KYIV BLOG: Zelenskiy goes to Washington but comes back with little of what he wanted

KYIV BLOG: Zelenskiy goes to Washington but comes back with little of what he wanted
Zelenskiy met with Biden in Washington but came out of the meeting with very little, which is not what he wanted. China will be the big winner as a result and Russia too, but to a lesser extent
By Ben Aris in Berlin September 3, 2021

President Volodymyr Zelenskiy finally had his first face-to-face meeting with his American counterpart Joe Biden on Wednesday, September 1. The talks went on for two hours, instead of the scheduled one, and covered a long shopping list of wishes from both sides.  

The issues are well known. Zelenskiy wants weapons, Nato membership commitment and an effective effort to block Nord Stream 2 (and/or money). Biden wants Ukraine to get on with reforms and to end corruption first.  

My take-out is neither side got what they wanted. Tellingly, instead of the traditional joint press conference they chose to issue a joint statement that laid out promises, in very general terms, that we have heard a million times. (I have appended the full statement to BMB Ukraine’s comment on the meeting here.)  

Indeed, Biden has become very allergic to questions at press conference recently, since the fall of Kabul to the Taliban. He sounds like a bit like Yeltsin, who only answered questions he wanted to, and Biden is simply bulldozing his way over the issues, claiming that the Afghan occupation was “an enormous success”, when clearly it was the exact opposite.  

You can be sure that the Kremlin was watching closely and the mere fact that there was no opportunity to ask those embarrassing questions, like: “Exactly when will Ukraine be offered Nato Membership Action Plan (MAP)?” tells you all you need to know about the results of the talks.  

The lack of a press conference is a problem for another reason too. Really the main goal of this visit was for the picture of Zelenskiy standing shoulder to shoulder (I was going to make a joke here: shoulder to hip, as Zelenskiy is so short and Biden tall…) symbolising the fact that the US has Ukraine’s back in its undeclared war with Russia.  

The missing Biden-Zelenskiy photo may turn out to be a big problem. The Kremlin take will be that Ukraine has been moved several pegs down the importance ranking in US foreign policy, leaving Russia free to act as it likes in Ukraine.  

The fact that Zelenskiy's visit was delayed several times and then delayed again at the end by a day, as Biden was busy dealing with the Afghan fall-out, also sends the same message. What did Ukraine actually get in concrete terms from this visit? $60mn in new military support, presumably on top of the c$250mn it got in each of the last two years, and some energy deals – i.e. almost nothing.  

It’s widely assumed that Biden is clearing the decks so he can fully concentrate on “the China problem”, which has overtaken “the Russia problem” in Washington’s worry list.  

Bottom line is, Ukraine is left in the limbo in the middle of Europe. It has been stranded there since 2014: it has broken relations with its former biggest trade partner Russia, but has a very modest indeed free trade deal with the EU. And it has adversarial diplomatic relations with Moscow, but only half-hearted support from Brussels, which continues to keep it at arm's length.  

The West has been supporting Ukraine to the extent it remains a Western-orientated buffer country between the EU and Russia, but no one in the West is really interested in anything more than that. In other words, it is now in the same place as Turkey in the “perennial EU membership waiting room” and unlikely ever to get out – at least not under Biden’s administration. At least Turkey managed to join Nato – something I feel Nato is regretting now.  

Zelenskiy is not stupid. He can see this. And he has rightly been pushing very hard and very publically for his Western “allies” to commit to bring Ukraine in from the cold. And each time he asks they say nothing. Again yesterday: no press conference, no commitment, no photo.  

I think this may be the straw that breaks the camel’s back, or at least turns its head a little more to the east. Zelenskiy has already been flirting with China, which recently promised to invest billions of dollars into Ukrainian infrastructure and is opening up its markets to Ukraine as a reward – the next best thing to giving Kyiv cash. (If the EU really did want to help Ukraine and wean it off IMF aid money, we have long argued that it should simply open its markets to Ukraine and allow it to trade its way out of its hole.)

Unsurprisingly, the Ukraine-Turkey relationship is also flourishing, so a new set of relationships is gelling there as well with its centre of gravity in the Black Sea. Turkish President Recep Tayyip Erdogan also very clearly has big geopolitical ambitions in that region and its new drone sales could be a game-changer for the regional balance of power.  

The irony of Biden’s lukewarm embrace of Ukraine is that he may end up pushing Ukraine into China’s arms, which is exactly counter to the policy he is supposedly following of containing China. The US focus on the Russian problem has had exactly the same effect: the show-down has driven Moscow and Beijing together, whereas we know Putin would much prefer to be friends with Europe and create a single market “from Lisbon to Vladivostok,” the centrepiece of his long-term grand foreign policy plan.  

My brother-in-law, Axel Schneider, who is a professor of Sinology at Gottingen university and one of Germany’s leading experts on China, is convinced that the US and China will go to war in the next 15 years, as the White House is clueless about how China works and helpless to prevent its rise. I may be reading too much into this story and I don't know about war, but Biden appears to have just pushed Ukraine a little closer to China, which is improving its position in the EU’s backyard, and is the exact opposite of what it is assumed Biden wants to achieve.  

Metinvest on a roll

Again I find myself adding a business story about Ukraine that is totally different in nature to the politics story. Yesterday I talked to Yuriy Ryzhenkov, the CEO of Metinvest, a steel maker and Ukraine’s biggest company, after it reported record results.

The company is doing very well but not only thanks to the boom in commodity prices, but also thanks to investments into productivity and efficiency that earned it an extra $370mn from simply running its business better.  

However, when I asked Ryzhenkov about the outlook for Ukraine, which is doing very nicely (economically) at the moment, he was a lot more cautious. Basically he and his peers hold that another crisis will hit at some point – there is typically a big one every eight years or so – and the game is to use the good times to get ready for the inevitable next instalment of the bad times.  

But Metinvest’s story also shows that real progress is being made and that the transition story has moved on from simple survival and making cash to investing into efficiency and improving not revenues but profitability. That is very encouraging and it is true for more and more of the economy. Russia is streets ahead on this score, as its companies’ efforts to improve profitability further have taken them to a place where they are now innovating and the best ones surpassing their EU peers.  

In Ukraine the increasingly “normal” nature of big business is what we saw in Russia in the early noughties and it bolsters my optimism that Ukraine could be poised for take-off. Really all it needs now is some peace and quiet on the crisis front and to get its head down to do the reforms, as these now will translate directly into big growth gains. Here’s hoping.

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