Wednesday, March 5, 2014

The Ukraine Crisis and the Mind of an Economist

Like many which very little knowledge of the region, I have found the crisis in Ukraine confusing.  The 'economics' angle has focus on natural gas and the benefit of the military sea port in Sevastopol.  But, as an economist, this does not tell mew that much.  Yes, contestable resources are important, but modern economics is all about the effect of incentives on behavior and I have found the coverage of the crisis distinctly lacking in its analysis of the incentives on Putin to pursue his current strategy.

Which is why I found this op-ed piece in The New York Times so illuminating. I cannot speak to the veracity of the analysis, but at least it speaks my language: what are the incentives that Putin is responding to.  It may have inaccuracies but the discussion of incentives makes a lot if sense to me:

Mr. Putin’s aim is not a de jure separation of Crimea from the rest of Ukraine. That would be legally problematic and disadvantageous to Moscow in terms of its future influence over Ukrainian politics. The purpose of Russia’s incursion was to obtain the greatest possible autonomy for Crimea while still retaining formal Ukrainian jurisdiction over the peninsula.

A referendum on March 30 is likely to result in a vote for further autonomy, and it would provide Crimea with such broad freedoms that it would become a de facto Russian protectorate. Moscow would then aim to keep the Russian Black Sea fleet in Crimea indefinitely, and remove any limits on its operations, size and replenishment. 
That’s because Russia has a strong interest in nominally retaining Crimea as part of Ukraine. From the disintegration of the Soviet Union onward, Crimea, with its traditionally separatist leanings, was always a destabilizing factor. It served as a direct avenue of Russian pressure on Ukraine, and also guaranteed almost a million “pro-Russian” votes in Ukrainian elections, ensuring the dominance of the pro-Russian eastern half of the country over the nationalist western half.

Ahh ... realpolitik

1 comment:

Keir said...

So the Russians have suddenly called for a referendum for anschluss in TEN DAYS- despite the chaos, fear and inability for any who would disagree to mobilise or prepare. Exactly, all but to the very day, that Germany did the same thing after its March invasion of Austria. Appalling. It might be noted that in the last election, the party of the current head of Crimea, Sergei Aksyonov, who was elevated to that position with the help of the Russian military, got only 4 percent of the vote. Looks like another Munich- give a dicator a slice of another country's territory despite having committed the country to defend it- according to the Budapest Memorandum of 1994, the U.S. and Britain are obliged to protect the territorial integrity of Ukraine. Fat chance.