The leverage war

Russian President Vladimir Putin spotted a leverage opportunity when he ordered his armies to invade Ukraine. He saw, correctly, that he had the leverage because the West would not come to the rescue of Ukraine with troops and planes. The fate of Ukraine was lodged into this geopolitical vortex because Putin saw a leverage opportunity that blocked NATO troops from helping defend Ukraine.

In his view, Putin also had leverage over Europe, because Russia is a chief supplier of natural gas to Europe, especially Germany. Yet Germany’s decision to supply Ukraine with extensive military hardware showed that Putin’s assessment of his leverage was mistaken.

Putin did not anticipate the amount of military support that Germany, and the West in general, would provide; nor did he anticipate the ferocious fighting by the Ukrainians. Still, he was correct to identify a leverage opportunity when he ordered the invasion.

The concept of leverage, from a historical perspective, was discovered by the ancient Greek mathematician and scientist Archimedes, who said, “Give me a long enough lever and a fulcrum on which to place it, and I shall move the world.” Leverage basically involves using a modest input to create a maximum output using a fulcrum of some kind. Leverage always involves power, but not all uses of power involve leverage.

Out-leveraged from the standpoint of basic bargaining leverage, the West – from the standpoint of a leverage lens – turned to a second kind of leverage: they turned to what management consultants C.K. Prahalad and Gary Hamel have called “resource leverage” in their landmark book, Competing for the Future.

Resource leverage, which goes beyond the standard allocation of scarce resources, involves creating a maximum output from minimum input, typically by developing some creative strategy. The Walkman united headphones and the tape recorder; email and tweets enabled the sender to reach a million voters or consumers with one touch of the key.

The way the war has evolved serves to illustrate how leveraging, whether it is traditional bargaining leverage, resource leverage, or financial leverage, which was at the center of the financial crisis of 2008-2009, is one of the dominant themes of our time. This war is in many ways a “leverage war.”

THE COALITION built by President Joe Biden is itself the result of a systematic leveraging effort. We have leveraged our relationships with the UK, France, Germany and other countries to provide a massive amount of anti-tank and anti-aircraft missiles, and a massive supply of machine guns, bullets, grenades and military information technology.

We have also worked with the coalition to sanction Russian oligarchs, and especially Russian banks, limiting their capacity to loan and borrow money and therefore decreasing their capacity to grow their financial assets and benefit from financial leveraging.

This terrible war is the epitome of what l have called “The

Age of Leverage.” When the US and the USSR ended the 45-year Cold War, traditional top-down relations of authority with implicit bargaining leverage dissolved. More complex multiple-leveraging strategies emerged that enabled countries, companies and non-state entities to achieve their objectives. The rise of information technology, likewise, made it possible to use modest information inputs to obtain vast voter and consumer outreach.

In the Russia-Ukraine leverage war, many of the old players are back on the stage, but the geopolitical situation is post-Cold War. The US is neither fighting a proxy war with the USSR in Asia nor negotiating with the USSR over a SALT Treaty. Instead, the US is working hard to leverage relationships and resources to supply weapons to a friend and to engage in a financial war that will devastate the Russian economy.

This military war in Ukraine, the financial war in Russia, the worldwide social media and Internet campaign castigating Russia, the leveraging of social media and IT by President Zelensky to address 17 parliaments and inspire his people, and the leverage opportunity Putin saw prior to ordering the invasion of Ukraine, all exhibit the central leveraging features of our time.

The leveraging prism can help illuminate this complex geopolitical situation. Moreover, it might give Ukraine, the US, and the coalition some assistance in determining its next steps

The writer has taught political philosophy at five colleges and universities and is editor of Leveraging: A Political, Economic, and Societal Framework