Putin wants to negotiate an end to the Ukrainian war

Putin appears to have painted himself in the corner and needs to end the war quickly: his “special operation” in Ukraine didn’t bring the lightning victory in only a few days that he originally expected. Instead, half of the occupied territory in the north, east and south of Ukraine is already lost in a series of counter-offensives by the outstanding Ukrainian forces. It appears to be a matter of at most another six months before also the remaining occupied territories will be all lost to Putin. Unless….

Pax Russiana

Unless he pulls another rabbit from the hat. His latest rabbit is a partial mobilization. Not just to threaten Ukraine and its allies, but also to appease his right-nationalist and very vocal critics. It’s also a message to other “Pax Russiana” countries: don’t mess with us. We still have a formidable army. We still have nukes that we can drop. Therefore, it is understood as a strong message to Armenia, Azerbaijan, Kyrgyzstan and Tajikistan with their flaring up border conflicts, to Moldova and Georgia with break-away republics, to Chechens and Dagestani to prevent them from rising up again, and to Belarussians who think of violent revolt against Lukashenko.

Negotiations

To put even more pressure on Zelenski to return quickly to the negotiation table and strengthen his own hand, he restarted the annexation referendums of Kherson, Zaporizhya, Donetsk and Luhansk. At the same time appeasing his very bellicose right flank.

But this appears to be just part of a balancing act. A sign on the wall is the mass prisoner swap, leading to the return of 215 POWs, including more than 100 Azov POWs, in the night of September 22. Making pro-Moscow bloggers angry as they wanted to see them hanged as promised to them before. In return, Ukraine released pro-Russia oligarch Viktor Medvedchuk, 67, and only 55 Russian POWs.

End of war?

Isn’t it a surprising coincidence that months of backdoor negotiations suddenly produced a result, immediately after Putin raised the stakes with the partial mobilization and annexation announcements? As if he wants to signal ‘I am finally serious about ending the war’ as he had recently promised Indian president Modi. And he seems to be willing to give more than he takes, which is very un-Putin under normal circumstances. He must feel very stressed and uncertain, and fear for his (political) life and the stability of Russia.

What will happen next? Behind the screens the intensity of armistice or peace negotiations might increase. Given the dire situation of the Russian troops in Kherson, Luhansk and elsewhere, the most logical outcome is first a retreat to the 2014 borders, and the disarmament of the LNR and DNR in the spirit of the Minsk agreements. Further, partial autonomy of Luhansk, Donetsk and Crimea within the borders of Ukraine appears acceptable. Finally, the Russian troops leave or face justice if they committed war crimes. I can’t see the Ukrainians accepting anything less than that. This means an end to the war effectively.

Post-war boom

In the post-war era, Ukraine works to join the EU. It rebuilds itself quickly, financed by the abundant aid of its NATO partners. It develops itself as a young democratic nation, which acts as a technology magnetic in the disintegrating CIS region. In short, a post-war boom.

Global stock markets will veer back. The pressure on energy markets will ease, and sanctions might be lifted in reward. We will likely hire even more high-skilled professionals than we do now in Kyiv, Kharkiv and other cities of this tech-savvy country of heroes. Because we all should continue to invest only in democracies.

Martijn Hoogeveen

Founder and CEO of Icecat NV. Investor. Ph.D.