Updated: Jun 25
In upholding the centrality of the Black Sea in Russian strategic thinking, did Putin do too much too soon?
I cannot forecast to you the action of Russia. It is a riddle wrapped in a mystery inside an enigma; but perhaps there is a key. That key is Russian national interest. It cannot be in accordance with the interest of the safety of Russia that Germany should plant itself upon the shores of the Black Sea, or that it should overrun the Balkan States and subjugate the Slavonic peoples of south eastern Europe. That would be contrary to the historic life-interests of Russia.
---- Winston Churchill, BBC broadcast, 1 October 1939
The seeds of the current war in Ukraine were sown in 2021, and Putin’s actions are not unprovoked, as the western media trope would have it. There was serious provocation, without doubt, but President Putin may have acted too early, and aimed too high. Both could prove costly misjudgments, for him personally and for Russia.
Prelude: Sowing the Seeds, 2021
The provocation began almost immediately after the Biden team took charge in January 2021. Before discussing this, it would be helpful to look at the composition of the main actors in the Biden team, and to see that they are the same as the ones who were in office in 2014, when the Ukraine crisis flared the last time. The point person in the State Department was Victoria Nuland, then the Assistant Secretary, now the Under Secretary. Secretary of State Blinken was then the Deputy Secretary. Susan Rice was then the National Security Adviser, and holds a position in the White House again, as Domestic Policy Adviser. And, of course, Biden himself was Vice President with responsibility for relations with Ukraine.
The year 2021 began with a major NATO exercise, Steadfast Defender 21 [also referred to as Defender Europe 21], the largest all-Arms exercise since the end of the Cold War. The main focus area was the western border of Russia, including the Black Sea. Some press reports also mentioned the inclusion of Georgia and Ukraine in the exercise, but NATO reports only spoke of NATO members and partners, without naming the countries involved. Russia moved some forty thousand troops to the Ukrainian border in response to what its Defence Minister, Sergei Shoigu, called NATO’s provocation; the US reaffirmed its support for Ukraine’s territorial integrity.
Thus the stage was set for military escalation from around March 2021.
The next important stage in the escalation was the setting up of the Crimea Platform in August 2021 by the Ukrainian President, Volodymir Zelensky. Before going into the details, it would be helpful to understand Russian thinking about Crimea and the Black Sea. Shortly after taking over Crimea in 2014, Putin explained that NATO expansion into Ukraine would mean that the US Navy would take over the Tsarist city of Sevastopol, the historic city of the Russian Navy, and this was obviously unacceptable. This really is the heart of the matter; Crimea and Sevastopol dominate the Black Sea and this is Russia’s access to the Mediterranean and West Asia, an area of growing importance and successful diplomacy for Russia. That is why I have begun this essay with a quotation from Churchill’s famous riddle-mystery-enigma speech; substitute America for Germany, and it is as true today as it was then.
The talk about short flying times for missiles is not such an important issue, because the flying time from Latvia or Lithuania to Moscow and to St Petersburg is shorter, and yet, Russia did not launch any military moves to prevent their joining NATO. By contrast, they did move militarily to control a large part of the Georgian Black Sea coast in 2008. Clearly, the Black Sea is becoming a determining factor in Russian strategic calculations in a way that the Baltic Sea is not; however, the inclusion of Finland in NATO may force Russia to rethink this too, since, between them, Estonia and Finland can bottle up the Gulf of Finland. This, in turn, would hinder shipping from St Petersburg, which Russia will assuredly resist.
This would explain why the Russians took the formation of the Crimea Platform as seriously as they did. In February 2021, President Zelensky signed a decree titled "On Certain Measures Aimed at Deoccupation and Reintegration of the Temporarily Occupied Territory of the Autonomous Republic of Crimea and the City of Sevastopol", after consultations with western countries. The formal launch of the Crimea Platform took place in August 2021 and was attended by some forty-five countries and organisations; these included representatives [Ambassadors or Ministers] of all the G7 countries, almost all NATO countries as well as Finland, Sweden and Switzerland. Ukrinform, the official news agency of Ukraine, informed readers that the goal of the Platform was the “deoccupation” of Crimea.
This clearly would not go down well in Moscow – and it did not. Foreign Minister Lavrov described the Platform formation as a “witches’ Sabbath”, and Russia did its utmost to limit international support for the initiative. As mentioned, some forty-five countries and organisations took part at senior levels, so the Russian effort was not very successful.
Meanwhile, the US Sixth Fleet and the Ukrainian Navy held the annual Black Sea exercise, Sea Breeze 2021 in June and July. These were annual exercises begun in 1997, but after 2014, they grew larger, both in terms of size and number of participants. In 2021, apart from the main NATO Navies, those of Brazil, Egypt, Israel, Pakistan and Georgia also participated. Among other aspects, the exercise also practised amphibious operations. Even Japan and South Korea took part, but Germany apparently did not. For their part, the Russians shadowed many of the ships in the Black Sea, and there was one incident involving the UK ship HMS Defender, when the Russians fired warning shots because the ship was sailing close to the exclusion zone around Crimea.
Similar tensions were building up on land. Russian forces began being deployed on the border with Ukraine from April 2021, and the number had reached ninety thousand by autumn. The Russians continually denied any warlike intent, but also kept issuing warnings that they would not stand aside if Ukraine launched mass casualty attacks on Russian-speakers in that country.
The next step on the escalatory ladder was the signing of two major documents between the US and Ukraine. The first happened immediately after the Crimea Platform meeting: on 31 August 2021, the US Defense Secretary and the Ukrainian Defence Minister signed a Strategic Defense Framework, a document that touched all the sensitivities of Russia. It spoke of preserving the territorial integrity of Ukraine and condemned the Russian occupation of Crimea and its activities in eastern Ukraine; it mentioned the Black Sea, and reiterated that Ukraine would be free to join NATO, and meanwhile it would enhance interoperability with NATO.
This document was followed by the US-Ukraine Charter of Strategic Partnership on 10 November 2021. This document went further than the Defence agreement, in that it was more explicit about the aims of the two countries. Some of its passages are worth quoting in detail.
The two countries emphasize[d] unwavering commitment to Ukraine’s sovereignty, independence, and territorial integrity within its internationally recognized borders, including Crimea and extending to its territorial waters in the face of ongoing Russian aggression…
Bolstering Ukraine’s ability to defend itself against threats to its territorial integrity and deepening Ukraine’s integration into Euro-Atlantic institutions are concurrent priorities [for the US];
The United States intends to support Ukraine’s efforts to counter armed aggression, economic and energy disruptions, and malicious cyber activity by Russia, including by maintaining sanctions against or related to Russia and applying other relevant measures until restoration of the territorial integrity of Ukraine within its internationally recognized borders.
In brief, this was a clear statement of intent to assist Ukraine in taking Crimea, and this is something that Russia regards as an existential threat – meaning, as was clarified later, that the use of nuclear weapons could not be ruled out in a situation where Russian control over Crimea was threatened.
The Russian response was forthcoming shortly afterwards. This was done in the form of a proposal for the signing of two formal Treaties, one between Russia and the US, the other between Russia and NATO. The burden of the two draft documents was, in essence, the same: no eastward expansion of NATO, and specifically ruling out the inclusion on Ukraine. There were differences in the two drafts, however, and these dealt with two matters in the US draft Treaty: the first was the mutual assurance against supporting any unlawful change in power, a clear hint at “colour revolutions”. The second referred to the nuclear basket – all intermediate and shorter range missiles were to be eliminated from the territory of foreign countries, and even in home countries, would be deployed where they could not threaten the other side. There was also an explicit reference to the danger of nuclear war in case of any clash between Russian and US forces.
The draft with NATO was more explicit in mentioning Ukraine; there was to be no enlargement of NATO, and Ukraine was not to be admitted. There were to be no military exercises in Ukraine, or other states of eastern Europe, or the south Caucasus, or Central Asia.
Not surprisingly, neither draft mentioned upholding the principle of the territorial integrity of states.
It would be worthwhile to pause the narrative at this point, and consider this aspect in the context of developments regarding Ukraine since the end of the Cold War, a chronicle in which neither emerges with credit. The Russian side would prefer to forget its commitments under the Budapest Memorandum of 1994, under which the Russians, the US and the UK guaranteed the territorial integrity of Ukraine, Belarus, and Kazakhstan, the three countries in which the Soviet Union had deployed nuclear weapons. In return for these countries giving up their nuclear weapons, the three nuclear powers stood guarantee for their sovereignty and independence within their existing borders.
On the US side, it would prefer to forget its commitment not to expand NATO eastwards, its actions in the Balkans through the decade of the 1990’s, when it worked for the slow destruction of Yugoslavia. Although there were several UN Resolutions upholding that country’s territorial integrity, these were ignored in practice. The case of Kosovo was of particular concern for the Russians, and they have drawn parallels between Kosovo, and what they have subsequently done in Georgia and Ukraine. Indeed, the similarities between the actions of the two sides are hard to deny. Also undeniable is the falsity of the western charge against Russia that the war in Ukraine is the first in Europe since the Second World War – that dubitable distinction must go to the wars in the Balkans in the 1990’s. US-led NATO forces attacked the Serbs starting in Bosnia-Herzegovina in 1994, and ended in 1999 with a bombing campaign against Belgrade lasting 78 days, in support of the Kosovo Liberation Army to ensure Kosovo’s separation from Serbia.
The following piece of reminiscence from Balkan Insight, written in 2019, to mark the 20th anniversary of the 78-day bombing campaign by NATO against Belgrade is apposite:
Jacky Rowland, who was the BBC’s correspondent in Belgrade when the NATO strikes started, said that while the bombing, the deaths and the destruction were very real indeed, it nevertheless felt like there was something surreal about the idea of a war in Europe at the end of the 20th Century.
As to NATO’s eastward expansion, after some attempts at denying that there were any such assurances – or at least any documentary evidence to that effect – the matter has been settled. There was such an assurance given at the time of discussions over German unification. Over the period since the first round of fighting in Ukraine, among other sources, the US National Security Archive confirms the existence of documentary proof of such assurances. They confirm that then-Secretary of State James Baker assured both Gorbachev and Sheverdnadze that NATO would not expand an inch beyond the borders of GDR, and there would be “iron-clad guarantees” to this effect.
The west would also like to forget the Minsk Agreements, which ended the first round of fighting in Ukraine in 2014-15. The essence of those Agreements was a military disengagement in Donbass, including the withdrawal of all foreign fighters, and that Ukraine, in turn, would amend its Constitution to allow for devolution of power to the Donbass, specifically to allow for greater cultural and linguistic freedom to the Russian speakers of Ukraine. A new Constitution was to be adopted by end-2015, guaranteeing these changes.
Moving Towards War, 2022
As the situation was building up for war in early 2022, the French and the Germans, co-authors of the Minsk Agreements, did try and revive the Minsk Agreements. And, according to Chancellor Scholz, President Zelensky reaffirmed his commitment to the Agreements. But this was publicly contradicted by the Deputy Prime Minister of Ukraine, Iryna Vereshchuk; earlier, the Ukrainian National Security Secretary, Oleksey Danilov, had said that implementing the Minsk Agreements would mean the destruction of Ukraine, and should not be done. The Minsk Agreements had also been endorsed by unanimous vote in the UN Security Council.
Further escalation followed, this time from the Russian side: this was the recommendation of the Russian Parliament to President Putin to recognise the independence of the two break-away republics in Donbass – Lugansk [Luhansk in Ukrainian] and Donetsk. In a well-publicised meeting of the Russian Security Council, there was almost unanimous support for the proposal, and action was taken to recognise the independence of the two republics. This was two days before the launch of what Putin called the “limited military operation”. Pravda gave a revealing report on the discussions in the Russian Security Council, of which the following paragraph is particularly worthy of note:
Было два предложения: признать немедленно и признать после переговоров с Джо Байденом, который якобы должен гарантировать за два-три дня составление конкретного плана по выполнению Минских соглашений. С подачи секретаря Совбеза Николая Патрушева, это предложение поддержали директор СВР Сергей Нарышкин и премьер Михаил Мишустин, однако Путин возразил: вам же доложили Козак и Лавров, что нет никакой надежды на изменение позиции Киева и Запада, зачем же давать им ещё два дня?
There were two proposals: recognise the republics immediately or recognise after the talks with Joe Biden, who, within two-three days, would supposedly guarantee the elements of a concrete plan for implementing the Minsk Agreements. According to the Secretary of the Security Council Nikolai Patrushev, the Director of SVR Sergei Naryshkin and Premier Mikhail Mishustin, supported this proposal, however Putin objected: you were informed by Kozak and Lavrov, that there is no hope of any change in the position of Kiev and the West, why do we need to give them another two days?
This was the first of the missteps made by Putin, and a departure from his usual dispassionate approach to foreign policy problems. It is true that nothing would come out of his talks with Biden, but it would be helpful to the Russian case to give the appearance of being willing to negotiate until the last moment. One must conclude that he did indeed move too soon; Russia had nothing to lose by waiting another week or so, and show that it was willing to exhaust all peaceful means before taking up arms.
It may also be recalled that, by this time, Biden had been warning about Russian plans to invade, based on intelligence inputs from Russia. But the Ukrainian leaders, including Zelensky, were dismissive of such reports. Some of the Ukrainian senior officials, including Danilov, were also confident of facing the Russians militarily. The Russian leaders too denied any intention of going to war with Ukraine. In the event, US intelligence proved to be quite accurate, which could suggest a source in the Kremlin. The accuracy of the forecast was confirmed on 24 February, with Putin announcing the launch of what he called a “special military operation”.
Putin’s speech on this occasion was unusual for two reasons. In the first place, he sounded angry and emotional, very different from his usual controlled self. Secondly, he set himself the goal of, inter alia, demilitarizing and de-Nazifying Ukraine – as could be expected, this was a case of trying to do too much. A propos of this, an unguarded remark of Biden’s in January 2022 created some doubts about the nature and strength of the US/NATO response should Russia attack Ukraine.
Biden’s exact words were as under:
I think what you're going to see is that Russia will be held accountable if it invades. And it depends on what it does. It's one thing if it's a minor incursion and then we end up having a fight about what to do and not do.
This invited swift responses from the Ukraine leadership. Zelensky declared that there were no such things as minor incursions; Foreign Minister Kuleba added that this could be seen as am invitation to Putin to act, though he added that Biden was committed to Ukraine. Biden’s remark was clarified, as could be expected, but it leaves open the question of how the west would have responded if, indeed, the Russians had set more limited goals for themselves. If, for instance, the military aim had been limited to taking Mariupol, so as to complete the land link to Crimea, and some territory in Donbass, would that have divided the west, as Biden said it would?
The question is moot now: not only did Russia try and occupy Kyiv, it also failed to achieve this objective. The attempts in Donbass are also making agonisingly slow progress, and there have been some reverses as well. Mariupol is now finally under Russian control after a prolonged siege, and so one of the main objectives has been achieved, to wit, the establishment of a land link from Russia to Crimea. But all this fighting illustrates once again that Russian forces fight well in defence of their country, but do badly beyond their borders – as witnessed by the war against Poland in 1921, or Finland in the Winter War of 1939-40. Afghanistan in the 1980’s showed the same. What is also striking in the current fighting is that the armoured warfare that the Russian Army has been justly famous for, has failed to live up to its reputation.
Stirring Atavistic Animosities
One further development is worth noting. Of late, as the Russian military operation has slowed, there is a discernible attempt on its part to play on the so-far suppressed territorial claims between the countries of East Europe. Parts of western Ukraine were won by Stalin during the Yalta meeting in 1945 between Stalin, Roosevelt and Churchill. These territorial claims relate to Lvov in the first place, for it had historically been part of Poland, and to Zakarpattia where a Hungarian minority lives. Ukraine’s language policy, though aimed at suppressing Russian, has also affected the Hungarian minority. Hungarian Prime Minister Orban retains a close relationship with Putin, has resisted military aid to Ukraine, and after winning the April election, declared that among the many opponents he defeated was Zelensky.
For its part, Russia is playing up these claims: in two articles in Pravda on 28 and 29 April 2022, it was reported – based on inputs from the Russian Foreign Intelligence Service - that the US and Poland were planning to reunite the ex-Polish lands under the pretext of sending NATO [actually Polish] forces into western Ukraine to defend against Russian forces. It was reported that all the major players were in agreement: the US with Poland, Russia with Hungary, the latter two having worked out their understanding during the visit of Prime Minister Orban to Moscow in early February 2022. He did have a five-hour meeting with Putin, and declared afterwards that Russian security demands were reasonable and should be negotiated. He added that sanctions would not work, and that he saw no intention on Putin’s part to escalate the conflict with Ukraine and would not allow additional NATO presence on Hungarian territory.
The Pravda articles – and there were more afterwards – quoted the head of the Polish ruling Law and Justice Party, Jaroslav Kaczynski suggesting sending NATO [in reality Polish] troops into Ukraine as peace-keepers, but Zelensky declined. Commenting on this, Pravda also quoted Donald Tusk, former Polish Prime Minister [later President of the European Council], as saying that these were Orban’s plans in the event of a collapse of Ukraine, but one could only at the extent of Kaczynski’s involvement in these plans.
The map below accompanied the Pravda articles.
Predictably, the response from all the western countries named by Pravda was to rubbish the charges made by Russian intelligence. It is almost certainly a Russian ruse to drive a wedge between the western allies, and Ukraine, and it is clear that the US will not only not support such a plan, but will actively oppose it. The Russian approach is to revive old animosities, of which there are plenty in this region, and to stoke territorial revisionist ambitions.
But this does reveal Russian thinking of an alternative outcome to the war, an outcome that aligns with Putin’s view that Ukraine was never a state, and was created by the Bolsheviks after 1917, and its current borders established by territorial acquisitions of Stalin after the Second World War. It also leaves a tempting opening for Poland and Hungary [as well as Romania] to reclaim lost lands if the situation should ever allow for it. Also worth noting in the map is the Russian Ukrainian territory all the way up to Budjak, going past [and including] Odessa – old southern Bessarabia.
Such a development seems unlikely in the foreseeable future, but needs to be kept in mind, for stranger things have happened in the recent past. For now, there is another headache building up inside Russia: the high casualty rate is causing questions to be raised from both the opponents and supporters of the war.
Third Country Responses
One of the other major outcomes of the entire episode has been the cementing of the Russia-China alliance. Much has been made of the Joint Statement issued by Putin and Xi during the former’s visit to Beijing for the opening of the Winter Games, and the references there to the fact that their friendship had “no limits” and that there no “forbidden areas” of cooperation. And yet, as the Russian media themselves pointed out, the long Statement did not mention the word “Ukraine”, or the words “South China Sea”.
Nonetheless, once the war began, the Chinese stepped up their support for Russia, especially bilaterally. Although the official Chinese position remained consistent in support of the territorial integrity of states, including Ukraine, in practice, China has extended support to Russia. It has opposed NATO enlargement, and it has ignored western sanctions
In fact, it may be more helpful to focus on another sentence from the Joint Statement:
They reaffirm that the new inter-State relations between Russia and China are superior to political and military alliances of the Cold War era.
That is a smart way to avoid entanglements in each other’s quarrels, while at the same time extending diplomatic support to the other partner when it suits them to do so. Over the Ukraine issue, China has another constraint in how far it can go in supporting Russia. This is the strong EU stand in favour of Ukraine. The EU is China’s second-largest source of trade surplus, after the US, and it would not like to risk losing that, especially given that the US appears to be moving towards a policy of sustained competition, occasionally even confrontation, and China’s own economy is facing troubles from many directions.
In fine, it would be fair to conclude that it is the unremitting hostility of the west towards Russia that has driven it closer to China, a situation that they – and the Chinese – are getting into with their eyes open, recognising, despite the rhetoric, that there are limits to their ties.
This element of reserve confirms what is mentioned above: their tacit alliance is the result of unremitting US and western pressure on Russia. That pressure is the necessary condition for the confluence of interests of Russia and China; take it away, and Russia will be less committed to the China tie-up, and this should be good for most of the Indo-Pacific region. In fact, before the current round of tensions, several Russian think tanks, some known to be close to the Kremlin, had been promoting the strategy of Russian “new nonalignment” between the US and China. But in the current perfervid anti-Russian mood in the US such a shift is unthinkable.
As to India, the western criticism of India’s refusal to endorse sanctions against Russia needs to be rebutted. For a start, it has long been Indian policy that only sanctions imposed by the UN are binding. India has, in fact, not even imposed bilateral sanctions on China or Pakistan, in spite of years of active hostility by both these countries.
Equally important, the west had not supported India in its clash with China in June 2020 in eastern Ladakh. President Trump had, in fact, offered to mediate between India and China, thus taking a neutral stand. The Europeans had, as is their wont, advised dialogue. If it was because they have substantial interests in China, then that also applies to India vis-à-vis Russia.
Lastly, Ukraine has often taken stands inimical to Indian interests, on issues including India’s nuclear programme and Jammu and Kashmir. It has also been supplying arms to Pakistan, particularly offensive equipment like tanks. These are all of critical importance to India, and Ukraine had no reason to adopt such positions. Russia, by contrast, has been helpful on these issues, though it is also now developing ties with Pakistan, something that needs careful watching.
Thus, India has good reason not to be overly concerned about western criticism, and has made its position quite clear. The western pressure is understandable, because they would want as many countries as possible aligning with their stance. The US has the most at stake. As mentioned, it has a strategic partnership agreement with Ukraine, and a focus on Crimea, which was the real trigger for the current round of fighting. The US also had a similar agreement with Afghanistan, with similar provisions for support of the sovereignty and territorial integrity of that country. This was abandoned within a few short years, though it was signed under the Obama Administration, in which Biden was Vice President. They need to safeguard the credibility of their assurances. This is probably why the Biden policy is to escalate its military supplies to Ukraine as the fighting continues, almost exactly as they did in Afghanistan during the 1980’s. They have not reached the “Stinger moment” yet, which marked the point where the military balance turned against the Soviet Union, and in favour of the US-backed Islamist fighters, but appear to be drifting towards it.
As the fighting escalates, these hard decisions will have to be made by the US and NATO leaders. And if the Wall Street Journal is to be believed, there are growing differences within the alliance over supplying heavier weapons to Ukraine. Predictably, it is what former US Defense Secretary, Donald Rumsfeld, called “Old Europe” that is reluctant to go further in arming Ukraine. The US, UK and the newer members, especially the former members of the Warsaw Pact and the Baltics that are keen to help Ukraine fight and prevail.
Meanwhile, strains are appearing in Russia as well. A few of the top leaders have distanced themselves from the war. Among them, Anatoly Chubais, who was among the early promoters of Putin’s career; also Valentin Yumashev, son-in-law of former President, Boris Yeltsin, who was serving as adviser to Putin in an honorary capacity – there are others too.
Some, like Chubais, have left the country, others have left their official positions.
The Ground Situation
The ground fighting is not going well so far for Russia, as the map below will show. Their forces have been forced to withdraw from all areas beyond Donbass which they had tried to take, with the exception of the land corridor from Russia through Mariupol to Crimea itself. Even within Donbass, Russian Forces are making slow progress. On the 100th day since the launch of the war, they are now fighting for Severodonetsk; the Russians claim to have taken it, the Ukrainian Mayor claims they have taken back part of the town. The US, meantime, is stepping up the lethal power and quantity of its military aid, with the supply of longer-range Multiple-Launch Rocket Systems.
The critical question is - what is the attitude of the local population? Putin has launched the campaign in order to protect their rights, linguistic rights in the first place. If the Russians get their support, they will prevail in Donbass. If they do not, it will be hard for them to retain their hold. Where Crimea is concerned, there is no question – support for Russia is strong and widespread.
It should be pointed out that there is no plan to hold referendums in places like Zaporozhe or Kherson, also under Russian control, according to the pro-Russian executive heads there. This provides context to the fact that the new leader of South Ossetia has also postponed the referendum there, due on 17 July. South Ossetia and Abkhazia were the two break-away regions of Georgia, whose separation and independence Russia recognised in 2008; the former was to hold the referendum on joining Russia, and that has been postponed. This has caused concern in Moscow.
None of the leaders have given any persuasive explanation for why the idea of referendums have not found favour. This stands in sharp contrast to the process of incorporation of Crimea in 2014, and to the planned referendums in Lugansk and Donetsk. Most intriguing is the explanation, of sorts, given by the newly-elected leader of South Ossetia for the postponement: “the uncertainty of the legal consequences of the issue." and the "inadmissibility of a unilateral decision to hold a referendum".
Understandably, Moscow has called for continuity [the former President was strongly integrationist], but all these developments could be signs of changing popular perceptions of integrating with Russia.
Indirect evidence to the same effect may be seen in how the nature of the people opposing the Russian occupation of eastern Ukraine is changing. In the early stages of the war, most of them were Ukrainian speakers; latterly, quite a few of them speak Russian, and come from towns like Kharkov and Mariupol. Anyhow, the leaders of both Lugansk and Donetsk have promised referendums regarding the future of their areas. That should settle the matter, at least as far as Russia is concerned. The west has not accepted the referendum in Crimea, and will not in Donbass, if indeed it is held, and goes against Ukraine.
Sanctions: Financial, Energy, Agricultural
Apart from warlike supplies, the other pressure the west has applied on Russia is through sanctions. The initial steps consisted of financial sanctions, like cutting many Russian banks from the SWIFT [Society for the Worldwide Interbank Financial Telecommunications] payments system – though with exceptions. One of the important banks that has been exempted is Gazprombank, the banking arm of the major gas supplier, Gazprom. It is through this exception that payments for gas supplies to Europe are continuing.
In broad terms, the western sanctions may be divided into three categories: financial, energy, and Russian counter-sanctions, on food grains.
As mentioned, the financial sanctions were the first to kick in. but, apart from the exception made for Gazprombank, the US Treasury also allowed for dollar-denominated foreign bonds to be paid until 25 May. Under this exception, Russia made a payment to JP Morgan in mid-March of over $100 million, mainly to US bondholders.
But now, starting late May, Russia is heading for formal default, its first since the Bolshevik repudiation of foreign debts in 1918. The reason is that the EU, in its latest round of sanctions, its sixth, blocked the operations of the Russian company, National Settlement Depository, which was handling such settlements. The 30-day grace period will expire on 27 June, and Russia may then be declared in default. This would block Russia from all international loans, except those that a bilateral G-to-G arrangement could be worked out – with China, for instance – but that remains an open question for now. It would also raise interest rates for any loans it may be able to obtain.
Another effect of the financial sanctions was the steep fall in the value of the Rouble against the main western currencies. Against the Dollar, the Rouble was 81.3 on 23 February, the eve of the operation; it fell to a low of 138.7 on 9 March, as the sanctions hit, and recovered to 61.4 – stronger than before the sanctions – by 6 June. A combination of high interest rates, peaking at 20%, capital controls and other restrictions on foreign currency transfers, as well as steadily rising oil and gas prices, which helped Russian earnings explain these movements. Nonetheless, the main stock index MOEX has fallen from a peak of 3605 just before the war to 2352 in early June 2022; the real economy is forecast to contract.
The second set relates to energy. Russian gas supplies are down 28% since the start of the year, but volatile prices in Europe – ranging from a peak of Eur 200 per MWh down to Eur 80 per MWh, or lower than the price prevailing on the eve of the war – make it difficult to judge the likely future trends. But European dependence on Russian gas supplies is so high that the European Commission is not even planning on ending its imports before 2027. It does, however, plan a reduction of two-thirds by the end of 2022, mainly by switching to other suppliers, chiefly the US and Norway.
In sum, Russian revenues have not suffered from the decline in gas prices, though they have suffered because of the drop in supplies to those countries that have not switched to payment in Roubles.. But the big advantage Russia has enjoyed has been in terms of the jump in oil prices.
Oil prices were rising from late 2021, probably as a result of increased demand, as the global economy recovered from the pandemic and related restrictions. Even on the eve of the war, Brent crude was selling at $91/bbl, and Urals crude closely tracks Brent, with occasional deviations. By early March, it had reached $120/bbl, and has stayed above $100 ever since. As a result, Russian revenues have risen sharply; most of their budgeting is done on a base line estimate of $60/bbl, so this price has undone the effects of sanctions.
The above price movements and the Russian budgetary situation also explain why they are able to offer India such favourable terms as they have for oil sales. Thus far, western sanctions have not hurt Russia, and that also explains why the US is now persuading the Saudis and other oil suppliers to raise output in order to apply some price pressure on Russia. To what extent this will happen is still not clear.
Candidate Biden had had some harsh words for the Saudis, and Crown Prince Mohammed bin Salman [MBS} in particular. He had declared his intent to make the country a pariah because of the killing of Saudi-American journalist Adnan Khashoggi. Those words came back to haunt him, when he tried to speak to MBS to ask for increasing oil output: both MBS and his Emirati counterpart refused to take the call. Things have improved now, though, and a visit by Biden is planned, though reports indicate that it has been postponed for now. All the same, OPEC has agreed to raise output by 1.3 million barrels per day [mpd] by August this year, but have not blocked increased Russian output as well. Some doubts have also been raised about the capacity available in many of the OPEC-plus members to raise output.
A brief mention should also be made of Russian nuclear fuel capacity: it contains some 37% of the global enrichment capacity for civilian use, and even the US’ latest experimental nuclear plants depend on Russian supplies for fuel enriched to 20% of U-235, an unusually high degree of enrichment for power generation. The Biden team is said to be considering nuclear sanctions on Russia, but the local operators are opposed.
The other serious effect of sanctions is on food grains. The Black Soil of Russia and Ukraine is among the most fertile in the world and is found only in this European belt, and in parts of North America. The map below shows the Black Soil areas of Ukraine. This is the soil that has traditionally made Ukraine the bread-basket of Europe.
Russia too has a stretch of Black Soil [Chernozyom in Russian] and is also a major producer and exporter of food grains, especially wheat and corn. However, both countries are seeing a slowing in exports and uncertainty over the spring sowing means bleaker prospects for the coming harvest. This is particularly aggravated in Ukraine, since much of the fighting is taking place in those areas where the crops were sown. The International Grains Council has projected as much as a 40% decline in Ukrainian exports in the coming season, because of the war. Russian exports and output will also decline, according to these forecasts, but marginally.
Another angle to this economic pressure is that China has switched its corn purchases from Ukraine to the US, ostensibly because of uncertainty over future Ukraine supplies. Of course, this would please both the Russians and the Americans, so the Chinese are benefitting twice over from the switch.
Another insight into Chinese behaviour has been provided by recent articles in Pravda, which has done some competent reporting on the war. One article revealed that China was by-passing Russia in its rail links to Europe, going through Azerbaijan to Georgia, thence to Romania [presumably across the Black Sea], and further on into Germany. The second article informed readers that, according to the President of the Russian Academy of Sciences, China had suspended cooperation with Russia. He contrasted this with India’s policy, which was to proceed without let-up in its cooperation projects.
Between them, Russia and Ukraine are among the top three exporters of wheat, barley and sunflower seed; in addition, Russia is also among the top exporters of Nitrogen-, Phosphorus- and Potassium-based fertilisers. The chart below provides a visual image of the importance of the two countries in the global trade in agriculture. The effect of the war has been to block deliveries world-wide, and thus push up prices.
The shortage of foodgrain exports, especially from Ukraine, is hurting the African countries the most. Some countries, like Somalia, are not just facing harsh climatic conditions for their own primary industries, but are also heavily dependent on imports from the two warring countries. This explains why the head of the African Union, Senegalese President Micky Sall visited Moscow in early June. After meeting President Putin, he declared himself reassured; for their part, the Russians have said that they are not responsible for the hold up in grain deliveries, but have also demanded the lifting of sanctions in return for stepping up grain shipments. Foreign Minister Lavrov also visited Turkey in order to work out details for shipping grain through the Black Sea.
The price effect may be seen in the following chart, issued by the UN Food and Agriculture Organisation. It shows that the prices of foodgrains are the highest they have been in the last ten years, and this is an added source of enhanced revenue for Russia. However, Russia has halted exports because of the sanctions imposed by the west – and is being accused of “weaponizing” food. Perhaps a better way of understanding what Russia is doing is to see it leveraging its strengths, just as the west is doing with its control over the world’s financial system.
Ukraine is facing greater difficulty in its exports because Russia has blocked shipping through the port of Odessa, from where 90% of Ukrainian exports used to go. Russia denies blocking shipments from Odessa, and says that it is Ukraine that has actually mined the waters around the port.
At the same time, Russia also demands the lifting of sanctions in order to cooperate in shipping food grains out of Odessa. Since this is not going to happen, for now, rail and river routes are being used – admittedly an inadequate substitute for the Black Sea route.
What is more, the harvesting and sowing for the next crop are both disrupted by the war, so the prospect must be for higher prices in the coming months.
The overall assessment must be that sanctions on Russia have so far not had the effect the west sought; in fact, it is they who are bearing the brunt of shortages and inflation. This could be short-term, but only if alternatives can be found, alternatives that are commercially viable for the long term. For hydrocarbons, this is possible, though it will take some doing, both diplomatically and in terms of finance, for example, in arranging for enhanced gas supplies from the Persian Gulf. Russia will also oppose this, but it has its hands full, so it is unlikely to play the role it did in Syria in 2015-16 to prevent the Qatar-Turkey pipeline.
It then comes down to staying power. There are credible reports on both sides, Russia and NATO, of internal differences, as the war drags on. If Russia can finish the job - and that really means taking Donbass and southern Ukraine all the way to Odessa and beyond in the next few months - it will have succeeded. If the west can escalate to the point where Russian casualties mount and internal questioning grows, then Russia will have failed. And, of course, if Russia does succeed in taking the lands identified above, what will be left of Ukraine, and will that rump be viable?
Three brief points on the effects of the war stand out.
The first is the unity that the west has shown in confronting Russia. This goes beyond the usual trans-Atlantic unity within NATO and between the US and the EU, though that itself is extremely significant. What is even more striking is the fact that even countries like Sweden, Switzerland and Finland have all joined in the sanctions against Russia. And to add to that, Sweden and Finland have applied for NATO membership. So NATO moves closer to Russia’s borders. The main war aim with which Putin launched the war was to prevent precisely this outcome. Despite Turkey’s current objections, it is probably a done deal that the two applicants will be admitted.
The second is important shift that took place in August: the chaotic pull-out from Afghanistan was meant to free up the US military and its other resources to focus on the Indo-Pacific region – the “pivot to Asia” redux. But just as the first one was stymied by happenings in West Asia and the mis-named “Arab Spring”, this one has been diverted by the war in Ukraine. And, in spite of the demurrals, there is diversion of resources to the Ukraine war, even though the US has been active with the Quad. The recent aid package of $40 billion for Ukraine is bound to strain the finances even of a country such as the US. There is, in turn, a significant corollary to this for Taiwan, where the People’s Republic has been aggravating tensions through constant violations of the ADIZ of Taiwan, besides other military manoeuvres in the vicinity. China seems to have an abundance of good fortune – or good moves in the region.
The third relates to nuclear non-proliferation. If Ukraine had not surrendered its nuclear weapons [they had the scientific talent to manage them], they probably would not be in the predicament they face today. Would this kind of thinking be affecting policy in countries like Iran and North Korea? That would be logical, especially because the value of US assurances, as in the Strategic Partnership Agreements with Afghanistan and Ukraine have certainly been compromised.
 https://www.rferl.org/a/russia-ukraine-military-germany-nato/31203229.html  Putin: NATO Enlargement Pushed Russia To Annex Crimea | HuffPost The World Post  Crimea Platform: A way forward (ukrinform.net); see also JOINT DECLARATION OF THE INTERNATIONAL CRIMEA PLATFORM PARTICIPANTS | Ministry of Foreign Affairs of Ukraine (mfa.gov.ua)  Sea Breeze 2021 - An Exercise in the Black Sea | SOF News  U.S.-Ukraine Strategic Defense Framework  https://www.state.gov/u-s-ukraine-charter-on-strategic-partnership/  For texts: Treaty between The United States of America and the Russian Federation on security guarantees - Министерство иностранных дел Российской Федерации (mid.ru) Agreement on measures to ensure the security of The Russian Federation and member States of the North Atlantic Treaty Organization - Министерство иностранных дел Российской Федерации (mid.ru)  A good treatment of the Budapest memorandum may be seen at Ukraine war: what is the Budapest Memorandum and why has Russia's invasion torn it up? (theconversation.com)  78 Days of Fear: Remembering NATO’s Bombing of Yugoslavia | Balkan Insight  NATO Expansion: What Gorbachev Heard | National Security Archive (gwu.edu) https://tass.ru/mezhdunarodnaya-panorama/13722949?utm_source=yxnews&utm_medium=desktop  Ukraine security chief: Minsk peace deal may create chaos | AP News  Unanimously Adopting Resolution 2202 (2015), Security Council Calls on Parties to Implement Accords Aimed at Peaceful Settlement in Eastern Ukraine | Meetings Coverage and Press Releases  [SVR = Sluzhba Vneshnei Razvedki] - Foreign Intelligence Service [author’s note]  https://www.pravda.ru/politics/1684839-ldnr_sovbez/  https://www.npr.org/2022/01/20/1074466148/biden-russia-ukraine-minor-incursion  https://www.pravda.ru/news/world/1703427-naryshkin_polsha_ukraina/ And https://www.pravda.ru/world/1703933-polska_ukraine/  Hungary’s leader, visiting Moscow, calls Russian demands reasonable and says sanctions are pointless. - The New York Times (nytimes.com)  How Putin’s Denial of Ukraine’s Statehood Rewrites History | Time  https://www.wsj.com/articles/weary-russia-tries-to-avoid-entanglement-in-u-s-china-spat-11592654401?mod=hp_lead_pos5  https://www.wsj.com/articles/cracks-appear-in-western-front-against-russias-war-in-ukraine-11654004651  https://www.rt.com/russia/556495-restoring-peaceful-life-kherson/  https://www.themoscowtimes.com/2022/05/31/georgias-breakaway-region-ditches-referendum-on-joining-russia-a77843  https://www.themoscowtimes.com/2022/05/31/georgias-breakaway-region-ditches-referendum-on-joining-russia-a77843  For details: Explainer: Russia walks the plank to a foreign bond default | Reuters  https://www.exchangerates.org.uk/USD-RUB-spot-exchange-rates-history-2022.html  Why Russia isn't hurting even as it cuts off Europe's gas - CNN  Interactive graph: https://tradingeconomics.com/commodity/eu-natural-gas  Interactive graph: https://tradingeconomics.com/commodity/brent-crude-oil  A good summary of the situation may be found here - Russia's energy clout doesn't just come from oil and gas – it's also a key nuclear supplier (theconversation.com)  Russian Grain Exports Persist, Albeit at Slower Pace, as China Turns to U.S. Corn • Farm Policy News (illinois.edu)  https://www.pravda.ru/economics/1700638-marshruty/ And: https://www.pravda.ru/science/1698839-aleksandrsergeev/  https://www.france24.com/en/africa/20220603-african-union-head-sall-reassured-after-talks-with-putin-on-food-shortages-amid-ukraine-conflict  Source: https://www.fao.org/3/cb9236en/cb9236en.pdf