Crimea One Year On: Where Does Russia Go Now?

A year has passed since Russian President Vladimir Putin proclaimed the formal annexation of Crimea to the Russian Federation. This act, which in the Kremlin’s narrative amounted to the rightful return of an ancient Russian holy land, seemingly elevated Vladimir Putin to near savior-like status in the eyes of the Russian people. If only Vladimir had stopped there. If he had, not only would so much bloodshed have been avoided, but Europe would not be facing its most dangerous and complex security challenge since the Cold War.

It is not hard to understand why Putin did not stop. There was virtually no penalty for the annexation of Crimea, beyond a lot of huffing and puffing in Washington and Brussels about this dramatic violation of international law, accompanied by laughably weak economic sanctions. Furthermore, Putin’s popularity ratings skyrocketed into the high 80s after he masterminded his glorious modern version of the “(re-)gathering of the Russian lands.” There is no question in my mind that Kremlin survey researchers were well aware in advance that spetsoperatsia Krym [Special Operation Crimea] would provide a dramatic boost to Putin’s public image, which had shown signs of growing stale in the previous two years.

So in April 2014 the Russian government’s hybrid war in the Donbas began to take shape. Local insurgents were joined by Russian intelligence officers to begin the destabilization of local and municipal governments. The fighting escalated in mid-summer after the first failed cease-fire, and to the surprise of most observers—especially the Russians—the Ukrainian military and informal volunteer militias achieved a great deal of operational success, most notably in the re-taking of the city of Slovyansk on July 6. The Ukrainians could launch air strikes against the insurgents with impunity, and Moscow was faced with the decision of allowing the insurgents to be driven to defeat, or to supply them with air defense systems to stave off the Ukrainian air force.

The Kremlin chose the latter and while Putin watched the World Cup final in Brazil on July 12-13, it appears that significant anti-aircraft artillery was delivered across the border. Sitting in Moscow that Sunday morning,  I watched a caravan of Russian armor on its way to Lugansk live on YouTube. Only four days later, on July 17, Malaysian Airlines Flight 17 was tragically shot out of the sky over eastern Ukraine, leaving almost 300, mostly European civilians, dead. No longer could Washington and Europe ignore the intense fighting taking place in Ukraine, and soon much tougher economic sanctions were levied against Moscow.

The fighting intensified over the next month, culminating with  a major military setback for the Ukrainian army that effectively led newly-elected Ukrainian President Petro Poroshenko to sue for peace. The result was the September 5  Minsk agreement, which we would later come to know as Minsk I. Unfortunately the agreement, which among its 12 points called for the withdrawal of all illegal armed formations and military equipment, did not hold, and in January the Russian-backed insurgents undertook a major winter offensive that led to the Ukrainian defeats at the Donetsk airport and later the rail hub of Debaltseve. A second Minsk agreement (Minsk II) was reached in February on terms less favorable to Ukraine, a reflection of the military advances made by the Russian-backed forces since the September agreement.

Although there have been hundreds of violations of Minsk II and documented evidence of more Russian equipment crossing the border to resupply the insurgents, there remains a shred of hope that the agreement will hold. In Washington a fierce debate emerged about whether to supply the Ukrainians with lethal military assistance, while in Europe the debate centered on whether (and if so, when) to lift economic sanctions or, alternatively, to impose much more biting sanctions.

Meanwhile the Ukrainian military, deeply battered and overextended, has virtually no means of stopping Russian armor should the insurgents go back on the offensive. Possible, or even likely, goals of a future insurgent offensive include the Black Sea port city of Mariupol, and perhaps to go as far as to establish a land corridor connecting the Russian mainland and the Crimean peninsula.
At present, we are witnessing a break in the action. Good news for Kiev came recently with the International Monetary Fund’s (IMF) approval of a new $17.5 billion assistance package, pending the success of the Minsk II ceasefire and the passage of reforms in the Ukrainian Rada (parliament).
It would appear that this arrangement gives Moscow veto power over the IMF package.

Not all, however, remains well on the home front for the Russian leadership. Over the past year, the Russian economy has contracted sharply. Already facing near-zero growth before the annexation of Crimea, the halving of the oil price in the second half of last year led to a 50 percent decline in value of the ruble and plunged Russia into a deep recession with a likely economic contraction near 5 percent in 2015, pending future oil price dynamics and Western decisions about additional sanctions.

Despite the dramatic decline in Russia’s economic fortunes, Putin seems perfectly content to stay the course in Ukraine, at least for now. He can shift the blame for poor economic performance from the misguided state-centric policies that his administration has imposed since his return to the presidency in May 2012 to external factors, including Western sanctions and the external shock of declining oil prices. 

During the vast majority of his tenure as Russia’s de facto or de jure leader since 2000, Putin’s popularity has been based on his ability to deliver economic growth and prosperity. But as Russian growth has declined in recent years, he has shifted his strategy, seeking to emphasize a brand of traditional Russian values (not unlike those promoted under Nicholas I in the first half of the 19th century, a leader whose rule coincidentally ended with his death during the disastrous Crimean War in 1855) and a highly chauvinistic version of Russian nationalism. Essentially, Putin’s foreign policy is now the foundation of his domestic legitimacy. So far, it is working wonderfully for him.

The question we must ask ourselves as we enter the second year of this conflict is: how long can this last? The Russian government has already burned through approximately $150 billion of its  currency reserves, which today, while still significant, stand at less than $360 billion. Assuming that the oil price stays in what appears to be the “new normal” range of $40 to $70 per barrel and that no further economic sanctions are imposed, Russia can probably hold out for a couple of years before the economic situation becomes truly desperate. But we will certainly see more bankruptcies, layoffs, further cutbacks in social welfare spending, and possibly deeper economic contraction. How long then does the legendary Russian capacity to endure suffering last? Nobody knows the answer to those questions, but virtually all sense further instability and danger just beyond the horizon.

These sensitivities have been heightened in recent weeks with the tragic murder of opposition figure Boris Nemtsov and Putin’s totally unexplained eleven-day disappearance from public view starting March 6.

For the Obama Administration and our European allies, Putin’s Russia has emerged as a gigantic, unwanted policy dilemma. Most of us do not want to see Russia proceed on the road to economic collapse, but we have no control over Putin’s policies and the egregious violations of international norms he has carried out in Ukraine must be addressed. Most of us do not want to see an escalation of the conflict in Ukraine, but despite several opportunities over the past year to resolve the conflict, each ceasefire has ended with further escalation on the part of the insurgents, to the point that the winter offensive just months ago was the most intense military fighting in Europe since World War II.

Most of us do not want to see a total breakdown in U.S.-Russia relations, as cooperation with Russia is critical to U.S. foreign policy and national security goals in a number of areas. For example, in the first half of 2014 the U.S. and Russia together carried out the highly complex operation to remove and decommission all of the declared chemical weapons in Syria—a remarkable achievement and a boon for international security (just imagine if ISIS were able to get access to some of this arsenal). If one believes, as I do, that an agreement over the Iranian nuclear program is crucial for global security, it is undeniable that Russian cooperation in these negotiations is critical as well.

There is no magic bullet that will solve this policy dilemma, and it would be highly presumptuous on my part to suggest that I possess a clear answer. For now, we can hope and wait to see whether the Minsk II ceasefire holds. I am not optimistic, and if it does not, there will be no third such agreement. Its failure would signal the onset of a lengthy and very dangerous period for Russia’s relations with the West, one that would have much in common with the Cold War that we so happily concluded a quarter century ago.

Andrew C. Kuchins is senior fellow and director of the Russia Eurasia Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. For a complete history of the Ukrainian conflict, updated daily, visit

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Andrew C. Kuchins