By Janet Ekstract, ISTANBUL- Ukraine’s President Volodymyr Zelensky spoke to the press about the updated Russia-Ukraine peace plan which is now a 20-point plan agreed to by U.S. and Ukrainian negotiators in Florida last weekend. Zelensky who described this plan as “the main framework for ending the war” stated that the plan does include security guarantees from the U.S., NATO and Europeans for a coordinated military response should Russia invade Ukraine a second time. When it comes to parting with territory, Zelensky referenced a “free economic zone” as an option as he told the press that Ukraine is against withdrawing from the Donbas. He said that U.S. negotiators are seeking to create a demilitarized zone or a free economic zone and that any area Ukrainian troops pull out of must be policed by Ukraine. As Zelensky so starkly put it: “There are two options,” adding “either the war continues or something will have to be decided regarding all potential economic zones.” The 20-point plan is viewed as an update of the original 28-point agreement created by U.S. envoy Steve Witkoff with the Russians several weeks ago – unacceptable to both Europe and Ukraine.
According to the latest news reports, despite the war causing major financial decline for Russia, Russian President Vladimir Putin insists on pushing forward even to his country’s own detriment since Russia has been forced to take out massive loans. Under legislation enacted in February 2022, Russia has taken control of war-related lending at its major banks. It is directing the banks to extend preferential loans – on terms set by Russia for a wide range of businesses providing goods and services for the war. Since mid-2022, this state directed war funding scheme has assisted Putin in Russia’s $446 billion overall corporate borrowing. Recently, reports have indicated that Moscow’s heavy reliance on state-directed preferential lending has caused serious, adverse effects for Russian citizens. It is now the main reason for Russia’s ten percent inflationary rate and the Russian Central Bank’s key rate of a record twenty-one percent. As a result, the war debt is boosting systemic credit risk for the near and medium-term. High interest rates are driving up corporate distress levels in the actual economy and fears have risen about widespread bankruptcies.
Analysts and experts on the region, have pointed out that Putin is in trouble and is looking for a way out of the war that saves face for Russia. Meanwhile, Putin threatened in December to take control of the entire eastern region of Ukraine by force if Ukraine insists on not pulling out. Despite his rhetoric, Putin is aware that U.S. President Donald Trump’s patience is wearing thin and he wants an end to the war immediately. As Zelensky said: “If they try to obstruct everything, then President Trump would have to arm us heavily, while imposing all possible sanctions against them.” He also said that a referendum would have to be held on the entire peace plan and that only a referendum would decide on whether there would be a free economic zone in Donbas. Zelensky added that in any case, such a zone would have to be under Ukrainian administration and police, “definitely not the so-called Russian police,” he said. In such a scenario, Zelensky explained that the current front line would then become the boundary of the economic zone with international forces on the ground along the contact line to ensure no Russian infiltration. So far, Russia rejected a European proposal to police any peace deal through a Coalition of the Willing as a “brazen threat.”
