The sanctions gamble

Ukraine and Russia are engaged in a weapons war. The West in Russia are engaged in an economic war of attrition. The West’s main weapon is sanctions. Putin’s main weapons are European dependence on Russian oil and gas, food supplies to millions and the perceived decadence of Western populations. Europe had hoped to build up a reserve of stored gas supplies for the winter by importing as much Russian gas as possible until December. But Putin this week scuppered that plan by cutting piped exports by 80 percent. Germany has stopped lighting public buildings at night and has turned off the hot water in public sports centres. The price of energy is rocketing around the world, fuelling inflation and costing jobs.  There is a real prospect of energy rationing in Europe and possibly further afield. But what about Russia? Putin has admitted that Western sanctions are “a huge challenge.” The Mayor of Moscow has said the city has lost 200,000 jobs. Businesses have been forced to close and inflation in Russia is 16 percent. Analysts at Yale University this week reported that “imports have collapsed” and domestic production has come to a “complete standstill.” But here is the rub, Putin believes that Russians are tougher than their European and American counterparts. Western support for sanctions will collapse, Putin believes, when European and American consumers can no longer afford their long car journeys, overheated homes, exotic foods and multiple holidays. It’s a gamble. For both sides.

Pelosi visit threatens Xi’s position

US President Joe Biden and his Chinese counterpart Xi Jinping had a two-hour face to face in cyberspace this week. They discussed Ukraine, climate change and lifting some of the Trump era tariffs. But top of the list was Taiwan and the proposed trip to the disputed island by Speaker of the House of Representatives, 82-year-old Nancy Pelosi. The Chinese have vowed “resolute and forceful measures” if the visit goes ahead. The Ministry of Defense has threatened that the “Chinese military will never sit idly by.” In Taiwan, the authorities have been conducting air raid drills. At the heart of the problem is China’s claim of sovereignty over Taiwan and its stated willingness to use force to impose it. To date, however, Beijing’s emphasis has been on diplomatic pressure. It has successfully isolated the Taipei government by hounding other nations to break off relations and blocking Taiwan’s membership of international bodies. Anything that smacks of international recognition of Taiwan is strongly opposed by Beijing, and a visit by a high-profile American politician who is third in line to the presidency is extremely high profile—especially given Ms Pelosi’s strong anti-Beijing position. She has repeatedly attacked the Chinese Communist Party’s human rights record, entertained the Dalai Lama, unfurled a pro-democracy banner in Tiananmen Square and supported Hong Kong demonstrators. In short, she is not well-liked in Beijing.  But there are other problems related to President Xi’s position within the Chinese Communist Party. It is not strong at the moment. He is viewed by many as having badly managed the covid pandemic and China’s response to the war in Ukraine. In October the Party will hold its national congress at which Xi is expected to be voted a third term. It is important that the vote is a general acclamation rather than a mere majority vote. Failure to stand firm on Taiwan—added to covid and Ukraine—could undermine that.

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