Ukraine in Focus

Ukraine in Focus provides commentary on the conflict and outlooks for various facets of the crisis. GIS Founder and Chairman Prince Michael of Liechtenstein explores the long-term view in detailed scenarios for Europe and beyond.

December 1, 2022

Ukraine’s flourishing IT sector

Prince Michael of Liechtenstein

Ukraine’s brave resistance to Russia’s invasion is giving military historians plenty to study about modern warfare. Besides old-fashioned trench fighting, this conflict has been a hi-tech showcase of armed and surveillance drones, GPS-guided missiles and sharp satellite images of enemy positions.

Combatants on both sides, of course, engage in destructive cyberattacks and hacking of each other.

But there are amazingly positive innovations taking place, including a Ukrainian one that makes the lives of gravely wounded soldiers and other amputees much better. Esper Bionics has taken advantage of advances in artificial intelligence and digital signaling technology to bring the bionic age closer. Its prosthetic hand promises greater and more intuitive use and has been hailed by Time magazine as one of the top 100 innovations of 2022. The company promotes its product as “the first prosthesis that improves and gains abilities over time.”

The battlefield is not the only area showcasing cutting-edge technology. One of the really bright spots – and one of the few sectors growing despite war – is the nation’s information technology sector. It has helped keep the country running.

The winter will provide the biggest test as both temperatures and Russian missiles drop. Keeping on the lights, the heat, the water and the internet will tax Ukraine’s professionals, including IT specialists, as well as the nation’s Western supporters. Failure could open the floodgates to a new wave of refugees to Europe – on top of the nearly 8 million people so far – if Ukraine is left freezing in the dark.

Amid the death, destruction and distraction, it is easy to overlook how the IT sector in Ukraine has grown – from $5 billion in sales and services in 2020 to $6.8 billion in 2021 and an expected $8 billion in 2022. That could make the sector worth 6 percent of what will be an admittedly shrunken gross domestic product this year of as little as $130 billion, way below the record $200 billion in 2021. IT still lags behind traditional sectors such as agriculture, steel and manufacturing, but maybe not for long.

Some numbers, according to the IT Ukraine Association: 300,000 employees, nearly 20,000 registered legal entities and a survey showing 54 percent of high school students want to join the sector. More than 80 percent of the companies have fewer than 80 employees, according to the association. And another bright spot showing Ukraine’s integration with the West: 80 percent of tech workers have an intermediate or higher command of the English language. These are well-paying jobs, with project managers commanding roughly $4,000 monthly – more than four times the nation’s average salary. One study found the total aggregate value of Ukrainian start-ups (not only in the IT sphere) is $23 billion. Despite the conflict, investment and venture capital are flowing into the sector.

The education component is likewise strong. Some 150 institutions offer IT bachelor’s degrees. The capital of Kyiv drives much of the industry, but strong regional anchors have developed in other major population centers such as Kharkiv, Dnipro, Odesa and Lviv. Often, educational institutions and companies form clusters to ensure that the training provided is what the private sector wants and needs.

More than just a good way to make a living, tech is clearly the direction of Ukraine’s future military and civilian economy. The war is only accelerating this trend, as Ukrainians are forced to rethink and retool everything, despite Russian President Vladimir Putin’s attempts to drag the nation back to the Soviet past.

November 25, 2022

Understanding Polish support for Ukraine

Prince Michael of Liechtenstein

On November 15, the global spotlight turned on Poland when a stray rocket exploded in a village in the country’s east, killing two. For hours, the world stood on edge, waiting to hear if the missile had been fired by Russian forces, and if Warsaw would invoke NATO Article 5, forcing a response from the world’s most powerful military alliance.

As it turned out, Polish and American officials said that the rocket had been launched by Ukrainian air defenses, meant to take out one of the many Russian missiles fired against Ukrainian civilian targets that day. Instead of blaming their neighbors for carelessness or reconsidering their strong backing for Kyiv, Poles laid the tragedy directly at the feet of Moscow. In fact, they saw in it a reason to increase support for Ukraine and its military, even calling for more modern, accurate air-defense systems to be supplied.

The reaction was emblematic of Poland’s stance throughout the entirety of Moscow’s aggression against Ukraine. As refugees flooded across Poland’s eastern border, individuals, religious and social groups, and municipal organizations rushed to find food and shelter for Ukrainians escaping the war. It is estimated that about one in every 15 Poles – some 2.6 million – opened their homes to Ukrainians as they tried to figure out how they would live, where they would settle, what jobs they could take up and where they could send their children to school.

Militarily, Poland has also proven one of Ukraine’s biggest supporters. According to defense analysis firm Oryx, Poland has supplied “well over 300 armored fighting vehicles (AFVs), including over 230 tanks and some 110 pieces of self-propelled guns and multiple rocket launchers, amongst a host of other weapon types.” By value, that makes Poland the third-largest supplier of arms to Ukraine since the war began, behind the United States and the United Kingdom.

All told, Poland has devoted some 0.6 percent of its gross domestic product to financial, humanitarian or military aid to Ukraine – again third, behind the much smaller Latvia and Estonia. Several civil society groups continue to send aid. Poland was one of several countries to crowdfund a Turkish Bayraktar drone for its eastern neighbor, while private citizens continue to lead impactful initiatives. One of these, led by a Polish Twitter personality, has helped deliver nearly 30 vehicles so far to the front lines – some paid for by prominent politicians and businesspeople like former Foreign Minister Radoslaw Sikorski or InPost CEO Rafal Brzoska.

To some, the reaction was unsurprising since Moscow has long painted Poland and other Central and Eastern European countries as “Russophobic.” And indeed, while that may be going too far, all of these countries suffered under Soviet brutality in living memory.

Over the centuries Poland has had varying relations with Ukraine. When it comes to more recent history, the ghosts of World War II still haunt this region of the world, perhaps more than any other. Borders were changed radically, and populations were resettled.

Over the last two decades especially, as Poland has grown rich and Ukraine wallowed in corruption, political infighting and then the 2014 war with Russia, Ukrainians have increasingly immigrated into Poland. The influx had gotten so large that anti-Ukrainian feeling had begun bubbling up. The slogan “Stop the Ukrainization of Poland” grew in popularity in nationalist circles.

Today, that slogan can still be heard, but it is mostly ridiculed and ignored. But why, especially if Poland and Ukraine share such a fraught history?

The reason is that Poles see much of themselves in Ukrainians. They identify with their fight for freedom and self-determination, and see a mirror of their own struggle against Russia in the 1980s. The countries have similar population sizes – Poland has 38 million people, Ukraine has 43 million – a history of being invaded and subjugated by neighbors, and a similar language. Studies put Ukrainian lexically closer to Polish than Russian.

When asking what “could have been” after Poland’s democratic transition, academics have often compared it with Ukraine. Poland chose “shock therapy” capitalist market economic reforms and pushed hard for European Union and NATO membership. Ukraine, whose gross domestic product was similar to Poland’s in 1989, did none of those things and grew far less quickly.

Now Poles see a chance for their neighbors to repeat – or even best – their successes, if they can manage to gain the same economic, political and security advantages. That would be a boon to Poland as well, providing a trading partner with enormous potential and a defensive partner with a modern, battle-tested military. It would also prove yet again that the Central and Eastern European model of reform and integration with the West can deliver security and prosperity to millions in a relatively short period of time.

Poles have been hailed for their generosity in this conflict, but they know that Ukrainians are the ones who have been far more generous – giving the lives of their people to defend Europe from a Russia that would surely not stop if it were to win this war. They realize that supporting Ukraine is not only a moral imperative but a practical one because they can deeply relate to Ukrainians’ situation and suspect that if it were not for them, Poland could be next.

November 9, 2022

The path to peace

Prince Michael of Liechtenstein

While Russia and Ukraine are still far apart in their conditions for ending the war, at least both sides have defined their positions recently. While their stances are impossible to reconcile now, they give the outside world some basis to push for direct negotiations that may yield compromise and ultimately peace.

In recent days, China, Turkey, the United States and others have weighed in with their views.

China drew a firm stance against the use of any nuclear weapons, taking direct aim at Russian President Vladimir Putin’s veiled threats of nuclear blackmail. “The international community should … jointly oppose the use or threats to use nuclear weapons, advocate that nuclear weapons must not be used and nuclear wars must not be fought, in order to prevent a nuclear crisis in Eurasia,” President Xi Jinping said in Beijing after meeting on November 4 with German Chancellor Olaf Scholz.

Mr. Xi’s clear statement may help ease global fears and sends a signal to his Russian counterpart that he would face severe consequences for using nuclear weapons.

Turkey gave a master class on how to convince Mr. Putin to back down. After Russia announced on October 29 that it was pulling out of an agreement to ensure the safe passage of Ukrainian grain to world markets out of three ports, President Recep Tayyip Erdogan called the Kremlin leader’s bluff. Turkey, which has military superiority in the Black Sea, decided that the grain convoys would go ahead with or without Russia’s permission – daring Mr. Putin to attack. No attack came. Instead, Russia quickly rejoined the agreement on November 2.

The United States let it be known that it is talking privately to Kremlin leaders to contain the conflict and, presumably, feel out possible compromises. An unannounced visit to Kyiv by U.S. National Security Advisor Jake Sullivan was followed by news reports on November 5 that American officials are privately encouraging President Volodymyr Zelenskiy to show more willingness to negotiate.

At this stage, however, the desire for peace is not shared by the instigator of the war nor the leader of the defending country under attack.

Since the invasion on February 24, Mr. Putin has announced that four regions of Ukraine are now a part of Russia and there can be no compromise or negotiations over their status, nor over the fate of illegally annexed Crimea, seized in 2014. This statement has been followed by mass bombings of Ukraine’s energy infrastructure, in a bid to create a new refugee outflow by leaving Ukrainians freezing in the dark in winter without water. Mr. Putin, of course, has made it clear repeatedly for years that he does not regard Ukraine as a real country.

Mr. Zelenskiy followed by saying there would be no negotiations with Russia as long as Mr. Putin is in power, a response to Mr. Putin’s repeated refusals to talk to his Ukrainian counterpart, who he dismisses as a Western puppet.

Ukrainians overwhelmingly – nearly 90 percent all over the country – want to fight to regain all of their territories seized by Russia. Living under Russian occupation is simply not an option for most Ukrainians. Wartime atrocities are only hardening their resolve.

After Mr. Sullivan’s visit, President Zelenskiy presented Russia with five conditions. They are: Restoring territorial integrity, respecting the United Nations charter, paying damages caused by the war, punishing each war criminal and guaranteeing an invasion won’t happen again.

These are understandable conditions. They may be reasonable and just, but that doesn’t make them realistic. So far, Russia has shown no willingness to engage in real negotiations, stop fighting or withdraw its forces. On the contrary, it continues to mobilize new troops to send to Ukraine as well as buy missiles and drones from the rogue regimes in Iran and perhaps North Korea.

The West, meanwhile, helps Ukraine, but just enough to create a military stalemate, rather than enough to expel the Russian forces. This dithering only prolongs the war, delays the prospects for negotiations and runs the risk of creating Western fatigue. If Russia destroys Ukraine or keeps territories that don’t belong to it, the costs and consequences for global security will be infinitely higher than if the West simply provided Ukraine with enough now to prevail against the unprovoked aggression.

Both nations need outside military help, Ukraine especially, but also now Russia. This doesn’t make either nation less sovereign, no more so than Europe’s dependency on American military might or NATO for defense makes its nations less sovereign.

But dependency does create leverage for China, Turkey, the United States and Europe to pressure both sides to find an acceptable solution to end the fighting and, just as importantly, guarantee a lasting peace.

In the grain agreement, Turkey’s Erdogan has shown the world how to work with both nations. “Personal relationships are the most important and productive steps in diplomacy,” Mr. Erdogan said, noting his frequent talks with Mr. Putin and Mr. Zelenskiy.

Hopefully, these lessons will be learned and applied to end this ghastly conflict.

October 27, 2022

The importance of propaganda

Prince Michael of Liechtenstein

Propaganda is as old as war itself. Reinforcing the public’s determination to endure sacrifice to maintain the war effort, undermining the enemy’s resolve and convincing neighbors and allies to dedicate resources to your aid are critical in achieving victory. Leaders have known this since at least Darius I of Persia commissioned the Behistun Inscription in the 5th century BCE.

Over the centuries, propaganda has grown more sophisticated, but has also changed to match the zeitgeist and the forms of media people consumed. In the Middle Ages, songs of knights’ exploits in foreign wars inspired awe among the populace. Later, literature played an ever-larger role. One example is Lord Byron’s writings on his experiences in the Greek War of Independence in the 1820s, which whipped up pro-Greek feeling in the West.

In the 20th century, radio, film and television were crucial vehicles for propaganda – the American public would watch war reels at the movie theaters or listen to President Roosevelt’s fireside chats. During the Cold War and the War on Terror, leaders would make their case in prime-time speeches, and defense departments in countries around the world would fund TV series and movies showing their soldiers as heroic and their fight as just.

Today, it is clear that propaganda has become an indispensable part of the war effort on all sides, and may be even more important than ever before. Television still plays a key role in getting the message out – especially in Russia, from which much of President Vladimir Putin’s base receives its information. The nightly political programs are full of fabrications about Nazi Ukrainians and misinterpretations of history, meant to keep everyday Russians convinced that their western neighbor must be brought to heel. In that, it has largely worked.

Of course, the internet plays the biggest role. For the more technology-savvy Russians, Telegram is the social media site used to get updates on the conflict. Facebook, Twitter and other sites also have their share of Russian propaganda.

And while all of this may be effective with the Russian public, it has gained the Kremlin little traction among the international community. If countries are staying on Russia’s side or remaining neutral, it is more out of self-interest than a belief that its brutal attack on Ukraine is somehow justified.

On the other hand, Ukraine has proven masterful at using 21st-century tools to its advantage. The same genocidal ravings that are broadcast on nightly television to the Russian public are plastered across YouTube and Twitter, with commentary about just how unhinged such thinking is. A “Ukrainian Meme Force” even sprung up, disseminating the latest GIFs or images reminding the world that Ukraine was unjustly attacked, and that it is fighting back bravely.

Celebrities such as Mark Hamill and Arnold Schwarzenegger have voiced their backing for Ukraine, which Kyiv’s supporters have amplified across the internet. That has kept the war on the minds of many in the West, whose attention might otherwise have turned to high inflation or the latest domestic political scandal.

One particularly potent grassroots initiative has been NAFO – short for the North Atlantic Fella Organization – a group of people who use Shiba Inu faces in their profile pictures and repeat Kyiv talking points or flood pro-Kremlin posts with ridicule. The group has been so effective that some of its online “victims” accuse it of being funded by the CIA.

Without such efforts, it is worth wondering whether the resolve of the United States, the United Kingdom and Ukraine’s other Western allies would have remained so strong. Would Kyiv have received the high-level intelligence and advanced weaponry it has used to turn the tide? Or would publics have become so overwhelmed by bothsidesism that leaders would have found maintaining such support politically unfeasible?

These are questions worth asking as we watch the war unfold, and as we think about the conflicts that are bound to break out in the future.

October 20, 2022

Ukraine’s indomitable spirit keeps the economy going

Prince Michael of Liechtenstein

Considering Ukraine has been through eight months of war, its economy is holding up surprisingly well. The reason? Ukrainians are showing the same resiliency, innovation and adaptability in saving their livelihoods that they are in repelling Russia’s invasion. Western assistance also helps.

But let us not forget that huge damage is being done. Thousands have been killed and wounded. A big part of the labor force is tied up in fighting the war or living abroad as refugees. Infrastructure, factories and housing have been destroyed in many cities. The situation is critical.

Nevertheless, Ukrainians have been circulating videos recently of how quickly they are repairing buildings, roads and other infrastructure in the wake of bomb strikes. After a Russian missile left a giant crater in Kyiv’s Shevchenko Park, children were playing in it the next day. Optimism also prevails in the established business community, along with some fresh investment.

A recent survey by the American Chamber of Commerce in Ukraine found more than three-quarters of members believe the war will end next year. More than 90 percent believe Ukraine will win – meaning recover all or most of the territories seized by Russia. These entrepreneurs are in Ukraine for the long haul. Almost all (98 percent) businesses plan to stay in Ukraine next year. Only 22 percent think that the postwar recovery will be completed within five years. Other findings: 45 percent forecast an increase in revenue, 42 percent think the economy will grow and 20 percent even plan to increase their headcount. The full results are here.

It is not only bomb damage that Ukrainians are busy repairing. While still below prewar levels, economic activity is increasing, and in a reasonably balanced way, with imports at $4.5 billion and exports at $4.1 billion in September. Ukraine had $68 billion in exports in 2021. The Economist even took notice, writing that Ukraine’s economy “seems to be growing again” after getting knocked down by Russia’s full-scale invasion in February.

While the situation is tenuous, three of Ukraine’s brightest sectors are becoming better known – tech, agriculture and, more broadly, infrastructure. In each, there are positive developments.

Tech

Horizon Capital, a private equity firm with $1.2 billion in assets under management, has raised 50 percent of a new $250 million fund aimed at fast-growing tech companies and export-oriented businesses. Capital also continues to flow to Ukraine’s start-ups, which have spawned many prominent businesses such as Grammarly and Gitlab. Last month, FF Venture Capital, a New York-based early-stage investor in Ukraine, announced it had raised $30 million. Before the war, Ukraine had 200,000 information technology workers, exported $5 billion in services and, by 2024, the IT sector had been expected to reach $17 billion a year in revenue – thanks to tax incentives, an educated workforce and an influx of specialists from Russia and Belarus.

Mykhailo Fedorov, Ukraine’s minister for digital transformation, is an up-and-coming young leader who has shifted many government services from hidebound Soviet bureaucracy to sleek digital – reducing chances for corruption along the way. He also secured Elon Musk’s Starlink satellite internet service early in the war, assuring that vital military and other communications would not be interrupted. Mr. Fedorov represents the hope for a future in which Ukraine shakes off its outdated and oversized bureaucracy in all areas.

Agriculture

Agriculture is driving much of the rebound. Since a Turkish-brokered agreement in August, Russia has stopped blocking Ukraine’s Black Sea export routes in three ports long enough for 345 ships with nearly 8 million tons of grain to get to market, helping to ease food inflation. The numbers grow daily. Ukraine hopes to renew the agreement – set to expire on November 22 – for another year and include a fourth port, the one in southern Mykolaiv.

Ukraine’s agricultural production is important to the nation and the global food supply. The country’s territory consists mostly of arable land, including a good share of the world’s highly fertile black soil. While productive, Ukraine has yet to unlock its true potential. It is gradually lifting a ban on the buying and selling of agricultural land, removing a big obstacle to increased investment.

In 2021, agriculture accounted for 44 percent of Ukraine’s exports and 10 percent of its gross domestic product. It is the leading exporter of sunflower oil – storage tanks for which have been a recent target of Russian attacks. It is also among the top exporters of wheat, barley, corn and rapeseed. Estimates vary, but Ukraine helps feed up to 400 million people. Still, the war has cut harvests because of Russian seizure of farmland, inflation and supply-chain disruptions.

Infrastructure

Ignoring the devastation being inflicted by Russia’s war, infrastructure – defined broadly to include energy, transportation and communications – is another bright spot.

In energy alone, Ukraine did not join the rush in Germany and elsewhere to dismantle its nuclear power plants. Nuclear energy generates about 50 percent of the nation’s electricity. Ukraine had also been moving steadily closer to its goal of getting 25 percent of its energy from renewable sources by 2035. It has switched to the European power grid away from the Soviet era one, a change that will force overdue modernizations. Until recently, Ukraine had been an exporter to Europe of cheap electricity, generating $150 million in revenue per month. The nation also has vast untapped oil and gas deposits.

The infrastructure is undergoing a major revamp as well. New border crossing points are going up on its western borders with European Union nations, particularly Poland, to ease current bottlenecks and reflect the EU’s status as Ukraine’s top trade partner, displacing Russia. Railway connections are also going to be gradually resized to meet EU dimensions. Before the war, the country had embarked on a massive road-building program. That network, and so much more, will have to be rebuilt after the war. Better connections with the West will be vital to enhancing Ukraine’s status as a manufacturing hub. If there is such a thing as a silver lining in war, it is that Ukraine can finally modernize its archaic Soviet-era infrastructure and housing.

Other innovators

But there are other interesting economic players. Motor Sich, located in the embattled southeastern provincial capital of Zaporizhzhia, is one of the leading manufacturers of aircraft engines and a repair center, with a highly skilled workforce. Unfortunately, the Russians shelled the plant. Azovstal, one of Europe’s largest steelmakers, was destroyed – but the know-how remains. Also, in nearby Enerhodar, is Europe’s most powerful nuclear power plant, currently hijacked by Russia.

Russia’s aim now is to destroy as much as possible. The hardships for Ukrainians are enormous. Ukraine will continue to need strong help, but its determination inspires hope.

October 14, 2022

Positions hardening

Prince Michael of Liechtenstein

A mix of conciliatory messages aimed at Russian President Vladimir Putin came recently from the United States and especially Turkey – and all for naught.

The Russian leader rebuffed these potential openings for peace, instead unleashing missiles and attack drones on at least 10 Ukrainian cities on October 10. Combined with previous assaults on the southeastern city of Zaporizhzhia, the explosions in recent days killed three dozen civilians and hit energy infrastructure, including in the capital of Kyiv.

Mr. Putin ordered the attacks apparently in retaliation for the October 8 explosion that damaged the Kerch Strait Bridge, connecting Russia to the Crimean Peninsula. Mr. Putin blamed the bridge attack on Ukraine. “Strikes were carried out with high-precision weapons on the energy, military and communication infrastructure,” the Russian president said. “In case of continuation of terrorist acts on our territory, the responses will correspond to the level of threats.”

The attacks came after hardliners in Russia called on the military to reverse battlefield losses and take a tougher line with Kyiv. “Ukraine as a nation should not exist,” said Andrey Sidorov, deputy dean of world politics at Moscow State University, in a sentiment that is shared by many in Russia.

Any hopes for a settlement were dashed even more completely with Mr. Putin’s appointment of General Sergei Surovikin to rescue the faltering war. Gen. Surovikin has a reputation for cruelty against civilians in campaigns in Chechnya and Syria. 

All of these developments mean that recent peace overtures will soon be forgotten, if they have not been already.

Even the strand of hope presented by Ibrahim Kalin, a spokesperson for Turkish President Recep Tayyip Erdogan, who told CNN that Mr. Putin “wants to have a new grand bargain, a new deal with the West” will not make a change. The positions in the West hardened and concessions are rejected. 

The October strikes, particularly in the heart of Kyiv, threaten to further isolate the Kremlin leader. Even China and India, both fence-sitters in this war, called for de-escalation. Western allies may now be more likely to start providing the longer-range missiles, modern air defense systems and fighter jets that Ukraine has been seeking from the start. Germany and the U.S. both have pledged deliveries of newer air defense systems soon.

In Kyiv alone, bombs hit the German consulate and European Union Advisory Mission, a children’s playground, Taras Shevchenko National University, the National Philharmonic, the Kyiv City Teacher’s House, a popular pedestrian bridge overlooking the Dnipro River and a science library. A missile also struck the headquarters of DTEK, Ukraine’s largest private energy company.

The Russian leadership has frequently miscalculated in this war and appears to have done so again in trying to terrorize the nation into submission. Ukraine has vowed to fight on.

October 10, 2022

The next few weeks could be decisive

Prince Michael of Liechtenstein

It appears that the crisis surrounding the Ukraine war is reaching a critical stage. The Kremlin is using speeches to prepare the world for the possibility of a limited tactical nuclear strike. This certainly shows that the Russian leadership believes its chances of success in a conventional war are waning.

In the meantime, Russia unilaterally annexed four territories in Ukraine, a move that is not recognized internationally.

Nevertheless, the annexation means that from Russia’s point of view, if the Ukrainian armed forces were to cross into that territory, it would amount to an attack on Russia.

The point was brought home when the Kerch Strait Bridge, which links Russia with Crimea, was hit on the morning of October 8, ostensibly by Ukrainian forces. Russia responded on October 10 with a barrage of missiles and kamikaze drones across Ukraine, hitting energy infrastructure and civilian targets.

This will make it extremely difficult for Moscow to reach any compromise. Whether desperate or not, the annexation is a very definitive step by the Kremlin and a signal that it will not give in.

So far, Russia’s partial mobilization has been unsuccessful. In fact, the number of people leaving the country has sharply increased. This is bad news for Moscow.

China appears to be deeply disappointed with the Russian performance and has lost most of its willingness to support Russia. Furthermore, Russia’s influence in Central Asia is weakening. There, China seems to be winning.

The next few weeks could be decisive, with Russia wanting to show any sort of “success,” whatever that might mean.

A big question is whether the Kremlin might consider a smaller nuclear strike.

The prospects for negotiations appear to be dwindling. On October 4, Kyiv issued a decree banning talks with Russia.

September 22, 2022

Educating Ukrainian refugees

Prince Michael of Liechtenstein 

Ukrainian students, from kindergarten through high school, are learning lessons in life that no young people should have to face – those of war, death and displacement along with the subjects they are studying from textbooks and in classrooms. The war’s dead include hundreds of children alone, a total that may end up in the thousands once a full account is made. 

With the traditional September start to a new school year, it is worth checking how many schoolchildren went back to Ukrainian classrooms and how many remain abroad. This provides another snapshot of how Ukrainians think the war is going. 

By conservative estimates, 500,000 Ukrainian students are enrolled in schools in the European Union, including 185,000 in Poland and another 150,000 in Germany. UNICEF puts the figure much higher, perhaps unrealistically so, estimating that one-third – 2.2 million out of 6.6 million school-age children in Ukraine – are abroad. One explanation for some of the discrepancy in numbers is that Ukrainian schoolchildren now in other nations continue to attend their home schools in Ukraine remotely. And, while most refugees went to an EU country, thousands of families ended up in Russia – forcibly or willingly. 

Also, while getting in and out of Ukraine now is time-consuming (no air travel since the start of the war), it is relatively easy by bus, train or car. So, the number of Ukrainian refugees is literally a moving target. It ebbs and flows with the state of the war, which has turned in Ukraine’s favor in the last weeks with an eastern counteroffensive. 

Whatever the exact figure, a sizeable contingent of Ukrainian schoolchildren is studying abroad. Many of them face a steep curve in learning a new language and new ways far from the homes they left behind. 

In Ukraine, the education ministry says 2,400 schools have been damaged, including 270 institutions completely destroyed, in the hostilities. That’s up to 20 percent of all schools. For the vast majority of students who stayed in Ukraine, online learning and schools equipped with bomb shelters are standard in more dangerous areas. The education ministry says that 12,900 institutions are operating – 5,497 remotely, 3,867 in hybrid mode and 3,500 offline. At the university level, thousands of young Ukrainian soldiers are postponing their education to defend the nation. Men from 18 to 60 also still face a general ban on traveling abroad. 

It is an enormous challenge and expense to educate students in the best of times. These are far from those times, with students in Ukraine constantly facing the distractions of war, including regular air raid sirens. Abroad, host governments have increased their education spending substantially to accommodate these refugees. 

Wherever they are studying, the hope is that these young Ukrainians will learn critical thinking skills that allow them to discern the truth. In history alone, there are diametrically opposing lessons in Russian vs. Ukrainian textbooks, for example. 

This war is dooming Russia’s attempt to bring Ukraine back into its fold for generations, if not forever. Ukrainian students now in Polish, Dutch and German classrooms are becoming more worldly in nations that are noticeably more prosperous than their homeland. Amid the positive lessons, they will unlikely forget why they were forced from their homes in the first place and where the blame lies. 

September 9, 2022

Ukraine seeks to establish a modern economy 

Prince Michael of Liechtenstein 

Ukrainians have surprised and impressed the world with their tenacity in their fight for independence and to regain territory taken by the Russian invaders. Obviously, Western support has been crucial. 

Perhaps they can mount an even more successful drive when it comes to creating a dynamic and modern economy after the war ends. It could become – depending on the strong willingness of the people, entrepreneurs and administration in Ukraine – a big success. 

That is the aim of the Ukrainian government’s global public relations campaign unveiled this week, along with a new website, called Advantage Ukraine. Its goal is to attract $400 billion in new foreign direct investment (FDI) and has even identified 500 projects in several key sectors. Ukrainian President Volodymyr Zelenskiy helped kick it off, and it is being highly advertised to financial centers. 

But finances are only one piece of the puzzle. FDI can trigger liquidity as initial capital. It is questionable, however, whether a government investment initiative is the right place to identify projects. Local entrepreneurship and dedicated infrastructure development is the key. If Ukraine manages to unleash this necessary driver, the capital will come. The main component will be a business-friendly framework, as well as a significant reduction of bureaucracy and state involvement in the economy.  

Ukraine’s advantages are numerous indeed. It is clearly an underperforming country, with annual economic output ranging from $150 billion to a peak of $200 billion last year. This is a small sum for a nation, one of Europe’s poorest, with more than 40 million people. But from agricultural production to forestry from digital innovation to machinery and engineering, Ukraine has a lot of underutilized human and natural capacity. Its climate, location, terrain and access to the Black Sea, make it ideal for many ventures in the above sectors but also in logistics (ports and rivers) and renewable energy. 

Ukraine has sizeable natural gas and oil reserves to be tapped. Perhaps agriculture is where the greatest potential lies. The nation, the size of France or Texas, is blessed with generous amounts of the world’s most fertile black soil, yet industry has not begun to tap the potential, particularly in processing more of the bountiful harvests into higher-value food products. However, quantities can also be increased.

The biggest factor is a well-trained and skilled workforce, especially in technology, mathematics and engineering.  

Before the war, Ukraine had carved out a niche as a manufacturing hub, with a highly skilled but modestly paid workforce. German and other car manufacturers years ago discovered the benefits. They created a cluster of businesses, mainly in western Ukraine, to assemble wiring and other components as part of the automobile supply chain. Ukraine is an outsourcing software hub. Information technology was expected to account for 10 percent of the nation’s gross domestic product (GDP). It is a leader in digital innovation.  

This extends to government services as intended by Mr. Zelenskiy’s “state in a smartphone” application that demolished layers of stultifying Soviet-leftover bureaucratic practices that had been increased by overregulation.

The present picture is not idyllic, however. 

Advantage Ukraine is only the latest government attempt to attract private investment, dating back to the collapse of the Soviet Union in 1991. They all founder for the same reasons: Spectacular corruption, no rule of law and overbearing government intrusion in the economy. Ukraine’s state budget routinely accounts for a third or more of the national GDP. The government budget is not high – only about $50 billion. The problem is that the economy is so small and private investment so weak. Oligarchs and other powerful interests had a habit of controlling access – often with official help – to key sectors such as energy, media and construction. Opaque government spending and favors, meanwhile, have routinely been sources of ill-gotten riches for insiders. 

The hope now is that Ukraine’s fight for survival will succeed and motivate its people to fearlessly demand less government, attack corruption and force greater accountability among its elected leaders. Besides war, Ukraine has fought three revolutions in as many decades to live in a civilized world. Its economy is moving not only to the West politically, but also to the west geographically. Since the war, hundreds of businesses have relocated from the more dangerous eastern regions and set up shop closer to European Union borders. 

We hope that the crisis brings Ukraine the ability to shed the limiting ghosts of the past and not fall into a new trap of overregulation. This would allow private capital to flow to investments in the country. Whether it will attract $400 billion in fresh investment is questionable and also secondary, but the emphasis on the private rather than public sector to lead a great rebuilding of the nation is the correct one. 

August 31, 2022

Calculating engagement in Ukraine

Prince Michael of Liechtenstein

So many Western leaders have repeated a phrase so often during Russia’s war in Ukraine that it has almost become a mantra: They regularly pledge to do “whatever it takes for as long as it takes” for Ukraine to prevail as an independent nation.

But what do the numbers really show about which governments are truly committed to helping Ukraine defend itself against Russia’s invasion and regain its territory, 20 percent of which is now controlled by Moscow?

Fortunately, the German-based Kiel Institute for the World Economy keeps a monthly scorecard of publicly disclosed assistance in its Ukraine Support Tracker. It is due for an update soon, but from January 24 until August 3 of this year, the analysis released on August 18 shows:

  • Unsurprisingly, the United States – with the world’s largest economy and military budget – is the clear leader in two of the three monitored forms of commitments, pledging 25 billion euros in military assistance and 9.2 billion euros in humanitarian aid, while coming in second place in financial aid with 10.3 billion euros.
  • No other nation even comes close. European Union institutions edged out the U.S. in financial aid commitments with 12.3 billion euros. In military pledges, the United Kingdom ranks a distant second place with 4 billion euros while Poland’s 1.8 billion euros easily beat the meager totals for Germany and France.

There are other ways to look at the numbers. But a general caveat must be stated: figures expressed in dollars or euros say little about the effectiveness of equipment bought or supplied. The essential point is whether the equipment is right for the job, and used properly:

  • In terms of share of the economy, the financial aid leaders are revealing. They all either were part of the Soviet Union (the three Baltic nations) or are on Russia’s border (Norway) or have a painful history of living under Moscow’s domination (Poland). Estonia and Latvia are the two leaders – tied for first with commitments of 0.8 percent of their gross domestic product to support Ukraine. Other nations are far behind.

Yet another way to look at the numbers is to compare the amounts of weapons promised with those actually delivered. After all, it is easy to talk big and do nothing, but which nations are doing the best at keeping their promises? Here the numbers reveal a different picture:

  • In absolute amount, the U.S. is the winner again – delivering more than 2 billion euros out of 8.6 billion pledged. But that amounts to only 24 percent of the commitment. Granted, this snapshot was taken before the U.S.’s most recent announcement on Ukrainian Independence Day (August 24) of another $3 billion in military aid, part of a $40 billion assistance package approved in May by Congress.
  • Only Poland and Estonia have delivered 100 percent of the weapons promised, while Germany comes in at 71 percent, ahead of the U.K.’s 67 percent.
  • Germany did score 100 percent in one category – budgetary support. It has delivered all of its pledged 1.3 billion euros. France is not among the leaders in any category. Paris offers only 230 million euros in military aid and 800 million in financial aid.

What should one conclude from these numbers?

Arguably, no nation – including the U.S. – is anywhere close to doing “whatever it takes” to help Ukraine win. It is too soon to judge whether countries will stay on Ukraine’s side “for as long as it takes” either.

But it is also clear that, without U.S. support, Ukraine’s military would either have had to fold a long time ago or its forces would be fighting a far tougher kind of war – possibly a guerrilla insurgency in urban areas with inferior weaponry against the much larger, better-armed invaders. Ukrainians have vowed to fight to the finish for their independence. Still, without Western support and weapons, the finish may have come already.

If Ukraine had to rely on the commitment level of Germany and France alone, two nations whose leaders consider themselves to be champions of EU values, Kyiv would be in big trouble today. It simply would not have the arsenal – particularly the long-range precision artillery, air defenses and intelligence capabilities – that have helped the nation fight off the Russian invasion this long.

With winter coming, Russia’s energy war against Europe is likely to intensify as its economy may shrink only 6 percent this year, evidence that Moscow is far from being crippled by Western sanctions.

Kyiv’s supporters will simply need to do more to help an independent Ukraine prevail. Unfortunately, however, some of the country’s representatives are showing a certain arrogance in their demands for support, which could be difficult for some people to understand and is counterproductive.

August 22, 2022

The Erdogan-Guterres team rides again

Prince Michael of Liechtenstein

If a Nobel Peace Prize existed for trying, then Recep Tayyip Erdogan and Antonio Guterres would be leading candidates for the honor.

The Turkish president and the Portuguese diplomat who heads the United Nations visited Volodymyr Zelenskiy on the Ukrainian president’s home turf in Lviv’s Potocki Palace on August 18.

This is the pair that brokered a partial lifting of Russia’s naval blockade in Ukraine’s Black Sea ports. Since the implementation of the deal started on August 1, at least 25 ships and 625,000 tons of grain have reached world markets. The trio talked about ways to expand the sea trade further. Before the war, Ukraine’s ports had the capacity to ship up to 6 million tons of grain per month.

But other volatile issues also commanded their attention. Russia seized Europe’s largest nuclear power plant, located near eastern Ukraine’s Zaporizhzhia, early in the war on March 4 and turned it into a military outpost. Both sides accuse each other of shelling near the plant, which has six of Ukraine’s 15 nuclear reactors and can supply four million homes with electricity. “We don’t want to experience a new Chornobyl,” Mr. Erdogan said of the potential for catastrophe. They also discussed further prisoner exchanges between the two sides.

But the ultimate ambition is much grander: To bring an end to the war under conditions that both Russia and Ukraine will accept. Given the military stalemate, there is a faint hope for peace that could grow stronger as losses mount on both sides.

Reports have already surfaced of a possible November meeting between Mr. Zelenskiy and Russian President Vladimir Putin in November at the Bali Summit of G20 leaders. Mr. Erdogan additionally repeated his long-standing offer to host peace talks between the two warring presidents in Turkey.

Mr. Putin and Mr. Erdogan seem to have a lot to talk about lately. As Russians vacationed at their favorite seaside resorts in Turkey, the leaders of both countries met on July 19 in Tehran and again on August 5 in Sochi at the Russian president’s Black Sea summer residence.

After meeting with Mr. Zelenskiy, the Turkish president indicated he would be speaking soon with his Russian counterpart again.

At this point in the war, which will be six months old on August 24 – also the 31st Independence Day of Ukraine – the Erdogan-Guterres tandem is the world’s best hope for peace. The Kremlin does not even consider Switzerland as neutral in this conflict, but it will work with Mr. Erdogan. As for Mr. Guterres, the Russian veto in the Security Council allows it to keep the UN in check.

Russia and Turkey have strong ties. Rosatom, the Russian state atomic energy agency, won a $20 billion contract to build a nuclear power plant in Turkey and recently wired a $5 billion advance payment to the builder. Russia has also sold S-400 missile defense systems to Turkey to the dismay of Ankara’s NATO allies. Moscow can count on Mr. Erdogan not to participate in any Western sanctions against Russia.

Despite his status as a credible broker between the two sides, Mr. Erdogan made his views clear in Lviv. He supports the territorial integrity and sovereignty of Ukraine and calls for Russia’s military withdrawal. He long ago allowed a Turkish company to arm Ukraine with lethal and effective Bayraktar combat drones, while refusing to do the same for Russia.

Ukraine and Turkey also have strong ties. They signed a free trade agreement this year, pledging to raise bilateral trade to $10 billion annually. Hundreds of major Turkish businesses are active in Ukraine, many of which have pledged to take part in the nation’s postwar reconstruction. Ukrainians enjoy visa-free travel to Turkey. Mr. Erdogan did not come to Lviv alone. He brought with him a large delegation of diplomats, ministers, military advisors and businesspeople.

Mr. Zelenskiy has hardened his position, saying there is no point in negotiations until Russia leaves all of Ukrainian territory. The bolder stance reflects public opinion, Western support and recent successes in degrading Russian military assets in Crimea and other Kremlin-occupied territories in Ukraine.

While a peace agreement is not foreseeable, the determined intervention of Mr. Erdogan and Mr. Guterres shows at least incremental progress is possible.

August 16, 2022

Ukraine strikes behind enemy lines 

Prince Michael of Liechtenstein

Ukraine finally appears to be shooting back, though it has been coy about taking responsibility. 

The initiative is long overdue. Ukraine cannot win the war if it remains a sitting duck to all kinds of attacks from Russia and Belarus, as well as from territories that it no longer controls, such as Crimea and Donbas. The Western allies would be misguided in placing restrictions on the military targets that Ukraine can strike with its newly acquired weaponry, including longer-range precision artillery such as HIMARS, and possibly soon, more fighter jets. The common-sense consensus among military and other experts is that Ukraine is well within its rights of self-defense to eliminate threats from wherever they emanate. 

Here are some of the interesting recent developments: 

  • series of explosions hit the Saki Air Base in Crimea early on August 9, destroying several Russian fighter jets, detonating munitions depots and killing perhaps scores of combatants. While exactly how it happened remains a bit of a mystery, it appears that Ukraine once again successfully penetrated Russian air defenses or organized a successful sabotage operation on the ground. Either way, Moscow suffered a blow almost as humiliating as when Ukraine sank the Moskva, once the flagship of Russia’s Black Sea Fleet, with a pair of Neptune anti-ship missiles on April 14. Will the next target be the $3.5 billion Kerch Strait Bridge that connects the peninsula to the Russian mainland? 
  • Only a day later, on August 10, explosions struck a military airport in Belarus that Russia used to launch attacks on Ukraine. The base in question is only 30 kilometers from the Ukrainian border in southeastern Belarus. Belarus’ authoritarian ruler, Alexander Lukashenko, supports Russia’s invasion of Ukraine and has allowed Russia’s military to use the country’s territory as launching points for attacks. 
  • A series of mysterious explosions and fires at sensitive military locations inside Russia have also raised suspicions of Ukrainian strikes or sabotage. Moscow’s aversion to acknowledging that it is indeed at war and suffering losses has not made ascertaining the truth any easier. 

Ukrainian successes are likely to force Moscow to change its tactics again. Russia has been unpleasantly surprised throughout this war by Ukrainian military capabilities and has been forced to adjust. Ukraine’s success in shooting down Russian warplanes and helicopters, for instance, might make Russian pilots reluctant to enter Ukrainian airspace. 

It is doubtful that Russia has suffered enough to call an end to its war. Vladimir Putin’s covetous intentions toward Ukraine are long-standing and well-known. Besides reports that Russia plans to annex four Ukrainian regions after staging referenda next month, there are also fresh reports that Russia will buy 1,000 military drones from Iran to improve its capabilities. 

With polls showing that most Russians support the invasion and an impressive majority of Ukrainians are against surrendering territory and believe their nation will win, this war is likely not going to end soon. 

August 9, 2022

In Ukraine, the economy is decisive 

Prince Michael of Liechtenstein

In a speech this summer to the European Parliament’s Foreign Affairs and Security and Defence Committees, NATO Secretary General Jens Stoltenberg offered an eloquent argument for supporting Ukraine:  

“Even if you don’t care about the moral aspect of this, supporting the people of Ukraine, you should care about your own security interests. So, therefore, you have to pay: pay for the support, pay for humanitarian aid, pay the consequences of economic sanctions. Because the alternative is to pay a much higher price later on. … Yes, we pay a price. But the price we pay as the European Union, as NATO, is a price we can measure in currency, in money. The price they pay is measured in lives lost every day. So, we should just stop complaining and step up and provide support. Full stop.” 

This summarized the circumstances from the military and security points of view. But there is also the demographic, economic and social situation, which risks breaking Ukraine’s back. In this context, time is on Moscow’s side. 

The brutality of the war – including the indiscriminate bombing of civilians – has spurred the dislocation of 12 million Ukrainians, or nearly 30 percent of the population. About half of those, mainly women and children, remain abroad, while the other half relocated to safer parts of the country. This is a humanitarian tragedy, but also an economic disaster. The loss of women has left a large gap in the workforce. A significant portion of the male workforce is fighting. Now, there are not enough women to replace them in the workplace. 

Even as early as spring, Ukraine’s authorities said the Russian bombing had destroyed or damaged more than 30 percent of the nation’s infrastructure. 

Rents and property prices are down – some by more than 30 percent – but it depends on the location. In comparatively safe western Ukraine, prices have risen. But it is a fair assumption that a country at war is not a hot property market. Who would buy a home that cannot be insured and that can be bombed at any moment? 

The 30 percent figure appears in several other depressing economic indicators for Ukraine:  

Gross domestic product is expected to shrink by at least 30 percent in 2022, while inflation will top 30 percent. The hryvnia, Ukraine’s currency, has lost more than 30 percent of its value in the last month, although only 25 percent officially.  

Due to the war economy, wages and household income have fallen sharply. Although there is a lack of sufficient labor to reconstruct the country and restart economic growth, the official unemployment rate climbed to some 35 percent, showing the magnitude of the turmoil. 

For Ukraine to survive, Western nations will have to live up to their pledges of material and materiel support. The European Union has disbursed only 1 billion of a promised 9 billion euros

The speed and generosity do not match the urgency of the crisis. Russia is upping the ante by threatening to formally annex the territories it controls in September. Some concerns that the money will be misspent due to corruption or bad governance might arise. This issue should and can be tackled head-on in an open and unemotional way. It would be very helpful for the EU to lower protectionist regulatory barriers in trade with Ukraine. Both sides could reduce red tape at the border. 

Even if the Russian invasion can be contained or pushed back, a dysfunctional economy might become the dagger in Kyiv’s back – and Moscow’s strongest weapon. 

August 3, 2022

Boosting Europe’s energy security

Prince Michael of Liechtenstein

Even in summer, Europe is worrying about affordably staying warm in winter if Russia keeps restricting its natural gas supplies.

If these were normal times, three routes alone – the Baltic Sea’s Nord Stream 1 and 2 pipelines and Ukraine’s land-based network – could easily carry more than 200 billion cubic meters of gas from Russia to Europe yearly. This would be more than enough to go around. But now, the gas is just trickling in. Germany shut down Nord Stream 2 over the Russian invasion of Ukraine. Russia has cut Nord Stream 1 to just 20 percent of capacity. Ukraine’s pipelines are, meanwhile, running largely empty.

Europe, especially Germany, has only itself to blame for becoming hostage to Russian energy supplies that are just another weapon in Vladimir Putin’s arsenal against the West – or at least against those countries that have the audacity to oppose the Kremlin’s war. Nord Stream 1 came online in 2011, after two winter shutoffs of gas through Ukraine and wars in Chechnya and Georgia. Nord Stream 2 was commissioned in 2015, only a year after the Kremlin’s seizure of Ukraine’s Crimean Peninsula and parts of eastern Donbas. German leaders now cautiously admit they were terribly wrong to have risked being taken hostage by Moscow. It was more important for them to make the populistic move of shutting down nuclear power in the country.

In the face of the current adversities and high prices, Europe can seize the opportunity now to boost long-term energy security. This will require increasing oil, gas and coal production in the short term, while pretending to move to more climate-friendly renewable energy sources such as solar, wind and hydropower. But until a political rethinking on continuing nuclear power in Germany takes place, energy dependence on gas will prevail.

The Kremlin likely hopes that Europe, with a poor record of standing up to bullies and defending its principles, will again choose cheap Russian gas over supporting Ukraine as the temperatures drop, recessions bite and political fortunes sour.

Besides needing a mild winter, Europe is pledging a voluntary reduction of 15 percent in gas consumption this winter. It is trying to stock up and store as much as it can now. Of course, some nations like Hungary will not go along and will cut their own deals with Russia, while others want more time to adjust. It is doubtful that a boycott of Russian oil will work, although the U.S. is seeking a united front for a price cap on Russian crude. Natural gas is another matter. Finding buyers and building pipelines outside of Europe will take time.

Germany is already firing up its old coal plants, building liquified natural gas terminals and considering whether to postpone its scheduled 2022 exit from nuclear power – a step it should have never taken in the first place.

For a change, Europe needs to act quickly and decisively. Russia benefits greatly from energy insecurity by selling less gas and oil for more money.

Investment in wind, solar and hydropower technologies has come a long way in recent years. They are paying off and providing more electricity than before. But while renewables and nuclear can help, they will not replace oil, gas and coal for quite some time.

Europe learned a costly lesson by neglecting defense. In the long run, just a credible deterrence will guarantee peace.

July 18, 2022

A rare agreement in the works

Prince Michael of Liechtenstein

While Russia has yet to show interest in ending its war short of Ukrainian capitulation, an agreement is taking shape that offers a glimmer of hope for eventual peace talks.

Turkey and the United Nations are at the center of a possible deal, to be announced as early as this week, for a food corridor that would end the Russian blockade of Ukraine’s vital agricultural exports through its Black Sea ports. The arrangement would provide safe passage for more than 20 million tons of stored grain, which needs to be cleared to make way for the new harvest. These shipments are particularly important for the food security of consumers in the Middle East and Africa, as well as to tamp down the overall price inflation of commodities. A coordination center in Istanbul would manage the exports of Ukrainian grain.

If the breakthrough comes, it is not clear what motivated this rare moment of cooperation and economic rationality in an otherwise irrational conflict that marks its fifth month on July 24. Perhaps Ukraine’s June 30 recapture of Snake Island from Russia, opening a grain export route through Danube River ports near Romania, gave Russia a taste of what could be coming as international pressure mounts over the issue.

But it is obvious that Turkey’s President Recep Tayyip Erdogan is playing a critical role as an arbiter on this issue, guiding the two nations to progress with UN help. And weeks of painstaking talks signal that both Russia and Ukraine have sufficient trust in Ankara, suggesting Mr. Erdogan may be called on to reprise his mediating role on other issues if both nations finally get serious about peace.

President Erdogan talks regularly with Vladimir Putin and Volodymyr Zelenskiy. Turkey has opposed the Russian invasion and recognizes Crimea as part of Ukraine. It is on the opposite side of Russia in Syria and has sold military drones to Ukraine. But it has not participated in economic sanctions against the Kremlin. 

Turkey is also facing disastrous economic consequences with 79 percent inflation, making it a highly motivated interlocutor in seeing its two food-rich neighbors end their conflict. And Turkey comes to the negotiating table with leverage as a gatekeeper to the Black Sea, able to control the passage of warships through the Bosporus and Dardanelles straits.

Underscoring Turkey’s importance, Mr. Putin is set to make only his second foreign trip since the start of the war when he travels to Tehran on July 19 to meet with his Turkish and Iranian counterparts. The Russian leader also went to Turkmenistan and Tajikistan on a trip in late June.

“Turkey is probably the only country that Russia is ready to look at as a mediator in this conflict,” Fyodor Lukyanov, chairman of a Kremlin advisory board on foreign and defense policy, told the Wall Street Journal. “There are currently no grounds for peace talks, but at some point there will be.”

Mr. Erdogan will undoubtedly explore the groundwork for the war’s endgame in his July 19 meeting with President Putin.

July 11, 2022

Ukraine deserves a successful rebuild and peace

Prince Michael of Liechtenstein

The head of the European Investment Bank estimated the cost of repairing the damage wrought by the war in Ukraine at some 1 trillion euros. The government in Kyiv has said the figure could be around $750 billion. Whatever the sum is, Ukraine’s reconstruction will prove an enormous task.

However, putting a price tag on the project in some ways misses the point. Simply throwing money at Ukraine is not the solution. The task of rebuilding to create a modern, efficient and prosperous country – even from ashes, in some regions – will mainly depend on the Ukrainians themselves.

The bravery and patriotism they have shown in defending their nation against an aggressor with more soldiers and firepower offer a realistic hope that they will apply the same energy in building Ukraine into a thriving country with a cohesive society and a strong market economy. 

Investment from abroad will be necessary, as will an injection of liquidity provided mainly by Europe and the United States. Yet, it would be dangerous to expect that foreign funds will serve as the main component of the rebuild. It is also up to Ukrainians to push for governance reforms and to create a leaner, more effective administration. Ukrainian entrepreneurs, supported by motivated staff, will drive the creation of prosperity.

A big task for the government on both the national and local level will be reforming the country’s civil service and rebuilding infrastructure. Foreign investment in infrastructure will be crucial, and a big task for Europe – but must be based on trust that the Ukrainians will use it efficiently.

Lessons from the Marshall Plan

Besides the important issues raised above, Ukraine should concentrate on building a real market economy based on private initiative. This was one of Germany’s biggest successes after World War II. The Marshall Plan was important for Germany, but it mainly served as a liquidity boost. The United Kingdom received aid from the plan as well, but decided to use it to fund a system of big government and nationalization. West Germany, where the war wrought much deeper destruction, rebuilt quicker and soon overtook the UK in prosperity.

Besides a market economy, Ukraine will need a strong, well-equipped defense force to guarantee its peace in the future. Here it would be appropriate for Kyiv to expect material and financial support from European countries. 

Let us hope that this war, which has already become a war of attrition, will end soon and to Ukraine’s deserved satisfaction. Then the rebuild can start. Can we hope that the forthcoming mediation at the Vatican will bring a solution? The Holy See has been successful in settling several past conflicts, normally through silent diplomacy. This time, the Pope himself intends to talk with Kyiv and Moscow.

June 30, 2022

Western leadership: Words or deeds?

Prince Michael of Liechtenstein

Ukrainian President Volodymyr Zelenskiy has said he wants to put an end to Russia’s war – with a Ukrainian victory – by winter. Achieving that goal will require both Ukraine and its Western backers to dramatically step up their efforts.

The reasons for urgency are clear. Russian bombs are raining down on Ukraine on an almost daily basis – 2,800 cruise missiles since the Kremlin launched the full-scale invasion on February 24. Along with military targets, the Russians have hit shopping centers, schools, kindergartens, hospitals and cultural centers. An estimated 200 Ukrainian and 300 Russian soldiers are killed each day. Russia now controls 20 percent of Ukrainian territory and is again advancing in the east.

Ukraine is threatened with destruction and demographic catastrophe while the global economic fallout of the conflict is deepening. Russia has blocked 15 of Ukraine’s 18 ports and has halted much of its own food exports. Some 400 million people in the world receive food from these sources.

The G7 and other invited nations, as well as the United Nations and NATO all met this week with the war at the top of the agenda. While the rhetoric and statements about unwavering support for Ukraine hit the right notes, the multinational organizations and today’s political leaders have yet to prove they are up to the task of devising a successful strategy to help Ukraine push back Russia.

As the situation on the battleground makes clear, neither the size nor speed nor quality of the weapons delivered thus far have allowed Ukraine to launch major counteroffensives, let alone hold all of its own ground. The West’s timid incrementalism is no way to win a war.

Too many Western leaders are still catering to domestic constituencies. But time is of the essence. The Kremlin again this week said it has no intention of accepting any peace agreement short of Ukrainian surrender.

Missteps, some decades in the making, need to be corrected. Leaders have failed to achieve energy security, the protection of commercial shipping in international waters and, most importantly, adequate security to deter military invasions. The NATO summit in Madrid is taking steps in the right direction, committing to putting 300,000 troops on high-alert status and accelerating the membership applications of Sweden and Finland. Weakness will only lead to more aggression and will send the message to aggressors all over the world: Might makes right. In the end, an efficient defense, made credible by a willingness to fight and deter, will provide peace.

June 22, 2022

Realigning away from Russia

Prince Michael of Liechtenstein

Recent diplomatic and other developments might support Ukraine’s position by potentially showing that Russia is more isolated. Although individually none of these events were either deep or dramatic, together they show a greater international assertiveness against the invasion.

They might also signal to Moscow that the longer it keeps up its attempt to subjugate Ukraine and subvert international norms, the more isolated it will become. Whether this will influence Moscow at this stage is, however, doubtful.

There was the exceptional boldness of Kazakhstan’s President Kassym-Jomart Tokayev telling Russian President Vladimir Putin to his face in St. Petersburg on June 17 that he does not recognize the Russian-controlled “quasi-states” in Ukraine’s Donbas regions of Donetsk and Luhansk.

Then, Vilnius announced it would not allow land passage through Lithuania of prohibited freight to Russia’s Kaliningrad exclave, as dictated by European Union sanctions. The move does not amount to a blockade, unlike the one that Moscow has erected in the Black Sea on Ukrainian exports. But the message is clear enough.

Additionally, Berlin signaled to Moscow that its use of energy as a weapon has its limits. After Russia essentially sanctioned Germany by reducing natural gas exports through the Nord Stream 1 pipeline, Germany responded by saying on June 19 that it will make greater use of its coal plants to stave off a winter energy crisis. It was certainly good that Berlin appeared unimpressed. However, the additional use of coal plants will not fully substitute the steeply reduced gas deliveries. All this poses a credibility problem domestically for the Greens and the Social Democrats in the governing coalition.

Barely noticed was Kyiv’s decision to finally impose visa requirements, starting July 1, on Russians seeking to travel to Ukraine. It is a legal requirement that will not change much now, since travel between the two nations has largely been halted due to the war. But it comes in the same year that Ukraine realigned its energy grid to the European one, cutting another vital link with its Soviet past. It is doing the same with its railways.

The June 16 visit to Kyiv by four leaders of EU nations – Germany, France, Italy and Romania – was noteworthy for their support of Ukraine’s desire to join the 27-nation bloc. It is symbolic, considering the huge gap between candidate status and actual EU membership. Accession for Ukraine is not certain and may take years unless its governance is improved. The visitors from Paris, Berlin and Rome had strong domestic political imperatives that they wanted to satisfy by making the trip. But hopefully, the visit may have also signaled that Germany’s Olaf Scholz, France’s Emmanuel Macron, and Italy’s Mario Draghi have finally concluded that for now there is little point in negotiating with President Putin separately and without clear objectives.

None of this means that Moscow has changed its worldview – as state-controlled Russian TV makes clear on a daily basis. But it might indicate that the way in which Moscow is treated by its regional neighbors is changing in ways that may become more assertive.

June 15, 2022

Vladimir the Great

Prince Michael of Liechtenstein

From the beginning of the war, Russia has used expansion – that is, NATO’s expansion – as the main justification for its invasion of Ukraine. Last weekend, as he cast himself as a modern-day Peter the Great, Russian President Vladimir Putin made clear that another kind of expansion was also motivating him.

“Either a country is sovereign, or it is a colony, no matter what the colonies are called,” the Russian president told Moscow students in remarks on June 9, exactly 350 years after the birth of Peter the Great. “A colony has no historical prospects, no chance for survival in this tough geopolitical struggle.” Which classification Ukraine and many other nations fall into in this dichotomy is clearly implied.

At their peaks, the Russian Empire and its successor, the Soviet Union, stretched over vast territories of Europe and Asia, more than 22 million square kilometers. Besides the 15 republics that constituted the Soviet Union, the Russian Empire also incorporated territories of modern Finland, Poland, and even Alaska, which was sold to the United States in 1867.

Nor is it difficult to guess where Mr. Putin aims to take his own nation. To illustrate his point, he reached back to the Great Northern War of 1700-1721, which became the founding year of the Russian Empire after its defeat of Sweden.

“On the face of it, Peter the Great was at war with Sweden taking something away from it. He was not taking away anything, he was returning,” the Russian president said, adding ominously: “It seems now it’s our turn to get our lands back.”

Empire-building through military conquest is a reality of world history – for centuries before and after Peter the Great’s memorable 52 years on earth. We need to ensure countries’ security, even if it needs to be enforced by military power.

June 8, 2022

Turkey to the rescue?

Prince Michael of Liechtenstein

On June 8, Turkey hosted a meeting with Russian officials, including Foreign Minister Sergei Lavrov, amid rising concerns over global food shortages because of the Kremlin’s blockade of Ukraine’s seaports. Currently, 22-25 million tons of grain are stuck in these ports. The amount could climb to 75 million tons after the Ukrainian harvest in September. The sea, not railways or roads, is the only way to quickly move such vast amounts of grain.

Freedom of commercial navigation in international waters is essential to free trade.

But the initial reports out of the June 8 meeting in Ankara are not encouraging. Turkey and Russia traded accusations about who is to blame, while Turkish Foreign Minister Mevlut Cavusoglu promoted a United Nations proposal in which the international community ensures the safe transport of the stored grain while protecting the security interests of both warring neighbors.

Russia is using food, like it has energy, as a weapon of war. Besides the blockades of the Azov and Black seas, its most recent bombings destroyed one of Ukraine’s largest grain storage terminals in Mykolaiv and a rail car repair shop in Kyiv. It has seized agricultural land in Ukraine and there are credible reports that Russia has stolen large amounts of Ukrainian grain.

Russia says it will be happy to grant safe passage to grain-carrying ships out of Odesa’s Black Sea ports if Ukraine would kindly remove its mines. Yet Russian promises in this regard are not to be believed. Demining would give the 20 or so warships of the Russian Black Sea Fleet a straight shot at attacking Odesa, the No. 3 city in Ukraine, plus Russia is believed to have placed its own mines in the sea.

Russia also claims that Western sanctions are preventing it from exporting its agricultural bounty to needy nations in Africa and elsewhere. This is also not true, as debunked on June 6 by United States Secretary of State Antony Blinken and by European Council President Charles Michel at the United Nations. The West exempted food from sanctions and Russian shipping bans do not extend outside the countries that are imposing them.

Ukraine’s importance as a food exporter – helping to feed an estimated 400 million people in the world – is underscored by U.S. Department of Agriculture statistics.

Turkey’s call for an international convoy to ensure safe passage is the best option available today. There are also numerous precedents for providing military escorts to commercial shipping, including U.S. convoys in the 1980s to prevent Iran from blocking passage through the Strait of Hormuz for oil tankers. But this idea may founder for the same reason that Ukrainian calls for a no-fly zone have been rebuffed. As in the air, a naval convoy would run the risk of a direct military conflict between the West and Russia.

This brings us to the vital role of Turkey. The nation of 84 million people is a NATO ally and imports food from Russia and Ukraine. It also is the gatekeeper in controlling access to the Black Sea through the Dardanelles and Bosporus straits thanks to the 1936 Montreux Convention. Since the onset of Russia’s war, Turkey has already used its powers to restrict the entry of warships to prevent the escalation of the conflict.

It is hard to say what the savvy negotiator President Recep Tayyip Erdogan has up his sleeve. Turkey remains neutral in the war but has good relations with Russia and Ukraine. It is conceivable that Turkey, perhaps with Black Sea NATO allies Bulgaria and Romania, can find a way out of this crisis that protects the security interests of both Russia and Ukraine, does not provoke military escalation and yet gets the food to the millions of people who desperately need it. The world would be most grateful.

June 6, 2022

A stalemate in more ways than one

Prince Michael of Liechtenstein

There are many conventional ways to measure whether Russia or Ukraine is winning or losing in the war that enters its 100th day on June 3. The main one, of course, is territory held. On that score, there is no clear-cut winner.

Since Russia’s invasion on February 24, 2022, it has expanded its hold perhaps to nearly 20 percent of Ukrainian territory, a major increase from the 7 percent occupied before the full-scale assault. But the Kremlin’s grip is shaky. Ukraine has pushed Russia away from the two biggest cities – Kyiv and Kharkiv – and is mounting counteroffensives to regain lost territory in the south, particularly around Kherson, while trying to hold on in the east against a fierce Russian barrage.

But there is another telling measure of the state of the war today – and that too shows something of a draw.

Memories remain fresh of Ukrainians frantically crowding highways and railway stations to escape Russian bombing early in the war. An estimated 6.6 million people fled the country, most to European Union countries, where they have been largely welcomed and afforded the opportunity to stay and work for up to three years. Another 8 million Ukrainians have relocated within the country, generally as far from the Russian border as possible.

But the tide is turning.

As of May 24, 2022, some 2.2 million Ukrainians had already returned, according to United Nations estimates cited by the BBC. Kyiv Mayor Vitali Klitschko says the capital, with a prewar population of 3 million people, emptied out by two-thirds when Russian forces were advancing in late February and March. Now it is only one-third empty.

State Border Service figures from April, the latest full month available, show almost a dead heat between daily arrivals and departures. Presidential advisor Timofiy Mylovanov, an ex-economy minister who is president of the Kyiv School of Economics, recently posted a photo on his Facebook page showing a long line of Ukrainians waiting to get into the country from Poland. And more recent statistics show more Ukrainians are returning than leaving.

This is good news. Ukraine will need more of its 40 million citizens back to revive an economy that has shrunk by half since Russia’s invasion. It will take serious Russian setbacks on the battlefield – at least enough to force a reasonable peace agreement – before more Ukrainians feel confident enough to return.

Many key events lie ahead. But a big one to watch will come on September 1, the traditional start of the school year. Since Ukrainian males aged 18 to 60 are still not allowed to leave Ukraine, and many elderly people refuse to leave their homes, the refugees abroad are mostly women and children. How many of those children answer the first school bell in Ukraine will give the world another key indicator of this war’s direction.

May 25, 2022

War crimes and corruption

Prince Michael of Liechtenstein

Ukraine’s judicial system moved with unusual speed in securing the May 24, 2022, conviction of a Russian soldier, Vadim Shishimarin, 21, for killing an unarmed civilian, Oleksandr Shelipov, 62, in the first of what promises to be many war-crimes investigations and trials.

It is too bad the Ukrainian courts, prosecutors and police have not shown the same determination in solving major crimes, including those involving corruption, throughout almost 31 years as an independent nation. There has not been a single case of major corruption successfully prosecuted since the 1991 breakup of the Soviet Union.

In the governance and corruption scales, Russia fares worse than the neighbor it invaded on February 24, 2022.

Ukraine’s democracy is messy and imperfect – but it has, among other achievements, allowed its people to freely elect six presidents and numerous parliaments. Russia, meanwhile, has had Vladimir Putin as president or prime minister for all but eight years of its post-Soviet existence. People debate whether Mr. Putin is a dictator or an autocrat, but it is not much of a distinction. In Transparency International’s Corruption Practices Index, neither country has bragging rights – Ukraine ranks 122 and Russia 136 among the 180 nations studied.

Ukraine has largely shelved its nasty political disputes during the war in favor of national unity. But cracks are appearing.

Viktor Medvedchuk, a friend of Mr. Putin, is facing treason charges – but not quietly. The pro-Russian member of parliament has accused ex-President Petro Poroshenko of illegally privatizing a section of a Ukrainian pipeline that also operates in Russia to profit from the diesel fuel trade. That section has since been renationalized under Mr. Poroshenko’s successor, Volodymyr Zelenskiy. Mr. Medvedchuk also alleges Mr. Poroshenko sought his help as a back-channel conduit to Moscow in illegally buying coal from areas of the Ukrainian Donbas controlled by Russian forces. The ex-president’s lawyer dismissed the charges as a baseless public relations stunt.

In peacetime, corruption has serious consequences. In war, those consequences turn deadly. Ukraine would have had greater national security and may have even been strong enough to deter Russia’s invasion had it created the rule of law earlier. Corruption, meanwhile, has cost Russia dearly – from erroneous assumptions of easy victory to a hobbled invasion force hollowed out by graft.

It is an ugly spectacle as the war enters its fourth month with no end in sight.

May 17, 2022

Who wins from shutting down business in Russia?

Prince Michael of Liechtenstein

The truth may be the first casualty of war, but economic destruction is not far behind. These inevitabilities are increasingly obvious to the world as the war in Ukraine approaches its three-month mark on May 24.

I have long viewed government-ordered economic sanctions against Russia or other powerful states as generally ineffective and more harmful to economies in general than the intended targets. Sanctions can often be evaded and, in the case of essential global commodities, there will always be buyers. Military superiority, motivation and morale are the three ways to win wars.

Nevertheless, more and more businesses are choosing to leave Russia on their own – a self-sanctioning spurred by international outrage and pressure from clients, but also perhaps because the Russian market is simply no longer as attractive as it was before Vladimir Putin’s great misadventure.

Fast-food giant McDonald’s became the latest big-name brand to pull out of Russia, announcing the sale of all 850 of its outlets and casting the decision in moral terms.

“We have a commitment to our global community and must remain steadfast in our values,” said the company’s CEO Chris Kempczinski in a May 16 statement. “Our commitment to our values means that we can no longer keep the arches shining there.”

French carmaker Renault also announced on May 16 that it would exit Russia, but gave itself the option of returning within six years.

The question is whether these so-called “value-driven” decisions will have much influence on the Russian state’s bottom line.

While international firms leaving may at first look bad for Moscow, in reality, their assets will be quickly snapped up – likely by a well-connected businessperson, ready to rebrand the company and use its facilities and assets – at a bargain price. People will keep their jobs.

For companies like McDonald’s and Renault, their actions may give them a quick public relations boost. But leaving a market of 140 million people will take a significant chunk out of revenues – even if Russia has temporarily lost some attractiveness. McDonald’s expects a write-off of $1.2-1.4 billion. That Renault left itself the option to return quickly is telling. And while McDonald’s closed its restaurants in Russia months ago, it still plans to hold onto its trademarks there.

So, these companies may end up hurting themselves, could come back anyway (but in a weaker market position), and in the meantime, the business they were doing will simply be done by someone else. The Russia-based firms that take their place could get a boost from patriotic consumers, while they fill the Kremlin’s coffers with tax rubles. Nobody wins.

Except, perhaps, for Mr. Putin’s standing within Russia. This is why he seems impervious to the economic fallout and willing to continue the war anyway. Closing businesses will certainly not help.

May 10, 2022

Victory Day ambiguities

Prince Michael of Liechtenstein

The West approached Victory Day, the 77th anniversary of the Allies’ defeat of Nazi Germany, with trepidation. Many Ukrainians remained outside of their country, fearing a nuclear Armageddon on May 9 or at least intensified attacks from Russia. And while the frequency of air raid sirens has increased throughout Ukraine in recent days, the carnage has remained largely contained to the contested eastern areas near Russia’s border.

Vladimir Putin’s words were closely watched during the traditional Red Square parade for clues about where the war was heading. What the world heard was ambiguity in a brief address from Russia’s president, who cut a solitary figure on the stage as other world leaders boycotted the Moscow event.

He did not declare victory. He did not officially declare war, so what remains is a “special military operation” launched on February 24. He did not announce a full-scale mobilization. He did not talk about taking over the whole of Ukraine. He did not state specific aims.

Rather, Mr. Putin continued to play the victim, insisting Russia was engaged in a defensive operation to thwart a NATO-backed plot to invade the Russian homeland, including the eastern Donbas and on the Crimean Peninsula. (The international community regards these territories, of course, as part of Ukraine.)

Where does this leave us, besides guessing? The Russian president – in line with centuries of Russian political tradition – is a master at presenting enigmas. It is unlikely, however, that he will silently give up.

It was somewhat naive to believe that the May 9 celebration would prompt President Putin to disclose plans or start specific actions.

Unfortunately, we cannot see a light at the end of the tunnel.

May 4, 2022

Another casualty of war: Agricultural production

Prince Michael of Liechtenstein

It is not only the human toll of Russia’s war on Ukraine that grows daily. The economic fallout is already rippling through the global economy, contributing to higher inflation, energy prices and food costs. 

Russia and Ukraine are major agricultural producers, together producing 12 percent of the world’s calories. Combined, Russia and Ukraine account for 14 percent of the world’s wheat production and 28 percent of all traded wheat. Ukraine is also a top 10 producer of sunflowers, barley and corn, while Russia and its ally, Belarus, supply a lot of fertilizers to the world.

The war is putting all this at risk. The fighting (and Western sanctions) are damaging Russia’s economy, which may shrink by 10 percent in 2022. Still, Moscow is getting off lightly compared to Kyiv. Ukraine’s loss is simply devastating – a 45 percent drop in gross domestic product is expected this year alone. Ukraine’s famously fertile black-earth soil has made it a breadbasket of the world – and a target for invaders.

Today, Russia stands accused not only of war crimes, which it denies, but of blockading the Black Sea so that Ukraine cannot export its grain to the world. Accusations of outright theft of stored grain and farm equipment have been made, reviving horrible memories of the Holodomor, during which Soviet leader Joseph Stalin starved to death an estimated 4 million Ukrainians in 1932-1933.

Spring is the time for renewing life – and for farmers to be in the fields. The longer that this war goes on, the likelier it becomes that some of the world’s neediest will be hungrier while the more fortunate among us will be paying a “war premium” on the purchase of our next loaf of bread or sirloin steak. 

April 27, 2022

Darkness before dawn?

Prince Michael of Liechtenstein

As the destruction mounts in Ukraine, the West has beefed up its military assistance to Kyiv. The more muscular response should be welcomed and could, hopefully, bring the world mercifully closer to peace. The end to Russia’s invasion cannot come fast enough amid global economic and other challenges.

Ukrainians have shown they will courageously and capably defend their nation if properly armed. After initial hesitation, more than 40 nations came together on April 26 in Germany for a conference to pledge continuous military aid.

If the West can help Ukraine gain a decisive upper hand on the battlefield, reality may start to dawn on Moscow that the invasion will have to end.

Unfortunately, Russian President Vladimir Putin has not reached that point and is launching economic attacks of his own against the West. On April 27, Russia’s Gazprom cut off natural gas supplies to Poland and Bulgaria, evidently to punish the willingness of these two nations to arm Ukraine and their refusal to meet Moscow’s demands for payment in rubles.

With Russia’s nuclear saber-rattling increasingly having no effect on the West, Mr. Putin’s best option is to seize on the desire of the world to end this conflict quickly. The Kremlin will find that calling off the invasion is the only way to ease the mounting, but not necessarily permanent, military and economic pressure it faces.

April 12, 2022

The horrible slaughter in Ukraine continues

Prince Michael of Liechtenstein

In the war in Ukraine, the center of gravity has moved away from Kyiv to the east and southeast of the country. However, this does not mean that Kyiv will not again become a target.

It is now clear that the Kremlin miscalculated. Unfortunately, instead of looking at the situation realistically and taking the appropriate measures, the Russian authorities have allowed the military to unleash severe brutality.

Economic measures have never proven effective against savagery. At the present stage, Moscow will only understand force.

Getting Russia to the negotiating table under acceptable conditions requires the West to show credible strength. That means military strength, and the least NATO can do is supply effective weapons systems – including offensive ones – probably through its members. It can neutralize Russia’s nuclear threat by promising to retaliate in kind.

During the war in Iraq, the United States declared a no-fly zone over the entire country, since the enemy was comparatively weak. In the current conflict, it is a big mistake to exclude such measures in advance. This war is not a pure military war anymore, it has degenerated into manslaughter.

April 5, 2022

How Western Europe’s lack of policies helped get us here

Prince Michael of Liechtenstein

This past weekend, we learned that a terrible massacre had occurred in Bucha, a city about 24 kilometers outside Kyiv. The evidence suggests that the Russian army killed hundreds of civilians there during its occupation and retreat. The enormous outrage this has created is justified.

Ukrainian President Volodymyr Zelenskiy invited former German Chancellor Angela Merkel and former French President Nicolas Sarkozy to inspect the site. His argument – which is correct – is that these two leaders’ policies helped to create this war.

It is true that Germany’s past neglect of its defense contributed to Russian assertiveness: Moscow knew very well that Europe was neither ready nor willing to fight militarily. As GIS pointed out years ago, a better response to the occupation of Crimea and the Donbas region would have been efficient investments by Germany in defense, instead of just such lukewarm sanctions.

The irresponsible decision by Chancellor Merkel’s government in 2011 to discontinue nuclear energy led to a high dependence on Russian gas. This dependence means the current, stronger sanctions against Russia will be short-lived. Although Ms. Merkel said that Nord Stream 2 was just a business decision, it was in fact very political.

It is certainly necessary to have relationships with Russia, but as long as Europe cannot reach the same level in matters of defense, it will have a weak position.

April 1, 2022

Long-term opportunities for Ukraine

Prince Michael of Liechtenstein

With its armed forces putting up a courageous fight and its people coming together to support their country, Ukraine is experiencing a unifying moment. Most of its population is made up of either native Ukrainian or Russian speakers. When it comes to the degree of resistance to Russia’s military aggression, there is no difference between these two linguistic groups.

When peace finally comes – hopefully, it is not too far away – this unifying experience could provide a foundation for successful reforms. A postwar government could have broad popular support, which it could use to reduce the country’s oversized bureaucracy, transforming it into an efficient civil service and administration. As reforms in Georgia have proven, such an initiative could go a long way toward solving the country’s biggest problem: pervasive corruption.

Ukraine has well-educated, diligent people, and the potential to be a rich country. Due to excessive bureaucracy and high levels of corruption, it has so far not managed to attain the prosperity its citizens deserve.

March 23, 2022

What Europe can learn from Ukraine

Prince Michael of Liechtenstein

The brave resistance of the Ukrainian people and the determination of their president, Volodymyr Zelenskiy, have aroused a lot of admiration throughout Europe. Refugees have been received in a very friendly and open manner. Sanctions on Russia are continually being ratcheted up.

However, some unnecessary animosity against Russia has also appeared. For instance, a university in Milan halted courses on Fyodor Dostoevsky because he was Russian. Some in Europe have implemented anti-Russian measures without making a distinction between factors that are related to the war and those that are not.

Years of prosperity have led Europeans to worry about minor matters. Gender issues and cancel culture, for example, have recently dominated the headlines and had an outsize influence on politics. Europe needs a call to respect traditions and to recognize that European heritage has brought us freedom and prosperity.

It is worth pushing back against the tendency to misjudge Christianity and Europe’s past. The liberal ideals of freedom and self-responsibility, as well as the protection of life and property, all derive from the Christian tradition.

The Ukraine crisis should be a wake-up call for Europe. It has revealed the foundation of our values and shown us that they are worth fighting for. To deserve peace means to be willing to fight for it.

March 18, 2022

A lesson for Russia

Prince Michael of Liechtenstein

If we are to analyze the reasons for, and the results of, the war in Ukraine, we need to find the causes – which does not mean we want to justify the invasion.

Like many autocrats, Russian President Vladimir Putin tolerated corruption among the people who surround him to ensure their loyalty and dependence. Contrary to popular belief, he is not necessarily enriching himself.

He likely lost control of the extent of the corruption, especially in his country’s defense sector. The Russian army’s inability to take over Ukraine quickly after the invasion must have come as a shock to him. It was a misjudgment, probably based on faulty information.

Due to the corruption, the Russian military had poor-quality equipment, less-than-ideal training and low morale. A major mistake in the information President Putin received is how determined the Ukrainians would be. Another was the status of Russia’s defense forces.

This week, he denounced “national traitors,” especially those who are earning money in Russia but are living in the West, “who have a villa in Miami or the French Riviera, who cannot do without foie gras.”

The leaders in the Kremlin might try to get out of the trap typical to autocrats and sometimes technocrats of surrounding themselves with irresponsible “yes men” who only offer them the information they want to hear.

March 16, 2022

A ray of hope

Prince Michael of Liechtenstein

Kyiv and Moscow are continuing talks and keeping open the possibility for further dialogue. This is already a good sign, and for the first time, yesterday, President Zelenskiy mentioned that these talks have become more substantive.  

Both sides must still strengthen their positions. Ukraine is bravely continuing its resistance, while Russia persists in its attacks. 

The battlefield positions are not changing much. The destruction, misery and casualties are terrible. Ukraine’s strength is in the determination of its armed forces and its people. Russia’s is in its potential for escalation. In fact, Russia has already escalated the conflict significantly and has recently brought in mercenaries to help its efforts.  

A further escalation was Russia’s limitation of its food exports. The resulting food price inflation is a problem for the West. However, the bigger problems will be in Africa and the Middle East, severely hit by the rising costs and shortages. This could also create migratory pressure toward Europe. 

If we take an optimistic view, we can see the strengthening of both countries’ positions as setting the stage for more negotiations in the short term. Those talks could then open up further opportunities for a resolution. 

March 11, 2022

Ukraine and European priorities

Prince Michael of Liechtenstein

The Russian invasion of Ukraine abruptly transformed attitudes and policies in Europe. Several shocks have occurred that have forced countries to reconsider their priorities. 

The first shock for many – especially younger people in Europe – was that war is possible. Attitudes toward defense have changed completely. 

Most see a possible energy crisis as a critical challenge to European prosperity. Such a crisis would not only mean a rise in energy prices, but also a threat to energy security.  

If the supply of energy to Europe were cut off, it would be a severe blow, and could show just how vulnerable highly developed economies can become. Even short blackouts can have long-term effects, hindering the delivery of essential goods. Civil protection throughout the continent should be strengthened. 

The looming danger of an energy crisis also shows how important collaboration and integration are in Europe. However, that integration must be limited to areas where it is strictly necessary. Countries cannot afford to engage in unnecessary harmonization. 

Europe indulged in the luxury of trying to enforce a value standard. That standard did not always include – and sometimes even neglected – the core values of individual freedom, self-responsibility, the right to life and property rights.  

And while checks and balances on power are necessary, European structures (as well as leaders and the media) issued moral judgments against members like Poland and Hungary, while ignoring deficiencies in other countries. Poland was highly criticized for its policies on refugees. Now, however, it is showing a type of generosity not seen in 50 years.  

We can only hope that while supporting Ukraine, Europe will realize that it is necessary to concentrate on core priorities and forget about exaggerating problems about which it is a luxury to worry. Only on this basis can Europe defend its freedom, which could also give a greater sense of security to Ukraine, Georgia, Moldova and the Baltic states.

March 9, 2022

The coming food security challenge

Prince Michael of Liechtenstein

There is a lot of talk these days about Europe’s future energy supply, mainly natural gas. Spot prices for oil and gas continue to see drastic increases. Supply remains constrained: Russia will be cut off from many markets, Saudi Arabia has not yet increased its output and the future of Iranian production is up in the air. 

There is less talk about the effect of the Ukraine crisis on global food markets, though it is even more important. Ukraine is one of the world’s main exporters of wheat and corn, as well as sunflower oil. Sunflower oil is a key frying oil and is used in many prepared foods. The war has hampered not only cultivation, but also shipping of this resource, since many of the country’s ports are now part of a war zone.  

Before the conflict, food prices were already increasing; now that situation will accelerate. Higher food prices could lead to significant unrest and instability in regions like India, Africa and the Middle East. We also have to acknowledge that Russia – now under severe sanctions from many countries – is also one of the world’s main exporters of grain. While it remains crucial that we use all means possible to stop the aggression, we must face the consequences of doing so with realism. We will need to find alternatives to mitigate the pain that high food prices will cause. 

In this context, it is a pity that Argentina and some other large food exporters have implemented socialist policies that reduce the efficiency of their agriculture sectors. It is also a shame that pressure to use biofuels – often produced from crops that would otherwise be sold as food – is reducing the availability of essential foodstuffs on global markets. Organizations like the International Energy Agency promote using biofuels as a means to reduce climate change, but the issue needs to be rethought. 

March 7, 2022

The importance of mediation

Prince Michael of Liechtenstein

The increasing brutality of the war in Ukraine is shocking, bringing to mind images of the Chechen war and the destruction of Grozny. 

At the beginning, it was clear that Moscow intended to take Ukraine via “blitz,” rapidly removing the government and doing little harm to the civilian population. That strategy overlooked the patriotism and bravery of the Ukrainian armed forces, government and people.  

Now the Kremlin has a dilemma. It will be difficult for Russia to extricate itself from this war, but domestically it will also be hard to justify the brutality against populations that according to President Putin are “ethnically Russian.” This is a key difference compared to the war in Chechnya, when Russians were appalled by Chechen terrorist activities in their country.  

Developments could accelerate quickly now that both sides have decided to use mercenaries. Such troops are difficult to control.  

More importantly, leaders like Israeli Prime Minister Naftali Bennett are trying to mediate the conflict. Mediation can help achieve the crucial goals of getting Russian troops to retreat and reestablishing Ukraine’s sovereignty. 

The Russian population will likely understand that its troops cannot become entrenched in Ukraine indefinitely. In this context it must be made clear that the present invasion is unacceptable, but also that Russia as a country will remain a respected major member of the international community once its forces have retreated. 

March 4, 2022

Taking the long-term view

Prince Michael of Liechtenstein

It appears that Russia is serious about advancing further in Ukraine. It will be difficult for Moscow to back down now: the propaganda it has used – calling the Ukrainian government and military “Nazis,” as well as its declarations that it will “demilitarize” the country – makes it difficult to justify not taking control over the entire country.

We can hope that the ongoing negotiations will at least succeed in establishing corridors of safe passage for civilians. Unfortunately, we will have to prepare ourselves for the reality that this war will continue for some time. This will mean more activities by paramilitary groups on both sides, potentially causing the situation to spiral further out of control.

The bravery of Ukraine’s armed forces and the patriotism of its people are impressive. They deserve help. Lofty words – like U.S. President Joe Biden’s a few days ago – are not enough. They must be backed by action. Demonstrations around the world and displays of sympathy on social media are nice, but ultimately ineffective.

European countries must stay strong and show determination to improve their defense and prepare their economies for a possible energy crisis. The openness to refugees is reassuring. Now, however, it is important to support Ukraine’s defense, find a way to keep what is left of its economy standing, and assure the delivery of food and medical services. All of this will require specific, targeted action.

In the long term, Ukraine’s future will hinge on rebuilding its economy and allowing most refugees to return. That so many people are leaving Ukraine is not only a human tragedy, it represents a massive brain drain.

March 3, 2022

Preparing for the long-term consequences

Prince Michael of Liechtenstein

Moscow’s isolation is increasing. However, because Europe – especially Germany – still depends on Russia for energy, the SWIFT channels that allow countries to pay for those supplies are still open. 

Europe must be prepared for very high energy costs and for an additional bout of inflation. This is the price to be paid for some countries’ ill-fated energy policies. Shutting down nuclear power generation did not only hurt the environment by increasing the reliance on fossil fuels, it was also an exercise in virtue-signaling that may become very difficult to afford. Failed politics and insufficient defense of Europe have brought us to this point. 

The crisis will have other repercussions. Russia and Ukraine are two of the world’s largest producers and exporters of essential food products. Food prices will rise. We will have to adjust to these new realities, and they should not be used as an excuse to allow aggression. 

Preparing for the consequences of the current crisis and finding alternatives will allow us to apply policies that take a long-term view. This is the only way to find satisfactory solutions for Ukraine’s independence and future European relations with Russia based on mutual respect. 

March 2, 2022

Ukraine and the European Union

Prince Michael of Liechtenstein

A few days ago European Commission President Ursula von der Leyen proposed European Union membership for Ukraine. Understandably, Ukrainian President Volodymyr Zelenskiy picked up on this and requested that the bloc immediately grant his country accession under a “special procedure.” Eventual EU membership for Ukraine is worth discussing, but there is a danger in overpromising.

Back in 2014, during the Euromaidan protests in Ukraine, several Western politicians implied that there was hope for EU membership. Little progress was made – for justified reasons, though Kyiv was disappointed.

It is questionable whether it is the European Commission’s role to offer such hopes. We must not forget that the Commission is the EU’s executive body, not its decision-making one – that is the job of the European Council.

Instead of making grandiose, feel-good statements about where Ukraine belongs in the long term, it would be better to find ways to help Ukraine and end the bloodshed.

In 2006, Archduke Otto von Habsburg, a longtime member of the European Parliament, wrote this request to that body: “If economic difficulties persist that prevent the Ukraine from adhering to the Copenhagen criteria, an immediate partnership should be granted Kyiv with a view to obtaining the status of a membership candidate. This would show Russia that the Ukraine belongs to Europe and that one is not ready to betray friend and partner because of pressure from Moscow.

In 2006, this was a long-term view. The goal of Ukrainian membership will not be achieved by raising expectations. We know how long accession negotiations take. Now is the moment that pragmatic solutions need to be achieved, to end the bloodshed and destruction.

March 1, 2022

Refugees

Prince Michael of Liechtenstein

Refugees from the war in Ukraine have begun arriving by the tens of thousands, primarily in Poland but also in neighboring countries. For now, those fleeing the war are mostly women, children and the elderly, while the able-bodied men are staying to keep the country’s essential services running and to volunteer in the defense of their land. 

It is impossible to know how bad this conflict will get or how long it will last – the number of refugees could still increase greatly. Hopes are high that eventually, they will be able to return. Their situation seems temporary.

When the Soviets crushed the Hungarian Revolution of 1956, nearly 200,000 refugees fled to Austria. They had little hope of going back to their homeland. They were warmly welcomed and continued on to various countries in Europe and North America. Some 20 percent remained in Austria. The welcoming spirit remained, and they were quickly integrated into the society and labor market. They were keen to be active.

Today, Ukrainian refugees are also receiving a warm welcome. They often have relatives in neighboring countries. They share cultural similarities with most of the peoples in Europe. If they have to stay longer, they will likely integrate without (take “too much” out) trouble. The situation with migrants from Africa and the Middle East is different. Difficulties in integration could have less predictable effects on society and the economy. 

Now, the challenge is mainly to provide the basic necessities for the refugees: food, shelter and medical treatment, as well as schooling for the children. By the way Poland handles the situation well and generously. It also appears that large numbers of Ukrainians will be absorbed into the rest of Europe. Families are already keen to welcome these unfortunate people in their time of hardship.

February 28, 2022

Western armament and cyber defense

Prince Michael of Liechtenstein

Despite warnings from American intelligence agencies and others, Russia’s full-scale invasion of Ukraine took many by surprise. The Kremlin, however, seems even more shocked by the resistance it has encountered. The Russian leadership appears to have greatly underestimated the determination and bravery of the Ukrainian people, its armed forces and its institutions.

The entire country is finding ways to support the fight. Volunteers are lining up to join militias, while others are helping the medical services or giving blood. Cities and towns across Ukraine are preparing to receive the invaders with Molotov cocktails.

The “blitz” with which the Kremlin sought a quick victory, did not work. Its military operation is already bogged down. Though the blame for the conflict lies with Russia, Europe – and especially Germany – bear some responsibility, since they have been unwilling to invest in defense for years.

During former Chancellor Angela Merkel’s 16 years in office, Germany neglected its defense. Until four days ago, the Scholz government was not ready to support Ukraine effectively. Military attacks cannot be avoided by sanctions, but only by preparedness. This has been one of GIS’s main messages for 10 years.

Germany has now decided to support Ukraine and has also announced that it will dedicate additional 100 billion euros in its defense budget. We hope that these funds will be used more effectively than in the past. The problem is that even with a lot of money, the Bundeswehr’s effectiveness will only increase over the long term. What Europe should do now, besides support Ukraine, is increase its civil protection and especially its cybersecurity.

Scroll to top