05/19/2014 02:15 EDT | Updated 07/19/2014 05:59 EDT

Ukraine Must Play Tough After This Week's Election

If Ukraine calls Putin's bluff, Russia's stability may be shaken and certainly western Europe's indifference will be. Putin's nationalistic narrative has temporarily supplanted the protests in his own country and allowed him to impose repressive measures, but his power is fragile.

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Between 1994 and 1996, Ukraine surrendered the world's third largest nuclear weapons stockpile to Russia for dismantling in return for promises of territorial protection made by the U.S., Russia, Britain, France and China. This was called the Budapest Memorandum.

Now 20 years later, those five signatories have completely reneged on their promise to keep Ukraine intact. The defenseless country is under siege from Russia and next week, on May 25, an election will be held to determine its future. The prospects are far from propitious. The last President of Ukraine was driven out of power but managed to disarm the country further by selling its military equipment, for personal profit, to African dictators.

Another nation-state culprit is Germany. The world's most reluctant super-power has done nothing because it's been politically and economically co-opted by Russia.

Its former chancellor, Gerhard Schroeder, sits on the board of Moscow's giant Gazprom, is close to President Vladimir Putin (describes him as a "flawless democrat") and is a backroom obstructionist to sanctions or actions.

He enjoys more influence than ever, despite being out of government since 2005, because Chancellor Angela Merkel was forced to form a coalition with his Socialist Party. So German and European sanctions are minimal compared with President Barack Obama's, even though Ukraine is a European problem. And Britain, the favored playground of the Russian oligarchs, has done nothing to uphold the Budapest Memorandum.

The only strategy that will work is hardball on the part of Ukraine and the West, according to American money manager and Russian expert Bill Browder in an interview. He visited Canada this month to convince Ottawa to adopt a version of the Magnitsky Law passed in 2012 that he proposed. The legislation was named after his Russian lawyer who was tortured and murdered by Russian officials trying to defend trumped-up corruption charges against Browder.

The Law has blacklisted, and sanctioned, 18 Russians and their companies, making them "financial pariahs" for stealing $230-million in tax rebates from Moscow based on fraudulent documents, he said. Several countries have frozen or seized apartment buildings and assets at the request of American authorities and Browder wants all countries to pass such a law.

"The amount of corruption is staggering and today there is nowhere to hide. You can't launder large amounts of money because of the global banking system, money transfers and the Internet," he said. "On the U.S. Department of Treasury Web site it states that 50 per cent of the oligarchs are holding Putin's money. He has become one of the richest men in the world."

Browder said U.S. intelligence is gathering information to hunt down Putin's assets or for those close to him to expose the level of corruption. Browder, a money manager, knows Russia and became the country's biggest foreign investor. Soon he realized that the corruption was so pervasive that his investors were threatened. So he began blowing the whistle on egregious actions and frauds. In 2006, Putin and his cronies drove him out of the country.

"The sanctions that Washington has imposed since the annexation of Crimea are good and attack Putin's oligarch trustees. But Europe has been duplicitous. Germany has been duplicitous. There is not a single oligarch on their list of those sanctioned and that's where the oligarchs keep their money, in Europe," he told an audience gathered at an Estonian Center, part of the Central and Eastern European Council in Toronto.

Browder believes this is an economic Cold War, not a shooting one, and Putin is playing poker, not playing Napoleon. Russian ethnics in neighbouring countries can agitate and some countries, notably, Bulgaria, have become dependent on Russia.

"Putin is going to take over Ukraine, just the East, then Moldova, Transnistria and then test NATO and see whether it's going to hold. Is President Obama going to send in troops to save 1.3 million Estonians? If not, then NATO falls apart and Putin can take what he wants," he speculated.

Hegemony, not invasion, is the goal for Russia because its army is badly equipped and soldiers lining the border are usually drunk, said Browder. An invasion would mire Russia in a guerilla-style occupation for years. "Crimea was easy to annex because there were already 15,000 Russian troops living there or stationed at its Russian military base. The rest would require an occupying force."

He believes the next elected President of Ukraine must take tough action. "He should give NATO permission to enter and guard his country. If there is any invasion by the Russians, Ukraine must cut the natural gas off to the rest of the European countries. This will force everyone to the table because this is the economic artery. Actually, he should cut the gas immediately and play hardball," said Browder.

If Ukraine calls Putin's bluff, Russia's stability may be shaken and certainly western Europe's indifference will be. Putin's nationalistic narrative has temporarily supplanted the protests in his own country and allowed him to impose repressive measures, but his power is fragile. That's why tougher measures by Ukraine, and the uncovering of the massive money trail, could eventually bring Putin down.

First published in National Post


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