Europe’s game – Part 2

In the previous entry, I argued that Europe had to push forward with sanctions on Russia, despite the imminent threat of a Russian economic crisis. However, Europe’s game does not end here. It has to carefully observe the movements within the Russian political elite. Russia’s looming economic breakdown and Western sanctions have indeed affected power relations within the elite – but not everyone suffered equally.

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Europe’s Game – Part 1

Pro-Russian rebels held illegal elections in the Donbass on 2 November, which Russia first recognised then only “respected”. Meanwhile, Ukrainian authorities and NATO reported a serious Russian military build-up in Eastern Ukraine. Vladimir Putin was told off at the G20 summit, where even his face-to-face encounter with Angela Merkel went haywire. The British embassy in Kiev offered the Russian government a guide to identify its own armoured vehicles. You might have thought that if anytime Europe was ready to introduce new sanctions against Russia, it was now. If you did, you were wrong. EU member states failed to agree on new sanctions against Russia on Monday; instead, they chose to pretend something was happening and called to sanction rebel leaders. With the Russian economy on the verge of a serious crisis, the newest phase of the Ukraine crisis may just look like this: a chicken game, in which, before eventually losing, Putin might first score some political points.

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When the wells run dry

Those critical of Western sanctions against Russia usually point at the fact that these measures have so far failed to do their job. They failed to bring meaningful changes in Russia’s foreign and domestic policies and failed to stop the war in the Donbas. Critics are partly right. Certainly, it took the West too long to force Vladimir Putin to the negotiating table. On the other hand, if the purpose of the West was to weaken Russia and to simultaneously split the political elite, thereby paving the way for changes in the longer term, they are on the right track. 

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The cost of peace

The war in Ukraine is, arguably, a very costly business for Russia’s leaders. No wonder that the political and business elite seem to be increasingly divided on the issue. However, the situation created by the conflict has benefited Russia’s ruling political class and personally Vladimir Putin in a different way: it granted the President an almost unprecedented hegemony over the Russian political sphere. Putin should, however, know that this hegemony is temporary. Therefore, while he is still able to accumulate further political capital, he will try to finish the redistribution of power and wealth that started together with his third term. This is expected to cost Dmitry Medvedev his position.

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Putin’s Milosevic moment

As the world is gearing up for the upcoming talks between Vladimir Putin, Petro Poroshenko and Western officials in Minsk next week, all sides seem to pretend that time works for them and stakes are higher on the other side. The Ukrainian army, while suffering heavy losses, claims that it is close to the total annihilation of rebels. The EU, marred by internal debates on Russia’s present and possible future counter-sanctions, including a gas war, is trying to show unity and determination. Russia, despite an obvious panic among some of its largest businesses – such as Rosneft or VTB – acts as if it were winning the conflict in Ukraine. While such a chicken-game, many fear, might as well turn the conflict into a full-scale war, there is something that has to make Putin extremely cautious: he cannot know when he is about to reach his ‘Milosevic moment’.

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Why sanctions may as well work

Two days ago, Clifford Gaddy and Barry Ickes, two renowned experts on Russia’s economy published a short analysis on the possible effect of European and American sanctions on Russia. The outlook was grim, they concluded: not only were sanctions unlikely to produce the desired effect, but they would also lead to an increased state control over the Russian economy and they would make the Russian public rally around Vladimir Putin. While the two gentlemen make a number of valid and important points, I still think that sanctions, if properly implemented and accompanied by an adequate show of political will, do work. Here’s why.

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Not a golden opportunity

One of the conclusions many have drawn from the tragedy of flight MH17 was that Vladimir Putin now had the golden opportunity to withdraw from Ukraine – a war he had wanted to end anyway – and blame it all on the separatists. However, somehow this does not seem to be happening. The war has continued and Russia put the blame on Ukraine. This is not a surprise: there has never been a golden opportunity. Putin did want to exit the war but he wanted to do it on his own terms. This choice is what he lost in the disaster on Thursday. 

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