by Peter Lavelle, Sputnik News
There is wide recognition among Russia’s political and financial elites the country will continue to be in conflict with the West for the foreseeable future.
Russia’s President Vladimir Putin’s incredible poll numbers tell him he has the support of the public for the policy agenda he chooses. This makes both Putin and Russia feel confident.
For years Putin has made it abundantly clear in his speeches Russia is not happy with the global status quo. His address to the Federation Council this week is evidence of this. As far as Putin is concerned, the entire international system is rigged to Washington’s advantage. The very existence of the U.S. dollar ensures Washington and its closest allies will never allow a fair playing field. That said, Putin is not eager to see the current global system collapse. He wants more political equality, but he also knows Russia and other emerging powers face punishment for challenging and breaking with the Washington designed global consensus.
Thus, broadly speaking Russia sees itself preparing for conflicts ahead, a war by other means if you like. The military should always be prepared for contingency plans, but the conflicts Putin has in mind focus on finance, trade, and economic warfare. And, preparing for war, the Kremlin is taking a long view Western sanctions on the back of the Ukraine crisis have been a renewed wake-up call. Sanctioning an individual or individuals and their wealth rarely changes a country’s domestic or foreign policy choices. But sanctioning the energy sector’s ability to go to international markets, for example, exposed dangerous weaknesses. Since then Kremlin has been conducting “stress tests” across numerous sectors searching for other weaknesses. Putin is hoping for the best, but expecting real challenges. Going on a war footing is never easy.
Sanction are Pinching, but What Really Hurts is Price of Oil
To-date food import bans have been met with very little negative blowback. Consumers are not worried about food; they have something else on their minds. The real concern is growing inflation and the painful drop in the ruble’s value on international exchanges since early 2014. Sustained lower oil prices have crimped fiscal appetites and forced Russia to consider its own form of budget austerity. Many individuals have had to consider personal austerity, as well. Soon we will know how many Russians decided to stay home during the upcoming winter break. This in itself will be an interesting economic and political indicator.
The Russia-West Standoff: Both Determined, Russia Well Prepared
Since the advent of the “sanction season” both sides are sticking to their proverbial guns. Aches and pains, yes, but so far no broken bones or a trip to the emergency room. Russia’s balance sheet is very robust. The country can easily and comfortably cover all foreign debt obligations and expected a small budget deficit to the end of 2015 without going to international markets for refinancing or new borrowings. This includes the condition of Russia being in recession for most of the year. Also, a weak ruble adds security to the budget. And additionally, import substitution will continue apace, such as of military spare parts once sourced from Ukraine. All in, Russia is prepared while the West scrambles to fight off divisions among themselves.
What is next from the West? US President Barack Obama and German Chancellor Angela Merkel keep saying they are committed to maintaining a tough line against Russia, but they are vague about what further sanctions could entail. Indeed, there is not a whole lot more the West can do against Russia without inflicting massive assaults on their own economies.
Threatening Russia like Iran or North Korea is simply not tenable. Europe would freeze in winter and oil prices would skyrocket. Such conditions would create the truly unthinkable – a hot war that would later be called WWIII.
Russian World Order?
Since the Great Recession of 2008 Russia has been acutely aware of its vulnerabilities. Being too closely integrated into western financial institutions was one of them. The Ukraine crisis was just a reminder that Russia must develop safeguards against weaknesses and dangers generated in the West, particularly those found on Wall Street. But it would be a mistake to believe that Putin wants to pull Russia out of the current global economic system. Putin is hardly looking to design a “Russian world order.” Russia merely wants fair access to international markets; it wants its companies to be truly international, and fair trade for all. And if you have been listening for the past 14 years, Putin wants institutions like the BRICS and the G20 to do the heavy lifting when it comes to global policy making.
But make no mistake, Russia is resolved to protect its sovereign rights in ways European countries have learned to deny themselves. The West’s media claim that Putin’s language is bellicose and threatening is a gross exaggeration. In fact, he simply wants it recognised that Russia should not be denied a respected position in the world. In the meantime, Russia and Russians are doing much to make this happen even if Washington continues down the path of confrontation.
For years Putin has made it abundantly clear in his speeches Russia is not happy with the global status quo. His address to the Federation Council this week is evidence of this. As far as Putin is concerned, the entire international system is rigged to Washington’s advantage. The very existence of the U.S. dollar ensures Washington and its closest allies will never allow a fair playing field. That said, Putin is not eager to see the current global system collapse. He wants more political equality, but he also knows Russia and other emerging powers face punishment for challenging and breaking with the Washington designed global consensus.
Thus, broadly speaking Russia sees itself preparing for conflicts ahead, a war by other means if you like. The military should always be prepared for contingency plans, but the conflicts Putin has in mind focus on finance, trade, and economic warfare. And, preparing for war, the Kremlin is taking a long view Western sanctions on the back of the Ukraine crisis have been a renewed wake-up call. Sanctioning an individual or individuals and their wealth rarely changes a country’s domestic or foreign policy choices. But sanctioning the energy sector’s ability to go to international markets, for example, exposed dangerous weaknesses. Since then Kremlin has been conducting “stress tests” across numerous sectors searching for other weaknesses. Putin is hoping for the best, but expecting real challenges. Going on a war footing is never easy.
Sanction are Pinching, but What Really Hurts is Price of Oil
To-date food import bans have been met with very little negative blowback. Consumers are not worried about food; they have something else on their minds. The real concern is growing inflation and the painful drop in the ruble’s value on international exchanges since early 2014. Sustained lower oil prices have crimped fiscal appetites and forced Russia to consider its own form of budget austerity. Many individuals have had to consider personal austerity, as well. Soon we will know how many Russians decided to stay home during the upcoming winter break. This in itself will be an interesting economic and political indicator.
The Russia-West Standoff: Both Determined, Russia Well Prepared
Since the advent of the “sanction season” both sides are sticking to their proverbial guns. Aches and pains, yes, but so far no broken bones or a trip to the emergency room. Russia’s balance sheet is very robust. The country can easily and comfortably cover all foreign debt obligations and expected a small budget deficit to the end of 2015 without going to international markets for refinancing or new borrowings. This includes the condition of Russia being in recession for most of the year. Also, a weak ruble adds security to the budget. And additionally, import substitution will continue apace, such as of military spare parts once sourced from Ukraine. All in, Russia is prepared while the West scrambles to fight off divisions among themselves.
What is next from the West? US President Barack Obama and German Chancellor Angela Merkel keep saying they are committed to maintaining a tough line against Russia, but they are vague about what further sanctions could entail. Indeed, there is not a whole lot more the West can do against Russia without inflicting massive assaults on their own economies.
Threatening Russia like Iran or North Korea is simply not tenable. Europe would freeze in winter and oil prices would skyrocket. Such conditions would create the truly unthinkable – a hot war that would later be called WWIII.
Russian World Order?
Since the Great Recession of 2008 Russia has been acutely aware of its vulnerabilities. Being too closely integrated into western financial institutions was one of them. The Ukraine crisis was just a reminder that Russia must develop safeguards against weaknesses and dangers generated in the West, particularly those found on Wall Street. But it would be a mistake to believe that Putin wants to pull Russia out of the current global economic system. Putin is hardly looking to design a “Russian world order.” Russia merely wants fair access to international markets; it wants its companies to be truly international, and fair trade for all. And if you have been listening for the past 14 years, Putin wants institutions like the BRICS and the G20 to do the heavy lifting when it comes to global policy making.
But make no mistake, Russia is resolved to protect its sovereign rights in ways European countries have learned to deny themselves. The West’s media claim that Putin’s language is bellicose and threatening is a gross exaggeration. In fact, he simply wants it recognised that Russia should not be denied a respected position in the world. In the meantime, Russia and Russians are doing much to make this happen even if Washington continues down the path of confrontation.
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