Gema Benito Zamora, Alejandra Infante Velado & Jennifer Velasco Calvo

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THE ANNEXATION OF CRIMEA THROUGH

GAME THEORY
Gema Benito Zamora, Alejandra Infante Velado & Jennifer Velasco Calvo
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1. INTRODUCTION

The annexation of Crimea has been a very popular topic in geopolitics since 2014, with different
scholars arguing different changes in the global balance of power and in the International order
(Saluschev, 2014). Regardless if this is justified or not, what it is undeniable is that the Crimean
crisis is still very controversial in many aspects: weather if the Russian intervention can be
justified according to norms of international law (Ingelevič-Citak, 2015); weather Ukraine is a
defenseless victim of Russian imperialism or a responsible actor of equal power contributing to
the humanitarian, economic and political disasters; etc. Despite the fact that the Russo-
Ukrainian war is now considered a “frozen conflict”, as violent fighting is now rare in the
frontline even though there is still military occupation (Atlantic Council, 2020a); it is still
important to analyze what possible scenarios may appear in the near future and how could this
conflict be solved, or at least, enter a path of negotiations.

Our aim in this paper is to forecast, considering Ukraine and Russia (as well as other actors) as
rational players, what new variables, actors and situations may shift the actual “equilibrium” of
this frozen conflict to a new scenario in which the problem of the ownership of Crimea could be
solved. In order to do that, the structure of this essay will be the following:
In the first part, we will gather the historical background of the conflict in order to fully
understand why it developed the way it did. In the second part, we will expose the interests of
Russia, Ukraine, the European Union and the NATO in this conflict. In the third part, we will use
economic theory, specifically game theory, first to present the actual scenario of the conflict in
a deeper approach; and second to forecast some possible future scenarios in which the conflict
may change. And in the last part, we will dedicate some time to analyze the conclusions and
further implications of this analysis, as well to mention the restrictions and limitations of our
models.

2. HISTORICAL BACKGROUND
The relationships between Russia and Ukraine and the presence of Russian actors in Crimea
dates from a long age. In fact, the Crimean Peninsula was officially a part of the Russian Empire
in 1783, after the Ottoman Empire was defeated by Catherine the Great´s army (Ingelevič-Citak,
2015; Saluschev, 2014). Later on, on the 20th century Crimea was recognized as an integral part
of the USSR and renamed as “Crimean Autonomous Soviet Socialist Republic “ in 1921 (Ingelevič-
Citak, 2015).
The situation became more complicated during and after the World War II, as some Crimean
Tatars were accused of collaborating with Nazis and were forcibly displaced (Ingelevič-Citak,
2015). This is a key point, because the properties they left were given to the new Russian settlers
of Crimea, who became the majority of the Crimean population after the war. Therefore, it

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wouldn’t be illogical to think that Russia´s interests on Crimea are not only based on economic
gains, but also on historical complaints.
Crimea lost the autonomy it was given by the USSR in 1946, when it turned into a region of the
RSFSR (Russian Soviet Federated Socialist Republic). Later on, on April 1954 it will be transferred
again, this time from the RSFSR to the UKSSR (Ukrainian Soviet Socialist Republic) (Ingelevič-
Citak, 2015). This continuous changes of “ownership” have affected socially and economically
the situation of the region, as the characteristic of the population have vary from Tartar majority,
to Russian majority, to Ukrainian majority again, and so on; creating a multicultural and “multi-
national” society.
A major change came with the disintegration of the Soviet Union in 1990s, as it was the moment
when Ukraine should fight to became an independent state, as the Baltic states of Lithuania,
Estonia and Latvia did (Restoration of Independence in the Baltics, s. f.). The USSR recognized
Ukraine´s independence in 1991 and since then “most of the ethnic Russian population of the
peninsula supported claims for the secession from Ukraine and re-joining Russia” (Ingelevič-
Citak, 2015). We must remember that most of the ethnic Russian population was in the part of
the Crimean Peninsula; so the strategy of the government to stop the claims of independence
was to give Crimea a wider range of autonomy (Ingelevič-Citak, 2015).
Summing up, the history of Crimea until the 21st century has been marked from constant
changes in belonging and political autonomy. This has clearly marked the subsequent situation
in the current century.
Problems in the Crimea peninsula arise again in the end of 2013 and 2014 with two key
elements:

- The suspension of the negotiations on the association agreement with the EU by the
Ukrainian president Yanukovych.
- The conduct of a referendum on March 16 to ask people of Crimea whether they
wanted to join Russia or to restore the Crimean Constitution of 1992, but staying as part
of Ukraine.

The first one, the suspension on the agreements with EU, triggered anti-governmental and pro-
European demonstrations of Ukrainian citizens, which ended in February in 2014 with the
security forces killing at least 77 protesters in Kiev («Ukraine Profile - Timeline», 2020). Later,
the Verkhovna Rada (government) adopted a resolution dismissing the president and calling for
new presidential elections on 25 May 2014. This supposed a total transformation of the political
structure of Ukraine and a new government, which was immediately recognized by the United
States and European Union. Of course, Russia argued illegality of the procedure and refused to
recognize the new government. This scenario opened an opportunity for the Crimean forces
closer to Russia, who, through the Prime Minister of Autonomous Republic of Crimea, invited
Russia to intervene in order to guarantee security and peace in the territory. As we have
observed, the answer of Russia was to send military forces and start the process of annexation
that concerns this essay.

The second one, the referendum held on March 6, offered two choices to the population, which
have been the center of many debates about the legality of the referendum itself. Some scholars
have argued that it wasn’t proposed an option to remain Ukrainian under the same
circumstances of the current Constitution; and that no international observers were present to
ensure the legality and freedom of the process; therefore, the result was invalid. Also, the
percentage of turnout was said to be first at 83 percent, and later was corrected to only 30

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percent (which makes more sense taking into account that Crimean Tatars and Ukrainians
accounted for 40 percent of population in the region).

The implications of the referendum were the annexation of Crimea to Russian territory and the
later justification by Russia under the International Public law following compliance with the
principle of Intervention under Invitation, the Ukrainian Law and with the Russian law and its
right to protect nationals. However, many scholars have argued the illegality of these actions as
they constituted violations of several multilateral and bilateral agreements (Treaty on the Non-
Proliferation of Nuclear Weapons on the Budapest Memorandum, Helsinki Final Act, the
agreements on stationing the Black Sea Fleet of 28 May 1997) and several international law
principles as “territorial integrity, sanctity of state borders, non-use of force, and non-
intervention into other state’s internal affairs” (Ingelevič-Citak, 2015)1.
Since the referendum, occupation by Russian military forces, which, by the way started much
earlier than officially claimed (Atlantic Council, 2020), increased.

3. ACTORS´ INTERESTS ON CRIMEA ANNEXATION

 RUSSIA

As we have already mentioned, Russia has been historically involved with Ukraine and the
Crimean Peninsula. In fact, the Crimean Peninsula itself has a Russian-speaking majority, so it is
not rare to think that part of Russia interest´s is to protect its “nationals” as it has internationally
argued; but there is more. Beside the historical reasons (Crimea has been part of Russia during
the reign of Catherine the Great and later on it belonged to the RSFSR) and the demographic
and cultural reasons (60% of the population in Crimea in 2014 was ethnic Russian (Pifer, 2020)),
some analysts have argued that it is about natural resources (Kirillova, 2018), specially gas.
They explain that the annexation of Crimea can be seen both, as a strategy to end the energetic
diversification that Ukraine started on 2011 with the president Yanukovyich by reducing Russian
gas imports from 45 bcm to 28 bcm in 2013 (Umbach, 2015); and as an attempt to block Western
energy companies from the gas of the Crimean Peninsula (Kirillova, 2018). By controlling the
territory of Crimea, Russia ensures being the main energy exporter in the region to European
countries2 and also, enables the Ukrainian plan of self-sufficiency, which forecasted a total
elimination of Russian gas imports for 2020 (Umbach, 2015). The construction of the Russian
Kerch bridge in 2018 and the concession of the energetic resources of the peninsula from the
new illegal government of Crimea to Gazprom, an enterprise which has already nationalized the
Crimean branch of Naftohaz Ukrainy (Umbach, 2015); are evidences of the energetic importance
of the region and the Russian seizure.
Economic reasons and the effect of Russia´s domestic policies can be also seen in the intention
of annexation. The previous economic situation in Russia was much weaker than in the
preceding terms of the president Putin and he based much of his reelection on Russian
nationalism, which claimed Crimea as Russian territory (Pifer, 2020).

1
We will not go deeper in this subject as it will complicate the analysis more than necessary, but to know
more about the legality of the annexation of Crimea under the International Public Law we recommend
the reading of Ingelevič-Citak, M. (2015) and Milano, E. (2014).
2
In fact, if we check the data we will find that Russia is among the fastest-growing exporters of petroleum
gas since 2015 (Petroleum Gas Exports by Country, 2020).

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Crimea has also geopolitical interest. Some scholars have argued that Russia has turned Crimea
into a military base, where anti-aircraft missile systems have been installed (Atlantic Council,
2020). Also, that the seizure has “allowed an expansion of Russian military capabilities by taking
over most of the Ukrainian Black Sea Fleet, about 190 Ukrainian military installations, stocks of
arms, ammunition and other equipment” (Bebler, 2015). This, together with the increase in
“territory, population, territorial waters, mineral and other natural resources” has strengthen
the military presence on Russia in the Mediterranean area (Bebler, 2015).
At last, we should also mention that the seizure of Crimea has altered the European security
order, as a consequence of the violation by Russia of the principles on the Helsinki Final Act of
1975 about the inviolability of the borders. This has been an opportunity for Russia to show that
it is a power strong enough to carry this threat.

 UKRAINE

The interest of the Ukrainian government is to get Crimea back. However, it is true that since its
independence on 1 December 1991, the country's history has been marked by the East-West
divide as well as disputes over Crimea (ACAPS), so after the military intervention “it became
impossible to determine how many inhabitants of Crimea in fact supported actions of Russia”
(Ingelevič-Citak, 2015). But anyways, there is a significant number of residents of Crimea who
are ethnic Russians and that had supported the “integration” with Russia (Ingelevič-Citak, 2015).
The reasons of Ukraine to recover Crimea are based on the historical and political recognition of
the region as part of the country on several international documents as the Helsinki Final Act
and the Budapest Memorandum. Ukraine is losing economic power with the seizure of Crimea,
as well as the opportunity to become closer to the EU.

 EUROPEAN UNION

It is known that Ukraine mentioned its aspirations for European integration for the first time in
1993, as a key direction in its foreign policy; it was developed in the Strategy of Ukrainian
Integration to the EU in 1998 and in the Program of Ukrainian Integration to the EU in 2000.
Relations between the two were developed in the context of the EU’s European Neighborhood
Policy from 2004 and furthered on the principles of political association and economic
integration within the Eastern Partnership, launched in 2009. In January 2016, Ukraine joined
the Deep and Comprehensive Free Trade Area with the EU.
Therefore, the EU is interested in approaching Ukraine in economic terms and condemning the
annexation of Crimea, which is illegal according to the UN Charter. It has done so by a non-
recognition policy and sanctions as banning the imports to the EU from Crimea, the investment
by EU companies in Crimea, the exports to Crimea for products and technology in
transportation, telecommunications and energy sector; and the EU tourism services. It has also
frozen assets and visas to 175 persons and 44 entities (EEAS - European External Action Service
- European Union External Action, 2020).

 NATO

Relations have improved between the government and NATO in the context of the Ukrainian
conflict, and, Russia’s annexation of Crimea in 2014; after they ended in 2010 when
Yanukovych’s returned to the presidency and Ukraine formally withdrawn its bid for full NATO
membership (Crisis Analysis of Ukraine, 2018).

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Defense and security cooperation has been reinforced through capability development and
capacity-building programs; in parallel, NATO has helped the coordination of humanitarian
assistance.
However, Ukraine is not a member of the NATO3 and experts’ advice is to continue to be like
this (Gardner, 2014; Suba, 2020). Instead, the NATO has put effort in helping Ukraine to “develop
Ukrainian security through initiatives supported by the Trust Fund program, which provides an
alternative way to increase their cooperation and strengthen their partnership” (Suba, 2020).
Also, even though NATO recognized that in Crimea there is a potential for armed conflict and
military intervention from Alliance members, the problem should be address as a threat to
collective security, which will help dealing with the polarization between Russia and the west.
Therefore, cooperation with collective security organizations as the OSCE will be prioritized; and
reforms on the economic sector and tackling corruption will be supported (Suba, 2020).
However, despite the fact that Allies stand for the sovereignty of Ukraine and its territorial
integrity; and despite of their practical support and concerns on human rights violations, NATO
has not carried out a direct intervention in the political matters; only in trying to secure the
situation in the Black Sea (NATO, 2020).

4. CRIMEA ANNEXATION TROUGH GAME-THEORY: A CHICKEN GAME

In this section we will translate the conflict of the annexation of Crimea to a model of game
theory. We propose the chicken game as the most accurate model to represent the situation 4,
as it is a positive-sum game; what means that actors have different payoffs for different
strategies they choose. In order to represent this conflict, we propose the following
assumptions:

- It is a two player game: Ukraine and Russia are the players. In order to make it more
simple, we have decided that the interests of the EU and the NATO will be represented
in Ukraine, as their interests is to maintain Ukraine sovereignty over Crimea. Also, the
Autonomous Parliament of Crimea, which invited Russia to military intervene in the
country, will be embedded in the Russian player, as they share the same incentives and
interests.
- Both players are rational. They also have equal bargaining power and full knowledge
about the preferences of the other one. Russia knows Ukraine is rational, and Ukraine
knows that Russia knows that it is rational, and so on.
- It is a two strategy game: strategy C will be cooperating; strategy D will be defecting. By
cooperating we mean searching for a peaceful solution of the conflict of sovereignty by
diplomatic and no military or violent means. By defecting, we mean the opposite; the
use of force and violation of international law.
- We assume that both players have the same incentive to not choose cooperation, and
that the incentive to defect is higher, as it gives them a higher payoff (payoffs of
cooperating are 3,3 while the payoff of the player who is defecting, if it is the only one
doing it, is 4).

3
For more information on Ukraine´s membership of NATO we recommend (Gardner, 2014); (Institute of
World Politics, 2015) and (Balukh, 2019).
4
Other authors have applied the chicken game to geopolitical conflicts as the Cuban Missile Crisis to
indicate deterrence between two nuclear powers (van Eck, 2016).

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- We suggest the following equations:

Vrussia(D) > Vrussia(C),
G> IR,
Being G the expected gains of the intervention and IR the expected International
response; we see that the expected value for Russia of defecting (Vrussia(D)) will be
higher than the expected value of cooperating (Vrussia(C)), when the expected gains
from the annexation are bigger than the expected negative consequences of the
International community.
- The normal form of the game will be:

Looking at the normal form, we can observe 2 Nash Equilibria: (2,4) when Russia cooperates
and Ukraine defects; and (4,2) when Russia defects and Ukraine cooperates.

The scenario when Russia defects and Ukraine cooperates (4,2) corresponds to our case, the
Annexation of Crimea. However, we know that the other scenario (2,4) does not make much
sense, as Ukraine (and the EU and NATO) does not have interest in intervening in Russia.

In this case, to find what will be the optimal strategy for the players, we will use the extensive
form, and we will also add a further assumption.

- The extensive form of the game will be:

This is a sequential game, which means that the strategies are not decided by the two players
simultaneously, but that one player makes a choice before the other. In this case, the player
who makes the first move will determine if the equilibrium is (2,4) or (4,2).

For the player who plays first, the best strategy (with the higher payoffs) will also be defecting.
In this case, Russia will play first, as it has a long list of historical, cultural, economic and

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geopolitical reasons in the annexation of the peninsula, as we have mentioned before. It also
has another incentive, and it is that if Ukraine acts first, and for example, becomes a member of
the NATO, it will have more military capacity and economic support. In this case, Russia will lose
the hegemony in the Black Sea in favor of the Western powers. Russia also plays first because it
assumes, as we do, that Ukraine will not act first. As we have said, Ukraine is not a member of
the NATO, and the NATO hasn´t carry out a direct operation on the Crimean Peninsula because
it fears it will increase the polarization of the international order. Ukraine (and the Western front
in general) is more risk-averse than Russia, as if it will pursue a military operation, pro-Russian
forces in Crimea may destabilize the entire country. This is also the reason why (1,1), which will
be a situation of open war, is not an equilibrium.

In addition to these two equilibria, we have also the mixed strategy equilibrium.

After some mathematical operations, we conclude that the mixed equilibria will be (q=1/2,
p=1/2), being q and p the probabilities that the other player chooses either to defect or to
cooperate. The results will be graph as the following:

Being Vrussia(D) the expected value for Russia of the strategy defect, and Vrussia(C) the
expected value for Russia of the strategy cooperate. As it is a symmetric game, both strategies
will have the same value for Ukraine.

Hence, in this case it will be than:

Vrussia(D) > Vrussia(C),
G> IR,
q < 1/2, being q the probability of Ukraine choosing Defect
As,

Vrussia(D) = -3q+4 Vrussia (C)= -q+3

q= 1/2 (the same operations are valid for p)

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We can see that when the expectations of Ukraine choosing Defect are bigger than 1/2, then
Russia`s most optimal strategy is to Cooperate. In the same way, when expectations of Ukraine
choosing Defect are smaller than ½, then Russia´s most optimal strategy is to Defect.

Therefore, 1/2 is the third equilibrium, in which both actors are indifferent whether to defect or
to cooperate.

And now that we have described how the actual scenario is, we will like to make some
forecasting about how this equilibrium could be shifted. As we have said in the introduction, this
essay is aimed to propose possible solutions to the annexation of Crimea, even if they are purely
theoretical.

Therefore, we suggest a scenario in which Ukraine joins the NATO and, as a consequence, the
assumption that Ukraine will not start a military intervention supported by the West is weaker 5.
Now the International response will have heavier consequences, which will be bigger than the
prospected gains. The set of equations will look like this:

Vrussia(D) > Vrussia(C),

G < IR, and now q> 1/2 for Ukraine to choose Defect.

If we graph the previous scenario and the predicted scenario with the hypothetical join of
Ukraine in the NATO, in terms of actors´ expectations, it will look like this:

The red line is the first case, the annexation; the green line is the second case, Ukraine joining
the NATO. As we see, the mixed strategies equilibrium moves to the left, what means that there
is wider range in which Russia will prefer to cooperate. In other words, the threshold in which
Russia is indifferent between strategies is lower, and the probability that Ukraine chooses to
Defect is higher.

5
In fact, the equilibrium may already be shifted by the implementations on sanctions on Russia by the EU.
However, some authors have argued that sanctions “fail the utilitarian ethics test” and “the rights test
because property, contract and association rights are violated” (McGee, 2014). And even, if they have
changed the situation it is by weakening Russia, and we wanted to focus on solutions that will strengthen
Ukraine, to foster its action, not Russia “inaction”. That is the reasons why we decided to ignore sanctions
and propose the NATO alignment.

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5. CONCLUSIONS AND FURTHER IMPLICATIONS

As we have seen, the Ukrainian crisis with the annexation of Crimea is a very intricate conflict,
with a complex historical background, a polemic legal interpretation and the involvement of
many actors with many different interests. We have tried to approach it in the simplest way in
order to applicate a game theory model with basic assumptions. We should recognize that
further research is necessary to assess the possible consequences of the Ukraine membership
in the NATO, as it may trigger further actions from Russia. What we can conclude is that the
conflict seems pretty far to be solved, if it is frozen right now.

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