OPINION: Ukraine, and Europe, Cannot Depend on Trump

The imminence of the Trump presidency has also fueled market speculation that a peace deal between Russia and Ukraine will be agreed shortly - helped by Trump’s campaign trail rhetoric that he would end the war in a matter of days upon taking office, if not sooner. Reflecting the above, Ukrainian Eurobonds were amongst the best-performing assets across EM in recent months, notably alongside the other war, or peace, play, Lebanon.

I am not sure that reaching a peace deal, that is durable, between Ukraine and Russia, is actually that easy - a realization that has perhaps now dawned on Trump, who set back the timeframe for his imposed peace from a few days to now six months. General Kellogg, Trump’s pick as Ukraine rapporteur, has similarly become more circumspect, indicating hope of some peace breakthrough now only within the first 100 days of a Trump administration. Likely this timeframe will lapse again.

But does Trump actually have a peace plan for Ukraine?

I really doubt it. And I think resetting of the date to make progress on any peace is a reflection of this very fact.

The reality is that I just don’t think Trump, or Kellogg, for that matter, have a deep understanding of Ukraine, Putin, or European security. Trump likely has few cares - none of these issues are high on his list of priorities around MAGA. Pulling financial support for Ukraine sold well on the campaign trail, especially when the message was that those resources could be redeployed to long-forgotten, or neglected, US communities. The sad reality though is that under a Trump presidency, even if financial support to Ukraine is halted, I doubt whether those same disadvantaged US Rust Belt communities will see much of the same “Ukraine” dollars.

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For Trump, Ukraine is someone else’s problem - Europe’s, and I think that his foray over the past week now to talk of pushing US territorial ambitions over Canada, Greenland, and Panama, is his way of messaging that if he is expected to sign off on Russia keeping territory gained in Ukraine, he expects something in exchange. What is the quid pro quo from Putin to Trump? Turning a blind eye to the US taking Greenland? Quite likely in terms of Trump’s mindset. Trump will likely sell, quite literally, Ukraine down the river.

Now people like Kellogg and Mike Waltz - Trump’s pick for NSC head - might be good at trying to put words in Trump’s mouth, or trying to fit some logical national security strategy around Trump’s relationship to Putin, and Ukraine, after the event, but it is unclear in my mind whether Trump is on board with either of their pitches.

The real shame here, as I have argued in this blog earlier this year, is that Trump has a really strong negotiating position with Putin, over Ukraine, if he only realized as much.

Putin needs a deal over Ukraine much more than Trump. Russia can wage a long war, for sure, but it comes with risks - risks of an economic implosion due to sanctions, or a repeat of the Prigozhin-style mutiny due to the huge, and rising social and human cost of the war.

The longer the war goes on the worse it gets for Putin, and more risks - Ukraine faces risks, albeit somewhat different (manpower shortages, donor fatigue, etc.) from a long war.

This is not the case for Trump or the US.

The cost of supporting Ukraine in this war has been around $100 billion over the three years of the conflict for the combined West. Only around 40% of that has been provided by the US, which is a fraction (less than 5% to be precise) of the US defense budget. And, much of US spending on Ukraine, stays in the US, as payments for US arms and munitions - much of which is old kit which would have been destroyed anyway as the US upgrades its own armed forces.

Further Ukraine and its other NATO allies, because of the war in Ukraine, and the now obvious Russian threat, are forced to rack up purchases of US arms.

The longer the war goes on, the more the US benefits from arms sales - and Europe is now expected to increase its defense spending by 1% plus of GDP over the next few years, that’s another $250 billion a year. And much of this spend will be with US defense manufacturers.

Set against this, Ukraine is depleting the conventional military capability of Russia, a near peer global competitor, and with zero loss or risk to US troops - there are no US boots on the ground.

A more logical negotiating strategy would be for Trump to threaten Putin to increase support to Ukraine to push him to accept a deal, or to impose even more painful sanctions on the Russian economy - as the costs to the US of such an approach are minimal.

Trump has the gift of threatening to support NATO membership for Ukraine, or to green-light Ukrainian use of long-range missiles to hit far into Russia. Trump has all options/leverage.

Trump has leverage but so far all we have seen is the Trump administration gifting this leverage away to Putin. Trump has said no NATO membership for Ukraine, no long-range missiles, a halt to financial support to Ukraine, and potential sanctions relief to Russia.

Kellogg, Waltz et al, have, meanwhile, suggested freezing front lines along current lines of contact - in effect suggesting that Russia keeps whatever territory it currently de facto occupies or controls. What is in all this for Ukraine in peace talks, and what is Putin expected to give? It seems very one way, and in favor of Putin from Trump, and over Ukraine.

It appears that while Trump is sitting on all the aces, he has gifted the game already to Putin. I thought that Trump was supposed to be the king of the deal? Trump has not only revealed his hand to Putin but seemingly asked Putin what cards he would like to take before the game is even played.

Now the end game from any negotiation might well have been no NATO membership, and Russia keeping the territory it currently controls. But giving these away before the sides have even sat down to talk is unconscionable from Trump, et al, and outright amateurish.

The Kremlin must be laughing at Trump. Trump literally is the Emperor with no clothes, and the courtiers like Kellogg and Waltz don’t seem minded to tell hard truths to the boss.

In all this, what now matters above all for Ukraine in any peace talks is security. Ukraine can live with the loss of the territory currently occupied by Russia, but for the country to have a real economic perspective, there needs to be security over the land remaining under its control.

This could be assured through NATO membership, bilateral security guarantees or assurances that the West will provide Ukraine with the full range of equipment/financing to be able to defend itself - the latter equivalent to say, the State of Israel backing from the US.

The problem for Ukraine is that Trump has already given away no NATO for Ukraine to Putin, while bilateral security guarantees are problematic given they would likely keep guarantor powers on the hook almost as per NATO article VI defense.

Neither are now likely, but Putin will now make the debate all about what level of defensive capability Ukraine will be allowed. He will want to assure that Ukraine is given as little military capability as possible - leaving it insecure and open to future Russian invasion.

The latter threat will likely stall investment into Ukraine for years to come, ensuring sub-par development, and likely resulting in social and political instability in Ukraine. Failure to ensure Ukraine’s security will ensure only limited return of the millions of Ukrainian migrants living overseas. And for those that return, along with the millions returning from the front lines, the danger is disappointment. This will likely fuel additional outmigration - and the risk of political discontent at home. Putin knows all this and he will exploit this.

Russia will likely intervene again in the future. And there is a risk, and not a small one, of Ukraine’s collapse - which would be a social, political, economic and security disaster for Europe.

Imagine tens of millions of Ukrainians moving West - further fueling populist, far-right parties in Europe. In terms of security, the collapse of Ukraine will leave its now huge military-industrial complex in the hands of Russia, with the combined Russian and Ukrainian military and industrial complexes being more than a match for the rest of Europe.

Can a Russia fresh from such a victory in Ukraine stop there?

Surely the temptation will be to go on, to the Baltic states, Moldova, and beyond.

Indeed, is that not the experience already from Putin in Georgia, Transnistria, and Ukraine? Absolutely yes.

Trump might not care, or understand, the threat to Europe from Putin, or the importance of ensuring Ukraine’s security in any peace deal, but Europe should. Do European leaders get the importance to their security now of the peace likely to be imposed on the continent by Trump? Perhaps the realization is just dawning. But I guess the question is can Ukraine and Europe decline any such peace agreed by Putin and Trump, if, as likely, it leaves Ukraine insecure?

Could Ukraine fight on, with the support of Europe, and without US support in that scenario?

Ukraine could fight on for a time, given the prefinancing/positioning of US munitions in Ukraine seen in recent months - efforts to Trump-proof Ukraine. Months yes, but a year or more, unlikely, given Ukraine and Europe’s dependence still on US weapons supplies.

Ukraine, and Europe, can cover the financing needs - Ukraine has $46 billion in FX reserves, and has access to the $50 billion ERA facility from immobilized CBR assets plus much remaining of the EU’s own €50 billion MFA.

The war has been costing $100 billion a year to sustain Ukraine’s defense - I have argued $150 billion annually is needed to put Ukraine on the foot.

A price tag of $100-150 billion a year is manageable for the $25 trillion European economy, and especially when considering that failure to counter the Russian threat will likely increase the European defense spend by €250-500 billion a year.

Better still if Europe gives up its staunch defense of the $330 billion in immobilized CBR assets, giving these to Ukraine so it can fund its own defense.

Herein the rub, yes Trump might not be willing to write checks for Ukraine’s defense, but if Europe, and Ukraine, came knocking with a big checkbook, willing to spend hundreds of billions of dollars in the US for the defense of Ukraine and Europe, I just don’t think Trump, and MAGA, could say no to the prospect of sustaining hundreds of thousands of jobs - perhaps millions - in the US.

This is about Europe waking up to the existential threat from Russia, understanding that the US is no longer the backstop to their security, and hence the need for them to bankroll Ukraine, and to make the pitch to a Trump presidency for a long-term arms purchase program. Play to his ego, call it the Trump Plan for the Defense of Europe, a new Marshall Plan. It’s that important for sure.

Unfortunately at the moment European leaders are simply not connecting the dots - heads remain in the sand over likely outcomes with a Trump presidency, in denial over the risks from Russia, and preferring to ignore the obvious cost/benefit wins of ensuring their own security by ensuring Ukraine is secure as their frontline defense.

Reprinted from the author’s @tashecon blog! See the original article here. 

The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post.