SIM Report: Central & Eastern Europe, Issue 2

UKRAINE & RUSSIA: SUCCESSFUL PRISONER EXCHANGE SIGNALS IMPROVING RELATIONS, DÉTENTE

On 29 December, Russia and Ukraine successfully concluded an exchange of 200 prisoners, including Ukrainian soldiers and pro-Russia separatists. This comes after Ukrainian President Volodymyr Zelenskiy and his Russian counterpart Vladimir Putin agreed to a ceasefire in eastern Ukraine by the end of 2019 during a summit in Paris on 9 December. The first day of the summit, which was mediated by France and Germany, also led to an agreement for an ‘all for all’ prisoner exchange. However, Kiev and Moscow failed to reach a timetable for local elections in eastern Ukraine as Zelenskiy wants Ukraine to obtain full control of the border between the eastern breakaway regions and Russia before the votes are held; this was rejected by the Russian government.       

The agreement and December prisoner exchange represent important steps towards the successful implementation of the 2015 Minsk Protocol, an agreement aimed at ending the war in eastern Ukraine. Indeed, an exchange of dozens of prisoners in September, and a partial withdrawal of troops from both sides shortly after laid out the foundations of the December agreement. However, the ceasefire has not brought hostilities to a complete halt and sporadic fighting continues, albeit to a limited extent. 

While some aspects of the Minsk peace deal remain unresolved, the series of recent confidence-building measures, including the prisoner exchange and troop withdrawal represent a significant de-escalation in Ukraine-Russia relations. For both leaders, there are strong incentives to follow through with the deal. By de-escalating hostilities in eastern Ukraine, Moscow can expect warmer relations with the EU and consequently a potential lifting of costly economic sanctions against Russia. Notably, for Zelenskiy – who has limited leverage vis a vis Russia and faces pressure from nationalist groups over giving too many concessions to Moscow – ending the war in the east provides a strong opportunity to reinforce his government’s efforts to boost foreign investment and improve Ukraine’s competitiveness. In the short-to-medium term, an end to hostilities will lower the security risk in Ukraine. It will also alleviate pressure on Ukraine’s public finances as less resources will be required to support active fighting forces in the eastern front. 

In a separate but related development, the two countries also reached a five-year agreement, worth USD7 billion, regarding the transit of natural gas from Russia to Europe via Ukraine. The agreement was set to expire on 31 December. The deal contains a clause requiring Russia to pay a minimum transit fee for natural gas even if it does not send contracted volumes through Ukraine.

Seen in a modern historical context, these recent developments represent a significant breakthrough after tensions escalated during the November 2018 Kerch Strait crisis. A longer-lasting settlement however is contingent on the two sides reaching an agreement on holding local elections in the contested Donbass region. This will likely be reached sometime in the first half of 2020. Consistent ceasefire violations in eastern Ukraine, however, will question the legitimacy and effectiveness of the peace deal as well as test both leaders’ willingness to resolve the conflict. Likewise, if both sides fail to meet the conditions set by the deal, this could also imperil the prospects for the natural gas agreement. 

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