First, State Duma elections are upcoming on Sept. 18, and Putin will be eager for the ruling United Russia party to do well, as a precursor then to his own re-election in the March 2018 presidential elections.
While polls show United Russia doing okay (60 percent support), Putin never likes to take chances with domestic politics, and will want to impress on the Russian electorate his own strength, and how lucky they are to be Russians citizens, as perhaps compared to their Ukrainian counterparts, as reflected on insecurity, weak leadership in Kyiv, and weak backing from its Western allies.
Second, Putin’s intervention in Syria has yielded significant political gains/leverage – as reflected in the PR coup this week with Turkish President Recep Erdogan’s visit – but no decisive victory for the Bashar Assad regime (or Russia), and with the bitter ongoing battle for Aleppo, the question is whether Assad’s forces have the ground forces sufficient to deliver a final military victory.
Russia’s own death toll in that conflict – exposed with the loss of a Russian helicopter crew over the past week – is rising and exposes the difficult choices Putin has to make therein.
Third, the 25th anniversary of Ukraine’s independence from the Soviet Union, and importantly from Moscow, is looming on Aug. 24.
Fourth, Ukraine’s own anti-corruption agenda seems finally to be making progress under the new prosecutor general, Yuriy Lutsenko, and a number of high profile ex-President Vitor Yanukovych ministers (Oleksandr Yefremov, et al) are in the process of being indicted/arrested. . . . And note that this new risk of re-escalation comes as the Ukrainian macro outlook has begun to brighten . . . . Large fiscal, current account and energy deficits have been reduced. The currency has stabilized, with NBU reserves being rebuilt from $5 billion to over $14 billion now, and with little or no Western international financial institution support over the past year.
Inflation has dropped from near to 60 percent to around 6 percent and the economy is poised for real GDP growth this year of around 1 percent. That number could be particularly embarrassing (in an election year) given that the Russian economy is likely still to record a real GDP contraction this year of 0.5%.
And, in the past, military re-escalation in the east has worked to destabilise the macroeconomc economy in Ukraine, forcing locals to buy foreign currency, weakening the hryvnia, depleting reserves, boosting inflation and driving the economy into recession. There may thus be a desire to go back to past proven policies and to try and weaken the comparative Ukrainian economic performance.