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Putin Needs Victory



"All we need is victory regardless of the cost." So runs the refrain in a popular old Soviet film, "The Belarusian Railway Station," about World War II veterans. This line probably explains President Vladimir Putin's policy on Ukraine. The latest developments, including the seizure by Russian operatives of police stations in several towns in eastern Ukraine, make it increasingly clear that Putin's game plan is to destabilize the region and use the chaos as an excuse to invade. A Russian military invasion of all of Ukraine, including the capital of Kiev, cannot be ruled out. It is time for the West to stop the waiting game and escalate its sanctions against Russia to avoid a catastrophe.

The sequence of events this year has made Putin's plans obvious. Evidently, the Russia president decided to annex Crimea himself with a few close former KGB officers. His decision-making power is nearly absolute. He has successfully built up a neofeudal system based on crony capitalists, state capitalists, and top state security officials. The feudal lords are richly remunerated at the cost of the state and remain loyal. Such a feudal system is politically stable, but economically stagnant, since it is alien to reform.

Ukraine's democratic breakthrough and European integration posed an existential threat to Putin's system. The democratic breakthrough challenged his domestic power, and the European Association Agreement offered to Ukraine would have ended his neoimperialist project called the Eurasian Union, designed to bring together the former Soviet republics.

Putin, who is an astute tactician and improviser but a poor strategist, concluded that he had to act. As the new democratic Ukrainian government was appointed on February 27, unmarked Russian special forces occupied the Crimean parliament, and the next day they seized the Crimean airports. Three weeks later Crimea had been annexed by Russia in an extraordinary act of aggression, but no fewer than 88 percent of Russians approved this incorporation of their traditional favorite holiday spot.

After the Russian annexation of Crimea, the predominant Western view was that Putin would stop. But by annexing Crimea, Putin risked alienating the remaining 96 percent of the Ukrainian population. Democracy could evolve in the country, and Ukraine would opt for European integration. Crimea was not a victory, only an appetizer. To achieve a victory, Putin has to proceed to widen his aggression. He faces three options: to control, devastate, or incorporate Ukraine.

Officially, Russia is demanding a new constitution for Ukraine, neutralizing and federalizing the country. But Ukraine has no reason to accept its emasculation. Putin lives in the illusion that Washington and Brussels dictate everything in Ukraine. Therefore, he does not want to negotiate with Ukraine but with the United States and possibly the European Union. Yet Washington and Brussels will not accept such a constitution for Ukraine. Still, a new constitution remains the official Russian goal. On April 17, the four parties are supposed to meet with one another in Geneva for an abortive negotiation.

Putin is left with two alternatives. He can destabilize Ukraine through covert subversion, using trade and gas sanctions to make sure that the country fails so that democracy does not appear attractive to Russians. This scenario is being implemented with Russian nationalist bikers and military "tourists" who are being bussed into Ukraine's East to cause disturbances. On April 6, a masked and armed crowd occupied the Kharkiv Opera House in the belief that it was the government's regional administrative headquarters, showing the absence of local participation. Yet, separatism for the Russian-speaking population is not catching on at all. The Russian provocations are too obvious.

That leaves Putin with one single plausible option: military invasion. On Saturday, April 12, small groups of what were obviously Russian special forces in their usual uniforms and with sophisticated armament—but without insignias—occupied police stations in several towns in the Donetsk region. This looked exactly like the Russian seizure of the Crimean Parliament.

So far, the Ukrainian government has avoided responding with force for several reasons. Deposed President Viktor Yanukovych allowed Russian secret services to infiltrate Ukraine's security services and military, rendering them unreliable. Moscow wants corpses to show that Ukraine has fallen into chaos to justify its armed intervention, which Kiev wants to avoid. Finally, Ukraine was completely unprepared for this aggression, and it needs time for mobilization.

Today, Ukraine has little choice but to meet this covert military aggression with military force. Putin has crossed the Rubicon. As Polish Prime Minister Donald Tusk noted on April 13: "Over the past few hours we've witnessed the worst-case scenario playing out in Ukraine." All the defenders and apologists of Putin have turned out to be wrong and can now be disregarded.

The question remains whether the Kremlin intends to take the whole of Ukraine or only half of it. In early November, Russian state television showed a map on how Ukraine should be divided. An alleged Russian national security council memorandum has been leaked, showing how Russia would seize 11 eastern regions as well as Kiev, annexing more than half the country. Yet, the well-informed former Polish President Alexander Kwasniewski claims that Russia's aim is to seize the whole of Ukraine.

Not only does Putin want to record a victory in Ukraine, he needs to do so fast. His deadline is May 25, when Ukraine is scheduled to hold presidential elections. Putin claims that Ukraine has no legitimate or constitutional government, but at the same time he wants to postpone the Ukrainian presidential election, which would provide Ukraine with a fully-legitimate president.

To judge from recent opinion polls, the presidential election is between two veteran pro-European politicians, Petro Poroshenko and Yulia Tymoshenko. Whoever wins, the new Ukrainian president would have democratic legitimacy, unlike Putin. Therefore, he wants to make sure that the election does not take place, and the safest way of doing so is to invade Ukraine militarily.

This reasoning leads to three conclusions. First, Putin will not stop unless he faces horrendous obstacles. Second, Western sanctions to date have failed because they have not made Putin change course. Unfortunately, the United States and the European Union have persistently been behind the curve. Third, Russia and the West have ended up in a squirrel's wheel of tit-for-tat. Neither side has any strategy. Mindlessly, they wander along a road without knowing where it leads.

Given that Putin has launched a war in eastern Ukraine, it would be rather optimistic to hope that mere sanctions would stop him. Moreover, the West has probably less credibility with Putin than President Kennedy had with Soviet leader Nikita Khrushchev after their disastrous summit in Vienna in 1961. That debacle led to the Cuban missile crisis. After Russia's war in Georgia in August 2008, the West made some noise, but soon it turned quiet, ignoring the Russian aggression. Clearly, Putin expects that to happen once again.

Considering its lack of credibility, the West needs to step up its sanctions instantly and dramatically to a near Iran level. Presumably, this will not be sufficient to stop a war in Europe, but the West needs to finally get serious.

The good news for the West is that Russia is highly vulnerable. Its GDP is slightly less than 3 percent of global output, or 6 percent of NATO's output. Its military expenditures are less than one-tenth of NATO's, and half of Russia's arms procurement cost is probably lost on kickbacks. Russia is far too weak to be so aggressive, and it has no allies.

Its economic weakness is conspicuous. The market volatility in March, partially caused by the threat of sanctions, has shaved off about 2 percentage points from Russia's expected GDP this year. Capital outflows amounted to $64 billion in the first quarter, slightly more than 3 percent of GDP, and they are now expected to rise to some $150 billion for the year as a whole. This will hit Russia's investment, consumption, and growth.

The ruble has fallen, and inflation has risen, forcing the Central Bank of Russia to raise interest rates by 150 basis points. With continued Russian aggression in Ukraine, and stricter Western sanctions, Russia can easily see a fall in its GDP of 2 to 4 percent this year. That will hurt Russia's standard of living, which has been vital for Putin's popularity. Perhaps there is a limit to how much economic damage Putin can tolerate. The West needs to test this hypothesis by imposing a truly great cost upon him with a broad array of sanctions. Obviously, the West should also supply arms to Ukraine as fast as possible.

The West has no reason to worry about Putin losing face. He is used to losing face and saving himself through skillful improvisation or manipulation. Rather than apologizing for Russian atrocities in Chechnya, he celebrated them as a victory. He unleashed the shoot-out of hundreds of child hostages in Beslan in September 2005 and used it to reinforce his authoritarian powers. After President Obama snubbed him by refusing to go to Moscow for a bilateral summit in September 2013 and threatened to bomb Syria, Putin came up with the clever idea of eliminating Syria's chemical weapons. Putin is not interested in any win-win game. On the contrary, to him victory means that his enemy loses.

The West needs to recognize that it cannot afford not to stop Putin. The earlier and more effectively that is accomplished, the lower the cost will be. The obvious parallel is the West's failure to stop Nazi Germany in time in 1938.

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