Tom Arms World Review: The global impact of Putin’s invasion of Ukraine

Russia’s attack has started a worldwide rearrangement of the political order. Old alliances need to be reinforced. Some will be reconsidered. New Alliances, treaties and trade deals will be made as governments decide where their vital interests lie—with the autocratic but advancing Russia or the the democratic but defensive America and Europe or in the narrowing neutral land somewhere in between. Washington and Moscow will declare: You are with us or against us. We are not entering Cold War Two. We are entering a significantly new warmed up war.

The World Economy

One of the first causes of concern is the economy. Governments cannot fight cold or hot wars without cash. The world economy as a whole has already been severely weakened by the pandemic. World stock markets—the source of equity finance– dislike instability and uncertainty. Ukraine has created both, and the markets around the world have plummeted. Energy prices have also climbed as Russia is the world’s largest supplier of natural gas and second largest producer of oil. Nearly half of continental Europe’s energy originates in Russia. Germany—the EU’s economic engine—is especially dependent on Russian fossil fuels. But Russia is also a large exporter of gold, nickel, and the other rare but important mineral element palladium. The black earth of Ukraine is Europe’s bread basket. World bread prices will rise. Governments will need to borrow more money which will drive up interest rates and inflation. There will be more investment by Russia, NATO and others in troop numbers, missile deployments, cyber warfare, space, and intelligence gathering. This means there will be less money for social welfare, civilian infrastructure projects and any other vote-winning projects. More resources to defend Europe means less to protect other regions from Jihadism or to fund foreign aid programmes. These are the sacrifices of which politicians speak.

China

China is at the pivot of any new world order. It has the world’s largest population and military and the second largest economy. It is rising fast and its people—and many others—believe this is the Chinese century. The ruling Chinese Communist Party knows that its continued grip on power depends on continued economic success and that success is dependent on international stability. Currently China are political bed mates with Russia. The two share common cause in their opposition to America and democratic values, and have signed a series of trade and military agreements. China could help Russia circumvent sanctions. But they are unnatural allies. Over the centuries they have competed for hegemony of the Eurasian land mass and the past has always been a major factor in Beijing’s strategic thinking. In addition, China has a major stake in the existing structure of the world economy. Its industries are the workhouse of the West and it holds a trillion dollars of US debt.  Beijing’s reaction to Putin’s invasion leaned towards their fellow autocrat while at the same time calling for respect of internationally agreed boundaries. Of course, Taiwan is a major consideration. Will China view Putin’s march as an opportunity to launch their own attack on Taiwan? Or, on the other hand, will America’s inevitable refocus on Europe buy them time and opportunity for the preferred peaceful takeover. Chinese support for Russia is not inevitable—at least not as fulsome as Putin would like

Russia

Russia has always blamed the West for either blocking its progress or holding it back. That Vladimir Putin believes this is abundantly clear from his articles and rambling rants. But that does not mean that the Russian population want war. Thousands have already taken to the streets to protest in Moscow and St Petersburg. The numbers are small by Western standards, but huge when you consider that every demonstrator faced arrest. Putin, has by accounts, ill-prepared his domestic audience for the sacrifices of the war he created. Belarus, by the way, can now be considered part of the new Russian empire. This and a growing chorus of protest could backfire. Economically, Putin has spent years building up Russia’s financial backstop to deal with the crisis he has created. Moscow has more than $460 billion in reserve, with a debt level of 29% of the gross domestic product and 15.9 months of import cover. This means Russia can withstand some global shocks such as limited sanctions, even if its economic growth remains at its low rate of approximately 1.5%. But the sanctions will be tough (sort of) and armies are insatiable devourers of cash. Putin’s best opportunity is a short, sharp war; a quick installation of a puppet government in Kiev, a treaty which leaves NATO humiliated but at peace and then a period of reassessment. All the signs are that this scenario is already fading into the past. If that is the case, then the Russian leader has three weapons: his military, his oil and gas and cyber warfare. His political capital has a negative rating. If Putin uses any of these weapons in response to NATO sanctions then that could be construed as an attack on a NATO country and we are racing down the road to world war between nuclear powers.

The United States

America is at one of its periodic crossroads. It wants to defend democracy but not in a country 5,000 miles away. Its people are tired of what President Biden has dubbed “forever wars”. They are tired of spending billions on European defence while their allies dispense cash on their welfare states and in street cafes. A poll taken on the eve of Putin’s invasion showed that only 25 percent favoured defending Ukraine. That, of course, may have changed after the actual attack. Logically, it knows that its withdrawal from Afghanistan and the Middle East was a major factor in Putin’s decision to invade. So too is Barack Obama’s Asia Pivot, which now must be heading towards the foreign policy dustbin. Domestic politics are even more of a disaster zone. The country is divided between those who want to move towards a European-style welfare state and those who hanker after a golden past when America was filled with prosperous White Christian faces recently returned from saving the world. These conservatives are so determined on recreating this glorious past that they have made a Faustian pact with the politically and morally corrupt Donald Trump. For conservative Republicans, respect for the law now plays second fiddle to 50’s values. But the ex-president may have gone too far in praising the Putin’s attack on Ukraine as “genius,” “smart,” and “savvy.” Perhaps, he suggested, America should use the same tactics to protect its southern border. Certainly the traditional Republican Party leadership is swinging behind support for NATO and Ukraine. The problem is that Democrat Joe Biden appears ill-equipped for the task ahead, especially for the role of “Leader of the Free World.” He is old, uninspiring and at heart a pacifist. The sanctions he has persuaded allies to persuade are tough, but nowhere near what was originally threatened. Trump and the pro-Putin far right are still there, waiting for him to make the wrong step.

The European Union and NATO

The North Atlantic Treaty Organisation is the world’s largest and most powerful military organisation. It is comprised of 27 countries and 3,378, 500 active personnel. It has been training for war with Russia for more than 70 years. The European Union also has 27 member countries and is the world’s largest trading bloc. Europe has been the cockpit for world wars for centuries. The EU was created to make such wars unthinkable by creating an economic interdependence between former warring countries. In Putin’s eyes, the two organisations are flip sides of the same coin—one economic and political, the other political and military. He was as opposed to Ukrainian membership of EU as he was of NATO membership. The 2014 Euromaidan demonstrations in Kiev were a demand for Ukraine’s accession to the EU. It resulted in the overthrow of the pro-Russian government and Russia’s annexation of Crimea and invasion of Eastern Ukraine. NATO and the EU are not mirror organisations. For a start, Britain is no longer part of the EU. But it is part of NATO and plays a significant role as one of the alliance’s three nuclear powers and a member of the Security Council. Its decision to leave the EU was certainly a factor in the lead-up to Putin’s decision to go on the military offensive. Prime Minister Boris Johnson has taken one of the hardest lines on sanctions, but there is doubt surrounding donations to his Conservative Party by Russian oligarchs. Sweden and Finland are members of the EU but not members of NATO. There is now a real possibility that the two countries will end decades of neutrality and join the alliance and significantly alter the balance of power in the Baltic. Russia will be displeased. Turkey is another country that is a member of NATO but not the European Union. President Erdogan’s response to the invasion was a warmed up version of tepid and has refused Ukrainian demands that Turkey close the Bosporus and Dardanelles to Russian shipping. The Russians are building nuclear power plants in Turkey and have supplied the Turkish military with state of the art surface to air missiles. Germany has suspended the Nordstream2 gas pipeline through from Russia through the Baltic.  But there doubts expressed on Friday about the EU commitment after the European summit exempted Russian banks from sanctions on gas and oil sales. And, at EU insistence, the West has so far refused to impose the crippling sanction of denial to the international SWIFT system which controls international bank payments. Former EU Commission President Donald Tusk tweeted: “In this war everything is real: Putin’s madness and cruelty, Ukrainian victims, bombs falling on Kyiv. Only your (the EU) sanctions are pretend. Those EU governments, which blocked tough decisions (i.e. Germany, Hungary, and Italy) have disgraced themselves.”

The Middle East, OPEC and Climate Change

Here is a radical thought: Israel has one overriding vital interest: the survival of the state of Israel. If its leaders believe the West is now a declining foreign policy asset it will ally itself with the country most likely and able to provide protection. It should be noted that one of its first supporters was the Soviet Union. The Arabs are unsentimental about treaties and alliances. Amongst themselves the political chairs are constantly shifting. Egypt was British, fought the British and the Israelis, merged with other Arab countries, allied with the Soviets, ditched the Soviets, allied with the Americans and made peace with the Israelis—all in less three decades. But, of course, there is Arab oil which gives countries such as Saudi Arabia, Iraq, Kuwait, the UAE and Qatar a foot in both camps. They have good relations with Russia and coordinate oil and gas and price policies with Moscow, although Russia is not a member OPEC.  But at the same time, they are major recipients of American and British weaponry with whom they share the common enemy Iran. Tehran has in recent years moved closer to Moscow and is no respecter of international boundaries. It will side with Russia. The entire region is increasingly worried about climate change and the growing shift towards renewable energy. Ukraine will be both a boost and a threat to the fossil fuel producers. In the short and medium term it will drive prices to record highs with increased demands from gas-guzzling military machines and concern about Russian-produced energy supplies. In the long term, The West will be looking to move faster and more comprehensively towards green renewable sources to reduce, if not eliminate, their dependence on Russian oil and gas.

South and Central Asia, Japan, SE Asia, Korea and Australasia

on the same day that Russian tanks rolled into Ukraine Pakistani Prime Minister Imran Khan was photographed meeting with Vladimir Putin. It would have been impossible to signal a more visible support for the Russian leader. The fact is that Pakistan and Russia have a common interest in regional stability in central Asia. America has fled after two decades of a “forever war” in Afghanistan, preceded by many more in which Pakistan was Washington’s closest regional ally. Islamabad has been left high and dry to deal with millions of Afghan refugees flooding across the border and the threat of instability in Afghanistan as the Taliban struggles to gain control while cut off from Western-controlled international aid. Afghan refugees are also seeking refuge in the former Soviet states of Turkmenistan, Tajikistan and Uzbekistan. These countries all have good relations with Moscow which wants to ensure that they remain stable and friendly. The Russians are also concerned about the attempted coup in Kazakhstan. Putin can’t afford to be fighting on two fronts. During the Cold War India was officially neutral with a strong tilt towards the Soviet Union. It still buys Russian weaponry but its strongest military ties are now with Washington and the Asia pivot has made it a key member of “The Quad” (India, Japan, Australia and the US). The Quad is an anti-Chinese pact. If the US pivots back towards Europe the other three members of the Quad will be expected to pick up the slack. This will please the Japanese who have been gradually circumventing the restrictions on its post-war military. It now has 261,000 active personnel. Australia would also be pleased with a bigger role. Southeast Asian countries, especially Vietnam, the Philippines, Malaysia and Singapore, are concerned about possible lack of support over the South China Sea. And then there is Taiwan which was dealt with above.

* Tom Arms is foreign editor of Liberal Democrat Voice and the author of “The Encyclopedia of the Cold War” and the recently published “America Made in Britain” that has sold out in the US after six weeks but is still available in the UK.

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5 Comments

  • nvelope2003 27th Feb '22 - 2:29pm

    Putin has ordered the military to put nuclear weapons on alert because of Western threats!

  • David Garlick 28th Feb '22 - 11:04am

    Not inspiring confidence but realistic assessment I think.
    The best thing that might come out of this nightmare in this country and maybe others would be a government supported rush, a Careful rush, for renewable energy and home insulation reducing any need for Russian oil and gas and addressing Climate Change. A minor thought in current global terms but worth persueing.

  • A maybe true reflection on where we are at this present time but pretty dispiriting all the same, regarding energy what are the solutions for now and the immediate future perhaps putting a hold on the over simplification and time limits to the green agenda might be on the cards and making use of the energy that is available to us in the short term?

  • Nigel Quinton 28th Feb '22 - 1:39pm

    Thanks Tom for another excellent summary. It’s extremely worrying. One question I have is whether the US Asian Pivot is such a bad thing – has it actually affected the situation in Europe and Ukraine directly? The establishment of the Quad, and the position of India within it arguably provides a useful bulwark in South Asia against both Russia and China.

    In reply to others comments on energy I recall being sceptical (as many others were) about concerns a decade ago around energy security. How wrong we were! But then we probably felt then that by now our reliance on fossil fuels would have declined far further than it has. We must push now for a significant ramping up of investment and facilitation of renewable energy and for energy efficiency. Whatever you think of the tactics of Insulate Britain, and XR, they are totally right to be telling us to get in with the transition as fast as we can possibly go.

  • David Garlick 28th Feb '22 - 4:54pm

    Decades of Cold War to come for us all.
    Russian sports people better get used to winning evrything, Belarus better get used to losing everything…!

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