Russia and Ukraine hold peace talks in Paris : ‘It’s now or never’

There is cautious optimism that talks between the leaders of Russia and Ukraine on Monday could end the stalemate over a long-running conflict in the Donbass region.

Russian President Vladimir Putin and his Ukrainian counterpart Volodymyr Zelensky will be joined at the talks in Paris by France’s President Emmanuel Macron and German Chancellor Angela Merkel; the group is known as the “Normandy Four.”

Macron and Merkel have previously tried to broker several peace agreements, known as the “Minsk agreements,” but these have yet to be fully implemented. It will be the first time that Putin and Zelensky have met face to face and the first time that the Normandy Four group has met since October 2016.

Relations between Russia and Ukraine nose-dived after Moscow annexed Crimea from Ukraine in early 2014 and then supported a pro-Russian uprising in the Donbass region in the east of the country where two republics (of Donetsk and Luhansk) were declared by pro-Russian separatists.

The conflict is now in its fifth year and has been largely characterized by clashes and skirmishes between separatists and the Ukrainian army. Nevertheless, 13,000 people (including civilians and combatants from both sides) have died in the conflict since 2014, according to the United Nations, and hostilities have affected 3.9 million civilians living in the region.

The summit comes amid a tentative rapprochement between Russia and Ukraine that has taken place since Zelenksy came to power in May.

He had made achieving a peace deal with Russia, and ending what he’s called “this horrible war,” a key part of his election manifesto. The 41-year-old president is inexperienced, however, having a background in comedy and TV production rather than politics, leading some experts to worry he could be outmaneuvered by a veteran Russian president.

For Russia too, though, the stakes are high, with the country still subject to international sanctions for its interventions in Ukraine. The lifting of EU sanctions has been tied to the successful implementation of a peace agreement with Ukraine.

There is a fragile cease-fire in the Donbass region right now but the Minsk agreements are widely seen to have failed because both sides accused the other of not abiding with the deal, and of misinterpretation of the conditions of the deal.

In 2016, Germany’s then-Foreign Minister Frank-Walter Steinmeier came up with a plan (now known as the “Steinmeier formula”) to solve the deadlock. The plan is like a road map to peace setting out a sequence of events that both sides need to enact — including the holding of free and fair elections in the Donbass region and for self-governing status to be granted if these are deemed to have taken place.

This has proved a very hot potato for Zelensky who signed up to the formula in early October. He has been accused of capitulating to Russia and there were protests at the decision.

Signing up to the Steinmeier formula has appeared to bear some fruit with Ukraine and pro-Russian separatists disengaging forces in three areas along the front line in recent weeks. For its part, Ukraine has said that no elections will take place in the region unless they are in accordance with Ukrainian law and until it regains control over its border with Russia in that area.

Zelensky has said “there won’t be any elections under the barrel of a gun,” and that no elections would take place “if the troops are still there.”

Last week, an aide to the Ukrainian president said that Ukraine will attend the meeting in Paris with goodwill and hopes for a deal. But he added that it would not wait “years” for Russia to implement its part of the Minsk deal. Presidential aide Andriy Yermak also said that if peace talks with Russia fail, Ukraine will consider “building a wall” along its borders with Russia.

Ahead of the summit, the Elysee Palace released a statement in November saying that it would “be held following major progress since the summer in negotiations for a settlement in the east Ukraine conflict, progress which in particular allowed the removal of troops from several areas on the frontline.”

There might be progress, but experts say the meeting might be a last opportunity for the countries to normalize relations.

Christopher Granville, managing director of EMEA and Global Political Research at TS Lombard, told CNBC that the meeting was a “now or never” opportunity.

“There seems a reasonable chance of some progress (at the meeting), but that’s the boring answer, the more interesting answer is that I do think it’s now or never. In politics there’s always a window, there’s a moment of political capital, a honeymoon when something can be done, and Zelenksy’s honeymoon is probably past its zenith, so either something is done now or the window will close, so that’s what makes it particularly interesting.”

Daragh McDowell, head of Europe and principal Russia analyst at Verisk Maplecroft, told CNBC ahead of the summit that principles of territorial sovereignty and integrity were at stake, however.

“France has made it clear that it wants to normalize relations with Russia somehow, but at the same time we’re in a position where Russia has changed its borders through military force, invaded a European country — there are very important principles at stake here and you can’t just draw a line under it and say, ‘all is done, all is forgotten’,” he said.

Russia also has a commercial interest in improving relations with its neighbor, not least on the energy front as it looks to maintain its dominant position in terms of energy provision to Europe. Russia was the largest supplier of natural gas to the EU, both in 2018 and 2019, according to data from Eurostat, although it is facing a competitive threat from the U.S. on that front.

France and Germany’s leaders want to see relations normalized between Ukraine and Russia due to the heightened geopolitical threat posed by Moscow on its border, as well as realpolitik and the desire to keep Russia on side and engaged to a large extent.

Although new gas pipelines are under construction to transport Russian gas to Europe via alternative routes (such as the Nord Stream 2 pipeline which will supply gas from Russia to Germany, and the TurkStream pipeline from Russia to Turkey) much of the EU’s gas currently comes via Ukraine.

The EU is keen to avoid any gas supply disruptions like the one that happened a decade ago when Gazprom, the Russian state-owned gas giant, cut off all supplies to Europe via its Ukrainian pipelines because of a dispute over debt with Naftogaz (Ukraine’s state-owned oil and gas company) and the price for Russian gas supply.

Russia has an interest in signing a new deal because, if not, its reputation as a reliable supplier could be dented. Ukraine has a strategic interest in locking Russia into a new long-term deal, which would ensure significant transit volumes of gas after the Russia-sponsored pipelines bypassing Ukraine come online, according to Andrius Tursa, central and eastern Europe advisor at Teneo Intelligence.

“Significant volumes of Russian gas supplies to Europe passing through Ukraine will stall if the two countries do not reach a new gas transit agreement by the end of 2019,” Tursa said in a note Thursday.

“If no deal is reached by the end of 2019, significant volumes of Russian gas would stop flowing through Ukraine to European countries down the line, resembling the gas supply crisis of 2009,” he said.

“Bilateral relations between Russia and Ukraine would take another hit, further lowering the prospects for conflict resolution in eastern Ukraine.”