Crisis in Crimea: What Ukraine, Russia, the U.S. and the EU Should Do

Ukraine2 (1)

As the West struggles with how to respond to Russia’s increasing military presence in the Crimean Peninsula — a move that followed months of protests culminating in the removal of Ukrainian president Viktor Yanukovych — businessman Alexander Gordin discusses how global political leaders can avoid a full-blown disaster.

Gordin is managing director of the Broad Street Capital Group, a New York based international private merchant bank, and author of a book titled, Fluent in Foreign Business: Grow Your Company by Expanding into Foreign Markets. He has had extensive business dealings in Russia, Ukraine and multiple countries in Eastern and Central Europe/Central Asia.

Global media have exploded over the last few days with news of Russia’s ostensible invasion of Crimea, an act that shows Russia snubbing its nose at Ukraine’s newly elected government and largely ignoring threats from the U.S. and the European Union. It could lead to a disaster of epic proportions — I am afraid to even think about the possibility of a World War III — yet I believe none of the parties involved wants a war. There is a way out of this mess.

What qualifies me to write this article? I have done uninterrupted business in Russia, Ukraine and multiple countries in Eastern and Central Europe/Central Asia over the last 24 years. I have also worked closely with all three trade and development Agencies of the U.S. government and with the Department of Commerce, as well as with senior government officials of several Eastern European and Central Asian countries.

For the Western world to try and embarrass Russia by putting democracies in its backyard creates a source of perennial irritation. The U.S. never liked having a Communist country 90 miles off its shores.

As a result, I have come to understand the geopolitical forces tugging at the region. I have been on official U.S. government trade missions to Georgia right after the war with Russia and to Crimea. I worked as part of the United Nations Development Programme’s outreach to Belarus and managed a U.S. public company with interests in Moldova. Although I try to stay away from politics, it is clear that business and politics in that region are inextricably linked, so I will offer my thoughts on what needs to happen in order for the ongoing crisis not to turn into a disaster.

Refocus on the Underlying Interests 

Let’s call a spade a spade. For the Western world to try and embarrass Russia by putting democracies in its back yard creates a source of perennial irritation. The U.S. never liked having a Communist country 90 miles off its shores. Why would we for a moment assume that having the West back Georgia, Moldova or Ukraine would bring joy and comfort to the Russian leadership?

It is in Vladimir Putin’s interest to have Ukraine come into Russia’s sphere of influence, or at least not allow the country to fall under Western control.

The West’s interest is to have Ukraine come into its sphere of influence (the EU, NATO), or at least have it remain democratic and territorially whole without the West having to engage militarily. So how do all sides get what they want?

Let Ukraine be! Both sides should immediately agree to leave Ukraine alone and stop pulling it into their respective orbits. Under Leonid Kuchma, the second president (1994 – 2005) of independent Ukraine, the country has been able to masterfully balance the interests of both forces while remaining independent and prospering economically. The same thing should take place now. Let business and economics be the drivers, and the free market will work to balance respective interests out. All sides should stop stoking the separatist tensions and agree to stop pulling independent Ukraine into their respective orbits. The country is large enough and rich enough, and it can certainly regain its rightful place in the geopolitical arena.

Jointly Address Recovery and Rebuilding

Simultaneously, both the U.S./EU block and Russia should provide joint economic aid to Ukraine to let it come out of the economic liquidity crisis, which was the result of looting and mismanagement by the previous administration. This tit for tat response should be moved from the missile offensive to the economic aid arena. Each side (the EU, U.S. and Russia) should commit $15 billion, which would total $45 billion in badly needed economic aid for Ukraine. Let the country rebuild itself because the economic stakes are enormous. Exxon, Shell, Chevron, Cargill, the European Bank for Reconstruction and Development and Franklin Templeton Investments have billions committed in direct investment, as do EU countries and Russia, which have massive equity stakes or interests in the oil, gas, aerospace, agriculture, coal extraction, retail and telecom sectors.

Both sides should agree to a stalemate, have Russia pull the troops out and proceed along a non-interference policy.

U.S. and European exporters have billions at stake from losing Ukrainian markets for agricultural, extraction and production equipment. Ukrainian steel, pipe and agricultural producers have vast market opportunities in Russia, the EU and Asian countries. Undermining their ability to export will further choke off much needed tax revenues and foreign currency inflows.

Change the Game

Although I foresee the possibility that NATO would put an aircraft carrier group in the Bosphorus strait to block exit from the Black Sea — or have its own military exercises somewhere, let’s say Poland, as a show of counter force to the Russian troop deployment – the U.S. and its allies need to refocus the entire game plan. Going toe to toe and engaging militarily is a losing proposition. Both sides should agree to a stalemate, have Russia pull the troops out and proceed along a non-interference policy.

At the same time, Russia and the U.S. should refocus their cooperation in areas where common ground exists between them: preventing nuclear weapons in Iran, stopping the spread of radical terrorism globally, and deepening trade and economic ties between them. The way things are going right now, Putin is playing chess, while the West is playing checkers. Both sides need to start playing Monopoly and stop antagonizing each other.

Sounds simplistic? Not really, yet it is very difficult to implement. However, if basic tenets and philosophies similar to the ones outlined here are adopted by all sides involved, a peaceful resolution is very possible. This is especially true given the fact that over the last 25 years, there has been a tremendous fusion of assets, people and cross-border economic and cultural ties between Russia, the U.S., the EU and Ukraine. Let the cooler heads prevail.

Citing Knowledge@Wharton

Close


For Personal use:

Please use the following citations to quote for personal use:

MLA

"Crisis in Crimea: What Ukraine, Russia, the U.S. and the EU Should Do." Knowledge@Wharton. The Wharton School, University of Pennsylvania, 03 March, 2014. Web. 28 July, 2015 <http://knowledge.wharton.upenn.edu/article/crisis-crimea-ukraine-russia-u-s-eu/>

APA

Crisis in Crimea: What Ukraine, Russia, the U.S. and the EU Should Do. Knowledge@Wharton (2014, March 03). Retrieved from http://knowledge.wharton.upenn.edu/article/crisis-crimea-ukraine-russia-u-s-eu/

Chicago

"Crisis in Crimea: What Ukraine, Russia, the U.S. and the EU Should Do" Knowledge@Wharton, March 03, 2014,
accessed July 28, 2015. http://knowledge.wharton.upenn.edu/article/crisis-crimea-ukraine-russia-u-s-eu/


For Educational/Business use:

Please contact us for repurposing articles, podcasts, or videos using our content licensing contact form.