Putin Is Losing In Ukraine And That's Our Biggest Problem Right Now
http://www.forbes.com/sites/gregsatell/2014/03/02/putin-is-losing-in-ukraine-and-thats-our-biggest-problem-right-now/
Greg Satell, Contributor
3/02/2014 @ 6:48PM
As Putin moves his troops into Crimea and threatens to invade Eastern Ukraine, President Obama warns of "costs". Many believe that if we had a stronger hand at the helm, the Russian President wouldn't have dared such a gambit.
Yet to understand how ridiculous that notion is, you only have to go back to 2008, when Putin invaded Georgia. I was traveling through Georgia during the spring of that year and saw some of the troop movements. It was clear that war was in the air. Yet when the tanks started rolling in August, the Bush administration seemed genuinely surprised.
Bluster got us nowhere then and it will get us nowhere now. In fact, due to a much firmer alliance with Europe and somewhat renewed moral authority in the world, we are in a much better position to deal with this crisis than we were back then.
Yet still, the situation is very dangerous and we must proceed extremely carefully, taking into account the realities of the world and not falling prey to Cold War fantasies.
First, the obvious. War in Ukraine would be horrific. Many of the fine young men I worked with there would be conscripted into the army. Some would surely die, others would never be the same. My family and friends there would face danger of the worst kind.
Yet, Russia wouldn't fare much better. Ukraine is no pushover.
I'm not a military expert, but the western personnel I have spoken to consider the Ukrainian forces to be more prepared than their Russian counterparts. One way to understand the difference in quality is to look at the the ratio of professional soldiers to conscripts. Ukraine's armed forces are 60% professional; Russia's only 30%.
Further, when the Soviet Union broke up, much of its arms industry was located in Ukraine, which even today remains the world's 9th largest arms supplier. And Ukraine would most likely receive support, both overt and covert, from NATO allies on its borders -- Poland especially -- and electronic intelligence from the United States.
Of course, Russia's armed forces are far larger, but there would be no easy victory. In the meantime, harsh sanctions would surely go into effect. Many of Russia's elite would see their assets frozen and travel visas revoked. Its banks would be cut off from the international financial system. Trade with the West would grind to a halt. Within weeks, shoppers in Moscow would start to see empty shelves.
And that's what makes recent events so scary. Putin knows all this and he still seems determined to press his luck. He isn't, as some would believe, playing the role of a chess master, but that of a desperate man with nothing left to lose.
To understand how things most probably look from Putin's point of view, take a look at the Black Sea, where Crimea is located.
During the Cold War, the Soviet Union dominated the region, controlling all of its coastline except for Turkey in the south. Today, Bulgaria and Romania are NATO allies, Georgia is actively seeking membership and it's likely that Ukraine will soon do so as well.
That dynamic continues to play out on every front. A decade ago, with the US mired in two wars and subject to international condemnation over Iraq, Russia sought to split the Atlantic Alliance. Further, as Europe's primary supplier of natural gas, Putin could exert pressure whenever he needed to impose his will.
Yet it was the EU, not the US that was Putin's chief adversary in the latest crisis and as The Washington Post reports, ten years of gas politics have resulted in dramatically reduced demand for Russian resources. Even Ukraine has cut consumption by 40%. Russian coffers have lost billions in the process.
Now, the change in Ukraine's government has left Putin's dream of a Eurasian Customs Union to rival the EU in tatters. He faces growing opposition at home, a continuing crisis in the Northern Caucasus and poor economic prospects. A significant drop in the price of oil could send his economy into freefall.
President Obama says that we shouldn't view events through the lens of a Cold War chessboard and he's right. We control nearly all the pieces and have little ground to gain. Putin, on the other hand, is down to his last few pawns.
So yes, we should be firm. We should be clear that Putin's recent behavior is unacceptable and will incur further costs. Yet we should also give him a way out of the crisis and do our best to help him avoid humiliation.
Putin cannot win. I would suspect that even he knows that. What we need to do now is diminish his determination to impose a price on the rest of the world.
Update 1: Reuters reports that markets in Moscow are in near free-fall on Monday. Stocks are down more than 10%. $10 billion of reserves have been burned through and interest rates have been hiked. The Ruble has fallen 2% to historic lows and there are reports of dollar shortages at street vendors. Russia still has massive foreign reserves of nearly $500 billion, but if the crisis persists, things are sure to get worse.
Update 2: The New York Times reports that after speaking with Putin by phone, German Chancellor Angela Merkel wasn't sure that he was in touch with reality and that he seemed as if he was "in another world." So, it's not clear how the now obvious consequences will figure into his decision making. Russia could very well be entering an economic crises not seen since the 90's.
Additionally, all G-7 nations have suspended preparations for the summit in Sochi, which might be a prelude to a more comprehensive sanctions regime.
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