Russia's Putin wants chaos, not invasion, in eastern Ukraine: Analysts

MOSCOW (AFP) - President Vladimir Putin is seeking to maintain influence in Ukraine by fomenting instability in its Russian-speaking eastern regions but will stop short of sending troops there in a Crimea-style swoop, analysts said.

Ever since the Kremlin took control of Ukraine's Russian-speaking peninsula of Crimea last month and has massed tens of thousands of troops on Ukraine's border, Europe has been on tenterhooks expecting Mr Putin to occupy eastern Ukraine.

But the intractable Russian strongman has been playing a diplomatic cat-and-mouse game with the West, inflaming tensions with his pledges to protect Russian speakers in Ukraine's east without following up on his threats so far.

Ukraine's former Soviet master Russia is now pushing Kiev and its allies in Brussels and Washington to grant more powers to the country's eastern regions through federalisation that would elevate the status of a Russian language.

But the Kremlin conspicuously did not support pro-Russian militants who have over the past days occupied government buildings in key eastern Ukrainian cities including Donetsk and declared independence.

In a move signalling his unwillingness to ramp up confrontation with the West, Mr Putin expressed hope on Wednesday that upcoming four-way crisis talks with the European Union, the United States and Ukraine will bring positive results.

On Thursday, the Russian president sent a letter to the leaders of 18 European countries that receive Russian gas, warning them that Russia could cut natural to Ukraine and interrupt transit supplies to Europe if Kiev did not settle its US$2.2 billion (S$2.75 billion) bill.

But he also suggested that Moscow and Brussels work together to restore Ukraine's battered economy, in what might be an effort to step back from the brink of military confrontation.

"There will not be a repeat of a Crimean scenario," Konstantin Kalachev, head of the Political Expert Group, told AFP.

Moscow will most likely limit itself to providing only logistical and moral support to pro-Russian separatists, said Mr Kalachev.

The occupation of eastern Ukraine, where a majority does not support succession, is fraught with huge political and economic risks, analysts said.

The EU and the United States have already slapped targeted sanctions against some of Mr Putin's closest allies.

US President Barack Obama said on Thursday that the United States and its allies should prepare new sanctions against Russia if it escalates the crisis over Ukraine.

A new round of Western sanctions could target Russia's entire political elite and would deal a wounding blow to Russia's stuttering economy.

The cost of seizing Crimea is already expected to be a major drag on the economy, hitting gross domestic product and intensifying capital outflows.

World Bank President Jim Yong Kim warned that the crisis would also have far-reaching effects on Russia, forcing it into recession this year.

"This is a very serious issue for Russia - a very serious issue for its growth prospects," Mr Kim told reporters in Washington Thursday. "So we simply urge all of the parties to continue with negotiations and find a peaceful means of moving forward."

G7 finance ministers and Central Bank governors later met briefly, with Ukraine, "its financing needs and the international response," again high on the agenda.

Economists and investors will widely see Ukraine's east with its impoverished coal-mining region of Donbass as a new economic liability rather than an asset.

"Any military operation in the southeast (that the West is so afraid of) looks unprofitable and unnecessary," business daily Vedomosti said in an editorial, warning of "huge new expenses for the Russian budget."

Alexei Malashenko, an analyst with the Carnegie Moscow Centre, struck a similar note, saying that sending troops to eastern Ukraine would be "the apex of stupidity."

"They have already sensed that they've gone too far, that the risks are huge," he told AFP, referring to Russian officials.

The tug-of-war over Ukraine has plunged ties between Moscow and the West to their lowest point since the Cold War.

The crisis was triggered by a sudden decision by Viktor Yanukovych, Ukraine's president at the time, to ditch a broad political and economic agreement with the EU under pressure from Moscow.

Following deadly clashes a popular pro-Western uprising ousted Yanukovych who has since taken refuge in Russia.

After failing to keep all of Ukraine firmly anchored within its sphere of influence, Moscow will seek to keep the country's eastern regions in its political and economic orbit by trying to maintain instability there.

"There will be a scenario of endless 'managed' chaos," said Mr Kalachev of the Political Expert Group.

"The maximum task is to turn Ukraine into a showcase of the negative consequences of a revolution, democracy, a multi-party system, and the European choice."

Such tactics, he said, would not only help Mr Putin win better concessions from Kiev's pro-European authorities who prepare for snap presidential polls on May 25 but also strengthen his power base at home.

"But any chaos should have its limits - no one needs hundreds of thousands of refugees and a civil war."

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