22/7/2014: Shaping a Road Map for Resolving the Ukraine Impasse

With the conflict in Ukraine is tumbling toward a breaking point (http://trueeconomics.blogspot.ie/2014/07/2172014-conflict-over-ukraine-is-now.html), it is heartening to see the Guardian wading into Ukrainian crisis dimension with a proposed solution that actually attempts to bridge the gap between Eastern Ukrainian separatists, Kiev, Moscow and the West:
http://www.theguardian.com/commentisfree/2014/jul/21/putin-save-face-mh17-russian-leader-ukraine-rebels

As readers of this blog know, I have called for a staggered reforms approach based on "elections + Aid & Development Programme + referendum" formula since February this year:
http://trueeconomics.blogspot.ie/2014/02/1922014-ukraines-political-economy-is.html and http://trueeconomics.blogspot.ie/2014/02/622014-what-does-future-hold-for.html

The dynamics have changed a bit since the original suggestions, but the nature of the required compromise did not. To move on from the civil war situation toward peaceful resolution of the political and economic crises Ukraine faces, the nation needs:

1. Immediate bi-lateral ceasefire agreement backed solidly and enforced by EU and Russia; both acting as guarantors and enforcers of the agreement on the sides of, respectively, Kiev and Donetsk;
2. Following the ceasefire, Ukraine needs structured and facilitated peace talks;
3. Peace talks must start with the opining positions of both sides recognising ex-ante: secured national integrity of Ukrainian state, full recognition of the legitimacy of the current Government in Kiev, recognition of the need for regional-level direct democratic decision making in shaping the future political configuration of Ukraine;
4. Kiev must, up front, recognise the need for local referenda in determining the future outlook of political institutions in Ukraine, while separatists must recognise that the future referenda cannot be held on the basis of secession, but must be grounded within the confines of the united Ukraine. Kiev also must recognise the need for full recognition of the rights of Russian and other ethnic minorities and there has to be external monitoring group set up to oversee such recognition is implemented. Much of this already enshrined in law in Ukraine, but Ukrainian laws are held in low regard in the East;
5. The talks must produce a road map - including timings - for: A) local referenda on the structure of regional relations with Kiev; and B) constitutional - nationwide referendum - aiming to reform and confirm constitutional institutions of the state; 6) Before any referenda can be held, there is a need for a normalisation period, during which reconstruction and development of the regions can take place. Funding for this should be supplied by the guarantors of the peace process (EU and Russia) on the basis of the World Bank-administered loans with referential conditions (Marshall Plan);
6. EU and Russia must engage in a multilateral (EU, Ukraine, Eurasian Union) coordination of trade and investment policies aiming to prevent disintegration of Ukraine's trade and investment capabilities in either market.

The above are not the only conditions for launching a successful institutions-building exercise in Ukraine, but they are the central ones.

The key point is that, as the Guardian puts it: "we cannot afford a decade of cold war. It’s time to swallow hard, and bring the region’s dominant powerbroker inside the tent, to help ensure the integrity of Ukraine – and peace in Europe."