In the Ukraine crisis, Putin faces a stark choice

BRUSSELS – As he engages in coercive diplomacy with the West, Russian President Vladimir V. Putin faces a stark choice: he can move militarily to control Ukraine or preserve economic ties with Russia. Europe. But it will be difficult for him to do both.

For better or for worse, Europe’s relationship with Russia is one of interdependence.

Europe still badly needs Russian gas and oil, and Russia the revenue from their sale. Russian gas accounts for 40% of the continent’s supply – in Germany it’s more than 55% – and Russian oil 25%. At the same time, Russia is still heavily dependent on energy sales, which account for more than 30% of its economy and more than 60% of its exports.

This means that even if sanctions are imposed, Europe will have to continue to buy Russian energy, whether the Nord Stream 2 pipeline, which is designed to bring Russian gas to Europe, bypassing Ukraine, either commissioned or not. Yet the continent would then diversify its supplies much faster away from Moscow even as it accelerates its transition to sustainable energy.

As close as Russia and China now become, as evidenced by an extraordinary joint statement made by Mr. Putin and Chinese leader Xi Jinping last week at the Olympics, it would take the Chinese market many years to recoup the loss of power. ‘Europe. .

Mr. Putin would no doubt turn to China, said Alexander Gabuev, president of the Russia in Asia-Pacific program at the Carnegie Moscow Center. “If another war breaks out in Ukraine, Vladimir Putin will need a friend again, and that friend will be his rich friend, ally and neighbor Xi Jinping,” Gabuev said.

Both countries are trying to present a united front against the global influence of the United States, both in Europe and in Asia. But how much Russia wants to steer away from its European markets and how much China wants to irritate Europeans are open questions.

China also has important commercial and diplomatic interests in Europe that it would not want to jeopardize by squeezing too closely an aggressive Russia, and Beijing has always been a strong supporter of international borders and against outside intervention. While Beijing and most of the world consider Taiwan to be part of China, Ukraine is a very different case.

The growing relationship between Russia and China, Mr Gabuev said, is increasingly directed towards Washington, “but it is not an alliance where the two sides support each other on everything”.

A major rift with Europe could last up to a decade and further damage Russia’s credibility as a reliable trading and diplomatic partner.

This underlines the importance of the European Union and its willingness to sanction Russia as a means of deterring Mr. Putin; NATO troop reinforcements aim less to deter than to reassure. No one expects Russia to test NATO’s commitment to the collective defense of its members, which, of course, does not include Ukraine.

The United States can also impose significant economic sanctions, particularly on Russian banks and the import of key technical components, such as semiconductors. But the United States has relatively little trade with Russia compared to the European Union, which is Russia’s largest trading partner.

So how the European Union chooses to wield its economic power matters, which is why the Biden administration has spent so much time informing and cajoling Europeans.

And despite the differences between European countries, who would pay the highest price for sanctions and possible Russian counter-sanctions, the length of this crisis has allowed for substantive negotiations on a serious sanctions package. European officials have drawn up what they see as a powerful set of basic sanctions if Russia invades Ukraine, with options to increase that depending on what Mr Putin actually does.

Germany’s new government, with its three-party coalition, has now had time to debate the issue internally and engage in a serious sanctions package, including targeting Nord Stream 2. Already, German approval of the pipeline has been delayed until at least this summer, and speaking alongside Chancellor Olaf Scholz in Washington this week, President Biden said: “If Russia invades – that means tanks or troops are crossing again the Ukrainian border – then there will be no more Nord Stream 2.”

But Europe is vulnerable to Russian counter-sanctions, not just interruptions in energy flows, which Moscow could blame on accidents or pipeline damage rather than an open breach of contract. Even a few days of gas cuts would raise already high energy prices, upsetting voters and panicking the stock market.

Europe also depends on Russia for various important raw materials, from palladium to titanium to potash, a major export from Belarus essential for fertilizers, despite existing sanctions. The goal, said a senior European official, is to make Russia, the target of the sanctions, feel more pain than the Europeans.

EU officials are therefore discussing which countries could be most affected by sanctions or any Russian response and what Brussels can do to limit the pain. Croatia provided a good example after Russia was hit by EU sanctions in 2014, following the annexation of Crimea and the shooting down of a Malaysian airliner by pro-Russian separatists in the eastern Ukraine. Croatia has been hit by Russian counter-sanctions, including a ban on certain food imports. Brussels then worked with Zagreb to minimize losses.

As always, a lot depends on Mr. Putin.

Nigel Gould-Davies, a former British diplomat now at the International Institute for Strategic Studies, believes this period of diplomatic coercion is “not an alternative to aggression but a potential prelude”, with the military build-up of the Russia around Ukraine, coupled with cyberattacks and a reduction in gas supplies to Europe, indicating unprecedented preparations for military action.

But the response from the United States and Europe has been surprisingly strong, he writes, narrowing Mr Putin’s options as Ukraine drifts west. Now, he said, “aggression is the only option which is not certain to leave Russia in a worse diplomatic position than before its reinforcement”.

Dmitri Trenin, director of the Carnegie Moscow Center, isn’t so sure. Mr Putin could easily declare a diplomatic victory, Mr Trenin argued in the Russian newspaper Kommersant, and say he was able to “force the West to finally negotiate with us on European security issues”. This includes reviving the Minsk Accords, which paved the way for a more federal Ukraine and a lasting ceasefire there.

Or Mr Putin could roll the dice militarily, which Mr Trenin considers unlikely given the risk of bloodshed and the economic cost.

Mr Putin would be better served with a smaller operation, such as the occupation of Donetsk and Luhansk in eastern Ukraine, which the Russian Duma has already voted to annex, or a series of cyberattacks that rock the Ukrainian government and would be far less likely to produce punitive sanctions from Washington and Brussels.

Yet, Mr. Trenin said, a new policy is emerging in Russia that breaks with past efforts by Mikhail Gorbachev and Boris Yeltsin to integrate and cooperate with the West.

“What if the separation from the West that President Putin has been talking about in response to the prospect of US ‘hellish sanctions’ becomes a reality?” He asked. “What if Russia finally embarked on a completely different foreign and domestic policy, which would also include the economic, social and ideological spheres?”

Only Mr. Putin can answer the question, Mr. Trenin said. “It is impossible to understand his response from the outside. Russia has the capabilities to implement both scenarios.

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