Dialog Europe Russia

Economic Challenges and Costs of Reintegrating the Donbas Region in Ukraine

DER commissioned a study at the renowned Vienna Institute for International Economic Studies (wiiw) concerning the Economic Challenges and Costs of Reintegrating the Donbas Region in Ukraine.

Even though the present COVID-19-situation has a huge impact also in the Donbass, we want to keep the basic problem in our focus. There is a suspicion that nobody can/wants to stem the costs of economically rebuilding this war shaken region – but actually, there is an almost complete lack of solid data giving a sober picture of the situation and the means needed. The study is a first step to tackle this problem.

The study is available for download.

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News Highlight

How Navalny's case changed relations between Russia and Germany

September 14th, 2020
Carnegie Moscow Center
by Dmitry Trenin

The case of the poisoning of Alexei Navalny marked a turning point in relations between Russia and Germany. Actually, the details of the case itself, which are still largely unclear, are no longer important. In Berlin in September 2020, the most important decision for German foreign policy was made: Germany will no longer pursue any special policy towards Russia. Will not try to understand the motives of the other side, strive for mutual understanding and at least minimal interaction. Berlin will not act as a translator from Russian political language into Western ones, nor will it be responsible for relations with Russia to explain to Moscow the position of its allies.

This special role that the Federal Republic and its Chancellor have played in recent years is a thing of the past. Now Germany is in relation to Russia - like everyone else in Western Europe. At the level of rhetoric, this means a fundamental opposition to the Kremlin's foreign and domestic policies, harsh criticism of certain specific steps of Moscow, and great solidarity in this sense with the countries of Eastern Europe. At the economic level, many expect the Nord Stream 2 gas pipeline project to be abandoned. In any case, the era of large Russian-European energy projects appears to be over. At the diplomatic level, a significant limitation of official contacts is likely and, possibly, a suspension of the dialogue at the highest level.

It is unlikely that President Putin, when giving permission for the emergency evacuation of Navalny from Omsk to Berlin, assumed such a turn of events. Rather, one can assume the opposite: he counted on interaction with Angela Merkel, on a joint - with the help of Germany - a way out of the unpleasant incident without new losses to Russia's reputation.

You can try to imagine how Putin reacted to Merkel's statement about Navalny's poisoning by Novichok. A backstab is the softest thing that comes to mind. Personal relationships with foreign leaders are critical to Putin's foreign policy. On the other hand, for a rational-minded Russian president, a negative result is also a result. And he will keep this result in mind.

This means that not only Berlin is closing the era of trustful, long-term friendly relations with Moscow, which Gorbachev opened. Moscow also turns the page. What 30 years ago, at the time of German reunification, was seen not only as a historical reconciliation, but also as a guarantee of future friendly relations and close cooperation between the two peoples and states, has itself become a thing of the past.

The present, in turn, begins to overlap with what seemed long ago. In the area of rhetoric, where the Russian side does not hide its indignation, the German accusations against Russia have been compared to the Nazi arson of the Reichstag, in which the then Berlin accused the Comintern and Moscow. In the political field, the Kremlin is unlikely to take any drastic steps right away, but from now on it will view Germany as a dependent state controlled by the United States. Like the American ones, German partners are now also quoted for Russia.

This conclusion will have implications for the situation in Donbass, as well as for the Belarusian confrontation that has entered a protracted phase. The value of interaction with Berlin and Paris in these areas - in Normandy or bilateral formats - is declining, and dialogue with Washington on Ukraine and Belarus has long been reduced to mutual sharp warnings and no less harsh rebuffs.

Thus, the situation becomes simpler and at the same time more risky: Russia no longer expects something from Europe, and therefore it becomes unnecessary to look back at its opinion or interests. A zero-sum hybrid war has long been waged with the Americans. In this struggle, there are less and less constraining factors.

The collapse of special Russian-German relations was the latest and most powerful in a series of attacks on Russian positions in Europe. In a number of countries in recent years there have been high-profile corruption scandals that knocked out of the saddle leading politicians inclined to cooperate with Moscow. In France, these were presidential candidates Dominique Strauss-Kahn and Francois Fillon, in Italy - Deputy Prime Minister Matteo Salvini, in Austria - Vice-Chancellor Heinz-Christian Strache.

In other countries - Spain, Greece, Bulgaria, Montenegro, the Czech Republic, Slovakia, Norway - Russian conspiracies or spies were exposed, which led to a cooling of relations with Russia. Finally, the scandal with the poisoning of Sergei Skripal and his daughter in Salisbury, England, acquired a truly universal sound.

Western "colleagues", as they say now, worked strategically, clearing their half of the field from hostile influence. As a result, there are practically no states left in Europe whose authorities would treat Russia in a neutral-positive way. So Merkel's decision to transfer the fate of Nord Stream 2 to the European Union looks like the final verdict.

Any special operations - our own or someone else's - are designed to change the situation with a spectacular blow in their favor. Strategically, however, the success of special operations is by no means always long-term. They are often more effective than effective.

The Skripals case arose at a time when in some European countries - four years after the Ukrainian crisis! - there has been a desire to revise the sanctions policy. As a result, the revision was postponed. The Navalny case happened when there was a desire to avoid a new tough split in Europe, now as a consequence of the US-Chinese confrontation.

The pathos of this article is not that both poisonings are provocations from one side or the other. It lies in the fact that, despite scandals and other obstacles, the important interests of Europe, including Germany, and the corresponding interests of Russia require interaction and cooperation, and that recurring scandals do not suppress these interests, but only drown them from time to time. Therefore, it is necessary to restrain emotions and look at things more broadly.

Everyone in the Euro-Atlantic needs to remember that Russian-German reconciliation is just as important a pillar of European security as German-French reconciliation. Such a reconciliation is a true miracle of modern history, given the unhealed trauma of Hitler's aggression, the enormous scale of destruction and the millions of victims of the war.

You should not frighten yourself and those around you with the ghosts of Molotov and Ribbentrop - especially now, when, instead of trying to divide Eastern Europe between Moscow and Berlin, the struggle is for what kind of neighbor Russia will get near Smolensk. There is no need to rejoice at the revival of German-Russian enmity. This will not strengthen NATO. Germany may be quicker to comply with its commitment to increase military spending, but spending will not improve European security. You should not rely on outside assistance or on the sustainability of nuclear deterrence. The latter only gives a guarantee of destruction, not salvation.

Russian-German relations have been deteriorating for almost ten years. It is unrealistic to return them to the days of partnership for the modernization of Europe from Lisbon to Vladivostok in the foreseeable future, but there is still an opportunity to stop the transition of Russian-German relations into a phase of hostility.

To do this, you need to reduce the degree of public rhetoric, conduct your own most thorough investigation of what happened to Navalny on Russian territory, and develop a well-reasoned position before discussing the issue in the Organization for the Prohibition of Chemical Weapons.

This position must be convincing, first of all, for Russian society. The approach "we don't know what happened, but we have ten versions of what could have happened" did not work either in the case of Litvinenko, or with the destruction of the Malaysian liner, or with the Skripals. It will not work in the Navalny case either.

It is better to take a break in relations with Berlin. Let the Germans decide for themselves whether they need another gas stream from Russia. Let them decide for themselves who after Germany will become the main EU expert on Russia - Poland or Lithuania. Let it be determined with the successor of Merkel and in general with the future of their party-political system. It's none of our business.

After a while, the search for mutual understanding with Germany on a new basis - neighborhood, predictability and mutual benefit - will need to be renewed. For Moscow, the most important task now in Europe is not to miss Belarus, just as Ukraine was so inept. to prevent Lukashenka from deceiving Putin, nor by Putin being deceived by the Belarusian people. And, of course, in Russian too.

The material was prepared within the framework of the project "Russia - EU: Developing a Dialogue", implemented with the support of the EU Delegation to Russia

Plan for Ukraine’s Reconstruction in the East (PURE)

The purpose of this Memorandum is to propose a strategy to reframe the discussion of the conflict in the Donbas and prepare a political foundation for post-war stability in Ukraine. This might be done by moving the focus of the Normandy Group from military de-escalation to economic reconstruction. The Minsk Process has succeeded so far in stopping the war, but it offers no framework for the reconstruction of those parts of Ukraine which were heavily damaged during one of the worst military conflicts in Europe since decades. De-escalation has so far not led to a lasting peace and restored prosperity. The Minsk Process is missing this last chapter: a credible Plan for Ukraine’s Reconstruction in the East.

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