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Ukraine Update: War a Shot Away, Ports Eyed

The President of Ukraine, Petro Poroshenko, on Saturday, August 30, after the meeting with Vladimir Putin, made a very troubling statement: "Ukraine is now at the crossroad." Just in a week or two, we will see if there will be a full-scale war with Russia or if Ukraine will give up.

The Russian regular troops have invaded Ukraine and begun fighting with the Ukrainian troops. The Russian army already shells Ukrainian cities, Russian attackers bomb the Ukrainian troops, and the Russian navy attacks the Ukrainian fleet. Putin threatens to expand the invasion to the full extent if Ukraine will not come to his demands. And it seems that his demands, among other things, include the legitimization of the rebels and the widest autonomy for the rebellious regions. It is autonomy that he is demanding, not their independence. The autonomy is the key: These rebellious regions will have the right to veto all the decisions of the Ukrainian power like joining the EU, joining NATO, etc. At the same time, such autonomy puts off from Russia the obligation to rebuild and support these formally Ukrainian republics.

There are first signals that Poroshenko is inclined to start negotiations. It is impossible to predict the reaction of the Ukrainian people to such political movement. It is very likely that there will be another revolution, chaos, and the loss of the independence after Russia will have occupied Ukraine “to restore peace and order.”

Either option – war or ceasing fire and legitimization of rebels - is bad. In case of the expansion of war, it is impossible to predict its outcome, where the Russian army will have been stopped if stopped at all. It will be impossible even to assess the possible damage to the Ukrainian economy in general and to agriculture in particular.

The legitimization of rebels creates a very dangerous precedent: Russia will further exploit these tactics to destabilize the situation in other regions of Ukraine. Military forces concentrated in the already controlled regions will start another war.

The first option leads to the final isolation of Russia in the world, regardless of the war outcome for Ukraine. The second one, though slower, may be more preferable for Russia since it actually legalizes all its earlier actions. At the same time, this option gives the opportunity for the EU and the USA to refrain from the introduction of the further sanctions that may also aggravate their economies in return. There is evidence that the European political leaders put the extreme pressure on the Ukrainian power to choose the truce.

Under this second option, Ukraine still will be able to finish the harvesting season and export grain, oilseeds, and vegetable oils at least this marketing year. But it also puts a big question mark on the next year, especially in the regions neighboring Russia and legitimized rebellious regions. Because Russia badly needs the corridor to Crimea and Transnistria, as well as military industrial regions such as Dniepropetrovsk, Zaporizhia, and Mykolaiv, all Ukrainian ports on the Black Sea and the capital of Ukraine, Kiev, as the symbol of victory.

Either way, Ukraine is facing hard times.

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