Zenrus, 13:06, 16 December 2014
A worrying thought. The Western sanctions are clearly not the deciding factor in the rouble crash, that accolade goes to the oil price slump, but they are undoubtedly a factor. So Moscow would want them lifted, but the political cost of simply backing away from their ill-starred and ill-considered Donbas adventure is likely to be considered too great. So, I cannot wonder if the temptation will be to escalate the conflict, possibly throwing in a brigade or two of troops. Why? Short-term, this means things get worse, but I suspect the West would think twice about serious extra sanctions, fearful of the risk of collapse and chaos in a fragile Russia. But, the calculation would go, it might be enough to force Kyiv to make a deal, which would allow Putin to claim success and withdraw from the region (keeping Crimea, of course), claiming peace with honour. This in turn could be leveraged to get the sanctions regime lifted or at least eased, hopefully providing a degree of macroeconomic relief. After all, the alternative would seem to be a frozen conflict and indefinite sanctions. So, will the Kremlin think short-term escalation may bring medium-term relief, as a better option to long-term sanctions? We’ll see if units around Ukraine start to be brought back to full operational readiness. Or if Strelkov comes back in from the cold!
In Moscow's Shadows 
Dmitry Gorenburg
/ December 16, 2014Winter is not the best time for fighting, though. Would give even more of an advantage to the side playing defense, wouldn’t it? And I think there’s a segment in the West that at this point would be happy to increase sanctions to escalate Russia’s collapse. It would help cement the narrative that sanctions actually accomplished something.
Dmitry Gorenburg
/ December 16, 2014For example, the narrative on Obama signing the Ukraine assistance bill is right along those lines: http://www.bostonglobe.com/news/world/2014/12/16/obama-sign-legislation-putting-new-sanctions-russia/OYYvW9fImRwwcpwY7bj3MK/story.html
Mark Galeotti
/ December 16, 2014Agreed, and I think Russia would want to cause pain more than take-and-hold, which alleviates some of the operational challenges of winter on the offensive; they also have clear superiority in air and artillery. Although yes, there is a constituency that sees Russian collapse as a good outcome, I think that will not fly in Europe. A change of policy is the explicit aim; regime change maybe an implicit hope; but an actual collapse would be very, very dangerous, especially to Russia’s near and far neighbours.
omroslak
/ December 16, 2014“…they also have clear superiority in air and artillery.”
I wonder what explanation they would offer as to how the “separatists” got a hold of Mig-29s for use against Ukrainian forces? Seems a bit of a stretch to say that are flown by fighter pilots “on leave.”
Dave Page - Gloucester
/ December 16, 2014If NATO responds he will call it War.
andreinternational
/ December 16, 2014I can easily imagine Putin heating up the conflict in Ukraine again, just to take eyes off the problems at home at least. Can Putin blame the economic struggle solely on sanctions though? Or will the Russians start to turn against him?
Matthew Daley
/ December 16, 2014Like many, I worry that such moves on the part of the US gov’t will eventually draw both sides into some form of a conflict. Are such fears overblown/hyperbolic? How do both major sides walk this whole thing down?
Dave Page - Gloucester
/ December 16, 2014US has not really responded – Putin is working early on the next Presidential Elections. Control Freaks worked gradually so any reaction is seen to be an over-reaction.
Matthew Daley
/ December 23, 2014i know the NI can be kind of alarmist at times, but this is part of what worries me. http://nationalinterest.org/feature/dangerous-escalation-us-backs-putin-corner-11914
Mark Galeotti
/ December 29, 2014I don’t see any plausible basis for fearing a shooting war with the West, but certainly we’re in for much more antagonistic relations — and, at least doe some in the West, yes, the ultimate aim is regime change, even if no one wants to admit it.
rods2
/ December 16, 2014I agree that this is perfectly plausible and it must be on the table, but it could also go the opposite way, with more intensive peace talks to try to get a face saving political deal as risks and costs would be lower, for possibly the same outcome and this still leaves escalation on the table if a satisfactory deal can’t be found.
If there is an escalation in Donbas, the US may raise sanctions as per Congress law 758 and would President Obama supply the authorised defensive weapons? There is also the factor of how much stronger and organized the Ukrainian army is since September? It would also be a winter war which favours the defenders, when Siberian temperatures bite!
With current global sentiment towards the rouble, markets tend to overreact to further downside news, like more sanctions. Putin seems to have created a perfect storm for his economy, with New Year arriving early as I expected this in 2015. Putin has a real toxic situation now to deal with, a falling rouble, counter-cyclical interest rate rises to try to defend it and failing (reminds me of UK in 1992 with three interest rise in a day, followed by Black Wednesday), burning through currency reserves doing the same, a low oil price, with Saudi Arabia saying they are happy with $60 a barrel for 2015, US production still increasing with wells in place having a lights off price of about $40 a barrel, Russian companies owing USD loans of $38bn in December and $98bn in 2015, with many trading in roubles. Putin talks about rebalancing the Russian economy with more self-reliance, but this is going to cost roubles and $$$. With 25-50% of food imported, while about 25% of Russian arable land lays fallow, much inaccessible, through infrastructure failure again there are no cheap solutions here. Russian farmers are also reluctant to take on loans to expand in such economic uncertainty. One area where I wonder if Putin might try to push back, like with his food sanctions against the West is through a deliberate default of some or all the $700bn that has been borrowed by Russian companies through Western banks, to see if he can create a mirror economic crisis in the West, but I think his debts and economy is too small at $700bn and $2tn to do this against the combined Western sanction countries of $44tn, the West’s central banks would certainly act in unison to contain the situation and it would almost certainly result in his geopolitical energy assets in Eastern European countries being put into receivership and sold off towards covering the banks losses.
This year with the threat of Fed tapering, Brazil, India and Indonesia had currency problems through capital flight, where Western Investors withdrew the money that had been chasing better returns. With an improving US economy on the back of cheap energy and on-shoring of high energy businesses, there will be more, better, investment opportunities in 2015, with economists estimating that $2-9tn, will return to the US, the top 5 contenders to lose this investment money in order are: Russia, Ukraine, Brazil, Indonesia and India.
As Shakespeare said: “When sorrows come, they come not single spies, but battalions“. Interesting times lie ahead.
Dave Page - Gloucester
/ December 16, 2014Putin is not interested in saving face … he considers the West to be an enemy and he, for one, cannot retire to London – people will die but Putin in his arrogance still thinks Crimea will feed his food needs.
Ray Finch
/ December 16, 2014Good question. If the major Russian media is any sort of barometer, I don’t see much evidence of upping the ante. Over the past week, they have toned down the harshest criticism toward Kiev and appear genuinely hopeful that the latest ceasefire will hold. Still, conflict and economic distress have their own logic (as does the desire to remain in power). I could see some of the loud patriots close to Putin (e.g. Rogozin, Glazyev) advocating another short, victorious war to demonstrate Russian resolve and distract the masses. On many of today’s (16 Dec) Russian TV newscasts, the story of the falling ruble was followed by a report on the successful completion of a major military exercise in the Western Military District. Is this a bellicose tea leave?
Mark Galeotti
/ December 16, 2014Though often the rhetoric goes down precisely as in-theatre action hots up
crayfish
/ December 16, 2014Reblogged this on UNDER THE TOADSTOOL.
Dr. Malcolm Davis (@Dr_M_Davis)
/ December 16, 2014We are assuming any escalation would happen in the Donbas. What about Putin’s options elsewhere… TransDneister and Moldova or in Georgia? With all the Russian military activity occuring in the Baltic region, what about Russia’s options against the Baltic States, or even Sweden or Finland? It may not necessarily be a military attack – but could be ‘special warfare’, or more aggressive military operations along NATO’s periphery.
Mark Galeotti
/ December 19, 2014Pressure on the Baltics is likely, alas, to be a leitmotif of coming months, maybe even years, but pressure elsewhere would be directed primarily, if indirectly, at NATO and it is hard to see even the present incarnation of Putin thinking he can bring such pressure to bear as to force the West to back down. I’d think a direct push to resolve the Ukrainian issue more likely – IF the Kremlin is looking for any military solution to its economic woes.
edwinpace
/ December 18, 2014But Russian regular troops so far haven’t been particularly effective against the Ukrainians. They failed to take either Mariupol or Donetsk Airport. Putin may well try it, but unless it’s overt, with plenty of air and artillery support, it may well backfire. Then both Putin and us might be in far worse trouble than before.
Mark Galeotti
/ December 19, 2014They did manage to prevent what seemed a potential military victory against the insurrection in September, though.
Matthew Daley
/ January 6, 2015What is your take on the whole “Ukranian Freedom Act” that was put forth by congress, Mark? Is it too belligerent or just hot air on the part of the west? That’s why I fear some sort of escalation, some of which is shared in this piece: http://www.russia-direct.org/qa/ukraine-crisis-has-become-more-dangerous-just-new-cold-war
Mark Galeotti
/ January 6, 2015Honestly, I think it’s more the latter. I don’t see any serious escalation as likely
Matthew Daley
/ January 6, 2015Even if it doesn’t escalate, do you see both sides eventually dialing things down a little or are we returning to the level of acrimony from the early 80s? Given that fairly bellicose types like McCain are coming into larger roles, how much can they potentially inflame things further? I know you’ve had your doubts that we’re re-entering the cold war, but do you think that both sides can somehow meet in the middle before things get worse? Sorry for the barrage of questions.
Mark Galeotti
/ January 6, 2015We could well see greater acrimony, but this is not a struggle between competing worldviews or ideologies. When it comes down to it, Putin is not going to sacrifice himself or Russia for any bigger cause, and Russia’s resources are not up to a greater challenge. Yes, I think 2015 will be a rough, snarky, contentious year, with hotheads on both sides saying all kinds of silly things, and local provocations and the like. Things will get worse in the short term, but only up to a certain point.