Sunday, November 30, 2014

On Russia and Ukraine

For many years I've studied the Russian front during WW2, where the Germans and their allies battled the Russians (and their empire) in some of the largest and deadliest battles on earth. The war went far beyond the battlefield, with the Russians taking over the ancient German capital of Prussia, evicting / killing all the (remaining) citizens, and turning it into today's Russian enclave of Kaliningrad. This is fair desserts; the Germans planned to turn Moscow into a reservoir. That war was about annihilation, a complete extermination and permanent subjugation of their foes.

In recent years I've tried to turn away from this focus, since I didn't think that this conflict, ancient by modern standards, had much to teach us anymore, and just following along a well-worn narrative was teaching me nothing. And I did move on, reading about more modern conflicts, and today's volunteer and high-tech military as opposed to the "old world" of conscripts, artillery, heavy armor, utter destruction of cities and the civilians trapped inside them, and political control superseding military objectives.

The Russian armed forces also seemed to be gliding towards irrelevance, other than their ubiquitous nuclear weapons. Their performance in Chechnya was poor until they basically razed (their own) cities into ruin with heavy artillery fire; to this day I don't understand why this wasn't called out as a giant atrocity. In Georgia they were able to beat a tiny, poorly armed adversary, but their motorized divisions seemed to be driving by compass and they did not cover themselves in military glory. Their military transitions from conscript forces with older weapons and tactics also seemed to be foundering in the face of objections from old-line military-industrial complexes.

When Ukraine slipped out of Russia's orbit and the vast presidential compound of the ex-president was paraded on TV worldwide, Putin obviously viewed this as a direct threat to his authority. The Russians historically had been at odds with the Ukrainians over natural gas prices and on other topics, but it wasn't obvious that this was going to move into a warlike situation. Ukraine is rich with agricultural resources but these resources aren't prized by the Kremlin; they need easily extractable resources like oil, natural gas and various iron ores that they can pull out of the ground and sell for hard cash overseas. John McCain's recurring joke that Russia isn't much more than a gas station with nuclear weapons in fact has a lot of merit. Other than around Moscow, parts of St Petersburg, and in "showplace" locations like Sochi and Vladivostok Russia in fact was falling into ruin and shambles.

But something was happening; the Russian forces that invaded the Crimea (even though they were never formally identified as Russians) appeared to be well organized and well armed. It was not the "Keystone Cops" group that I might have expected. They handled themselves with relative distinction, fulfilling their objectives with limited civilian casualties and using discretion against the Ukrainian military forces they encountered. This was the complete opposite of the blundering incursions into Chechnya.

At the start of the war against the Ukraine, the rebels made initial gains, and the Ukrainian forces seemed to be disorganized and ineffective. This was in line with expectations since the Ukrainian military had been gutted by a lack of funding and lacked forward looking leadership. However, the Ukrainians bounced back and began using their heavy weapons (air power, artillery) in an effective manner against the comparatively poorly armed rebels. The Ukrainians also made heavy use of irregular forces (local guys with lighter weapons) to move forward and seize ground while the regular army provided fire support; these tactics can be wise on a military basis but often provoke long term consequences since irregular forces often behave like bandits when confronted with opportunities for looting and can cause higher civilian losses.

The Russians fought back by directly aiding the rebels, whether they admitted to it publicly or not, culminating with (accidentally) shooting down the Malaysian jetliner. The Russians provided heavy artillery and rockets to counter the use of Ukrainian heavy weapons, and are continuing to provide effective support to the rebels. The Ukrainians have taken severe losses at the hands of these Russian tactics, although the Russian rebels too have suffered significant losses. It is hard to know what the truth is in this elusive land, since propaganda and outright lies have long been the coin of trade of the Russians.

What to make of Russia and the Ukraine? In the short term, it absolutely has been a morale booster for Russia and Putin's popularity. The seizure of Crimea was popular among average Russians, and it seemed bloodless to boot. The war with the Ukraine, utilizing proxies and trumped up claims of Ukrainian atrocities, is also a hit for Russians who get their news through the captive TV stations that broadcast Putin's ideological lines.

From a strategic level, however, this war has got to be viewed as a complete disaster for Russia. Whatever the short term gains of pushing around Ukraine may be, in the long term they have created a hardened enemy that will never forget these humiliations and are now implacably an enemy right on Russia's border. Instead of Ukraine being a "buffer" state for Russia against NATO, the Ukraine is a "buffer" state for NATO against Russia. Ukraine could potentially have been an ally; they had a large Russian speaking contingent and if handled deftly and prodded with economic / natural gas aid, things could have turned out differently.

The analogy is like the USA fighting Canada or the USA fighting Mexico from a Russian perspective. Russian military equipment, ordinance, money and lives are being expended and they are turning what could have been an ally into ruins. The Russian military industry is connected with Ukraine and this is a major hard currency earner; it is hard to imagine that these relationships aren't severed forever. And based on past activities, the areas that are mined, looted and ruined won't be rebuilt in the near term or perhaps in any term - likely they will remain a blasted no mans land because who is going to invest in a ruined land run by a bandit government that could change hands at any time? Only the insane.

No one knows what will happen with the Ukraine. Can they shake off decades of corruption and incompetence, reorganize their society and economy, and become a well run and competitive country that is able to defend their borders with Russia? Even if the rebel held lands are lost to the Russians and become a no-mans land, the remaining country is still large and contains many resources if they are well organized and move with unity and purpose. While Russia can obviously rain destruction on their neighbor (or even the USA; let's not forget their huge stockpiles of nuclear weapons) this is not a card that one can play indefinitely without consequences; Ukraine will re-arm and return the favor with pain of its own, and after all what is the Russian public's stake in this war?

On to oil; tied with these events are sanctions against Russia and the precipitous fall in the price of oil. Russia's economy is built on oil and selling natural gas to Western Europe (and now China) - a falling oil price sends their entire economy into turmoil. The ruble is also tied to the price of oil; due to sanctions and the distress of the Russian economy the ruble has also fallen significantly and is one of the worst performing currencies. Paradoxically this partially buttresses the economy because oil is denominated in the hated US dollar, so although the price of oil has fallen a lot it "buys more" when translated into rubles. With this level of oil price and sanctions, the Russian economy will face severe problems and many indebted Russian companies are going to have trouble refinancing their debt and purchasing foreign goods and expertise which is needed to keep the economy running in many areas with the weak ruble and lack of confidence overall.

Another item of interest to me is the traditional "Krugman" view of the economy that it is powered by consumers. Oil and energy make up half the economy; so consumers can pick up the other half? Hardly... consumer spending has plummeted in a crisis of confidence linked to the drop in energy revenues and sanctions; the idea that consumer spending is "independent" of the economy as a whole and its competitiveness has been ridiculous forever and it is typically not working in practice.

So what does all of this mean? Certainly the Russians can heavily damage the Ukraine; but this is all pointless in the longer term. They are trading their wealth, soldiers and energies for essentially nothing of value in return. Their professional army can destroy but they cannot occupy the Ukraine, although their bandits probably can create some sort of brutal strong-arm "government" in the blasted areas they control with whatever population cannot escape (likely the old and alcoholics) similar to what has been deployed in Chechnya and other "frozen" conflict areas.

The Russian economy is heavily damaged; the fall in oil prices is (mostly) beyond their control but it is happening at a most un-opportune time. Sanctions will punish those few Russian companies that attempt to sell to the West, and state control of the Internet is also hurting one of their most competitive industries (high tech). The ruble is also falling and soon the Russians will be able to buy what is produced locally and this will not be the cornucopia of choice that they have today.

Much of this plays into the hands of the Chinese, who now can scoop up Russian energy cheaply. They can also invest in Russia and work to utilize their fallow lands and extract their commodities when the Western majors leave. However, the Russians know that their actual long term enemy is to the south, as the Chinese covet all the land, water and resources to feed their billions and their highly effective industry could put all of these resources to good use. The Russians have to know that they can't win long term against the Chinese if they are stuck in a long term land war with NATO and the Ukraine; their forces are spread much too thin. Every day the Chinese grow stronger and every day the Russians grow weaker; while the Russians focus on punishing their erstwhile allies in the Ukraine (similar language, etc...) a country with which they have no affinity except for a now quaint "pretending" that they are both communist founded countries is growling at their border and coveting the resources that provide their long term ability to survive as an independent dictatorship.

All of this brings up the next unspoken question - what is Russia without Putin? He is the strongman, and he doesn't really have an ideology except for Russian power and controlling wealth through the state and his friends who are now billionaires. It is a very unstable type of government; unlike the former Communist Russia if Putin should die or otherwise leave power the institutions that remain behind are weak and captured and will not be able to withstand the vacuum. Putin has re-awakened the hard core military conflicts that I cite at the top of the page; these demons will not easily be put back in the bottle, and NATO now has its existential purpose re-engrained in the hearts of those adjacent to the Russian menace (the Baltics, Poland, etc...).

China will play an immensely important part in the next stage of the narrative. Unlike Russia, China has the resources and will to subjugate lands and people as you can see in Tibet and adjacent countries and savors at the idea of conquering and utilizing the vast lands that rest right above them to the North. The Russians in those areas are often Asian as well and perhaps have more in common with this rising power than the czarist Moscow based whites that run their lives (such as it is) today.

Sadly enough, a lifetime of studying war in the East is now useful for consideration of what may happen next. I was hoping that this knowledge was of use only for the dustbin.

Cross posted at Chicago Boyz

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