Russia and China's Plans to Evade U.S. Economic Power

From Zongyuan Zoe Liu and Mihaela Papa, at Foreign Affairs, "The Anti-Dollar Axis":

Russian forces are now seizing territory across Ukraine, shelling military and civilian targets, and creeping closer to capturing the capital, Kyiv. The international response to Russian President Vladimir Putin’s invasion has been furious, and U.S. allies are united against the invasion. U.S. President Joe Biden has led the international community in slapping punitive sanctions on Russian elites and firms with the intention of crippling the Russian economy and forcing a change of course. But so far, these measures have failed to compel Russia to accept a cease-fire or to withdraw.

The war is barely ten days old, and it remains to be seen what Putin will do if and when sanctions stoke greater public discontent in Russia. But these punitive sanctions may also backfire in another way. Biden’s flexing of American economic muscle will only embolden Russia and other U.S. rivals, notably China, to deprive the United States of the very power that makes sanctions so devastating. Russia and China will expedite initiatives to “de-dollarize” their economies, building alternative financial institutions and structures that both protect themselves from sanctions and threaten the U.S. dollar’s status as the world’s dominant currency. Without concerted action, the United States will struggle to reverse this movement and see the weakening of its global standing.

The U.S. dollar’s preeminence in the global financial system, backed by vibrant U.S. markets and unmatched U.S. military strength, makes any sanctions imposed by Washington formidable. No other currencies, the euro and the yuan included, have come close to dethroning the dollar from its primary position in the global economy and in international financial markets. The dollar is the most widely held reserve currency in the world. It is the main invoicing currency in international trade and the leading currency across global financial institutions. It dominates global equity markets, commodities markets, development finance, bank deposits, and global corporate borrowing. In times of crisis, people around the world turn to the dollar as their first choice of a safe-haven currency. U.S. sanctions effectively amputate the financial power of a foreign aggressor, preventing it from raising capital in global markets to bankroll its activities.

Russia might be the most outspoken champion of throwing off the yoke of the dollar, but its agenda has great appeal among major powers. China’s commitment to diversifying its foreign exchange reserves, encouraging more transactions in yuan, and reforming the global currency system through changes in the International Monetary Fund further buttresses Russia’s strategy. Deteriorating U.S.-Chinese relations incentivize Beijing to join with Moscow in building a credible global financial system that excludes the United States. Such a system will attract countries under U.S. sanctions. It would even appeal to major U.S. allies who hope to promote their own currencies to the detriment of the dollar. When imposing sanctions, the Biden administration must not just consider how these measures will shape the war in Ukraine but also how they might transform the global financial system.

THE DOLLAR YOKE

For at least a decade, Russian policymakers have been wary of the preeminence of the dollar. In 2012, Russian Deputy Foreign Minister Sergei Ryabkov expressed Russia’s concern about the dollar’s dominance in international trade. After the annexation of Crimea in 2014, the Obama administration expanded sanctions on Russia that targeted several large Russian banks, as well as energy companies, defense corporations, and wealthy supporters of Putin. The Russian government subsequently launched two critical pieces of financial infrastructure to fend off sanctions and preserve its financial autonomy if cut off from the Society for Worldwide Interbank Financial Telecommunication system, also known as SWIFT, which allows banks to send messages to one another. One was an independent national payment system that worked as a Russian alternative to payment platforms such as Visa and Mastercard. The other was a proprietary financial messaging system called the System for Transfer of Financial Messages, or SPFS, the Russian version of SWIFT.

SPFS became fully operational in 2017, transmitting transaction messages in any currency. In December 2021, it had 38 foreign participants from nine countries. As of this March, SPFS has over 399 users, including more than 20 Belarusian banks, the Armenian Arshidbank, and the Kyrgyz Bank of Asia. Subsidiaries of large Russian banks in Germany and Switzerland, the two most important financial power hubs in Europe, have access to SPFS. Russia is currently negotiating with China to join the system. This alternative financial infrastructure enables Russian corporations and individuals to retain some access, albeit limited, to global markets despite sanctions.

Since 2018, the Bank of Russia has also substantially reduced the share of dollars in Russia’s foreign exchange reserves with purchases of gold, euros, and yuan. It also withdrew much of its reserves from U.S. Treasury bonds; between March and May 2018, the Bank of Russia reduced its holdings of U.S. Treasury securities from $96.1 billion to $14.9 billion. In early 2019, the bank cut its U.S. dollar holdings by $101 billion, over half of its existing assets. In 2021, after the Biden administration imposed new sanctions on Moscow, Russia announced its decision to completely remove dollar assets from its $186 billion National Wealth Fund, a major sovereign wealth fund.

Since the beginning of his fourth presidential term in 2018, Putin pledged to defend Russia’s economic sovereignty against U.S. sanctions and prioritized policies that steered the country’s economy away from the dollar. He advocated for getting “free” of the dollar “burden” in the global oil trade and the Russian economy because the monopoly of the U.S. dollar was “unreliable” and “dangerous.” In October 2018, the Putin administration supported a plan designed to limit Russia’s exposure to future U.S. sanctions by using alternative currencies in international transactions...

Keep reading. 

 

How the West Unplugged Russia From the World's Financial Systems

At WSJ, "Western financiers severed practically every artery of money between the country and the rest of the globe, in some cases going beyond sanctions":

Two weeks ago, Russia’s companies could sell their goods around the globe and take in investments from overseas stock-index funds. Its citizens could buy MacBooks and Toyotas at home, and freely spend their rubles abroad.

Now they are in a financial bind. Soon after Russia invaded Ukraine, another war began to isolate its economy and pressure President Vladimir Putin. The first move was made by Western governments to sanction the country’s banking system. But over the course of the past week, the financial system took over and severed practically every artery of money between Russia and the rest of the world, in some cases going further than what was required by the sanctions.

Visa Inc. V -3.91% and Mastercard Inc. stopped processing foreign purchases for millions of Russian citizens. Apple Inc. and Google shut off their smartphone-enabled payments, stranding cashless travelers at Moscow metro stations. International firms stepped back from providing the credit and insurance that underpin trade shipments.

This unplugging of the world’s 11th-largest economy opens a new chapter in the history of economic conflict. In a world that relies on the financial system’s plumbing—clearing banks, settlement systems, messaging protocols and cross-border letters of credit—a few concerted moves can flatten a major economy.

Russia now faces a repeat of one of the most painful episodes in its post-Soviet history—the financial crisis of 1998, when its economy collapsed overnight. In the decades that followed, Russia earned its way back into the good graces of financiers in New York, London and Tokyo. It is all being undone at warp speed and will not be easily put back together.

The ruble has lost more than one-quarter of its value and is now virtually useless outside of Russia, with Western firms refusing to exchange it or process overseas transactions. Moscow’s stock exchange was closed for a fifth straight day on Friday. The Russian Central Bank more than doubled interest rates to attract foreign investment and halt the ruble’s free fall. Two firms that are crucial to clearing securities trades, Euroclear and DTCC, said they would stop processing certain Russian transactions.

With their interest payments stuck inside the country—following the sanctions, Mr. Putin also ordered intermediaries in Russia not to pay—some Russian companies and government entities could default on their bond payments to international creditors. That could make the country toxic for investing for years. Shares of Russian companies, even those without obvious ties to the Kremlin, were booted from stock-index funds, which will further isolate them from pools of Western capital.

Analysts expect Russia’s economy to contract as much as 20% this quarter, roughly the same hit the British economy took in the spring of 2020 during the pandemic lockdowns.

Aleksandr Iurev left Moscow eight years ago as an aspiring entrepreneur. Russia’s escalating hostility in the region made it “no place for business people,” he said from his home in New Jersey. The 36-year-old runs a mobile-app startup and this week, he can’t make payroll for the six developers who work for him in Russia because they hold personal accounts at sanctioned banks.

“It is completely shut off,” he said. He’s looking into cryptocurrency to keep his staff from bolting.

His company, Pocketfied, has other problems: Members of his marketing team in Ukraine took the week off to help build street barricades in Dnipro, in the country’s east.

The one lifeline that still connects Russia’s economy to Western markets is its supplies of energy, which European countries rely on and have been loath to cut off, especially during the winter. U.S. lawmakers are pressuring the White House to expand sanctions to include energy payments, which would sap Russia of its largest source of income, at $240 billion last year.

Even if governments don’t act, the market is speaking: Russian oil producers have had trouble finding buyers for shipments since the invasion began.

“The golden age that we had from 1945 to last week is now over,” said Gary Greenberg, head of global emerging markets at Federated Hermes, which manages $669 billion in assets. “As investors, we need to look at things differently now.”

As it dug out from the 1998 crash, Russia plugged itself into the global economy. It joined Brazil, China and India—dubbed the BRIC economies by Western investors—as the next frontier of finance.

American, British and Swiss banks courted the flood of money its oil industry produced. Russia’s biggest banks listed shares in London. One of them moved into an office across the street from the Bank of England. The Moscow exchange itself went public in 2013 with backing from U.S. and European investors.

The first signs of decoupling came in 2014, when Mr. Putin’s territorial ambitions began to stir. Western governments put limited sanctions on Russia after it annexed Crimea from Ukraine.

Russia began trying to sanction-proof its economy. It built its own domestic payments network—called Mir, Russian for “peace”—to function alongside and, if needed, replace those run by Western firms. It shifted its overseas holdings away from the U.S. and its European allies and toward China, which has been relatively more accommodating of Mr. Putin’s efforts to expand his influence and territory. It doubled its gold reserves.

Those efforts to wall itself off may prove insufficient. At least 40% of Russia’s $630 billion in foreign reserves are in countries that have joined in the latest sanctions. The rest, mostly in China, it is free to spend—but only in China. Moving those reserves out of the country would require first converting them into a Western currency like dollars or euros, which no global bank will do.

Russia, like many energy-rich countries, exports oil and gas and imports much else—automotive parts, medicines, broadcast equipment, wallpaper, fresh vegetables.

The financial journey that enables their geographical one depends on a complex web of loans, insurance policies and payments. Western banks are stepping back from trade financing, executives said, wary of the risk that their counterparty uses a sanctioned Russian bank, or has ties to a sanctioned oligarch. Maersk, the Danish shipping giant, suspended deliveries to Russia, citing tougher terms now being demanded by financiers.

Czarnikow Group, a London-based trade-financing firm, was preparing this week to send a shipload of a specialty plastic used in soda bottles and clamshell packaging, with scheduled stops in Russia and Ukraine. On Monday, the firm got notice from its insurance provider that its policy would no longer cover the ship.

“It was obvious we weren’t going to be able to put a vessel in,” said Robin Cave, Czarnikow’s chief executive, who began looking for alternative ports and is talking to his client about where to send the cargo...

Take a Peek Inside the Massive 'Stratofortress' B-52s Currently Doing Laps Around Eastern Europe

At Instapundit, Ed Driscoll quips, "JUST AS LONG AS SLIM PICKENS ISN’T IN THE COCKPIT."

Definitely click through. Lots of excellent video at the post. 

CONTENT WARNING: Russian Cruise Missile Strike Kills Family in Irbin, Ukraine (VIDEO)

This video is so intense Google's buried results for it, BBC's pulled the segment from their channel, and I'd be surprised if this one from Bloomberg stays up through the night. 

Some copies have even been deleted on Twitter, especially after Clarissa Ward RT'd it earlier (though the clip's gone now). 

Some #StandWithUkraine dude has it posted at a long thread showing today's horrific developments. Another copy is here.

Some are calling these "mortar shells" raining down on Irpin, but at the video, that's no mortar. It's a missile.

Both Pamela Brown and Anderson Cooper showed it during their respective news hours, with Cooper leading with it at the top of the hour, issuing a stern content warning: " We want to warn you it [this video] shows precisely what war is, but it's important for you to see it." Yeah, all the live shots of bombed out ground up meat and bone is "important for you to see," to bolster CNN's ratings though the March Nielson's sweep.

Story at the Associated Press, "Ukraine says Russia steps up shelling of residential areas."

And scroll down at the New York Times, here: "Russian forces fire on evacuees, leaving 4 people dead outside Kyiv.The attack in Irpin, west of the capital, suggested either direct targeting of evacuees or disregard for the risk of civilian casualties":

IRPIN, Ukraine — A Russian force advancing on Kyiv fired mortar shells on Sunday at a battered bridge used by evacuees fleeing the fighting, sending panicked civilians running and leaving four people dead on the pavement.

Crowds of hundreds have clustered around the damaged bridge over the Irpin River since Saturday. Ukrainian forces had blown up the bridge earlier to slow the Russian advance. Only a dozen or so Ukrainian soldiers were in the immediate area of the bridge on Sunday, not fighting but helping carry civilians’ luggage and children... 

A New York Times team — including the photojournalist Lynsey Addario; a security adviser; and Andriy Dubchak, the freelance journalist who filmed the scene — witnessed the moment that civilians were fired upon.

As the mortars got closer to the stream of civilians, people ran, pulling children, trying to find a safe spot. But there was nothing to hide behind. A shell landed in the street, sending up a cloud of concrete dust and leaving one family — a woman, her teenage son and a her daughter, who appeared to be about 8 years old; and a family friend — sprawled on the ground.

Soldiers rushed to help, but the woman and children were dead. A man traveling with them still had a pulse but was unconscious and severely wounded. He later died.

Their luggage, a blue roller suitcase and some backpacks, was scattered about, along with a green carrying case for a small dog that was barking...

 

Under Steady Barrage, Ukrainian Forces Repel Russians

At the New York Times, "Shelling Halts Mariupol Evacuation as Conditions Deteriorate":

LVIV, Ukraine — Frantic efforts to rescue civilians from the worsening violence in Ukraine came under direct attack by Russian forces on Sunday as at least three people were killed in shelling outside Kyiv. Russian forces were struggling to advance on multiple fronts. The Ukrainian military said it was successfully defending its position in fierce fighting north of Kyiv, the capital, and holding back Russians from the east, where President Vladimir V. Putin’s forces bogged down in clashes around an airport.

The United Nations refugee agency said that 1.5 million people had fled Ukraine in the 10 days since Russia’s invasion began, making it the fastest growing refugee crisis in Europe since World War II.

In southern Ukraine, the unexpected Ukrainian success of defending the critical port city of Mykolaiv after three days of intense fighting underscores two emerging trends in the war.

Russia’s failure to seize Mykolaiv and other cities quickly, as President Vladimir V. Putin of Russia appears to have intended, is largely a function of its military’s faltering performance. Russian forces have suffered from logistical snafus, baffling tactical decisions and low morale.

But it is the fierce and, according to many analysts, unexpectedly capable defense by Ukrainian forces, who are significantly outgunned, that has largely stalled the Russian advance and, for now, prevented Mykolaiv from falling into Russian hands.

Here are the latest developments:

* A Russian force advancing on Kyiv fired mortar shells on Sunday at a battered bridge used by evacuees fleeing the fighting, sending panicked civilians running and killing four: a mother and her two children and a family friend traveling with them.

* A planned evacuation of Mariupol — a port city of a half-million people that has become a key battleground in Russia’s objective to capture Ukraine’s entire southern coast — was halted for a second consecutive day amid “intense shelling” by Russian forces that have encircled the city, the mayor’s office said. Residents are facing increasingly dire conditions in the city, which has been cut off from food, heat and electricity for days.

* Amid antiwar rallies across Russia, the police said more than 3,000 people were arrested, the highest nationwide total in any single day of protest in recent memory. An activist group that tracks arrests, OVD-Info, reported detentions in 49 different Russian cities.

* The Biden administration is studying how to supply Russian-made Polish fighter jets to Ukraine, U.S. officials say. President Volodymyr Zelensky is asking for more lethal military aid, especially Russian-made aircraft that Ukrainian pilots know how to fly. Russia threatened countries that allow the Ukrainian military to use their airfields.

* Hundreds of thousands of homes across eastern and southern Ukraine had their gas turned off on Sunday as the areas faced heavy fighting, according to Ukraine’s Gas Transmission System Operator.

* Mr. Zelensky repeated his calls for NATO to enforce a no-fly zone over his country to stop Russia’s aerial attack, saying, “It’s easy when you have the will.” NATO has been unwilling to take such a step, fearful of triggering a wider war with Russia...

 

How Vladimir Putin Brought the West Together

 At Der Speigel, "United By Danger":

The Ukraine war is uniting the West – politically, militarily, morally. But what will the world's democracies do with this newfound unity? Can they succeed in preventing further escalation?

The small Romanian town of Câmpia Turzii doesn't look like the kind of place where global political developments take place. The bed of gravel in front of the town hall is waiting for new asphalt, the "Asia” market next door has lost its "i," and the hotel on the outskirts of town bears the simple name A3. The town’s biggest attraction stands at the city limits. Once you pass the last single-family homes, you suddenly find yourself in front of a mounted aircraft. A blue, Soviet-produced MiG-21 fighter jet juts into the sky like a signpost.

Câmpia Turzii has been home to an air base for almost 70 years. During the Cold War, Warsaw Pact pilots took off and landed here. These days, though, NATO troops are stationed behind the metal gate.

People waited for precisely that for more than 50 years, says Laura Ștefan, a Romanian who works for the Expert Forum, which promotes trans-Atlantic relations. "The Americans were the salvation," she says. "When the first U.S. soldiers moved in, people greeted them with flowers."

NATO, the West – synonymous for many with freedom and prosperity back when Romania joined NATO in 2004.

Today, the country that has for so long stood in the shadow of European history is a front-line state. "We border Ukraine," Ștefan says. "If it came to an invasion of Romania, that would be the end. For many of us, but also for Putin. But I don’t think an invasion of Romania is likely. Still, we have to be prepared for anything.”

Slowly, we're running out of comparisons for grasping the magnitude of what is currently happening. Just a week ago, Vladimir Putin’s invasion of Ukraine brought to mind events like Saddam Hussein’s 1990 attack on Kuwait – a large scale and ultimately devastating military operation, but also one whose impact at first seemed limited to the region.

In the meantime, however, an open and brutal war is raging, and Putin’s threat of using nuclear weapons is evoking the darkest moments in human history: the fateful chain of events that triggered World War I in 1914 and the unleashing of World War II through the invasion of Poland on the orders of a single, megalomaniacal dictator.

.. Few spoke seriously during the Kuwait crisis about the possibility of an imminent third world war. Today, many are using that expression, from the German Green Party politician Jürgen Trittin to the British-American presidential adviser Fiona Hill, who says the global conflict began long ago – with the assassination attempts by Russian agents in the West, for example.

The same West that for so long seemed powerless in the face of Putin’s provocations has now been united by his attack on Ukraine in a way that neither the Kremlin nor Western politicians could have foreseen...

More.

 

Russian Helicopter Gunship Shot Down Over Kyiv Oblast Province of Ukraine (VIDEO)

 At Business Insider, "Ukraine shares footage that appears to show a Russian helicopter gunship shot down in flames with a Stinger portable air-defense system, say reports":

Footage appears to show the moment a Russian gunship helicopter was shot down by a man-portable air-defense system (MANPADS) in the Kyiv Oblast province of Ukraine.

In the video, a helicopter immediately bursts into flames and crashes to the ground after being targeted by a weapon. The footage was shared on Twitter by the Ministry of Defence of Ukraine on Saturday morning. "This is how the Russian occupiers are dying," the ministry said in the caption. "This time in a helicopter!"

It was also circulated on Facebook by the General Staff of the Armed Forces of Ukraine...

Up to eight paratroopers, in addition to its two-person crew, can conduct fire with small arms through the openings in the side windows of these helicopters. Mil Mi-24 Hind gunships have been in use since 1970.

The helicopter appears to have been shot down by an FIM-92 Stinger MANPADS, according to the military and civil aviation website The Aviationist. These man-portable air-defense systems developed in the US can operate as an infrared homing surface-to-air missile.

Several nations have said they are providing Stinger missiles to the Ukrainian forces amid the Russian invasion, including Germany, Denmark, The Netherlands, and the U.S. ...

 

U.S. Working With Poland to Send More Fighter Jets to Ukraine (VIDEO)

I was thinking about this as I was writing my earlier entry on establishing a "no-fly zone" over Ukaine. My thought's were more American F-16s than Russian MIGs, but hey, it's like a new cold war, right? 

At WSJ, "U.S., Poland Look at Providing Soviet-Era Aircraft to Ukraine":

The U.S. is exploring a deal in which Poland would send Soviet-era aircraft to Ukraine in return for American F-16 jet fighters, U.S. officials said Saturday, in the latest bid to help Ukraine respond to Russia’s invasion.

The deal would require White House approval and congressional action, U.S. officials said.

The disclosure of a possible deal followed Ukrainian President Volodymyr Zelensky’s impassioned plea to Capitol Hill for assistance in obtaining more lethal military aid, especially Russian-made jet fighters that Ukrainian pilots can fly. Mr. Zelensky also supported a proposal to ban U.S. imports of Russian oil, in a video call Saturday morning with members of Congress.

There were more than 200 House and Senate members on the call, said people who participated. Mr. Zelensky spoke for about 25 minutes before taking questions.

Senate Minority Leader Mitch McConnell (R., Ky.) asked Mr. Zelensky what one thing he needed most, according to two people on the call. The Ukrainian president replied with the need for jet fighters. He also brought up instituting a no-fly zone over Ukraine, but said, through a translator, “if you can’t do that, at least get me planes,” according to a person on the call.

Eastern European allies are in possession of Russian military jets that potentially could be transferred to Ukraine. Sen. Dick Durbin (D., Ill.), the No. 2 Senate Democrat, said that the U.S. should help make possible the transfer of the aircraft. “We must eliminate every obstacle to providing every measure of support to Ukraine to include finding a way for the United States to compensate our Eastern European partners who wish to donate their Soviet-style aircraft to Ukraine,” he said in a statement.

Another lawmaker said in an interview that Congress could direct funds in a pending spending bill to replenish the stockpiles of European allies.

Mr. Zelensky said that the jets were more important than the Stinger antiaircraft missiles that the U.S. has greenlighted.

A U.S. defense official said other allied nations are seeking to provide Ukraine with Russian aircraft. The U.S. military would backfill with American aircraft...

 Keep reading.

Ukraine's Nuclear Power Fleet the Prize in Russia's Escalating Energy War

 At the Sydney Morning Herald:

Russia’s strategy of seizing control of Ukraine’s power generation by attacking its fleet of nuclear reactors has prompted global fears of a Chernobyl-style nuclear catastrophe.

On Friday, AEDT, Russian troops seized the biggest nuclear power plant in Europe after a middle-of-the-night attack that set it on fire. Firefighters extinguished the blaze, and no radiation was released, UN and Ukrainian officials said...

The attack triggered global alarm and fear of a catastrophe that could dwarf the world’s worst nuclear disaster, at Ukraine’s Chernobyl in 1986. In an emotional nighttime speech, Ukrainian President Volodymyr Zelensky said he feared an explosion that would be “the end for everyone. The end for Europe. The evacuation of Europe.” ...

More.

 

NATO Rejects No-Fly Zone for Ukraine

If Twitter's global commentariat's any measure, practically the entire world's population wants the U.S. military to join the fight in Ukraine. Turns out it's a moral imperative, ironically, since for the last 21 years, the U.S. has been demonized for its nation-building wars in Afghanistan and Iraq, to say nothing of the reaction to the assassination of Osama bin Laden among the 2 billion Muslims worldwide. 

The truth is there is no other country that can destroy Russia and liberate Ukraine. No country with the economic, financial, and military might. Every head of state knows this. People get on the wrong side of the American hegemon at their peril. Even China is hedging its bets now after seeing how fast the U.S. and members of the Western led-international community took down Russia's entire financial system.

It's a breathtaking display of U.S. power. We may not be the the international superpower we once were, but for now, there's no one near ready to take our spot. 

At the video, Vladimir Putin warns the Western allies against creating a "no-fly zone" over Ukraine.

And at the Los Angeles Times, "NATO rejects Ukraine’s plea for no-fly zone after Russia seizes nuclear plant, uses cluster bombs":

KYIV, Ukraine — Russian forces pressed their offensive against key Ukrainian cities Friday in a heavy bombing and shelling campaign that has led to a ballooning humanitarian disaster, spurred a growing exodus of people and raised fears of a wider calamity after Europe’s biggest nuclear power plant was set ablaze. A chorus of international condemnation and outrage followed Moscow’s capture of the nuclear complex, amid indications Russian forces would continue to go after such facilities.

And in Ukraine’s south, Russian troops besieged the city of Mykolaiv in an apparent march toward Odessa, Ukraine’s most important city on the Black Sea.

In urgent meetings of U.S. and European leaders at NATO headquarters in Brussels, the alliance’s commander confirmed Russia was attacking Ukrainians with cluster bombs, a munition outlawed by more than 120 countries. But NATO also rejected Ukraine’s pleas to establish a no-fly zone over the battered country.

“Unfortunately, tragically, horrifically, this may not be over soon,” U.S. Secretary of State Antony J. Blinken said, emerging grim-faced from the meetings.

Blinken said a no-fly zone would require employing NATO aircraft over Ukraine in potential conflict with Russian fighter jets and lead to “a full-fledged war in Europe.”

The Biden administration, which has joined most of Europe in enacting severe economic sanctions on Russia, said it was examining a ban on Russian oil exports, although support for that is muted because it would raise gas prices in the U.S. and Europe.

Pentagon officials expressed alarm over Russia’s violent takeover of the Zaporizhzhia nuclear complex in the southeastern city of Enerhodar and said it remains unclear how Moscow plans to use the facility. At a minimum, the Russians could cut off the electricity that the plant supplies to much of Ukraine, a senior official said.

“Using combat power to try to take a nuclear power plant over ... it just underscores the recklessness of this Russian invasion,” the official said, briefing reporters in Washington on condition of anonymity.

Authorities said Friday morning that local firefighters had extinguished the fire at the plant and that there had been no release of radioactive material. Even with Russian forces in control, officials said, the local staff continues to operate the plant and is inspecting it for damage.

None of the site’s six reactors — only one of which was in use, at about 60% capacity — was damaged, said Rafael Mariano Grossi, the head of the International Atomic Energy Agency in Geneva. Initial reports Friday had mistakenly indicated there was a fire inside one of the reactors.

But the strike on the plant, which sparked immediate fears of a Chernobyl-like disaster, with radioactive clouds drifting over the rest of Europe, demonstrated anew the war’s potential for terrifying effects far outside Ukraine’s borders. Norway’s leader called the shelling of Zaporizhzhia “in line with madness.”

Linda Thomas-Greenfield, the U.S. ambassador to the United Nations, warned in an emergency session of the Security Council that Russia could make use of any of Ukraine’s other nuclear facilities as pawns in the war.

Energoatom, Ukraine’s state nuclear plant operator, said three Ukrainian soldiers were killed and two were injured in the strike.

In an emotional video address, Ukrainian President Volodymyr Zelensky appealed for a stop to the shelling of Zaporizhzhia and for a Western-enforced no-fly zone over the country to forestall any other strikes on sensitive infrastructure. Ukraine is home to four nuclear power plants.

“Only urgent action by Europe can stop the Russian troops,” said Zelensky, who fielded a flurry of worried calls from President Biden and other world leaders. “Do not allow the death of Europe from a catastrophe at a nuclear power station.”

His comments came as Russian troops strengthened their grip on Ukraine’s south in a bid to choke off access to the Black and Azov seas and establish control over a swath of land pushing up against Moldova and NATO member Romania to the west...

Keep reading.

 

Russia's Currency Reserves Aren't Safe

Actually, nobody's reserves are safe. This round of economic and financial sanctions are perhaps the most devastating since World War Two. 

At WSJ, "If Russian Currency Reserves Aren’t Really Money, the World Is in for a Shock":

Sanctions have shown that currency reserves accumulated by central banks can be taken away. With China taking note, this may reshape geopolitics, economic management and even the international role of the U.S. dollar.

“What is money?” is a question that economists have pondered for centuries, but the blocking of Russia’s central-bank reserves has revived its relevance for the world’s biggest nations—particularly China. In a world in which accumulating foreign assets is seen as risky, military and economic blocs are set to drift farther apart.

After Moscow attacked Ukraine last week, the U.S. and its allies shut off the Russian central bank’s access to most of its $630 billion of foreign reserves. Weaponizing the monetary system against a Group-of-20 country will have lasting repercussions.

The 1997 Asian Financial Crisis scared developing countries into accumulating more funds to shield their currencies from crashes, pushing official reserves from less than $2 trillion to a record $14.9 trillion in 2021, according to the International Monetary Fund. While central banks have lately sought to buy and repatriate gold, it only makes up 13% of their assets. Foreign currencies are 78%. The rest is positions at the IMF and Special Drawing Rights, or SDR—an IMF-created claim on hard currencies.

Many economists have long equated this money to savings in a piggy bank, which in turn correspond to investments made abroad in the real economy.

Recent events highlight the error in this thinking: Barring gold, these assets are someone else’s liability—someone who can just decide they are worth nothing. Last year, the IMF suspended Taliban-controlled Afghanistan’s access to funds and SDR. Sanctions on Iran have confirmed that holding reserves offshore doesn’t stop the U.S. Treasury from taking action. As New England Law Professor Christine Abely points out, the 2017 settlement with Singapore’s CSE TransTel shows that the mere use of the dollar abroad can violate sanctions on the premise that some payment clearing ultimately happens on U.S. soil.

To be sure, the West has frozen Russia’s stock of foreign exchange, but hasn’t blocked the inflow of new dollars and euros. The country’s current-account surplus is estimated at $20 billion a month due to exports of oil and gas, which the U.S. and the European Union want to keep buying. While these balances go to the private sector, officials have mobilized them. Stopping major banks like Sberbank from using dollars and excluding others from the Swift messaging system still plunges the economy into chaos, especially if foreign businesses are afraid to buy Russian energy despite the sector’s explicit exclusion from sanctions. But hard currency will probably keep gushing in through energy-focused lenders like Gazprombank, and can theoretically be used to pay for imports and buy the ruble.

Yet the entire artifice of “money“ as a universal store of value risks being eroded by the banning of key exports to Russia and boycotts of the kind corporations like Apple and Nike announced this week. If currency balances were to become worthless computer entries and didn’t guarantee buying essential stuff, Moscow would be rational to stop accumulating them and stockpile physical wealth in oil barrels, rather than sell them to the West. At the very least, more of Russia’s money will likely shift into gold and Chinese assets...

 

Putin Follows Through on His Word

It's Pat Buchanan, at the American Conservative, "Putin Warned Us":

When Russia’s Vladimir Putin demanded that the U.S. rule out Ukraine as a future member of the NATO alliance, the U.S. archly replied: NATO has an open-door policy. Any nation, including Ukraine, may apply for membership and be admitted. We’re not changing that.

In the Bucharest declaration of 2008, NATO had put Ukraine and Georgia, ever farther east in the Caucasus, on a path to membership in NATO and coverage under Article 5 of the treaty, which declares that an attack on any one member is an attack on all.

Unable to get a satisfactory answer to his demand, Putin invaded and settled the issue. Neither Ukraine nor Georgia will become members of NATO. Russia resolved that it would go to war to prevent that from happening, just as it did on Thursday.

Putin did exactly what he warned us he would do.

Whatever the character of the Russian president, now being hotly debated here in the USA, he has established his credibility. When Putin warns he will do something, he follows through.

Days into this Russia-Ukraine war, potentially the worst in Europe since 1945, two questions need to be answered: How did we get here? And where do we go from here?

How did we get to a place where Russia—believing its back is against a wall and the United States, by moving NATO ever closer to Russia’s borders, put it there—reached a point where it chose war with Ukraine rather than accept the fate and future it believed the West had in store for Mother Russia? ...

Keep reading. 

U.S. and NATO Pressed on Ukraine Aid

 At WSJ, "As Russian Invasion of Ukraine Widens, the West’s Options Shrink":

Seven days into Russia’s invasion of Ukraine, the U.S. and its North Atlantic Treaty Organization allies are coming under increasing pressure to do more to help Ukraine, even as they face diminishing options for doing so.

As Russia continues its push to capture urban areas, one of the more drastic options discussed publicly has been a no-fly zone, which would stop Russian aircraft from launching strikes over Ukraine, eliminating a key military tactic. But the idea has been dismissed by the U.S. and NATO countries.

“That is in many ways for many people, the unspoken question. Why not just engage militarily? But that’s not something any NATO member is thinking of doing. And there’s a reason for that, which is in order to have a no-fly zone above Ukraine, in the current circumstances, you would have to take decisions to shoot down Russian jets,” British Prime Minister Boris Johnson said Wednesday. “And that’s not something that any Western country is contemplating.”

British officials say that while the no-fly zone has been discussed at senior levels, it isn’t a realistic option given the risks of it provoking a direct conflict with Moscow.

Creating a continuous, effective no-fly zone over Ukraine, particularly with several NATO nations, would require several hundred planes, not only to uphold the no-fly zone but to support those aircraft maintaining that no-fly zone. In addition, air forces across multiple nations would have to coordinate. And, should Russia attack NATO-member aircraft, that would be seen as an attack on the 30-member alliance.

The British government has said it would instead continue to impose more sanctions on Russian individuals, deliver more weapons to Ukraine and make it easier for refugees fleeing the conflict to settle in the U.K.

Sanctions, however, won’t have an immediate effect on the battlefield, Western leaders have acknowledged. “This is going to take time,” President Biden said last week as the U.S. began rolling out punitive financial measures that included cutting off some of Russia’s largest banks from the global financial system.

However, officials hope that the unprecedented economic hit will bite the Russian economy rapidly, meaning that as the bombs fall on Kyiv, there will be Russian bank runs and Russian businesses collapsing, showing real-world consequences for Russian President Vladimir Putin.

A no-fly zone could be part of an eventual peace agreement, one official said.

While NATO members have rejected any notion of direct intervention, they have recently increased their defensive presence, with more than 100 jets now at high alert, operating from 30 locations, more than 120 ships on patrol from the Baltic Sea to the Mediterranean Sea, and thousands more troops deployed to NATO’s east.

Mr. Putin’s reference to putting his nation’s nuclear-weapons arsenal on alert has also raised concerns among NATO allies about the potential risks of military involvement. There appears to be no consensus yet as to how the West would react to such an escalation, and one European diplomat suggested the nuclear-posture change was a bid to deflect attention away from the conduct of the war.

But if Mr. Putin did follow through with his threat, the nuclear-armed NATO members would put their nuclear arsenal on alert, officials said.

One NATO official speculated that Western countries could in such a scenario attempt to send more substantial support to Ukraine by private channels, without specifying what that would entail. A European official said this had already been discussed in government circles.

“The situation is escalating and Putin seems keen for it to escalate, he is following a logic of war,” the European official said.

On Friday, foreign ministers from NATO member states will hold emergency talks about Ukraine. Among the issues they will discuss, U.S. officials said, is how the alliance can support Ukraine, even though it is a non-NATO member. But officials conceded there aren’t many options.

Even the Western weapons shipments now streaming into Ukraine via Poland could lead to an escalation of hostilities between Russia and NATO, some officials fear, and the alliance members are divided on how much military assistance to provide. Over the weekend, the EU’s top diplomat, Josep Borrell, said the bloc would send jet fighters to Ukraine, and, for the first time, finance member countries’ deliveries of offensive weapons to Kyiv.

Several officials familiar with the discussions said that there was never any agreement on such a move, which had merely been discussed among foreign ministers of the bloc. On Tuesday, officials in several countries that have the types of aircraft Ukrainian pilots are trained to fly said they were unwilling to provide them despite Mr. Borrell’s comment.

NATO and European officials said that there was a great concern about Russia attacking the supply lines that channel weapons and other materiel to Ukraine via Poland. The positioning of troops in Belarus as well as around Kyiv suggested that Russia was planning to cut off the western part of the country and end the shipments of arms and humanitarian aid to Ukraine.

NATO members appear to accept that regardless of what measures they take, Mr. Putin appears set on widening the conflict...

Putin the Powerful: Oligarchs Can't Take Out Russian Dictator

Somewhere I read that Vladdy's hold on power had weakened since last Thursday, especially since things were going so badly on the ground. 

Perhaps not.

See Max Seddon, at the Financial Times, "Russia’s oligarchs powerless to oppose Putin over Ukraine invasion: President responds to any criticism with reprisals, leaving business leaders with diminished influence":

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As Russia’s tanks rolled into Ukraine last week, Vladimir Putin gathered the country’s top businessmen in the Kremlin’s ornate Hall of the Order of St Catherine to discuss their response to the economic shocks that would follow.

The Russian president, seated about 20ft away in a conspicuous social-distancing measure, told them he had “no other choice” but to invade Ukraine — and, if they wanted to keep their businesses, neither did they, according to people briefed on the meeting.

“It was a pointless meeting. The main idea was to explain himself. The explanation was: ‘I get it, but I didn’t have any other way out.’ That’s really what he thinks,” one of them said.

The EU on Monday froze the assets and imposed travel bans on more than half a dozen of Russia’s most prominent businessmen in a move officials have said is aimed at compelling the country’s elite to demand Putin change course.

But the power dynamic of the meeting made for a much starker message to the assembled billionaires. He warned that anyone who avoided doing business with companies sanctioned by the west would face punishment under the law — implying that the oligarchs had to make a stand — while also stating that Russia would help companies hit by western sanctions.

The comprehensive guest list for the meeting, where attendees sat in alphabetical order, showed that any form of dissent has become a distant prospect as Putin’s power becomes near-absolute, people close to some of the attendees said.

Though some, such as banker Petr Aven and Vladimir Yevtushenkov, owner of the Sistema conglomerate, were among the first to make a fortune in Russia’s turbulent 1990s, they were outnumbered by the heads of the state-run banking and energy groups that now dominate Russia’s economy — many of whom have ties to Putin’s inner circle.

Mikhail Fridman, Aven’s business partner, has criticised the war in general terms but told reporters on Tuesday he did not want to attack Putin directly because it “will not have any impact for political decisions in Russia” while endangering his employees.

“Nobody really wants to suffer. But the message is we will have to,” said a senior state banker. “Being on the US sanctions list used to be a status symbol of patriotism. But now it’s a requirement. If you’re not on it, it’s suspicious.”

The meeting showed how far Russia — and Putin himself — had come since his first meeting with the oligarchs a few months after he took office in 2000.

Then, the fledgling leader offered a deal to the wealthy businessmen: keep the gains they had made from privatising Russian state assets after the Soviet Union’s collapse in return for pledging fealty and staying out of politics.

Since then, Putin has imposed his will on the oligarchs by responding to any criticism with reprisals, leaving them with vastly diminished influence — and some of them in prison, such as the former oil magnate Mikhail Khodorkovsky, who spent 10 years in prison on tax and fraud charges that were largely seen by international observers as politically motivated.

Some who built their fortunes before Putin came to power — such as Khodorkovsky and the banker Sergei Pugachev — have left the country. A few other more recently minted businessmen have left the country or been arrested...

Putin Accidentally Revitalized the West's Liberal Order

It's Kori Schake, at the Atlantic, "The Russian president thought he sensed an opportunity to take advantage of a disunited West. He has been proved wrong":

Russia’s invasion of Ukraine has unleashed a chorus of despair—beyond the cost in Ukrainian lives, the international order that the U.S. and its allies built after World War II is, we are told, crumbling. The writer Paul Kingsnorth has declared that the liberal order is already dead. The Indian journalist Rahul Shivshankar has argued that “in the ruins across Ukraine you will find the remains of Western arrogance.” Even the brilliant historian Margaret MacMillan has written that “the world will never be the same. We have moved already into a new and unstable era.”

The reverse is true. Vladimir Putin has attempted to crush Ukraine’s independence and “Westernness” while also demonstrating NATO’s fecklessness and free countries’ unwillingness to shoulder economic burdens in defense of our values. He has achieved the opposite of each. Endeavoring to destroy the liberal international order, he has been the architect of its revitalization.

Germany has long soft-pedaled policies targeting Russia, but its chancellor, Olaf Scholz, made a moving and extraordinary change, committing an additional $100 billion to defense spending immediately, shipping weapons to Ukraine, and ending the Nord Stream 2 pipeline, which was constructed to bring gas to Germany from Russia. Hungary, thought to be the weakest link in the Western chain, has supported without question moves by the European Union and NATO to punish Moscow. Turkey, arguably the most Russia-friendly NATO country, having bought missile defense systems from Moscow, has invoked its responsibilities in the 1936 Montreux Convention and closed the Bosporus strait to Russian warships. NATO deployed its rapid-reaction force for the first time, and allies are rushing to send troops to reinforce frontline states. A cascade of places have closed their airspace to Russian craft. The United States has orchestrated action and gracefully let others have the stage, strengthening allies and institutions both.

We are a long way from the ultimate outcome of Russia’s invasion, but even if Ukrainian military forces cannot prevail or President Volodymyr Zelensky and his government are killed or captured, it’s difficult to see how Putin’s broader gamble succeeds. If Zelensky falls, another leader will step forward. Even Russian-speaking Ukrainians have become anti-Russian. The scene depicted in Picasso’s Guernica, one of wanton and barbaric violence, is the best Putin can hope for: Conquering Ukraine will require unspeakable brutality, and even if Moscow succeeds on this count, foreign legions are flowing to Ukraine to assist an insurgency in bleeding Russia’s occupation. If Ukraine fends off Russia’s assault, it will be welcomed into NATO and the EU.

The Ukrainian government that so recently seemed mired in corruption and division has been outstanding: President Zelensky has refused to flee and inspired resistance; outgunned and outmanned Ukrainian military forces seem to have held their own. They understand that they’re in a battle of ideas, establishing, for example, a hotline for Russian prisoners of war to call their families.

Civil activism is the lifeblood of free societies, and Ukrainians have been excelling, including the sunflower lady, who cursed Russian soldiers; civilians lining up to collect arms and make Molotov cocktails, or change out street signs to confuse the invaders; and breweries retooling to produce weaponry.

Ukraine’s tenacity and creativity have ignited civil-society energy, corporate strength, and humanitarian assistance. The hacker group Anonymous has declared war on Russia, disrupting state TV and making public the defense ministry’s personnel rosters. Elon Musk’s SpaceX has promised to help keep Ukraine online. The chipmakers Intel and AMD have stopped sending supplies to Russia; BP is divesting from its stake in the Russian energy giant Rosneft; FedEx and UPS have suspended service to Russia. Norway’s sovereign wealth fund is cutting all its investments in Russia. YouTube and Meta have demonetized Russian state media. (Even Pornhub is denying Russians access.) Belarusian hackers disrupted their country’s rail network to prevent their government from sending troops to support the Russian war. Polish citizens collected 100 tons of food for Ukraine in two days. Bars are pouring out Russian vodka. Iconic architecture in cities all over the free world is lit up with the colors of the Ukrainian flag to show solidarity. Sports teams are refusing to play Russia in international tournaments. The London Philharmonic opened its Saturday concert by playing the Ukrainian national anthem, and the Simpsons modeled Ukrainian flags. This is what free societies converging on an idea looks like. And the idea is this: Resist Putin’s evil...

Still more.

 

The West's Sanctions Barrage Severs Russia’s Economy from Much of the World

I'm fairly blown away by how monstrous these economic sanctions are. Putin had squirreled away $650 billion in gold reserves, of which he can't even get his hands now. 

It's also fascinating that Russia's oil industry was largely spared from the sanctions barrage, explicitly because Western Europe is so dependent on Russian supplies. This is the killer weakness among the Western democracies, extreme vulnerability interdependence: The abject reliance on the world's worst authoritarian regimes (including Saudi Arabia, etc.) for their energy supplies.

This is conflict oil and should be completely repudiated by Western societies. In the U.S., that would mean the stupid Biden administration would have roll back its green energy agenda, deregulate, restore pipeline projects, allow drilling and production on federal lands, etc., and then just leave freakin' energy markets alone to boost supplies of oil, natural gas, and whatever else we need.

Sheesh. 

At the Wall Street Journal, "The country has been all-but-unplugged from a global system that powered its yearslong transition from a closed society":

Western nations dropped economic sanctions of historic scale on Russia that are hobbling its financial system and effectively reversing 30 years of post-Cold War engagement.

The economic moves by the U.S. and Europe, in response to the invasion of Ukraine, reverberated Monday through Russia’s economy, which was largely cut off from much of the West, and hindered the ability of Russia’s central bank to manage the country’s financial system and mitigate the damage.

Western banks and businesses added to the governments’ actions by halting operations in Russia and sales to Russian companies. Many cited the risks of potentially violating sanctions. More broadly, businesses prize stability, and invasions create chaos.

In just days, Russia has been all-but-unplugged from a global system that powered its transition from a closed, government-controlled economy to a more modern one that yielded Western goods, foreign travel and a middle-class lifestyle.

“Today, Russia’s financial system and economy are facing a totally abnormal situation,” the usually reserved Bank of Russia Gov. Elvira Nabiullina, dressed in black, said Monday.

The impact hit Russian stock, bond and currency markets. Its central bank shut the stock market, avoiding an expected selloff, and raised benchmark interest rates to 20% from 9.5%, to make holding the ruble more attractive and cushion its expected fall.

The ruble fell to 108.014 to the U.S. dollar from 83 on Friday—a drop of more than 20% and its worst one-day decline since Sept. 3, 1998. Shares of several large Russian companies traded in London and they fell as well. Sberbank, the country’s largest lender, was down 74%. The bank was sanctioned by Western nations. The country’s energy giants also got hit, with Gazprom falling almost 53% and Rosneft declining 42%. The central bank said the Russian stock market would remain closed Tuesday.

Russia imposed capital controls, blocking residents from sending money to foreign bank accounts and restricting payments on offshore debt. On the streets, Russians on Monday lined up at ATMs to take out cash.

The speed and breadth of the sanctions overwhelmed years of preparation by Russia after the 2014 sanctions. In a strategy dubbed Fortress Russia, the country built up more than $600 billion in foreign reserves, bought gold and pivoted some exports to China. Closing off Russia’s access to those reserves undercut the strategy, a fact acknowledged by Ms. Nabiullina, the central bank chief.

Timothy Ash, an emerging-market strategist at BlueBay Asset Management, wrote in a note to clients Monday: “From Fortress Russia to Rubble Russia in a week.”

The latest round of sanctions are likely to cause a sizable contraction for Russia’s economy this year, and could prompt bank runs and higher interest rates as the Russian ruble depreciates, according to the Institute for International Finance, a Washington-based global association of financial firms, Elina Ribakova, deputy chief economist at the IIF, said Monday she expected sanctions to bring about a contraction of at least 10% in Russia’s gross domestic product along with double-digit inflation.

“The pressure on the Russian economy is just tremendous,” said Janis Kluge, an expert on the Russian economy at the German Institute for International and Security Affairs. “And it’s going to get even more dramatic over the next weeks and months.”

Even before Russian President Vladimir Putin’s decision to invade Ukraine, Russia’s central bank had difficulty bringing inflation under control. In January, the inflation rate stood at 8.7%, more than double the central bank’s target, despite a series of interest rate increases that began last March.

Boris Titov, Mr. Putin’s business ombudsman, criticized the central bank’s rate increase Monday, saying in an Instagram post that it chose to “further strangle” Russian businesses that are already “at the front-line” of sanctions...

 Keep reading.

Europe's Dependence on Russia's Natural Gas Supplies Following the Invasion of Ukraine

Oil.

Petroleum.

Fossils fuels.

No matter how much radical environmentalists deceive the leaders of the developed democracies, the fact remains that without fossil fuels, these countries would perish.

At the Economist, "If the supply of Russian gas to Europe were cut off, could LNG plug the gap?":

Russia’s invasion of Ukraine has led to renewed speculation about the future of European energy, and in particular about its supply of natural gas. The continent gets around a quarter of its energy from gas. In 2019 Russia provided over 40% of that gas. The West has not gone so far as to place limits on Russian gas exports, although Germany has suspended the licensing of Nord Stream 2 (ns2), a completed but not yet operational pipeline between Russia and Germany. But what if Vladimir Putin, Russia’s president, were to cut off gas to the West? One alternative source of energy is liquefied natural gas (lng), which is usually transported by sea. To what extent could lng replace piped Russian gas as a source of energy for Europe?

Europe already uses a lot of lng; it makes up around a quarter of the region’s natural-gas imports. One question is how much more of the stuff Europe can process. lng is first turned into a liquid in order to be transported; it must then be “re-gassed” at terminals, usually near the coast, before it can be used to heat and power homes. Heavy investments in regasification plants mean that Europe has plenty of idle capacity. The region’s import terminals ran at 45% of capacity last year, according to Energy Intelligence, an industry publisher, although not all of these terminals are in the right place. Germany has no terminals, while Spain has a quarter of the continent’s capacity, even though its gas infrastructure is largely isolated from the rest of Europe.

The more pressing problem is the available supply of lng. The biggest exporters of lng are America, Australia and Qatar. Although they all have plenty more gas, all are already exporting at or near full tilt. It takes a long time to expand liquefaction and export capacity, so Europe’s best short-term hope would be to get hold of existing lng cargoes originally destined for elsewhere. But Asia also has a strong appetite for lng. China’s imports grew by 82% between 2017 and 2020, for example; last year it overtook Japan as the world’s biggest importer. And around 70% of lng traded globally is on contracts that run for ten years or more. Europe tends to rely on spot markets and shorter contracts. In the past that has allowed Europe to take advantage of low prices when stocks were plentiful, and ensured that countries did not commit themselves to using fossil fuels decades into the future. But it also leaves Europe at the mercy of the market.

When Europe’s gas reserves dwindled over the autumn and winter, in part because Russian supplies dropped, lng imports shot up (see chart). So did prices. In the past, spot prices in Asia have typically been higher than in Europe. But in recent months the price in Europe has at times matched Asian levels. The invasion of Ukraine has only made things worse...

Still more.

 

Joe Biden's Failure in Ukraine

Pamela Geller features the Epoch Times, "Washington’s Policy Failure in Ukraine":

The Biden administration seems to have thought it could scare the Russians away from Ukraine, so refused, on principle, to negotiate. The Russians weren’t scared off, and we and our allies (not to mention the Ukrainians) are without much of a policy.

A superpower shouldn’t make threats that won’t be backed up. The United States and NATO—who don’t agree on very much—do agree that no one will use military force to defend Ukraine. That means all the threats are economic and political.

This is necessary, because America’s ability to defend Eastern Europe militarily is, to say the least, questionable. We have few ground forces, no in-depth defenses against Russian missiles and rockets, and little assurance that NATO can fight even if it chooses to. The expansion of NATO in the 1990s came when most of our allies had disarmed as part of the “peace dividend” after the collapse of the Soviet Union.

The United States did some serious disarming as well, and the result is that no NATO member outside of the United States can really defend its own territory, let alone someone else’s. And keep in mind that Ukraine isn’t a NATO member.

In addition, U.S. forces are weaker today because of long wars in Iraq and Afghanistan, throwing away trillions of dollars and leaving a lot of our forces unable to be summoned to a fight. Readiness levels remain appallingly poor despite some improvements during the prior administration. In addition, the Pentagon continues to ignore important defense systems, including tactical and strategic air defenses; we have sent our soldiers to war with no air cover against missile and drone attacks. War stocks, too, which take years to replenish, are at bare minimum levels or below.

Objective conditions leave any U.S. leader with an almost empty military hand.

The right move, the clever move, would have been serious arms control negotiations with Moscow when Russian President Vladimir Putin demanded them. Putin handed the administration a clear opportunity, because it appears the Russians are afraid of NATO. It appears—it may not be true—but if they are afraid of NATO, we could work out deals to protect European security and Russian security, something the Russians not only say they want, but also put their “want” in the form of demands.

The same possibility for negotiations had applied to Ukraine. The Russians argued that the Ukrainians should negotiate the terms provided for by the Minsk Protocols. Washington, however, applied no pressure on Kyiv, although it’s a signatory along with the two Donbas “republics.” The core issue there was limited autonomy for those “republics,” which the Russians have now recognized as independent and to which they have sent “peacekeepers.”

Certainly, it would have been difficult, but Ukraine would have held onto the “republics” and taken away the Russian excuse to threaten Ukrainian independence. But the Ukrainians really were convinced, wrongly, that support from Washington would get them back the lost areas with no compromise and chase the Russians away. Washington should never have been allowed that fantasy.

There’s a reason that Ukraine isn’t in NATO—and that adding it isn’t on the NATO agenda...

 

Russia's Invasion Could Unleash Forces the Kremlin Can't Control

The Ukrainians a determined, fierce, and awfully brave. 

Just a few minutes ago on CNN, William Taylor, a former ambassador to Ukraine, argued that the Ukrainians will never allow a Russian-back puppet regime in Kiev. People will take to the streets. Strings will be cut and puppet squashed.

And now, at Foreign Affairs, see Douglas London, "The Coming Ukrainian Insurgency":

Russian forces have struck targets across Ukraine and seized key facilities and swaths of territory. The Ukrainian military is no match for this Russian juggernaut. Although some reports suggest Ukrainian troops have rebuffed attacks in certain parts of the country, it seems more likely that Russian President Vladimir Putin will decide just how far Russia goes into Ukraine. As a retired Russian-speaking CIA operations officer who served in Central Asia and managed agency counterinsurgency operations, I did not think Putin would have attacked Ukraine unless he had already devised a reliable end game, given the costs of an intractable conflict. But Putin’s best-laid plans might easily unravel in the face of popular Ukrainian national resistance and an insurgency.

If Russia limits its offensive to the east and south of Ukraine, a sovereign Ukrainian government will not stop fighting. It will enjoy reliable military and economic support from abroad and the backing of a united population. But if Russia pushes on to occupy much of the country and install a Kremlin-appointed puppet regime in Kyiv, a more protracted and thorny conflagration will begin. Putin will face a long, bloody insurgency that could spread across multiple borders, perhaps even reaching into Belarus to challenge Belarusian President Alexander Lukashenko, Putin’s stalwart ally. Widening unrest could destabilize other countries in Russia’s orbit, such as Kazakhstan, and even spill into Russia itself. When conflicts begin, unpredictable and unimaginable outcomes can become all too real. Putin may not be prepared for the insurgency—or insurgencies—to come.

WINNER’S REMORSE

Many a great power has waged war against a weaker one, only to get bogged down as a result of its failure to have a well-considered end game. This lack of foresight has been especially palpable in troubled occupations. It was one thing for the United States to invade Vietnam in 1965, Afghanistan in 2001, and Iraq in 2003; likewise for the Soviet Union to enter Afghanistan in 1979. It was an altogether more difficult task to persevere in those countries in the face of stubborn insurgencies.

Russia can likely seize as much of Ukraine’s territory as it chooses. But plans to pacify Ukraine will require far more than the reserve forces Putin has suggested might occupy the territory as “peacekeepers” after initial combat objectives are met. Thanks to Putin’s aggression, anti-Russian fervor and homegrown nationalism have surged in Ukraine. Ukrainians have spent the last eight years planning, training, and equipping themselves for resisting a Russian occupation. Ukraine understands that no U.S. or NATO forces will come to its rescue on the battlefield. Its strategy doesn’t depend on turning back a Russian invasion, but rather in bleeding Moscow so as to make occupation untenable.

Any future insurgency will benefit from Ukraine’s geography. The country is bordered by four NATO states: Hungary, Poland, Romania, and Slovakia. Belarus, a Russian ally, is itself bordered by Poland on the west and another NATO member—Lithuania—on the north. These long borders offer the United States and NATO an enduring way to support Ukrainian resistance and a long-term insurgency and to stoke unrest in Belarus should the United States and its allies choose to covertly aid opposition to Lukashenko’s regime...

RTWT.

 

Biden’s Public Approval Tanking as Russia Prepares to Take Kiev

At the Federalist, "Biden’s Approval Sinks Further As Russia-Ukraine Crisis Heightens."

A freakin' 56 percent majority thinks the Biden presidency has been a failure.

The president's at 39 percent approving for his handing of the Ukraine crisis. 

Brutal. 

The full results are here, "NPR/PBS NewsHour/Marist National Poll: The Biden Administration Heading into the State of the Union Address, February 2022" (via Memeorandum).