Bargaining with the Devil

The roaring economic resurgence expected to follow on the heels of the COVID-19 pandemic has been replaced with financial anxiety, primarily driven by unsustainably high inflation. While the aftershocks of the pandemic, from disrupted supply chains to labour shortages, were already feeding inflationary pressures, President Vladimir V. Putin's decision to launch an aggressive invasion of Ukraine in February precipitated the current miserable economic outlook. More precisely, the West's understandable decision to impose crippling sanctions and a sharp reduction in orders of Russian oil and gas has put us firmly in a dangerous inflationary spiral, the worst since the 1970s. After over two years of punishing socio-economic turmoil, the last thing anyone wanted was stagnant growth and alarmingly appreciating poverty levels. And that's just in the wealthier nations of the world. In the developing world, the United Nations has estimated that tens of millions are on the precipice of famine. 

Brent and crude oil are up over 50% year-to-year; natural gas is over 110%; gasoline is over 70%; heating oil is over 107%; coal over 210%. These figures confirm the obvious - at this rate, we are all in for a long, dark winter. The perverse consequence is that Russia's receipts from fossil fuel exports have more than doubled since it invaded Ukraine. China has just become Russia's number one importer of crude oil. For every unwilling buyer, there are several more ready and waiting. The average Russian citizen may be experiencing the re-Sovietisation of their society, with the mass exodus of American and European corporate giants, from McDonald's to American Express, but President Putin does not care. That is fodder for his propaganda efforts. More important to him are his strategic reserves of cash. On that front, Russia is still in a robust position. Putin always anticipated punishing economic warfare from the West and has been preparing for years. 

In all likelihood, the war in Ukraine will - tragically - last many more months and probably years. Putin is in it for the long run. He is prepared for the waiting game. Barring another Russian Revolution or his unexpected death or assassination, there will be no relenting. Unquestionably, Putin's gamble is that the Western alliance will eventually splinter. How much more economic pain and strife will our fellow citizens tolerate? How many more will take waiting at the local food bank every week? What happens when inflation is comfortably in double-digit figures? How long can our governments send regular aid in the billions to Ukraine when our economies enter a sharp recession? Most of us rightly feel for the plight of our brothers and sisters in Ukraine, but people tend to prioritise themselves when they have to choose between heating their house and feeding their children. 

The choices we face are complex, and none offer an easy way out. But between hard decisions, one is far and away the most disastrous and morally bankrupt. That is, reversing course, giving up on Ukraine, and retreating inwards. Such a u-turn will not appease Mr Putin. On the contrary, it will aggrandise him to continue his military misadventures in other countries. There are other nations he believes are the rightful territory of Russia, particularly the Eastern bloc of the European Continent. Furthermore, the fanciful and capricious claim of "Nazis" repressing Russian-speaking peoples in other nations can always spring from the mind of a man who sees himself as a modern-day Czar.

In the same vein, any negotiated settlement between Ukraine and Russia firstly carries the absolute risk that Russia will not honour it and, most importantly, will inexorably lead to Ukraine relinquishing part of its sovereign territory to the aggressor. One would have to suspend reality to accept any possibility that international recognition of, say, the "Donetsk People's Republic" and the "Luhansk People's Republic" would satisfy President Putin and cause him to abandon any future military exploits. Russia invaded Georgia in 2008, Ukraine in 2014 and again in 2022. As long as the ex-KGB man is at the helm and does not feel existentially threatened, he will continue his grand dream of undoing what he sees as the greatest tragedy of the 20th Century: the dissolution of the Union of Soviet Socialist Republics. 

It is no exaggeration then to conclude that the fate of Ukraine will determine the security and stability of the world order for a very long time. Whether anything less than the direct military confrontation with the Russian Federation will preserve the security of Europe appears increasingly doubtful, albeit utterly horrifying.