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30 May 2014

Putin Blinked


MAY 27, 2014 


There was a moment at the height of the Cuban missile crisis in October 1962 when Soviet ships approached to within just a few miles of a U.S. naval blockade and then, at the last minute, turned back — prompting then-Secretary of State Dean Rusk to utter one of the most famous lines from the Cold War: “We’re eyeball to eyeball, and I think the other fellow just blinked.”

The crisis in Ukraine never threatened a Cold War-like nuclear Armageddon, but it may be the first case of post-post-Cold War brinkmanship, pitting the 21st century versus the 19th. It pits a Chinese/Russian worldview that says we can take advantage of 21st-century globalization whenever we want to enrich ourselves, and we can behave like 19th-century powers whenever we want to take a bite out of a neighbor — versus a view that says, no, sorry, the world of the 21st century is not just interconnected but interdependent and either you play by those rules or you pay a huge price.

In the end, it was Putinism versus Obamaism, and I’d like to be the first on my block to declare that the “other fellow” — Putin — “just blinked.”

In fact, I’d like to say more: Putin got pretty much everything wrong in Ukraine. He thought the world was still shaped by “spheres of influence” dictated from the top down, when Ukraine was all about the emergence of “people of influence” — The Square People, organized from the bottom up and eager to join their own sphere: the world of liberty and free markets represented by the European Union.

Putin underestimated Ukrainian patriotism; even many Russian speakers in eastern Ukraine did not like pro-Putin thugs trying to force them to join Russia. “Ukrainians have said in opinion polls that they want open borders and visa-free access to Russia,” noted the pollster Craig Charney. “But they also said in those polls — and confirmed with their majority vote for a pro-European candidate in Sunday’s election — that while they think Russia is a nice place to visit, they wouldn’t want to live there.”

And, most of all, Putin underestimated the impact of Western economic sanctions. The world turned out to be more interdependent, and Russia more exposed to that interdependence, than Putin thought.

So he blinked. The first flutter was pulling back his troops from Ukraine’s border and letting the election proceed. Interestingly, he chose to blink this out most directly at last week’s St. Petersburg International Economic Forum, Russia’s annual conference to attract global investors. “We want peace and calm in Ukraine,” Mr. Putin told the business executives. “We are interested that on our western borders we have peace and calm in Ukraine. ... We will work with the newly elected structure.”

After Putin spoke, the ruble rose 1 percent against the dollar, demonstrating just how much global markets will continue to reward his conciliation and punish his aggression. It has not been pretty. Putin has had to spend billions propping up the ruble and making up for lost foreign investment. Reuters reported that Russia’s First Deputy Prime Minister Igor Shuvalov told some attendees in St. Petersburg that the sanctions are “causing serious consequences for our economy,” which could soon be in recession.

And, because Putin’s aggression in Crimea has spurred Europe to reduce its dependence on Russian gas, Putin rushed to Beijing to conclude a natural gas supply deal with China. The price China extracted is secret and experts “suspect Putin dropped the price of gas significantly for China in a desperate maneuver to ensure a steady cash flow for Gazprom in the face of sinking revenue and Western sanctions,” The Washington Post reported. “ ‘There’s something fishy in the contract,’ ” said Mikhail Krutikhin, an energy analyst at RusEnergy, suggesting that Russia got a bad bargain. Putin blinked.

Let’s add it up: Putin’s seizure of Crimea has weakened the Russian economy, led to China getting a bargain gas deal, revived NATO, spurred Europe to start ending its addiction to Russian gas and begun a debate across Europe about increasing defense spending. Nice work, Vladimir. That’s why I say the country Putin threatens most today is Russia.

The Russian people will have to sort that out. I wish them well. I don’t want Russia to become a failed state. But I want to see Ukraine get where its majority wants to go — toward closer ties with the E.U., but without a break in ties to Russia. That will require not only a new Ukrainian president, but a new Parliament, a new constitution and an engaged network of civil society groups able to hold Kiev’s all-too-often corrupt leaders to the rule of law and to the standards of governance being demanded by both the E.U. and the I.M.F., in return for aid.

With Ukraine’s economy closely tied to Russia’s — Kiev owes Russia $3.5 billion in gas bills — Putin still has enormous power to squeeze Ukraine. The goal of the West should not be to prevent Putin from having any influence in Ukraine. Given all the links, that is not possible or healthy. It is to keep Putin backed off and blinking enough so that Ukraine can be Russia’s neighbor — charting its own balance between the E.U. and Moscow — but not Russia’s vassal.

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