Assessment of the current situation in the conflict between Ukraine and Russia
To kick off a joint series of events with the Funk Group, we looked at the situation in Ukraine in two webinars. While there were still cautious signals of relaxation last week, as of now it can be said with sad certainty: War is raging in Europe again.
In order to make the existing risk that we are observing in Ukraine easier to understand and to present further recommendations for action, we used a technique in the webinar that we had already used in our country risk reports (together with the Funk Foundation): The scenario approach. In unclear crisis situations, scenarios help to develop different strategies for the future, which can then be adapted more and more precisely to reality. Since the worst-case scenario has now actually occurred, we will limit our analysis to this scenario, explain the historical course and, finally, briefly show which indicators supported this scenario.
In the scenario approach - roughly simplified - the current situation is first analyzed in the "longitudinal", the historical course, and once in the "cross-section". Cross-sectional means that the most important actors, their interests and the measures they use are identified. Since the four most important actors, their interests and strategies were presented shortly but very clearly in the set of slides (in German) also available for this event, we will not go into more detail and refer to slide 9 of the presentation. Based on these findings, scenarios are applied at the two extreme points of a development spectrum that appears conceivable: The best possible (best case) and the worst possible (worst case) course. In addition, there is a trend scenario that is not based on the extremes, but on the observation of the actors and their actions. This names and shows what corresponds to a typical behavior pattern. As a rule, the trend scenarios are also those that seem most likely. However, if reality develops differently than expected, the extreme scenarios help to gradually derive one's own strategy from them. As of now, we know that the worst-case scenario for Ukraine has occurred. Before we give you an overview of the current events, we want to show how the events of today could happen.
The development since 2007
The situation in Ukraine is therefore initially as follows: The conflict between Russia and Ukraine has a much deeper and longer history than is sometimes mentioned in current reporting. Moreover, the current situation should not be viewed in isolation. We see the current conflict as part of an extensive system of conflicts, some of which go back into the past (e.g. state disintegration conflicts after the end of the Soviet Union from 1991, more recent but particularly revealing: Russia-Georgia over the regions of Abkhazia and South Ossetia), as well as a number of conflicts currently taking place in parallel. These include some that have rarely received media attention, such as the conflicts between Russia and its Baltic neighbors (alleged protection of the Russian-speaking minority), but also with Finland and Sweden (freedom to join NATO) or with Poland. In addition, one could expand the regional focus at this point and refer to other geopolitical power conflicts, such as the one between the United States and China. However, the framework set does not allow for a differentiated presentation of the respective events and courses of events. However, they will be used selectively for further analysis. The following section therefore focuses on the conflict between Russia and Ukraine, which we will present in a very condensed form.
For MBI CONIAS, the beginning of the conflict between the two states, which were closely linked economically and geopolitically during the Soviet era, dates back to January 2006 at the latest, when Russia literally turned off the gas tap to Ukraine for the first time and the energy-intensive industry in Ukraine, but also the supply of the civilian population, was severely affected. In connection with the so-called "Maidan protests", experts were once again able to guess how tense the situation between the two countries must have been around 2013. In November 2013, then Ukrainian President Viktor Yanukovych, who comes from eastern Ukraine, had his government under Prime Minister Azarov announce that the association agreements with the EU would not be signed for the time being. The subsequent pro-European protests and demonstrations on Maidan Square in Kiev were flanked in foreign policy terms by a drastic price reduction by Russia on its natural gas supplies and the prospect of making up to $15 billion US dollars available to the financially ailing Ukraine in the short term. After several months of constant protests, in the wake of which more than 100 people lost their lives, the situation came to a head on February 22, 2014, when the Ukrainian parliament removed President Yanukovych from office - who then fled first to Crimea and then to Russia.
It is in this context that the largest confrontation to date between Ukraine and Russia arose: The occupation of Crimea in February 2014 by pro-Russian activists and the outbreak of fighting in eastern Ukraine in the industrialized regions of Lugansk and Donetsk. While Crimea was quickly placed under Russia's administrative sovereignty and only sporadic incidents occurred there, fighting in eastern Ukraine - mostly without much attention or comment from the public in Western countries - has been ongoing since 2014. Remarkably, despite the "non-interstate" war between Ukraine and Russia, trade volume grew by more than 27% in 2017 alone. Although some of the increases may be explained by currency fluctuations, it should be noted that economic exchanges between the two countries did not decline at all during these years, despite the sanctions imposed.
On September 1, 2017, the Association Agreement between Ukraine and the EU, the postponement of which was the stumbling block for the protests in Kiev in the fall of 2013, came into force. The Russian side responded by being credited with several serious cyberattacks on Ukraine since 2015, most recently in February 2022.
Worst-case scenario: A war to control all of Ukraine?
The worst-case scenario we proclaimed last week was subtitled "war to control all of Ukraine" - and it seems that the Russian side is currently putting it into practice. Since the morning hours on Thursday, the troops stationed around Ukraine have indeed been advancing along the routes we had outlined. After targeted air strikes weakened Ukraine's air defenses during the night, armored units and ground troops advanced into Ukraine's territory yesterday. CNN and Tagesschau reported troop movements into Ukraine's territory from the Crimean Peninsula, from the self-proclaimed People's Republics of Luhansk and Donetsk, from Russian territory in the northeast, and from Belarus in the northwest. Above all, aggression from Belarusian territory is particularly relevant, since these troops can only have one target: The capital, Kiev. With this statement, which yesterday afternoon also increasingly manifested itself through skirmishes on the outskirts of the metropolitan region of Kiev, it becomes clear that President Putin is no longer only concerned with occupying eastern parts of Ukraine, but with controlling all of Ukraine: The worst-case scenario.
The news situation is still confusing at the moment and many reports cannot be verified. What is confirmed is that there are explosions throughout Ukraine and that military bases have been attacked at various points, including near NATO's eastern flank on the Polish border. The status of the fighting, however, cannot be assessed with certainty. It is foreseeable, though, that the Ukrainians’ struggle will only be temporary resistance, since the Russian military is far superior to the Ukrainian in volume and capabilities. Based on Putin's speech, it can be assumed that Russia intends to overthrow the current government after taking control in Kiev. In perspective, a Russian-controlled government in Kiev can then be expected. To what extent the population or pro-Western activists or politicians have to fear persecution is currently still open. Many Ukrainians from the eastern parts of the country do not even want to ask themselves this question, as they are already moving in large convoys on the roads towards the west, towards the Polish border.
As for geopolitical classification: As a result, Russia would have gained a very decisive geostrategic advantage by not only taking control of the land connection to Crimea, but also controlling important ports on the Black Sea and the high-yield agricultural areas in Ukraine that lead far to the west.
According to the regulations of the NATO treaty, this attack would not be a NATO alliance case, since Ukraine is not a NATO member state. In humanitarian terms, the war would have devastating consequences. Although Russian forces would be significantly superior to Ukrainian forces in all areas, and in this scenario, Russian cyberattacks on the Ukrainian army's communications structure could lead to a rapid breakdown of intra-Ukrainian communication, the fighting could nevertheless result in high casualties on the Ukrainian side. In addition, there are potentially up to 1.5 million refugees. The first signs of a refugee dynamic toward the West, and Germany in particular, are already evident. This development could have further repercussions on the various migration conflicts already existing in Europe.
From a regional and global economic perspective, the outbreak of war will have fatal consequences. This is because the threatened severe economic sanctions, especially by the USA, but also by the European NATO and EU member states, will be implemented promptly and will affect not only Russia, but secondarily also the West. Among other things, a high increase in energy prices is to be expected, which could hit the economies still weakened by COVID-19, in some cases considerably.
In conclusion, it should be noted that the current events are an international armed conflict that can be classified as a war of aggression by the Russian side. It is therefore clear that Russia is breaking international law in several respects. In addition, one thing is already clear: The post-Cold War phase of the last 30 years is over. Europe is facing major geopolitical upheavals with currently unforeseeable consequences.
Final consideration: Could the current occurrence of the worst-case scenario have been predicted?
As already explained and also addressed in the webinars, dealing with events that lie in the future will always be associated with uncertainty and risk. However, the use of scenarios helps to avoid being unprepared for the future. As also explained in the webinar, it is difficult to state probabilities of occurrence for the different scenarios. During the analysis, it already became very clear that the worst-case scenario that occurred and the usually realistic trend-case scenario were hardly distinguishable in terms of their probability of occurrence. Compared to the 25 scenarios in the country risk reports, this represents the absolute exception. Looking back, what spoke for yesterday's development?
Reasons that can explain the occurrence of the scenario are not on the statistical level. Rather, it is about Putin's system, a power apparatus around the president who cannot accept the end, or rather the outcome, of the East-West conflict and now saw one of the last opportunities to rewrite that "end of history," as the outcome of the Cold War was often called. Putin and Russia are back on the international stage today. Russia is a respected, even feared, geopolitical power. If Putin reappropriates Ukraine, many of the geostrategic disadvantages Russia suffered as a result of Ukraine's independence will be eliminated.
The extent of the troop stationing and the entire costly effort ultimately spoke in favor of an invasion. How, some analysts asked themselves beforehand, was Putin supposed to walk away from the conflict in a face-saving manner after his maximum diplomatic demands on the EU and NATO? Today we know that he never wanted to.
There are also smaller indicators, which in retrospect can be classified as indicators: The Russian cancellation of further diplomatic talks with the USA at a lower level and the hasty withdrawal of a Russian yacht from a German shipyard, which is said to belong to Putin himself. Employees claimed to know that this was done in order not to lose the yacht to the sanctions regime in the event of war.
In any case, it remains to be said that the Ukraine crisis "did not fall from the sky" and that the conflict had been observable since 2006 at the latest. Political risks can be identified at an early stage and one can prepare for them.
About the authors:
Dr. Nicolas Schwank and Leon Seydel
CONIAS Risk Intelligence
Michael Bauer International GmbH
Sources and references:
Graphic creation: Leon Seydel
 For the concept and explanation of “conflict systems” or “conflict families”, see Schwank, Nicolas (2012): Konflikte, Krisen, Kriege. Nomos. S.151 ff.
 We currently monitor approximately 1,000 ongoing political conflicts in the CONIAS Conflict Database.
 https://www.nzz.ch/russland-verstaerkt-seinen-einfluss-auf-die-ukraine-ld.1058122?reduced=true; also: https://www.fr.de/politik/russlands-belohnung-janukowitsch-11711346.html