Why Sanctions Will Have Little Effect On Putin

One of the reasons the U.S. has problems dealing with the Eastern mind is our continued failure to think like they do. We assume that since our thought pattern makes sense to us that it should make sense to a Russian. This is not the case. The Russians do not follow the Western tradition of philosophy and what has value in Western culture does not necessarily have value in the mind of a Russian. For example: Biden will place sanctions on Russian Oligarchs (by which he means very wealthy Russians.) He does this because in the Western canon of political thought money is power and the oligarchs will then force Putin to remove his forces from Ukraine.

But this, like most U.S. negotiating positions, is wrong. In the Eastern philosophy from which Russian thought derives, money is not power rather might makes right. You might be the wealthiest person in Russia but you are there because I, he who is in charge of the Military, Police, Tax authorities, etc, permit you to be. If you resist me I will arrange to have you discredited, investigated, arrested or perhaps you will need to meet with an untimely accident. The supposed oligarchs of Russia do not control Putin as U.S. politicians may be controlled by money, rather he permits the oligarchs to exist.

In Russia might makes right and might will have its way. Biden arrives at this juncture because Obama failed in 2014 in his toe to toe joust with Putin and, secondly, because of Afghanistan. In 2014 Obama drew a red line in the sand of Syria and promised dire consequences should the Syrians use chemical weapons again. They did and he did nothing. Seeing this Putin realized Obama was a weak leader and not long after the Syrians chemical weapons usage he sent forces into Crimea to aid the Ukrainian resistance in its fight for independence from Ukraine. See a pattern? Biden bungles Afghanistan being willing to suffer all sorts of ignominy just to get out of the problem. Putin now knows that Biden, like Obama, is not a strong leader and does not care about the international reputation of promises made by the U.S. government and he begins to maneuver to take the rest of Ukraine knowing exactly how the U.S. will respond.

The East plays a long game, the West a short game, the East values life less than the West, the East has a much greater ability to rationalize than the West, the East believes might makes right, the West believes money talks louder than principle or resolve. The East defines peace differently than the West because the West believes peace grows out of a society wherein everybody is a participant, while the East defines peace simply as the absence of conflict, unless conflict is needed to keep the peace.

Lastly the West has many players each of whom must answer to other politicians. In this case the other side is one person, Vladimir III, Czar of all the Russians and according to him there are lots of Russians in Ukraine.

Prediction: After the Ukraine is pacified and happily part of Russia, Putin will turn his attention to the Baltic States where lots of Russian speakers reside.

3 thoughts

  1. Ambrose Evans-Pritchard of Telegraph (UK) is always worth reading; this article in particular.
    AMBROSE EVANS-PRITCHARD15 February 2022 • 4:30pmImage removed by sender. Ambrose Evans-Pritchard
    Russia has amassed foreign exchange reserves of $635bn, the fifth highest in the world and rising. It has a national debt of 18pc of GDP, the sixth lowest in the world, and falling.

    The country has cleaned up the banking system and has a well-run floating currency that lets the economy roll with the punches.
    It has a budget surplus and does not rely on foreign investors to cover government spending. It has slashed its dependency on oil state revenues. The fiscal break-even cost of a barrel of oil fell to $52 last year, down from $115 before the invasion of Crimea in 2014.

    It is the paradox of Vladimir Putin’s tenure that he runs one of the most orthodox policy regimes on the planet. “The macroeconomic team at the central bank and the treasury are exemplary,” said Christpher Granville from TS Lombard.

    Mr Putin’s tight ship is a striking contrast to the prodigal socio-economic systems of the West, where money rains from helicopters and fiscal dominance prevails. “He is extremely conservative and rails against the dangers of debt,” said Chris Weafer from Macro-Advisory in Moscow.
    The commodity boom is adding an extra $10bn a month to Kremlin coffers from oil and gas. It is being squirrelled away in the National Wellbeing Fund.

    This rainy day reserve can be tapped as needed to cover social spending: pensions, child care, fertility bonuses for families, and mortgage subsidies for first-time buyers – components of Mr Putin’s levelling-up strategy for the 2020s.

    The Kremlin could sever all gas flows to Europe – 41pc of the EU’s supply – for two years or more without running into serious financial buffers.
    The West talks of “devastating” sanctions if Mr Putin invades Ukraine. Tuesday is the turn of German Chancellor Olaf Scholz to repeat the warnings in Moscow, meekly in his case. There is theatre to this ritual, at best wishful thinking, at times masking economic self-interest.

    The harsher truth was summed up by Russia’s ambassador to Sweden. “Excuse my language, but we couldn’t give a shit about western sanctions,” he told the Aftonbladet newspaper.

    Washington says it will inflict much harsher punishment than in 2014, starting at the top of the escalation ladder. The Kremlin may already have calculated – accurately in my view – that the impact will in fact be less.

    Post-Crimean sanctions coincided with a secular commodity bust, the main reason why Russian real disposable incomes were to slide by 12pc. This time they coincide with a secular commodity boom.

    Russia today has a semi-autarkic economy, and its chief trade partner is China. The copious document signed by Mr Putin and Xi Jinping at the Beijing Winter Olympics – Entering a New Global Era – establishes a de facto authoritarian alliance.

    We should take the rhetoric with a pinch of salt. They remain two scorpions in a bottle, as amorous as Ribbentrop-Molotov lovers. But right now China has Russia’s back against the West, and this renders it impossible to enforce meaningful sanctions.

    The Kremlin knows that Europe has vetoed the expulsion of Russia from the SWIFT network of international payments. “The West has to do something to save face but we expect nothing more than sanctions on two or three large Russian banks.
    That would be disruptive but Russians are used to this. The only sanctions that would have any real impact is to try to kick Russia out of the global financial system altogether,” said Mr Granville.

    “Obviously Russia would grow faster if it were integrated into Western supply chains but in a sense the damage has already happened since Crimea. Further measures would be more of the same,” he said.

    It is clear that there will be no blockade of Russia’s energy nexus. Germany’s gas dependence is so total that Mr Scholz still cannot bring himself to state unequivocally that the Nord Stream 2 pipeline should be shelved after a full-blown invasion.

    Whatever is done requires the unanimity of all 27 states and will therefore gravitate to the lowest common denominator.

    “Europe can’t do without Russian energy, and it has nowhere else to turn. This is not just about gas: there are oil pipelines, as well as 2.5m barrels a day of refined products like aviation fuel and diesel,” said Macro-Advisory’s Mr Weafer.

    Deliveries of liquefied natural gas, mostly from the US, have slowed the depletion rate of Europe’s gas reserves over the last month, with the help of mild weather.

    But they are uncomfortably low – Austria (19pc), The Netherlands (24pc), France (28pc) – and global LNG capacity is stretched to the limits. A total Kremlin cut-off would bring Europe to its knees within weeks.

    The White House thinks Mr Putin cannot achieve his $400bn investment plan to diversify the economy over the next decade without Western technology, but China can plug many gaps, and there is no chance of sustaining a hermetically sealed sanctions regime at global scale.

    Mr Putin has an unrepeatable chance to smash the post-Cold War settlement and reassert Russian dominance over its near abroad. Nothing on the current menu of sanctions will alter his calculus.

    If he steps back from an invasion over coming days it will be for one of two reasons. The first is that the US, Britain, and Turkey have shipped weapons to Ukraine that are sufficiently sophisticated to move the needle: anti-tank and anti-aircraft missiles, and drones.
    Nato’s Eastern European states have held firm. The US and the UK have mobilised their cyberwarfare capability on behalf of the alliance. Washington has made it clear that it will support a guerrilla insurgency to raise the tariff of military occupation.

    Mr Putin has to weigh the risk that Ukraine’s battle-hardened reservists might put up stiffer resistance than expected and that a lightning strike on Kyiv might prove harder than it looks.

    Almost nothing that core Europe is now doing has any bearing on this. The EU failed to heed the lesson of Russia’s seizure of Georgian territory in 2008. It continued disarming even as Russia armed further. It spent a decade obsessing over institutional architecture, and then trying to save monetary union from its own contradictions.

    It lost sight of the greater strategic imperative during the European debt crisis, when states slashed spending on modern weaponry to meet arbitrary and pro-cyclical austerity targets. These were enormous errors of statecraft.

    The other reason why Mr Putin may desist is if Germany and France have promised behind closed doors to give him what he wants without a war: Ukraine on a platter, stripped of sovereignty and locked into Moscow’s strategic orbit. To call it Finlandisation is a euphemism It is closer to Russification.

    We will find out soon enough what has been going on in these private sessions but it was revealing to see the ashen face and involuntary wince of Ukraine’s Volodymyr Zelensky as the German Chancellor spoke in Kyiv.

    Mr Scholz did indeed seem to be pulling the rug from underneath his feet, deflating Ukraine’s hope of genuine independence with the soft-spoken words and careful precision of an employment lawyer, the Chancellor’s former job.

    Markets are implicitly betting that a Western sell-out on Mr Putin’s terms is the likely outcome, and that Ukraine will be pressured into “voluntary” realignment – like the Czechs in 1938 – allowing business to continue as usual.

    Utter cynicism is usually the safest bet.

    (The Ukies are screwed).

  2. “Only one thing can cause Russia to rethink and even abandon its program of conquest: coffins. And if Ukraine’s friends continue to support the Ukrainians who want to fight for their freedom, an abundant supply of those will be coming back to Russia.” –Eliot Cohen, “Arm the Ukrainians Now,” The Atlantic, Feb. 23, 2022

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