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The end of the Cold War did not resolve the question of where the boundary lies between the Russian and Western spheres of influence in Eastern Europe. As a result, Russia and the West are in direct competition for control over a belt of former Soviet Republics abutting Russia, including Ukraine, Moldova and Georgia. The West is trying to integrate them into NATO and the EU, as part of its historic mission to bring stability, good governance and free markets to post-communist Europe. By contrast, having failed in its early attempt to create pan-European security structures, Russia wants to integrate these states into its own regional political structures (or, at a minimum, for them to remain non-aligned) to secure its southeastern flank and to create a protected market for Russian goods.

 

Strategic competition between Russia and the West began to escalate last decade but reached a new intensity in 2014 after a popular coup in Ukraine gave rise to a pro-Western government which aimed to take Ukraine decisively out of the Russian sphere of influence. Three years on, the country is still the key battlefield in the broader East-West conflict. Russia is using a range of tactics to prevent Ukraine from integrating with the EU and NATO, exerting immense pressure on the government in the hope that it will lose power to a pro-Russian administration. Meanwhile, the West, and especially the United States, is providing diplomatic, military and economic support to the government in Kiev.

 

However, the conflict is not contained within Ukraine’s borders. In order to put pressure on the other, the West and Russia have imposed reciprocal sanctions. The West has placed travel bans and asset freezes on key individuals and companies and an embargo on the sale of various technologies. For its part, Russia has banned the import of agricultural goods and periodically interrupted the flows of natural gas which supply much of Central Europe.

 

In parallel, both Russia and the West are building up their military presence on either side of Ukraine. In recent months, the US has deployed heavy weaponry in six NATO member states (the three Baltic States, plus Poland, Romania and Bulgaria) and engaged in near-continuous military exercises in the region; now NATO has committed four battalions to the Baltic region. Meanwhile, Russia is building up military forces in the Baltic, Crimea, Transnistria and the area east of Ukraine, as well as flying regular sorties into Western airspace and deploying nuclear missiles in Kaliningrad.

 

Russia and the West are also competing for the allegiance of individual states in the region with a mixture of rewards, threats, sanctions, military deployments, strategic investments, propaganda, counter-propaganda and targeted financing of NGOs and political parties – in totality, hybrid warfare. In Belarus, traditionally a close ally of Russia, the EU has dropped sanctions against the leadership while Russia has enticed it with the promise of new loans. In Moldova, Western attempts to steer the country towards democratic reform are being countered by Russian attempts to draw Moldova back into Russia’s orbit – a campaign it appears to be winning, following the election of a pro-Russian president in November. In the Baltic States, already integrated with the West, Russia is using the large Russian minority to force a change of policy on regional governments.

 

Further afield, Russia is nurturing its traditional alliances with Orthodox nations such as Serbs, Macedonians and Greeks in ways that are destabilising the delicate balance of power in the Balkans. In Central Europe, Moscow using its political and economic power to cultivate its relations with swing states such as Hungary, Slovakia, the Czech Republic and Slovenia with the aim of creating a caucus within the EU opposed to punitive actions against Russia. And in Syria, Russia is putting pressure on the US by maintaining President Assad in power.

 

The consequences of the dispute between Russia and the West are felt across Eastern Europe. Sanctions are having a detrimental effect on the region’s economies in the form of lost exports to Russia, while a glut of food inside the EU has brought down prices and harmed the region’s farmers. Meanwhile, a decline in the ruble since 2014 has limited sales to Russia of manufactured goods, and services such as tourism, leading to recession in Belarus and Moldova. More positively, a burgeoning dispute between Russia and Turkey has now temporarily ended, reviving plans to build the Turkish Stream pipeline which may eventually provide the Balkans with a new source of Russian gas. 

 

The consequences for stability are also profound. Ukraine remains locked in a state of armed conflict, which has now claimed 10,000 lives and caused 23,000 injuries. Moldova is experiencing serious problems of governance. Ethnic divisions in the Western Balkans are sharpening, creating a potentially explosive situation. And those states closest to Russia are rapidly re-arming and readying for war. In the last few months, the Baltic States have all announced a sharp rise in their defence spending and many regional states are building up their reserve armies. And Poland has indicated its wish to buy extended range joint air-to-surface standoff missiles.

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Forecast

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The underlying source of conflict will not go away – both the West and Russia covet the territories separating their respective spheres of influence, and both are willing to commit to the long haul. With the issue of Ukraine’s status in abeyance, and Russia and the US on opposite sides of the conflict in Syria, there is an omnipresent risk of a flare up in tensions in Eastern Europe. In a worst-case scenario, Russia and the US will continue to ratchet up the pressure on one another, leading to a miscalculation by one that tips into violence.

 

The main mitigating factor is the willingness of both sides to de-escalate what has effectively become a political stalemate in Ukraine which neither side can easily win by means of coercion. Many European states, which want to concentrate on resolving the EU’s internal problems and have an interest in good relations with Russia, are opposed to a deepening confrontation with Russia. Germany is spearheading attempts to reach a new arms control agreement with Russia. France, a key player, is likely to elect a president in May which supports an accommodation. Similarly, Russia’s own economic woes limit its desire to prolong the conflict. A survey by the Levada Center polling agency in November suggested that 70% of Russians want better relations with the West. In the longer term, there is potentially a compromise to be found on Ukraine, namely its ‘Finlandisation’: that the West agrees to Ukraine remaining militarily and politically neutral while Russia allows it integrate economically with the West and establish a democratic system of government.  

 

The key variable is the position taken by the United States, which alone can provide the military power to pose a meaningful threat to Russia. Much depends on the stance which the incoming president, Donald Trump, takes. Although his policy towards Russia has not yet taken shape, he has questioned the benefits of the current standoff and appears to want Russia as a strategic partner in stabilsiing the Middle East. Potentially, he may limit the current military buildup in Eastern Europe and look for a way to withdraw, even at the price of ceding Russia what it wants in Ukraine.

 

 

Immediate Impacts

 

• Continued sanctions will have negative economic consequences for Eastern Europe, most notably lower prices for food caused by a surplus in the EU.

 

• Russia’s reduced purchasing power will negatively affect exports, tourism receipts, loans and investments into Eastern Europe.

 

• Russia’s policy of alliance building in the Balkans will foment regional tensions and provoke dormant conflicts.

 

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Potential Impacts

 

• A persistent military build up could lead to the permanent militarisation of NATO’s eastern frontier, mirrored by a build up of troops on the Russian side.

 

• Russia may counter perceived Western aggression with political subversion, cyber attack or, in extremis, a suspension of energy supplies to the West.

 

• In an escalating scenario, Russia could deploy irregular militias to the Baltic States and incite unrest among ethnic Russians.