What Ukraine Can Offer Putin?

From the Bloombergviews

(1:15 pm.: Updated second paragraph to include reference to NATO reports of Russian military involvement.)

The convoy of about 300 whitewashed Russian military trucks on the Ukrainian border, the first of which entered eastern Ukraine today, is an apt metaphor for this depressing conflict. Russia says they're carrying humanitarian aid. Ukraine says Russia has invaded.

It may not be an invasion, but Ukrainian officials have the better of this argument. Many of these trucks are almost empty, and they are traveling without the Red Cross escort Russia agreed to. Now NATO reports that Russia has brought artillery across the border. Still, Ukrainian officials must be careful in how they respond, because there remains plenty of room for escalation.

Their campaign against pro-Russian rebels in their city strongholds has been making gains. But the closer victory comes, the higher the risk that Russian President Vladimir Putin -- cornered by the nationalist fervor he has whipped up in his own country -- will indeed invade to prevent it. Even if he didn’t send in troops, Putin would doubtlessly respond by extracting crippling long-term economic costs.

Ukrainian leaders rightly believe that the convoy's true purpose is to slow the assault on rebel forces: Ukraine's military will now need to restrict their use of artillery and airpower to avoid killing Russian aid workers. Even so, President Petro Poroshenko should avoid the temptation to cry foul and press for a military victory ahead of parliamentary elections, expected in October. Ukraine's friends, including German Chancellor Angela Merkel, who visits Kiev tomorrow, can help convince him that the best course is to start negotiating a political settlement with Putin, because striving for a military victory isn't just illusory, it is dangerous.

Next week's meeting between Putin and Poroshenko in Minsk offers an opportunity to break the standoff. Poroshenko's June peace plan, which promised to decentralize power and entrench Russian-language rights, remains a good place to start. There will need to be a cease-fire, as well as international monitors to secure it. Most of all, Poroshenko and Putin will need to address the root causes of this made-in-Russia conflict.

The deepest of these involves Ukraine's economic ties with its neighbors. The challenge here -- which is not as hopeless as it sounds -- is to allow Ukraine to forge connections with both the European Union and the Russian-led Eurasian Union.

Poroshenko and Putin's meeting will take place at a summit of the Eurasian Union, which Putin wants him to join. For his part, Poroshenko has invited representatives of the European Union, including the energy commissioner. So all the necessary parties to a broad settlement will be present and able to address Russia's concerns over how it can trade with Ukraine once Ukraine becomes part of an EU Free Trade Area.

Putin’s central goal throughout this crisis has been to force Ukraine to join the Eurasian Union. That's the main reason he destabilized a neighboring country, and for that he must not be rewarded: No one should ask Poroshenko to renege on the trade and association agreements that Ukraine has signed with the EU, or agree to any referendums or constitutional changes that would amount to splitting the country.

On the other hand, Poroshenko could easily offer a guarantee that his government will not seek membership in the North Atlantic Treaty Organization, in essence "Finlandizing" his country. The condition for that assurance should be that Russia recommit to the 1994 agreement guaranteeing Ukraine's territorial integrity, which Putin broke by annexing Crimea.

As for Putin? He should be under no illusions about the long-term cost to Russia for escalating this conflict. But once a possible deal is in the works and a cease-fire is in place, he should feel free to send all the white-painted trucks he wants to the people of Lugansk and Donetsk.

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