Xavier Vives is Professor of Economics and Finance at IESE Business School.

By Xavier Vives

Russia’s invasion of Ukraine has stunned the world, leading many commentators to conclude that so rash an act could be committed only by an irrational autocrat, or perhaps even a madman. But others have discerned a rational strategy for exploiting the West’s current weakness to re-establish the old Soviet empire. Who is right?

From the fiascos in Syria and Afghanistan to Brexit and the deepening polarization and paralysis in the United States and Europe (which is also irredeemably dependent on Russian energy), there are plenty of reasons why Russian President Vladimir Putin may have decided that this was the moment to strike. Add in Russians’ post-imperial hangover after the fall of the Soviet Union, and you can start to see why he may think he is holding a winning hand.

Putin has justified his war against Ukraine with preposterous claims about a genocide being committed against Russians in the country’s eastern provinces, all of which is eerily reminiscent of Hitler’s Big Lie in 1938. After Hitler claimed that 300 Sudeten Germans had been killed by the Czech police, the West offered its wink of approval at Munich, and Hitler proceeded to invade and dismember Czechoslovakia. We all know what happened next. As Winston Churchill famously said of British Prime Minister Neville Chamberlain upon his return: “You were given the choice between war and dishonor. You chose dishonor, and you will have war.”

Britain and France’s concession of Czech territory to Germany (which they offered without bothering to consult the Czechs) led to a war that Hitler had in fact been planning all along. Similarly, it now seems clear that Putin has long prepared for his invasion of Ukraine. In addition to forging new economic agreements with China and flooding international and domestic media channels with misinformation, he also amassed some $‌630 billion in foreign-exchange reserves.

Though the historically severe sanctions now being placed on his regime have put that war chest out of reach, accumulating it attests to a significant amount of planning. Putin and his Kremlin acolytes could not bear to have a neighboring Slavic nation-state building a Western-style democracy and preparing someday to pursue NATO membership. While European political leaders such as French President Emmanuel Macron pursued dialogue with Russia and offered various forms of appeasement, we now know that a diplomatic “solution” was never really on the table.

Photo: REUTERS

What considerations would have gone into Putin’s strategy? For starters, he probably counted on sanctions being bearable, given that the West mustered only a limited response when Russia annexed Crimea, interfered in Western elections, carried out assassinations around the world, and played a role in downing a civilian airliner in 2014. The Kremlin also anticipated, correctly, that Western democracies would not respond to military action with force.

Moreover, with China sharing the Kremlin’s interest in containing the advance of liberal democracy around the world, Putin could count on the Chinese to provide an additional economic lifeline by purchasing Russian gas. But this new relationship will not be costless. As the world continues to divide into separate technological and economic blocs, Russia will become even more dependent on China, implying a loss of strategic autonomy. Russia may have a powerful military; but with a GDP similar to that of Spain and Italy, it is far from being an economic power.

Photo: REUTERS

Another cost will be the revival of NATO, which will go from being brain dead (as Macron put it) to indispensable. Around 25% of the Estonian and Latvian populations are of Russian origin. Despite their membership in the alliance, these countries will need additional reassurances after what has happened in Ukraine. Indeed, by threatening Finland and Sweden for their participation in recent NATO talks, the Kremlin has indicated that Putin’s mission goes well beyond Ukraine.

Putin has also issued a not-so-veiled threat to use nuclear weapons: Anyone who intervenes in Ukraine will face “consequences you have never encountered in your history.” Has mutual assured destruction lost its effectiveness as a nuclear deterrent? Is this not madness?

Most likely, it is another strategic ploy: what used to be called the madman theory of diplomacy. It is to Putin’s advantage if the West believes that Russia is so committed to its mission that it will risk incurring massive damage and that he might be capable of anything. For this posture to be credible, he must constantly dissemble. If he blinks, the West will know that he has been pursuing a calculated strategy all along. In game-theory terms, he will have revealed that his “type” is not always aggressive after all. With that, he will lose an essential strategic advantage.

Photo: REUTERS

The Kremlin has maintained its aggressive line so far. But this comes with two dangers. The first is that an accident or a misunderstanding will trigger a direct military confrontation with the West. Russia cannot afford that unless it is fully backed by China, which currently has nothing to gain from such a scenario.

The second danger is that the West will try to test the Kremlin with limited but forceful military resistance of its own. To do this in Ukraine may be too risky, although it could be triggered by a massacre in a large city, but blocking Russian warships from the Bosphorus and Dardanelles straits indicates a possible path.

Putin most likely has ruled out this possibility because he has concluded that the West is too feckless. What if he were proven wrong? What if the West were to give the Kremlin a good reason to believe that it was not so weak after all? At the end of the day, much will depend on what price the West is willing to pay to contain Russia.

Copyright: Project Syndicate, 2022.

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