Clearly the pithiness of my post titles is on the decline. Apologies.
Vox is arguing that international investors are keeping Vladimir Putin from invading Ukraine. The logic is that investors have pulled back from Russia over the past months. This pullback has damaged the Russian economy. Therefore, to protect his economy, Putin is also pulling back from his attempts to cleave off parts of Ukraine.
Well, consider these two hypotheses:
- Putin has chosen to pull back because of the economic costs (recession caused by changing investor sentiment);
- Putin has chosen to pull back because of the strategic costs (the risk of involvement in a brutal counterinsurgency against fellow white orthodox Slavs).
In other words, the Vox author has proposed an hypothesis without evaluating the counterhypotheses. And in this case, the counterhypothesis is much more compelling.
To be fair, it does appear to be true that capital is leaving Russia at an accelerated pace. This was not clear in March, when the markets appeared to care little about Crimea. As we predicted here, however, the prospect of war in eastern Ukraine has been another story. Capital flight has raised interest rates and in turn damaged the Russian economy.
The problem is that it is clear that Putin has incentives to pull back even if his economy was booming. It is clear that there is no popular support for secession in the east. (See also these poll results by province.) The Ukrainian government and some large minority of Ukrainians are prepared to fight. The referenda have no legitimacy. An invasion (even one invited in by the Donetsk People’s Republic) could easily spark a war that would blow apart the nascent Eurasian Union and possibly cause Putin to lose power.
This is not to say that all big wars would have negative strategic consequences for the Russian president; it is to say that a war with Ukraine right now over this would.
So Putin is playing it smart. Even if he wants to annex Novorossiya for its own sake, he is playing it smart, because you can’t always get what you want. But if you try sometime, you just might find, you get what you need ... which is, for the Russian Federation, a federalized Ukraine that grants Russia access to the arms factories located there.
In short, the Vox author wants to believe that big interstate wars are now impossible, and so he looks for evidence that globalization or postmodern pacifism or some other thing will force Moscow to pull back while completely ignoring the counterhypotheses.
I should add here that absent deliberate sanctions or a large-scale prolonged war (both of which are strategic problems) the economic damage has already been done. If more market reactions were Putin’s only concern, then he might as well ignore the sunk costs and keep going. That is not what he is doing.
Finally, Meghan O’Sullivan has a good piece about why sanctions won’t stop Putin. Her arguments also apply to un-orchestrated economic damage.
Vox appears to be caught in a Norman Angell moment. Angell famously wrote before WW1 that interstate war had become unprofitable. Angell, however, did not believe that fact made war impossible, just that it made war stupid. That was a mistake made by others. Vox appears to be resurrecting that mistake for the 21st century.