“The only reason Putin is able to march his armies and sail ships threatening Ukraine is because the oil and gas market is so high.” That was the most poignant statement made by Debra Cagan, Distinguished Energy Fellow, Mediterranean Basin, Middle East, and Gulf Initiative from the Transatlantic Leadership Network at the February 3, 2022 “Russia-Ukraine conflict and implications to Turkey” meeting sponsored by the Atlantic Council.
The energy analyst made this statement after carefully describing the balance of dependencies between Russia and countries like Germany and Turkey who are the two largest consumers of Russian natural gas in the NATO alliance.
Germany is economically vulnerable to Russian natural gas leverage. This explains Germany’s reluctance to upset Russia. Something that analyst Can Kasapoğlu, the Director of Security and Defense Studies Program at EDAM, noted was a blunder by the Biden administration to base its Ukraine response policy on German posture when it came to office as opposed to fully consulting a broader spectrum of NATO partners. It left the West in a weakened negotiating position, particularly in the vacuum after the Trump Administration’s departure. Putin was both emboldened and had the pocketbook to act boldly.
Cagan pointed out that there is currently an international national gas shortage due to a combination of cutbacks in production due to COVID-19, hesitancy by producers to invest in new capacity because many customers have committed to climate change conversion to renewables policies, and Middle Eastern production increasingly committed to long term supply contracts with China. The result is an expensive energy spot market that the Russians are benefitting from. And that is why Russian Federation President Vladimir Putin has the disposable income to dabble in military adventurism.
But this also means that Putin’s house of cards can just as easily collapse. If the price of oil and gas drops, Putin’s ability to continue to threaten Ukraine will be dramatically strained. That’s easier said than done. Cagan noted that the competitive alternatives to Russian supplies are not ready.
The Iranian gas pipeline that would send gas from that country isn’t ready. The Iranians need hard cash investments to complete building it but the money isn’t forthcoming given the Western community’s continued reluctance to work with the Iranian government. Lacking a pipeline, the Iranians have had to resort to a series of gas swaps stringing from Iran to Turkmenistan to Azerbaijan to get energy to the West.
On the other side of the Gulf, producers such as Qatar and Saudi Arabia are focusing on long-term contracts to Asian nations including China and Japan. Rounding out the tight energy supply chain creating Russian political leverage, US production is buried under a mountain of politics dissuading producers from both taking supplies out of the ground and transporting them cost-effectively.
That could change if the Biden administration decided to use the energy market as an asymmetric weapon to undermine Russia’s ability to afford to parade its army around Crimea, Belarus, and Russia skirting the easter edges of Ukraine.
Personally, I would counsel US leadership to engage with oil-producing countries to explore ways to bring down spot prices and reduce dependency on Russian supplies to develop an economic wedge to signal Putin that, with or without sanctions, his free money to play monopoly next to Ukraine will disappear.
It remains to be seen if the Biden administration is pragmatic enough to shed the bondage of “woke” progressivism and climate change politics, even for a little while, in order to create an effective asymmetric threat to Putin’s financial ability to threaten Ukraine.
The thing is that this might be enough to tip the scales back towards an outcome that gets the Russians to decide on their own that this isn’t the time or the way to look out for their security concerns. It paves the way for constructive diplomacy to counsel Mr. Putin that he would be much better off re-investing the windfall profits of a hot energy spot markets into his own country’s infrastructure. It is the better path to rising from a $1.483 trillion USD GDP into a much larger economy.
Cagan also made another poignant statement about the Ukraine calculus. She noted that “Ukraine doesn’t have to win against the Russians. They just have to make it hurt.” The reality that an invasion by Russia will result in a long, drawn-out conflict is a credible deterrent.
Ukraine must convince Russia that it’s going to be another Afghanistan, the way it was for both the USSR and USA, a sinkhole that will eventually need to be walked away from.
The key steppingstone to this is to also convince Russia that the separatists in Donetsk and Luhansk regions in eastern Ukraine will not prevail short of Russia invading. In this regard, Can Kasapoğlu notes that cooperation between Ukraine and Turkey, which has been supplying armed drone technology to create a modern network-centric warfare capability similar to the battlespace management systems used by the United States, Turkey, and other coalition nations in Syria to wage war, provides a growing capability to deal with separatist elements in Ukraine.
Kasapoğlu is quick to point out that Ukraine’s capability is inadequate against the full might of the Russian Federation; but as long as the fighting inside Ukraine is limited to proxy separatists, the Ukrainian government can hold its own.
To make a Russian invasion “hurt,” it will take bolstering Ukraine’s military to the point that it can become a permanent insurgency harassing a Russian presence into surviving inside fortresses and outposts. In other words, a Western-sponsored Taliban, or more to the liking of the West, the Kurds of the Syrian Democratic Forces (SDF) who have battled ISIS, the Assad government, and the Turks, against all odds.
According to a report from Ukraine by Hollie Mckay, ordinary Ukrainians are going “2nd Amendment” and preparing to do just that, “Ukrainians start arming themselves for possible Russian attack”. That’s a start but the West must also keep supplying Ukraine with weapons designed to defeat modern tank armies, which the US and NATO have been doing.
If the Russians do invade, it’s unrealistic to think they’ll be repelled. The implication is clear. It means the West must commit to continuing to supply a Ukrainian insurgency proxy war until the Russians leave. It becomes a game of swapping a small separatist movement that wants to join Russia for a much larger one that wants to throw out Russia.
Politically, if Russia invades, the Ukrainian government can go into exile and run an insurgency from the West while NATO countries fly diplomatic cover in the United Nations, impose coordinated economic sanctions, and set up supply chains bypassing Russian energy, tourism, and trade. On this front, it’s the best posture for the US, UK, France, Germany, and Turkey to signal a willingness to support a Ukraine government in exile if Russia invades, with a promise that Ukraine will be invited to join NATO when the Russians eventually leave.
As a proxy war arena, Ukraine has Machiavellian utility. The West certainly has weapons technology aplenty. For instance, given the way drone warfare technology is evolving, Ukraine could replace Yemen as the next proxy war testing ground for advanced conventional warfare weapon concepts. That’s a prospect that would certainly “hurt” for Russia. It certainly hurt the last time the USSR was in Afghanistan and US-supplied Stinger missiles turned Mi-24 Hind helicopter gunships into death traps.
The No Invasion Alternative
If Russia does not invade, Ukraine seems destined to become the next no man’s land Fulda Gap of the European landscape. It’ll be stuck between NATO and Russia for some time. In the calculus of global stability, that’s perfectly fine. Standoffs are workable tools of statecraft.
Preventing that invasion boils down to who will negotiate a stable deterrent outcome. At the moment, it’s probably the United States and the bolder NATO countries that don’t have severe leverage dependencies on Russia, which leaves out the Germans who, despite the sugar coating of the diplomacy, have shown themselves to be not ideal for drawing NATO’s line in the sand.
Looking at alternatives, analyst Yevgeniya Gaber, Senior Fellow, Centre in Modern Turkish Studies at Carleton University assessed Turkey as a potential diplomatic broker noting the country is both a NATO member and has a complex economic and military relationship with Russia. Turkey bought S.400 anti-aircraft missiles from Russia. Turkey also shot down a Russian aircraft that strayed into Turkish airspace in 2018. Gaber noted that Turkey could be a shuttle diplomacy broker testing how much “give” the US and Russia can tolerate. But Cagan and Kasapoğlu saw Turkey’s predicament as more of a moment when Erdogan will have to stop straddling the line and chose a side.
Regardless, the real question is would either the US or Russia welcome a brokered “crab walk” strategy to the power play negotiations at hand. The consensus of the Atlantic Council panelists was no. I agree. The US and Russia both like engaging in direct loggerhead positional bargaining too much.
The Sound of Inevitability
However, the standoff won’t last forever. The oil market will change to one that isn’t so rich at some point. It’ll happen whether the US uses price manipulation as an asymmetric weapon or not. Regardless of what Mr. Putin does, the die of the future of Eurasia is already cast. I believe that Ukraine will become part of NATO and will assume a place beside Bulgaria, Romania, and Turkey creating a changing political landscape of the Black Sea coast. It will transform from a Russian lake into European Union coastline.