PUTIN'S STATEMENT AT VALDAI: A COMMENT

"Russian president Vladimir Putin on Friday accused the US of undermining the post-Cold War world order, warning that without efforts to establish a new system of global governance the world could collapse into anarchy and chaos. In one of his most anti-US speeches in 15 years as Russia’s most powerful politician, Mr Putin insisted allegations that its annexation of Crimea showed that it was trying to rebuild the Soviet empire were “groundless”. Russia had no intention of encroaching on the sovereignty of its neighbours, he insisted. Instead, the Russian leader blamed the US for triggering both Crimea’s breakaway from Ukraine and thousands of deaths in the war in the east of the country, by backing what Mr Putin called an armed coup against former president Viktor Yanukovich in February. “We didn’t start this,” Mr Putin said. Citing a string of US-led military interventions from Kosovo to Libya, he insisted the US had declared itself victor when the Cold War ended and “decided to … reshape the world to suit their own needs and interests”. “This is the way the nouveaux riches behave when they suddenly end up with a great fortune – in this case, in the shape of world leadership and domination. Instead of managing their wealth wisely … I think they have committed many follies,” he told a conference of foreign academics and journalists at an Olympic ski venue near Sochi. The speech was one of Mr Putin’s most important foreign policy statements since he surprised the west in Munich in 2007 by accusing the US of “overstepping its boundaries in every way” and creating new dividing lines in Europe. Some commentators speculated that it reflected Moscow’s fury after US President Barack Obama recently ranked Russia alongside the Islamic State of Iraq and the Levant, known as Isis, and the Ebola virus among the top three global threats. But his tone surprised even supporters."

Neil Buckley, "Putin unleashes fury at US ‘follies’". The Financial Times. 24 October 2014, in www.ft.com.

"The United States, in turn, is looking to step up its own game. Policymakers are considering giving global companies a choice: stop providing long-term financing and energy assistance to major Russian companies or be kicked out of the U.S. financial system. Such measures resemble the sanctions the United States placed on Iran a couple of years ago. But Iran was a different problem. And treating Russia the same way would be a mistake. Sanctions can be an effective tool for forcing engagement and negotiation. But the pace and implementation must be tailored to the target. In the case of Iran, the United States was able to tighten the screws by pressuring foreign firms to stop dealing with the country. That move created some angry blowback, but it generally worked. And partially as a result, Tehran is at the negotiating table. When it comes to Russia, though, the political pushback that would come from blacklisting dealings with the strategic Russian energy and banking sectors would be much more severe because Russia is a more important market. Further, more companies would likely be willing to forego access to U.S. markets in order to continue working with the Russians. And that would undermine the sanctions’ effectiveness. More generally, policymakers in the United States should be wary of continually relying on sanctions that penalize foreign firms by preventing their access to U.S. markets. Ultimately, such a strategy could backfire. At some point, foreign companies may decide that doing business in U.S. markets -- and being subject to U.S. sanctions policies -- is simply not worth it. That would hurt the U.S. economy and diminish the United States’ ability to use economic levers to advance its foreign policy".

Eric Lorber and Elizabeth Rosenberg, "Don't Mistake Russia for Iran: Why the Same Sanctions Strategy Won't Work". Foreign Affairs. 20 October 2014 in www.foreignaffairs.com.

The recent statement by Russian President Putin puts the lie to the concept trotted out by some (such as Eric Lorber and Elizabeth Rosenberg above) that the sanctions regime instituted by the Western powers on Russia are or will prove to be 'ineffective'. It being very difficult to imagine that Grazhdanin Putin fury, fully on display to-day would not have occurred but for the fact that sanctions are indeed taking a bite on the Russian economy. Indeed, it appears that given the recent decline in oil prices of upwards of twenty-six percent, that already Western sanctions are having a measurable negative effect on the Russian economy 1. Given these circumstances it boggles the mind that already defeatist sentiments are endeavor to end or diminish the sanctions regime on Russia. To my mind, the desiderata of sanctions on Russia are two fold: i) create enough economic 'pain' that Russia shall in due course withdraw from Ukraine and eventually Crimea; ii) ideally, following from 'i', the eventual ouster of Putin by another 'Orange Revolution' style coup. Ideally, some type of political version of a 'surgical strike' akin to what happened in Ukraine earlier this year, in Georgia in 2003 and Serbia in 2000. Perhaps 'ii' is an overly optimistic goal. Certainly at the moment, it is not in the least likely. However, given several years of an ongoing recession in Russia, with oil prices stagnate and with capital flight rampant, it is not in the least unlikely, that akin to what happened in late Sovietskaya Vlast, in the 1980's, that an economic crisis will in turn create a 'regime crisis' a crisis in the legitimacy of the regime itself 2. In such an event, far from appearing the overwhelming powerful state apparatus that it presents to the outside world as at present, the question will become whether the Russian Federation will completely collapse and break-off into various pieces.

1. On this, see: "Oil Prices Continue to Define Geopolitics". Stratfor: Global Intelligence. 14 October 2014, in www.stratfor.com. See also: Delphine Strauss, "Russia’s rouble falls to new dollar lows". The Financial Times. 23 September 2014, in www.ft.com.

2. For this analysis of what occurred in late Sovietskaya Vlast, see, Stephen Kotkin. Armageddon Averted: The Soviet Collapse, 1970-2000. (2000).