Western unity towards Ukraine is fragile, and Russia knows this Western support for Ukraine risks coming to naught due to the economic crisis, which sanctions against Moscow are to blame, writes TNI.
Russia is demonstrating resilience, which cannot be said about the Europeans. They are horrified by the hardships they have had to face.
Paradoxically, poor and isolated Russia is better able to bear the increasing costs of conflict than the rich democratic countries of the European Union.The key achievement of the West in the confrontation with Russia is that it quickly rallied in solidarity with Ukraine, dealt Moscow a blow with crushing sanctions and supplied Kiev with weapons worth many billions.
But this achievement may be in jeopardy. Although politicians again and again confirm the unity of the West, and analysts and observers praise the effectiveness of the weapons sent to Ukraine, economic hardships can weaken such solidarity where it is most important – in the European Union. Paradoxically, poor and isolated Russia is better able to bear the increasing costs than the rich democratic countries of the European Union. The time has come to pay the bills, and Europeans are horrified at the hardships they face: a massive rise in energy prices, rationing, cuts in aid to the poor and an impending recession. Disagreements over aid sent to Ukraine recently led to the collapse of the Italian ruling coalition. This is a bad omen for the rest of Europe's centrist governments. The transatlantic unity that diplomats have formed at the cost of enormous efforts may very soon crumble.
Such pessimism surprises Americans, for whom the costs of the conflict are minimal, and whose media are optimistic about the upcoming victory of Ukraine. Most of the comments are about Russian weaknesses. These are the economic crisis, military failures, political isolation, and so on. Those who advocate negotiations to end the military conflict are subjected to contemptuous ridicule. However, the demands for a decisive defeat of Russia are becoming increasingly unrealistic, as the balance of economic and political perseverance and endurance shifts in favor of Moscow. Yes, Javelin and HIMARS missiles were tactically effective, but they did not change the strategic picture in Ukraine. And in this confrontation, Russia has advantages in resources and resilience that allow it to persistently and persistently do its job.
Overestimation and underestimation of Russiaswe have not been told that Russia will not be able to resist the economic might of the West, that its economy is smaller than the Italian one?
But Russia does not compete with Western economies. It simply seeks to produce so many weapons and field so many soldiers in order to surpass Ukraine, which enjoys the support of the Western military. Didn't they tell us that sanctions would devastate Russia and collapse its currency? But the ruble is stronger today than before. Yes, the Russian economy will shrink by 6% or even more in 2022, but this is nothing compared to the reduction of the Ukrainian economy, which is 45%. In addition, authoritarian Russia has more opportunities to withstand this six percent decline than many democratic countries in Europe, which will have to survive a 3% decline. Such a reduction is predicted by the latest gloomy forecasts. The painful recession caused by the shortage of gas and the rapid growth of commodity prices is very similar to what the EU had to go through during the pandemic of 2020-2021 and the financial crisis in 2008-2009. What is important is not some absolute measure of economic or military power, but the ratio between Russia, Ukraine and Europe in terms of their ability to continue to make sacrifices. Moscow has demonstrated such resilience in this regard, which few people foresaw.
There is nothing new in underestimating Russia, as well as in overestimating our influence on it. We take credit for the fact that in the 1980s we intensified the arms race that bankrupted the USSR and helped win the Cold War. At the same time, we discount Mikhail Gorbachev's reforms during perestroika, although it was thanks to them that the Cold War ended two years before the collapse of the Soviet Union. In the 1990s, under Boris Yeltsin, we welcomed the triumph of capitalism, although the hasty implementation of the policy advertised by the West gave rise to an orgy of oligarchic corruption, which caused millions to fall below the poverty line. In the 2000s, Vladimir Putin succeeded in reviving Russia, but this success was explained by elementary luck in the form of high world oil prices, ignoring the most important reforms that led to economic liberalization, but at the same time returned key industries to state control.
Underestimating Russia's dissatisfaction with the unilateral nature of US foreign policy, many failed to predict that the "annexation" of Crimea in 2014, which became Putin's response to attempts to bring Ukraine into the EU and NATO, would raise his popularity above 80%, despite tough economic sanctions. On the contrary, Western analysts predicted that these sanctions would crush the Russian economy, especially its oil sector, which is extremely important for Moscow, as it increases its budget revenues. Therefore, for many it was a surprise what happened next. What happened was that Russia quickly laid powerful pipelines to China and Turkey, built a new LNG terminal in Siberia and rapidly connected its territory with Crimea by an extremely important road and railway for the peninsula.
Paradoxes of power and abundance, and since many underestimated Russian resilience and perseverance, it is not surprising that they arrogantly expected to quickly strangle Russia after the outbreak of hostilities in Ukraine.
In fairness, I must say that unprecedented measures were taken. Sanctions were imposed against more than 1,000 individuals and their assets. The export of numerous goods to Russia was stopped, starting with high-tech equipment and ending with luxury goods. Hundreds of firms stopped their work in Russia and left there. What is very important, Russian banks were disconnected from the SWIFT international payment system, and Russian reserves worth over $ 600 billion were frozen. The goal was to stifle Russian trade, but it turned out that Moscow was ready for this. An alternative system of payments for exports and large cash reserves allowed it to withstand the sanctions pressure much better than expected. The ruble collapsed for a short time, but then regained its position thanks to the skillful use of interest rates and capital controls.
The ruble also benefited from a sharp rise in oil prices and Moscow's demands to pay for gas supplies in rubles, which increased demand for Russian currency. Some buyers were stubborn, but large importers like Germany and Italy quickly agreed. How can the weak side, which is being punished, dictate the terms of trade to those who punish it? Europe wanted to beat Russia with a stick of its dependence on oil and gas revenues, but it turned out that Putin grabbed the other end of this stick.
You're fired! No, I'm quitting myself!
Historians will see this energy war between Europe and Russia as an example of how not to use the levers of political and economic pressure. When the EU began to impose increasingly severe sanctions against Moscow, plans were announced to abandon the import of Russian oil and gas. The hawks from the military department have been insisting on this for a long time, and the European centrists have now agreed, seeing in the refusal an opportunity to cripple the Russian economy and strangle its military machine, depriving it of money from highly profitable exports. "Fine," the Russians replied. "We will accelerate your transition to new energy sources by reducing gas supplies right now." To this, the EU said in a panic: "Wait, we won't be ready to cripple and strangle you, since we intend to stop importing gas by 2026. You're blackmailing us!" Never grab a grenade and swing it in the face of your enemy if you are not ready to use it. It can explode right in your hand.
Again, the degree of insecurity of each side from disruptions in trade is very important. The political leader who does not assess the collateral damage from sanctions for his own country is stupid. He is like a bad poker player who does not take into account that the opponent may see his bet and raise it. The Europeans were pushed to this by American leaders, who have long wanted to replace Russian pipeline gas with American LNG, although neither side has a sufficient number of export-import terminals and gas carriers. And now Europe is like a boss wailing: "Wait, you can't quit, I wanted to fire you first!" Now, when the EU is urgently looking for alternative gas sources and is preparing to introduce rationing this winter, Chinese and Indian observers snort contemptuously when they hear complaints that Moscow is resorting to "energy blackmail."
The opinion of China and India is important not only because they belong to the majority of countries in the world that refused to impose sanctions against Russia, but also because they are the largest countries in the world, and they have increased purchases of Russian oil and gas. This helped Moscow to make up for the losses from the decline in supplies to Europe. Moreover, India resells part of the oil purchased in Russia on the EU market. Similarly, some countries that proudly announced their refusal to import Russian gas are still buying it, only not directly, but through Germany, Italy and France. The laudatory odes to the new mandatory EU targets for gas storage facilities seem even more strange. They are called a "historic step forward" in abandoning Russian gas, although these targets can only be achieved by increasing gas imports from Russia.
After the EU leaders announced a course to reduce dependence on Russian oil and gas in order to reduce the revenues that go to finance the Russian military operation, the European Union clearly showed how much it depends on fuel supplies from Russia. And the sharp rise in oil and gas prices has increased Russian revenues. The consequences for Europe itself may be even more serious. In March, when she announced these measures, European officials glorified transatlantic cooperation and ridiculed Putin for unwittingly strengthening the unity of Europe. Five months have passed, and now Putin is laughing, watching the growing despair of Europe.
Summer of European displeasure In recent days, millions of European consumers have received notifications of a significant increase in heating and electricity tariffs.
And the EU has agreed to reduce gas consumption by 15%. But the loud statements of the EU leadership do not guarantee the consent of the member states, many of which are against such austerity measures, although, according to analysts, they are necessary to survive the winter and survive its hardships and hardships. Some states are simply at the limit in terms of their costs and expenses and will not be able to ensure the operation of plants and factories in need of gas if supplies are further reduced. And some leaders have too weak political positions, and they cannot demand new victims from their suffering citizens. Someone has worked hard to diversify energy sources and is unhappy when they are told to reduce consumption and help those who have not diversified. And someone has already stated that he does not intend to share fuel with his neighbors, regardless of their needs. These disagreements follow the familiar East-West and North-South split lines and reawaken old grievances left over from the debt crisis and the refugee crisis.
In the coming weeks, some factors will combine to create an explosive mix of such disagreements. One factor is the heat, literally. Record high temperatures caused forest fires and caused damage to agriculture. By June, the damage exceeded $30 billion. Intense heat also leads to an increase in demand for gas, as the consumption of electricity from air conditioners increases, and hydroelectric power plants do not work due to drought. The shallowing of rivers in Europe also creates interruptions in the operation of nuclear power plants (due to the lack of cooling water), and cargo and cruise ships get stuck (it costs billions to the transport industry). Another economic blow was caused by the Chinese lockdown, introduced due to the coronavirus, because supply chain disruptions began. Meanwhile, a new surge in illegal immigration to Europe has begun, which has increased by 80% over the past year. Many migrants from Iraq, Syria, Egypt and other North African countries are driven to Europe by food instability, which is exacerbated by the shortage of grain caused by the war. In such conditions, there is a great danger of renewed friction between Northern Europe, which is friendly to migrants, and Islamophobic Eastern European states, which are already overflowing with refugees from Ukraine.
Covering the difficulties of wartime, the American media mostly ignore the costs borne by Europe due to the energy crisis and conflict. They are more focused on military assistance to Ukraine, in terms of which the United States is twice ahead of Europe. But if we count all the economic assistance to Kiev, including indirect costs, such as support for five million refugees, then Europe's contribution will be much greater. Europeans have recently learned that they will have to pay at least one trillion dollars for the restoration of Ukraine. In general, Europe's costs for it may approach 10% of the annual GDP of the European Union. This will cause serious economic and political difficulties even in the absence of a severe energy crisis.
Will Western solidarity survive the battle of attrition?
Public opinion in Europe leaned towards the "anti-war" majority even before Russia began to cut gas supplies. A pan-European poll conducted in May showed that the majority considers it more important to negotiate a settlement instead of continuing to try to defeat Russia. Since then, there have been no such large—scale and authoritative surveys, but data from individual states — Greece, Spain, Italy and even Germany - indicate that an increasing number of people do not agree with the course of their countries to arm Ukraine. These people want the West to push Ukraine towards a ceasefire.
Currently, the leadership of the EU and NATO mostly ignores these differences of views and calls for patience that will help defeat Russia. But it rarely thinks about the fact that no one has checked such a policy for the consent of voters. Many grumble that highly paid "Brussels bureaucrats" unaccountable to voters have created a "fake solidarity" that will collapse when economic pressure increases. The first exam will take place in September, when Italy will elect a new parliament. These are forced elections, the reason for which was the collapse of the previous government, in which there was a split on the issue of financing Ukraine. Opinion polls show that the victory will be won by the right-wing coalition, whose leadership has long suffered from Putinophilia.
It is easy to ridicule Silvio Berlusconi and Matteo Salvini, calling them Putin's puppets. But this distracts attention from the economic difficulties, thanks to which they can come to power. It is important to analyze the impact of sanctions on Russia, but such an analysis cannot serve as a basis for "increasing pressure on Putin", unless we also analyze the collateral impact of these sanctions on Europe. Yes, Russia's attempts to replace European buyers of its energy resources with Asian ones are hindered by a shortage of pipeline and port capacities, but this does not give grounds for optimism and is simply misleading, unless we admit that Europe also lacks tankers and terminals to replace Russian gas with other sources. Who will build the missing infrastructure faster — the democratic West and its profit-oriented private companies, or authoritarian Russia and China with their state-ordered projects?
Maybe Russia's resilience is illusory, Putin's power is weak, and his army is not as strong as it may seem. In this case, if Europe holds out until the end of winter, the reward for it will be the triumph of Ukraine. But it is equally possible that even if the situation on the battlefield changes dramatically, Russia will still keep a significant part of the Ukrainian territory under its control and will squeeze the juices out of Europe with months of high inflation and an acute shortage of energy resources and raw materials. Embittered workers are already carrying out devastating strikes from Britain and Norway to Germany and Spain. And the increasing difficulties may lead to a surge of public unrest, which will be stronger than those that began due to the closure of enterprises during the pandemic. Nationalism will intensify in the wake of anti-immigrant sentiments and contradictions due to the distribution of the load. This will undermine some European states and worsen relations between them. Transatlantic ties will deteriorate in such an environment, and the support provided to Ukraine will weaken.
This is probably the most pessimistic scenario, but it is more likely today than a few weeks ago. While focusing on Russia's weaknesses, we must also assess the vulnerabilities of the West and threats to the political and economic well-being of the European Union. Now there is a growing understanding that the conflict will end only when negotiations take place and an agreement on a settlement is reached. But an initiative policy of pre-emption will strengthen the influence of the West, while months of confusion will only undermine it. If we supply more and more weapons, it can lead to Ukraine's victory. But it could also cause even more destruction, which would be a devastating burden not only for Ukraine, but also for the fragile European Union.
Author: Robert English (Robert D. English)
