC COUNCIL A Roadmap for Ukraine

credit: US Department of State. Russian Foreign Minister Sergei Lavrov (left) and US Secretary of State John Kerry (right) address reporters after a meeting in March 2014. Photo reassurance, token NATO deployments to neighboring Western Actions NATO nations, and routine exercises with the Ukrainian Financially, Ukraine needs rapid cash, but International military. Unilaterally, Alliance members could assist Monetary Fund (IMF) austerity strings—whatever the Ukrainian military by supporting, in a limited way, their long-term potential virtues—are likely in the aspects of equipping, planning, training, and logistics. short term to make the economic conditions worse for the majority of the population and undermine the Economic Actions legitimacy of the Kyiv government. To some degree, swift One of Putin’s key advantages in this scenario is that constitutional and security reforms might ease public Ukraine’s economy is highly dependent on Russia in a acceptance of IMF-imposed austerity measures to meet variety of ways that the West cannot negate, circumvent, loan requirements. Russia, however, would have many or substitute for in the short-to-medium term. Besides opportunities to underline the negative impact of the energy, Russia is one of Ukraine’s primary trading IMF/EU austerity package on Ukraine’s economy. The partners. Through economic means, Russia would West should prepare for Russia to increase gas prices or use all its leverages and likely seek a deal with the even suspend delivery to Ukraine if either the roundtable new Ukrainian government, regional elites in the east, talks or elections hint at outcomes unfavorable to Russia, and the international community. The ultimate price while using its ability to subsidize Ukraine’s energy of gas would depend on the deal struck, but for now needs as a source of positive leverage. prepayment on the basis of the 2009 contract applies. It is doubtful that the West has the will to sustain Ukraine’s Conclusion economy without Russia, especially given the price of This scenario is particularly challenging to the West gas, and even if the West has a solid economic plan, Russia can still undermine its implementation. actions which tend to limit more aggressive responses. Thisconsidering tendency the must legitimate, not result or at in least lack ofjustifiable, action, but Russian rather Additionally, Russia may, in light of Ukraine’s inability in efforts at creating uncertainty in Russian economic to govern or secure the eastern regions, establish the investment, maintaining a coalition of nations supporting ability to provide local services and economic support that would make the local population look to Russian- demonstrating military and political resolve. It would presentstandards the for special global challenge order and that conflict the main resolution, steps the and West government in Kyiv. The Kremlin could also instigate a influenced authorities in the east rather than the trade war by increasing tariffs, limiting or terminating make a success of itself—rather than punishing or directly imports from ports Ukraine does not control, and resistingwould need Russia. to take These are effortsaffirmative—i.e., are imperative helping not Ukraine only blocking or restricting trade with other countries. to resolve the current crisis but to guard against similar actions by Russia in the future.

ATLANTIC COUNCIL 21 A Roadmap for Ukraine

DELAY/DE-ESCALATE SCENARIO

Russian Interests and propaganda efforts. Even so, uncertainty regarding Ukrainianof the “green pro-Russia men” and separatists’ toning down willingness official rhetoric to keep itsHaving broader already objectives achieved in Ukraineits main withoutobjectives escalating in Crimea, in thethis situation scenario thereRussia any is confident further. As it such,can now Russia also would achieve between separatists and Ukrainian forces, Russia would cease all overt, covert, and quasi-legitimate activities to continuefighting would to put remain. the blame In theon theevent Ukrainian of further authorities clashes intervene in Ukraine. Moscow knows that it can utilize the separatists. the Ukraine’s future trajectory even after the May 25 while disclaiming all capacity to influence the actions of elections.the fact that Furthermore, it would remain the Kremlin in a position believes to influence that it can get most of the Western sanctions lifted and likely MOSCOW’S prevent NATO deployments to eastern allies by de- escalating the situation. Russia also calculates that it OBJECTIVE IS TO can have the potentially greatest political leverage if it is seen as de-escalating the situation on the ground and engaging in a process of political dialogue with the new MAINTAIN STATUS government in Kyiv. Finally, by de-escalating, Russia is also limiting Ukrainian authorities’ willingness to take QUO IN UKRAINE decisive action. WHILE NEGOTIATING Political Actions The Kremlin would take decisive steps to de-escalate the A POTENTIAL LONG- situation on the ground in Ukraine. Notable steps include recognizing the results of the May 25 election and TERM POLITICAL entering into a process of political dialogue with the new situation in Ukraine is inherently weak. Moscow’s SOLUTION objectivegovernment is to in maintain Kyiv. Russia status is confident quo in Ukraine—e.g., that the internal deep internal divisions, Western frustration with the problem, CONSISTENT WITH ITS and no strong Ukrainian links to NATO or the EU—while negotiating a potential long-term political solution INTERESTS . consistent with its interests. Western Actions Certain European allies are likely to view Russia’s de- not attempt any immediate military or political efforts escalation actions as a sign of goodwill and as proof of toConfident regain Crimea, that the Moscow new Ukrainian would accept government the newly would the wisdom of a restrained Western response to Russian elected government as legitimate and initiate political provocations. They would push for a rapid return to dialogue. Though it would refrain from seeking to business as usual, including the removal of economic integrate eastern provinces into Russia, Moscow would sanctions against Russia and a “normalization” of still continue to insist on a federalization of Ukraine’s political relationships. Others, particularly Poland and eastern parts on terms that would undermine Ukrainian the Baltic states, would remain more skeptical and, at a very minimum, insist on keeping existing sanctions and it would opt to do so within the context of a legitimate avoid softening the approach vis-à-vis Russia for the politicalunity and process give Russia with considerablethe aim of achieving influence. de However,facto time being. These differences would encourage Russia to domination of the east and neutralization of Ukraine stick to an ostensibly cooperative approach. as a whole through constitutional reform rather than through armed separatism. That said, it is still likely that The West should provide substantial support to the new Russia would continue to play a “dirty” role in Ukrainian Ukrainian authorities to promote better governance and politics, using money as political leverage. Russia rule of law in an attempt to stabilize the country, but would also make efforts to reduce its direct support to there would be little willingness to provide military aid separatism in the eastern regions by sending home some to the country for fear of provoking Moscow.

22 ATLANTIC COUNCIL A Roadmap for Ukraine

Military Actions Moscow would seek to maintain the upper hand threat of economic punishment. Moscow further believes militarily and look for forcible opportunities even sufficient political influence in the country without the while it is awaiting a satisfactory political solution. politicians and providing targeted economic assistance toit can Ukraine. have political influence by buying individual that it had genuinely reduced the military threat. To However, it would want Kyiv and the West to accept deployments on the border with Ukraine, with the WITH STRONG exceptionthat end, Russia of the wouldnow-annexed significantly Crimea. roll Doing back itsso wouldrecent not only re-enforce the message that Russia is being LEADERSHIP AND restrained, but that any crisis is over. It would also reduce the costs and complications of sustaining forward deployments and avoid prolonging diversion of top SUBSTANTIAL quality units that Moscow normally allocates to other borders. WESTERN SUPPORT, UKRAINE HAS THE building measures to limit the scale and effectiveness of UkrainianRussia would security likely forces, propose bar various outside confidence- assistance to them, POTENTIAL TO and secure a de facto (if not de jure) guarantee that Ukraine would never join NATO. STABILIZE SOONER Western Actions Allies are likely to judge Russia by its willingness THAN MOST THINK . to cease military activities inside Ukraine. If Russia withdraws all covert deployments inside Ukraine (e.g., Western Actions “green men”) as well as all the troops near the Eastern In what would amount to a contest over who can most border, Western allies would be more likely to remove sanctions and move toward a partial normalization in military force is not an issue, at least for the moment, the Westinfluence should the move future smartly of Ukraine and ingenerously a context towhere support NATO deployments or policies. Ukrainian economic recovery. Although economic relations with Russia, and forgo any significant change in reforms are needed, too much IMF-style austerity too Economic Actions soon risks discrediting both the West and the new Ukraine would remain dependent on Russia economically, Ukrainian government among large sections of the especially in trade and energy areas. By choosing not to use military force, Russia calculates it would avoid the direct and indirect costs associated with annexing parts of throughUkrainian either population. international As a test or ofbilateral Russia’s stimulus bona fides, the eastern Ukraine. Though it is uncertain whether the West packagesWest should to support encourage Ukraine Russia and to contributepublicly highlight financially the contradictions in any Russia threats to shut off gas to get back on its feet, Russia would not seek to explicitly supplies or otherwise damage Ukraine economically. underminewould be able the to international provide sufficient community’s assistance efforts for Ukraineto support Ukraine. Moscow would also provide assistance Conclusion on its own, aimed at giving it political leverage and Putin believes that the internal instability of Ukraine preventing the country from spiraling back into chaos, would allow Russia to achieve its main strategic while encouraging Ukrainian elites to become (or remain) objectives without taking any further overt, covert, dependent on Moscow’s favor. Russia may conclude that or quasi-legitimate activities to shape internal maintaining at least a minimum functional Ukrainian developments. Instead, Russia would seek to de-escalate political and economic order is in its interest and may the situation in Ukraine and with the West. This would even facilitate its objectives. allow it to avoid further sanctions from the West as well as a major pushback by the new Ukrainian government. As such, Russia would abstain from attempting to It is important to be clear that under this scenario as explicitly use economics as a geopolitical tool to impact much as the others, Putin is planning for the long term Ukraine. This means the Kremlin will not threaten to shut off gas supplies or instigate a trade war. Still, Russia will still continue to utilize its strong leverage vis-à-vis and socialwill not reforms. give up With on Russia’s strong influencepolitical leadership in Ukraine. and substantialUkraine needs Western to undertake support, difficult however, political, Ukraine economic, has the potential to stabilize sooner than most people think. the Ukrainian economy to influence the country’s future development. Russia is confident that it can guarantee ATLANTIC COUNCIL 23 Atlantic Council Board of Directors

CHAIRMAN HONORARY *Alexander V. Mirtchev DIRECTORS Patrick J. Durkin *Judith A. Miller PRESIDENT AND CEO Obie L. Moore David C. Acheson *Jon M. Huntsman, Jr. Thomas J. Edelman *Frederick Kempe *Stuart E. Eizenstat Madeleine K. Albright Thomas R.J. Egan, Eldridge Jr. VICE CHAIRS Bruce*George Mosler E. Moose Lawrence P. Fisher, II ThomasGeorgette R. Mosbacher Nides FrankJames C.A. Carlucci,Baker, III III *Richard Edelman Julie Finley Franco Nuschese Harold Brown *Robert J. Abernethy Michèle Flournoy Sean O’Keefe *Richard L. Lawson *RonaldAlan H. Fleischmann M. Freeman LeonRobert E. M.Panetta Gates *Virginia*C. Boyden A. Gray Mulberger Ahmet Oren Michael G. Mullen *W. DeVier Pierson AnaHilda Palacio Ochoa-Brillembourg Colin L. Powell *Robert S. Gelbard Thomas R. Pickering CondoleezzaWilliam J. Perry Rice TREASURER *Sherri W. Goodman *Andrew Prozes Edward L. Rowny *John Studzinski *Stephen J. Hadley Arnold L. Punaro Mikael Hagström Kirk A. Radke SECRETARY *Brian C. McK. Henderson Ian Hague George P. Shultz *Walter B. Slocombe John D. Harris II John W. Warner Teresa M. Ressel LIFETIME DIRECTORS DIRECTORS Frank Haun Joseph W. Ralston William H. Webster Carol C. Adelman Stephane Abrial Rita E. Hauser Charles O. Rossotti Lucy Wilson Benson Odeh Aburdene Michael V. Hayden StanleyJeffrey A. O. Rosen Roth Peter Ackerman Annette Heuser Robert Rowland Brian Dailey Timothy D. Adams Marten H.A. van Heuven KennethDaniel J. Callahan,W. Dam III Jonas Hjelm William O. Schmieder Lacey Neuhaus Dorn *Michael Ansari Karl Hopkins Harry Sachinis Stanley Ebner RichardJohn Allen L. Armitage Robert Hormats Anne-Marie Slaughter Chas W. Freeman *Adrienne Arsht Wolfgang*Mary L. Howell Ischinger John P. Schmitz Robert E. Hunter Elizabeth F. Bagley Alan J. Spence Carlton W. Fulford, Jr. David D. Aufhauser Sheila Bair Reuben Jeffery, III John M. Spratt, Jr. Edmund P. Giambastiani, Jr. Robert Jeffrey James Stavridis FranklinJohn A. Gordon *Thomas L. Blair Stephen*James L. R. Jones, Kappes Jr. *PaulaRichard Stern J.A. Steele Barbara Hackman *Rafic Bizri George A. Joulwan James B. Steinberg Maria Pica Karp Roger Kirk Francis Bouchard Robert L. Hutchings MyronJulia Chang Brilliant Bloch Zalmay M. Khalilzad Robert J. Stevens *R. Nicholas Burns RobertFrancis M.J. Kelly, Kimmitt Jr. *EllenJohn S. O. Tanner Tauscher Geraldine S. Kunstadter *Richard R. Burt Peter J. Tanous Karen Tramontano PhilipJames A.P. MccarthyOdeen Michael Calvey Peter Kovarcik Clyde C. Tuggle WilliamJack N. Merritt Y. Smith Ashton B. Carter Henry A. Kissinger Franklin D. Kramer Paul Twomey Marjorie Scardino Philip Lader Melanne Verveer Ahmed Charai Enzo Viscusi Ronald P. Verdicchio WesleyJames E. K. Cartwright Clark Charles F. Wald CarlWilliam E. Vuono H. Taft, IV Henrik Liljegren David W. Craig *Jan M. Lodal Michael F. Walsh John Craddock Tom Craren *George Lund MarkJay Walker R. Warner Togo D. West, Jr. Jane Holl Lute Izzat Majeed R.*Members James Woolseyof the Executive Nelson Cunningham Wendy*John D. W. Macomber Makins Committee ^ International Advisory Board *Ralph D. Crosby, Jr. Mian M. Mansha DavidJ. Robinson A. Wilson West Members William E. Mayer MaciejJohn C. WituckiWhitehead List as of May 21, 2014 Ivo H. Daalder Eric D.K. Melby Mary C. Yates Gregory R. Dahlberg Franklin C. Miller Dov S. Zakheim Conrado*Paula J. DobrianskyDornier Christopher J. Dodd James N. Miller The Atlantic Council is a nonpartisan organization that ­promotes constructive US leadership and engagement in ­international ­affairs based on the central role of the Atlantic community in meeting­ today’s global ­challenges. 1030 15th Street, NW, 12th Floor, Washington, DC 20005 (202) 778-4952, www.AtlanticCouncil.org