The Cable

How the Cease-Fire With Russia Might Save Ukraine

The U.S.- backed cease-fire deal between Russia and Ukraine is widely seen as a victory for Moscow. But it might be just what Kiev needs to stave off economic disaster.

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The U.S.-endorsed cease-fire between Russia and Ukraine is widely viewed as a win for Russian President Vladimir Putin. But it might be exactly what Ukraine needs to prevent an economic collapse.

The deal forces Ukrainian President Petro Poroshenko to acknowledge gains made by pro-Russian separatists. Ultimately, Putin is the only one who can stop the flow of Russian weapons and soldiers across the border with Ukraine, a key component of the deal. And critics in the United States continue to insist military assistance is needed to deter Putin.

But it also allows Ukraine to receive a cash injection that is needed to save its failing economy. Ukraine’s currency, the hryvnia, is tanking — it plummeted 50 percent last week, causing a spike in inflation. Military operations are draining the country’s coffers. Foreign investors, weary of uncertainty, are staying away. Trade with Russia — its largest partner — has dried up, strangling Ukraine’s industrial base.

Sean Kay, a professor in the department of politics and government at Ohio Wesleyan University, told Foreign Policy the debate over whether the U.S. should send weapons is obscuring the International Monetary Fund’s $17.5 billion lifeline to Ukraine that was announced soon after the cease-fire was signed. Once other donors kick in, Ukraine is set to get about $40 billion. Right now, the country of some 45 million people only has just $6 billion in currency reserves, down 15 percent in the last month. By comparison, Spain, which has a population of 47 million, has $51 billion in reserves.

“Ukraine may have needed this deal as much as anyone,” Kay said. The IMF “was reticent to make that commitment without the prospect of a stable window, and Ukraine probably felt a pretty significant need to create stability.”

“For all the bluster about sending weapons, I don’t hear the same people making the argument that we should be sending a big check,” he said.

For now, Secretary of State John Kerry’s backing of the deal takes weapons off the table. It also means the momentum to send arms to Ukraine building over the last two weeks has crashed.

Lawmakers in both parties who favored more military aid to Ukraine expressed skepticism of Russia’s commitment to the deal.

“We hope for peaceful resolution from this agreement, but we must also be mindful of Russia’s historical pattern of cease-fire violations,” Rep. Marcy Kaptur (D-Ohio) told Foreign Policy.

Kaptur is among 30 lawmakers who signed a recent letter to Obama calling for an increase in military aid to Ukraine.

Sen. John McCain, one of Congress’s strongest hawks on military assistance to Ukraine, said the specter of sending lethal aid should continue to be strongly considered.

“Some will use this deal as excuse to delay sending defensive lethal assistance to Ukraine. But as long as Vladimir Putin negotiates peace while sending in tanks, that need still exists,” McCain said.

Andrew Dobriansky is the spokesman for the Ukrainian Congress Committee of America, a group that advocates for Ukraine in the United States. He dismissed the deal.

“We know it’s not worth the paper it’s written on,” Dobriansky told Foreign Policy. “We need defensive measures. Seventy percent of casualties are coming from light rocket and heavy artillery attacks. We could cut that down if we had early wanting radar systems and drones.”

Photo credit: Sergey Gapon/Getty Images

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