US intelligence had warned Russia was poised for a full-scale invasion of Ukraine; but when it did come there was a sense of horror and disbelief. Many had thought we were past the era of real armies and tanks crossing borders physically, violating the sovereignty of other nation-states. Most saw this as another round of sabre-rattling by Vladimir Putin for greater geopolitical attention.
Now it has happened, where is the Kremlin headed? It’s not the skirmish of the earlier Crimean-type annexation. It’s a full-scale war against an ill-prepared Ukraine. Russian troops have crossed the borders, and are sweeping towards Kyiv from 3 directions. The obvious intent is to crush Ukraine militarily, eject the current pro-NATO government headed by President Volodymyr Zelenskyy and then install a Moscow-friendly regime.
Vladimir Putin has probably planned this as a quick blitzkrieg. Regime change, and then withdrawal of ground troops to the old borders. But in war, things can go awry. You can choose when to start it, but you may not be able to get out when you want to. Putin’s rambling and threatening speeches have talked of ‘protecting Russian minorities’ and ‘de-nazification’, but it is Russian Imperialism pure and simple. The Kremlin does not believe that Ukraine, or for that matter all the other ex-Soviet states that broke free, have a right to exist independently. As allies of NATO, it’s worse.
It’s confusing but Putin’s objectives are two-fold: One, to ensure Russia’s hegemony in Eastern Europe and to keep the NATO alliance at bay; and, two, to force the West to accept Russia not as a regional satrap but as an international super power on the negotiating table. Putin’s brazenness has been helped along with the assurance that the US and its allies will limit themselves to economic sanctions, and have no stomach for military confrontation after Afghanistan and Iraq.
Economic disaster
The impact of Russia’s war will depend on how long it lasts. For a world just emerging from the freeze of the pandemic, slowing growth and rising energy and food prices will be the immediate cost. Crude oil has pierced $100 a barrel and is headed for the $110-$120 range in the next few days. Russia’s is the world’s 2nd largest producer and a cap on Russian oil will create a big shortage.
Europe will be the worst impacted and will have to hunt for alternative sources as it gets nearly 40% of its natural gas and 25% of its oil from Russia. Again, Russia, along with Ukraine, supplies the rest of Europe with as much as 40% of its wheat supplies. If the ‘bread basket of Europe’ is ravaged by war, one can expect food prices to spike. Beyond wheat and oil, shortage of supplies of nickel and aluminium will hit manufacturing chains the world over.
Rising oil prices will also hit India hard. We import over 80% of our demand; and petroleum and oil products makes up as much as 25% of our import basket. Finance minister Nirmala Sitharaman has admitted there will be a big negative impact. Her latest Union budget estimates are based on an assumption of $70-75 for a barrel of crude. With oil shooting to $110, the current account deficit is likely to balloon by an additional $15 billion, or about 0.4% of GDP. This will push up inflation big time.
Ukraine is on its own
From the latest on the war front, it is clear Russian troops are already knocking on the doors of Kyiv, and Joe Biden’s ‘sanctions’ are having little effect. On the ground, Ukraine is fighting alone. President Zelenskyy voiced his frustration with NATO saying: “We have been left alone to defend our state. Who is ready to fight alongside us? I don’t see anyone.”
Even the potentially most damaging piece in the sanctions game - the cutting off of Russia from the international payment system called ‘Swift’ which would restrict Russian banks to access foreign currency — has been shelved for now.
Whether the EU and the United States will move beyond condemnations and decorative ‘sanctions’, and whether Ukraine has the will to fight a long-term battle for survival are important elements of the future. What is clear now is Russian Imperialism has emerged as a significant threat. In fact, President Xi Jinping of China might learn from Putin how to do a quick and unilateral ‘unification’ of Taiwan.
In this fast-changing geo-politics, the old superpowers seem to be outmanoeuvred. Neither are they up to the task of stopping the Russian juggernaut. the task of stopping the Russian juggernaut. And how can they? The US has its own long and dirty history of foreign intervention — most recently in Iraq where it entered to find Sadaam Hussain’s non-existent Weapons of Mass Destruction (WMDs).
Ukraine will finally have to fight its own battle, but it can learn from Afghanistan. The Russians have forgotten before the US was kicked out of Afghanistan, it was the Russians who met their Waterloo there.
Russia’s plan
Vladimir Putin has probably planned this as a quick blitzkrieg. Regime change, and then withdrawal of ground troops to the old borders. But in war, things can go awry. You can choose when to start it, but you may not be able to get out when you want to.