How the West can win in Ukraine

The West needs to engage with Russia, and avoid pushing Vladimir Putin into a corner.

Ever since the Malaysia Airlines plane was shot down over Ukraine last week, "the pressure has been on Russia and on President Putin to admit guilt at least by association", says Mary Dejevsky in The Independent. However, when we judge Russia's response, we should remember that "there is no way that Putin or anyone else would have been rubbing his hands in glee". The West assumes that Putin "controls what happens in eastern Ukraine, even if Russia has not actually invaded. It is not at all clear, however, that this is so." The reality is that the incident "is an acute political embarrassment to the Russian president. If he was supplying [arms] and can control the rebels, he is complicit; if not, his impotence in Ukraine is exposed". Either way, he loses.

It's true that Putin is weaker than he seems, says Con Coughlin in The Daily Telegraph. "The most important thing for European ministers to remember during the crisis is how little they actually have to fear from Putin for Russia needs the West far more than the West needs Russia." Granted, tougher economic sanctions might force Putin to stop supplying gas to western Europe. But turning off the taps would also damage Putin. Obviously, Russian oil firms would lose profits in the short term. But it would also be harder for these firms to raise foreign capital for investment in the longer run. Over the next 20 years, Russia may need to invest as much as $750bn in its energy industry to ensure it can maintain current production levels.

What's more, the crisis also "gives the lie to the idea that Mr Putin is some kind of strategic genius", says Gideon Rachman in the FT. Instead, by manipulating the media and public opinion, Putin has created a trap for himself. Yes, he's currently popular in Russia, but it's now hard for him to back down. "Anything less than total support for the separatists will open Putin to the charge that he has failed to protect Russian speakers fromthe fascists' his media claim control Ukraine."

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So what approach should the West take with Putin? "To get something positive out of this disaster, the West needs to avoid pushing Russia into a corner," says Mark Almond in the Daily Mail. "The pressure to pile punitive sanctions on Russia looks irresistible." Some even advocate arming Ukraine "so it can hit back". But President Barack Obama should read up on the Cuban Missile Crisis in 1962. Several advisers wanted President Kennedy to bomb the Soviet missile sites in Cuba.

But instead, Kennedy successfully pressured the Soviet leader, Nikita Khrushchev, into withdrawing without a major military confrontation. Khrushchev fell two years later. "Russians will notice if their president is allowed to back down gracefully and his prestige will wane."

I've worked closely with Kremlin officials, and I know that "Putin detests being lectured by outsiders, and tends toreact badly to all criticism", saysAngus Roxburgh in The Guardian.So the West should "steer him towards real engagement by promising constitutional talks with Ukraine, provided he takes resolute action to kick out the separatists who, he has now discovered, are nothing but a liability".

Ed has been a private investor since the mid-90s and has worked as a financial journalist since 2000. He's been employed by several investment websites including Citywire, breakingviews and The Motley Fool, where he was UK editor.


Ed mainly invests in technology shares, pharmaceuticals and smaller companies. He's also a big fan of investment trusts.


Away from work, Ed is a keen theatre goer and loves all things Canadian.


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