We all saw it coming. The Olympics are over and Putin moves on the Ukraine or more specifically on Crimea. The former KGB thug cannot stand the constant retreat of Russia interests and loss of prestige.
Here are a few points to remember.
Gas to Europe may be a black-mail tactic that Putin can use. But there is only one pipeline into the Crimea and it goes through the Ukraine. He will be hurting the very people he seeks to protect. Despite the propaganda that will come out of the Kremlin Russian interests are not served by a frozen Crimea.
Russia needs the foreign exchange that gas and oil sales bring. he can threaten to cutoff Europe. He probably will remind the west he knows where the shutoff valve is. But he will also hurt his own pocket-book and forever isolate Russia as a supplier. If Russia cannot sell oil and gas it will run short of foreign exchange very quickly.
Putin has his own dissent problem. If conditions in Russia worsen his grip on power will loosen. Maintaining an active hostile occupation of Crimea in a belligerent context is expensive. He needs to keep the game up and that costs cash. He does not have it.
The Pro-Ukrainian sentiment is very strong in both USA and Canada. Elections are nearing. Putin may die the death of a thousand cuts.
Much of Russia’s response is a nostalgic throw back to olde cold war days. The Russian fleet is not what it used to be. Russia does not have the same interests it used to have. Russia is spending resources on prestige and not on factors which will make them strong.
Russia needs access to the western financial system. Iran learned this the slow and hard way.
Syria continues to bleed with a stupid civil war. Russia will find it difficult to continue maintaining their involvement. Crimea will trump Syria when Russia considers its interests.
China is of course watching this very quietly. They know that a distracted Euro-focused Russia will fumble the ball in Siberia and Asia. If Russia is interested in Crimea than China covets much if not all of Siberia.
Russian oil and gas resources are optimized by western energy companies. If this were withdrawn oil and gas resource production would decline rapidly and create more internal dissent.
In the meantime the market hates uncertainty. Don’t do deals where Russia is a factor. No one can assess the wild card factor.
George Gutowski writes from a caveat emptor perspective.