Unpacking Ukraine – Signs of Hope, Signs of Despair

As I’m writing this piece the Russian invasion of Ukraine just entered day 4. Ukraine thankfully appears to be holding out unexpectedly well so far. Given the reluctance towards military involvement of other countries, a prolonged stalling of the Russian advance until their financial costs force them to retreat is probably the best we can hope for at this point.

But this piece is not about the war itself. The fog of war is real, and there is too much obscured data or misinformation currently circulating for me to comment on. Besides, other people far more knowledgeable than me to discuss this topic. What I can do however, is show the light this conflict has cast on several other geopolitical phenomena, and how it is illuminating for what the future might hold.

The United…ish Nations

When I’m writing for this website, I rarely write something from start to finish in one go. Instead, I have a long list of future posts and ideas that are in various stages of development. One of the more developed drafts was meant to serve as a follow-up to my earlier discussion on how much we’re affected by ingroup vs outgroup dynamics.

The post was intended to be a humorous discussion of how an alien invasion could arguably be one of the best things that could happen to us. Climate concerns and COVID-19 failed to unite us, because they didn’t present us with a clear enemy to ‘fight’ and rally against. But an unprovoked attack from aliens that threatened our existence? That would be a solid foundation for a collective, united human cause. The draft for that post just went into the trashcan, when it became clear that the Martian invaders I was looking for were on our own planet all along.

Ok, so maybe Putin is not a literal Martian invader (or is he?), but he’s playing the role remarkably well. His attack on the sovereign nation of Ukraine has served as a great unifying force that the world hasn’t seen for some time. Countries and factions alike that haven’t seen eye to eye for ages (if ever), suddenly found a common cause and grounds for reconciliation.

From the European Union, to the United States, to Japan, to Turkey, to Al-Qaeda, Putin has done an excellent job of making himself a global pariah, and it’s probably safe to call him the most hated man in the world at this point in time. Our collective response does give some hope that when we are faced with a common enemy, we are still capable of uniting.

It all boils down to having a suitable outgroup, in this case ‘the Russians’ (an unfortunate side-effect of this conflict is that Russians will very likely start facing repercussions around the globe, even when their actual involvement with, or support for the war is non-existent). As long as we can find the right outgroup to blame and direct our anger towards, there seemingly remains room for us to unite and set our differences aside.

“When our outrage is justified instead of being fabricated by the media, we can put our differences aside.”

While it’s unlikely that, once this conflict is over, we’ll immediately unite under a common banner to deal with some of the other existential threats we face, the current situation shows that it’s not impossible either. Where social media is so often a source of division, it is now a beacon of solidarity. This goes to show that when our outrage is justified instead of being fabricated by the media, we can put our differences aside. There is hope for humanity yet.

Unfortunately, it’s not the entire world that’s rallying against Putin. Belarus is of course a Russian puppet state in all but name, so their support for the Russian invasion is no surprise. But China has also lifted their restrictions on Russian wheat imports, while India started purchasing Russian oil after a two-year hiatus. India has also started to explore rupee payments to circumvent the economic sanctions Russia faces. China, India, and the United Arab Emirates all refrained from condemning the Russian invasion at the UN security council.

These countries all have their own reasons for doing so, whether financial or geopolitical. While I generally attempt to view every situation from all possible perspectives, and acknowledge that what we perceive as good and evil is often in the eye of the beholder, in this case there really appears to be no defensible justification for Russia’s invasion of another sovereign nation. That makes it all the more disappointing to see some countries falter in condemning these atrocities.

Broken promises

But more concerning than the absence of condemnation is the lack of military support provided by the United Kingdom and the United States. Along with Russia, these countries were the main signatories of the Budapest Memorandum on Security Assurances. Under the terms of this agreement, Belarus, Kazakhstan and Ukraine would forego their nuclear arsenal in exchange for protection against invasion. Clearly this protection hasn’t been provided, with both the UK and the US being adamant about not sending any troops to Ukraine.

While the threat of Russian escalation towards nuclear weapons serves as a plausible justification for why other countries haven’t intervened, it also effectively means that the Budapest Memorandum is worth less than the paper it’s written on. The situation is eerily reminiscent of the appeasement approach used by the Allies towards Germany prior to the start of World War 2, and we all know how that turned out. When the threat of nukes is enough to scare other countries away, we’re incredibly lucky that the Ukrainians are making the Russian invasion as difficult as it is. But imagine if the invasion would have been a resounding Russian success over the span of only a few days? What would be stopping Putin from moving on to the next country afterwards?

“When it comes to self-preservation, some countries might decide that’s a price worth paying”

So what does this mean going forward? To start, further reductions in nuclear proliferation just became a whole lot less likely. The potential of employing nuclear weapons can be an incredibly effective deterrent against foreign invasions like the one that’s occurring in Ukraine. Undoubtedly the Ukrainian government is currently very much regretting that they gave up their nuclear weapons in the first place. Other countries will likely feel similar going forward. When these agreements don’t provide the guaranteed protection, they’d be foolish to voluntarily give up such a weapon themselves.

In fact, it might even lead to more proliferation of nuclear weapons. When the threat of employing nukes is sufficient to prevent other countries from intervening militarily, countries that currently don’t possess any nuclear capabilities might start considering what would happen to them if they were invaded. In a historic move that goes against 75 years of policy, Germany just tripled their military budget in response to Russia’s unchecked aggression. Could you really blame them if they start considering the option of developing their own nuclear capabilities? When international aid can effectively be blocked through nuclear threats, every country suddenly has a vested interest in developing their own nukes as a deterrent.

Yes that might subject them to sanctions, but it’ll likely be to a much lesser extent than those Russia is currently facing. And when it comes to self-preservation, some countries might decide it’s a price worth paying. On top of that, should multiple countries decide to start developing nuclear weapons simultaneously, they could set up their own internal trade network to soften the economic blow. Overall, this development will likely have global repercussions regarding the threat of nuclear weapons for decades to come.

SWIFT action?

Instead of providing military aid, a majority of countries have opted for sanctioning Russia instead, ranging from introducing trade barriers, to bans from international events, to halting the Nord stream 2 pipeline, to a removal from the SWIFT banking system. Championed by many, it’s actually not all that clear what effect these sanctions will have, for several reasons.

First, the implementation of sanctions was hardly surprising to anyone, let alone Putin. This means that the implementation of these sanctions must have been factored into the decision to invade Ukraine. When sanctions are an expected but insufficient deterrent before the invasion commences, it’s clear that they’re not going to affect the actual decisions made during the war.

“These sanctions might make Putin desperate”

Second, sanctions rarely function on short notice. Instead, they generally take months, if not years, to make their presence felt. This means that the consequences they have on the current ongoing conflict are minimal. And given that, by all appearances, Putin appears to be the instigator behind the invasion while many Russians do not support it, we need to consider what might happen when these sanctions do take effect in the future. It is not unimaginable that Putin’s ambition will see him ousted from power before the implemented sanctions take their full effect. Yet whoever eventually succeeds Putin as Russia’s leader will still face the consequences from these sanctions, even if they oppose the war.

Third, we need to consider who is really affected by these sanctions. Yes, large business-owners and oligarchs might feel some of the consequences from these actions, but they’re also most likely to have invested assets in secure places like Switzerland, who up until this point has not agreed to freeze Russian assets. Instead, it’s the common population who will bear the brunt of these sanctions. The working class, with few financial means and reserves, will be most strongly affected by rising prices, lack of access to imported goods and a depreciating currency.

There is still something to be said for implementing sanctions that affect the working class, as the idea is that this will cause dissatisfaction in the home country, which would supposedly lead to increased domestic pressure on the government to cease their hostilities. A good idea on paper, and potentially even effective in countries with democratically elected governments. But when the country is ruled by an autocrat, where citizens are conscripted and protestors are jailed en masse, placing this burden on the public is hard to justify and just increases their hardship.

“It’s not even clear what some sanctions are attempting to achieve”

And the situation is no different in other European countries. For example, restrictions on Russian gas imports will again be mainly felt by those in the working class. This is at a time when some of the most affected countries by such measures, such as Germany, are already facing poverty levels at a 30-year high. It’s therefore understandable why some countries might hesitate with the introduction of some of these sanctions, when we start to explore who will bear the brunt of the consequences, and what they might actually achieve.

Fourth, sanctions are actually ridiculously ineffective. Based on research covering the past 50 years, only 13% of unilateral sanctions actually achieved the foreign policy goals they set out to attain. And while a quick implementation of sanctions is a predictor of success, Russia had months to anticipate these sanctions and financially prepare themselves. The likelihood of success in this instance is even lower when we consider the other main predictors: modest goals, sanctioned country is much smaller, friendly prior relations between sanctioner and sanctionee, and limited cost to the sanctioning party. All other considerations clearly don’t apply here.

Fifth, it’s not even clear what some sanctions are attempting to achieve. Sanctions such as banning Russia from sporting events or the Eurovision song festival causes significant harm to athletes and performers, but is symbolic at best when it comes to effectiveness. Even more interesting is the commotion that was raised as a result of halting development of the Nord stream 2 pipeline, that was supposed to deliver Russian gas to Europe through the Baltic Sea. The whole reason the pipeline was such a big deal to begin with, was to enable Russia to circumvent Ukraine when it came to supplying European gas. But if Russia manages to successfully annex Ukraine or install a puppet government, the main objective of Nord stream 2 will have been made redundant to begin with!

In fact, cancelling the Nord Stream 2 project actually creates more pressure on Russia to succeed in their operations in Ukraine, since Russian dependence on Ukrainian infrastructure is undoubtedly going to be problematic for them should the conflict be resolved in Ukraine’s favor. This brings me to the last point: the main consequence of all these sanctions is to increase the pressure on Russia.

Military operations are expensive, and economic sanctions can make a costly endeavor even pricier. These sanctions place a deadline on the Russian invasion, which so far has not been going swimmingly for Russia. The result is that these sanctions might make Putin desperate. As the saying goes, “desperate times call for desperate measures“. There is a real risk here that Putin might feel the need to escalate even further to achieve his objectives, which can have disastrous consequences.

The price/profit of war

A final concerning, but unsurprising aspect of the conflict in Ukraine is capitalism rearing its ugly head throughout the war. When media outlets aren’t profiting directly by plastering advertisements throughout their war coverage, they are continuously interrupting themselves with the latest updates on how the stock markets are faring – and no, not the stock markets in Ukraine or Russia, which have direct bearing on the war, but those in the U.S. and Europe.

“Like any other war, there are always those that profit from it”

The biggest land war in Europe since World War 2 just broke out, we’re about as close to World War 3 as we’ve been since the Cuban Missile Crisis, and a significant amount of attention is spent on describing how the stocks are doing. And this is not just reporting from the Economist or the Wall Street Journal, this is from mainline media outlets! The premise that the average citizen, who likely doesn’t own any stocks, should care deeply about how the stock market is doing while a massive war is going on says all about where our current mindset is at.

And for those of us who do own stocks? As far back as two months ago, threads on Reddit have been speculating on how best to profit from the potential of war erupting in Ukraine. And like any other war, there are always those that profit from it:

Whatever the outcome of this conflict will be, the Ukrainians (as well as the Russians who got dragged into a war against their will) are going to suffer. On a global level, the situations is a mixed bag. Russia’s failed attempt at a swift victory combined with the long-term repercussions they face might act as a deterrent for future belligerents. The signs of unity and solidarity shown are also encouraging, but we have no idea how long they will last, and solidarity from other earlier events such as 9/11 has historically been fleeting.

Meanwhile, people all across the world will have to deal with the fallout of sanctions that do little to stop the war, Russians are expected to make a run for the banks tomorrow as millions risk being bankrupted, rising international tensions make de-nuclearization seem like a distant dream, Germany has overnight decided to re-take their position as a major military power, and war is once again fertile grounds for portfolio gains in Wall street. Perhaps that alien invasion would have been preferable after all.

Ron Maas
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