Category Archives: War in Ukraine/Russia

War in Ukraine/Russia

Understanding and Responding to Putin’s Threat Regarding Nuclear Weapons

When Putin invaded Ukraine, he believed occupying Kyiv, toppling the Zelensky government and replacing it with a friendly regime, would be accomplished quickly.  Of course, Putin knows what the world knows.  The war has been an unmitigated disaster for Russia.  Poor planning and dubious military strategy, insufficient boots on the ground, substandard performance of military equipment and inadequate munitions, contributed to Russia’s woes on the battlefield.  

But the essential story involves the grit and determination of the Ukrainian people to defend their country.  Certainly, a massive amount of western military aid was important to Ukraine’s defense.  But consider how the Afghan army, armed and trained for a generation by the US, proved incapable of defending the country from Taliban forces.  

Given Russia’s poor performance on the battlefield, Putin reframed his military offensive as a tenacious defense of the motherland.  Satanic Western forces are out to destroy Russia.  And Putin has warned he will use every weapon to rebuff this existential threat to Russian security.  These are unsettling words from the leader of a country with the world’s largest nuclear arsenal.  At no time during the Cuban missile crisis did Russia threaten to use nuclear weapons.  

Putin’s nuclear saber rattling is being taken very seriously.  But how are we to understand it?  What prompts Putin to make this threat?  We would be wrong to conjure images of Richard Nixon’s “crazy man” strategy, that Putin is trying to “out crazy” the west, as one commentator put it.  He is not crazy, nor is he trying to sound like someone who is.  

Let’s take a step back.  Putin referred to the dissolution of the Soviet Union as one of the great tragedies of the 20th century.  He is the ultimate Russian patriot who experienced this as a personal humiliation as well as a national catastrophe.  Over time, he defined his political and historical ambition to repair Russia’s national psyche by avenging Russian humiliation and restoring the country to its rightful preeminent place on the world stage.  

We must keep in mind there are several important sources of Russia’s humiliation.  A military defeat in Afghanistan, the dissolution of the Soviet empire, and the loss of the cold war.  And perhaps the most insidious humiliation involves how their erstwhile Chinese communist comrades engineered the greatest capitalist transformation over the last forty years, while the Russian economy remained stagnant and dependent on the extraction of minerals and oil.  

Putin fashions himself to be a cross between Peter the Great and Henry Kissinger.  But the self-proclaimed savior of Russia’s national pride and dignity, engineered a disastrous military campaign that turned Russia into a pariah state.  A leader whose mission was to alleviate national disgrace exposed his country to greater scorn.  This is intolerable and unacceptable to Putin.

Putin will do everything in his power to stave off this outcome.   This is not the reasoning of a madman.  It is the reasoning of someone who realizes he exposed his beloved Russia to global ridicule and disdain.  Putin knows what the world knows: that he failed abysmally in Ukraine.  He knows he is ultimately responsible for the national humiliation associated with Russia’s poor military performance.  Of course, he will consider any means possible to remedy the situation, to avoid any further military and political damage, including the potential use of tactical nuclear weapons. What is unthinkable for Putin is not the use of nuclear weapons in Ukraine, but the possibility of sustaining a military defeat that heaps further humiliation upon Russia.

What is to be done?  We are dealing with an extreme nationalist leader who damaged his country’s political and military prestige in the world community.  The diplomatic challenge here is to engineer an acceptable diplomatic offramp for Putin to save face in a way that will also be palatable to Ukraine.  This is not about appeasement.  This is not about placating a war criminal.  This is about making it possible for Putin to stand down in Ukraine.  Ukraine and the West must be able to offer something of value to Putin that will allow him to say to himself and the Russian people, “mission accomplished”.  

What could this be?  First and foremost, diplomatic pressure must be applied to Ukraine to renounce any desire to join NATO. The timing is awkward, given Zelensky’s recent announcement to petition NATO to fast-track Ukraine’s membership.  But Ukraine must relinquish this ambition.  Further, Ukraine must proclaim its political and military neutrality a la Finland during the cold war. But one might ask, what about Ukraine’s future security needs?  Given the tenacity of Ukraine’s defense against Russian aggression, there should be no doubt about Ukraine’s resolve to protect itself.  Russia is not likely to invade Ukraine ever again.   

Next, it is extremely unlikely Ukraine will expel all Russian troops from Ukrainian soil.  Prior to the invasion, there were regions in eastern Ukraine that appeared to favor reunification with Russia.  A condition of any peace settlement should be an agreement to hold binding internationally administered referendums to determine if any regions of Ukraine prefer annexation to Russia.  

Like all Soviet leaders before him, Putin feared being encircled by hostile powers.  Over the course of years, Putin voiced persistent concern about NATO expansion eastward. Ukraine’s declaration of neutrality would go a long way to addressing Putin’s fear.  Removing any prospect of Ukraine joining NATO and securing a legal means to potentially annex some territory in eastern Ukraine could be enough to declare a ceasefire and bring Putin to the negotiating table.  And the promise of resumed access to some $300 billion in foreign currency reserves, currently frozen in the west, could be an additional powerful incentive to entice Putin to negotiate.   

Would all of this be acceptable to Ukraine?  Clearly, they defied the odds and resisted Russian aggression on their soil.  Would a declaration of neutrality and the possibility of ceding some territory in the east be too hefty a price to pay for peace?  That is something Ukraine would have to decide for itself.  But agreeing to these conditions would give them an opportunity to end this dreadful war and to direct their national attention towards the urgent task of rebuilding their gravely damaged country.  

Neal Aponte, Ph.D.

Editor of Delano

War in Ukraine/Russia

A Way Out of the Ukraine Crisis

Time is of the essence.  Many lives hang in the balance.  Will the fate of Kyiv and Kharkiv conjure Aleppo and Grozny?  The Ukrainian resistance to the reprehensible and vicious Russian invasion has been heroic.  But continued Ukrainian bravery and the considerable financial and military support offered by most of the world will not change the eventual outcome.  The inability to impose a no-fly zone over Ukraine will ensure an eventual Russian military victory.  If necessary, Russian forces will destroy and capture Kyiv.   Of course, defeating an army and capturing a city remains quite different than controlling an entire country.   

Ukrainian resistance demonstrated to Russia and the entire world that Ukraine will not become Belarus.  The capture of Kyiv, the removal of the Zelensky government and the establishment of a puppet regime, will immediately trigger a fierce and determined partisan guerrilla war.  Maintaining a loyal government will require a permanent Russian occupation that will become the target of continual violent attack.  Russia does not have the ability to vanquish Ukrainian resistance.

Despite the utter futility of his extraordinary military gamble, Putin remains determined to pursue his current course of action.  While his decision to invade represents the most significant strategic blunder of his political tenure, Putin will double down on his military offensive if necessary.  Accordingly, the Zelensky government has an important choice to make.  It is an awful choice, but one that must be made immediately to save many lives and maintain Ukraine’s political sovereignty.  Zelensky should renounce any desire for Ukraine to join NATO and the EU. In effect, Zelensky must declare Ukraine’s political and military neutrality.  

Zelensky must be persuaded to accept the geopolitical significance of how Ukraine borders Russia.  Ukraine is not Canada.  Russia’s perception of Ukraine joining NATO as an existential threat must be recognized and respected.  Would Biden or any president accept Mexico or Canada establishing a military alliance with Russia?  We must understand Russia’s insistence on Ukraine remaining neutral as asserting its version of the Monroe Doctrine.  

Zelensky’s choice before the Russian invasion remained stark and clear:  to decide to become Finland or risk sharing the fate of Czechoslovakia in 1968, when Russian tanks rolled into Prague.  Finland remained neutral during the cold war and avoided Russian invasion, while remaining an independent democratic nation.  Ideally, all sovereign nations should enjoy the freedom to determine its political alliances.  But the world has never worked that way.  The Mexican dictator Porfirio Diaz, who ruled Mexico before its Revolution in the early 20th century, once said:  Poor Mexico, so far away from God, so close to the United States.  With rueful wisdom, Porfirio simply acknowledged how countries living in the shadow of a great power must respect the interests of that power.  The same holds true for Ukraine today.   

Even at this moment, Ukraine might be able to maintain its political sovereignty, its freely elected government and independent civic institutions.   But it must safeguard these right now by renouncing any desire to join the Western alliance.  It must become and remain officially neutral to protect the Ukrainian people and its cities from further devastation.  

Some will consider this to be a policy of appeasement.  But there is a great difference between appeasement and acknowledging brute geopolitical reality. Where a country is physically located in relation to a great power has enormous consequence.  The world has united in its opposition to Putin’s decision to invade Ukraine.  We are operating from a position of strength not weakness, the way Chamberlain approached Hitler in 1938.  Biden should get on the phone right now to tell Putin he cannot win.  In fact, he should add, no one wins.  Everyone loses.  Russia, the West and the entire world loses, if he continues with his invasion.  Perhaps Putin has received that message from friends like Erdogan and other leaders like Macron. It is a message that bears repeating.  

To those who want to continue to arm Ukraine, what is the goal of that strategy?  To defeat Russia on the ground?  To engineer a stalemate forcing Russia to negotiate?  That is extremely unlikely. Meanwhile, many more Ukrainians will be killed and whole cities will be destroyed.  The West and the world must accept the fact that no matter how many weapons Ukraine is given, the grim military outcome will remain the same.  Offering Ukraine’s political and military neutrality in exchange for an immediate end to the violence is a deal worth making.  

Zelensky’s decision to publicly declare Ukrainian neutrality would be exceedingly difficult and painful.  It would have to be explained not as a surrender, but as an acceptance of geopolitical reality and the inevitable military outcome.  It would have to be framed as the best decision to save lives and Ukraine’s continued sovereignty.  In exchange, Russia would have to withdraw its troops and accept the Zelensky government as expressing the will of an independent Ukraine.  And the Minsk accords would be reaffirmed by all parties.  Would Russia accept these terms?  Ukraine and the world would do well to find out.  If Putin refused, it would reinforce his political isolation, expose Russia to the full weight of economic sanctions and elevate the risk of political instability at home and in friendly countries like Belarus and Kazakhstan.  Time is of the essence.  Zelensky must make his decision.  Many lives and cities, and Ukraine’s political sovereignty itself, hangs in precarious balance.  

Neal Aponte, Ph.D.

Editor of Delano   

War in Ukraine/Russia

Will There Be War in Ukraine?

If Vladimir Putin decides to invade Ukraine, it will represent the biggest political gamble of his tenure and his most profound strategic blunder.  There are a few compelling reasons why Russia should refrain from launching a military strike.  If Russia invades, it will face a hostile population that has enjoyed political freedom for a generation.  There will be a fierce and determined armed resistance, in support of Ukraine’s independence, opposed to any Russian occupation.  A prolonged insurgency against Russian forces broadcast to the world could embolden the political opposition in countries allied to Russia, like Belarus and Kazakhstan.  It should be noted that the Kazakh regime recently needed Russian “peacekeepers” to end a week of violent protests about rising fuel prices.  And there is smoldering resentment in Belarus towards its president, who most consider illegitimate because of widespread voter fraud in their last election. Putin’s military adventure in Ukraine could trigger an “Arab Spring” like reaction in Eastern Europe and Central Asia.

Then there is the issue of how Russian citizens would respond to a war in Ukraine.  While many believe the West, and more specifically the US, is provoking Russia into war, Russians are also fearful of war.  How will citizens respond to Putin’s decision to invade if the body count begins to rise significantly and after the West imposes new and unprecedented economic and financial sanctions?  Consider too that Russia’s largest trading partner is the EU, representing about 40% of Russia’s trading revenue. Russian aggression against Ukraine would diminish trading revenue and, when coupled with sanctions, might spark a financial crisis.  Could public uneasiness about the consequences of war be exploited by Putin’s political opponents?  Would they question his decision to invade and end up challenging his continued grip on power?  

While the drum beat of war resounds across Ukraine, how can the West deter Russian aggression at this late hour?   Emmanuel Macron was right when he said Europe cannot be secure if Russia is not secure.  We must consider NATO expansion to Ukraine as equivalent, say, to Mexico or Canada establishing a military alliance with Russia, resulting in the presence of Russian troops and/or missiles there.  No American president would tolerate this.  Accordingly, the perception of Ukraine’s NATO membership as an existential threat must be understood as Russia’s version of the Monroe Doctrine.  Putin has a valid point. The West should acknowledge it by placing a twenty-five year moratorium on any NATO expansion.  

But the broader political and diplomatic goal involves persuading Russia that its political and economic future remains bound up with Europe, not China.  The West should pursue a political rapprochement with Russia that, over the long-term, could make Ukrainian membership in NATO irrelevant to Russia.  Or better yet, the West should work to create an environment whereby the rationale for NATO, to deter Russian aggression, becomes obsolete.  We would do well to remember that thirty years ago, Putin’s predecessor Boris Yeltsin visited Washington and delivered a message of hope and friendship in a speech to Congress.  This seems like a fairy tale now, but it did happen.  An appealing array of trade deals, arms control negotiations and new agreements on a range of issues ranging from the climate crisis, fighting global terrorism to cyberattacks, could change the current political narrative and entice Russia into the European fold.  

Finally, the West needs to recognize that Putin’s military build-up reflects Russia’s political and military humiliation in recent decades. It suffered a disastrous military intervention in Afghanistan.  And it sustained the loss of its empire with the dissolution of the Soviet Union.  Putin’s aim remains quite simple:  to make Russia great again, to restore Russia to its rightful place as a respected political and military actor on the world stage.  His military build-up is not a bluff. It is a desperate attempt to get the West to recognize and respect Russia’s security needs.  A moratorium on NATO expansion and an attractive assortment of deals that lashes Russia’s interests to Europe, would enable Putin to declare “mission accomplished” and initiate a troop withdrawal.  Allowing Putin to savor his “victory” should not be construed as placating a ruthless authoritarian leader.  Rather, it represents the first step in a long process to persuade Russia that its economic, financial and political future rests with Europe and the West.  This will be essential to avert war now and to defuse future political and military tensions in Europe and around the world.

Neal Aponte, Ph.D.

Editor of Delano

War in Ukraine/Russia

Resolving the Ukraine Crisis

 The Ukraine crisis feels like déjà vu all over again.  Russian troops poised to invade a neighboring country.  American threats of unprecedented economic sanctions.  Russian demands that NATO never expand eastward.  American troops on high alert.  Russian threats to place nuclear weapons near America’s coastline.  Thirty years after the Soviet Union dissolved, Russia and the West are engaged in a second cold-war.  

What is Putin thinking?  What will he do?  An aura of inscrutability surrounds him in the West.  No one can predict his next move.  Upon closer inspection, the mystique dissipates like mist.  He is an authoritarian nationalist leader of a humiliated country.  He aims to restore Russia to its rightful place on the world stage as a military and political force to be reckoned with.  There is nothing mysterious about Putin’s aim:  to make Russia great again by restoring its sphere of influence in Eastern Europe.   

The sources of national humiliation are several.  Its military adventure in Afghanistan ended in dismal failure.  Zbigniew Brzezinski crowed the US would turn Afghanistan into a Russian Vietnam. Thwarted by Mujahadeen guerillas, engulfed in an interminable military quagmire, the Russian military suffered an ignominious defeat and the Soviet puppet regime in Kabul was removed.  

With the stroke of a pen, Mikhail Gorbachev dissolved the Soviet Union in 1991.  Its de facto empire, ranging from the Warsaw Pact in Eastern Europe to its satellite republics in Central Asia, suddenly and unceremoniously vanished.  Some years later, Bill Clinton and Boris Yeltsin agreed Warsaw Pact nations were free to pursue NATO membership.  Putin referred to the demise of the Soviet Union as one of the greatest catastrophes of the 20thCentury.  His personal experience as a KGB agent working in East Germany awaiting orders that never came from Moscow was personally devastating.  

But there is another enduring source of humiliation sustained by Russia.  And this rarely gets mentioned.  In 1979, Deng Xiaoping pronounced the Chinese would become capitalist roaders.  Hamstrung by Maoist policies, China remained a poor economic backwater.  Deng envisioned a radical departure.  

During the last forty-five years, the Chinese engineered the most breathtaking industrial transformation in human history.  It became an economic and financial superpower and the world’s largest exporter.  Meanwhile, Russia’s economy remained dependent on extracting its vast natural resources like oil and gas and the production of metals, like steel and aluminum.  Being eclipsed by their erstwhile Communist comrades represents an enduring national humiliation for Russian leaders.  

While 2022 reprises the political tensions of 1962, we should recall another pivotal year.  In 1992, Boris Yeltsin came to Washington to address a joint session of Congress.  He extended a hand of friendship, proclaiming an end to enmity between Russia and the United States.  Politicians from both parties applauded vigorously and leapt to their feet chanting his name.  It is astonishing to recall that moment almost thirty years later.   

Equally remarkable is the fact that shortly after being appointed Yeltsin’s successor, Putin consulted Madeleine Albright in 2000 about Russia joining NATO, but was flatly rebuffed. For almost twenty years, from 1991 to 2008, the West was afforded an extraordinary opportunity to bring Russia into the European community.  Vanquished in the Cold War, the post -Soviet leadership, first Yeltsin then Putin, wanted to join the winning side.  While Western leaders would not allow their ex-communist adversary to join NATO or the EU, a Marshall Plan for Russia in the 1990’s or 2000’s might have done wonders to cement ties between Russia and the West.  Unfortunately, that opportunity was not recognized and seized. 

Putin once said Russia’s mistake was trusting the West.  He added the West’s mistake was trying to take advantage of that trust.  There is truth in Putin’s observation.  Russia was not going to become a Western style liberal democracy, a new-fangled version of the UK or France, no matter what the circumstances.   But a program of economic liberalization and market reform introduced gradually in the immediate post-Soviet era, not a doctrinaire program of shock and awe, involving fiscal austerity and a significant decline in living standards, could have generated an economic engine for political liberalization.  Of course, we will never know what that may have accomplished.  

Currently, the West is reaping the bitter harvest of that missed opportunity.  Putin fears, as all Soviet leaders did, that Russia will be surrounded by hostile forces.  But here too Putin has a point.  Imagine a regime change in Mexico or Canada that resulted in a military alliance with Russia.  Any American president would invoke the Monroe Doctrine to overcome the threat, as Kennedy did during the Cuban missile crisis.  

So what does Putin want?  He wants to restore Russia’s sphere of influence in Eastern Europe and diminish NATO’s presence on his doorstep.  Think of it as Putin’s equivalent of the Monroe Doctrine.  But we should not assume Putin wants to invade Ukraine.  Consider the consequences to Russia if he did.  Installing a puppet regime in Kyiv would subject Russian occupiers to a tenacious armed resistance.  Sustained violent opposition to Russian occupation broadcast to the world would probably embolden political dissidents in other countries like Belarus or Kazakhstan, to renew calls for regime change, generating a potential Eastern European/Central Asian “Arab Spring”.  Ukrainian resistance to Putin’s invasion could even fuel resurgent opposition at home and threaten his grip on power.  Moreover, the financial toll of an invasion would likely be enormous and unpopular with Russian citizens, even if they construe Ukraine to be a legitimate part of Russia.  

We can be sure Putin has considered all this extensively.  Perhaps the troops at Ukraine’s border are designed to announce to the world that Russia is, once again, a significant political and military force.  If nothing else, Putin has conveyed how its national interests must be considered and respected by Europe and the US.  

Mindful of Russia’s enduring national humiliation and the threat posed by NATO expansion to its border, the West should consider imposing a moratorium of, say, 25 years, on any NATO expansion, while asserting the West would respond swiftly and severely to any threat to Ukraine’s territorial integrity.  Moreover, the West should propose ways to help Russia become more competitive in the global marketplace, perhaps establishing mutually beneficial trade agreements.  If Putin can extract these important concessions, Russian citizens would applaud his show of strength.  And the West would avert a military conflict in Ukraine.  Finally, the West should view the current crisis as a valuable opportunity to engineer a rapprochement between Russia and the West including a new round of arms control negotiations.   This would alleviate a potent source of Russia’s national humiliation and reduce geopolitical tensions in Europe. 

Neal Aponte, Ph.D.

Editor of Delano

War in Ukraine/Russia

The Revenge of the Bolsheviks: Vladimir Putin and the West

A century ago, Vladimir Lenin and his Bolshevik party began a Russian revolution that toppled its Tsarist regime and shook the world. The Bolsheviks construed their victory as the opening salvo in a global struggle to smash the economic and political power of capitalists everywhere. They organized and controlled an international revolutionary movement by cementing ties with sympathetic political parties and movements in advanced industrialized nations across Europe and the US.

Fast forward a hundred years later and Bolshevik ideology represents a great scourge of 20th century history, associated with a brutal dictatorship that killed millions and damaged the lives of countless others. Moreover, Russia today is a humiliated nation. A devastating military defeat in Afghanistan was followed by the demise of the Soviet Union and the loss of its empire. Equally important, Russia’s economic prospects have been greatly eclipsed over the last forty years by their erstwhile communist comrades in China. To compare Russia and China, say, in 1975 versus today represents an eye-opening humiliation for the Russian nation. As many have noted, Russia is like a mafia state characterized by a corrupt system of crony capitalism while the Chinese economy, firmly integrated with trading partners around the world, has become the second largest in the world.

Putin believes that after the collapse of the Soviet system, the West attempted to exploit their Cold War victory by pushing disastrous political and economic “reforms” that weakened the Russian state and impoverished many of its citizens. In Putin’s view, the West passed up a golden opportunity to partner with the Russian Federation to create a new international political order.  Instead Allied powers, in particular the United States, endeavored to transform Russia into a Western style liberal democracy.  Putin interpreted the reform efforts of the 1990’s in much the same way Hitler exploited the Treaty of Versailles after the First World War: as the betrayal of a proud and vanquished nation.

In Putin’s view, Russia’s descent into political and social disarray in the 1990’s expressed a fundamental conflict between the interests Western elites and a strong and resurgent Russian state. In response to the remarkable and terrifying chaos of the Yeltsin years, he sought to reestablish a formidable central authority designed to promote stability and prosperity at home and to project Russian political and military authority abroad.

Putin’s political goal is clear and simple: to reclaim greatness on the world’s political stage. Like many Russian leaders before him, he believes the West wants to surround Russia with hostile governments. So first and foremost, he wants to install friendly regimes in neighboring countries, e.g., that occurred in Moldova and Bulgaria in 2016. This “soft” version of Russia’s empire would reestablish its sphere of influence and prevent further NATO incursion in Eastern Europe.

But Putin has a larger ambition. Still resentful of the West’s attempt to weaken the Russian state after the end of the Cold War, he aspires to challenge the capitalist world order like the Bolsheviks a century ago. But instead of Marxist-Leninist ideology, Putin utilizes nationalist sentiment and traditional religious values to fashion himself as the de facto leader of an international movement to eclipse the power of “globalist” political and economic elites in the West.

Seen in this context, the curious political bromance between Putin and Trump makes more sense. Yes, we do not know about Trump’s business ties to Russian interests. Yes, there are unconfirmed reports about personal information the Russians have on Trump, in a plot twist summoned from the pages of a Cold War potboiler. But focusing on these issues ignores a more compelling truth: Trump represents a dream political partner for Putin. To the extent Trump assails the enduring relevance of NATO and the viability of the EU, and offers withering criticism of Angela Merkel, who now symbolizes the push for more European solidarity, he shakes the pillars of the Western alliance. Suddenly, the ideal of a united Europe and an ironclad relationship between Europe and the U.S. recedes before a rising populist and nationalist tide across the Western world. And Putin appears poised to exploit this trend by cultivating ties with both separatist movements of the far left and nationalist movements of the far right in Europe under the rubric of “anti-globalism”.

It is stunning to see Russia emerge as a force to be reckoned with in Europe and the Middle East and sobering to consider Putin as the preeminent geopolitical thinker on the world stage. As he construes Western political and economic elites as being anti-democratic, they pursue globalization to advance their own interests at the expense of “the people”, an important part of his grand strategy will be to welcome populists like Trump or Le Pen as comrades. In Putin’s eyes, Trump is a fellow traveler. The curious relationship between these leaders goes beyond a consideration of business ties or sordid personal revelations. We have avoided accepting the plain truth: Trump envies Putin’s ability to advance his country’s interests. He fashions himself to be a leader cut from Putin’s populist and nationalist cloth.

Neal Aponte, Ph.D.
Editor of Delano

War in Ukraine/Russia

The Showdown With Russia

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Acting like a 20th century nationalist leader determined to restore Russia’s relevance on the world’s geopolitical stage and reestablish a sphere of influence in Eastern Europe, Vladimir Putin annexed Crimea and threatened Ukraine. His provocative military adventures triggered a swift reaction from the Western world. Over the last several months, the West has waged a war against Russia using crude oil prices and the international credit and currency markets as its theatres of conflict.

Since Ukraine erupted earlier this year, the price of oil dropped 40%. The decline in crude prices coupled with meaningful sanctions by the West precipitated a flight of some $125 billion of capital from Russia while its currency, the ruble, plummeted 40%, forcing the government to maintain its value against international speculators. Russian companies owe Western banks $650 billion and remain unable to refinance their debt because they do not have access to international credit, compelling the treasury to consider using currency reserves to pay $120 billion due next year. Putin severely underestimated the sophisticated arsenal of economic and financial weapons that could be employed against the Russian economy, now forecast to shrink next year because of the crisis.

Putin noted in his recent annual press conference that Russia failed to diversify its economy over the last 20 years. Oil revenues still account for nearly 60% of Russia’s total exports and 40% of its national budget. This remains a source of frustration and humiliation for Russia’s leadership. As the blood of the Russian bear runs the color of crude oil, can there be a more effective response to its aggressive behavior than a precipitous and dramatic decline in oil prices?

Some analysts contend the sudden and remarkable decline in oil prices simply reflects market forces, the result of a steady supply coupled with diminished global demand. But slackening demand and falling prices should entice leading producers to cut production, as OPEC did in the past. A number of countries, notably Venezuela, Iran and Russia, recently lobbied for this. But they were rebuffed by Saudi Arabia, whose oil minister flatly rejected any cuts. The ostensible reason for Saudi resistance has been to undercut the price and erode the market share of American shale producers. Yes, American oil imports have declined since peaking in 2005 because of domestic production, but the US still remains the world’s second largest importer and the biggest consumer of oil on a per capita basis. Moreover, the reduced cost of producing shale, at least one major deposit remains profitable even if oil declines to $50, renders the apparent Saudi rationale a rather speculative gamble. And while the major driver of increased oil prices over the last decade, insatiable Chinese demand, has eased with softer economic growth, the Chinese continue to purchase and stockpile cheaper oil to bolster their national reserves. So we find it difficult to believe the massive 40% reduction in oil price over the last several months can be attributed to reduced demand.

The bottom line is this: because Russia remains so dependent on oil revenues, it must sell as much oil as possible, leaving it stuck between a rock and a hard place. The more Russia sells at greatly reduced prices, the more it stands to lose. If prices remain below $80 a barrel, Russia will lose more than $100 billion this year.

In the short-term, the economic war being waged by the West will have a drastic impact on irksome nations such as Russia, Venezuela and Iran, effectively killing three birds with one stone. Each of these governments confronts an intricate global web of economic relationships that ensnare virtually all nations in the 21st Century. With respect to Russia, Putin appears cornered and recently made encouraging conciliatory remarks on Ukraine. Now is the time to signal Western readiness to offer an olive branch pending a lasting political settlement. The goal should be to entice Russia to act responsibly in the European and world community, not to demand capitulation and inflame further nationalist sentiment.

 

Neal Aponte, Ph.D.
Editor of Delano

War in Ukraine/Russia

What Does Russia Want?

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In a celebrated passage from Democracy in America written in the 1830’s, Alexis de Tocqueville predicted the United States and Russia would become the world’s preeminent powers. For a few decades in the mid-20th century, Tocqueville appeared clairvoyant. But over time, it became increasingly clear Russia’s military might far outstripped its economic clout. And the demise of the Soviet Union undermined any illusion of Russia’s imperial pretension.

Western leaders underestimate how the Russian nation has been humiliated by recent history. We believe the most serious political and military crisis in Europe in decades must be understood as an attempt to reverse this painful trend. Vladimir Putin is determined to take greater risks to restore his country to what he considers its rightful place as a venerated player on the world stage. So identifying the sources of Russia’s humiliation will help us understand the root cause of the current crisis and construe an effective response.

There are three major sources of Russia’s humiliation. Two of them are obvious. First and foremost is the end of the Cold War. In relatively short order, Russia lost its political and military sphere of influence in Eastern Europe and Central Asia. America emerged victorious from the protracted ideological, economic and political struggle to become the world’s only superpower. Secondly, the defeat of the Soviet Army in Afghanistan represented a significant blow to Russia’s military establishment.

The third source of humiliation is powerful and insidious: Russia’s position in the world economy vis-à-vis China. These erstwhile Communist allies underwent a process of economic and political reform over the last few decades. Scholars debate the most effective sequence and pace of these reforms: which should go first, how fast should they proceed? While the debate continues, the contrast between Russia and China has been undeniable and remarkable. In the last 25 years, China emerged as an economic and financial powerhouse, becoming the largest exporter and the second largest importer of manufactured goods in the world, as Russia remained dependent on exploiting its vast energy and natural resources. Fortunately for Russia, increased prices for their commodities resurrected its economy. But Russia’s overall economic progress was greatly eclipsed by China. We believe the divergent paths of these former Communist nations represents a profound humiliation for Russia’s political leadership. An inability to diversify the economy and inferior rates of overall growth pose an enduring challenge.

In this context, Russia’s use of military force in Ukraine must be understood not as a sign of strength, but as a signal of enduring vulnerability, insecurity and weakness. The West faces a greatly injured nation determined to salvage its national pride and self-respect. In other words, Russia’s actions can be summed up in a terse phrase: the best defense is a good offense.

How should the West respond? In the short-term, the effective response involves a measured and credible show of strength. This means presenting a clear message that continued aggressive behavior has disastrous economic consequences. It should not mean reduced cooperation between Russia and NATO. Nor should it mean a blanket demand for Russia to capitulate. This would only exacerbate Russia’s national humiliation. Putin does not want to go to war. But he believes NATO’s push eastward to include Ukraine represents a threat to Russia’s security interests. So over the longer-term, the West must develop a strategy to deepen Europe’s military partnership with Russia. For instance, NATO could take the lead in nuclear disarmament negotiations to encourage Russian reciprocity; coordination of anti-terrorism policy between Europe and Russia could be strengthened; Russia could be enlisted to play a constructive role in the Iranian nuclear standoff. This would enhance Russia’s international stature and reduce its chronic fear of being encircled by hostile military forces, enabling Russia to save face and alleviate its humiliation. Over a decade ago, Putin wanted to join NATO. How absurd that seems today. Yet integrating Russian and Western military and political interests would greatly defuse the current crisis and mitigate future conflicts.

 
Neal Aponte, Ph.D.
Editor of Delano