Putin’s costly folly
Russian President Vladimir Putin has managed to seize Crimea and its two million people by sheer force, but he has lost Ukraine and the price of his ambition is steep and quickly rising. As Ukrainian security forces begin to clash with pro-Russian provocateurs in the country’s unstable eastern region, Putin must know that he has forfeited any hope of realizing his dream of a robust Eurasian Economic Union of former Soviet bloc states, solidly anchored in Ukraine and its 46 million people.
Now, as the crisis escalates, he appears to be sacrificing Russia’s prosperity as well, fanning tensions in Ukraine and hoping to maintain some hegemony there. Russia’s economic growth may literally grind to a halt this year because of “geopolitical uncertainty,” finance minister Anton Siluanov has just announced. And Russia could well be plunged into outright recession if Putin is unwise enough to invade Ukraine and bring down Iran-style banking and energy sector sanctions on his depressed economy.
Prime Minister Stephen Harper has strongly denounced Putin’s “aggressive, militaristic and imperialistic” actions, and has rightly joined with allies in supporting the fledgling Ukrainian government and imposing travel bans and asset freezes on Putin’s oligarch cronies, lawmakers, security chiefs and bankers. Russia has been suspended from the Group of Eight club of industrial democracies. And the Organization for Economic Co-operation and Development has blocked Russia’s accession to the group of 34 wealthiest nations.
All this is a blow to Putin’s aspirations to make Russia and its 145 million people a player in the world’s central economic organizations. And it doesn’t end there.
Russia’s anemic $2 trillion economy is being pummelled. More capital has fled Russia — $64 billion — in the first few months of this year than in all of last year. The World Bank warns the damage could hit $150 billion by year’s end. The ruble has lost 10 per cent of its value and the stock market is down by almost as much. The top five companies on the Moscow exchange have lost more than $50 billion in market capitalization in recent months. And Crimea will suck up $20 billion or more support in the next few years.
Europe, meanwhile, is looking to reduce its dependency on Russian natural gas, one of Moscow’s few big sources of revenue.
However well Putin’s nationalistic aggression may play with the home crowd, it is a mug’s game. Bullying Ukraine has cost Russia plenty, and the price is rising faster than many had foreseen.
As the Ukraine situation deteriorates, Russian President Vladimir Putin appears to be sacrificing his country’s prosperity as well