Risk of serious conflict in Ukraine as Russians urge Putin: 'Be bold!'

The confrontation with Russia over Ukraine lurches from one initiative, bluff, threat and counter-threat to another, with no long-term solution in sight. And the longer the crisis runs, the greater the chances are that political bluff will lead to real military confrontation.

Vladimir Putin now realises that all lines of retreat are blocked. If he blinks he is likely to be cut down by his military leadership and the ultra-nationalist groups who are already saying openly he is being too weak, failing to grab what should be truly Russian in Ukraine.

‘Level three’ sanctions imposed by President Obama and the EU will hit banks, shipbuilding, and Russia’s principal partner for BP, Rosneft. Together they are said to represent just under 20 per cent of key gas and oil extraction facilities.

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But the Financial Times commentator Christopher Granville warns: “This will fail to deliver a knockout blow.” He points out that the notion of ‘level three’ sanctions are pretty much nonsense – there are really only two levels: lesser ones that play on sentiment, and involve personal restrictions on travel of the Putin circle for example, and then the more serious ones that hit the economies on both sides of the divide. Which is where we are now.

Yet the restrictions on banking and investment in industry, from shipbuilding to energy extraction, particularly in cutting the flow of dollars into Russia, could tip the Russian economy into recession.

The FT points out that things were already pretty bad even before Obama began to unroll his programme of serious sanctions, with growth in Russia’s GDP slowing to around one per cent last year. Ironically the first Obama sanctions were unveiled before the day Malaysian Airlines Flight MH17 was shot down over eastern Ukraine.

Then, on Monday, out of the blue, the US administration announced that it had evidence Russia had breached a major disarmament treaty, the Intermediate Nuclear Forces (INF) treaty of 1987, by developing and testing a new medium-range cruise missile, the ‘Iskander’ R-500, with a range of some 1,000 kilometers.

The INF treaty, which bans the increase of stockpiles and testing of missiles with a 500 to 5,500-mile range, was a milestone in Mikhail Gorbachev’s rapprochement with the West, leading to the end of the Cold War and with it the Soviet Union.

Neither side has liked the INF agreement very much because it has carried an elaborate inspection and monitoring regime. Russia hinted that it wished to end the INF treaty a year ago: it needs to update ground-launched cruise weapons to defend its huge land borders.

But the Americans must have known about the R-500 for some time. The announcement of the accusation now seems timed to ratchet up the propaganda battle with Moscow – just like the UK’s sudden announcement last week of a full public inquiry into the murder by poisoning of the former KGB agent Alexander Litvinenko, eight years after the event.

Where does this leave the Russian president?

Putin has gathered power and prestige at home by building up the armed forces and Russia’s defence industries, equipping allies like Syria, for example, with some of the best of its new weaponry, such as the Buk anti-aircraft missiles of the kind that brought down Flight MH17.

But he now risks becoming a virtual prisoner of the more strident faction of his military and the ultra-nationalist groups like Novy Russia.

On social and local media they have urged Putin to convert posturing into action and take what is rightfully theirs - the eastern provinces of Ukraine. Novy Russia – 'new Russia' – should be all the lands east of the Dnieper River, they say. Some members of the Novy Russia group have openly accused Putin of being a "coward" and a "traitor".

Putin knows he has to pacify these groups, particularly as the Russian economy comes under pressure. He has 15,000 troops massed on the borders between western Russia and the Ukraine, and as the city of Donetsk, held by pro-Russian rebels, comes under attack from Ukrainian forces, he may feel forced to give the order to advance.

The British announcement yesterday that the UK will send a 1,350-strong battle group, with tanks and light armour to this autumn’s Exercise Black Eagle in Poland appears to be little more than a gesture, coming as it does on top of the sending of four RAF Typhoon jets to Latvia this spring. But even such a small gesture brings us all closer to the fine line between confrontation and conflict.

The short-termism of the West’s actions and propaganda distracts from the growing conclusion that Russia’s Ukraine operation has been in the making for years. The lunge for South Ossetia in 2008, and the short war with Georgia, now look like Putin’s trial run for the main objective – Ukraine. (Sky News reported last night that the Russians are rushing to complete the construction of a vast security fence around South Ossetia.)

The stakes are now pretty high. Russia does not want Ukraine to join the West, the EU and Nato, though the invitation for the latter has never been proffered. Moscow would like to grab what it can in the eastern Ukraine.

In the process there is now every chance that Ukraine itself could be yet another non-state state, a well of anarchy, crime and chaos, so valuable to extremists of all stripes and to the global Mafiosi. This is the real threat to the West from Ukraine today.

Nato still has to show that it has a formula to deal with this crisis, which is about to go global any minute. Meanwhile Vladimir Putin may feel compelled to act tough as well as talk tough – not least to fend off the knives of the courtiers at home.