Russia has crossed the Rubicon: they have sent in ‘peacekeeping forces’ to the separatist held parts of the Ukraine and recognised two breakaway states- Donetsk and Luhansk, as two new countries. The reaction of the West so far has been to announce economic sanctions that could escalate into more severe sanctions if the situation on the ground worsens. The questions that need to be asked right now are: What is Putin’s aim behind this move? How far is he willing to go? What cards does he hold? And how far are the Western nations ready to go to counter his actions?
The history of Russia and Ukraine go back hundreds of years and this obviously complicates matters in terms of creating narratives that may not be relevant today. The Ukraine was a member of the USSR and upon its breakup was an ally of Russia until 2013. It was only after the pro-Russia government was overthrown and the successor government favoured ties with the West that Russia invaded the Crimea in 2014 and annexed parts they claimed were historically Russian. There was the real threat to Russia then that Ukraine would join NATO- which would be intolerable to Russia as it shares a border with Ukraine. The US imposed sanctions on Russia for its military adventurism but- despite the debilitating effect that it has had on the Russian economy, Russia has never withdrawn. The current actions make less sense given that there was no immediate existential threat from the West any longer.
There are many possible explanations for Putin’s actions and why he did not act in all these years in between. The most plausible explanations floating around suggest that Putin is acting from a position of domestic weakness; the Russian economy has been struggling for a long time now and this action is the action of an unpopular despot that is trying to distract his domestic audience from the fact that real average income has been contracting.
Fig. 1: Russian GDP growth since 1990
Source: macrotrends.net
There is a political spin that is now circulating in the United States that says more about US politics than it does about Russian motivations. This is the argument that current President Joe Biden is weak and that this would not have happened under Donald Trump. This argument is weakened by the fact that under Donald Trump the US was threatening the stability and cohesiveness of NATO itself by threatening to walk away from the Alliance and blackmailing the Ukrainians for Trump’s personal gain. This served Putin’s (and Russia’s) geopolitical goals rather well without even the risk of international opprobrium attaching itself to Russia. Trump was also seen as being weak against dictators like Putin and Xi of China- if not compromised due to his financial history.
The response by the West- mainly economic sanctions, highlights the unwillingness of nuclear powered rivals to go to war against each other. The risk of escalation is simply too high. But the west is compromised: Europe is heavily reliant on gas supplies from Russia; 33% of European gas comes from there. Germany relies on nearly half of its gas from Russia but they have boldly now cancelled approvals for the Nordstream 2 pipeline which would have been able to pump another 55 billion cubic metres of gas per year to Germany. The US has sanctioned VEB- Russia’s 5th largest bank and closely connected with the Putin regime. They have also sanctioned Russia from accessing global sovereign debt markets- Russian bonds can no longer be traded in either the EU or the US markets, which will begin to bite some months down the line. The scope for escalation of economic damage remains and the West recognises the oligarchic nature of the Russian government by extending the sanctions to Putin’s Russian allies in the government (Duma) and his financial supporters. Finances play a surprising role in Russian displays of strength. The last act of aggression from Russia came when oil prices were above US$100 per barrel- something that gives Russia financial revenues to support an invading force (to pay for supplies mainly), levels we are nearly touching of late. This could also account for lack of Russian aggression between 2014 and 2022- low oil prices have given the Russian government low revenue streams.
The potential damage to fragile world growth is dictating the stance of the European governments- something that Putin may have been gambling on. High energy prices (gas included) are the principal driver of European inflation. If that spikes due to this standoff then Europe will be forced to hike rates sooner and this could cut down growth prospects. Russian and Chinese cooperation is also required to bring Iran back to the table to renew the 2015 treaty which the US walked out of in 2018. This would help bring down oil prices as Iran comes back on stream; whilst China may desire this they are tacitly supporting the Russians in this venture- a test case for their own possible future actions in Taiwan.
But this does not mean that physical conflict is off the table. The US is placing troops on the ground in their adjacent NATO ally countries. Russia is not backing down either- sending in further divisions of tanks and troops into Ukraine. The news media is hyping up the prospects of war and that only helps build up war hysteria amongst the general population but does not necessarily offer clear sighted analysis of whether this is likely to escalate further.
At the end of it, it must be remembered that Ukraine is a sovereign nation and that they were Russian allies until 2013 after which they voluntarily moved towards the West as they saw it in their own interests to ally with a prosperous democratic bloc rather than a declining power with autocratic leadership and low standards of living. Ukraine itself wanted to join NATO, as did Hungary, Poland, Romania and the Baltic nations. Putin is waging a war against the idea of the democratic form of governance as much as trying to regain a lost Soviet empire of influence. The fact that their allies in this are China and Syria show the limited appeal of the argument that this is not an act of aggression. What it looks like for the people paying close attention is a desperate act by a desperate leader and not the power play that he is hoping that it looks like.