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August 11, 2022
Expert Analyses Poland-Current Issues

The Russian Federation has already lost — the question is, how much damage will it still do? (Analysis)

 

If one were to forsake the observation of current events for a moment and then look at the international balance of power and Moscow’s position from a broader perspective, there should be no doubt about one issue: Russia is tanking. The problem is that Vladimir Putin has grabbed the Ukrainians and the European Union by their legs and is trying to drag all others underwater along with Russia’s own sheer weight. They are using a drowning person’s blackmail:

“Either you agree to my terms, or I will drown us all.”

However, the Ukrainians will not give in and are determined to cut off more Russian knuckles from the grip holding on to them. The West supplies the defenders with the necessary tools, simultaneously trying to cut off the energy umbilical cord that connects European countries with Russia. The question is whether European lungs are sufficiently developed to “breathe” both gas and oil — all on their own?

 

The Russian Federation has already lost — the question is, how much damage will it still do?

The thesis in the headline should not be taken as wishful thinking. Russia was heading for a catastrophe even before the full-scale invasion of Ukraine and the drastic sanctions that followed. It was not without reason that American analysts pointed out that after the year 2030, Russia would cease to be an adversary and a worry for the United States. Either Vladimir Putin read their reports or the conclusions aligned with the Russian analyses. That is why the decision was probably made to take drastic measures. Only the lack of success in Ukraine — which was probably supposed to be the seizure of power in Kyiv within a maximum of 2-3 days — resulted in getting stuck in a full-fledged war. With all its consequences. The processes that had so far consumed Russia slowly have now accelerated. While it can be said that time was running out in 2021, it is now too late for Moscow. On all levels. The horsemen of the Russian apocalypse have just mounted their steeds and set out to reap their harvest. From Vladivostok to Kaliningrad. A few ghastly points follow.

 The phantom of regression

In 2019, the Russian GDP, calculated taking into account the purchasing power of money, was 3.3 times greater than Poland’s (RUS: USD 4.2 trillion, POL: USD 1.4 trillion). It is worth adding dynamics to the comparison. The distance between Poland and Russia has been decreasing every year. Let us remind you that 38 million people work for Poland’s GDP and 144 million people for Russia (so there are nearly 4x more Russians). It is enough to say that the value of Polish imports (converted into dollars) has been higher than that of Russian imports for several years. In other words, we are a more receptive market for foreign partners and companies. Not only that — our territory is located next to the largest and wealthiest market in Europe (Germany). We are well positioned with the economic center of Europe. Poland has a relatively small and compact territory that is easy to connect and service. Goods are and reach everywhere, and society is much wealthier and more willing to consume. This is entirely different from the Russian territory, 17,000,000 km2, geographically long, stretching across the entire Asian continent. Emptiness, poor communication links, and huge distances between cities beyond the Urals pose significant logistic problems. The Russian market is vast in area but relatively small in terms of trade volume.

It is worth pointing out that in 2012 the Russian GDP (already converted into dollars) amounted to around 2.3 trillion dollars. In 2019, it was just under USD 1.67 trillion, and 2020 ended in a regression to USD 1.48 trillion. Poland jumped from USD 498 billion to USD 594 billion in 2012-2020. In other words, in 2020, our GDP was 40% of Russia’s.

After 2013, Russia’s GDP began to shrink rapidly. After eight years, the Russian economy has not returned to its previous level.

Furthermore, now it is worth adding that, according to the Russian economist Tatiana Mikhailova, as a result of the war and sanctions, Russian GDP will drop in the coming months to the level of 1995 (395 billion dollars — that is 200 billion less than Poland’s GDP!).

In 2012, we could pay about 11 Polish groszy for the rouble. In 2020, only six groszy were enough. Today it is a junk currency (PLN 0.03 per rouble — as of March 2022).

Rouble-Dollar exchange rate. Today, you have to pay as much as 80 rubles for one dollar; in 2013, it was just over 30.

 The specter of bankruptcy

Before 2020, the value of sales of fossil fuels accounted for half of the value of all Russian exports, which also corresponded to the value of half of the state budget. Income from the extraction of hydrocarbons directly translated into nearly 15% of the country’s GDP and indirectly had an even more significant impact. And 90% of all Russian gas exports went to Europe and Turkey.

Even then, many factors heralded the troubles of the Russian budget. Poland and its entire economic environment are becoming independent from Russian gas (investments in the Baltic Pipe project, gas delivery networks, LNG terminals). The EU climate policy (focusing on renewable energy sources) and the announced revolution in the automotive industry (abandoning oil). Add to this, the entering into the European hydrocarbon market by a prominent player, i.e., the United States. The latter thanks to the technology of obtaining gas and oil from shale, have impressively entered the EU market with their own raw materials.

In this regard, the hope for Vladimir Putin was the investment in Nord Stream II (NS II). However, it was not an economic argument (because it is with oil, not gas, that the Russians earn the most) but only a political instrument to pressure Poland and other Central and Eastern Europe (like Ukraine). However, the plan backfired in the face of sanctions on the NS II project. After its construction, political pressure (officially — procedural issues) prevented the gas pipeline from launching.

At the same time, the sanctions still maintained (after 2014) by the EU and the US did not allow for the acquisition of technology and capital that would enable the extraction of Russian hydrocarbons from the Arctic region. Without tapping into these resources — as the Russian Energy Minister Aleksandr Novak estimated in 2019 — oil production may drop by half in 2035 (due to the depleted and currently exploited deposits).

So it is evident to the Russians themselves that the cash flow from the sale of hydrocarbons would soon turn into a barely dripping spigot. Instead of waiting for the slow waning of capital inflows, Putin decided to act. As a result, the West intends to completely cut off from Russian resources — today.

What seems to be saving the Russian budget is the current sharp jump in the price of energy resources. After the 2014 invasion, the price of crude oil fell from around $ 110 (February 2014) per barrel to $ 31 (February 2016). Later, COVID reduced the price to about $ 27 a barrel (April 2020). Today, the price has jumped back up to over $ 100, and the Russians are stuffing their pockets with cash. Natural gas prices went through the above process almost in parallel terms.

Oil price per barrel (USD)

Unfortunately for the Russians, however, they are not the ones who have the most significant influence on market prices. The United States and, above all, OPEC is of great importance in this matter. In the past, it was different, but the US has strong influence and arguments, thanks to which it can influence the decisions of Arab oil exporters. Moreover, just wait for such an agreement to be made. Lowering the price of energy resources would significantly impact the Russian budget.

The transactions themselves are not enough. Because politics is also crucial in economics, as the sale of Russian energy resources is carried out in dollar transactions. Meanwhile, the Russians have a problem spending these dollars due to the sanctions. They can collect dollars, but at the moment, it is like collecting waste paper. That is why it was decided to make the recipients pay in roubles, which was also supposed to strengthen/support the position of the Russian currency. The problem is that settlements in junk roubles only discourage customers from using Russian resources.

For years, Russia has been increasing its currency reserves in preparation for possible war and more challenging economic sanctions. Graph: The amount of foreign exchange reserves expressed in millions of dollars.

And here we come to the question of many years of Russian preparations for possible sanctions and economic isolation. Kremlin authorities stocked up on gold and currencies other than the dollar. It was supposed to be rainy day weather security. The problem is that after the February attack on Ukraine, some of these reserves were — as part of the sanctions — frozen. And the resources found in Russia are basically hard to cash in on. For the needs of the internal market, the Moscow central bank can print as many roubles as needed (at the expense of a check on inflation). However, if you want to obtain parts, goods, and technology from the outside (for example, from China), the rubbish rouble is no longer suitable. Even the Chinese will not want to accept an equivalent of waste paper as payment for their goods, which cannot be later used in trade with anyone other than Russia itself. And that poses a risk. Because the falling rouble and the spiral of inflation mean that if the Chinese earn 1,000 roubles on the Russian market on one day, this amount may be much smaller on the next. So, selling Chinese products in Russia — in exchange for roubles — has become unprofitable.

On the other hand, if the Russians have so far imported something from the West, it was not profitable for them to import the same products from China, or they were unavailable there. So, replacing the supply chain will be either problematic or more expensive. Especially if the Russians will import using the yuan, while the rouble exchange rate will make buying anything abroad (be it from China or any other country) — incredibly costly. All of this will hit mainly the private sector.

At the moment, the level of inflation in Russia is difficult to measure. The authorities acknowledged that inflation was 12.5% ​​between March 2021 and March 2022. At the same time, it should be assumed that official announcements on this matter are significantly understated, as was the case in Turkey.

Inflation in Russia jumped sharply after 2014. At the moment, we are observing a similar phenomenon, although the data provided by the Russian government may still be understated.

The Russian economy and industry will suffer for all these reasons because some trade ties with the West cannot be replaced with a Chinese replacement. The Russian private sector is at a loss. If they can be bought at all, Chinese goods will be expensive. The risk of transactions with the Russians will be high. Of course, the Kremlin authorities will cope with the most urgent needs. They will be able to pay the Chinese for their most urgent needs in gold, foreign exchange, and raw materials. However, private companies will not be able to do so.

Additionally, it should be remembered that such wasted reserves (gold, foreign currencies) will run out quickly. At the end of 2021, Russian reserves were valued at $ 624 billion, which would allow Russia to meet its import needs for a year. Gold accounted for 21% of this amount. It is difficult to estimate how much of Russia’s reserves have been placed abroad (and therefore have now been frozen). Nevertheless, a cautious thesis can be made that Russia will have to tighten its belt in six months’ time significantly.

 The specter of corruption

In Russia, corruption is a natural tool for the functioning of society, the state, and its elites. Moscow is corrupting its disobedient regions. Huge sums are transferred from the central budget to problematic regions, which guarantees the loyalty of the local apparatchiks. The examples of Dagestan and Chechnya are the most expressive. At the same time, the Kremlin authorities buy loyalty for themselves in the conquered or dependent areas such as Crimea, Donbas, Abkhazia, and South Ossetia with cash. The funds transferred by Moscow sometimes constitute 90% of the budget of a given administrative unit. Of course, all this is at the expense of the regions that contribute much more to the common coffers than they take out of it. This is especially true of those districts famous for extracting energy resources. This, in turn, arouses their dislike of the Moscow authorities.

In domestic politics, it is similar at the elite level. Vladimir Putin has made the most prominent and most influential oligarchs dependent on himself, providing them with good contracts and jobs that assure huge profits. In 2016, 1% of the wealthiest Russians owned nearly 43% of the national wealth. Social inequalities continue to rise, and the middle class becomes poorer. In 2018, the wealthiest 3% of Russians owned 89% of all financial assets in the country. The wealthiest 100 oligarchs had more savings in their accounts than the rest of the Russian population. This phenomenon kills initiative and entrepreneurship in society and thus hurts innovation. A society made up of serfs and masters has no chance of developing as fast as the capitalist and democratic world. A “lagging behind” increases.

In turn, corruption at the lowest level of society and state administration, just like a cancer, slows down and degrades the activities of subsequent state bodies. It also distorts social morality. The state functions less and less efficiently at each successive level of the administrative or social pyramid.

For years, Russia has been ranked very far in the ranking of countries with the lowest corruption index.

Knowing all this, you should ask yourself what will happen to Russia as a state, social and administrative structure if the cash desk runs out of cash? Will regions that have shown separatist sentiments in the past continue to be loyal? Will Putin’s people be loyal?

The spirit of backwardness

All this together means that Russia cannot sustain itself in the technological race with the West and China. Moreover, this is a direct threat to the state. Imagine a situation where Russia’s nuclear arsenal would become so obsolete that it would cease to act as a deterrent … Therefore, Vladimir Putin, like Peter the Great, would like to make a technological leap in Russia. For centuries — due to many different factors — the problem is that such a jump in Russia could only take place thanks to the state’s involvement. And only by acquiring knowledge from the outside.

Meanwhile, Russia has been cut off from the know-how and technology of the West, and the Chinese also do not intend to share their discoveries with her. The proverbial Ivan does not have the materials, means, and sufficient motivation to make technological progress simultaneously on all levels. Relying only on its own technical thought and inherent possibilities, Russia must limit itself and choose spheres of involvement. Of course, the Kremlin has always focused on armaments, which completes (closes) the technology cycle in Russia. Because military research in Russia is closely guarded, military technology is not seeping so well into the business-commercial sphere as it is happening in the West. As a result, the money pumped into the armaments sector even impoverishes and impedes the development of the rest of the country (as it was in the times of the USSR).

Meanwhile, an inefficient economy and poor society cannot support development. A globalized world in which countries focusing on selected fields can exchange technologies from various levels is rushing forward. Russia stands still and tries to chase the rest with great effort only in selected sections.

 The humane Grim Reaper

However, economic problems are not the only ones. Russia is dying out. The birth rate has been dropping drastically since 1995 (similarly to Poland). There are less than 1.6 children per woman in Russia, and the fertility rate among ethnic minorities is much higher than that of native Russians. On the one hand, few children are born, while on the other hand, an inefficient and underfunded health care system and a catastrophic social situation in terms of drugs, alcoholism, and the AIDS epidemic contribute to premature death. Russia’s life expectancy stats show approximately 72 years (66 for men, 77 for women). In Poland, we live on average five years longer, and yet our country is not among the world’s leaders in this respect. By 2030, the number of Russians may be reduced by 3.5 million people — not considering natural disasters, wars or pandemics. Meanwhile, it is unknown how many lives COVID-19 has taken in Russia.

The demographic pyramid in Russia. Baby boomers are now between 30 and 44 years old. They are now a burden on the farming states. In 20 years, these people will start to retire.

The pension system is an additional problem. Around 2050, the generation of today’s 30-year-olds will begin to retire in Russia. If all of them reached retirement age, the system in Russia could collapse.

Vladimir Putin tried to reform the pension system to prepare for the mounting problems. However, waves of protests delayed and watered down the program. In 2018, a version was finally passed that will gradually raise the retirement age in Russia by 2028 from 55 for women and 60 for men to 60 for women and 65 for men (currently at 56 and 61). The earlier idea of ​​abruptly raising the retirement age quicker met great social opposition. And no wonder. If in 2028 the Russians live on average as long as they do today, they will only enjoy their retirement for a year. A few ago, it was even worse because a statistical man in Russia lived less than 65 years (it can be maliciously written that a pension in Russia would be paid only after death).

Nevertheless, this dire state of Russian society will change quickly. The war with Ukraine, drastic sanctions, increasing poverty, and lack of funds for health care can effectively solve possible problems of the pension system in Russia. At the cost of accelerating the process of depopulating the state and weakening it at almost every other level.

 The demons of war

By his full-scale invasion of Ukraine, Vladimir Putin wasted years of quite skillfully conducting foreign policy. This is not a novelty but rather a repetition of 2013 when Russia broke the terms of the 2009 reset of relations with the US. After the deal with Barack Obama, Putin got everything he expected. Agreement to create a political and economic bloc of Eurasia from Lisbon to Vladivostok. Economic and technological cooperation. Acceptance of Western Europe’s dependence on Russian energy resources. In addition, the Americans deactivated the Second US Navy Fleet, which was responsible for the North Atlantic, and thus was a counterbalance to the Russian Northern Fleet. What attracted the most attention in Poland was the fact that Barack Obama gave up building the anti-missile shield in Poland and the Czech Republic.

However, appetites increase with eating. Vladimir Putin, helping Bashar Assad in 2013, started playing against the USA. He believed that his political alliance with Germany was unquestionable, primarily due to Berlin’s energy dependence. All this ended with Ukraine’s separation from the Russian sphere of influence, with Poland, Romania, and the Baltic states being removed from the German sphere of influence, and with American involvement in the region of Central and Eastern Europe. Russia’s reaction was the invasion of Crimea and Donbas, which in turn, exposed Russia to sanctions not only from the US but also from the European Union. From that moment on, Russia started on a downward slope in terms of its economy, development, and society’s situation. However, Kremlin’s authorities tried to play their cards at the political level.

In subsequent years, Putin tried to strengthen the possibility of energy blackmail concerning Europe (Nord Stream II) and, at the same time, used the argument of force. He increased the subordination of Lukashenka and limited the development of Ukraine (including by freezing the conflict in Donbas). The Russians defended Assad in Syria. They won against Turkey at the Kurdish table. They maintained their influence in the Transcaucasus, where there was an Azerbaijani-Armenian clash. They demonstrated their position in Kazakhstan, where there have been changes to the unofficial governance structure. At the same time, cooperation with China looked relatively stable, and a common enemy — the United States — united the interests of Beijing and Moscow.

On February 24, 2022, Vladimir Putin once again overturned the chessboard table, on which he had been carefully moving successive pieces for the past seven years.

 A one-way ticket

All the above processes are described in a little more detail in the book: “The Third Decade. The world today and in 10 years.” [Pol.: „Trzecia Dekada. Świat dziś i za 10 lat”.]  I also put forward the thesis that Vladimir Putin has no chance of getting a deal that would be satisfactory for him with the Americans. The differences in expectations on both sides are too significant and cannot be reconciled. After the experience of the failed reset in 2009, the United States expected a firm guarantee that Russia would not turn against them again at the most challenging moment for Americans. For example, during the competition with China, which could outweigh the scales on the side of Beijing and thwart Washington’s efforts to maintain its position and stop the Chinese march. Such a guarantee could be Russia’s total dependence on US political will to sell energy resources to Europe. The problem is that it was not possible to build such a dependency, and Germany, which could support the US in this regard, turned out to be an untrustworthy partner.

On the other hand, the Russians did not intend to fight China (on any level) and — in the interest of the United States. It would be suicide for Moscow. Putin wanted to build a political and economic project independent of the US and be competitive with the Americans, based on the Berlin-Moscow (+ Paris) axis, which also ruled out dependence on the US. Washington policymakers could not agree to this because it would mean a complete collapse of the American world and hegemony. Without European support, the Americans would have a huge problem competing with China.

So much for geopolitical issues. The February 24th invasion completely reevaluated the arguments. The war crimes committed by Russian troops disclosed in Ukraine and the fact that they were committed based on previously-issued orders from the very top should dispel any fantasies about an agreement between the USA and Russia or, even more broadly: the West-Russia. Because apart from political and economic arguments, another one has arrived, much more important and related to credibility, which is of great importance in foreign policy.

Russia has no chance of a handshake with the West, friendship, or even an alliance. Nobody wants to have a friend who, when invited to dinner, will start to slaughter the host’s family with cutlery as soon as the host goes to the kitchen to serve the baked turkey.

At the same time, the problematic nature of a possible return to even correct relations with Russia is not only related to Vladimir Putin. The Russian press writes almost directly about the criminal policy of the authorities, presenting it as being the correct one. Meanwhile, in Russian society, support for Putin is growing, which should tone down the hopes of even the greatest supporters of a conciliatory policy toward Moscow.

All of this may lead to one conclusion. It is in the interest of the USA and all of the West (including Poland) to neutralize Russia as such. Hit it so hard that for the next 100 years, the Russians would have to think about internal problems and not have the time or strength to get involved in foreign policy, nor think about returning to the empire from the times of the USSR or the tsarist regime.

Putin, Russia, and the Russians served themselves a one-way ticket. And it seems that both in Washington and in European capitals, the elites are beginning to mature to this idea. For Russia has left no other choice to its potential partners.

A Chinese lifebuoy?

Throughout this puzzle, China now appears to be Russia’s last resort. However, this is only an illusion. The Beijing authorities are not among those that help and strengthen competitors for free. And this is really what the Russian Federation is. In fact, the Chinese will take advantage of Russia’s weakness to dictate a high enough price for their help. However, it should be remembered that the economy and prosperity of the Middle Kingdom depend on supply chains and mainly on sea routes. The United States and its allies control these. The Chinese do not care about fighting in the interests of Russia against the hegemon. Beijing would lose the most from this, as building a middle class in China to replace export profits with domestic demand has not been completed. Beijing needs an injection of Western cash.

Moreover, the Chinese economy depends on oil supplies by sea (mainly from the Middle East). The Chinese also import LNG and wthout these resources, the development of the Middle Kingdom would not be possible.

In other words, the Americans hold the arguments to persuade the Chinese to stop supporting Russia. China needs time to develop and become independent from the US and the West. Furthermore, they will be ready to field the Russians to gain this time, especially if it leads to a confrontation between Washington and Moscow. It should be remembered that while the Americans are doing everything they can to secure NATO, they are not really eager to confront Russia because of Ukraine. There is one reason. They fear that a commitment against Moscow will encourage the Chinese to open a new front in the Far East. Therefore, they prudently look at both sides and wait. If, on the other hand, Beijing guaranteed that there would be no second front … So, for the Chinese, provoking a fight between competitors and gaining additional years of peace may be an irresistible temptation.

Of course, China wants to extract the best possible price from the Americans in exchange for neutrality. Therefore, a very sharp political confrontation may also occur on the Washington – Beijing axis, which should not end in a war. A conflict could thwart many plans for both sides.

Both powers — China and the US — feel unprepared for a clash with each other. The Chinese have not yet completed the construction of the internal market and are still energy dependent on gas and oil imports. Americans feel that they should limit China’s growth now, but they cannot do it in a situation where Western Europe’s position on this issue is still uncertain. The Russians are eager to rearrange eastern Europe and undermine the credibility of the United States as a security provider, which would hit at the entire American system of alliances.

All this leads to the conclusion that Russia will become the first victim of its own aggressive policy. It is a pity that the Ukrainians have to pay the price for Putin’s geopolitical mistakes.

 What is in the future for Ukraine?

At this point that the text moves from the analytical part to speculation. However, it is worth considering how the further fate of the war in Ukraine may develop. Many commentators point out that Putin changed the strategic goals of the war. The forces shifted to the south and east, and the main purpose of the war was to take over Donbas and the southern coast of Ukraine. There were also voices in the public sphere that the longer the war lasted, the better for Ukraine. The flowing support allegedly strengthens the Ukrainian army with each passing day, while the Russians suffer heavy losses. Personally, I find such theses too optimistic. First, the equipment replenishment delivered to Ukraine from the West is a drop in the ocean of needs. Secondly, the Russians have a lot of equipment and mobilization opportunities. They are more potent as a state and as an army in total. The war envisioning complete destruction will be a catastrophe for Ukraine, also, when it comes to the destruction of a country that will have to rebuild itself for decades to come, even if it survives. Fortunately for the Ukrainians, the Russians are in a hurry to settle the matter because, for them, too, each subsequent day of the war comes at a considerable cost. Therefore, there is hope that the war may be decided in the perspective of months, not years (although a longer scenario cannot be ruled out). If that were to happen, the Ukrainians might have a chance of a favorable outcome in the main battle.

Strategic goals of the war

In addition, contrary to appearances, the strategic goals of the war have not changed at all. As I raised this point before, Russia will gain nothing by occupying one or two additional counties/states in Ukraine with a full-scale invasion. Yes, it will be some military success. Yes, it will weaken Ukraine even more. But from a geopolitical and strategic point of view, it will not wholly improve Russia’s position in the international arena. On the contrary, the scope of the sanctions and the devastation of Russia’s image is so enormous that the Kremlin authorities are now in a much worse position than before the February invasion. In other words, if Moscow does not take control of Kyiv and all of Ukraine, then the war will be a total disaster from a political and economic point of view.

Only the restoration of all of Ukraine to the Russian sphere of influence will allow Putin to threaten the entire West and NATO in the next step. The deployment of entire armies in an additional Ukrainian direction will put enormous pressure on Poland and the whole of the eastern flank of the North Atlantic Pact. The pressure — which the Russians imagined — would force the Americans to agree to Russian conditions. Either that or the US would have to wage a second, long Cold War with Russia, deploying enormous forces in Europe and abandoning the struggle for hegemony against China for several years.

Map showing the strategic situation after the fall of Ukraine. The Russians could put pressure on NATO from many directions while having control over Ukraine.

This is Vladimir Putin’s goal, his last hope. In my opinion— wrong. For the Americans should not give in. Losing the rivalry with Russia would mean a defeat in the whole game to maintain world primacy. Since the US would not be able to cope with the economic dwarf, which is the Russian Federation, the allies could start turning away from Washington. And to focus on partnership with China, fearing for its security (this especially applies to the Far East).

 The Belarusian factor

Coming back to the military issues and the war in Ukraine. The involvement of Ukrainian forces across the country’s entire border is also of crucial importance for the Russians. In addition, help from the Belarusian army would be useful and use forces from Transnistria.

Moreover, if Kyiv remained the main target of the war, I think the current retreat from the north and northeast direction is a tactical retreat on the part of the Russians. After which, there will be a reorganization, better preparation of an offensive plan for this episode, and then a renewed attack. The Russians will try to involve as many Ukrainian forces in the south and the Donbas as possible during this time to weaken the Kyiv direction. At the same time, political movements towards Belarus can be expected. It seems that Lukashenka has not proved to be a stable and loyal ally, as Belarusian troops did not support the Russian invasion. This kind of failing partner is unnecessary for Putin. Either Lukashenka will submit himself entirely to the will of the Kremlin, or he will be replaced. The latter option could also explain the complete withdrawal of the Russians in the north and northeast of Ukraine. After all, they did not have to make such a great retreat. However, they did. If Putin planned to put pressure on Minsk, then it would be better for the Russian troops fighting in Ukraine not to be dependent on communication and logistic lines in Belarus.

At the same time, the forces withdrawn from Ukraine have not been redeployed and are still located in Belarus. This may be a factor threatening the Ukrainians and placing additional pressure on Minsk.

 Ukraine has not won

So far, the course of the fighting has certainly inspired many people with optimism. However, it should be pointed out that the Ukrainians have a problem on the south-eastern front. And the Russians will not give up; Putin cannot afford to lose the war. If Moscow decides to invade, one should expect stubbornness (despite initial setbacks) and readiness to incur significant losses, if only to achieve its strategic goals. This approach ended disastrously for the Soviet Union in Afghanistan (where the war lasted ten years), but nothing has changed since then. Authoritarian states do this — victory is the only thing that matters, no matter the cost.

A new factor emerges in the current situation in Ukraine. The muddy season. An unsuccessful 1st phase of the conflict, problems with logistics, insufficient forces for the invasion, disregarding the opponent, and the need for reorganization. All this meant that we watched a kind of a war pause for several weeks. Nevertheless, in April, the partial assignment of some draftees began in Russia, so fresh soldiers may be sent to the front lines. It will not be a first-class soldier, but the sheer weight, numbers, and equipment resources can do their job.

Therefore, it can be assumed that the Ukrainians will face a much more difficult test than the one they passed in the first month of the full-scale war. It is just that the Russians may not make the same mistakes this time arounds. Furthermore, this may mean that the Ukrainians will not be able to cope without real help from third countries.

 The Western attitude — growing acceptance for resolute actions

Although the broadly-understood Western countries have become heavily involved in helping Ukraine, this support is indirect. The transfer of funds, weapons, and supplies to Ukrainians certainly helps and affects the number of Russian losses. There is no doubt that such activities by NATO will extend the period in which Ukraine will be able to defend itself. However, you should be aware that this country is much weaker than the Russian Federation.

The Western world has imposed additional sanctions to weaken the Russian Federation, but this is still not enough. The Kremlin authorities are reaping substantial financial benefits from selling oil and gas to Europe, even though the scale of exports has decreased. OPEC’s attitude is of great importance for the possibility of cutting off Russia from the profits from the sale of this black gold. However, Saudi Arabia — which plays the most prominent role in this organization — does not intend to increase its production so far. Therefore, the price of energy resources remains high, and the supply is insufficient to meet the high demand on the market.

Consequently, it can be argued that if the Russian Federation decides to fight until the final victory, then the defeat of the Ukrainians seems to be a matter of time. The state and its economy were devastated by the invader, and the army suffering from losses in equipment — with limited resources — will not be able to defend the country indefinitely. Meanwhile, the scale of aid received is a drop in the bucket in the ocean of needs.

It remains, then, to ask what is our (as the West’s) goal and priority? Is the provision of assistance — for the sake of having a clear conscience — or is it the real effect in the form of Ukraine maintaining its independence and the tasks assuring that the Russian Federation sustain such severe losses that it could not pose a threat to anyone for the next decades?

In the context of the interests of Poland, the Baltic States, Romania, Finland, and the United States, the latter option is more favorable and may even decide the fate of these countries in the long run. Turkey would also be very happy to eliminate the Russian threat in the Black Sea and the Transcaucasus region. In other words, for this group of states, the issue of neutralizing Russia should be paramount. Especially since the perfect situation to achieve this goal has emerged at this point.

Russia, fully committed to the war in Ukraine, cannot afford to open a front in other directions (especially against a stronger NATO). Therefore, the Kremlin authorities are now toothless, although Vladimir Putin tries to convince the world otherwise.

However, democratic states have a problem with taking actions that seem risky in the eyes of public opinion. Moreover, each decisive step requires formal and legal justification. In connection with the above, the attitude of the US and other countries to date has been characterized by a sense of reserve of any initiatives that could involve a greater risk (such as the transfer of Mig-29s or a possible armed peace mission in Ukraine).

Nevertheless, a lot has changed in recent days. The crimes committed by the Russians in Ukraine — as a result of both the initiative of the army itself and political decisions — mean that Western decision-makers no longer are bound by the ties due to the above. The crimes committed against the civilian population shocked world public opinion. Western societies stopped thinking in the context of interests, but consider emotional factors: a note of empathy for Ukrainians and disgust towards the aggressor’s acts begin to prevail on a scale showing an acceptable, upper limit to the aid provided.

At the same time, politicians also gained formal arguments. For if the Russians murder the civilian population in the occupied territories, it is evident that there are grounds for taking such actions that will limit the aggressor’s possibility of territorial expansion.

In other words, from the political and moral point of view, the possible introduction of a peacekeeping mission or creating a cordon sanitaire in Ukraine would have the greatest possible basis. The troops of the allied countries — at the request of the Ukrainians — could enter the territory of Ukraine and secure the territories not yet occupied by the Russians. Especially those located west of the Dnieper River. With each subsequent week of the war, in which the Russians are committing more and more crimes against the civilian population (let us recall the recent rocket attack on the railway station in Kramatorsk), there will be more victims. The public awareness of the need to take some preventive measures in the West will grow. Moreover, with it, the acceptance and even pressure on Western politicians to finally end this bloodbath taking place in Europe. This will also affect the acceptance of higher costs (e.g., for oil) at the expense of giving up on Russian raw materials.

In all this, historical parallels to Hitler’s times and appeasement politics will also play an increasingly important role. Europeans who remember the experiences of world wars begin to remember what a lack of firmness towards dictators who strive for war can lead to.

The processes of maturing politicians and society to make certain decisions proceed in different dynamics. As for the war in Ukraine, it is to be hoped that the awareness of the need to act will prompt us to take firm decisions before Moscow deals with Kyiv. In this context, the protracted war and the extraordinary persistence and determination of the Ukrainians are undoubtedly important. However, it should be remembered that each subsequent week of delay brings new victims, and Ukraine is not prepared to wage war on such a large scale for years. It would be disastrous for the Ukrainians if the Russians led to a tactical truce — resulting in the West not increasing sanctions against Russia — and then they could prepare the next attack much better against the Ukrainian state, weakened and exhausted after the war.

In my opinion, the actions of the Russian Federation — both those undertaken by troops in Ukraine and diplomatic and political movements in the international arena — may break the intellectual stalemate among Western decision-makers, which does not allow for a proper response to aggression. Putin’s relentless attitude and a complete lack of reflection and haughtiness will have to result in a cutting off of Russian energy resources’ supplies completely. At the same time, the option of challenging Russia in Ukraine will become for some NATO countries not only a slogan thrown into space but perhaps the only option that gives hope for stopping Moscow in its military march.

 The collapse of Russia — and possible consequences

Vladimir Putin is leading the Russians decisively and confidently towards geopolitical and economic defeat. The outcome of the war in Ukraine will only decide whether the Russian Federation will have the opportunity to drag more countries down with it. Consequently, it is up to the West — and especially the United States — to decide whether Russia’s aggression in Ukraine will be the last one.

The initiated processes — negative for Russia — seem to lead to a somewhat optimistic conclusion. Ukrainian resistance gives the West an opportunity and time to reflect, prepare and take appropriate action. In turn, the Russian way of waging war only increases the determination of the Ukrainians, and at the same time, it will induce the West to move more and more decisively. Even Putin’s final victory in Ukraine may not be enough to achieve the goals he had set.

In the medium to long term, the Russian Federation has no chance of returning to the table on its own terms. That is, to obtain capital, technology, and consent to create a separate block in the international balance of power. As a result, the accumulated internal problems — the accelerated negative processes — will implode sooner or later, which may end in the collapse of Russia itself (by the separation out of some regions where separatist sentiment has only been dormant) and even a civil war for power over the entire country.

Then there will be considerable changes in the regions that used to be the Russian buffer or zone of influence. We are talking about Eastern Europe and Transcaucasia, the Middle East, and Central Asia. It is also worth remembering that Russia acts as a stabilizing force (see protection against the Kurds, Assad, and Armenia). For Russia to fall out of its role as a major player in the international arena can cause much chaos.

The new situation will find India, which will only have to rely on the United States (which it has avoided like fire for years). The Chinese and Americans will resume the struggle for influence in Central Asia, where significant geopolitical changes could occur. In the last few days, there has been a shift of power from Pakistan, where Imran Khan lost his seat as prime minister due to a vote of no confidence. Khan pursued a pro-Chinese foreign policy. As a result, he also took a positive stance toward the Kremlin (due to the Moscow-Beijing tactical partnership). However, he lost the support of the army that exercises de facto power in Pakistan. This could have happened due to American actions, thanks to which the Pakistani military decided to reopen cooperation with the USA. Importantly, Imran Khan was a fairly secular, reasonable prime minister with enormous public support who managed in a rather crazy place full of radicals (I recommend the earlier but very up-to-date analysis from 2018: “Pakistan. The enemy of geopolitical hell?”) [Pol.: “Pakistan. Wroga geopolitycznego piekła?”] The country has much more significant problems with maintaining order in an ethnically heterogeneous country and extinguishing any animosities, which may also significantly impact world security because Pakistan is a country with nuclear weapons. The situation in the region is additionally complicated by the fact that regained the Taliban, who, after stabilizing their power, will have ambitions to destabilize and consume the entire region. Importantly, it could not be omitted.

Lonely Armenians would find themselves in a complicated situation in Transcaucasia. In turn, the Georgians could win something for themselves in the ensuing confusion (Abkhazia, South Ossetia), especially if a Chechen or Dagestan rebellion broke out in Russia. With Russia’s passivity, the Turks could realize their dream and create a Turkish-Azerbaijani axis reaching the Caspian Sea, where are the riches in the form of natural gas. It would also give Ankara access to the culturally close Central Asian states. However, the multitude of fronts and involvement in many other directions would instead prevent Erdogan from playing a decisive role in that region.

In the event of the neutralization of Russia, Poland could gain the most. We are facing a historic opportunity that was created without our participation. And regardless of our actions, the current of events pushes us in a direction favorable for Poland. Warsaw has become a partner, ally, and mainstay for Kyiv. For the first time since the 17th century, Ukrainians see Russians as their deadly enemy, Germans as an untrustworthy partner, and Poles as their greatest allies. On the social level, Poles have already won. If Ukraine survives, it will be possible to build a Polish-Ukrainian political partnership and bring Ukraine into the EU and NATO — in which we should take an active and even play a key part. The Warsaw-Kyiv bloc would be a heavy-hitter, tough enough to begin thinking about gathering other countries in the region around itself. The Balts or Romania could provide a political base that would allow them to co-decide about the European Union. The Intermarium block — which Józef Piłsudski dreamed of — would have a chance to come into being and play an important, equal role in shaping Europe. This, of course, is the most optimistic variant — and it is quite possible.

There may also be huge threats. The internal chaos in Russia can be extremely dangerous for Moscow itself and its surrounding states (especially in the context of nuclear weapons). At the same time, it is worth noting that if the Chinese failed to build their independence and prosperity, they could fall into enormous economic turbulence, which would radicalize their political class’s actions. Internal social pressure — triggered by crises ‑ could push the Chinese elites to do what Vladimir Putin has now chosen. In both cases, we are dealing with a similar cultural mentality, an autocratic system, and a smoldering chauvinism that can be easily fueled. Thus, the Beijing authorities may also seek solutions in military expansion.

However, speculation should be regarded only as one among many different contingencies so far into the future. This allows us to hope that the world will cope with the upcoming challenges better than in this rather pessimistic scenario.

 Challenges for Poland

In such an outlined reality, Warsaw’s authorities will have to make efforts to take full advantage of the current favorable situation. From the perspective of our national interest, Ukraine cannot lose and fall into the Russian sphere of influence. If this happened, the Polish state would be under pressure from the Russians and the threat of war in the coming years. We would have to concentrate on defensive thinking, which would limit our political possibilities. Moreover, Poland would become even more dependent on its allies in terms of security. This, in turn, would make us dependent on the political level, so Warsaw would have much more limited room for maneuver when it comes to pursuing its own interests. Ones that the allies would not have to care about.

The economic aspects should also not be overlooked. The takeover of power by Moscow over Ukraine would mean the migration of another million refugees to Poland. We would bear the main burden of supporting the arrivals, and the possible financial aid from the EU for this purpose would be another tool for putting pressure on Warsaw authorities. In addition, it is worth remembering that while our labor market may absorb, for example, a million or two additional workers — which would be beneficial for the economy — with 4-5 million refugees, the Polish state could be overburdened. Also on the administrative and financial level (allowances) or in such trivial matters as accommodation and meals. Similar consequences may result not only from the defeat of Ukraine but also from a prolonged, long-lasting conflict.

If the Russians suffered a defeat in Ukraine and Kyiv remained outside the sphere of Moscow’s influence, several options would open up for Poland. First of all, it should be ensured that the authorities from Kyiv perceive Poland as its most critical partner. Geography itself can help, as the most convenient communication routes from Ukraine to Western Europe run through Poland. Warsaw would have to become the most important supporter of Ukraine joining the EU and NATO. This is because Germany cannot be allowed to play the role of a country inviting Kyiv to the community and the North Atlantic Pact.

Polish-Ukrainian economic negotiations, which should take place even before Ukraine joins the EU, would be critical. Then Polish business and interests could spill over the Dnieper River much earlier than Western economic giants. This would give some advantages.

Poland has sufficient capital, strengths, and arguments to be an important pillar in Ukraine’s reconstruction program.

It would be essential — in any scenario — to build a sufficiently large and modern Armed Forces. The Polish land forces with only four divisions would be too modest if Ukraine lost. On the other hand, the defeat of the Russian Federation would have to involve giving up its aggressive attitude towards NATO, but it could destabilize the huge state internally. In such conditions, the Polish Army could be a political tool providing security guarantees to weaker or war-weakened countries in the region (Lithuania, Latvia, Estonia, Belarus, Ukraine). This, in turn, leads to the conclusion that the Polish Armed Forces should be prepared for various scenarios. Maintaining an appropriate balance and maintaining and even increasing the offensive potential could be of key importance to the interests of the Polish state.

It is imperative to simplify the tax system and introduce a business-friendly state program! The recent changes in this area have devastated the country’s image and the government, even though the assumptions of the so-called “Polish Deal” [ Pol.: “Polski Ład”]  were correct in principle.

Despite the increasingly complex requirements and procedures for running a business, our economy is developing quite well. And now, we can also use the potential of Ukrainians coming to Poland. Of course, this should not be done in such a way as to differentiate the legal situation of Poles and Ukrainians. There is need for systemic reforms.

 The challenges for Europe

The issue of the challenges facing the European Union and Europe as such is raised by many experts and politicians. These include, among others:

– management of refugees from Ukraine,

– limiting or even ceasing to import energy resources from Russia,

– cutting Russia out of European supply chains,

– ensuring the security of the continent by increasing the military potential of NATO and EU countries,

– filling the gap in the supply of agricultural-food products from Russia and Ukraine (anticipated problems with harvesting in Ukraine due to the protracted war).

 

All of these are highly pressing topics that require immediate action. However, Europe may face even more dangerous processes in the medium to long term.

We would like to remind you that Ukraine is not only Europe’s breadbasket but also the leading exporter of agricultural products to North Africa and the Middle East. Consequently, if these regions are affected by food shortages, resulting in a massive increase in food prices, many countries may encounter a repeat of the so-called “Arab Spring.” Social revolts, coups, and, consequently, even civil wars. Chaos in the Middle East and North Africa could have a huge impact on Europe’s security — on many levels. Through the Suez Canal, energy resources from the Persian Gulf reach Europe (which may soon become necessary due to the suspension of supplies from Russia). Through the Suez Canal, products and semi-finished products from China go to Europe. Finally, many migrants from Africa and Asia travel to the Old Continent across the Mediterranean Sea.

At the moment, the food market is still partially based on last season’s stocks. However, these stocks will run out quite soon. The lack of a harvest in Ukraine (which is one of the largest producers of wheat and oilseeds) will be a problem for that country and a large part of the world.

At the same time, “food” can be used politically. It is possible to imagine a situation where, for example, Turkey would block sea supplies of Russian agricultural products to Syria. Especially since Recep Erdogan is not a friend of Bashar Assad and would gladly participate in the partitions of the Syrian state or at least place a government in Damascus that would favor Turkey. The situation could be similar in Libya, where the civil war continues. Already, Lebanon is on the brink of collapse, where the explosion in the Beirut port deprived the country of its warehouses receiving goods from abroad. Egypt, which has become one of the largest food importers in the region, will face a difficult situation.

In other words, the Middle Eastern and North African powder kegs were reconnected under the smoldering fuse. Meanwhile, the United States may not be as much involved in the region as before, especially since the rivalry between Russia and China has gained new dynamics. In this context, regional players, i.e., Turkey, Israel, Iran, and Saudi Arabia, will be responsible for the events in the Middle East. The clash of the interests of these countries may introduce chaos in Syria and Iraq comparable to that in 2014 when we were dealing with a rapid expansion of ISIS and the risk of a possible collapse of the authorities of Damascus and Baghdad.

Potential chaos in the Middle East will have a huge impact on Europe. In this context, the countries from the south of the EU (France, Spain, Italy or Greece) should create a bloc responsible for stabilizing the above-described regions (and, in a way, step into the shoes of the US). The problem is that all these countries are consumed by enormous internal problems … Which is not optimistic.

 Summary

With all this in mind, one thing seems certain. The defeat of Ukraine would be unfavorable for NATO, the EU, and individual countries (such as the USA or Poland). If Moscow subjugated Kyiv, the Kremlin authorities could exert military pressure on the West and increase their influence in North Africa and the Middle East — because Russia would control a large part of the agricultural-food sector (the combined potential of Russia and Ukraine in this range). The Turks, who are strongly involved in the affairs of the Levant and Libya, also understand this.

Moreover, a scenario in which the war in Ukraine would be prolonged would be very unfavorable for the countries of the Old Continent. The chaos in the Middle East and North Africa would economically destabilize the rich countries of the European Union (import of raw materials and goods), politically, and humanely (refugees). Of course, each subsequent day of the war would also hit the vitality of the Russian Federation. It would negatively affect the countries bordering Ukraine.

For all these reasons, an immediate victory would be the most favorable scenario for Russia. For the West as well — but a victory in this case for Ukraine.

All this can lead to the conclusion that the West will be bolder and more openly supporting the still struggling Ukrainians. Especially in the context that even the occupation of Ukraine by the Russians may not stabilize the situation. The Ukrainians could probably continue the sabotage-partisan struggle.

In other words, Russia’s actions do not give the West a choice. In my opinion, one should expect ever bolder responses aimed at tasking the Russian side with a painful military and economic defeat. Which is what we should wish for.

However, it should be remembered that a possible positive end to the war in Ukraine will not mean peace in the long run. The Russian Federation will be prone to nervous, and perhaps even desperate, actions in the coming years — even before an internal collapse occurs. This — in the event of no success in Ukraine — would be closer because a failed war would undermine Vladimir Putin’s leadership, which seems to be one of the most critical factors in terms of the stability of the Russian Federation.

Krzysztof Wojczal

 

Sources:

https://businessinsider.com.pl/gospodarka/inflacja-w-rosji-poszybowala-przez-sankcje-rzad-podal-nowe-dane/lj3dx45

https://www.rp.pl/gospodarka/art19090471-rosja-z-najwiekszymi-rezerwami-zlota-i-walut-w-historii

https://wid.world/country/russian-federation/

https://www.themoscowtimes.com/2019/04/12/richest-3-russians-hold-90-of-countrys-financial-assets-study-a65213   [Accessed on July 22, 2020]

 

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