Gunfight at the Ukraine Corral

Survival  Blog  04 February 2016

By Elizabeth Pond

2016 promises to be a decisive year for Ukraine. The sudden resignation on 3 February of Economics Minister Aivaras Abromavicius – and the immediate sharp fall of Ukraine’s sovereign bonds – suggest that the showdown is at hand, much sooner than expected.

The country faces a stark choice. Its second civil-society uprising in a decade could dissolve into infighting among oligarchs, as the first one did. Or, with the help of its free-trade and association agreements with the European Union that finally entered into force on 1 January – along with Washington’s newfound interest in diplomatic engagement – it could at last begin to enact the reforms needed to consolidate its fledgling democracy.

The departure of Abromavicius, one of Ukraine’s leading technocrat reformers, was in response to what he said was pressure from Ihor Kononenko, the deputy head of President Petro Poroshenko’s parliamentary faction, to name his own lieutenants as Abromavicius’s deputy and as head of a major state-owned enterprise. The economics minister said in a statement that he had ‘no wish to be a cover for open corruption or puppets under the control of those who want to establish control over state money in the style of the old authorities’.

The key deciders now will be the Ukrainian oligarchs, who have shunned state-building in the past and concentrated instead on funding and controlling the evanescent political parties that operate as clientelistic personal networks. The deciding issue will be the reform of the kleptocracy that remains not just a parasite on governance but, as in Russia, the very driver of post-Soviet systems of neo-feudal governance.

The oligarchs left at the top of the heap after two years of Russian President Vladimir Putin’s undeclared war on Ukraine are President Poroshenko and Dnipropetrovsk baron Ihor Kolomoisky. Poroshenko is the sixth-richest Ukrainian, with an estimated wealth of just under $1 billion, according to Kiev’s Novoye Vremya. From the beginning, he has supported the 2013–14 ‘Euromaidan’ protests against authoritarian rule and their demands for a shift from East Slav fraternity with Russia to a new European identity. He was elected president of embattled Ukraine by 55% in first-round voting in May 2014, when memories of the shooting of a group of protestors known as the ‘Heavenly Hundred’ by the special police of then-president Victor Yanukovich in February, and the disgraced president’s subsequent flight to Russia, were still fresh.

Poroshenko’s rival for power is oligarch Ihor Kolomoisky, the second-richest Ukrainian, with an estimated wealth of just under $2bn. He returned from his Swiss residence to become the official governor of his personal stronghold of Dnipropetrovsk just as Putin was completing the annexation of Crimea in March 2014. He was the most lavish benefactor in 2014 of the volunteer militias that held off the vastly better-armed Russian/separatist troops in and near the Donbass until the ragtag Ukrainian army could be reconstituted following its budgetary strangulation under Yanukovich. According to the New York Times, a deal was made at that point promising oligarchs that they could keep their wealth if they remained loyal to Ukraine.

At present, both men are too weak to knock the other out. Poroshenko won their first public duel in March 2015, when he fired Kolomoisky from his political post as Dnipropetrovsk governor after the latter, along with 40 or 50 armed men, burst into the headquarters of the 51% state-owned UkrTransNafta pipeline firm in Kiev to try to reinstate a dismissed CEO who was allied to him. That clash paralleled efforts to bring volunteer militias under the aegis of Ukraine’s official armed forces and helped to establish in the 25-year-young state of Ukraine, at least in principle, the Weberian precept that a state must have a monopoly on the legitimate use of physical force.

Their second public brawl was more of a draw. Last October, a 500-man SWAT team detained Hennadiy Korban, Kolomoisky’s deputy in Dnipropetrovsk and head of Kolomoisky’s newly established pro-Ukrainian Dill Party (as distinct from his newly established pro-Russian Renaissance Party). Korban was first jailed on suspicion of kidnapping and embezzlement. He was released three days later, then consigned to house arrest, then to custody in a hospital, where he underwent surgery. Little has been heard about him since. Poroshenko supporters see the detention as a sign of the president’s seriousness about fighting corruption and organised crime. Kolomoisky supporters see it as a political vendetta.

For the sake of Ukraine’s democratic evolution, the relative lull in fighting in the Donbass (Putin dialled down the violence in September, turning his attention to Syria) is good news. This gives Kiev the breathing space to continue with urgently needed economic, administrative and legal reforms. Unlike mainstream Western analysts, who continued to warn for months that the lull in eastern Ukraine was only a tactical trick, the Ukrainians sensed instantly that Putin was finally retreating from his Ukrainian quagmire.

The lowered intensity of fighting is also bad news for democratic prospects, however, as the respite from Russian pressure has freed Poroshenko and Kolomoisky from their two-year compulsion to hang together in order to avoid hanging separately. It has allowed them to resume power struggles in redistributing the assets of declining oligarchs and stiffened their resistance to the uprooting of endemic corruption that might conceivably redound upon themselves.

This shift in atmosphere has triggered fear among reformers that today’s ‘Revolution of Dignity’ might repeat the failure of the pioneering Orange Revolution, the leaders of which, Prime Minister Yulia Tymoshenko and President Victor Yushchenko, quarrelled bitterly after attaining power. Their mutual hostility paralysed the government, alienated voters, and delivered the presidency to old-regime Victor Yanukovich in a reasonably fair election in 2010.

The fears of Euromaidan activists are compounded by concern over popular-reform fatigue and the populism that caters to it. MPs from the new Self Reliance party and Tymoshenko’s Fatherland party, among others, are manoeuvring to call a vote of non-confidence in the government and force early parliamentary elections in the spring that would favour their parties. A snap vote only a year and a half after the first post-Yanukovych election would certainly add turmoil and weaken the main parliamentary reform parties, those of President Poroshenko and Prime Minister Arseniy Yatsenyuk. Reforms such as hikes in consumer prices (even with offsetting subsidies for Ukraine’s poorest citizens) have reached the point of stirring up the greatest discontent, and public-approval ratings have now sunk to 25% for Poroshenko and 12% (some polls say only 2%) for Yatsenyuk. Meanwhile, a full 70% of Ukrainians think their country’s general situation is getting worse. Even now, Poroshenko and Yatsenyuk are unable to muster the two-thirds parliamentary majority that the constitution requires to approve key decentralisation measures in eastern Ukraine that are needed to keep the German- and French-sponsored ‘Minsk’ peace process on course.

Reformers hope to avert a regression to oligarchic business as usual by getting the West to apply pressure for enforcing last year’s raft of anti-graft legislation and to offer incentives by granting Ukrainians visa-free travel to the EU. This would reprise the EU’s approach to the 11 post-communist Central European states that were eventually permitted to partake of the peace and prosperity of Western Europe’s premier club of nations following the Cold War. To accelerate domestic evolution toward good governance in these countries, Brussels mixed the top-down co-option of local elites with the bottom-up fostering of proto-democratic civil society in what a Swiss-initiated interdisciplinary study has called functional cooperation.

Implementing this reform process in Central Europe was hard enough. Attempting to do so in Ukraine, which has had little exposure to western European democratic culture, and without even offering the lure of eventual EU membership this time around, presents an even greater challenge. Nevertheless, such reform remains a hope of the robust Euromaidan movement spawned by the 2013–14 protests in Kiev.

Indeed, the tacit partnership between the EU and Ukrainian reformers has already begun its work. Finance Minister Natalie Jaresko drums in the message at every opportunity that Ukraine will not attract Western investors unless it cleans up its act. Young MPs in Poroshenko’s party, such as former investigative journalists Mustafa Nayyem and Serhiy Leshchenko, make incriminating documents public to name and shame officials as they find evidence of corruption and political blockage of criminal prosecution and judicial lustration. NGOs such as Kiev’s Centre of Legal and Political Reform press the case for dismissing Chief Prosecutor Viktor Shokin, a holdover from the old regime’s procuracy who was promoted to the top by Poroshenko and who is now seen by many as the main obstacle to investigation and indictments in high-level corruption cases. When reformers like these run into a brick wall, the EU applies conditionality, informing Kiev that the introduction of visa-free travel for Ukrainians to Europe will be postponed until Kiev’s proclaimed anti-corruption drive actually starts putting senior offenders behind bars. American officials such as US Ambassador to Ukraine Geoffrey Pyatt and Vice President Joe Biden have also joined the fight by exerting public pressure on President Poroshenko to start implementing anti-graft legislation by firing Shokin. On 3 February, 10 ambassadors, among them those of the US, Canada and the EU, signed a bluntly worded public statement saying, ‘We are deeply disappointed by the resignation of … Abromavicius, who has attained true results of reforms in Ukraine’.

So far, this double-pronged campaign has manifestly failed to persuade Poroshenko to replace Shokin, whose influence derives both from the wide competences vested in the chief prosecutor under the patched-up constitution and from Shokin’s personal memory of skeletons in political closets. But Shokin’s tenure, along with the wrestling match between Economics Minister Abromavicius and the Western underwriters of Ukraine’s financial bailout on one side and President Poroshenko and Kolomoisky on the other, pose the most immediate test of what Tomas Fiala, CEO of Kiev’s Dragon Capital, has called Ukraine’s much-needed ‘deoligarchization’.

Having invested so much political and monetary capital into saving Ukraine from Putin’s assault, the EU in particular has a huge stake in the outcome. Besides wielding the stick of conditionality –with the implicit threat that ultimately some tranches of this year’s $40bn of pledged international aid might be held back in case of serious breaches of agreed programmes – the EU will be sending a corps of on-the-ground advisers to Ukraine to help with everything from small-business promotion to political-party formation to rule-of-law basics.

There are no guarantees. Even this massive Western engagement and functional cooperation with Euromaidan activists in building a new, European Ukraine could well get ground down by the stubborn inertia of the country’s kleptocracy. If this happens, the country’s reformers are unlikely to get a third chance to clean up Ukraine’s economy and politics for a very long time.

Elizabeth Pond is a Berlin-based journalist and author. She has contributed several articles to Survival, most recently ‘Will Ukraine Snatch Defeat from the Jaws of Victory?’, in vol. 57, no. 6, December–January 2015, pp. 59–68.

Will Ukraine Snatch Defeat from the Jaws of Victory?

By Elizabeth Pond

(Preprint version of the article in Survival  Dec. 2015/Jan. 2016)

Kiev has won an improbable victory by holding Russia’s military behemoth to a stalemate in Russian President Vladimir Putin’s undeclared war on Ukraine. After a year of intensive shelling during a poorly observed truce in the Donbas, the big guns went silent there on 1 September and have stayed silent ever since.

Yet as the immediate existential threat recedes, the oligarchs who once personally financed the country’s defense seem to be trying to snatch defeat from the jaws of victory. They have forgotten their original shock at Moscow’s lightning annexation of Crimea in March 2014 and are reverting to their cozy personal exploitation of Ukraine’s patrimony. This is precisely the kind of dysfunction that Putin is now counting on to make Kiev implode, even as he eases outside pressure by accepting military deadlock in eastern Ukraine and redeploys some combat forces from Ukraine to Syria.

Putin’s hopes to subdue Ukraine by its own collapse are based on the events of the first pro-European revolution on Kiev’s Independence Maidan (Square) a decade ago. A comparison of that Orange Revolution with the 2013/14 Revolution of Dignity is sobering. In the pioneer exercise of street power by Ukraine’s robust civil society in 2004 pro-democracy Maidan demonstrators forced a rerun of rigged elections that would have elevated pro-Russian Prime Minister Viktor Yanukovych to the presidency. The protesters succeeded in no small part because they were secretly helped by Colonel General Ihor Smeshko, head of the SBU successor to the Soviet KGB in independent Ukraine. Smeshko, whose own family members were demonstrating on the Maidan, enlisted some Ukrainian army support to thwart a bloody crackdown by Interior Ministry forces in the last hour before the planned bloodbath. The demonstrations ended peacefully. Reformist Viktor Yushchenko won the new vote, and reformers constituted a majority in parliament for the first time in Ukraine’s 13 years of independence–only to self-destruct through vicious infighting.

For a time the oligarchs and politicians subordinated their own intranecine feuds and banded together to prevent any Russian installation of Yanukovych as president. The oligarchs–who had acquired their wealth by buying privatised state assets cheaply in sweetheart political deals–were by no means democrats, but their interests lay in keeping the vastly richer Russian energy oligarchs from scooping up their own assets. So acute was their fear that for a few weeks in 2006 most of the wealthiest ones began to negotiate a joint pact in which they would emulate earlier Western robber barons, pay their taxes, and perhaps even become philanthropists to redeem their social debt.

At that point, however, hostility between President Yushchenko and Yulia Tymoshenko, his co-leader at Maidan and by then prime minister, was all-consuming. It paralysed the government, halted the metamorphosis of oligarchs into civic benefactors, reinstated backroom crony capitalism, disgusted the public and handed the presidency to Yanukovich in the 2010 election, this time in a fair vote. The moment of transformation was lost. (So was the career of Col. Gen. Smeshko, not because of his clandestine defense of the demonstrators, but because an SBU subordinate was implicated in the poisoning of candidate Yushchenko that had failed to kill him but left him permanently disfigured.)

Too calm after the storm

Today, as Putin suspends his war on Ukraine, a complacency similar to that in the Orange Revolution prevails among oligarchs. In large part, it reflects satisfaction at having called Putin’s bluff last year after a hundred Euromaidan demonstrators were shot and killed by the Berkut Special Police of Ukraine President (and Putin protégé) Viktor Yanukovych. Yanukovych’s own Party of Regions deserted him after the violence, he fled to Russia, and for months some 80,000 Russian troops exercised on Ukraine’s northern, eastern, and southern borders.

Politically, Ukrainians kept their nerve. Party of Regions parliamentarians voted with the former opposition in the Rada to appoint a new interim president and government. Subsequently, defying the threat on their borders, voters elected and legitimised a new president in May and a new Rada in October 2014. And the elected parliament passed a series of urgently needed reform laws to curb graft, probe the murky energy sector and begin building nascent democratic institutions. Moreover, under Putin’s threat Ukrainians – for the first time in their history – began forging a consensus on a national identity as distinct from Russian and allied instead to European identity.

Militarily, Dnipropetrovsk Governor Ihor Kolomoyskiy and other oligarchs swiftly raised private militias that not only supplemented Ukraine’s ragtag army but bore the brunt of the heaviest fighting against the modern tanks and multiple rocket launchers that Russia pumped over the border into the Don Basin (Donbas). They spearheaded the recovery of land initially lost to the Russian-armed and -led insurgents and by mid-August reduced the self-styled People’s Republics of Donetsk and Luhansk to two besieged pockets. That pushback, on top of Putin’s disappointment over the unexpected failure of Russian speakers in eastern Ukraine to rally to the cause and rebel against Kiev, was too much for the Russian president. In late August, for the first time, he sent elite airborne units into Ukraine in a full (if unacknowledged) invasion; within days these professional soldiers restored half of the territory the insurgents had originally taken and went home again, some of them in Cargo 200 caskets. The message was that Russia would not let its proxies be defeated in eastern Ukraine. Ukrainian President Petro Poroshenko understood the message and quickly agreed to a 5 September “Minsk” truce brokered by Germany.

The militia battles forced Putin’s hand. He had to decide if he really wanted to pay the costs of escalating from limited “hybrid warfare” by stealthy commandos to full combat–with the rising numbers of dead Russian troops, military overstretch, and proabably years of fighting Ukrainian guerrillas that occupation would entail. The rebels kept edging the frontline west during the year of the poorly observed truce, kilometer by kilometer, and tried for one last major breakthrough in January and February of 2015. Yet the Ukrainian lines basically held. For a few months more Putin continued to talk about his original dream of reconquering “New Russia,” the eastern 40 percent of today’s Ukraine that Catherine the Great had seized from the Ottoman empire in the 18th century. By May he dropped the subject, however, and by the end of August there was a sudden change in leaders among his Donbas proxies that brought the less militant Denis Pushilin to the fore in time to approve the new 1 September 2015 truce. Shortly thereafter Russian negotiators also initialled a deal to resume gas supplies to Ukraine at market prices over the winter months. And Moscow released from jail and returned to Tallinn the Estonian security officer it had kidnapped at gunpoint on Estonian soil a year before, in exchange for a Russian spy.

As provisional peace breaks out, the 1,000 Russian officers and trainers in the Donbas and 50,000 troops still massed just over the Russian border no longer seem menacing to Kiev. Corruption as usual has resumed, if with fewer pots of state gold to plunder. The will to root out corruption and implement tough reform of Ukraine’s post-Soviet kleptocracy is ebbing proportionately. Implementation of the crucial political and legal reforms that President Petro Poroshenko and Prime Minister Arseniy Yatsenyuk began is stalling.

Clearly, all the oligarchs who are now working primarily within the new Euromaidan ecosphere are currently focused on a dog-eat-dog fight for redistribution of the Ukrainian assets of those who are still sulking or equivocating–primarily ex-President Viktor Yanukovych and his one-time financier, Rinat Akhmetov, whose base in the Donbas iron and coal industry obliges him to balance off Kiev and the Russians who have the final say in separatist territory. So far President Poroshenko has won the most. The latest annual list of the country’s wealthiest oligarchs published by the Ukrainian magazine Novoye Vremya shows that he was the only one to get richer rather than poorer over
the past year. His assets rose 20% to bring him up to $979 million and sixth place on the list, behind Central Ukraine baron Ihor Kolomoyskyi (down 17% to $1.9 billion, for second place) and Akhmetov (down 56% over last year, but still in first place with $4.7bn).

Under the circumstances, is Putin right in anticipating a second Ukrainian implosion that he can exploit? Or are the Euromaidan idealists right in thinking they can avoid the Orange Revolution trap this time around?

Power struggles

In politics, the main power struggle pits the two oligarchs who were the earliest friends of Euromaidan–President Poroshenko and Central Ukraine grandee Kolomoyskyi–against each other. Second-tier oligarch Petro Poroshenko, the “Chocolate King,” helped fund the Euromaidan movement from its inception in 2013, was elected Ukrainian president in May 2014, and has been building up a wide presidential party ever since. Triple Ukrainian-Israeli-Cypriot citizen Ihor Kolomoyskyi returned to Ukraine from Switzerland to become Governor of Dnipropetrovsk under the interim Ukrainian government in March 2014. The two had a public clash last March, when the government fired Kolomoyskyi lieutenants as managers of the state-owned oil and gas monopolies and Kolomoyskiyi sent well-armed men to the firm’s Kiev headquarters in an unsuccessful attempt to reinstate them. Poroshenko took a risk and managed–barely–to fire Kolomoyskyi as Dnipropetrovsk governor without triggering serious repercussions. In October Kolomoyskyi took his revenge at the ballot box, when his candidates for mayors of the three largest cities outside of Kiev–Dnipropetrovsk, Kharkiv, and Odesa–looked likely to win, as of this writing.

When Kolomoyskyi’s mayoral candidate in Kiev was then suddenly detained before the run-off vote in mid-November by criminal investigators on suspicion of embezzlement and kidnapping, critics of Poroshenko accused him of playing politics with the prosecution office. Poroshenko described the arrest instead as just the ‘start’ of the anti-corruption fight. This rivalry and the corollary vendettas among Akhmetov, member of parliament Yulia Tymoshenko, titanium and fertiliser magnate Dmytro Firtash, and others seem not yet to have the venom of those during the Orange Revolution, but a comparable flare-up cannot be ruled out.

On the other hand, the younger Ukrainians who have now grown up in an independent country and take its existence as a given–and do not want the deaths of their fellow “heavenly hundred” to have been in vain–bring a new determination to their struggle for a more open society and polity. Mustafa Nayyem, the ethnic Afghan and investigative reporter who started the Euromaidan protest in 2013, along with a core of two dozen other activists, won seats in the present Rada, cooperate across party lines, and keep up the pressure for democratic reform and resistance to backsliding into the old crony system. They are conscientious about writing reform legislation. They use the weapon of naming and shaming liberally–and they are inventive in seeking allies in the West who can ferret out proof of Ukrainian money-laundering in British and German and Cypriot banks and give them the documents to confront culprits and urge them to contribute their wealth to Ukraine if they don’t wish to be taken to court.

In addition, the increased scrutiny of Ukraine by European partners that will accompany the coming into force of the European Union-Ukraine Association Agreement on 1 January 2016 should help Ukrainian anti-corruption activists. Already German, Polish, and other advisers are assisting various ministries–and gaining insights into the modus operandi of mid-level bureaucrats who conduct many of the routine bribe operations. They will be additional eyes and ears for the young Ukrainians who have come back after studying and working in the West with enough savings to take senior ministry posts and still support themselves on the low salaries paid to officials.

Second time lucky?

One final difference between today and a decade ago that offers hope of a better outcome from the second Maidan revolution than from the first is structural. Kharkiv University political scientist Oleksandr Fisun thinks that this time around, Euromaidan has already made Ukraine’s political system “more democratic and transparent” through its “civic activism, the absence of a dominant party of power, and improved competition among power centers.” For the first time, “Ukraine’s patrimonial politics are paradoxically contributing to the institutionalization of political pluralism, via a series of formal and informal power-sharing arrangements between the major Euromaidan players.”

Thus, President Poroshenko’s agreement of cooperation with Prime Minister Arseniy Yatsenyuk in April 2014, which was blessed by “Yanukovych semi-insiders” like oligarchs Dmytro Firtash and Serhiy Lyovochkin, helped to “marginalize the political avant-garde of the Euromaidan [right] radicals, Svoboda,” and also paved the way “to secure support from moderate factions of Yanukovych’s former Party of Regions,” like those around Borys Kolesnikov, the eastern Ukrainian Opposition Bloc’s shadow prime minister and former secretary of the presidium of Yanukovych’s Party of Regions.

Fisun calls this evolving system “neopatrimonial democracy, in which rent seeking remains the key driver of politics. Multiple patron-client oligarchic networks compete through formal electoral mechanisms, but their primary goals still focus on capturing positions to control sources of rents.”

If Professor Fisun is right, this neopatrimonial democracy might eventually lead, in conjunction with the current anti-corruption drive and with decentralization on the highly successful Polish pattern, to real political parties instead of today’s patron-client clans devoid of policy content. The parties might begin to aggregate and define the real interests of their constituents and then find fair compromises with other constituencies. They might even capitalize on the new Ukrainian identity that Vladimir Putin has bestowed on them by war to reconcile western and eastern Ukraine politically.

The immediate test of whether the oligarchs, having shuffled a few chairs, can now simply reconstitute with impunity their old rent-seeking empires with scant regard for the public weal will be the fate of the government’s balleyhooed reforms. The Rada took the first essential step to political reform in the wake of Yanukovych’s flight by revoking the super-presidential system of the new Yanukovych constitution and returning to the earlier constitution balancing the prerogatives of president and premier. And the Rada has passed more market and anti-corruption legislation in the past year than in the previous two decades of Ukraine’s independence.

Yet implementation is sluggish, especially in rule-of-law and corruption issues. The most glaring example of malfunction of the hyped anti-corruption drive is probably the retention of Viktor Shokin as chief prosecutor despite his conspicuous failure to bring any high-level graft indictments to court so far. With undiplomatic bluntness, US Ambassador to Ukraine Pyatt warned his Ukrainian friends recently that ‘Corruption kills…Ukraine can, and must, address the problem of corruption now…Rather than supporting Ukraine’s reforms and working to root out corruption, corrupt actors within the Prosecutor General’s office are making things worse by openly and aggressively undermining reform. In defiance of Ukraine’s leaders, these bad actors regularly hinder efforts to investigate and prosecute corrupt officials within the prosecutor general’s office.’

The man who has the authority to remove Shokin, but has not done so, is President Petro Poroshenko.

Ambassador Pyatt might have, but did not, conclude his speech by saying that if Ukrainians don’t get it right this time, they are unlikely to get a third Maidan chance for at least another decade.

Elizabeth Pond is a Berlin-based journalist and author.

The Version of Record of this manuscript has been published and is available in Survival: Global Politics and Strategy, vol. 57 no. 6 | December 2015–January 2016 | pp. 59–68

A Useful Stalemate in Ukraine

IISS Survival Blogpost     04 August 2015

By Elizabeth Pond

Russian President Vladimir Putin’s undeclared war on once-fraternal Ukraine has destroyed Moscow’s influence on Kiev, forged genuine Ukrainian identity in resistance and ended in a roughly stable stalemate in the eastern 3% of Ukraine that Russia now controls. However bitter that stalemate is to Putin, to Ukraine, and to the West, the least bad option may now be to prolong gridlock while diminishing casualties in Ukraine’s Donbas coal region.

This could lock into place Putin’s tacit admission of the rising costs of his misadventure, Kiev’s tacit cession of half of Donbas to Moscow and the West’s tacit adaptation of twentieth-century containment of the Soviet Union to twenty-first-century containment of revisionist post-Soviet Russia.

All three players have sought to limit the conflict on their own terms. Ukrainians have always had the inherently limited goal of defence. Putin started his war of choice confident that – in a theatre where Russia enjoys escalation dominance – he could restore the historical predominance of Russians over their Ukrainian ‘younger brothers’ in an operation that would be limited by the quick triumph of his own strong will over the hesitant West’s war fatigue. The West, which has scant geopolitical interest in Ukraine, has given Kiev moral support but has conspicuously restricted its military aid to a minimum in order to avert retaliatory Russian escalation up the chain to, as Putin has threatened, potential use of nuclear weapons.

At the same time, all the players have established their red lines. A year ago, when Ukraine’s ragtag army and start-up militias gathered strength and came close to defeating Putin’s proxy separatists in Donbas, Putin sent Russian airborne troops into battle (while denying that any Russian soldiers were there). They broke the Ukrainian siege in a matter of days and signalled that Putin would not allow his local proxies to lose. Kiev understood the message and initiated the first Minsk truce, but maintained its own red line in keeping Donbas de jure part of Ukraine.

German Chancellor Angela Merkel set out the West’s red line that Russia’s violation of international law and seven decades of peace in the European heartland was unacceptable. NATO mounted modest military exercises in the member states Putin was threatening – Estonia, Latvia, Lithuania and Poland – and announced plans to preposition heavy weapons there. Yet in Ukraine itself the West skirted the risk of triggering Russian escalation by avoiding direct military engagement and instead imposing financial sanctions on Russia to raise the long-term costs of Moscow’s forcible land grabs.

Stalemate in Donbas is now testing these red lines. Harbingers suggest that President Putin may be the actor who feels the most pressure in finally beginning to admit to himself the damage to Russia from his misjudgements in Ukraine.

He first squandered his initial total influence over Ukraine by prodding his protégé, Ukrainian President Viktor Yanukovich, to rout pro-European demonstrators at ‘Euromaidan’ by violence that turned protesters into martyrs. He annexed Crimea, believing that German businessmen were too dependent on Russian oil and trade for Europe to resist this breach of international law. He then proclaimed a crusade to take over the eastern third of today’s Ukraine, expecting Russian speakers there to rise up against Kiev and expecting the paltry Ukrainian armed forces to disintegrate before Russia’s military behemoth.

He miscalculated. Chancellor Merkel led Germany and the whole European Union to join the US in imposing the sanctions that, together with low oil prices, are already pushing Russia into a major recession this year. Russian speakers in eastern Ukraine never rebelled en masse. The Ukrainian army and militias, despite being vastly outgunned, proved to be formidable fighters and raised the spectre for Moscow of the quagmire of a long guerrilla war. And Putin’s war resuscitated NATO and turned ever wider circles of apolitical Ukrainians against Russia.

In the face of these serial tactical defeats Putin is now displaying less ardour for the fight in Ukraine. Lately he has seemed bored with Donbas and exasperated by the feuding criminals and mercenaries who are his separatist proxies there. He is conspicuously not moving to annex that war-ravaged rustbelt. He no longer speaks of ‘Novorossiya’, Catherine the Great’s term for the part of Ukraine he was claiming. He reportedly sent his top Ukraine adviser, Vladislav Surkov, to the Donbas last month to tell the separatists to stop murdering each other and to cool their zeal for launching a new offensive. He has not repeated recently his earlier threats to escalate confrontation up to the nuclear level. He has been at great pains to hide the deaths of the Russian soldiers he swears are not in Ukraine from their wives and mothers.

By now there are rumblings of Russian military overstretch, concerns about a revival of anti-Russian rebellion in the North Caucasus through veterans returning from Ukraine, and worry about illegal weapons flowing into Russia across the Donbas border. And despite Western fears of an imminent Russian attack on Ukraine this summer, the 50,000-plus Russian troops massed on and over Ukraine’s eastern border have so far done little more than join in the relatively low-level shelling across the Donbas truce line.

Does Putin’s softer line hide from the West Moscow’s preparation for a new assault in Ukraine? Or do Putin’s build-up of troops on Ukraine’s borders and menacing military exercises with nuclear-capable aircraft in the region hide from rabid Russian nationalists (as they suspect) a quiet retreat from belligerence by the Russian president? It’s hard to tell.

Enshrining stalemate in a formal or informal agreement would by no means ensure a lasting peace in Ukraine. But it could at least reduce casualties and provide some measure of whether the strategic patience Chancellor Merkel has counselled from the beginning is finally dulling Putin’s hubris. And it could give Kiev the space to get on with its Sisyphean efforts to rescue the moribund economy, reduce corruption, sideline Ukraine’s nastier oligarchs, and harness the private militias that have saved the country.

Elizabeth Pond is a Berlin-based journalist and author. She has contributed several articles to Survival, most recently ‘Serbia Reinvents Itself’, in Survival, vol. 55, no. 4, August–September 2013, pp. 7–30.

Harbingers of Transformation

A few bright spots on Europe’s troubled periphery

Berlin Policy Journal, German Council on Foreign Relations   April 7, 2015

by Elizabeth Pond

Even as the future of the European Union’s neighborhood remains under threat, a few developments on the EU periphery – in Ukraine, Romania, and Serbia – show that civil society and rule of law are making inroads in post-Communist kleptocracies.

For once there is some good news from the politically challenged periphery of the European Union. Chalk it up to nascent democracy, womanpower, and, believe it or not, the enduring attraction of joining the EU family.

In Ukraine, as the initial shock of Russia’s attack last year faded in memory, oligarch Ihor Kolomoisky tried to return to business as usual and grab new state assets. After his private protection squad recently took over the head office of the huge Ukrnafta oil and gas concern in Kiev, however, he was sacked by the central government from his post as the governor of Dnipropetrovsk province. In Romania – a nation renowned for graft – the highest serving official to be investigated for corruption in the past quarter century, Finance Minister Darius Valcov, actually resigned. And in Serbia, for the first time since ethnic Serbs massacred some 8000 unarmed Bosnian Muslim boys and men in Srebrenica in 1995, police arrested suspected Serb perpetrators of Europe’s worst atrocity in half a century for trial in Serbian courts.

Dangers still abound, of course. Russian President Vladimir Putin continues his nuclear saber-rattling. There are widespread fears that he may end the current fragile truce in eastern Ukraine when the spring mud hardens and overpower the outgunned Ukrainian army and militia defenders to seize more territory, and the crackdown on Kolomoisky has not stopped the greater menace that Vienna-based oligarch Dmytro Firtash poses to the Kiev government, as he wields influence by funding parties and politicians in Ukraine and in German-speaking Europe. In Romania, the political system there remains largely populated by unreformed members of the old pre-1989 Communist Party, who have formed a kaleidoscope of cozy clientelist parties. And in Serbia, Prime Minister Aleksandar Vucic still says that Serbia will never recognize the 2008 independence of Serbia’s one-time province of Kosovo, while the Belgrade Centre for Human Rights reports that respect for human rights deteriorated in Serbia in 2014.

Nonetheless, taming Ukraine’s oligarchs, putting previously immune Romanian officials on trial, and finally bringing Serb suspects in the genocide at Srebrenica to justice in Serbia’s own courts all mark turning points.

In Ukraine, the trigger to Kolomoisky’s fall from grace was neither the opening move of a coup, as widely reported, nor a repetition of the internecine feuding of the political winners of the earlier Orange Revolution. It was instead a backsliding to the oligarchs’ snatch-what-you-can reflex on the part of a billionaire who is skillful at murky deals but also feels some sense of civic responsibility. He tried to prolong his previous low-cost control of Ukrnafta, which he had maintained as a minority shareholder by blocking corporate meetings under an old sweetheart law requiring a quorum of 60 percent of shareholders. When Ukraine’s reformist Rada changed the law to a 50-percent-plus quorum, Kolomoisky sent his protection squad into Ukrnafta headquarters, allegedly to prevent a Russian raid. His quick dismissal from the Dnipropetrovsk governorship warned other oligarchs that undue political influence really is being curtailed – and that they would do well to emulate America’s 19th-century barons, support the rule of law to protect their new wealth, pay their taxes, and become philanthropists.

Everyone agrees that the oligarchs must be coopted into the new Ukrainian system if it is going to succeed, and Kolomoisky had himself already started to evolve in this direction. He contributed handsomely to construction of the world’s largest Jewish community center, which opened in Dnipropetrovsk in 2012 and quickly became a cultural magnet for the entire city.  After Russia attacked Ukraine a year ago, he returned from his homes in Switzerland and Israel to become governor of the key province of Dnipropetrovsk in central Ukraine, where he personally paid and equipped volunteer militias that helped hold the line against pro-Russian incursions from eastern Ukraine last summer. His downfall came when he wanted to keep his favored position in both his civic and tycoon worlds – and his disciplining will continue as all volunteer militias are gradually brought under army command.

Moreover, a number of the civil society watchdogs who ignited last year’s “Revolution of Dignity” – learning by doing as they camped out in Kiev’s “Euromaidan” square for three months and organized seminars on good governance and writing legislation – now hold seats in parliament alongside oligarchs. They are continuing their crusade inside elected institutions.

In Romania, even as a post-Soviet kleptocracy took root in the quarter century since the end of the Cold War, it was women who bucked the hierarchy and kept a fledgling anti-graft movement alive. Human-rights activist Monica Macovei was appointed justice minister in the three years before Romania was admitted to EU membership in 2007, survived death threats, and managed to improve the country’s human-rights protection sufficiently to meet the minimum EU legal standard. Laura Codruta Kovesi, Chief Prosecutor of the National Anti-Corruption Directorate since 2013, won 90 percent of her indictments last year, convicting a former prime minister, five parliamentarians, 24 mayors, and 1,108 others. Romania’s women lawyers are now fully backed by Klaus Iohannis, a straight shooter from Romania’s tiny ethnic German minority who was elected president in a surprise upset last November. In order to allow the government to work without suspicion, Iohannis persuaded Finance Minister Valcov to resign last week while he is investigated on charges of accepting a two million-euro kickback for the award of a public works contract. This is a common precaution when senior officials come under investigation in northern EU member states, but not in Romania. Other senior politicians are already becoming more circumspect, especially since surveys show that the 55 percent of the electorate who supported Iohannis last November has now swelled to some 75 percent who approve of his fight against graft.

In Serbia it is the female human-rights activists, male prosecutors, and Brussels eurocrats who have worked together for transformation. Sonja Biserko founded the Helsinki Committee for Human Rights in Belgrade and railed against Great Serb hubris. Natasa Kandic founded the Humanitarian Law Center in Belgrade and in 2005 broadcast a secret selfie video made by the Serb paramilitary Scorpions as they murdered six unarmed Bosniak boys and men from Srebrenica in 1995. The women braved death threats from compatriots who deemed them traitors to Serbdom. So did the unpopular male prosecutors who pursued Serb war crimes perpetrators.

Political pragmatism finally took hold as Aleksandar Vucic – who started his career as a wunderkind acolyte of strongman Slobodan Milosevic –quit Serbia’s most chauvinist party, won a decisive election, and, as prime minister reached an EU-brokered partial accommodation with Kosovo in 2013. This was the price demanded by Brussels for starting negotiations with Belgrade on Serbia’s coveted accession to the European Union. Today, twenty years after the Srebrenica massacre, Serb prosecutors are finally able to arrest Srebrenica suspects for trial in Serbian courts without igniting riots.

These are all harbingers of a healthy evolution in the region.

ELIZABETH POND, a Berlin-based journalist, has covered Ukraine and Eastern Europe for the past 30 years. She is the author of The Rebirth of Europe and Endgame in the Balkans.

Harbingers of Transformation

Debunking an urban myth

By Elizabeth Pond

It’s time to debunk the lingering urban myths that Germany has resisted imposing sanctions on Russia over its undeclared war on Ukraine and might once again desert the West in a flirtation with Russia. True, Chancellor Angela Merkel favors smart sanctions over blunt sanctions and is trying to negotiate with Russia a deescalation of the violence in Ukraine that has already killed more than 5000. But that’s empowerment, not opposition.

Moreover, her broader record in maximizing the West’s very weak opening Ukraine hand is impressive. At the start of the crisis, she told parliament bluntly that Russia’s land grab of its weak neighbor’s territory was unacceptable in a Europe that has finally turned a blood-soaked continent, in a “miraculous” evolution, into a zone of peace. Together with the United States, she sensibly rejected putting Western boots on the ground in a theater where Russian President Vladimir Putin enjoys overwhelming military dominance and parades his will to use it. As a surrogate counter to Russian aggression, then, she and the West as a whole gambled on pitting their soft power of long-term financial might against Russia’s hard power of short-term military muscle.

Berlin and Washington stressed that the West must stay united in the crisis and agreed to resolve tactical differences pragmatically, by writing separate but overlapping lists of sanction targets and coordinating them. America’s list was widely advertised by Congressmen as seeking to punish Putin and make him feel pain–and was also intended, Russian officials trumpeted, to force regime change on Moscow. Merkel’s list of targets was specifically aimed at deterrence of future aggression in Ukraine and–unlike the American list–was set to expire after one year unless it was renewed.

The up-front activism of the Christian Democratic chancellor, whose native style personifies leading from behind, met with skepticism in the US, in Europe, and certainly in Russia. Western critics thought that the Social Democratic foreign minister in her right-left grand coalition, Frank-Walter Steinmeier, would never cross his political mentor and Merkel’s predecessor as chancellor, Gerhard Schröder. Schröder famously once praised Putin as a “flawless democrat,” accepted a lucrative Russia-paid job as head of the shareholders’ committee of Gazprom’s Nordstream pipeline the instant he retired from politics–and never publicly challenged Moscow’s violations of international law.

Yet on this issue Steinmeier declared his emancipation from his former boss. He repeatedly condemned Russia’s Crimea snatch as resolutely as Merkel did. And within his party’s Bundestag caucus he weaned most of the left wing away from their nostalgia for the grand deal that never transpired in the days before 2012, when hope persisted that Putin might agree to a more cooperative security partnership with the West in return for investment and technological help in breaking out of Russia’s oil and gas mono-economy.

Even more surprising was Merkel’s success in winning support for financial sanctions, or at least acceptance of them, by the German business lobby that represents some 6000 firms with 300,000 employees who depend on the €77 billion annual trade with Russia. Even though bilateral trade would shrink by 26 percent from August 2013 to August 2014 under the sanctions regime, Merkel persuaded most of the lobby executives that Europe’s security and peace order must trump profits and jobs. She effected this change behind the scenes in private meetings that rarely hit media headlines.

In addition, she quietly provided German guarantees of Ukrainian payments for energy imports from Russia, guarantees which will assuredly be called on. Though no one actually quotes European Central Bank President Mario Draghi’s famous words in calming the eurocrisis, Germany is now prepared to pay “whatever it takes” to rescue Ukraine’s dysfunctional economy–if, and only if, the Ukrainian government cleans up the kleptocracy.

Armed with Germany’s own example of tolerating economic pain to uphold Europe’s taboo on forcible change of borders, Merkel then exercised similar suasion on her 27 fractious partner states in the European Union. France reluctantly suspended delivery of two contracted Mistral helicopter carriers to Russia. Britain subordinated the commercial interests of London banks and realtors to the common weal, even if it did continue to export weapons to Russia. Hungary, despite its vaunted turn to Russia (before the ruble plummeted), chose not to be the odd man out. Merkel delivered the required unanimous EU agreement to impose three rounds of sanctions on Putin’s wealthy inner circle as the Russians annexed Crimea.

The one constituency that Merkel did not court personally was the public. Nonetheless, her actions–and the bloodcurdling shooting down of the MH 17 airliner over separatist territory with a Russian Buk missile in July–triggered a public debate that has transformed popular German views of Russia. Last April 49 percent favored a neutral German role as a mediator between the United States and Russia. By December 76 percent mistrusted Russia and 54 percent approved sanctions.

Apart from the issue of sanctions, Germany’s assumption of geopolitical leadership of Europe for the first time since 1945 was most apparent in the diplomatic art of shifting the context of the confrontation over Ukraine in the West’s favor. In effect, President Barack Obama, fully occupied with crises elsewhere in the world–and exasperated that Europeans still remained free riders in security long after the EU had become richer than the US–outsourced the diplomacy to Merkel. This made sense; what to Obama seemed to be a pesky peripheral interest was a vital interest for states in the immediate European neighborhood. Moreover, Merkel was the one Western leader who could still communicate with the Russian president, in part because she speaks Russian from her East German schooldays, in part because Germany has been Russia’s best friend in the West ever since Moscow withdrew its 20 Soviet divisions from (East) German soil after almost half a century and permitted peaceful reunification of the two German states. Berlin, without gloating, let the troops retreat in dignity then and continued to treat Moscow with dignity thereafter.

The diplomacy was especially tricky because Putin’s improvisation to recover from successive setbacks made him unpredictable, while his reflex resort to the two tools he understood, armed coercion and outrageous spin, made him dangerous. Rational appeals that he was destroying the very social contract that had hitherto built his domestic popularity–restoring order after Russia’s initial Wild East capitalism and raising living standards for the urban middle class in return for abstinence from challenging his soft authoritarianism–fell on deaf ears.

At base, despite all his macho bluster, Putin’s annexation of Crimea was an angry reaction to his loss of control of all of Ukraine after he allegedly prodded his acolyte, then Ukrainian president Viktor Yanukovych, into authorizing Berkut police snipers to kill some hundred pro-Europe demonstrators in Kiev in early 2014. The counterproductive brutality shocked Yanukovych’s own party into deserting him, accelerated the formation of a distinct Ukrainian identity in opposition to Russian coercion, and voided Putin’s entire pet Eurasian Union project by immunizing East Slav Ukraine against joining and legitimizing it. Yanukovych and his family fled to Russian exile with, according to Anders Aslund of the Peterson Institute for International Economics, some $8 billion.

The most urgent challenge to Western diplomacy after Russia incorporated Crimea was to help Ukraine and its parliament-appointed interim government survive during the chaos following Yanukovych’s flight. The neophyte government was in disarray. The neglected and underfunded Ukrainian army seemed useless, and was in any case still stationed on Ukraine’s western border in a deployment pattern inherited from Soviet times. The Ukrainian security services were still heavily laced with Russian commanders. Putin had just resurrected Catherine the Great’s 18th-century name of Novorossiya for what is now the eastern half of Ukraine and laid down a historical claim to it. In the name of New Russia, Russian-armed and -led separatists were beginning to seize administrative buildings in eastern Ukraine, where Putin hoped to ignite a general uprising of Russian-speakers against the Kiev government. Some 80,000 Russian troops on high alert were conducting continuous maneuvers and feinting invasions of Ukraine on an arc to the north, east, and south of Ukraine.

Putin was on a roll, convinced that the Russian capacity for suffering far surpassed that of the effete West. His popularity soared to the mid-eighties in a chauvinist surge. He had acquired Crimea cost-free, as the outgunned Ukrainian army had not resisted the takeover, and as yet there were no dead Russian soldiers. He had lied serially to Merkel, most blatantly in denying any Russian involvement in the armed destabilization of eastern Ukraine. She no longer trusted him to implement any agreed deals.

In dozens of phonecalls with Putin beginning in early March, Merkel, like Obama, offered to help save face for the Russian president if he would get “off ramp” and not further dismember Ukraine. If he did not change his policy, she warned him, Russian oligarchs would face financial sanctions. He shouldn’t delude himself into thinking that German tycoons would thwart them.Yes, the sanctions would hurt the German economy, but this time corporate Germany too would give priority to raison d’état.

In this environment Germany initiated Geneva peace talks in mid-April to deescalate the violence. This achieved two of Berlin’s aims. The immediate goal was to get Russian Foreign Minister Sergei Lavrov to negotiate directly with his Ukrainian counterpart Andriy Deshchytsia (in the protective presence of the American Secretary of State and the EU foreign policy chief) and thus acknowledge the Ukrainian foreign minister’s legitimacy as his interlocutor. The mid-term goal was to keep Russia talking instead of shooting during the month of greatest Ukrainian vulnerability before new votes would begin to confer legitimacy on an elected president and government. Ironically, this more important purpose was realized at least in part because Putin apparently thought the Kiev government and the likely presidential winner, the Europe-oriented chocolate oligarch Petro Poroshenko, were so weak and manipulable that he could gain the prize of Novorossiya without having to fight for it, on the pattern of his Crimean conquest.

American hardliners judged the outcome of the Geneva accord harshly and criticized the Germans for agreeing to delay the next tranche of tougher EU sanctions for a few days (while also criticizing Obama for allegedly showing too much deference to transatlantic unity in the Ukraine crisis). European critics too accused Germans of appeasement and false moral equivalence in inviting Russia to a negotiation about the future of its victim Ukraine. Subsequently, Steinmeier felt obliged to use a budget speech in the Bundestag to refute those who saw German policies as “appeasement and are quick to make [false] comparisons” with Neville Chamberlain’s concessions to Hitler in 1938.

In the event, the Russian army did not attack in the window when in purely military terms it could have sliced through to Kiev, as Putin later boasted, in two days. The ragtag Ukrainian army, after starting a disastrous counteroffensive to retake territory held by pro-Russian separatists in Ukraine’s two easternmost oblasts, had time to regroup. Poroshenko was elected president by a clear majority in the first vote, without needing a runoff, on May 25. The delay before a resurgence of heavy fighting gave both Ukrainian and Russian speakers in the self-styled Republics of Donetsk and Luhansk in the east enough exposure to arbitrary rule by the motley teams of Russian proxies (and their failure to pay out the promised higher pensions) to sour on them. The inhabitants of Novorossiya did not rally to the pro-Russian cause as Putin had expected and thus confronted him with a second shrinkage of his influence in Ukraine to only Crimea and the Donbas of Donetsk and Luhansk. The Ukrainian army, purged of at least some of its Russian agents, resumed the counteroffensive in tandem with volunteer militias and by August pushed back the Russian proxies to two Donbas enclaves and prepared for the coup de grace.

At that point Putin drew his red line in the sand. He would not let his proxies be defeated. Still denying that any Russian regulars were fighting in Ukraine, he sent elite paratroopers to Ukraine in his first direct invasion of his fellow East Slav neighbor. In a few devastating days the 7000 combined Russian troops in the country overran at least five of Ukraine’s 15 brigades and rendered them combat ineffective, according to the Potomac Foundation. Poroshenko understood the message and quickly agreed to a truce on September 5. Berlin saw to it that the pact, while confirming a new front line that left pro-Russian forces in control of half of Donetsk and Luhansk, nonetheless contained provisions that could eventually form the basis for a semi-permanent ceasefire. These included a buffer zone free of heavy weapons and closure of the porous Ukrainian-Russian border to further flows of Russian tanks, artillery, and military personnel under the oversight of the revived Organization for Security and Cooperation in Europe. By extension, the truce defined the preconditions for easing financial sanctions. The Germans had also seen to it that the original EU sanctions were organized in packages that could be varied to calibrate signalling to Russia without requiring fresh authorization from the EU Council for each decision.

Since then, in flexible small fora–sometimes in the “Normandy format” of Ukraine, Russia, Germany, and France, sometimes in the “contact group” of Russia, Ukraine and the OSCE , sometimes in such ad hoc groups as Germany, France, and Poland or Ukraine, Russia, the EU, and the US–Berlin has continued to lead the diplomatic probes for a more stable ceasefire.

By the time Black Tuesday hit in mid-December, the ruble dropped to half its value of a year earlier, capital flight from Russia reached an annual $130 billion, GDP headed for a fall of over four percent in 2015, and Western investment in Russia dried up, Putin stopped scorning the sanctions as a pinprick. By aggravating the impact of the drop in oil price to $60 a barrel, the West’s sanctions began to bite a year earlier than advocates had expected. Even Putin, perhaps, now has to reconsider the forces his belligerence has unleashed. These include not only an accelerated rush by Ukrainians to drop an East Slav for a European Ukrainian identity, but also Russian domestic disapproval of sending Russian boys to get killed in Ukraine, as voiced by mothers and widows of the dead Russian soldiers, that are buried secretly by the army. They include as well potential renewed Chechen insurgency and sly distancing from Moscow by Belarus’s Aleksandr Lukashenko and Kazakhstan’s Nursultan A. Nazarbayev. A hint that the Russian president may be doing some rethinking could perhaps be found in pragmatic Russian-Ukrainian deals on energy and humanitarian aid for civilians in the Donbas over the winter and what seems to be a decision to leave the region as formally still part of Ukraine rather than annexing it to Russia.

If this narrative is a correct reading of events, why then does the myth of German resistance to sanctions–and suspicion of a looming repetition of German defection from Western liberalism–persist?

For four reasons, perhaps. The first is that Merkel’s leading from behind of her grand coalition, the pro-Russian German business lobby, and the EU operated so smoothly that the evolution of Berlin’s Ukraine policy seemed to happen automatically. With no Sturm und Drang, Merkel’s low-key campaign drew few headlines.

The second, related reason is a widespread misunderstanding by outsiders of how foreign policy is shaped in Germany and a tendency to conflate opinion polls and TV talk shows with real policy. Foreign policy actually remains an elite affair that is resolved within a notably stable centrist consensus.

The third reason is a widespread misunderstanding by outsiders both of the process of forging common policy within an EU of 28 members and of Berlin’s special role in forming a consensus that gets beyond a lowest common denominator to real evolution. Germany regularly helps by digging into its deep pockets, of course. But at its best, as a true believer in the European dream of integration, Germany also helps build consensus by lending a sympathetic ear to the smallest as well as the biggest members and formulating ways to blend varied interests. Greeks would surely object to this description, but Norwegian and Polish think tankers speak of Germany as Europe’s indispensable nation. German Foreign Ministry State Secretary Markus Ederer describes Berlin’s unique role as the CFO–the Chief Facilitating Officer–of the European Union.

Finally, the fourth reason might be a kind of historical determinism in the recurring fear–even 70 years after 1945 and the deep repudiation of Hitler’s crimes by today’s citizens–that the Germans could again succumb to their old anti-Western and anti-liberal temptations. Suspicions of a German-Russian flirtation, suggests one senior Scandinavian government analyst, were fed by “the extraordinary denial of the danger that Putin presents that was propagated so loudly by so many outspoken Germans in the security field” right up to the shock of the Russian takeover of Crimea in March 2014. By now evidence to support such worries is hard to find.

On the contrary, it looks so far as if well-coordinated Western sanctions, the Ukrainian armed forces’ feisty defense of the homeland, and Angela Merkel’s patient diplomacy have combined to produce a least-worst outcome that no optimist could have dreamed of when Putin annexed Crimea one year ago.

The short form of this essay was published in Foreign Affairs, vol. 94, no. 2 (March/April 2015) under the headline : Germany’s Real Role in the Ukraine Crisis

Putin’s long war

Russia’s invasion of Ukraine has destroyed the peace
in Europe for a generation

By Elizabeth Pond


2015+09 Medium Russia

A year after Russian President Vladimir Putin shocked Europe by annexing Crimea and fomenting rebellion in Ukraine’s previously quiet Donbas region, his undeclared war on the Russians’ East Slav brothers has become the new-old normal on the continent. It has displaced the seven-decade interlude in which Europeans thought they had established a post-modern peace order in their heartland and made armed land grabs of neighbours’ territory obsolete. It has induced a loss of hope in restoring Europe’s embodiment of the liberal peace first envisioned by Immanuel Kant within less than one or two generations – if at all. It has confronted the West with a stark choice between appeasement of a regional bully or war with no mutually understood restraints in a still nuclear-armed world.

Already the truce hammered out by the Ukrainian, Russian, German, and French leaders on 12 February in all-night negotiations at Minsk has collapsed in reality, if not in name. Separatists in eastern Ukraine and their allied Russian “paid volunteers” never halted their saturation shelling of the town of Debaltseve at one minute past midnight on 15 February, as was agreed, but kept up the barrage for three and a half more days until the thousands of Ukrainian soldiers surrounded there either died, were captured, or managed to retreat under withering fire to contiguous Ukrainian territory. As of this writing, only a few of the heavy weapons that were supposed to begin withdrawing from the designated buffer zone on 16 February have been pulled back on either side. The rebels have not allowed international monitors to take up their designated posts in the ceasefire zone or on the Russian-controlled Ukrainian border.

The truce that was patched up again after the devastation in Debaltseve will probably provide no more than a brief winter respite before a spring offensive by rebels and Russian professional soldiers in eastern Ukraine. (Moscow still denies that any of its troops and modern heavy weapons are there, despite all the direct photographic, electronic, and eyewitness evidence of their presence and the indirect evidence of artillery and multiple rocket shell targeting on Debaltseve with a precision that only well-trained Russian crews could provide.)

Even before this month’s ceasefire, German Chancellor Angela Merkel provided the epitaph for European peace in warning that she could see no realistic scenario in which any arms the West might give Ukraine could trump Moscow’s escalation dominance in the theatre. Russia had the credibility of caring more about its immediate Ukraine environment than any outside power did, and possessed the dominant local military might to enforce its interests by upping the ante ad infinitum over any weapon friends of Ukraine might introduce. The only hope Merkel could offer was that, with strategic patience, the West might eventually triumph, just as it ended the cold war – in tandem with the unmentioned Soviet statesman Mikhail Gorbachev – with the bloodless fall of the 28-year-old Berlin Wall in 1989.

This dark prognosis has only been reached in recent weeks. Throughout 2014, Europeans still hoped that their accustomed peace order could be restored soon. As Russian special forces in unmarked uniforms and masks abruptly ended the quarter century of amicable coexistence of the Russian and Ukrainian fleets in their Crimean port last March and deposed the peninsula’s regional government at gunpoint, US President Barack Obama dismissed post-superpower Russia as little more than a regional nuisance. Chancellor Merkel took Vladimir Putin’s irredentist threat far more seriously. She warned the American president that his Russian counterpart was living “in another world” of czarist-era nationalism that, she implied, precluded any cost-benefit rationality or compromise. Obama, preoccupied with pullback from America’s overstretch in the Middle East and Afghanistan and his pivot to Asia, in effect outsourced second-rank diplomacy about Ukraine to Berlin. For the first time since 1945 Germany had thrust upon it geopolitical leadership of Europe commensurate with the country’s economic clout. And for the first time Merkel, whose hallmark was leading from behind, stepped out in front.

As Putin raced toward annexation of Crimea, Merkel told the Bundestag on 13 March last year that the previous 69 years of reconciliation, peace, and freedom that had been created by an integrating Europe and the transatlantic democratic alliance was a feat that “till today borders on a miracle”. Russia’s heist of Ukrainian territory was unacceptable in 21st-century Europe and represented a reversion to “the law of the jungle,” to “the right of the strong against the strength of rights”, Merkel said. She reprimanded Russia for violating international law and specific treaties that Moscow was a party to, including the 1975 Helsinki ban on changing European borders by force and Russia’s 1994 assurance of Ukrainian borders in return for Kiev’s surrender of its huge arsenal of inherited Soviet nuclear weapons to Moscow.

In dozens of phonecalls she warned a disbelieving Putin that Europe’s hard-won peace order trumped commercial interests and that this time he could not count on Germany’s pro-Russian business lobby to veto European economic retaliation for his provocation. Europe and America announced publicly that they would not intervene militarily to defend Ukraine, a non-NATO member, but would gamble instead on countering Russia’s immediate military faits accomplis with slow-impact financial sanctions on Putin’s entourage.

Merkel was the West’s logical interface with the Russian president. She was the ultimate Putin-Versteher, or “Putin understander,” not in the original coinage of this euphemism to describe German apologists for Putin, but in the sense of someone who grew up in Communist East Germany, spoke Russian, and sensed intuitively the Russian mindset. She understood Putin’s paranoia about being encircled by NATO, even if that alliance expanded not by armed seizure of neighbours’ territory but by responding to the clamour for membership by Central Europeans fearing Russian recidivism to Soviet-style forced hegemony. She comprehended the threat to his own rule that Putin feared from street protests in Kiev; he had served as a KGB recruiter of spies in East Germany in the 1980s and watched the Berlin Wall fall to people power overnight.

Merkel also grasped Putin’s resentment at the subsequent Soviet implosion that he calls the 20th century’s “greatest geopolitical catastrophe” – and at the independent Ukraine that emerged from it and illicitly tempted its people, in his view, to betray their elder brother Russians by no longer obeying them as tradition required. And the humiliation felt by Putin over the cumulative shrinkage of his influence in Ukraine was well-known in Berlin. He first lost all of Ukraine when his protégé, the then Ukrainian President Viktor Yanukovych, let police snipers murder scores of pro-democracy Euromaidan protesters a year ago. The violence alienated even Yanukovych’s own party and left him no choice but to abscond to Russian exile – thus ensuring that Ukraine would not add its Slavic weight to Putin’s pet “Eurasian Union” project and effectively voiding the enterprise. Putin’s insistence that Kiev join the newborn Eurasian Union, sometimes called the Soviet Union lite, was the original trigger to the pro-European Euromaidan demonstrations.

Putin next lost Novorossiya, as he anachronistically called the eastern third of today’s Ukraine that he suddenly claimed for Russia because Catherine the Great called it that when she seized “new Russia” from the Ottoman empire in the 18th century. He seemed to believe Russia’s own drumbeat propaganda message that discontented Russian speakers in the entire region would rise up if Russian special forces just ignited a rebellion there. Yet the masses failed to revolt. Only in the rustbelt of the Donbas could Russian proxies mobilise ill-paid retirees and buy or coerce enough additional support to set up the self-proclaimed People’s Republics of Donetsk and Luhansk. Indeed, in the east as a whole, where many made no clear distinction between Russian and Ukrainian ethnicity, opinion polls showed that a majority still favoured staying within the Ukrainian state.

Moreover, Merkel realized that Moscow’s cost-free takeover of Crimea in the name of restoring Russia’s lost greatness – the greatly outgunned Ukrainian army on the peninsula did not resist the regional coup, and no Russian blood was shed – was boosting popular approval ratings of Putin to more than 80 per cent. This gave him new domestic legitimation even as his decade-old social contract of restoring order and a better life to a new urban middle class in post-Soviet Russia was becoming ineffectual in a time of economic slowdown.

Merkel therefore did not expect to budge the Russian leader from his zero-sum view of international relations and turn him into a cooperative win-win pragmatist, however much his own bank account was profiting from globalism and hydrocarbon rents as he reestablished the authoritarian rule that was the historic Russian default from the Romanovs to Stalin to Putin. Nor did she expect to deflect him from his reversion to the historic Russian sense of victimhood and need for a security so absolute that it required the absolute insecurity of neighbors in its sphere of influence.

She did, however, see Putin as an improvising tactician rather than a single-minded strategist. This made him unpredictable, but it also allowed for movement. In the first stage of the Ukraine crisis she repeatedly offered to help him save face if he would cease his depredations, to the point of suggesting European Union-Eurasian Union talks on a common economic space. She hoped to keep him talking rather than shooting for as long as possible and to nudge him toward a more realistic perception of the advantages he was losing and the tactical costs he was incurring in his drive to punish the Ukrainians and the West for their treatment of Russia as a second-class power.

Merkel first prepared the domestic foundation to support her diplomacy. She forged a close policy partnership with her Social Democratic Foreign Minister Frank-Walter Steinmeier. He and others in his parliamentary caucus weaned the Social Democrats from their romantic nostalgia for the old Ostpolitik days of Chancellor Willy Brandt. Together, the grand coalition between the Social Democrats and her own conservatives gave Merkel an 80 per cent majority in the Bundestag in support of targeted sanctions against Russia.

The chancellor then rallied German businessmen to the cause of sanctions – well before the tragic shooting down of the Malaysian passenger airliner over rebel Ukrainian territory in mid-July, an event that is widely credited with causing a change of heart in Germany’s pro-Russian elites.

Finally, Merkel took the sacrifices that German importers and exporters were ready to make – the huge Russian-German trade would shrink by a fifth from 2013 to 2014 – to her EU partners. She argued that the French should make their own sacrifices by not delivering the two Mistral helicopter carriers they had contracted to sell the Russians and that the British should enforce their money-laundering laws in dealing with the many Russian tycoons who have made their second home in London. In the end, she was able to deliver the unanimous vote of all 28 European Union members that was required to approve sanctions – and she saw to it that the authorization was written with enough flexibility to add or subtract names on the target list without making every shift subject to a new vote of unanimity. It was a quiet tour de force.

One task Merkel did not take on was persuading the generally Russophile German public that Putin’s behaviour was unacceptable. That did not matter, however, because foreign policy remains an elite exercise in Germany – and because the Malaysia Air tragedy did change popular perceptions of the Russians and yield 70 per cent public approval of sanctions.

In mid-April Merkel initiated a brief Geneva agreement that put onto paper a basic wish list: stopping the violence, disarming illegal armed groups, returning seized buildings to their rightful owners and giving international observers from the Organization for Security and Cooperation in Europe a monitoring role in eastern Ukraine. By bringing Russian Foreign Minister Sergei Lavrov and his Ukrainian counterpart together at the same table, the Geneva accord also finessed Moscow’s tacit recognition of the legitimacy of the interim Ukrainian government (appointed by parliament after Yanukovych fled) that Russian propaganda was presenting as the illegitimate result of a fascist coup.

Ironically, in this first stage the West was aided by the weakness of the provisional Ukrainian government. Over five weeks in April and May Putin mounted menacing war games by placing up to 80,000 Russian troops on high alert on Ukraine’s northern, eastern, and southern borders. But he did not need to invade in order to extend his influence. Local mercenaries, criminal gangs, and other proxies under the command of Russian special forces were doing quite nicely in occupying administrative buildings in a string of medium-sized towns in eastern Ukraine. And Putin presumably thought he could control whichever leading politicians emerged in Kiev without having to shed Russian blood. In this decision he displayed a tactical caution in preferring the weapon of intimidation to the weapon of military occupation, with its risks of quagmire and perhaps even guerrilla resistance.

The second phase of the Ukraine crisis began with the unexpected landslide election in late May of President Petro Poroshenko, the “chocolate king” oligarch who had served in several previous crony governments but had supported the Euromaidan demonstrations from their beginnings in late 2013. Poroshenko quickly sent the Ukrainian army and militias on an “anti-terror” counteroffensive to recover territory lost to the rebels and their Russian special forces allies. In April the long-neglected, underfunded army had failed miserably in the same mission, in part because hardly any soldiers had such simple protection as Kevlar vests or night goggles, and also because the Ukrainians still couldn’t believe that they must shoot at brother Russians who were shooting at them. There were defections to the pro-Russian side. Some troop carriers were lost because they were surrounded by local pro-Russian babushkas, and the soldiers didn’t want to use force against them.

In summer, however, older Ukrainian soldiers who had once formed the backbone of the NCO equivalent in the Soviet Army helped the ragtag Ukrainian forces and the better equipped militias to get their act together. They gradually recovered most of the territory held by the rebels and by mid-July were besieging the remaining rebel strongholds in the cities of Donetsk and Luhansk. In Kiev hopes rose that the Ukrainians could prevent further dismemberment of their country. On the rebel side, Colonel Igor Strelkov, the designated Russian military intelligence commander of the local Russian proxies and mercenaries who were being pushed back, complained bitterly that they were being deserted by the Russian leadership and pled for more heavy weapons. The Russians obliged by rolling over the border into the Donbas more multiple rocket launchers, anti-aircraft missile systems, plentiful ammunition, and the powerful Russian ground-to-air Buk missile system that could reach the altitude of 10,000 meters, where the Malaysian Air jet was flying when it was shot down. The Russians apparently also removed Strelkov from his post as defense minister of the Donetsk People’s Republic, however – officially, he resigned – and he returned to Moscow.

From the first half of August, the situation changed fundamentally,” wrote Russian academic and human-rights activist Nikolay Mitrokhin recently in a post on the opposition website that is now blocked in Russia. “The Ukrainian army was no longer opposed by divided and poorly armed groups of militants,” but faced instead a Russian army with dozens of tanks and artillery pieces, under the leadership of an experienced Russian general. In late August the first known direct invasion of eastern Ukraine by Russian units of paratroopers followed, rolled back the Ukrainian sieges, and delivered Putin’s clear message that he would not let his proxies in the Donbas be defeated. Some or perhaps all of the Russian airborne troops returned to their home bases after their punitive raid. The third phase was about to start.

President Poroshenko understood Putin’s red line instantly and on September 5 agreed through an envoy on a truce with rebel leaders that made the half of the Donetsk and Luhansk oblasts then under rebel control a no-go zone for Ukrainian troops. The ceasefire was never fully observed, but it deescalated the fighting to low-intensity shelling, and the frontline was relatively stable for four months.

German diplomacy in this interlude consisted of trying to freeze the conflict by converting the September 5 truce and subsequent protocol into a permanent comprehensive ceasefire or at the least into an acceptance of common constraints on escalation. If that could not be agreed on, the fear was that Europe would enter a new era of acute Russian-Western hostility without even the mutual restraints that the two superpowers settled on for the sake of humanity’s survival at the height of the cold war. The nightmare was only fuelled by Putin’s less-than-veiled threat that he possessed escalation dominance and that he could resort to nuclear weapons to maintain that dominance. He boasted that his troops could be in Kiev within two days if he so ordered and could be in the capitals of NATO member states – Latvia, Lithuania, Estonia, Poland and Romania – just as fast. Indeed, he has been graphically illustrating the point by aggressively testing NATO defenses of the Baltic and Atlantic states daily on the seas and in the air – and endangering passenger flights by sending bombers with transponders turned off into airspace that civilian liners use.

Any deal on de-escalation would have had to rest on a realistic admission in Kiev that all the moral outrage in the West at Putin’s bullying of a weak neighbor would not put Western boots on the ground to defend a non-member of NATO on Russia’s doorstep–and that the least worst outcome for Ukraine would be to surrender parts of the east to Russia de facto if that could prevent deeper dismemberment of the country. It would have had to rest further on an admission by the tactician in the Kremlin that the West’s sanctions, along with the drastic fall in the market price for Russia’s hydrocarbon exports, were already ruining the Russian economy–and that rescuing the national economy should take priority over the czar’s personal grip on power.

Neither precondition was fulfilled. Poroshenko acknowledged the harsh facts with his head but not with his heart, and whatever inclination he might have had to endorse a bitter compromise withered when the first post-Euromaidan parliamentary elections were finally held in October and Prime Minister Arseniy Yatsenyuk’s harder-line party outpolled Poroshenko’s by 0.3 percent. And in Moscow Putin held firm in his conviction that politics and will trump economics–and the Russian muzhik’s stoicism in suffering will always trump the West’s effete narcissism in any duel.

The deadlock of the period was ambiguous enough to keep alive a residual hope that the opportunistic Putin might still heed the mounting costs of military overstretch, growing opposition by Russian women to sending their sons and husbands to die in the secret war in Ukraine, revival of a moribund NATO, and consolidation of a new Ukrainian identity in opposition to the Russian enemy. No Russian would, of course, explain to the czar that Russia was in long-term decline demographically, economically, and ideologically, and could not long support a belligerent defiance of the West in a globalized world. Yet realists like Alexei Kudrin, a former Russian finance minister and economics adviser to Putin who remained on good terms with his ex-boss, did enjoy a license to admit publicly that the nation’s economy was already reeling from the sanctions in annual capital flight of $130 billion, a close to 50% drop in the value of the ruble, approaching negative growth of up to 5%, and a drought of incoming Western investment and know-how that would condemn Russia to the stagnation of a pre-modern extraction economy. The problem was that Kudrin never seemed to break through the president’s small inner circle of secret police, rentier oligarchs, and yes-men to persuade Putin of the looming catastrophe.

Now the debacle of this month’s last attempt at truce has killed the last residual hope. What will the fourth stage of the Ukraine crisis look like in 2015?

Clearly the end of today’s neo-cold war will not occur the way its superpower original did a quarter-century ago, when Washington ostentatiously outspent and out-innovated Moscow in weapons as well as general prosperity just as the Soviet economy and society reached a dead end, and Mikhail Gorbachev decided to trade in empire and feud for soft power and animal spirits. Nor will it come alone from Angela Merkel’s strategic patience that the Financial Times’s Philip Stephens parses as long on patience but short on strategy. Nor will it come from Vladimir Putin’s progressive foreclosure of his own options by doubling down militarily after every failure to persuade non-Russians of the splendors of Great Russian hegemony. The only certainty is that the war between Russia and Ukraine will go on.

Elizabeth Pond is a journalist based in Berlin and the author of several books about Germany, Europe and the Balkans. They include “Beyond the Wall: Germany’s Road to Unification” (Brookings Institution)

Vietnam’s Postwar Generation

By Elizabeth Pond

Hanoi / December 2013


The best way to see Hanoi is to ride pillion on Do Duyen’s motorbike. Duyen, like most Vietnamese drivers (except when they drink too much rice wine at Tet or at weddings) has a sixth sense of how others in the flood of motorbikes and intruding cars, trucks, buses, bicycles, cyclos, and village peddlers with bamboo carrying poles will react. Never mind that motorcyclists routinely make illegal left turns at intersections by plunging left against the three immediate lanes hurtling to the right in order to edge their way, eventually, into the three farther lanes hurtling to the left. Everyone else simply swerves to accommodate this anomaly in his own way, and the collective streams of traffic glide on.

You might call it a metaphor for the course of Asia’s newest tiger, the one that took off in the late 1980s and averaged 7.5% growth over the next two decades, to leap far past neighboring Laos and Cambodia in living standards. This tiger cub’s proportional poverty alleviation, egalitarianism, political openness, and optimism all surpass China’s. In Vietnam the real energy bubbles up from the chaotic bottom to be codified retroactively as government policy (sometimes), without necessarily being filtered through formal institutions or a non-existent civil society. Doi moi (“renovation”) set the pattern in 1986.

As Duyen makes constant micro adjustments to preserve the crucial centimeters of space between us and the rest of the capital’s pulsing humanity, he provides a running commentary. Some of it I catch, despite the warp of words on the way to my ear through his mouth mask and my helmet. Some I don’t catch, amid the roars and honks and occasional screech. There is the downtown park that until a few months ago showcased the Lenin statue that Moscow gave Hanoi in 1982; recently the 5-meter-tall Lenin migrated to the more out-of-the-way Reunification Park. Here on the left is West Lake, on the right Truc Bach Lake, the one John McCain parachuted into when his plane was shot down.

There is the amusement park. Over there is the Hotel Hanoi, the first four-star hotel in the capital, built a decade ago. Today it looks like a relic and gets mostly Chinese guests. On the right is the tower that will be 72 stories high when it is finished, the tallest in Hanoi. It was supposed to have risen to 102 stories, but then the world financial crisis hit, and it got scaled down. Here is Little Korea, where the expat businessmen know from their own experience what it’s like to swoop overnight from rice paddy to urban modernity. There is one of the 28 hotels that mogul PHPLX (name drowned in the gunning of engines as the traffic light changes to green) owns all over Vietnam. He doesn’t invest in stocks, just in property.

See that “Made in Vietnam” outlet? Those shops guarantee quality by selling global-brand clothes that are certified as not made in China. See all the water tanks on top of Hanoi’s narrow-front, 15-meter-long “tube houses”? A Vietnamese traveler noticed them in Taiwan in the early days of doi moi, brought the idea back, and found his niche in providing constant water pressure without your having to pump water up every time you want to use it. That’s what it’s like in such a young economy. There are lots of gaps, and all you have to do to make your mark is to identify and fill them. That’s the way almost half of Duyen’s class at the Hanoi Banking Academy became millionaires (even if half of this half fell back below the magic line when global stock markets dived).

Village to City

Duyen grew up in a village in the mountainous northwest, where he worked hard as a barefoot boy planting, hoeing, and harvesting the family rice terraces. His mother got up at 2:00 a.m. to make tofu in a co-op kitchen for delivery to the government store by 4:00 p.m. Duyen gathered firewood in the hill copses, hauled bamboo to build the family house and fence, and caught fish in the streams to augment the family’s meager diet. He also picked wild leaves to feed the pigs and the rabbit the family was fattening up for sale. In the pre-doi moi decade of severe central planning, food shortages, rationing, and widespread malnutrition, his family had to eat cassava on some days for lack of rice. They had to be on guard against other villagers who might sneak into the house when no one was home and filch their scanty belongings–perhaps with the help of a fishing rod baited with meat to hook the dog’s mouth and keep it from barking an alarm.

Duyen never saw anything beyond his own valley until he was in his late teens and his sister took him along to a larger settlement near the Chinese border to buy slippers. “Everywhere people started trading even though it was illegal. Then the law changed.” The Communit Party ordered the doi moi liberalization that echoed Deng Xiaoping’s earlier breakup of collective farms in China and legitimized the Vietnamese black market that had sprung up to fill the existential consumer gaps. “It was just like water flowing from one rice paddy to the next when a dike breaks.”

Duyen quickly sensed that his future under the newly tolerated market system would depend on gleaning information about the world of business. What better place to do it than at Hanoi’s Banking Academy, a 1961 North Vietnamese wartime institution that was now starting to retrofit Marxism-Leninism for the globalized age? With donations from his family, he crammed furiously to stretch his rudimentary village education up to a level to compete in entrance exams with graduates of the elite Hanoi high schools. By the time he was accepted into the academy as one of 156 out of 3000 applicants, he was also studying that other yuppy prerequisite–the English language–at night school.

At that point Vietnam still had a standard of living close to North Korea’s current level of misery and was only denied listing under the World Bank’s concessionary category of “least developed countries” because the educational drive of this Confucian society had already produced 90-plus percent literacy. At that point Hanoi was still so rough that Duyen hid his money in his underwear whevever he rode the bus.

After getting his diploma, Duyen worked for a cellphone company and earned enough money by 2000 to buy a new apartment for $8,500 and settle his father in it in the center of Hanoi, not far from Little Korea. His timing was perfect. The condo doubled its value in one year and kept on appreciating to its current worth of $120,000. With financial aid, he continued his education in the United States, earning an M.B.A. at Maryville University in St. Louis. He returned to Hanoi, this time to work for a bank. As he thought it over, though, he turned down promotion into the rat race of a prestigious career in finance and opted for the less demanding branch of tourism that would leave him master of his own free time.

When he married, Duyen enlarged his apartment from 39 to 57 square meters by enclosing the balcony; this gave his wife Trong and their twins, Bunny and Chipmunk, ample storage and multi-use space in the open-room layout. And as the five-year-olds grow up, the condo’s size will grow with them. The developers have promised double space to all the current owners, along with free temporary housing when they tear down the current buildings in the next few years and scale up to higher-rise replacements. This leaves the family budget in good shape.

As Duyen has exited the financial sector, he has no need to buy either an expensive golf club membership or a car. The Honda motorbike serves nicely for family outings, and Duyen is under no compulsion to impress business contacts by arriving at negotiations in a Mercedes or a Lexus sedan.

Hanoi’s Old and New Quarters

On Thursday morning I get acquainted with the octogenarian matriarch of my hotel in the bustling Old Quarter, with the help of her great-grandson. He is studying literature at university, trades off reception duty at the hotel with siblings and cousins, and speaks English. The developer who bought their house is waiting for the right time to put up more modern units from this and adjacent tube houses, at prices per square meter that will reach Tokyo levels. For now, the matriarch can continue to stay in the home she has inhabited for most of her life, slip out the door every morning to see friends and buy herbs on the streets that constitute everyone’s front doorstep and shopspace, then slip back in for a nap on her board bed as the spirit moves her.

Duyen picks me up, and we weave our way through the old guild streets, now shrunk to one block for the woodworkers, with their hand-lashed ladders of virgin bamboo trunks; one block for the ironmongers hammering red-hot crowbars into shape over tiny charcoal stoves; additional blocks for the silk and china and broom and flower merchants, and, since this is the beginning of the lunar month, ubiquitous shops with pyramids of red and gold boxes of sweets and packets of Thomas Jefferson two-dollar bills to burn as offerings to ancestors.

We head out through urban sprawl to one of the two rural districts of Hanoi that will soon become city districts. Duyen points out the heroes’ cemetery where Vietnam’s luminaries are buried, with the exception of the two most famous celebrities of all. Revolutionary leader Ho Chi Minh enjoys his own mausoleum at the center of the moribund party and government district. General Vo Nguyen Giap, who transmuted his original platoon of 34 men into an army that expelled both the French and the Americans from Indochina, is buried, at his request, in his home province.

As we proceed, the few rice paddies tucked into empty lots between commercial offices grow in number, and some water buffalo appear, nibbling the stubble that remains after the year’s single harvest. Some future high-rise building are already under constrution, as is a stadium that a few years from now might host Asian track and field championships for the first time.

By trial and error Duyen navigates his way through the maze of streets that have materialized since he was last here, and we arrive at the village of Yen Vinh to visit a friend of a cousin. Duyen coached Nguyen Hai Tho some years ago, showing him how to study English more effectively and drilling him until he pronounced the last consonant in English words clearly. The mentoring paid off. Tho now speaks easy-to-understand English, with distinct word endings, and works as a freelance tourguide. He leads us down a pedestrian lane in Yen Vinh’s newest neighborhood, past a motorbike parked in his front pocket garden, and into his one-story cement-block house with a tile roof. His accountant wife is in her office after having dropped their children off at first grade and kindergarten; he will pick them up in the afternoon. The older one is in a magnet school for gifted children and is the best in her class, he notes with pride.

Tho, like Duyen, is from the first Vietnamese generation that has had to invent its own life instead of simply replicating its elders’ subsistence farming or guerrilla privation. Like their friends, he and his brothers are the first in the family to have chosen their own marriage partners rather than following a rational economic pact arranged by their and their spouses’ parents. They are the first to have adopted the strange custom of bringing the toilet from the outhouse right into the middle of the home. They are the first to give their toddlers tricycles and blow-up plastic pools to splash in and let them watch Tom and Jerry cartoons on TV. The first to play a set of tennis before reporting for work in the morning. The first to eat meals sitting on chairs at raised tables (except when grandparents are present and everyone joins them in dining on the floor, even in luxury apartments). And above all, they are the first generation in four millennia to have known only peace in their lifetime.

For now the house is just right for Tho’s family, and a clear improvement on traditional village homes. In three or four years Tho expects to move on to a larger home, though. His and his wife’s incomes should suffice to buy an apartment for $75,000 or $100,000 and pay for public school fees that will increase from the $40 per month per child they disburse now to $200 per month per child in secondary school.

“If only Vietnam had been united before, it could have been as rich as [South] Korea now,” Tho muses. He is glad that America and Vietnam have forged better relations, as deterrence to a greedy China, and he observes that his cohort no longer shares its parents’ views about a predestined clash between communism and capitalism. He appreciates the sacrifice of his elders for the liberation of the country, “but for our generation, we just think it’s good for Vietnam to have good relations with every country, especially the West and America.”

On our way to lunch we stroll past the village “authority office” facing the muddy rice paddies and on to the original heart of the community, with its small Buddhist temple. One plot has been converted after the rice harvest to grow pumpkins and green vegetables for Hanoi palates, another to a cash-crop rose nursery to help supply the capital’s insatiable demand for blossoms. Each swelling bud has been painstakingly swaddled in paper to prevent it from opening before the optimal sale day. Ancient loudspeakers mounted on utility poles blare out the national radio pop songs that have largely displaced the old progapanda and summons to village meetings. A slope leads down to the village pond, where women washed their clothes before they had running water installed in their homes. Today it is used only for rinsing off muddy feet or shovels after weeding the ricefields.

The narrow lanes take us past one woman who looks up from her Japanese sewing machine as we pass by her open window to show us that she is finishing seams on trousers for export. A few doors on, apprentices in the middle of their three-year instruction sit on the floor of the carpentry shop and chisel traditional temple-post designs into jackwood logs that they steady with their toes. We end our tour at the village restaurant that spills out from the cooks’ home onto the street outside and order the local variant of the national dish of pho noodle soup.


The well-dressed Vietnamese woman in her mid-40s looks as out of place as I do as a Westerner. By chance we are both sitting in a street restaurant in a section of the city that is one of three new locales for families who once lived on houseboats on the Perfume River. In recent years they were relocated to apartments here in what seems to have been a miscarried effort to lift them out of poverty. The former fishermen received no vocational training for any occupation on land and are hard put to feed their families on the pittance they get as drivers of ancient pedicabs that are relics from French colonial times.

The woman assesses me with a curiosity that mirrors mine about her. Am I perhaps American, and if so, what city do I come from? Boston! She beams. Her son is studying in Boston, and she just visited him there, where he has a four-year scholarship at MIT. She pulls out her cellphone and displays photos of her son and the Massachusetts Institute of Technology as viewed from the Charles River bridge. I tell her that I just saw Dinh Anh Minh’s name that afternoon on the honor plaque at the elite Hue lycée that is as famous today for its pupils’ steady string of gold medals in the international math Olympiad as for its founding-father alumni, Ho Chi Minh and General Giap. My new acquaintance beams again. She is pleased that I already know that Minh was the first Vietnamese to win an Olympiad gold medal in the hard sciences (physics). She introduces herself as Ho Thi Thuy, Southeast Asia Manager for a Russian exporter of Vietnam’s prized highlands pepper.

Her son is both typical and atypical of the new generation of young people who are fanning out to the US, China, Australia, Singapore, and Germany for higher education. He is typical as one of the 106,000 Vietnamese in their early twenties studying abroad in this academic year, for a higher proportion than their counterparts in China. He is also typical of many in receiving full financial support; in the US alone the cumulative list of Vietnamese Fulbrighters specializing in subjects ranging from public administration (at Harvard) to environmental policy (University of Hawaii) to water management (Colorado State University) numbers some 500 by now. Minh is atypical, however, in the size of his generous stipend of $58,000 a year. Remarkably, the nuclear or extended families of the majority of Vietnamese foreign students have to cover the bulk of expenses of their clan’s young scholars, and they do so. Often enough, students keep their costs down by living with relatives in the San Jose or Sydney or Berlin diasporas, and taking shifts at cooking or waitressing in their third cousins’ Asian restaurants.

Thuy extends an invitation to breakfast the next morning in the leafy tropical garden of a restaurant overlooking the riverfront. We see no houseboats, nor even the traditional dredging sampans that have been evacuated to tributaries away from the center of Hue. Local leaders have yet to expand their imagination to think of the tourist value of reinstating the boats and their inhabitants and perhaps even subsidizing some of them to bring back all their ducks and fighting roosters and strung-up fishing nets and to resume laundering their wash at keelside. So far there are no model sampans in the old Nguyen Dynasty capital for vendors to hawk on the bridges that connect the two sides of the city, no picturesque postcards of Perfume River fishermen battening down the hatches of their rising boats as the first monsoon of the season pours down in sheets, The only local souvenirs on offer are GI dogtags that are either macabre or fake. There are not many buyers.

We exchange business cards, and Thuy gives me a jar of peppercorns as a memento. She hopes to visit Minh again soon, and we promise to stay in touch about a possible reunion at the Charles River, where we can at least see sailboats on the water.

Ho Chi Minh City

In this city the motorbike must wait. My first day back here after 43 years has to begin on foot, slowly.

My introduction to 21st-century Saigon—the name natives still use rather than Ho Chi Minh City—starts as I chat with the owner of my hotel. He is ensconced on a chair in the lobby supervising renovation of the property and waiting for the holiday return of his three children, who have been studying at high school and college in the United States for several years. Duyen, whose cousin used to work at the hotel as a receptionist, interprets. The hotel is in the one corner of the First District that still caters to international backpackers, but is gentrifying fast. A stack of new bricks appears in front of the hotel in the morning and is exchanged for an equivalent volume of jagged cement chunks and metal debris in the afternoon. Across the street, a new screen of red, white, and blue plastic sheeting signals that a parallel project is just about to begin there too. The owner’s oldest daughter arrives—and talks and gestures just like any outgoing American co-ed, with no residue of Vietnamese reticence.

I first take Duyen to see the spot where I lived four decades ago. In the park a young woman sits in the midday sun, giving herself a fix with a syringe. No passer-by intervenes. In the early morning, Duyen comments, the parks belong to the rich as they practice tai chi. In the middle of the day they belong to the poor, to the street orphans and cone-hatted vendors who find few customers in the heat and doze on benches instead.

On Le Loi Street there is no trace of the thin metal door that once gave me entry to a cavernous truck garage and the outdoor stairwell in the back leading up to my apartment on the top floor. My corner has already been absorbed by the posh neighborhood that is every day radiating farther out from the opera house. I presume that the fat sluggish rat that used to contest my space has long since been evicted from the premises.

By contrast, the Continental Hotel, the old hangout for wartime correspondents next to the opera, still exists. The state enterprise that now owns the hotel has kept its satisfying four-floor height and refurbished it in keeping with its19th-century origins. On one wall in the lobby Duyen notices a discreet plaque honoring Pham Xuan An, the veteran correspondent for Time magazine and invaluable part-time assistant to the New Yorker‘s Robert Shaplen, me, and perhaps a dozen other American reporters over the years. It is the only tribute to him that I can find in the entire country. After the 1975 fall/liberation of Saigon, it turned out—to the astonishment of all of us who had worked with him and of the American generals who had conversed freely with him as a very well-informed Time correspondent—that An had been a top North Vietnamese spy during the war. He had regularly delivered military intelligence to the Viet Cong’s well-camouflaged headquarters in Cu Chi, a scant 20 miles from the center of Saigon, a site that is today a prime destination for American tourists who might wish to crawl through parts of the 150-mile web of claustrophobic underground tunnels.

In retrospect, it is clear that his intimate knowledge and even love of America that made An an ideal spy. Once the war was over, however, his empathy for the US also made him suspect to his North Vietnamese commanders. He had to endure not only reeducation camp, but also a decades-long ban on foreign travel and any meetings with foreigners. Not until the 1990s was he promoted from the rank of colonel to brigadier general. And only in the months following the death of General Giap last October was An’s exploit widely publicized, six years after the premier agent’s death.

For lunch, Duyen and I choose the pho restaurant immortalized by President Bill Clinton’s visit of reconciliation with Vietnam in 2000. We sit elbow-to-elbow at tables with a clientele that consists of 50% American tourists, 50% Vietnamese yuppies, and 100% photographers with their cellphones. The pho tastes good.

In the afternoon, on the spur of the moment, Duyen calls a classmate and one-time badminton partner from the Banking Academy who moved here four years ago as a “75”—a north Vietnamese who came after the 1975 reunification to join the “54” southerners whose families have lived here since French times or, in the case of many Vietnamese Catholics, fled here after Gen. Giap’s rout of the French at Dien Bien Phu in 1954. Dang Tran Dzung accepts Duyen’s invitation to dinner, and we meet him at the Chanel and Gucci shops on the ground floor of his condominium building. Then we ascend escalators through a mall featuring toys and children’s designer clothes to a third-floor restaurant. As course after course is delivered smartly, it strikes me that rookie waiters in Vietnam take their profession just as seriously as any Italian or French maitre d’.

Unlike Duyen, Dzung stayed in the world of finance and has now risen to become the sales manager for his bank in Vietnam’s commercial capital of Ho Chi Minh City. His wife has started her own firm selling herbal cosmetics online and can continue this business wherever they live. Already the couple are Saigon boosters. Dzung finds this city much livelier than Hanoi, and less expensive to live in. He listens attentively as Duyen talks about the memorial to Pham Xuan An in the Continental Hotel and explains that An was an assistant of mine during the American war. I shine by reflected glory. Dzung looks at me with awe and declares, “He is my idol.”

After dessert, we take the elevator up to Dzung’s apartment to meet his family. His wife has her hands full trying to keep their sub-teen son and his buddy from across the hall from wielding their make-believe swords too boisterously. Their teenaged daughter is willing to try out a few words in English and to be coaxed to perform Für Elise on the upright piano in the living room before she disappears to cram with her French and math tutor.

Long An

The next day Duyen rents a Honda and we head west on Vo Van Kiet Street, named after the prime minister from the southern Mekong Delta who launched doi moi in the 1980s. Our destination is Long An, the venue for Jeffrey Race’s classic 1970s’ exploration of the Viet Cong tactic of courting peasants by exacting lower rice taxes and pressganging fewer soldiers than the South Vietnamese goverment did, while intimidating villagers by assassinating the best local leaders who opposed their cause.

Today’s Long An doesn’t look rural until you get off the ribbon of urban sprawl on Vo Van Kiet Street. The highway is lined all the way with wholesale warehouses, outlets selling streetlights imitating 1890s’ European gaslights, salesmen who display serried rows of a few hundred shoes by the side of the road, and scavenger dumps of rusted John Deere tractors, Komatsu mini-excavators, and disemboweled transmissions. A few kilometers past the sign announcing the invisible dividing line between urban Saigon and provincial Long An we turn off on a cinder side road, however, and are soon rewarded with a landscape of emerald Mekong Delta rice fields. In the 1980s, once doi moi lifted restraints on peasants, it was the delta that quickly compensated for the decade of acute malnutrition, fed Vietnam, and even made it the world’s second-largest exporter of rice, after Thailand.

A cheery barefoot farmer with a hoe, a pail, and a satchel approaches on one of the narrow mud dikes, welcomes us to his domain, and invites us to see the new wing of his house. In his lovingly tended flower garden he hacks open two waiting coconuts with a heavy knife and inserts straws for us to drink the milk. We enter the cool interior of his home, and Bay Hoach explains how much better his life is than his father’s was. He possesses the Land Use Right Certificate for the leasehold on his plots and is sure that his daughter—who attended the college of food processing and works in that branch—will inherit his tenure. His father plowed with a water buffalo; he hires someone with a rotor to till the ground instead. His father shelled the rice himself; he sells his 18,000 kilograms of grain each year to a big company to process instead, and with the money he is paid buys much better seed rice than he could grow. Nowadays he needs to work only sixty days out of the year, twenty for each of his three crops. These improvements gave him the extra money to expand his house and install a flush toilet—and enough free time to swing in his hammock and watch TV.

I ask what it was like for him during the American war, and in what could be a three-sentence reprise of Race’s War Comes to Long An, he replies, “I wasn’t for the Americans. I wasn’t for the North. And I wasn’t for the South.”

On our way back to Saigon, Duyen phones a second cousin who was born in the same village as he was, to see if we might drop by. Tran Thi Ha lives in a villa in a semi-gated community in Saigon’s new Seventh District, as befits the path she mapped out for herself as Vietnam globalized. She began as a guide for investors who were visiting Hanoi, became a facilitator in purchasing their airline tickets in the era when foreigners were barred from buying them directly, then founded a ticket agency that has become one of the largest in Saigon. She quickly realized that Korean businessmen were settling down in Vietnam in large numbers—by now there are 80,000 in Saigon alone—so she learned Korean as well as English and seguéed into a successful realtor with a large Korean clientele.

She welcomes us enthusiastically and goes off with Duyen to buy the ingredients for the banquet she instantly plans in our honor and will spend two hours cooking. Her junior-high daughter, whose fluent English derives from attending a bilingual Vietnamese-English school, entertains me in the meantime, in the hour before her tutor is due to appear. She first shows me around the neighborhood, then interprets for me when her grandmother hears our voices and comes downstairs to greet the newest foreign guest in the house.

After the feast, Duyen and Ha exchange multiple gifts for various family members. Duyen receives fruit, a soup powder made from a vegetable root, special ginger for his sister, and rare gourmet Korean mushrooms for him and his wife. As he flies back to Hanoi the next day for a surprise party for Trong he will be hard put to persuade the stewardess to treat all his bundles—including the bottle of soapy water with wand he has bought for Bunny and Chipmunk to make rainbow bubbles—as his carry-on allotment.

This is the new face of Vietnam.

Elizabeth Pond covered Vietnam in 1969/70 and South Korea in the early 1970s for The Christian Science Monitor.

© Elizabeth Pond

Links updated December 3, 2015