Are Putin’s Sanctions Countermeasures Working? Chat with William Wohlforth, Part 2


Okay. Let’s talk about the sanctions. What do you think of Putin’s countermeasures to the sanctions so far? He forced so-called unfriendly countries to buy Russian oil and gas with rubles. Uh, how long do you think he can insist on that?

The EU has responded. So, that was back in March, and the EU responded and said that they would refuse to settle the accounts into rubles because essentially, if you do that, then essentially you’re in some ways kind of insulating Russia from the financial sanctions. And, um, and so far it’s unclear to me what’s happened. Putin claimed, about a week ago, that the Europeans were not settling up in rubles. So, the status of that particular move by Putin is unclear to me at the moment. In other words, the news that I had seen, and even from the Russians themselves, is that Europeans are continuing to insist on payment in convertible currencies. But the Russian overall response has been sort of effective in the near term, particularly in defending the ruble and other defensive measures they’ve taken against these sanctions. However, the Russian central bank chief yesterday, the head of the Russian state bank, I think it was yesterday or the day before yesterday, essentially said in no uncertain terms that all of these measures are temporary in nature that Russia has taken and that the costs to the Russian economy are going to be quite spectacular and compounding and escalating in the weeks and months ahead. So, you can expect the bite of those sanctions to get tougher and tougher and tougher for Russia, according to Russia’s own officials, with each passing week.

You talked about Russian central bank. The West has frozen much of Russia’s, you know, over 600 million dollar foreign reserves held in foreign banks. But this, I mean, has not really crushed the Russian economy. China won’t freeze Russia’s, you know, foreign reserves held in [unknown phrase]. And because Russia still makes money from energy sales, its economy is getting by. The ruble now even bounced back to its pre-war value. So, do you think, you know, you just said this could be successful, but it would not be long lived. Is that right?

Yeah. I mean, the ruble bounce back is the result of very high interest rates being paid on ruble holdings, ruble assets, and capital controls. I mean, basically you’re putting on capital controls and you’re turning the ruble into a, into a domestic-only currency. In some sense, the long-term effect is to cut off the Russian economy from the world even more. The more you make, uh, impose these capital controls. So, that’s essentially a limited, that’s an option, that is an option for maintaining the ruble’s value that is not going to be sustainable forever without a significant cost to Russia’s ability to act in the international economy. You know, Russia needs to supply its inputs for everything that it creates. We still live in a globalized economy. There are still such things as supply change, and Russia is part of this. Indeed, there’s speculation that even Russian military production requires some degree of access to imports. And they’re not getting any of these now and therefore the ramified effects throughout the Russian economy of their inability to obtain these key inputs is, according to the Russian central banker herself, going to be escalating with each passing month.

Hmm. Okay. What do you think of Putin’s measure to link the ruble and gold? I mean, he said that the central bank will buy gold at a certain price with ruble from, I mean, at least until June 30th.

And from whom? Who wants to own all those rubles? That’s the question. When you have capital controls on the ruble, the ruble’s only really particularly useful for people inside of Russia. So, the question is who is now holding rubles is gonna want to transfer those rubles into gold? So, I don’t know. The international finance can have many tricks and many schemes within it, but to my mind, I’m not seeing that as a lifesaver for the Russian economy. Bottom line is you have an unprecedented set of sanctions against Russia, and they do take time to work. And as I’ve stated, we’ve now had the mayor of Moscow, we’ve had the deputy prime minister and we’ve had the Russian central bank head all say that, “get ready for feeling the bite of these sanctions.They’re going to hit and they’re going to hit hard.” So I–essentially, in some sense–defer to them and their expertise. In fact, in a way, they’re kind of brave to be even saying these things since they’re cutting against the line that Putin wants to send out that we can handle these sanctions, no problem.

Yeah. Yeah.

It should be stressed that it’s not clear that any of this is going to materially affect Russia’s ability to continue to prosecute the war. So, if the idea of these sanctions is to stop Russia from any kind of immediate action in the coming weeks or months in Ukraine, that’s not their capacity. That’s not their strong suit. Their strong suit is a longer term imposition of costs, such that if Russia’s contemplating trying to continue this campaign over really long periods of time, that the costs are gonna be very, very high for the Russian economy.

Mm-hmm. If Russia stops the war, do you think the sanctions will come off right away?

I’m worried about that. I mean, that goes back to what I was, how I was responding to your earlier question about Western, how the West can help try to find a resolution. If you put Russia in a position–again, I don’t like, you know, it’s very hard to have much feeling of concern for Russia’s wellbeing given that that country is responsible for this horrific war. On the other hand, if you wanna try to find a settlement of some kind, there ought to be some thought given to the upside for Russia. In other words, not just imposing costs but suggesting benefits if they are to cease this action in Ukraine. And so for that, saying it’d be nice if these sanctions were contingent, namely saying, “we put these sanctions on you because of what you were doing in Ukraine. If you stop doing that, we’ll take the sanctions off.”

Unfortunately, I’m not seeing any kind of talk of that nature because of the first part of the Zelensky speech that you referred to some time ago, his outrage at seeing that mother looking down the well and seeing her son. The emotions that are elicited by what Russia is doing in Ukraine are so intense that the feeling now is a desire simply to punish Russia and isolate Russia indeterminately. And as much as I can understand those emotions, I don’t think it’s prudent to act in this way. I think it’s better to suggest the possibility, the conditions under which the sanctions would be relieved. Certainly we should say explicitly that if the Ukrainian government agrees to a deal with Moscow, we will certainly, at the behest of the Ukrainian government, reduce these sanctions.

Hmm. What if the Ukrainian government does not require the West to reduce the sanctions? If, they say, you know, this is your decision?

Yes. Well, that gets to this tricky point of does the West want to actually be pressuring Ukraine to accept some kind of deal that the Ukrainian government does not want accept? Do we want to tell Zelensky that, “Hey, you know, the deal that Russia’s offering right now looks pretty good to us, and we really think you should accept this deal. In fact, you’re being unreasonable if you don’t accept that deal. You’re not being a responsible statesman.” I would love it if that scenario were to happen. In other words, for this to happen, we need to have some sign from Russia that there is some remotely plausible deal, some remotely acceptable agreement that Russia’s prepared to accept. And if we see some language like that, then it’s not inconceivable to me that we would really strongly urge Ukraine to begin to talk about such a deal. But we see nothing of the kind right now.

On the contrary, I think it’s very important to recognize that we’re seeing rhetoric from Russia, from Russian commentators and even some Russian officials, that literally does sound like genocide. I mean, I don’t use that term lightly, but there’s talk that basically says any assertion of an independent Ukrainian national identity is by definition Nazi, and our job is to de-Nazify Ukraine. If you hear talk like that from your so-called bargaining partner, how can we possibly be pressuring Ukraine to accept the deal? But if Russia starts to talk more reasonably and unless this kind of, if it were to cease, this kind of crazy talk about Nazis in Ukraine, then the West certainly would be in a position potentially to put some pressure on the Ukrainian government if the Ukrainian government is the one that seems to be blocking a deal.

When you talked about the tough talk from Russia about the genocide and stuff, do you think that’s also Putin’s thoughts?

Yeah. I mean, look, Putin’s rhetoric fed this kind of talk. It began last summer with an article he wrote on the historical unity of Russians and Ukrainians. Its very extreme nationalist take or view of the relationship between the Ukrainian nation and the Russian nation was in that article. And we moved on and on from there. There’s been a ceaseless strain of Russian state propaganda which supports this idea that essentially equates the assertion of an independent Russian, I’m sorry, an independent Ukrainian identity that is not part of the Russian world, that any assertion of that kind is essentially Nazism, fascism, unacceptable and needs to be destroyed. They are denying the right of an Ukrainian government or intellectual, or an educator or anyone to assert the idea that yes, we Ukrainians are independent of Russia. And in fact, we’re not really part of the Russian world. We’re part of the West. That sentiment, they are saying in Russian propaganda, is in and of itself Nazi. And that propaganda line is official Russian government propaganda. And the head of that government is named Vladimir Putin. So, he has to accept some responsibility for this.

Do you think Putin regretted his war?

I hope he does. I mean, I have no idea. He, of course, would never admit to this in public. When you are a personalistic dictator whose claimed rule in part is based on power and just the ability to continue ruling, but your claim to legitimacy is partly based on the image of a highly competent leader, as someone who is smart strategically, is a grand master of the game of politics, and when your legitimacy hinges upon this image, you are never going to admit that you made a catastrophic strategic blunder of historic proportions. However, I very much hope he recognizes that it was a blunder in private, and I hope he’s seeking a way to get out of this with a modicum of prestige intact so that he can go home, lick wounds and rethink his approach. I don’t know that’s the case, but I certainly wish it were the case.

I think Putin is a very puzzling figure. If you listen to his speech, I mean, a lot of his speeches a few years ago made a lot of sense, to me at least. I mean, he was talking about the country, the direction the country is taking, and he talks about some of the problems the West has and, uh, their way of dealing with it, and direction of the country and stuff like that. I think it all made a lot of sense, but, um, on the other side, he has this dictator authoritarian instinct in him that I think the West has not paid enough attention to. What do you think?

I agree. I actually have read and carefully studied many, many, many of Putin’s speeches about international position of Russia and how Russia has been treated, particularly by the United States. I have assiduously and carefully read the writings of public affairs and foreign policy commentators in Russia who articulate this viewpoint. And I view a lot of it, much of it, as completely reasonable, but none of it justifies what they’re doing in Ukraine. I think you can hold those two views in your head at the same time that yes, Russia has, actually does have some legitimate, reasonable complaints about its role in the world since 1991 or since 2001 or whatever year you wanna pick. You can agree with that and also say, but seeking to dismember Ukraine in 2014, fomenting a rebellion in Ukraine in 2014, and now attacking Ukraine and blowing up cities in Ukraine is not a good way to deal with those problems. So, yes, I do think we underestimated, potentially, the emotion, the degree to which Putin was willing to take drastic steps. And perhaps also, frankly, the degree to which Putin and his high command underestimated Ukraine’s position as a state with an identity of its own and with institutions that function, particularly with a military that functions. All of those are blind spots of Putin that many of us observing his foreign policy did not see as clearly as we probably should have.

Hmm. I think Putin probably had one huge miscalculation. That’s the stiff resistance of the Ukrainian people. If he thought he can get away with this, if the work can be finished very soon, very quickly, then, you know, maybe this is not a bad thing for him to do from his point of view. You know, his relations with the West and how it didn’t work out and all these supposedly grievances and stuff. If he can solve all these problems with a quick war with no real consequences afterwards, I mean, from the previous experiences, that might not be a bad thing for him. But he miscalculated how the West just solidified after the stiff resistance of the Ukrainians.

That’s right. The fundamental miscalculation had to be. The only way we can make even any sense out of what Putin did was the fundamental miscalculation was about Ukraine. Because the West’s response is a result of the Ukrainian response. Had the Ukrainians not been so powerful and brave in their resistance to Russia, had they not been so effective to force Russia to fight hard, you wouldn’t have seen this Russian, this, uh, Western response. So everything, the fundamental miscalculation, is a miscalculation about Ukraine, a blind spot, an inability to see the Ukraine that really existed and only seeing in the mind of Moscow, in the mind of Kremlin, seeing only the Ukraine that they thought existed, that they wished existed, that they imagined existed, but not the real Ukraine. That was a profound and deep blind spot that led them into this quagmire, led them into this disastrous war.

I can tell you, interestingly, there were people in Russia in February writing articles saying don’t do this thing. This is crazy. In fact, there was a wonderful article by a former, by a retired Russian colonel in the Russian armed forces who was retired from the general staff of the Russian armed forces who wrote a whole article saying stop talking about a quick two to three day invasion of Ukraine. It’s not gonna work that way, folks. It’s going to be, if you do this, it’ll be a total disaster. And he wrote this article in early February. So, there were people in Russia who could see what a disaster this would be, but it’s just Putin and his leading circle didn’t see it that way, as you suggested. The only way we can make sense of this is they literally thought they could make this thing happen very quickly, get a regime change, and the West would sort of protest and be bothered about it, but ultimately come around and accept a pro-Russian government in Kyiv.

Right. Right. So that just means Putin is isolated. He is not getting good intelligence from his people.

It’s one of the, it’s one of the problems of a personalist regime like this where the personalist, the person, the figure, the person who’s running the country has been in power for 22 years is that you cultivate around yourself, the leader cultivates around himself, people who are very compatible, who think the same way, and it gets harder and harder for people to bring to the leader contrary or uncomfortable or unwelcome assessments and opinions.

Yeah. That’s bad for Putin, but it’s also bad for the world. Let’s talk about how the world would change after this war. Do you think even before the war broke out, we were still living in this America-dominated unipolar world order?

I think much less dominated than it used to be. I still think there really remains one country in the world that truly does still stand above most others, indeed, all others in certain areas. I mean, you can see this in the financial area of dominance, there’s still layers of technological and economic strength, still some military advantages the United States has when compared to contenders, even China, but these advantages are far slimmer than they were in the 1990s, in the first decade of the two thousands. So, no question about it this unipolar era is not as robust and strong as it used to be. Indeed, I find it very unlikely that Russia would have contemplated an attack like this if the United States had been as strong and as dominant as it was in the early two thousands, let’s say,

Huh. Okay. So, I mean, America’s weakening and also, I mean, do you think President Biden played a role as well? If, uh, Trump is in power, do you think Putin would do a thing like this?

Nobody knows. I mean, that’s one of these speculations. We have no idea what role in the Kremlin’s thinking was played by, uh, their assessments of a given U.S. president. When I look at the carefully articulated analyses coming from highly connected Russian analysts, I see a rather different story. I see a story where they were thinking, you know, Biden’s a kind of realistic guy. He understands America really needs to focus on China and, therefore, he needs to kind of deal with Russia. And therefore, now is a good time to push for a renegotiation of our position, vis-a-vis NATO and Europe. And so, all of these analysts saw that buildup around Ukraine culminating in January and February as simply an attempt to bargain and get a better deal. What they did not expect, these analysts, was the actual invasion of Ukraine as it actually happened.

So, I’m not sure the assessment of Biden was, oh, he’s weak, he’s a pushover. It was more like, perhaps–again, speculating–that, oh, this president is one we can deal with. The problem with Trump was that it was a hard administration to negotiate with because it was so dysfunctional and kind of all over the place and hard to get its act together. In addition, you could argue that Trump was so hostile himself to NATO that you could calculate– again, this is all speculation–but you could calculate from a Kremlin perspective, like why should we upset the apple cart here? Why should we invade or do anything dramatic? Trump’s gonna do our job for us by, uh, if he gets elected to a second term, he’s gonna do something that’s gonna destroy NATO, which for us is a big part of the problem.

Interesting. Okay. So, we were talking about the world order after this war. If Russian, if Russia in the end is seen as the loser of this war, wouldn’t an America-dominated liberal world order be strengthened?

I think it will be given a kick in the pants. I think it will be given a little bit more, a little bit more esteem. I’m not saying you’re gonna restore this supreme self-confidence that the liberal world order had back in the 1990s when we were talking about a kind of an inexorable march towards democracy and globalization. But I do think that if Russia really ends up having a very, very costly and tough slog in its attempt to take territory from a sovereign neighbor, and if you–and by the way, and if we see that result happening in part because of the United States’ continued abiity to put together global coalitions, to impose intense economic costs, to dramatically funnel effective military technology to the victim, in this case Ukraine–if this result is seen as a result partly of American leadership, then yes, this rules-based order under the auspices of American leadership will receive a bit of a boost.

Hmm. Okay. Talking about the American-dominant liberal order, do you think there’s anything America should reflect, do you think there’s anything that America should reflect on in terms of its effort in supporting and spreading democracies around the world?

I really do. I mean, I can hold two views in my head at the same time that Ukraine is right, Ukraine is the victim, Russia is wrong, this is Russia’s war, and it is a disaster, a mistake, and, in many ways, a crime. I can hold that view while also holding the view that the United States and the West should reflect on how it dealt with Russia in the past, how it dealt with European security and indeed how it dealt with Ukraine. I mean, again, we will argue forever whether the NATO issue was really important or not important in explaining this decision. I happen to think if you were to wind the clock back long enough, back to the 2007, 2008 period, a more proactive, more thoughtful Western policy would have told Ukraine that membership of NATO is not in the cards, and we need to come up with an alternative arrangement.

It’s just possible that if we had worked hard at it, we might have ameliorated or reduced the intensity of this problem between Russia and the West that puts Ukraine in the middle of this. But we didn’t do that. We didn’t put the effort into it. We didn’t think Russia was really worth it. It wasn’t strong enough for us to bother. We had other issues. We had war on terror. We had all these other things going on. So, I do think there is a cause here for reflection on our policy for a difficulty that America sometimes has in accepting trade-offs and saying, you know, we really can’t have both this principle and also this other principle at the same time. So yes, I completely agree that this should be an occasion for a little bit of introspection and some circumspection going forward as to how we conduct ourselves.

Hmm. And also if Russia, I mean, this is another scenario. If Russia was perceived as the winner of this war, what kind of new world order are we going to see?

Well, Russia has, again, Russian officials, leaders and commentators and intellectuals have been telling us forever, really, but really strongly since 2007, 2008, that they’re very, very dissatisfied with a U.S.-led so-called unipolar type of world. They want a multipolar world. They want a European security order in which the United States is either absent or has a much smaller role. They want a much larger role for themselves. If you look at the treaties, the draft treaties, they put forth back in February, in the lead-up to this invasion, you could see the kind of order that they wanted. They wanted one in which NATO would back away, in which Russia essentially had a sphere of influence, in which even countries that are part of NATO but joined NATO after 1997, even those countries would not host any permanent NATO forces, would not station certain kinds of weapons, et cetera, et cetera, you get the story. That’s the world order that Russia wants. And that’s the world order that, if they win, they’ll seek to create. They have been very clear about this for many, many years. They do not like a U.S.-dominated world. They want a world in which there are multiple centers of power and that Russia is one of those centers of power.

So, if Russia is perceived as the winner of this war, you think an America-dominated unipolar world order will come to an end?

Well, it depends on what you mean by winner. I think the answer to that question is if they just gain some sort of dominant position in Ukraine, so they “win” in some sense of defeating the Ukrainian military and somehow getting–whatever the outcome is–a slice of Ukraine. They take Donbas. If they succeed in doing that but the rest of Europe solidifies, and Finland and Sweden join NATO, and NATO gets stronger, in no sense could you call that a weakening of this world order. It will be a much worse situation for Russia in which the world will be very much more severely divided into different camps, in which Russia will be excluded from much of the global economy, and in which Russia will be poorer and Russia will be isolated.

So, a victory in that sense, it seems to me, just purely a victory in Ukraine without gaining some sort of understanding with the West and some sort of allies within the West, within Europe, won’t get them this new world order that they seek. That’s why I see this as such a strategic blunder, because the only way Russia can really get what it says it wants, which is an equal role as a respected pole of power in the world, is by agreement with the West, by having the West talk to it and make bargains with it. But invading countries and killing people and blowing up cities makes it so much harder for the West to be able to do that. It puts a barrier in the way of any possible negotiation with Russia and makes the West inclined to just sort of isolate it. So it’s really, the invasion has really worked at cross purposes. So, to get back to your question, it’s not clear to me that a military victory in Russia, I’m sorry, by Russia in Ukraine would end this moment, would dramatically end this so-called U.S-led rules-based order that we keep talking about.

Hmm. Okay. So all around, this is a bad deal for Russia. Putin just had one miscalculation. Okay, go ahead.

Sure. When you do wars of choice, that is to say you choose to fight wars that are not really necessary, that are optional wars, and when you misjudge the country you’re invading and end up losing or not winning, it’s bad for you. So, to take an example, the United States did this in 2003 by invading Iraq. If we rewind the clock and the U.S. never invades Iraq, my guess is if we run that alternate history, America’s position as the global leader would’ve been much stronger than it turned out to be because ultimately, our ultimate failure to achieve our objectives in Iraq really hurt the U.S. position. So, similarly, a dramatic Russian decision to invade Ukraine and not get what it wanted, not get what it sought and only bearing costs, will harm rather than help Russia’s international position. For sure.

Mm-hmm. What about China? Do you think a China-Russia alliance would last? I mean, is China the beneficiary? I mean, can China benefit from this war either way?

Yes. I mean many Russian, I’m sorry, many China analysts and analysts of the Russia-China relationship tell me, and they write and analyze, produce analyses, that say that China, in some sense, benefits here in that this whole crisis in Europe prevents the United States from that laser-like focus on China that was the original intent of the Biden administration. In Washington, DC, there are plenty of China hawks who really want the United States to refocus on China, and Putin’s decision to invade Ukraine has essentially distracted that. So, that side of the coin, that side of the equation, is good for Russia, I’m sorry, good for China, helps Chinese, gives China greater freedom of action. However, the costs imposed on the United States, the sanctions imposed by the United States, the deepening attention between the United States and Russia also put some stress on the Russia-China relationship and put up Chinese diplomacy, in some cases, in a very awkward position.

So, it’s a double-edged sword. But I’ll put it this way: Russia has no choice here. If it’s going to continue in Ukraine, it doesn’t have a westward option anymore. It used to. You know, there used to be this idea that Russia can kind of dance between China and the West and so on and so forth. That’s over for the time being, which means Russia has no choice. Now, if you connect the dots, what does that mean for China? If Russia has no choice, it means China is in the upper hand in this relationship to a greater degree even than before, which means China will be able to dictate, to a much greater degree than before it was willing to do, the terms of the Russia-China strategic partnership.

For example, if Russia has nowhere else to go, then China can try to, Chinese state-owned corporations and other entities that have to deal with the potential for secondary sanctions, they can tread a very careful line and try not to ruin their business plans via too much support for Russia. And they can do that and know that it’s not like Russia has another option. There’s no other great power Russia can go to. Only Beijing. And so, I think that’s going to play into the terms of their strategic partnership.

Yeah. Russia is trapped.

In a way.

Well, thank you, professor. These are all my questions. Do you have anything else to add?

No, I very much enjoyed the conversation.

Alright. Thank you, professor.

You’re most welcome.

Leave a Reply

Your email address will not be published. Required fields are marked *