Economic Statecraft
Russia/Ukraine Brinkmanship, a Downward Spiral

With military troop buildup, lethal brinkmanship and the inevitable threats of extreme sanctions some targeted personally at Russian President Vladimir Putin himself - the crisis in Ukraine seems to be irrevocably spiraling towards deadly confrontation and real, battlefield hot war.

However, some prominent correspondents have claimed that Putin has never had any intention of invading Ukraine and the country’s natural resources and energy infrastructure number high on the list of factors holding the Russians back.

Mary Dejevsky of the UK Independent newspaper cogently argues that this is a ‘wholly confected’ situation and that all of the elements propelling the parties towards escalation – from the 100,000 troops amassing on the Ukrainian border to the supposed ‘false flag’ operation mounted as a prelude to invasion – are nothing but smoke and mirrors.

“All this,” Dejevsky insists, “is either irresponsible rubbish put about by people who should know a lot better than to risk sparking a military conflict with Russia. Or, it is part of a deliberate western plan to force Russia to choose – between outright (and rash) invasion, on the one hand, and retreat in humiliation, on the other. Either way, it is hard to exaggerate how reckless, how utterly deranged, this daily drumbeat of war emanating from western officials and “sources” really is.”

Dejevsky also cites Russia’s historical aversion to fighting a winter war on foreign territory, a lesson that was in turn inflicted on both Napoleon and Hitler, as well as stinging memories of the failed foray in the late 70s and 80s into Afghanistan. But there is another compelling argument against war: Natural Liquefied Gas.

Modern Diplomacy
Modern Diplomacy in an Unstable Global Order: Emotions, Obstruction and Coercion
Gregory Simons
This contemporary deeply undiplomatic form of diplomacy that is being waged by the US-led West is not done so from a position of strength, but rather from a position of declining influence and power.

Some pundits have theorized that impending military action might be a brute force attempt to shake up the energy markets and ratchet prices. But gas prices are already at record highs. And the industry has been afflicted by a storage deficit, attributed to Gazprom, which has restricted supplies. Overall, Russian energy supplies to Europe have fallen by 25% from 2020 levels. If Russia and Gazprom wanted to increase Gas profits, there would be no need to resort to war – they could simply turn up the taps or address these supply chain issues.

Even if Russia and Gazprom are hoping that the drumbeat of war will force prices even higher, the strategy brings with it immense risks.

The US and Europe are already seeking out alternative energy sources: “The Biden administration has been in regular discussions,” said CNN, “with a number of countries and companies in Europe, the Middle East, North Africa and Asia about stepping up production of liquefied natural gas to Europe in the event that a Russian invasion of Ukraine leads to gas shortages.” The Guardian, on the 27th January, suggested substitute suppliers such as Qatar, Libya and the US - with the help of mammoth transatlantic gas tankers - any of which could become permanent replacements.

More importantly, the impact of an attack on Ukraine on the Nord Stream 2 pipeline, designed to bring Russian gas to European markets through the Baltic Sea, could be devastating: “The conflict between Russia and Ukraine could spill into international energy markets,” says Forbes, “If Russia sent its troops into the heart of Ukraine, it could spell the end of Nord Stream 2 — an $11 billion natural gas pipeline. Germany, which is withholding approval of the line, warns of a ‘high price’ if it invades Ukraine.”

Economic Statecraft
Ukraine: Three Scenarios After the Answer From Washington
Ivan Timofeev
The main task for Russia is to avoid excessive overexertion and, at the same time, not get bogged down in a costly confrontation, maintaining and using levers of pressure on the West where its own interests require it, Valdai Club Programme Director Ivan Timofeev writes.

But regardless of whether Russia invades or not, Gas is destined to become the country’s weapon of choice against the west. As the Washington Post reports: “Russian and U.S. officials traded threats about what might be the Kremlin’s most potent weapon in its campaign to divide NATO as it weighs aggression against Ukraine: natural gas. As Russia’s tanks and troops are amassing at Ukraine’s borders, Moscow has reduced the amount of natural gas flowing into the heart of Europe. It is delivering enough to keep power plants and factories humming and ensure that European homes can fend off the chilly gloom - but not enough to prevent prices from soaring to record levels.”

Adds the London Times: “Senior UK government officials expect Russia to “weaponize” its natural resources by restricting supplies of gas to Europe if the West carries out its threat to impose sanctions. Ministers have been involved in top-level discussions to assess the impact that a reduced supply of gas from Russia would have on prices.”

So, while some pundits claim that the Russians have been playing poker and that the threat of invasion is a monumental bluff, other onlookers, such as Mark Leonard, founder of the European Council of Foreign Relations, have warned that the West should get ready for a masterful game of ‘multidimensional’ chess. If that is the case, and Putin comes from behind to produce a breath-taking move to check-mate his western opponents, expect Gas and Energy Resources – the country’s Bishop and Rook in this grand battle of wits - to play a vital role.

Modern Diplomacy
Can Russia Deliver on Its Threats?
Andrey Sushentsov
The lack of attention to Russian proposals and objections was the result of a distorted perception in the West about the goals of Russian policy. The main assumption in such a speculative scheme was that Russia cannot behave rationally, that it is just an ever-expanding expansionist power without logic or pragmatism. Such an assessment is very comfortable, but it is inadequate even when analysing the simplest questions, writes Valdai Club Programme Director Andrey Sushentsov.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.