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Some Suggested Steps to a Peaceful Solution in Ukraine

15/09/2014 12:39 | Updated 12 November 2014

In my first blog for the Huffington Post earlier this Summer I outlined a number of suggestions which I hoped, if taken, might steer Ukraine away from all out war with Russia. At that point the new Ukrainian President, Petro Poroshenko had been in office for just six weeks and we had hopes that he would be able to achieve a peaceful solution to the crisis.

Sadly, as all the world now knows only too well, since then the military conflict has escalated (with the most recent UN estimate putting the number of deaths on both sides of the conflict at 2,600) and we have also seen the tragic shooting down of Malaysian Airlines Flight MH17 with the loss of all 298 passengers and crew.

Despite Mr Putin's claims to the contrary, it is clear to most independent observers that Russian troops have moved into the disputed eastern territories of Ukraine and, so far, the welcome ceasefire has been shaky, to say the least. Regrettably, the international community has been unwilling to make a meaningful stand, other than by introducing limited economic sanctions which are, almost by definition, slow to bite.

I welcome the British businessman, Sir Richard Branson's peace initiative which you can view here and I am looking forward to working with him further on this in the near future. However, for the foreseeable future, the prospects for peace in Ukraine lies in the hands of Ukraine and Russia alone, and as such I feel that even though I have always remained strictly non-political in the past, I feel that to keep quiet, especially now that Ukraine is at war, is criminal - it my duty to speak out once again and at least outline some of the steps which I believe could lead to a peaceful solution.

Before we come on to concrete advice, I think we need to establish two points: first, that this war will not be a long one. I would urge international investors in Ukraine to hold their nerve. A solution will be found, it has to be found, as Ukraine is in no position to fight a long war with Russia. Because of this fact alone, a negotiated peace must be found, and will be found, and soon. It is what form this peace takes, and whether it is built on solid, lasting foundations which concerns me. Ultimately a bad peace is always preferable to a good war, and everyone concerned must keep this firmly at the front of their minds.

Second, we need to be clear - and I say this as someone who welcomed his election and as someone who has shared a stage with him at many conferences organised by the Kyiv Post and others - regrettably, President Poroshenko's government is in total chaos. The Ukrainian people are losing confidence in him after only three months. The Ukrainian military has suffered heavy losses of men and equipment in the field and as a result Ukraine's bargaining position is now weaker than it was two months ago.

To my mind President Poroshenko's biggest mistake has been in appointing a team who are 90% made up of veterans of the 2004/5 Orange Revolution. That team failed then and I see no reason to expect them to succeed when they have failed before. So, he needs to look hard for new talent. It is there in Ukraine and he needs to dig hard to find it. Also, there is an enormous Ukrainian disapora of individuals dating back many years, many of whom have attained senior positions in international commerce and banking - he needs to bring these people in, in an advisory capacity if he is not prepared to give them ministerial positions but (and this is key) he needs to listen and act on their advice.

Poroshenko also needs to accept that NATO is not coming any time soon. Ukraine cannot fight an extended war with Russia. The Ukrainian army is ill-equipped, chaotic and corrupt - the Russian army, though still corrupt, is well-equipped and experienced. Economic sanctions are a long-term instrument which will eventually hurt Russia but by then it will be too late: I repeat, because this is so important, this war will be very short because Ukraine cannot sustain it for any long period.

Given these facts, the only logical answer is: Poroshenko must negotiate.

To this end I make three concrete suggestions.

One, Mr Poroshenko in his heart may regretfully have to accept that Crimea is gone. There is no possibility of taking it back by force, just as there is no possibility of Russia being forced to return it through the power of the current economic sanctions alone. The Crimea has been Russian for much more of it's history than it has been Ukrainian and a majority of the people there wish to be in Russia.

Despite not being a political person, I do appreciate, as a businessman, the considerable political pressures on President Poroshenko. For this reason, he should keep up the face saving exercise of publicly disputing that Crimea has gone to Russia - he can call for UN Resolutions and for long-term discussions - but in the short-term he should not make the return of Crimea a pre-condition for peace negotiations because that will stop the negotiations before they even start.

The only way Crimea will return to Ukraine is by extended negotiations or if sanctions bite harder. Poroshenko should beg the West for that but I don't think there is any appetite for such a strategy in Brussels or Washington because Russian counter-measures have not even started yet - and if Russia turns off the gas pipelines, then some EU countries in Eastern Europe will freeze to death this winter.

Second, Donetsk and Lugansk. Here I think Poroshenko should do everything in his power - short of military means - to try and persuade them to stay in Ukraine. However, if after granting them many concessions and paying the enormous cost of re-building these war torn regions the majority of the people there still want to go with Russia, or with a Russian-allied independence, then again, and very regrettably, the only rational solution may be to let them go.

Poroshenko should look to the example of David Cameron over Scotland: he does not want to let Scotland go, he tries to persuade Scotland not to go, but he will not send in troops to try and prevent it if it is the genuine will of the Scottish people.

Having said that, some of the demands of the separatists make no sense to me if they are to stay in Ukraine - even under a proposed federal system. They say they want to join a custom union with Russia, while the rest of the country will be in a trade association with the EU. Such an arrangement is impossible as you would need customs barriers between different cities in the same country... it would be the same as making beer illegal in Chicago and keeping it legal in New York - it would lead to smuggling, to crime, to internal customs controls and chaos. So that needs to be resolved.

Also as part of the negotiations, Ukraine must insist that Russia's demand for a land bridge between Russian and the Ukraine is untenable as it will cut districts in half across a huge area of the country. Instead Russia should be given a cast iron guarantee by Ukraine they will supply water and electricity and other essential services to a Russian controlled Crimea.

So, my second piece of advice to Poroshenko is to listen to the concerns of the people in Donetsk and Lugansk and try and placate them. If they want Russian as the main language, give it. If they want to use their own resources for their own economic benefit - that's fine, that's federalism. The only thing they cannot have autonomy on, and remain in Ukraine, is foreign policy, including international trade policy - the customs issue raised above needs to be resolved. Then, if after all these concessions have been made, they still want to look to Russia - well, you may have to let them go.

Third, and this is crucial: President Poroshenko needs to look at his team again. Usually, in business and in sport, you don't change the winning team - so, likewise, why has he brought the losing team back? It is very difficult to find good people in Ukraine, people who are prepared to work for the benefit of all Ukraine's 46 million citizens and not just to line their own wallets, but they are here so you have to dig for them.

If you want to change the banking system, the monetary system, the judiciary - bring in the Ukrainian disapora to work alongside the existing people. If you have a judge, appoint another judge, a Ukrainian by parentage who has spent a lifetime in the diaspora, to work alongside the incumbent - and so if he or she sees the judge is finding in favour of one party in a case when that party is clearly in the wrong, then you know the judge is either totally incompetent or totally corrupt. Either way that judge should be gone. The same principal can be followed in banking and finance and other areas until corruption and the building of unjust personal influence has been uprooted.

To his credit, Poroshenko has brought in teams from Georgia, which was a sound idea as Georgia has performed an economic miracle - but their advice has been ignored. If you make sure you receive good advice but have no policy of execution, then the exercise is pointless - and, in fact, it is worse than pointless, because you've just wasted more money on the advice...

As I say, I welcome the intervention of Sir Richard Branson and his team of international business people. I think, as in so many situations, it is the clear-headed advice and vision of people who are involved in trade and entrepreneurship which can cut through the political rhetoric. Business people are, after all, used to assembling teams and getting things done - and business people can only achieve great things which benefit the prosperity of all citizens in conditions of peace. Fortunately for the Ukrainian people, Mr. Poroshenko has a proven record of running successful businesses, so he remains the right choice for Ukraine - I only take exception to some of his team members.

At such a tragic time for Ukraine I hope the country where I have spent most of my adult life, and most of my career as an investor and entrepreneur can learn from the lessons of business: clear thinking is needed, corruption must be rooted out and, above all, we must all act for the benefit of all of the people of Ukraine - and we can only do this in a climate of negotiated peace.