As Russia continues to move along its resurgent path, countries along its periphery are expected to face significant foreign and domestic policy challenges. Looking ahead to 2009, it is likely Russia will be increasingly interventionist when dealing with its neighbors. This is especially true in regards to Ukraine, a country that over the past years has experienced a deteriorating relationship with Russia over energy issues and attempts by pro-Western leaders in Kiev to remove the country from Moscow’s “sphere of influence.”
Russia’s resurgence, which is resulting in increased interventionism in Eastern Europe, Central Asia, and the Caucasus, is likely to have a significant impact on Ukraine’s domestic political situation in 2009. However, given the current economic turmoil plaguing much of the world, Russia may be restrained in fulfilling some of its foreign policy goals and ability to further influence its neighbors in 2009.
Political Situation
We believe that for much of 2009, Ukraine will be embroiled in political conflict and instability. The two politicians at the center of the conflict are President Victor Yushchenko and Prime Minister Yulia Tymoshenko. Another politician expected to remain influential in the Ukrainian political scene is Viktor Yanukovich, the main pro-Russian opposition leader. Tymoshenko and Yushchenko, former Orange Revolution allies, have grown increasingly distrustful of one another and will compete for power throughout 2009, resulting in political instability and uncertainty.
The likelihood of early elections in Ukraine is low, as President Yushchenko has backed away from the idea. Instead, presidential elections will occur in late 2009 or early 2010. While President Yushchenko is expected to run again for the presidency, he is unlikely to bode well compared to Prime Minister Tymoshenko and Mr. Yanukovich. Due to continued political wrangling and dire economic conditions, Yushchenko’s popularity levels have hit record lows; ultimately enhancing the likelihood he will lose the presidency in the next election, and representing a major setback for leaders who wish to move closer to Europe and the United States (US).
The two major figures in Russia’s political scene in 2009 will remain President Dmitry Medvedev and Prime Minister Vladimir Putin. Western leaders were optimistic with the election of Medvedev in March 2008; ultimately believing it would result in better ties and a more cooperative Russia. However, despite being more economically liberal than his predecessor, Medvedev has maintained Putin’s hard-line approach in many other areas and is expected to do so throughout 2009.
In 2009, Vladimir Putin is expected to remain the prime policymaker and most influential leader in Russia, despite holding the post of Prime Minister. Speculation that Putin is returning to the presidential post in the summer is only likely to occur if Russia plunges into economic turmoil. Medvedev’s popularity levels remain relatively high and Putin is unlikely to seek a return unless a clear threat to his power or popularity emerges, such as a major economic crisis or popular unrest.
Violence and Unrest
In 2009, Ukraine is expected to experience significant levels of unrest, primarily due to the country’s growing economic problems. With the economy likely to contract by up to 10 percent by March 2009, a new wave of economic turmoil is likely to plague Ukraine. As a result, we believe there is a strong likelihood that the dire economic conditions will lead to mass street protests in Kiev and other cities around Ukraine. There is potential that the protests in 2009 will be violent, as frustration within the population has escalated at an alarming rate. The unrest is expected to have significant political ramifications and result in an even lower popularity level for current President Viktor Yushchenko.
In 2009, we expect Russia to experience significant levels of civil unrest due to the country’s growing economic problems. It is the country’s economic problems, not the consolidation of power or repudiation of individual rights that will be the prime motivator for civil unrest in 2009. Russia’s economic well-being will largely be determined by the price of oil, which we believe will largely stay near US$50-60 per barrel, continuing to drain much of Russia’s reserves and result in budget deficits.
However, unlike Ukraine, Russia is much more prepared to deal with potential political unrest. The likelihood of political unrest turning violent is relatively low due to the increasing power given to security authorities and aggressive tactics often employed by Russian police.
Increased civil unrest in Russia will result in the Kremlin implementing additional measures that further restrict individual liberties and freedoms. In 2009, especially as the economic environment worsens, Russian authorities will step up intimidation tactics targeting prominent opposition leaders that may potentially pose a threat to Putin-Medvedev leadership, including Other Russia head Garry Kasparov and Eduard Limonov.
In 2009, we expect the security environment to significantly worsen in the Russian Caucasus, specifically in Ingushetia and Dagestan (Previous Report). However, we believe Chechnya will remain relatively stable given Ramzon Kadyrov’s strict control and successive ability to weaken the Chechen-based insurgency. The political situation will continue to remain unstable in Dagestan in 2009, resulting in high-levels of instability and unrest.
As a result of the deteriorating security situation, Russia is likely to deploy additional forces to the area, specifically Dagestan, in an effort to establish stability. While violence and insurgency is set to worsen, we do not anticipate political collapse for Caucasus’ governments, as they will continue receiving extensive military, financial, and political support from Russia. We believe the Caucasus-based radical groups will primarily target Dagestani security forces and Russian troops operating in the region. Like in 2008, we believe the rebels will confine attacks to the Caucasus region and not expand into Russian urban areas in 2009.
Energy Security
For 2009, energy security will be one of the prime concerns for the leadership in Ukraine. With the country suffering from a wide-range of economic problems, Ukraine will be unable to withstand a potential halt in energy supplies. However, given the current row between Ukraine and Russian oil giant Gazprom over unpaid debt, it is increasingly likely that Russia will halt gas supplies to Ukraine in 2009. The first shut off may occur in January 2009, resulting in further strain on the country’s political leaders and economy.
Russia is likely to seek to avoid supply disruptions to Western European customers, as Russia not only needs the funds, but also seeks to avoid creating trade-related tensions. In 2009, Russia will attempt to establish itself as a reliable energy supplier, but will not hesitate to halt oil shipments to countries that have debts, especially countries located along its border.
Because Ukraine is a transit country to other energy customers in the region, it is inevitable that nearby countries may experience disruptions. Countries like the Czech Republic and Hungary are likely to suffer as a result of a Gazprom-Ukrainian row in 2009. With the two sides remaining in disagreement over the issue, 2009 is likely to see sporadic disruptions in energy supplies, ultimately affecting parts of Eastern and Central Europe.
