Ukraine 101:

• A million Ukrainians have come to Poland since a pro-Russian insurgency erupted in their country three years ago. The immigration wave has effectively delayed the graying of Poland’s population by five years, according to PKO Bank Polski SA. (Bloomberg, 03.06.17)

West’s leverage over Russia:

• German Foreign Minister Sigmar Gabriel said on March 1 there had hardly been any progress in implementing the Minsk peace agreement for eastern Ukraine, which meant no lifting of sanctions against Russia was in sight. (Reuters, 03.01.17)
• The EU has cleared Hungary to build two nuclear reactors with Russian help after Budapest made commitments to safeguard competition in the energy sector. (AP, 03.06.17)

Russia’s leverage over West:

• Europe has wanted to wean itself from Russian natural gas since supplies from its eastern neighbor dropped during freezing weather in 2009. Almost a decade later, the region has never been more dependent. Gazprom shipped a record amount of gas to the EU last year and accounts for about 34% of the bloc’s use of gas. Russia will remain the biggest source of supply through 2035, Royal Dutch Shell Plc has said. Meanwhile, Bloomberg columnist Leonid Bershidsky argues that Gazprom needs its European customers more than they need it. (Bloomberg , 02.28.17, BloombergView, 03.01.17)

Russia’s leverage over Ukraine:

• Russia became Ukraine’s leading investor in 2016. Some $1.67 billion in investments came from Russia into the Ukrainian economy last year, accounting for 38% of total foreign investment, reported the Ukrainian news agency UNIAN, citing Ukraine’s State Statistics Service. (RBTH, 03.01.17)

Casualties and costs for Russia, the West and Ukraine:

• Regarding the blockade of transportation between separatist-held parts of Donbas and the rest of Ukraine maintained by Ukrainian war veterans and their supporters (see also Analysis section below):
  • The repercussions of an economic blockade between the separatist-held east of Ukraine and the rest of the country are beginning to reverberate. If the blockade were to continue for a whole year, it is estimated it would cost the Ukrainian economy a staggering $2.5 billion. (BBC, 03.02.17)
  • The protesters, who now number a few hundred, are calling the economic relationships that straddle the front line a “trade in blood,” accusing corrupt Ukrainian oligarchs of effectively subsidizing the separatist economy and allowing the war to continue. A big part of the economic disruption is a halt in coal shipments from the east, which powers industry in the west but is also a major source of income for the Russian-backed eastern “republics.” The blockade has precipitated a state of emergency in Ukraine’s energy sector and the government is warning of rolling blackouts, job cuts and economic consequences. (The [Toronto] Star, 03.07.17)
  • Interior Minister Arsen Avakov has called on the government to find a way to forcibly end the blockade, and several blockade participants at two locations were attacked on March 1. (RFE/RL, 03.01.17)
  • Alexander Zakharchenko, the main pro-Russian separatist leader in Ukraine, said on March 3 he would cut economic ties between rebel territory and the rest of the country, following through on an ultimatum to end trade if the government did not halt a rail blockade. (Reuters, 03.03.17)
  • Pro-Russian separatists in eastern Ukraine said on Feb. 27 they would take control of Ukraine-run businesses in rebel-held areas if the Ukrainian government does not end a rail blockade that has halted coal supplies. They then seized offices of a telecom firm and a charity controlled by Ukrainian billionaire Rinat Akhmetov. A fifth of a million phone users in Ukraine's rebel-controlled eastern city of Donetsk were cut off from the rest of the country as a result. (Reuters, 02.27.17, BBC, 02.28.17, Reuters, 03.01.17)
  • A company controlled by billionaire Rinat Akhmetov, Ukraine's richest man, said on March 2 that the seizure of some of its assets by Russia-backed separatists in the eastern part of the country is "unacceptable." (RFE/RL, 03.02.17)
  • Russian President Vladimir Putin's spokesman defended the separatist move to seize companies, saying that "regions that have been rejected by their state are in an increasingly difficult situation … in the conditions of a total blockade by extremist elements." (RFE/RL, 03.01.17)
• Lost industrial production from the Donbas region contributed to the 9.9% drop in Ukraine's GDP in 2015. But some 20 large factories and mines, with around 75,000 workers, continued operating in the rebel-held areas under a flimsy arrangement. (Bloomberg, 03.02.17)
• The European Union has extended for a year sanctions against 15 people in Ukraine accused of misusing state funds. Sanctions against former Ukrainian President Viktor Yanukovych and senior members of his administration were first introduced in March 2014 and have been extended annually since. (AP, 03.03.17)

Impact of Russia’s actions vis-à-vis Ukraine on other countries:

• European Union states agreed on March 6 to open a small command center to run military training missions abroad, a step France and Italy hope is a precursor to an EU defense headquarters. Foreign and defense ministers approved the Brussels-based command, which will be run by some 30 people when it is launched in the next few weeks, after Britain dropped its opposition to EU defense integration as it prepares to leave the bloc. (Reuters, 03.06.17)
• Sweden has moved to reintroduce conscription "as a response to the new security situation" in Europe, the country's defense minister said on March 2. (CNN, 03.02.17)

Red lines and tripwires:

• No significant developments.

Factors and scenarios that could cause resumption of large-scale hostilities or lead to accidents between Western and Russian forces in Europe:

• The Russian Defense Ministry said last week that the nation’s top military officer has spoken to his NATO counterpart for the first time in several years. The ministry said Gen. Valery Gerasimov, the chief of the General Staff of the Russian armed forces, had a phone call March 3 with Czech Army Gen. Petr Pavel, the chairman of NATO’s Military Committee. The ministry said Gerasimov and Pavel discussed prevention of incidents, prospects for restoring military cooperation and acute security issues. Also last week British Vice Chief of the Defense Staff Gen. Gordon Messenger met Gen. Alexander Zhuravlev, the deputy chief of Russia's general staff, and discussed how best to prevent accidents and other incidents involving the two countries' militaries. (AP, 03.03.17, Reuters, 02.28.17)
• “The threat from Russia is that through opportunism and mistakes and a lack of clarity regarding our deterrence, we find ourselves sliding into an unwanted conflict which has existential implications,” said Sir Adrian Bradshaw, a British general and NATO’s deputy supreme allied commander. (Financial Times, 03.02.17)

Arming and training of Ukrainian forces by Western countries:

• U.S. lawmakers on March 2 unveiled a bill to keep the U.S. armed forces operating through September. Some $150 million is allotted in the bill to supply Ukraine with lethal and nonlethal aid to counter Russian aggression. This would constitute only half of what the U.S. allocated for such aid in 2016. (VOA, 03.02.17, Gazeta.ru, 03.03.17)
  • The U.S. budget director has confirmed that the Trump administration will propose "fairly dramatic" reductions in U.S. foreign aid when it submits its fiscal 2018 budget later this month. (RFE/RL, 03.05.17)
• Canada’s government is extending a Canadian Armed Forces deployment in war-ravaged Ukraine by two years, a move that Moscow decried as a counterproductive “military venture” it predicted would hinder chances for peace. (Globe and Mail, 03.06.17)

Strategies and actions recommended:

• No significant developments.

Analysis:

• Bloomberg columnist Leonid Bershidsky writes that the remaining economic ties between Russia and Ukraine, including the arrangement for Ukrainian companies to operate in the rebel-held east, have been the only obstacles to an all-out war and now these ties have come under threat. (Bloomberg, 03.02.17
• The Trump administration's turn toward a surprisingly tough stance on Russia has generated applause in Europe, and alarm in Moscow. European diplomats said they have been assured that the U.S. won't sell out Eastern Europe and Ukraine to Russia by recognizing Moscow's greater sphere of influence. “We have made a lot of progress on developing a unified position," said a senior European diplomat who had consultations in Washington last week. "No one came away with the idea that the U.S. was striking some grand bargain with Russia." (Wall Street Journal, 03.06.17)

Other important news:

• Russia on March 7 rejected allegations that it sponsors terrorism by funneling arms and money to separatist rebels in eastern Ukraine and is responsible for discriminating against ethnic groups in Crimea. Roman Kolodkin, the legal director of Russia’s Foreign Ministry, said that a case filed by Ukraine at the International Court of Justice making the allegations is an attempt to draw the court into ruling on “issues between Ukraine and Russia that are clearly beyond the court’s jurisdiction in this case.” Kiev wants the world court to rule that Russia is breaching treaties on terrorist financing and racial discrimination. Ukraine also wants the court to order Russia to pay reparations for the downing of Malaysia Airlines Flight 17. (AP, 03.07.17)
• Ukraine’s deputy foreign minister on March 6 accused Russia of financing terrorism by shipping arms, ammunition and funds to separatist rebels in eastern Ukraine and of discriminating against non-Russians in the annexed Crimean Peninsula. (AP, 03.06.17)
• A new U.S. State Department report says human rights in Russia continue to be "significantly and negatively" affected by Moscow's "purported annexation" of Ukraine's Crimea peninsula and its support for separatist fighters in eastern Ukraine. (RFE/RL, 03.03.17)
• The annexation of Crimea is one of the greatest sources of national pride for ordinary Russians, according to a survey by the independent Levada Center pollster. Some 43% of Russians said they took pride in "returning Crimea to Russia," making it Russia's second most celebrated achievement. It was beaten only by Russia's victory in World War II, which was named as a source of pride by 83% of respondents. (The Moscow Times, 03.01.17)
• Many Russian banks are not yet accepting passports issued by Ukraine’s breakaway republics Donetsk and Lugansk, despite an order from Russian President Vladimir Putin that officials recognize the documents, according to the RBC news agency. On March 7 Russia’s largest state-owned bank, Sberbank, told Reuters it would comply with the president’s order; Ukraine’s central bank responded by saying it would likely recommend sanctions on Sberbank’s local subsidiary over the decision. (The Moscow Times, 03.07.17, Reuters, 03.07.17)
• Ukrainian Jews protested the attendance at an international symposium on the Holocaust by state historian Volodymyr Vyatrovych who praised a Nazi collaborator whose troops killed Jews. (JTA, 03.07.17)
• On an official visit to Kiev, British Foreign Secretary Boris Johnson joined his Ukrainian counterpart in condemning the separatists' latest acts. (Reuters, 03.01.17)
• Negotiators for the European Parliament and European Union member states have reached a deal to allow Ukrainian citizens to enter Schengen-zone countries without a visa. (RFE/RL, 03.01.17)
• The International Monetary Fund said March 4 that it had reached an agreement with Ukraine on an updated memorandum under a $17.5 billion program, paving the way for its board to consider the disbursement of a fourth loan tranche later in March. (Reuters, 03.04.17)
• A Kiev court arrested State Fiscal Service chief Roman Nasirov for two months and set bail at 100 million hryvnas ($3.7 million) early on March 7, as hundreds of protesters stood outside so the suspect could not leave. The National Anticorruption Bureau suspects the 38-year-old in the fraud and embezzlement of some $100 million in tax revenues from natural-gas delivery contracts. (RFE/RL, 03.06.17, CBC, 03.06.17, Kyiv Post, 03.07.17)