MOSCOW (Reuters) - Vladimir Putin’s call for pro-Moscow separatists to postpone an independence referendum in eastern Ukraine shows the Russian president has achieved as much as he can for now without taking the potentially catastrophic step of sending in troops.
The Russian president’s assertion that he has withdrawn forces from the Ukraine border - the White House says it has seen no evidence of this - was a clear sign that he wants to take the heat out of worst East-West row since the Cold War.
It may also indicate that the Russian economy, on the brink of recession, is feeling the pain of the Western sanctions imposed over the Ukraine crisis. Analysts predict the separatists will heed Putin’s call to postpone Sunday’s vote.
The greatest fear in the West, and in financial markets, was that Russia would send the 40,000 troops NATO says are massed on the border into Ukraine, biting another chunk out of the former Soviet republic following Moscow’s March annexation of the largely Russian-speaking Crimean peninsula.
That seems to be off the agenda for now and Russian markets soared in reaction to Putin’s words.
“It sounds like there’s de-escalation and that Putin will agree to Western terms,” said a Moscow trader at a Western bank.
But did Putin blink?
On the plus side, he can point to the fact that separatists in eastern Ukraine, who declared a “people’s republic” in the industrial region of Donetsk, are almost certain to be able to discuss their status with the Kiev government.
“(Putin) traded the referendum for the possibility that Kiev will begin talks on an equal basis with the Donetsk Republic,” “That’s very painful for Kiev,” said Moscow-based foreign policy analyst Vladimir Frolov.
Putin may feel his best bet for a chance to shape Ukraine’s future without invading is to press Kiev for concessions in negotiations with pro-Russian forces in the east.
Putin also showed his wish to compromise in relatively conciliatory remarks about Ukraine’s presidential election due on May 25, which Western governments hope will increase the legitimacy of the authorities in Kiev.
After weeks in which Russian officials have condemned the Ukrainian government as illegal and labeled it the “so-called Kiev authorities”, Putin said the vote was a “move in the right direction”.
He added, however, that the election could decide nothing unless all citizens were sure their rights would be safeguarded, leaving the door open for Moscow to condemn the vote and put the blame on Kiev.
Frolov said Putin wants talks between the Ukrainian government and the separatists to lead to “a new Dayton, under which Kiev will be forced to accept the kind of Ukraine that Russia wants to see”.
The 1995 Dayton Agreement formalized the postwar division of Bosnia and Frolov said Ukraine could end up divided as well.
On the minus side, Putin can have no certainty of how any talks between Kiev and the separatists will go. He also risks alienating his supporters who have been fed a relentless diet in the Russian media of Ukrainian aggression against a peaceful population defending itself in the east.
Some analysts suggest Putin has been pushed into compromise by economic sanctions imposed on individuals and companies close to the president. Putin has acknowledged the sanctions are hurting the economy, though not critically.
The West has threatened more far-reaching sanctions that would hit important economic sectors. Oleg Nemenski, senior analyst at the Russian Institute for Strategic Studies think-tank in Moscow, suggested the prospect of further damage to economic and political ties with Europe was behind Putin’s move.
“This would badly hit the Russian economy. Wise politics is to take into account one’s own capabilities,” he said.
At the same time, the troop withdrawal announced by Putin was “clearly a tactical move because Russia can at any moment redeploy its troops nearby the Ukrainian border”, Nemenski said.
Additional reporting by Steve Gutterman, Gabriela Baczynska and Thomas Grove in Moscow and Alessandra Prentice in Slaviansk; Editing by Giles Elgood