U.S. Think Tank Review: Now that Russian officials have recognized the controversial separatist elections in Eastern Ukraine as legitimate, Western think tanks have refocused their attention on Ukraine and how best to deal with Russia going forward.


Russian Foreign Minister Sergei Lavrov at the press conference after the fourth meeting of Russian, German and Polish foreign ministers in St. Petersburg. Photo: RIA Novosti

Last month’s U.S. think tank round up pointed to a possible détente between Russia and the West and an easing of tensions. The process of bringing peace to Ukraine seemed to have regained some footing in the form of the Minsk Agreement and a new European gas deal. However, Moscow’s decision to recognize the separatist elections in Eastern Ukraine on Nov. 2 has meant a quick return of the previous strategic dynamic: two diametrically opposed nations jockeying for Ukraine. And as the Minsk Agreement edges toward irrelevance, Western think tanks are analyzing Moscow’s possible future moves with renewed vigor.

Putin’s Valdai speech sets a negative tone

In 2007, Russian President Putin spoke at the Munich Conference on Security Policy, delivering a speech that stunned the West and sent shockwaves throughout the political community. Putin’s apparent distaste for the international status quo was chalked up to “Russia’s strong growth” trends.

Then, on Oct. 31 of this year at the Valdai Club event in Sochi, Putin delivered what Dmitri Trenin of the Carnegie Moscow Center called “Munich II"

Trenin later fleshed out his ideas and said Putin appeared to be a wartime president, “defying the U.S.-dominated global system” and appearing “supremely self-confident.”

More recently, a litany of U.S. State Department press releases have condemned Russia as spurning reconciliation and harming the very agreement that could successfully bring peace to Ukraine.

The U.S. takes a negative stance on separatist elections

Signed by Russia, Ukraine, and pro-Russian rebels on Sept. 5 (and revamped on Sept. 19), the Minsk Agreement is a focal point of the U.S strategy for Ukraine (both for President Obama and the U.S. State Department) and was considered by some to represent the potential end to the Ukrainian turmoil.

But the separatist elections on Nov. 2 risked the entire peace process, at least from the West’s perspective. Most recently, Russia’s recognition of the elections even prompted Ukrainian President Petro Poroshenko on Nov. 4 to threaten the separatists’ autonomy, which was upheld by the Minsk Agreement. Without intervention, the future appears grim.

On Twitter, U.S. think tanks offered their reaction to the controversial elections in Eastern Ukraine. For example, current Brookings scholar and former U.S. ambassador to Ukraine Steven Pifer tweeted:

The Twitter account for Carnegie Russia said that, “[The Eastern Ukrainian] rebels tried to replicate what they knew about elections—so this all looked like [elections] in the USSR.”

Without official exit polls and an independent oversight body, the elections must have been nothing more than a charade, according to Brookings’ Pifer.

And Steven Sestanovich of the Council on Foreign Relations (CFR) re-tweeted an opinion that the “fake Donbass elections [were] a slap in the face of the EU.”

In sum, the initial Western reactions on social media show that U.S. think tanks are disenchanted with Putin and his leadership, unsympathetic toward Eastern Ukraine, disgruntled about the state of the Minsk Agreement, and preparing for the worst.

But instead of simply watching Western scholars react on social media to politically charged events, it is also beneficial to watch market reaction to recent Russian moves in the geopolitical arena, especially in the energy markets.

Russia’s energy strategy for Europe and Asia

As Russia sits on some of the world’s largest energy reserves, selling oil and gas has become a critical factor in Russian foreign policy. Gas, of course, plays an important role in Russia’s geopolitical struggle with the West over Ukraine, where Russia has recently “resumed vital supplies of gas for the winter. And, in Asia, gas plays an important role in the future stability of the Russia-China relationship.

In general, higher energy prices make Russia more confident in its foreign policy, while lower prices require more belt-tightening and caution. To contextualize, Charles Wolf Jr. of the Rand Corporation points out that oil prices have tripled since 2000, when crude was $35 per barrel. From 2011 to early 2014, prices have skyrocketed to more than $100 per barrel – a 300 percent increase from 2000 and the cause of a Russian economic windfall.

Since mid-2014, however, oil prices have steadily fallen to levels unseen for years. “With demand dropping across Europe, Japan, India, China, Brazil and much of the emerging world market,” Charles Ebinger of Brookings states, Russia has to change tack.

Ebinger adds that there are short-term repercussions of falling oil prices on Russia, such as the inability “to fund the Assad regime” in Syria. But longer-term repercussions include a “major economic setback” for Russia. Since Russia’s 2014 budget is projected using an average price of $97 per barrel, “a price slide to $80 per barrel” or below would mean a serious blow to Russia’s economic fortunes.

Complicating matters for Russia is that China has not been as enthusiastic about its new energy relationship as Russia has been. For example, although a 30-year, $400 billion gas deal was signed between Russia and China in May, Edward Chow of the Center for Strategic and International Studies (CSIS) suggests that things may not be as good as they appear to be for Russia, “The fact that another agreement on the Russia-China gas deal had to be signed [in mid-October] suggests that not everything had been previously settled.” Chow also noted that, “The Chinese side has been consistently more cautious on their comments regarding Russia's eagerness to proceed.”

Moreover, all of Russia’s advances toward China regarding the Altai gas pipeline have fallen short. In response to another Russian advance in mid-October, China publicly announced that “new consultations were needed to examine the project” before they could commit. “It was a polite but adamant form of rejection,” Mikhail Krutikhin of the Carnegie Endowment said.