Reading the latest signals concerning prospects for ending Russia’s war against Ukraine: Will peace be given a chance?

July 28, 2024

Lots of interesting developments around Ukraine over the past week or so, that might just suggest that momentum might again be building for peace talks over the next few months.

First, Ukraine seems to have made really significant concessions in negotiations with bondholders over the past few days, which gives the prospect of a debt restructuring by September. The question was why bother rushing if the outlook on ending the war was so uncertain, and Ukraine would never have market access as long as the war was on-going? It only begins to make sense if someone is thinking here that the war might end sooner rather than later, and Ukraine then would need access to markets to help with the huge reconstruction needs.

Eurobonds rallied hard since Monday (up 5-10 points) on the announcement of the deal, a reflection of just how “friendly” this deal is for bondholders.

Second, the very controversial Orban trips to Kyiv, Moscow, Beijing and then Maro Lago. I know he got lots of flak for this, but there is no smoke without fire, surely.

Third, a trip by Boris Johnson to Maro Lago following which he published his own plans for a peace in Ukraine.

Notable here that Boris seems to have backed down from his prior hard ass pro Ukrainian stance of not giving territorial concessions to Russia. Not sure if all those Boris Johnson roads will now be renamed in Kyiv. But Boris seems to have picked something up here from the Trump team, surely.

Great write up by Lawrence Freedman, btw.

Fourth, Ukrainian foreign minister, Kuleba, finally make a visit to China, the first by a Ukrainian FM since the invasion, as prior the Chinese did not want to put Putin’s nose out of joint. The Saudi FM was also in Kyiv a week or so back, again a first of the kind, post invasion.

The joint Ukraine – China communique is telling, with Ukraine seemingly being brought into the one belt one road plan, and also accepting the One China policy – the latter something of a blow to erstwhile friends in Taiwan. Kuleba is also talking about the need for “serious” peace talks with Russia, and some joint Chinese-Brazilian peace deal. Previously Ukraine downplayed these as they saw them as too favorable to the Russian narrative.

Fifth, really interesting opinion polls, suggesting that opinion is changing in Ukraine towards making concessions.

My base case since the invasion has been that a compromise deal would involve a) Russia goes back to the position as of Feb 23, 2022, so moved back out of Zaporizhzhia and Kherson. b) Ukraine agrees to talks over the long-term future of Crimea, DPR and LPR, without actually agreeing their loss at this stage. This would kind of kick the can, kind of Northern Cyprus scenario; c) Maybe no commitment on NATO membership for Ukraine for the time being, but the West needs to give some serious security guarantees (think Israel style as per the U.S.). d) Ukraine needs EU membership.

Seems that we are seeing momentum as there is generally fear now that if Trump wins in November, Western support for Ukraine drops off a cliff – better for Ukraine to negotiate from a position of some relative strength before then. Notable now that the West is front loading disbursements to Ukraine from the $61 billion US package agreed by Congress in

April, and the $50bn package from interest earned on frozen RU assets. Ukraine is getting F16s as I write – a friend told me of huge US transport planes flying out of Eindhoven airport this week.

I think there is perhaps a desire from some in the West not to give Trump that win he keeps talking about, but instead give it to the dregs of the Biden presidency, or even give a bounce to Kamala.

On China, I wonder if also Beijing is thinking that by now kick starting a peace they can help avoid a Trump win, as that’s surely their nightmare scenario for November. Interesting also that China seems to have been annoyed by Putin’s deepening friendship with North Korea – that has put China’s nose out of joint for sure.

Perhaps Trump’s choice of Vance as VP has been the final straw for China as they now anticipate the mother of all trade wars in Trump 2.0, or Vance 1.0, if Trump fails to serve out his full term, after all, if elected, he will be the oldest ever elected president. The reality is that under Biden, and following the Russian invasion, the US has pulled its punches on trade tariffs on China – I think thankful that China has not gone all in to support Russia. China thinks it can deal with a Harris presidency, whereas I think the China hawks in the GOP are just not for turning – they actually think this all ends up in an actual war with China.

On Russia – my regional contacts are telling me that Putin really wants a deal now, and particularly, sanctions are really annoying Putin (not sure if hurting the economy that much, but they are a real embarrassment and take away from Russia’s desire to be seen as a global power. Perhaps notable as the West’s tightening of secondary sanctions seems to be really hurting Russia now).

Perhaps you could argue that Putin might want to hold out until November and a Trump win to give him max concessions. However, if China pushes for a deal before then it is hard to see Russia resisting as Western sanctions might hurt but not collapse the Russian economy, but if China pulls the plug in support for Russia its economy does collapse.

The risks are obviously plenty here.

a) Will any peace involving any territorial concessions (even talks on the long-term future of Crimea DPR and LPR) just politically destabilize Ukraine, and that might provide future opportunity for Putin to invade again.

b) Putin might in any event not be serious, and just mindful to use a ceasefire to regroup and rearm ready for the next invasion.

Actually, on the latter, which is my personal view, that Putin wants the whole of Ukraine, and that he cannot help himself. He will go in again at some point in the future, so the strength of the security assurance/guarantees given to Ukraine as part of any peace deal are so important. Budapest Memo 2.0 just does not stand to muster. Ukraine needs Israel style assurances of financing/arming/backstop, or NATO membership.

https://www.kyivpost.com/opinion/36495