The model of Hong Kong’s territory lease to the United Kingdom as a solution to the Ukrainian Crisis?

 

Dr. Ivan Manokha, Sciences Po

 

With political and economic costs of the conflict in Eastern Ukraine for both Ukraine and Russia (not to mention the price paid by the common people living in Eastern Ukraine and, to a lesser extent in the Crimea) constantly rising, the need to find a solution to the Ukrainian crisis is urgent. In this short contribution I suggest a solution based on a long-term territorial lease that would work similarly to the 99-year lease of Hong Kong Island by the United Kingdom from 1898 to 1997.

In a nutshell, the crisis in Eastern Ukraine may be seen as an attempt by Russia to divert the international attention from the Crimea, which had been annexed several weeks earlier, and to use it as a negotiation tool with the hope that, in fine, concessions made to the Ukrainian authorities and to the West with respect to Eastern Ukraine would help remove from the negotiations table the question of the Crimea, and to eventually obtain the recognition of the Russian jurisdiction over the peninsula. It seems that this objective has been somewhat attained with the issue of Crimea so far absent from talks. However, with the economic situation in Russia worsening as a result of the Western sanctions, the fall of the oil prices and the concomitant loss by the Russian Ruble of about 40% of it’s value, it seems that the solution proposed here might be timely and satisfy all the parties involved.

 

In short, what I suggest is that Russia and Ukraine agree that the Crimea remains under the Russian rule for a fixed (and long) period of time, let’s say 99 years as it was the case with the British rule over Hong Kong. What are the potential advantages of this?

 

  1. Potential political and economic gains for Ukraine

 

At the moment it is rather obvious for the Ukrainian authorities that Crimea is lost and it will not be possible, at least in the near future, to regain it. Signing such lease treaty with Russia would help President Poroshenko to save face and transform a situation from a hopeless loss to a lease that at least has an end date.

In exchange for such formal acceptance of the sovereignty of Russia over the Crimea, the Ukrainian authorities might succeed in obtaining economic concessions from Russia (the range of possible gains is large, but one might imagine, for instance, preferential tariffs for Russian energy resources during the period of lease).

 

  1. Potential political and economic gains for Russia

 

The formal lease of 99 years would, first of all, enable Russia to obtain the international recognition of its sovereignty over the Crimea which would lead to the removal of different sanctions to which the Crimea and its authorities have been subject. It would, at the same time, change nothing with respect to the enthusiasm generated among the Russian population by the acquisition of the Crimea and its support of the government of Vladimir Putin.

 

At the same time, provided that further concessions are made by Russia with respect to Eastern Ukraine (and, as said earlier, if we consider the Russian policy in this region as a tool to secure the formal recognition of its sovereignty over the Crimea, once this recognition is obtained with a lease treaty, there is no reason to believe that such concessions in Eastern Ukraine would not follow), the Western economic sanctions would be removed. This, in turn, should help Russia to deal with its economic downturn and avoid further decline.

 

  1. Potential political and economic gains for the West

 

It is obvious that an end of an armed conflict at the heart of Europe would have not only political and security benefits for the West, and especially the European Union, but also the economic ones as the importance of the Russian market and the demand of Russian consumers for the exports of the EU producers can hardly be overestimated.

 

Given all these potential gains, it seems that the solution proposed here should be pushed for by Western leaders in their negotiations with Russia and Ukraine.

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