Russia’s cold calculation on Crimea
Mar 05 2014
Will any of these threats make the slightest difference? However unpalatable it may seem, would dangling carrots induce a Russian withdrawal? Interestingly, western leaders have avoided making any military threats to Russia. This may be just as well. Russia may not have the armed forces the Soviet Union controlled during the Cold War, still with a quarter of a million combat troops, the Russian army is a force to be reckoned with, at least in its own cabbage patch. War weariness among the American public ties their leaders’ hands. Every neighbour of Russia knows this and is unlikely to offer passage to US troops, fearing the wrath of Moscow once the Americans have gone home.
So the west is left with economic sanctions and threatening diplomatic isolation. Freezing Russian assets held abroad may affect those Russian oligarchs not fast enough to get their wealth into safe havens. Plus these freezes are just that, they aren’t confiscations — and in time, the freeze melts away. Lastly, the governments of those financial centres — such as the city of London — that have become home to lots of Russian wealth won’t be keen on upsetting investors.
If asset freezes are unlikely to work, what about trade sanctions? According to the World Trade Organisation, nearly 80 per cent of Russian exports are energy and related products. Since oil and gas are homogenous goods, if the west won’t buy them, then Russia can find other customers. For sure, there would be some disruption, but with Russia’s trade surplus running at around $15 billion a month, there is a sizeable cushion for Moscow to fall back on. Worse, trade sanctions tend to be a double-edged sword, hurting the boycotter as well as the boycotted. Just ask those eastern European states that rely heavily on Russian gas imports.
So what to make of this? For sure, since it seems that the Russians have broken the United Nations charter, some might argue for economic sanctions as a punishment. I can understand that reflex, but surely it is wise to consider whether the sanctions will alter the deviant party’s behaviour. Otherwise, to fail in the defence of accepted global principles brings them into further disrepute.
It’s well known in the analysis of strategic interaction that a threat of sanctions works if two conditions are met. First, once the sanctions are imposed, the threatened party must gain less from continuing its deviant behaviour than with coming into compliance. Secondly, that the sanctions are credible in the sense that the threatening party isn’t prepared to suffer the pain inflicted on itself by the sanctions for if they aren’t, when push comes to shove, they might think twice about implementing the sanctions. Unfortunately, neither condition is satisfied in the present case and the Russians know this.
For sanctions to tip the balance in favour of Russia’s withdraw and given that the harm of economic sanctions on Russia are likely to be felt only in the near term, there would have to be a growing cost of Russia’s occupation that ultimately exceeded whatever benefits Moscow sees in retaining control of Crimea. Those costs might be raised if a guerrilla or civil war breaks out in Crimea, much as it did in Afghanistan. Such insurgencies takes time to inflict harm so Russian withdrawal on these grounds is not a near-term prospect. Ironically, the installation of a Russian puppet government in Crimea might make the costs of a Russian military presence there unnecessary, prompting a withdrawal that is not exactly on western terms.
As to the credibility of any economic sanctions against Moscow, unless the energy security of eastern Europe is secured somehow, there will be great reluctance by the European Union — Russia’s largest trading partner — to impose sanctions for any length of time. Even if the EU were to restrict non-energy imports from Russia, Moscow could retaliate by cutting off gas exports. As for US trade sanctions, the American market does not even figure in the top five export destinations for Russia’s exports. In a nutshell, the product composition and geographic spread of Russian exports don’t make them an effective means for influencing Russian policymakers.
If sticks won’t work, what of carrots? In addition to the obvious PR problem of being seen to reward Russia for breaking international rules, it is not clear what inducements would make Russia withdraw from Ukraine. Plus, to the extent that any payoff involved the future assent of the US Congress, then the Russians might think that any promised American carrots won’t be delivered upon. The same could be said of the European parliament. The issue of credibility strikes again. It’s hard to think of carrots for the Russians that meet three conditions: they don’t involve the assent of the key western legislatures, that are large enough to get Russia’s attention, and that can be withdrawn should the Russians renege.
International rules invariably protect the weak against the strong. For those rules to have teeth, whenever the small are threatened effectively, some of the strong have to come to their defence. Evidently, Russia has concluded that the west has little economic leverage and next to no taste for military action. This cold calculating logic will not be lost on any regional bully seeking to expand their sphere of influence.
(The writer is the Far East correspondent of Swiss daily Neue Zurcher Zeitung)