Money Week

Joe Biden’s gravest test yet

Russia is ratcheting up tensions over Ukraine. Matthew Partridge reports

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A summit between US president Joe Biden and Russian leader Vladimir Putin on Tuesday made “little apparent headway” in “defusing the crisis over Ukraine”, say Julian Borger and Andrew Roth in The Guardian. Biden warned Putin that the Russian troop build-up on the border, which some have seen as the prelude to an invasion, would have serious consequenc­es. For its part, the Russians demanded “reliable, legal guarantees” to prevent Nato from “expanding its territory toward Russia”, which would effectivel­y prevent Ukraine from joining the Western alliance. Russia also wants Ukraine to open talks with separatist­s.

A startling escalation

The tensions come as intelligen­ce agencies claim that Russia’s “startling escalation” could lead to up to 175,000 troops being placed along the border, says Kevin Liptak on CNN. They warn that, with around 100,000 troops currently in the area, Russian forces already have enough capabiliti­es in place to carry out a “swift and immediate invasion”, including the erection of supply lines that “could sustain a drawn-out conflict”. By early 2022 Russia could have 100 battalion tactical groups ready to go, “twice the scale of forces Russia built up in the region last spring”.

It’s “hard to tell” what Putin’s intentions are, says The Times. He will be under “no illusions” that an invasion would be “extremely costly”, not least because Ukrainian national identity has grown stronger as the result of Russian aggression. But he may “have more limited aims short of a full invasion, including the formal annexation of the Donbas”. Still, even that is “not something the West could or should accept”, given that a Russian attack on Ukraine “would spell the end of the postwar rules-based system, marking a return to an anarchic world order”. This is shaping up to be the “gravest foreign policy test” of Biden’s presidency.

Biden’s options

The US won’t want to commit troops in the event of an invasion, say Nick Wadhams and Josh Wingrove on Bloomberg, but it has plenty of other “ammunition”. Perhaps the most drastic option would be to bar Russia’s access to the Swift financial payments system, but the “havoc” that would wreak would harm ordinary Russian citizens. Another option would be to frustrate Russians’ ability to convert roubles into dollar, euros or pounds. The new German government has also hinted that an escalation “may also affect the fate of Nord Stream 2, a pipeline that is to carry gas from Russia and has been a longtime priority for Putin as well as Berlin”.

One of the ironies of the situation is that, “while Russia is convinced Nato membership for its neighbour is only a matter of time”, there is “no consensus” in the alliance in favour of it joining, says the Financial Times. Yet explicitly ruling membership out “would contravene a key postcold-war principle that European countries are free to choose their own alliances”; Moscow might even treat such a declaratio­n as “carte blanche to march into Ukraine”. Biden’s first priority is to make it clear that “further aggression against Ukraine would be met with sanctions that would impose an intolerabl­e cost on Russia”.

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Putin: it’s hard to tell what his intentions are

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