March Or Die

Date: 02/01/2022
Author: Mr. X


President Vladimir Putin may regret having pushed his country to the brink of war. Yet that doesn’t mean he won’t give the order to march. I think he has to.

There’s currently an absurd situation in Eastern Europe. Ukraine is telling the United States to calm down, Russia is accusing the United States of wanting a war, and American officials are the ones who sound the most worried, even though no American troops would be involved.

This isn’t the first time we’ve had this kind of a showdown. Since the Euromaidan revolution in 2013-2014, the Russian annexation of Crimea, and the creation of the breakaway “People’s Republics” in Ukraine’s east, Russia has occasionally moved troops to the border, rattled the saber, and then backed down. This time seems different, if only because of the media attention and American response.

Russia has shown a few signals that it is looking for a way out. It moved naval exercises to avoid antagonizing Irish fishermen. About a month ago, there were scattered reports of Russian troops leaving the border. Even now at the United Nations, Russia is accusing the United States of “whipping up tensions.” “You are almost pulling for this,” said Russian Ambassador Vassily Nebenzia said to his American counterpart. “You want it to happen. You’re waiting for it to happen, as if you want to make your words become a reality.”

The Russian government is haunted by fears of a “color revolution,” in which the United States State Department and American-supported Non-Governmental Organizations organize dissidents and use street protests and media pressure to overturn “authoritarian” governments. Russia has an “undesirable organizations” law that allows the government to simply shut down foreign-based groups. In the government’s eyes, this law is a shield that guards against foreign subversives. To many in the West, it’s a violation of basic civil rights, especially against the freedom of persecuted populations to organize.

Of course, we would never do that. Can you imagine activists or politicians in America being accused of secretly working for Russia?

Laughable right? Right?

All right, cynical point made. This is no simple ideological conflict. Moscow still has not forgotten or forgiven the “Maidan,” the overthrow of a pro-Russian government in Ukraine in 2013-2014. Yesterday, the Russian ambassador portrayed it as a violent insurrection that brought “nationalists, radicals, Russophobes and pure Nazis” to power. Of course, many in the West would respond that it was the overthrow of an authoritarian government. They would claim the Ukrainian government was preventing what people really wanted, a turn towards the European Union and NATO and a national life that wasn’t subject to President Putin’s orders.

However, to Russia, Ukrainian defection to the West is an existential threat. The birth of “Russia” as a state and a civilization arguably occurred in what is today Ukraine. Ukrainian membership in NATO would shatter Russia’s civilizational identity. It would also represent a permanent threat to Crimea, the ownership of which is a necessity to Russia. Even dissident Alexei Navalny, perhaps the most well-known international opponent of President Vladimir Putin, has hedged about returning Crimea to Ukraine. It’s doubtful those in Crimea (or others in the Russian-speaking east) want to go back to Ukraine anyway.

To many Western journalists, Russia is a menacing authoritarian state that is backing far-right movements within the United States and elsewhere. Russia has clearly been involved in some disinformation efforts, but it’s also become a scapegoat for many in the West who want an external foe to blame for internal problems. It’s a reversal from the Cold War days when even moderate movements could be discredited by accusing them of being backed by Communists. Today, unpleasant truths can be smeared as “Russian disinformation.” At the same time, the idea that the Russian government simply doesn’t know about hacking or cybercrime attacks on the United States and its allies beggars belief.

From a Russian perspective, the idea that Vladimir Putin is a right-wing radical would sound insane considering the Western support for the Maidan movement and Ukrainian armed forces. The latter includes the Azov Battalion, which many observers consider far-right or even neo-Nazi. Russian media (or, if you prefer, propaganda) regularly accuses the United States, not without reason, of funding far-right military forces. If there is a conflict, we can expect both sides to exchange accusations about the other being “Nazis.”

That’s an explosive charge anywhere, but especially in Russia. Vladimir Putin, no ideologue, has built a modern patriotic mythos based on Russia’s victory in the Great Patriotic War. This includes the construction of Russia’s breathtaking new Cathedral of the Russian Armed Forces. Here, you’ll find tributes to Soviet soldiers, Russia’s Orthodox tradition, and even the seizure of Crimea. The hammer-and-sickle and the crowned double-headed eagle of the tsars meld together in events like Russia’s annual victory parade. President Putin has also repeatedly defended the Russian state as a multireligious, multiethnic polity – albeit one that must be held together with strong leadership.

Meanwhile, Ukraine faces its own divisions. President Volodymyr Zelensky is telling his people and the world to “calm down.” The president is a former actor who played the president of Ukraine on a comedy show before he was elected. Without previous political experience, one could argue that doesn’t have the background needed to play brinksmanship with Putin.

However, one could also argue that he has a visceral understanding of the way media images can shape political realities. Businesses and tourists are not going to come to a country that the international media is portraying as a war zone. President Zelensky is also facing criticism from ex-president Petro Poroshenko, who is accusing him of being soft on Russia. A recent phone call between President Biden and President Zelensky turned into a public relations disaster, with President Biden reportedly saying that a Russian invasion is inevitable and President Zelensky dismissing the claim.

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President Putin may see opportunity in the West’s perceived divisions. President Joe Biden is unpopular, Canadian Prime Minister Justin Trudeau is on the run from truckers, British Prime Minister Boris Johnson is barely clinging to office, the French are facing a presidential election with strong far-right candidates, and the new German government must deal with the challenges of a post-Merkel coalition and high energy prices.

President Putin may also have a mistaken view of American weakness after the withdrawal from Afghanistan. In truth, while the execution was lacking, President Biden’s move was probably designed to reorient the United States towards competition with conventional military opponents such as Russia and China. Strategically, it made sense and was better than another decade of wasting money and lives. Still, the optics did not look good for the American military.

On the ground, Russia is clearly increasing its military options, especially by sending troops into Belarus. President Putin has vastly increased his leverage over Belarus and Kazakhstan by helping those governments brutally put down popular opposition movements. (It is no accident that both governments blamed those protests on foreigners.) Russia can also move more troops into the Donetsk People’s Republic, Luhansk People’s Republic, Crimea, and Transnistria, a breakaway region of Moldova. If Russia did want to attack, it could swarm Ukraine from multiple directions quickly. President Joe Biden has also already promised not to send American troops to defend Ukraine. If Russian wants to take all of Ukraine, there’s no military standing in his way.

He almost certainly doesn’t want to. President Biden has promised ruinous economic sanctions on Russia. These could potentially include seizing the assets of powerful Russians who hold their money in overseas accounts using the Magnitsky Act, making it more difficult for Russian companies to do business overseas, and potentially banning Russian banks from the SWIFT network. COVID-19 is hitting Russia harder than official statistics report, President Putin’s popularity is low (by his standards) among the public, and Russians are not eager for war. Russia is hardly ready for a war.

Still, I said Russia would move into Ukraine, at least into the eastern breakaway republics. Vladimir Putin may not want to do it, but he has miscalculated and his bluff has gone too far. The military buildup may have been a tool to force the West into negotiating seriously on keeping Ukraine out of NATO, ratifying Russia’s ownership of Crimea, or getting concessions on other issues. Yet the West has called his bluff, flatly refusing any guarantees over Ukraine.

Now, President Putin, because of his own misjudgment, is forced into a situation where there are no good options. He can’t retreat without losing face and emboldening domestic political opponents. He can’t move in without suffering massive financial losses. He can keep the crisis going, but Russia does not have massive financial resources. Whether by intent or accident, the West has forced him into a Fort Sumter situation, where he will look like the aggressor. He probably knows this, but the longer he waits, the more weapons can be sent to Ukraine and the bloodier an invasion will be. If he moves soon, Russian tanks could be in Kiev before the West can do anything but complain.

Still, it’s a terrible, risky step for him. Some Republicans in the United States, who undoubtedly think they are being “tough” on Russia, are pushing for sanctions to be imposed even before an invasion. At that point, it would be absurd for President Putin not to go in. The Russian government would conclude, rightly, they are going to be hit financially no matter what it does. President Putin may also be pressured to show strength if this become a contest of wills between Russia and the West, rather than the lead-up to negotiations. Secure in his new alliance with China, he can try to dictate a new multipolar world order.

In truth, if I were in his position, I’d go in at this point immediately. It’s likely that the United States is never going to let up on Russia. During the 2012 presidential election, President Barack Obama joked that Mitt Romney’s focus on Russia as a geopolitical foe was outdated. Now, largely because of domestic political developments in the United States, Russia is seen as an enemy by many in the government and (more importantly) the American media. If anything, a Republican congressional majority after 2022 is going to want increased pressure on Moscow, if only to hit President Biden for being “weak.”

In Ukraine, the longer Kiev survives without Moscow, the more cultural and political independence it will be able to build. The Ukrainian language is increasingly replacing Russian in areas Kiev still controls. Ukraine has its own autonomous Orthodox church, another sign it is building its own unique identity. Ukraine also has strong backing from Poland and the Baltic states, all of whom are concerned about Russian revanchism. Even Finland has broached the possibility of NATO membership, though not anytime soon.

President Vladimir Putin puts out a tough image, but the truth is that Russia is dreadfully weak compared to the United States and China. China may be allied with him for now, but that will not last. Personally, Putin is running out of time. It’s unclear who, if anyone, is going to take over the system he has built.

Economically, Russia is stagnating. It faces major demographic obstacles. There will be no change in relations with the United States unless there is regime change in Russia. Russia faces huge short-term financial problems if President Putin decides to move into Ukraine, but it may be better to face them now rather than suffer a slow, suffocating death.

Time is on Ukraine’s side – which is another reason Ukraine seems more eager than the United States to give President Putin a dignified way out. A Russian invasion would be a last-ditch attempt to preserve the declining “Third Rome’s” geopolitical and cultural power. It’s not the next step in Vladimir Putin’s master plan to conquer Europe.

While Americans can celebrate “color revolutions” and the eastward expansion of NATO, some Russian leaders see it as encirclement. At this point, President Putin probably sees it as a threat to his own regime’s survival. While a war is uncertain, backing down will undoubtedly be seen as weakness. Unless the West gives him some face-saving concession, Putin should (and I think will) give the order.

It may seem like madness to Americans, but no regime will put peace over its own political interests. After the breakup of the USSR (which Putin called a “tragedy”), the bombing of Serbia, the Maidan revolution, the attempt to overthrow Bashar al-Assad in Syria, and countless other Western actions, Russia’s regime will undoubtedly describe an offensive move as preemptive self-defense.

It may be a lie. It may be an act of desperation. That doesn’t mean it won’t happen.

Investors should remain attentive – an invasion is more likely than many think.

Mr. X is an investment analyst working in the Washington DC area who specializes in the intersection of business and public policy. After fifteen years working in politics, he writes on a classified basis for RogueInvesting.com to bring you news on what those with power are debating, planning, and doing.

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