WASHINGTON – America and the European Union finally came up with serious economic sanctions against Russia, as a way to force Putin to reconsider his critical support for the rebels in Eastern Ukraine.
Will Putin blink?
The question now is: “Will Putin blink?” Will Putin conclude that, since the West is getting serious about inflicting real economic damage to Russia, may be it is time to stop this Ukraine adventure, drop the rebels, and get back to business as usual with Washington and Brussels?
Honestly I do not know. I do know that, if Russia decided to prolong this conflict, it could do so. Russia has a bigger army and more resources already deployed just across the border with Ukraine.
The cost of continuing this war
However, in order to prevail, Russia would have to show its hand. Until now it managed to obfuscate its role by sending hardware and Russian agents across the border, while consistently denying any direct involvement in the civil war.
But this level of engagement has proven insufficient to win. Contrary to most prognostications, the Ukrainian armed forces are prevailing against the rebels, while world opinion condemns Russia’s support for the secessionists.
Now, after the Malaysia Airlines disaster, Europe seems to have found the resolve for enacting real, as opposed to symbolic, economic sanctions against Russia.
In conjunction with similar moves just announced by President Obama, this new sanctions regime may begin to hurt Russia. It will certainly encourage more capital flight, while strongly discouraging new foreign investments.
The natural gas issue
Sure enough, sanctions can hurt both ways. Everybody knows that Europe needs Russian natural gas. On the other hand, Russia needs the cash generated by the sale of its gas to Europe. Interrupting sales to Europe in retaliation for the sanctions will hurt both sides.
The open question is: “Which side is more fragile?” The Russians who needs cash derived from gas sales to pay for all the imported goods they need? Or the Europeans who do not want to face power shortages this coming winter?
This is murky. However, to the extent that Europe will not blink if and when the sanctions imposed on Russia begin to hurt at home, it is possible that Russia will reconsider its ill-advised Ukraine adventure and back off.
Putin is an opportunist
I for one never believed the story that Putin is animated by a grandiose design to reconstitute a “Greater Russia” and that he will not relent until he fully accomplished his goal. I see Putin as a shrewd opportunist. Clearly he wanted to bring an independent Ukraine back into Russia’s orbit. That plan failed, unexpectedly and in a rather humiliating way.
But Putin saw the state of chaos in Kiev as a golden opportunity for grabbing Crimea. And he dis so, swiftly and without firing a single shot. Remarkable success. But that was relatively easy, given the generally pro-Russian sentiments shared by the Crimeans, most of them ethnic Russians.
Eastern Ukraine was going to be a bit more complicated. However, Putin decided to try nonetheless. Now he is in a difficult situation. His ethnic Russian rebels are not winning, while world public opinion, after the Malaysia Airlines disaster, has turned against Russia, because it is obvious that the missile used to shoot down the civilian airliner was provided by Russia.
Where to now?
So, where to know? Putin may reconfirm his penchant for reckless adventure by deciding that Obama and the EU are just bluffing. Whatever they say now, deep down they do not have the will to keep the sanctions going. And so he may decide to double down and try to win the war he started in Eastern Ukraine, come what may.
Or he may decide that this is getting a bit too expensive, and that gaining control over a chunk of Eastern Ukraine is not worth all this trouble.
Costly victory for Ukraine
Having said all that, even assuming that Ukraine wins on the ground, this way re-establishing full sovereignty over its entire territory, (minus Crimea I would add), this will be an extremely expensive victory. Ukraine is totally broke. This long war can be financed only by going deeper into debt.
Therefore, at the end of all this, even if he gave up the idea of controlling a piece of Ukraine, Putin may still win something important. Consider this. With the secession he inspired and funded, Putin managed to turn already troubled Ukraine into an economic basket case.
No alternative model
And the West will have to pay for reconstruction and economic revitalization. Therefore, no way that Ukraine can become a vibrant, west-leaning economic power any time soon. No way that a prosperous and self-confident Ukraine will be able to create an alternative model to authoritarian Russia, something that could trigger the spreading of dangerous ideas about reform and greater freedom within Russia itself.
After all, who wants to emulate a semi-bankrupt state?