The Real Reason Russia Invaded Ukraine

Russian combat vehicles on display during parade festivities in 2010. (Alexander Kuguchin/iStock Editorial/Thinkstock)

Why does Russia care about Ukraine, a country that's said to be "as poor as Paraguay and as corrupt as Iran"?

Vladimir Putin would like you to believe it's because he's ensuring the safety and well-being of the millions of Russians living there. And, to a certain extent, he has a case.

Look at the following map, which breaks down the demographics of Ukraine by ethnicity.

Significant portions of the country are populated by ethnic Russians -- which isn't a surprise, given that Ukraine was once a member of the Soviet Union. This is particularly true when you look at the Crimean Peninsula (the brownish area on bottom of the map jutting into the Black Sea) and the Eastern regions bordering Russia.

But this still doesn't explain why Russia felt the need to put boots on the ground in the wake of the recent revolution.

By all appearances, the ouster of now-former Ukrainian President Viktor Yanukovych -- who, as is well known at this point, was backed by the political establishment in Russia -- stemmed from his regime's widespread and deep-seated corruption. According to its new finance minister -- who is obviously not unbiased -- as much as $70 billion was embezzled out of the country over the past three years alone.

In this regard, the Ukrainian revolution is very different from conflicts in, say, Syria or Lebanon, where sectarian strife is often the cause of ethnically fueled humanitarian catastrophes. This simply doesn't appear to have been the case in Ukraine. The people there were just tired of being ruled by a regime that used state funds to, among other things, build a floating restaurant on the grounds of the presidential palace.

This brings me back to the main question: Why did Russia feel the need to physically invade Ukraine, and, specifically, the Crimean Peninsula?

Scholars of international relations predictably attribute the decision to geopolitics -- that is, the rote desire to attain and maintain influence throughout the world. As a recent column in Bloomberg Businessweek explains:

Russia, which straddles Europe and Asia, has sought a role in the rest of Europe since the reign of Peter the Great in the early 18th century. An alliance with Ukraine preserves that. "Without Ukraine, Russia ceases to be a Eurasian empire," the American political scientist Zbigniew Brzezinski wrote in 1998. Russian President Vladimir Putin wants Ukraine to join his Eurasian Union trade bloc, not the European Union. Russia's Black Sea naval fleet is headquartered in Sevastopol, a formerly Russian city that now belongs to Ukraine. Last year Russia's state-controlled Gazprom (OGZPY) sold about 160 billion cubic meters of natural gas to Europe -- a quarter of European demand—and half of that traveled through a maze of Ukrainian pipelines. Those pipelines also supply Ukrainian factories that produce steel, petrochemicals, and other industrial goods for sale to Mother Russia. "Ukraine is probably more integrated than any other former Soviet republic with the Russian economy," says Edward Chow, a senior fellow at the Center for Strategic and International Studies in Washington.

But is it possible that the true explanation is even simpler? Could it be, in fact, that Russia's decision to invade Ukraine had merely to do with a handful of natural gas discoveries off the coasts of Romania and Ukraine?

I ask this question somewhat rhetorically, because I think the answer may be "yes." As Bloomberg reported in the middle of last year, the Black Sea remains "almost untouched by the oil industry, with fewer than 100 wells drilled, compared with more than 7,000 in the North Sea."

To add fuel to the fire, moreover, ExxonMobil (NYSE: XOM  ) recently discovered a massive natural gas field off neighboring Romania's shores. The find, according to that country's prime minister, may end up being so substantial that Romania could become a natural gas exporter by as early as 2018.

It's in this context, in turn, that the Russian invasion of Ukraine can arguably be best explained -- and particularly when you consider that Exxon was on the verge of signing an exploration agreement with the Ukrainian government until its now-former fuel and energy minister, Eduard Stavytsky, put the deal on hold in late January.

"We will sign it in February," Stavytsky told the media on Jan. 27. At the time, no reason was given for the delay. Perhaps now we know.

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Read/Post Comments (5) | Recommend This Article (22)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 03, 2014, at 12:13 AM, predfern wrote:

    Shifting energy trends blunt Russia’s natural-gas weapon

    By Steven Mufson, Published: February 28 | Updated: Saturday, March 1, 7:19 PM E-mail the writer

    http://www.washingtonpost.com/business/economy/shifting-ener...

  • Report this Comment On March 03, 2014, at 3:04 PM, Vladuk wrote:

    There is no legitimate reason for Russia invading and threatening Ukraine. The reason why is simple: Russia is not going to allow Ukraine to be independent. Russia is telling Ukraine that you are our bitch and you best not forget that. Whether Ukraine cedes any land to Russia or if there is regime change in Kyiv to another Russian puppet government or if the current government simply kowtows to Putin, the end result is a Ukraine dominated and subjugated by Moscow, which is just the way Russia wants it.

  • Report this Comment On March 04, 2014, at 2:09 PM, venera wrote:

    You it is correct have said that poor country Ukraine . The Authorities of the Ukraine for money allow;permit you to put(deliver) there their own military bases and fleet.You want Afghanistan ?Russian military bases near by USA no .Do Not use poor ukrainian folk , for achievement your interess.When 10 million ukrainian will go to Europe to search for work that you will do?

  • Report this Comment On March 05, 2014, at 10:05 PM, BeliaR wrote:

    What about Crimea.

    It became russian peninsula in 1779 and was gifted to Ukraine by Khrushchev in 1954. The main reason why he did it, some experts think, is that he needed electorate in face of Ukraine. The other reason that he was so proUkraine (as Lenin was) that decided to gift Crimea.

    Ukraine, also known as MaloRossiya (means

    "Small Russia" and was called so before word "Ukraine" was designed) is really just another Russia but with other name. Why it was created i dont know. But in last 20 years of its independency it has 4 presidents and all was VERY poor. So today u can see what can a country become if it is governed by thieves...

  • Report this Comment On March 26, 2014, at 8:17 PM, StevieRaveOn wrote:

    I thought it was commonly understood that Russia was just sick of having to lease its only warm-water port. Sevastopol is their most critical installation, and given the Russian occupation density I'm sure Putin felt pretty confident he could swoop in, annex Crimea, and be home in time for uzhin. And not for nothing...that's pretty much what's happening.

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