Russia's war on Ukraine is a week old and getting more violent and deadly by the hour, with a couple of thousand Ukrainian civilians dead and nearly a million fleeing the country already. The UN General Assembly, in an extraordinary session, voted today (141-5, with 35 abstentions) to approve a non-binding resolution demanding that Russia immediately stop using force against Ukraine and withdraw its military from the country. Russia and 4 puppet regimes-- Belarus, Cuba, North Korea and Syria-- voted against it.) Yesterday the NY Times reported that "no one can say with certainty just how many Russian troops have died but Ukraine has said its forces have killed more than 5,300 Russian troops. "For a comparison," wrote Helene Cooper and Eric Schmitt, "nearly 2,500 American troops were killed in Afghanistan over 20 years of war. For Putin, the rising death toll could damage any remaining domestic support for his Ukrainian endeavors."
Turkey has rejected a request from Russia to sail 4 warships through the Bosporus into the Black Sea. Meanwhile, the US is joining the rest of the West in banning flights from Russia. This on top of a banking system on the verge of collapse, Putin having "signed a decree banning Russians from leaving the country with more than $10,000 in foreign currency as fears grow that the Russian financial system is on the brink of collapse."
Derek Thompson covered that looming economic collapse for The Atlantic this morning. "The war in Ukraine," he wrote, "is being fought on two battlefields. The first battlefield is geographic. It is the land Russia is tearing up with tank treads and pounding with missiles. The second battlefield is made up not of physical particles, but rather of relationships-- contracts and promises between nations, banks, companies, and individuals. This is the economic arena. While Russia holds the military advantage over Ukraine on Battlefield One, it is getting destroyed by a Western alliance on Battlefield Two. In the past few days, the United States and several major European countries have declared a series of financial penalties and sanctions against Russia that are without modern precedent for a major economy. These policies are triggering a financial catastrophe in Russia... Companies are boycotting Russia too. BP and Shell have announced plans to exit their joint ventures in major Russian energy companies. Some countries are now refusing to do business with Russia entirely."
Although its geopolitical strategy puts it at odds with the West, Russia is an integrated member of the global economy. Only 12 countries in the world have more total exports. Russia trades oil, gas, and coal to much of Europe and wheat to the Middle East and Africa. The sanctions imposed so far amount to a kind of siege of a country that depends on access to global markets.
This is terra incognita for economic policy. No country has ever faced this kind of global freeze-out. The implications are hard to predict, but several consequences are already apparent in the form of bank runs and long ATM lines. On Monday, the London stock listings of several Russian banks fell by more than 50 percent. The ruble is trading like a junk cryptocurrency, collapsing more than 30 percent on Monday, and as it weakens, the price of certain imports will rise sharply. Unemployment will soar unless the central bank steps in to print money in order to keep companies afloat, but this will almost certainly cause even worse inflation. To throttle the worst inflationary effects, the Russian central bank doubled its key interest rate to 20 percent; for perspective, that’s higher than the U.S. federal-funds rate has ever been. Businesses are nervous that SWIFT sanctions will shut down international credit-card accounts. In normal times, the worst effects of most depressions aren’t felt for months. This has all happened in the past 72 hours.
Russia’s economic crisis could spark a brain drain. More young Russians are reportedly trying to emigrate. Today’s problems could set the stage for a long-term decline in Russia’s prosperity, as people with the means and motivation to get out move west. Migrants will, however, face a mobility problem: The European Union has closed its airspace to Russian planes and private jets. The country is sealed off-- from Western trade, Western travel, and (apart from energy exports) most Western business.
...We should not root for punitive calamity in Russia. The suffocation of the Russian economy might be morally justified, given the ruinous invasion of Ukraine, but these measures are without precedent. Maybe the sanctions will work, by driving Putin to the negotiating table. Or maybe they will make him feel cornered and cause him to lash out in a catastrophic way--committing suicide for fear of death, as Otto von Bismark put it. This was Vladimir Putin’s war to start. It will be Vladimir Putin’s war to end. But it falls to the West to convince Russia’s leader that he has the most to gain by bargaining rather than bombing.
Based on his NY Times column yesterday, I'm guessing Thomas Friedman pretty much is rooting for punitive calamity in Russia-- or at least for Putin personally. He wrote that he sees "three possible scenarios for how this story ends. I call them 'the full-blown disaster,' 'the dirty compromise' and 'salvation.'"
Friedman wrote that "The disaster scenario is now underway: Unless Vladimir Putin has a change of heart or can be deterred by the West, he appears willing to kill as many people as necessary and destroy as much of Ukraine’s infrastructure as necessary to erase Ukraine as a free independent state and culture and wipe out its leadership. This scenario could lead to war crimes the scale of which has not been seen in Europe since the Nazis-- crimes that would make Vladimir Putin, his cronies and Russia as a country all global pariahs. The wired, globalized world has never had to deal with a leader accused of this level of war crimes whose country has a landmass spanning 11 time zones, is one of the world’s largest oil and gas providers and possesses the biggest arsenal of nuclear warheads of any nation. Every day that Putin refuses to stop we get closer to the gates of hell. With each TikTok video and cellphone shot showing Putin’s brutality, it will be harder and harder for the world to look away. But to intervene risks igniting the first war in the heart of Europe involving nuclear weapons. And to let Putin reduce Kyiv to rubble, with thousands of dead-- the way he conquered Aleppo and Grozny-- would allow him to create a European Afghanistan, spilling out refugees and chaos."
No one stopped him then-- after all, who cares about Muslim humanity? So now we have this. Friedman forgot to bring that up. "Putin," he wrote, "doesn’t have the ability to install a puppet leader in Ukraine and just leave him there: A puppet would face a permanent insurrection. So, Russia needs to permanently station tens of thousands of troops in Ukraine to control it-- and Ukrainians will be shooting at them every day. It is terrifying how little Putin has thought about how his war ends."
Putin believes that it is his right and duty to challenge what [Fiona] Hill calls “a rules-based system in which the things that countries want are not taken by force.” And if the U.S. and its allies attempt to get in Putin’s way-- or try to humiliate him the way they did Russia at the end of the Cold War-- he is signaling that he is ready to out-crazy us. Or, as Putin warned the other day before putting his nuclear force on high alert, anyone who gets in his way should be ready to face “consequences they have never seen” before. Add to all this the mounting reports questioning Putin’s state of mind and you have a terrifying cocktail.
The second scenario is that somehow the Ukrainian military and people are able to hold out long enough against the Russian blitzkrieg, and that the economic sanctions start deeply wounding Putin’s economy, so that both sides feel compelled to accept a dirty compromise. Its rough contours would be that in return for a cease-fire and the withdrawal of Russian troops, Ukraine’s eastern enclaves now under de facto Russian control would be formally ceded to Russia, while Ukraine would explicitly vow never to join NATO. At the same time, the U.S. and its allies would agree to lift all recently imposed economic sanctions on Russia.
This scenario remains unlikely because it would require Putin to basically admit that he was unable to achieve his vision of reabsorbing Ukraine into the Russian motherland, after paying a huge price in terms of his economy and the deaths of Russian soldiers. Moreover, Ukraine would have to formally cede part of its territory and accept that it was going to be a permanent no man’s land between Russia and the rest of Europe-- though it would at least maintain its nominal independence. It would also require everyone to ignore the lesson already learned that Putin can’t be trusted to leave Ukraine alone.
Finally, the least likely scenario but the one that could have the best outcome is that the Russian people demonstrate as much bravery and commitment to their own freedom as the Ukrainian people have shown to theirs, and deliver salvation by ousting Putin from office.
Many Russians must be starting to worry that as long as Putin is their present and future leader, they have no future. Thousands are taking to the streets to protest Putin’s insane war. They’re doing this at the risk of their own safety. And though too soon to tell, their pushback does make you wonder if the so-called fear barrier is being broken, and if a mass movement could eventually end Putin’s reign.
Even for Russians staying quiet, life is suddenly being disrupted in ways small and large. As my colleague Mark Landler put it: “In Switzerland, the Lucerne music festival canceled two symphony concerts featuring a Russian maestro. In Australia, the national swim team said it would boycott a world championship meet in Russia. At the Magic Mountain Ski Area in Vermont, a bartender poured bottles of Stolichnaya vodka down the drain. From culture to commerce, sports to travel, the world is shunning Russia in myriad ways to protest President Vladimir V. Putin’s invasion of Ukraine.”
And then there is the new “Putin tax” that every Russian will have to pay indefinitely for the pleasure of having him as their president. I am talking about the effects of the mounting sanctions being imposed on Russia by the civilized world. On Monday, the Russian central bank had to keep the Russian stock market closed to prevent a panicked meltdown and was forced to raise its benchmark interest rate in one day to 20 percent from 9.5 percent to encourage people to hold rubles. Even then the ruble nose-dived by about 30 percent against the dollar-- it’s now worth less than 1 U.S. cent.
For all of these reasons I have to hope that at this very moment there are some very senior Russian intelligence and military officials, close to Putin, who are meeting in some closet in the Kremlin and saying out loud what they all must be thinking: Either Putin has lost a step as a strategist during his isolation in the pandemic or he is in deep denial over how badly he has miscalculated the strength of Ukrainians, America, its allies and global civil society at large.
If Putin goes ahead and levels Ukraine’s biggest cities and its capital, Kyiv, he and all of his cronies will never again see the London and New York apartments they bought with all their stolen riches. There will be no more Davos and no more St. Moritz. Instead, they will all be locked in a big prison called Russia-- with the freedom to travel only to Syria, Crimea, Belarus, North Korea and China, maybe. Their kids will be thrown out of private boarding schools from Switzerland to Oxford.
Either they collaborate to oust Putin or they will all share his isolation cell. The same for the larger Russian public. I realize that this last scenario is the most unlikely of them all, but it is the one that holds the most promise of achieving the dream that we dreamed when the Berlin Wall fell in 1989-- a Europe whole and free, from the British Isles to Vladivostok.