This is my blog, and I’m allowed to don the tinfoil hat every once in a while. Now… if you’re looking for inane conspiritardery about U.S. involvement in Ukraine, us funding protests, chemtrails, using supersonic, nuclear generated EMP weapons to foment unrest in Ukraine in order to capture the considerable assets of Oleksandr Yanukovych, you’ve come to the wrong place. I’m paranoid, not insane.
Besides, just because you’re paranoid, doesn’t mean they’re not out to get you. Right? RIGHT???
In all seriousness, I’ve been quite a bit perplexed by the actions of Vladimir Putin these past few weeks.
I explained the background on the Ukraine situation already, so I’m not going to get into it here. You can certainly read what I’ve written on the topic here and here. But what I haven’t done is write down my theories on the Russian reaction to the unrest in Ukraine and the ultimate fall of Ukraine’s ever-so-corrupt government.
I will admit I was a bit surprised.
President Vladimir Putin spent a lot of time and resources integrating Russia into the global economy, positioning Russia as a legitimate member of the international community, entering the World Trade Organization, developing economic ties with the European Union, freeing political opponents, including Mikhail Khodorkovsky, had been imprisoned for more than a decade, and brokering a deal with Syria. Putin has endorsed some free market principles, such as privatization and improving Russia’s business climate.
But on the other hand, I also understood that Putin wanted to return Russia to its former world power status, and that was the ultimate goal all along.
But on the third hand, I figured economic development and GDP growth were critical to Putin’s ultimate goal. After all, returning the country to its superpower status also involves not only the modernization of the Russian economy, but also the Russian military – a goal toward which Russia claimed it would commit between $650-$700 billion in procurement dollars. That’s a lofty goal for a nation whose armaments programs had a tendency to fail due to inefficiencies, corruption and inflation. Russia needed the money after its little incursion into Georgia in 2008 showed just how ill-equipped its military was. Russia expert Dmitry Gorenburg says the military received no funding for new equipment between 1993-2008, and post-2008 programs were a big fail in executing the Russians’ lofty rearmament goals.
As a result, the vast majority of its armaments are both physically old and based on outdated designs. To deal with this problem, the Russian government has begun to implement a 10-year and $650 billion State Armament Program. The program’s goal is to ensure that 70 percent of the Russian military’s equipment is modern by 2020. The program’s top priorities are to re-equip the Strategic Rocket Forces, the air force, the air defense and space forces, and to provide more advanced command and control equipment for the military.
The problem is there’s just not enough money. Russia’s crumbling economic infrastructure needs urgent updates, and Russia’s economic growth is unable to support the planned levels of military spending. Hell, former Minister of Finance Alexey Kudrin resigned over the issue! And Putin himself admitted that GDP needs to grow before Russia can afford to fund all its ambitious military plans.
“We are setting the goal of accelerating economic growth to 6 percent, better to 6-7 percent, and join the list of the world’s top five economies in five years but not only because advanced economies will be falling but also because we’ll be growing,” Putin said at a congress of Business Russia public association, which unites the country’s medium-sized businesses.
Russia has set the ambitious task of expanding its per capita gross domestic product by 50 percent in the next decade “to achieve the level of more than $35,000 per person from the current $20,700,” Putin said.
In 2011, Russia’s GDP will grow by 4.2-4.5 percent, the premier said.
It did. According to the Economist, Russia’s GDP grew by 4.4 percent in 2011. You know how much it grew in 2012? 3.5 percent. You know how much it grew in 2013? 1.4 percent. Hardly close to Putin’s economic goals. And between the rising inflation and the possibility of sanctions that could impact the Russian economy, and the continuing capital flight, Russia’s economic modernization and its military rearmament goals aren’t likely to happen.
But on the fourth hand, if Putin did, indeed, want to return Russia to some semblance of a “держава” or world power status, he wanted a customs union to counteract the EU, and he needed Ukraine to join, since the latter is a significant Eurasian economy. This is why Russia put so much political and economic pressure on Ukraine to not sign the Association Agreement with the EU, which ultimately caused Yanukovych to turn away from the West and pursue closer ties to Russia, and precipitated the demonstrations which later turned violent.
And that’s why I was a bit perplexed. Turning around into an aggressive invader shortly after hosting a Winter Olympics and after joining the WTO, and claiming to embrace economic development is incongruous. But it happened, didn’t it?
But what if…?
What if Putin’s plan all along has been to contribute to the destabilization of Ukraine and ultimately annex the Crimea?
What if Putin very carefully worked on crafting Russia’s image for the past decade, integrating his country into the international community and global economy, and lulling the west into a false sense of security?
What if Putin was playing the long game, working to ensure that the economy of Russia was so connected to the economies of the West and the United States that any significant economic decline in Russia would mean severe economic consequences for the United States and the European Union?
Because the result seems to be the following:
Any sanctions imposed on Russia or its assets will affect the EU and the United States. Andrey Klishas, chairman of the Federation Council committee for constitutional legislation has introduced a bill in the Duma that would seize the assets and accounts of American and European companies should sanctions be imposed on Russia. Europe’s sanctions on Russia could cut the oligarchs and members of the Russian government off from the European cities where many have properties and European banks, where many have cash. Meanwhile, Russia is threatening retaliation if sanctions are imposed. A Kremlin aide publicly warned a few days ago of the repercussions. Sergey Glazyev said if America were to impose sanctions on Russia over Ukraine, Moscow might drop the dollar as a reserve currency and refuse to pay off any loans to U.S. banks.
Frankly, Russians are used to economic hardship. Us spoiled first-worlders in the West are not so much.
Could Putin’s calculus include the fact that the West would be just as impacted by Russia’s economic downturn as Russia itself?
Could he understand that despite the current economic slowdown and Russia’s obvious intent to annex the Crimea after the latter holds a vote on independence this weekend, his approval ratings are still fairly high?
Could Putin’s intent all along have been to play long-term chess? To integrate Russia into the global economy and make it a vital source of energy for the West, and then to foment instability in Ukraine and move in with practical impunity, because he knows that the West would be loath to tank Russia’s economy for fear of taking themselves down as well?
It’s a pretty convoluted case, but it’s not unlikely.
Consider the fact that the European Union gets 37 percent of its oil and 39 percent of its natural gas from Russia.
Consider also that Russia is one of the largest economies in the world.
Consider also that economic growth in the EU and in Russia generally mirror one another, although Russia’s swings are a bit more extreme.
What if Putin has decided that the West won’t do much if he decides to annex Crimea after Sunday’s vote, and has ensured this by working to ensure that any sanctions would bite all parties involved?
After all, Russia has already been conducting “exercises” on the Ukrainian border.
After all, the Duma has already passed legislation outlining how Russia will annex new members of the Federation.
And according to at least one report, pre-marked ballots have already been delivered to Crimea in time for Sunday’s referendum. Yes, I said “pre-marked.”
So what if this was Putin’s plan all along?