Monday Open Thread [3.3.14]

Over the weekend, I have seen it said that Putin’s invasion of the Crimea in the Ukraine makes him and Russia appear strong, and the US weak by comparison. The blithering idiot pundits on the Sunday shows agreed, and David Gregory of Meet the Press said this was the premiere test of President Obama’s foreign policy. Really? I see it completely differently, as do the others I link to below. This is a desperate and panicked move by Putin, one made from weakness not strength. It will not make Russia stronger. Indeed, if the crisis is not resolved shortly, it will destroy the Russian economy. Russia is not the Soviet Union of old, a strong empire equal to or greater than the United States and its Western allies. No, it is a second world country with nuclear weapons that is headed for demographic and political collapse. This is a chest thumping move designed to hide that fact. And it is going to backfire.

This is the Russian ruble versus the U.S. Dollar this year.

Russia’s main stock market index fell nearly 13% as the country’s G8 partners condemned its military buildup in Crimea, demanding that it withdraw.

The ruble has declined by more than 10% this year as the Russian economy experiences a significant slowdown and weak future growth prospects.
Russia’s central bank reacted to the volatility by hiking interest rates to 7% from 5.5%, saying it aimed to maintain financial stability and inflation levels.

David Satter:

Russia and Ukraine under [deposed Ukrainian President] Yanukovych shared a single form of government – rule by a criminal oligarchy. This is why the anti-criminal revolution that overthrew Ukrainian president Viktor Yanukovych is a precedent that is perfectly applicable to Putin’s Russia. It is also the reason why, from the Russian regime’s point of view, the Ukrainian revolution must be stopped at all costs. …

In 2011 and 2012, Moscow witnessed the biggest protests since the fall of the Soviet Union over the falsification of elections and Putin’s decision to run for a third term as president. The protests eventually fizzled but, given the worsening economic situation, they could be reignited.

Kevin Drum believes Putin is acting out of desperation:

The reason Putin has sent troops into Crimea is because everything he’s done over the past year has blown up in his face. This was a last-ditch effort to avoid a fool’s mate, not some deeply-calculated bit of geopolitical stategery.

Make no mistake. All the sanctions and NATO meetings and condemnations from foreign offices in the West won’t have much material effect on Putin’s immediate conduct. But that doesn’t mean he doesn’t care about this stuff: he does, and he’s been bullying and blustering for a long time in a frantic effort to avoid it. Now, however, having failed utterly thanks to ham-handed tactics on his part, he’s finally decided on one last desperation move. Not because the West is helpless to retaliate, but because he’s simply decided he’s willing to bear the cost. It’s a sign of weakness, not a show of strength.

Mark Adomanis predicts that the economic impact on Russia will be devastating:

The Moscow stock market is going to get absolutely clobbered when it opens tomorrow, and many foreign investors are going to bolt for the exits as quickly as they can. Depending on the severity of the situation in Ukraine, the Russian financial system could come screeching to a halt. It’s a given that many of these decisions impacting Russia’s economy will be made in haste and without a sober calculation of costs and befits, but that’s the way the world works: investors often overreact to political events and they will certainly overreact to a military invasion of a neighboring country.

Indeed, as of this writing, the Russian stock market has crashed.

The MICEX index, the country’s benchmark index, fell 12%.

The market has already been quite bearish on Russian assets this year, particularly the ruble. But the prospect of sanctions and an expensive conflict are leading to swift punishment in the market.

For perspective, given our stock market’s current 16,000 point level, a 12% crash equates to the DOW losing 1,920 points. It never fell that much in one day, even during the Great Crash of 2008. In terms of percentage, in our history, our market has only collapsed more than 12% once. 1933 during the Great Depression.

Given this, it is likely that Russia will not be able to afford a new Cold War. Zack Beauchamp:

Russia’s turn to blunt military force in Ukraine is emblematic of the basic flaws behind its push to regain its global and regional standing. The reality is that Russia is a middling power with nuclear weapons; it can frustrate America in Syria, but it can’t make progress towards bending the world to its will using the sort of strategies it has tried to date.

Military power alone can’t do the trick. In a world of free trade and highly globalized markets, territorial conquest simply isn’t a good way to make your country stronger. In fact, it’s harmful. “War has lost its evident appeal,” political scientist John Mueller correctly notes, “because substantial agreement has risen around the twin propositions that that prosperity and economic growth should be central national goals and that war is a particularly counterproductive device for achieving these goals.” War won’t bring Ukraine into Russia’s fold, let alone a broader swath of Eastern Europe and Central Asia.

Josh Marshall:

Putin’s main aim in Ukraine has been to secure its entry to his Euroasian Union, a counter agglomeration to the European Union, based on autocratic post-Soviet regimes stretching from Europe into Asia. Putin has made it clear that the value of the whole enterprise hinges on Ukraine being in, not out. After coming close to securing a Ukraine permanently aligned with Russia, Russia settles for slice Russified Ukraine at the expense of a permanently hostile post-partition Ukraine basically forever. Yes, Putin’s mentality (and let’s be fair, Russia’s) is that it is better to be feared than loved. But the Sochi games are a good example of his willingness to spend vast resources to be, if not loved, than admired as a great power peer state on the global stage. Russian businesses that operate in Europe would also suffer across the board.

Andrew Sullivan:

But this much seems clear to me: Putin has panicked. To initiate a full-scale war with Ukraine, after effectively losing it because of the over-reach and corruption of Yanukovych, opens up scenario after scenario that no prudent Russian statesman would want to even consider, let alone embrace. That doesn’t mean he won’t continue to over-reach or that we should be irresolute in confronting this aggression; just that we should be clear that the consequences of further escalation will be deeply damaging for his regime – and certainly far graver for him than for the West. …

Europe will feel – does feel – far more threatened by an attack on Ukraine than on Georgia. And Putin has frittered away any benefit of the doubt he once might have had. We have many cards to play. Putin has one: military force. But if he uses it, he will be in a full-scale war within his own region of influence. Whatever else that is, it is not a demonstration of strength. It’s a sign of profound weakness.