Ukraine Crisis, Summary and Explanation
How Ukraine's Crisis Threatens the EU
The Ukraine crisis is a power struggle between factions within Ukraine. One wants to align with the European Union and the other with Russia. Ukraine had been an important contributor to the Soviet Union's economy between 1920 and 1991.
The current crisis erupted on June 7, 2014, pro-West president Petro Poroshenko replaced pro-Russia president Viktor Yanukovych. On September 12, 2014, Ukraine approved a trade deal with the EU that removed export tariffs. It agreed to delay its implementation a year to avoid Russian energy sanctions and even attacks. Ukraine President Poroshenko wanted to maintain the cease-fire.
The current crisis erupted on March 2014, when Russian special forces occupied Ukraine's Crimean peninsula. Russia claimed it was protecting its port access to the Black Sea. Russian President Vladimir Putin Ukraine had planned to develop Crimea's natural gas reserves in two years in a partnership with U.S. companies. If Ukraine had accomplished this, Russia would have lost one of its largest customers.
Between 2014 and 2018, a military conflict between Ukrainian soldiers and Russian-backed separatists has continued in eastern Ukraine. More than 10,000 people have been killed.
On November 25, 2018, Russian ships attacked and boarded three Ukrainian vessels in Crimean port of Azov near the Black Sea. It placed a freighter to block the port. It said Ukraine has violated Russian waters. The two sides signed an agreement in 2003 to guarantee free passage through the strait. In recent months, they've been harassing each other’s ships.
But critics at the United Nations Security Council meeting said Russia's attack was a violation under international law. The North Atlantic Treaty Organization increased its military presence in the area.
Putin's attack responded to the February 23 overthrow of his ally Viktor Yanukovych. The pro-West faction of Ukraine's Parliament took over the government. The crisis occurred because Yanukovych mismanaged the budget. He forced Ukraine to ask for financial help. First, it appealed to the EU, then Russia. The political unrest occurred at this point. Those who wanted to be closer to the EU objected when that solution was abandoned. Russia's military strike supported Yanukovych's return to Kiev and closer ties to Russia.
In April 2014, Russia supported local rebels who took over city halls and police stations throughout eastern Ukraine. That area is home to ethnic Russians who don't want to be part of the EU. Those Russians were moved there 50 years ago by Joseph Stalin, who intended to strengthen the Soviet Republic's hold on the area.
Earlier that month, NATO revealed satellite photos showing Russia's invasion of Ukraine's eastern border. An EU emergency meeting added further sanctions on Russia's oil and banking sectors. That occurred shortly after Russia sent a convoy of trucks over the border. They were bearing aid to Ukraine's eastern cities, held by pro-Russian rebels. But several of those trucks entered without approval.
Ukraine had also destroyed a convoy of Russian military vehicles. They were bringing arms to the rebels. It was the first time that Ukraine attacked Russian forces directly.
A few days later, Ukraine reported that several military vehicles were near the Russian border at the Crimean port of Azov. It claimed that Russia was creating a second front for the rebels. Russia also wanted land access through southern Ukraine. It wanted a shorter route to Crimea.
In July, Russia built up its military force on the border. There were 19,000 to 21,000 troops, 14 advanced surface-to-air missile units, and 30 artillery batteries. It was a battle-ready force that could launch an attack into eastern Ukraine at a moment's notice. Russia had already launched rockets across the border in support of Ukrainian rebels.
Why Ukraine Is So Important to Putin
Putin's standoff over Ukraine boosted his popularity rating in Russia to 80 percent. To maintain this popularity, he will continue to hold onto Ukraine despite the cost. For example, it would cost Russia more than $20 billion through 2020 to integrate Crimea.
Putin knows that NATO won't protect Ukraine since it is not a member. That emboldens him to continue to attack.
Ukraine had been the second-most important contributor to the former Soviet Union's economy. It provided one-fourth of Soviet agricultural output. It supplied heavy industrial equipment and raw materials to industrial sites throughout the former USSR.
On July 29, 2014, the United States and the EU extended economic sanctions against Russia. They wanted to convince Putin to stop supporting those in eastern Ukraine who want to break up the country. The United States had proof that Russia supplied separatists that shot down a Malaysia Airlines commercial jet over eastern Ukraine on July 17, killing 298 people.
The sanctions severely limit five out of the six major Russian banks' ability to obtain medium and long-term financing from Europe. The United States also restricted technology exports to Russia's deep-water Arctic offshore or shale oil production. Russia had already been ousted from the Group of Eight.
As a result of U.S. sanctions, British Petroleum was worried about its profits. Bank of America cut its exposure to Russia by 40 percent. Boeing and United Technologies started hoarding titanium. Russia's VSMPO is the world's largest producer of this rare metal.
In response, Russia banned imports of U.S. and European foods for one year. This included $300 million of U.S. poultry products.
After the sanctions, foreign direct investment in Russia dropped by $75 billion. That's roughly 4 percent of the country's gross domestic product. Its stock market plummeted 20 percent. Its currency, the ruble, fell 50 percent. To head off inflation, Russia's central bank raised interest rates.
The sanctions created a recession in Russia. The International Monetary Fund cut its 2014 growth forecast for Russia from 3.8 percent to 0.2 percent. Even though Putin continues to be popular at home, these sanctions are hurting the country's economy.
Russia is one of the emerging markets that suffered a currency meltdown in 2014. Forex traders abandoned these markets when the Federal Reserve began tapering its quantitative easing program. That reduced credit around the world.
Russia waged wars in Chechnya in the early 2000s. Putin annexed Ossetia in Georgia in 2008, and the Western world didn't really intervene. He also successfully launched a cyber-attack on Estonia. But Ukraine is larger and borders the EU directly.
Many small countries bordering Russia worried that if Ukraine falls, they would be next. The EU is unlikely to defend them since it depends on Russia for half of its gas. Many European businesses have profitable operations in Russia. Others sympathize with Putin, who is defending Russia's borders from encroachment by NATO.
Annexation of Crimea worries 260,000 Muslim Tatars. They were subjected to ethnic cleansing during the Soviet rule. They were forced to move to Central Asia, where half of them died. Crimean Tatars peacefully supported Ukraine's Orange Revolution.