Measuring Western Resolve

The last time the Russians did what they did on Monday, cross frontiers in Eastern Ukraine by force, President Biden was Vice President and Anthony Blinken, now Secretary of State, was deputy national security adviser and the current national security adviser, Jake Sullivan, was about to come into his own in the conspiracy to entrap presidential hopeful Donald Trump (on behalf of Hillary Clinton; see below, the latest Durham investigation findings).

That was in 2014. When the opportunity availed itself to send in special forces and take out the small contingent of “little green men” from Russia who appeared in Ukrainian Crimea while President Putin still insisted they were not his armed forces, the administration did nothing. Putin’s gamble, a tentative probe that could be disowned if all went wrong, paid off.

President Obama had other priorities than security in Europe and Biden was party to this as he held a brief on foreign policy. Blinken then publicly insisted that the economic and financial sanctions inflicted on Russia as punishment would be more than enough to restrain Putin from further such attempts. They clearly weren’t. For Blinken and Biden what goes around comes around. The dangerous combination of a provocative (to Russia) declaratory foreign policy – committed to spreading democracy around the globe and encouraging Ukraine to set its sights on entering NATO – with a weak defence posture epitomised in the great skedaddle from Kabul, has shown itself to be a disaster. Early straws in the wind which indicated that it might prove so appeared back in November; so it is not as if the administration did not have time to plan ahead.

Thus more financial sanctions are being imposed on Russia, though piecemeal as they were before. And how effective are they likely to be? Russia’s foreign debt amounts to 480 million dollars. However, the country has been prudent. It has been cutting its dollar reserve for the past year and hoarding its gold production. Its gold reserves amount to 640 million. And with the rising gold price, in part down to Putin’s threat to international security, and rising gold production this situation is more likely to get better than worse. Debt as a proportion of GNP is a mere 18%, whereas that of the United States is notoriously a wopping 128% and even that the European Union is 98%. Its greatest vulnerabilities are the fall in the standard of living and severely increased inflation that will worsen with shortages due to any major conflict. Thus far, however, Russia is neither vulnerable financially nor militarily, though a full scale war in Ukraine could turn things around.

Tongue in cheek, one reader of the hardline newspaper Vzglyad ru actually welcomed light British sanctions targeting leading Russians because the family of Foreign Minister Lavrov – a not entirely popular figure in his own bailiwick, whose mood is not improved by the stress he has recently been submitted to by the president – has decamped to London. And the White House has indicated that they are witholding the most drastic sanctions while they wait to see whether Putin goes all out in invading Ukraine. Blinken making the same mistake as was made under his nose in 2014. But is this in fact not likely to prompt salamic tactics: biting away at different parts of the sausage until there is little left? Germany has very reluctantly stopped the slow process of certifying Nordstream II. Yet the US administration’s spokespeople, who emphasised that it had done so under direct pressure from the United States and other NATO allies (a not very diplomatic comment) will not say that this cannot be reversed.

The best measurement of the effectiveness of sanctions is to check the rouble and the Russian stockmarket. Initially the market dropped, as did the rouble. You can monitor this yourself live on For NATO and Biden the news is not promising. Overnight the market has taken back some of its losses and the rouble has risen a little against other currencies, including the dollar and the euro.

On Sullivan:

Vzglyad ru:

Геополитика напрасно пугает Россию дефолтом

Страновой риск дефолта для России вырос почти в три раза за последние полгода  22 февраля 2022, 17:45
Фото: Максим Стулов/Ведомости/ТАСС
Текст: Ольга Самофалова