Also Published @ Financial Express
After three weeks of fighting, Russia has indicated that elements of a possible peace deal with Ukraine is close to being agreed. Ukraine has also made cautiously positive statements that it is willing to negotiate to end the war, but will not surrender or accept Russian ultimatums. While the negotiations are obviously not easy, there is some glimmer of hope of reaching a compromise. Having said that Mr Zelensky has pleaded with the US Congress for arms and has reiterated his plea for a no fly zone. Putin continues to describe the war in Ukraine as part of an existential clash with the United States and refuses to step off the gas pedal. In the meanwhile, Russia is intensifying its offensives to encircle cities and Ukraine has mounted counteroffensives in Kiev and Kherson. Fighting continues unabated. Russia , it seems is also attempting to reinforce the Ukrainian theatre with troops from the East. No one knows what’s coming next! The only predictability of the Ukrainian War that it is a ‘Lose-Lose’ situation for everyone concerned. The rest is predictably unpredictable!
The current situation (see map) indicates that Russia has occupied considerable areas and that fighting is going in a large number of areas. Russian forces have surrounded or are tightening their hold on many cities. However they have not been able to get hold of key cities including the capital, Kiev. Ukrainians are fighting a motivated defensive battle to buy time for a political settlement. Civilian causalities are mounting and the refugee count has crossed three million.
Where is this war headed? The key lies in the four Russian demands – 1. Ukraine not to be part of NATO, 2.Donetsk and Luhansk to be recognised as independent states, 3.Crimea to be recognised as part of Russia and 4.Demilitarisation of Ukraine. The first three demands are almost agreed to by Ukraine. It is the fourth which is problematic. The level of demilitarisation demanded by Russia seems to be unacceptable to Ukraine since it will seem to be a surrender. Till this issue is resolved, air strikes by Russia in Western Ukraine and tightening of the nooses around cities will continue. Ultimately, Russia and Ukraine will have to negotiate the force levels which the latter can hold, along with guarantees that they will not be violated. I do not visualise Russia holding on to any part Ukraine once the deal is done. If they do so , they will bleed through an Ukrainian insurgency. They are acutely aware of this. The ceasefire, when arrived at, will lead to Russia withdrawing from Ukraine. However till then, there are also good chances that NATO could get sucked in. All it will take is an errant missile landing in NATO territory during a Russian air strike in western Ukraine or if the Russians take down a NATO aircraft/asset by mistake. Further if the deal is delayed, and fighting continues, there are good chances that Russia might resort to battlefield tactical nuclear weapons in exasperation. That will take this conflict to a different level. There is also apprehension about Russia expanding the conflict into Moldova or Georgia since they are not part of NATO. Unpredictably still lies ahead. However the long term trends are clear. Everyone will declare a victory despite the fact that they would have all lost out. Hence there is a need to examine their purported wins and the losses of this war for each participant and interested parties.
Russia will claim victory on many counts. Keeping Ukraine neutral will be sold as a victory over the US led NATO. Besides this, legitimacy to its forcible annexation of Crimea and independence to Donetsk and Luhansk will be waved high. However the overall cost is enormous. Its economy will remain battered and hampered due to the unprecedented sanctions imposed on it. The after effects will last for a long time. Russia also faces long term diplomatic isolation from the West which is its natural trading partner. Its financial reserves have been sequestered by USA. It will be forced to export its goods at a discount. It will also be at China’s mercy for many things. Further, the sheen of a strong well trained Russian military has worn off. The domestic political cost of the ‘victory’ and loss of lives of its soldiers is not yet played out. Rebuilding its military will take some doing and time. Very importantly, Russia might have subdued Ukraine , but will acquire a hostile neighbour which will still be backed by the West and create trouble for it. The Western narrative of painting Russia as the villain of the war will endure. There is a huge cultural angle in this. When seen in balance, Russia will lose more than it will gain.
USA and NATO will claim victory for not letting Ukraine fall and blunting the massive Russian war machinery. It will also claim victory for containing the conflict to Ukraine and not letting it expand into Europe. USA will already be pleased that it has been able to reunite Europe and revitalise NATO. However it has lost Ukraine. Its carefully crafted plan from 2013, till date, to assimilate Ukraine into the NATO and EU fold has come unstuck. Ukraine will, in all probability, go into the Russian fold. This war has ensured that Europe will remain destabilised for a long time. Ukraine will rankle USA as yet another chapter in the long litany of American losses – Vietnam, Iran, Iraq, South China Sea and Afghanistan. In this period, USA has had to turn to Venezuela and Iran to stabilise global oil supplies and lift sanctions on them. This is pure double speak. It has peeved Saudi Arabia since sanctions on Iran, its main competitor in the Gulf are being eased. Reflexively, it has started speaking to China on oil trade in Yuan terms. Besides this, sanctions on Russia will also enhance Sino Russian trade in Yuan terms. This has the danger of shaking off the USD from its status of being the reserve currency of the world. If that happens, it will could lead to the collapse of the petrodollar regime to signal the end of an era. It will represent a monumental loss in American history. High stakes indeed.
Ukraine loses big time whichever way one looks at it. It has been left to fight on its own after being promised the moon. It is most likely to lose a major part of its territory. It has lost a lot of its infrastructure. The Russians have decimated its profitable arms and defence manufacturing industry. Far from being in NATO or EU, it is heading back into the Russian bear hug. Its people have been displaced. Their homes have been destroyed. As to when the three million refugees will come back is an open ended question. From where, Ukraine will find funds to build back is also uncertain. This is a country under systematic destruction and division. It is the biggest loser of this war.
The EU leaders will pat each other’s back that their unity prevented Russian attacks on its territory. In any case from what has transpired so far, it does not seem that Russia ever intended to enter EU or NATO territory. That will be a hollow victory declaration any way. The major loss to EU is that the divisions within themselves, are out in the open. Their ineffectiveness in conflict prevention in Europe or in deterring Russia is also pretty clear. They are being forced to militarise. Already defence budgets have been hiked across all EU nations. Their energy dependence on Russia will continue. They are staring at inflation. They also have to bear the brunt of hosting three million refugees. Combine this inflow with the Syrian refugees earlier. The ageing demographics of EU are under pressure and forced change. It has long term implications.
There is a general view that it will be China which will gain from this war. While the arguments are attractive to believe, there are down sides. Very clearly, China has been seen to be siding with Russia in this war. USA will redouble its efforts to undercut China at every stage hereafter. China will also face headwinds in Europe which is its lucrative and profitable market as well as a source of technology. All this will combine to weigh down its slowing economy further. However the main loss to China is that its military option of reuniting Taiwan forcibly is evaporating. Taiwan is already adopting the Ukraine model. It has doubled the training period for its reservists so that they are enabled to fight for their land as the Ukrainians have done. Another factor is that Japan and South Korea are now considering deployment of US nuclear assets on their territory after seeing the Russians playing the nuclear card. That will complicate Chinese nuclear environment. Very Importantly, Ukraine now sees China on the opposite side. That affects Chinese food security since import of Ukraine wheat is at risk. China also sources aircraft and warship parts from Ukraine which will not be available anymore. Further, the BRI gets affected since Ukraine was the overland gate way to Europe. Overall, China stands to lose .
Where does it leave India? As it stands, India is doing a diplomatic tight rope walk since it has abstained from voting against Russia in the UN. However this can be manged over a period of time. The real worry is that India’s dependence on Russia and Ukraine for its weapons and spares has highlighted a chink in its bid for strategic autonomy. India will have to put more into its Atmanirbharta programs. India’s energy security is also at risk. However, India has the capacity to manage this issue. Other than that, as far as India is concerned, this war is an European affair and we should let them sort it out. If an opportunity to mediate surfaces, India must not hesitate to take the initiative.
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