Lack of strategic success suggests Russia will double down after Minsk-II

One year to the day after the start of the Crimean invasion and following the Debaltseve diplomatic debacle, what's next? A year into his misadventures and despite his territorial gains Putin has still not achieved any strategic victories: Maidan Ukraine is alive and well and Ukraine has never been further from Russia ideologically. That lack of strategic success suggests Russia may pursue new advances and destroy the last remnants of hope clinging to the Minsk-II Accords. Our base case has Russia pausing while seeking a softening of the West's sanctions regime (before later doubling down), but Russian troop movements towards Mariupol suggest an attack is still a possibility. Meanwhile, Ukraine is taking steps towards tackling corruption, but the real grunt work is still ahead.

Debaltseve, the now-infamous railway hub that links the Donetsk and Luhansk Oblasts, was a strategic key for the Russian proxy forces, which explains why fighting intensified after Minsk-II. Now that it has fallen and is controlled by the DNR/LNR, what's next?

In the year (to the day) since starting to invade Ukraine, Putin's Russia has come to occupy some 8% of sovereign Ukrainian territory. Although the "inviolability of European borders" has been torn to shreds, Putin through his misadventures has yet to achieve anything significant in a strategic sense: the ideals of the Maidan are very much alive in Ukraine and continue to pose an exportable threat to the Kremlin's autocratic governance model; pro-EU, pro-NATO, and anti-Putin/Russia sentiment has never been stronger in Ukraine; Russia's hold on the Donbas still offers it little influence on internal Ukrainian governance; and the government and parliament have proven deft at managing the ticking time bomb they inherited from the Yanukovych administration.

And since Russia has yet to achieve any strategic goals, Minsk-II will not resolve this conflict and the Russian attack on Ukraine will continue, unless Russia has exhausted itself economically (not yet), militarily (plenty of cannon fodder left), and politically/diplomatically (surprisingly, not yet).

The options on the table – which are not necessarily mutually exclusive – are as follows: 1) continue the open military advance with attacks on Mariupol (a strategic port and home to two of Ukraine's top-3 metallurgical plants), Artemivsk (ammunitions store), and/or other strategic directions; 2) intensify efforts to destabilize the domestic scene through acts of terrorism (as seen yesterday in Kharkiv and numerous cities across southern and eastern Ukraine over the past months); 3) drive a wedge between the Poroshenko and Yatsenyuk camps with the goal of provoking an Orange-style divorce between coalition partners and paving a path back to government for pro-Russian political forces.

If (when?) the military push continues west, progress will likely be slow. Starting from the demarcation line, westward progress will be met with increasingly patriotic Ukrainians, fewer "Novorossiya" sympathizers, and a sharp increase in political costs internationally.

The last time the Russian forces pushed west and shelled Mariupol, the corridors of Western power – especially in Washington – exploded with hard talk of arming Ukraine, which subsequently scared old Europe to the negotiating table in Minsk.

Any push west would likely invoke a similar response, but this time faster and sharper given that the Mariupol shelling had taken many by surprise after months of lower-level clashes. Right now, all eyes are on Ukraine, which makes military gains without a reaction from the West all the more difficult. Moreover, Europe's preference for diplomacy has been proven ineffective, granting more bargaining power to the hawks in Washington.

To avoid fresh sanctions and perhaps even pressure Europe to soften its sanctions package, a period of short-term, relative calm along the demarcation line may be on the docket. However, following the Battle of Debaltseve, US Secretary of State John Kerry has indicated President Obama will weigh "new, serious sanctions" this week; he avoided speaking about arming Ukraine.

At the time of writing, Vice Speaker of Parliament (and former secretary of the National Security and Defense Council) Andriy Parubiy is in Washington and Ottawa lobbying for radars, drones, and other weaponry needed to curtail Ukraine's military disadvantage. But if new sanctions and armaments to Ukraine were not approved after Russia very publicly spit on Minsk-II immediately after its signing, we don't expect the West will muster the political will now. If, however, new measures are taken this week, we believe they will be more noise than consequence in the battle for Ukraine.

It is, then, not a matter of if, but when, the fighting will escalate, especially after the diplomatic train wreck that was Minsk-II. Although our base case is for a period of relative calm (relative being the key word; terrorist attacks and military clashes would continue, but just not make it to the front pages of the FT and NYT), the current massive relocation of Russian troops to the south near Mariupol would suggest otherwise. Admittedly, our base case relies heavily on past performance and on the premise that Russia is indeed interested in softening the West's sanctions regime.

Last week, Kyiv called for UN or EU peacekeepers to monitor the Minsk-II ceasefire. A neutral peacekeeping force has little chance of actually being deployed, but the move by Kyiv is not without value. The UN Security Council, with Russia as a permanent voting member with a veto, will never approve a true peacekeeping force, but clearly Ukraine knew this. Instead, the call for peacekeepers shifts the optics of responsibility for peace onto Russia: they now have to devise a way not to be seen as the side uninterested in peace by refusing to approve the peacekeepers. Yesterday, Poland and Latvia strengthened Ukraine's position by throwing their support behind the call for peacekeepers.

The Ukrainian government, meanwhile, has made high-profile progress in the judicial arena, a first move on the war with corruption. In just two weeks in office, Ukraine's newly appointed Prosecutor General has overseen the arrests of high-profile former Party of Regions officials, including Alexander Yefremov (reportedly a patron of the LNR) and Mikhail Chechetov, and the release of new information tying the murders of the Heavenly Hundred on Maidan to a key Putin aide. Meanwhile, Interior Minister Arsen Avakov has declared war on a key court in the city of Kyiv, for failing to ban the Communist Party.

Of course, detainments and flashy, populist statements do not a democracy make, but the progress is heartening.