Not Just Another Recession
Why the Global Economy May Never Be the Same
Vladimir Putin is determined to shape the future to look like his version of the past. Russia’s president invaded Ukraine not because he felt threatened by NATO expansion or by Western “provocations.” He ordered his “special military operation” because he believes that it is Russia’s divine right to rule Ukraine, to wipe out the country’s national identity, and to integrate its people into a Greater Russia.
He laid out this mission in a 5,000-word treatise, published in July 2021, entitled, “On the Historical Unity of Russians and Ukrainians.” In it, Putin insisted that Belarusians, Russians, and Ukrainians are all descendants of the Rus, an ancient people who settled the lands between the Black and Baltic Seas. He asserted that they are bound together by a common territory and language and the Orthodox Christian faith. In his version of history, Ukraine has never been sovereign, except for a few historical interludes when it tried—and failed—to become an independent state. Putin wrote that “Russia was robbed” of core territory when the Bolsheviks created the Soviet Union in 1922 and established a Ukrainian Soviet Socialist Republic. In his telling, since the Soviet collapse, the West has used Ukraine as a platform to threaten Russia, and it has supported the rise of “neo-Nazis” there. Putin’s essay, which every soldier sent to Ukraine is supposed to carry, ends by asserting that Ukraine can only be sovereign in partnership with Russia. “We are one people,” Putin declares.
This treatise, and similar public statements, make clear that Putin wants a world where Russia presides over a new Slavic union composed of Belarus, Russia, Ukraine, and perhaps the northern part of Kazakhstan (which is heavily Slavic)—and where all the other post-Soviet states recognize Russia’s suzerainty. He also wants the West and the global South to accept Russia’s predominant regional role in Eurasia. This is more than a sphere of influence; it is a sphere of control, with a mixture of outright territorial reintegration of some places and dominance in the security, political, and economic spheres of others.
Putin is serious about achieving these goals by military and nonmilitary means. He has been at war in Ukraine since early 2014, when Russian forces, wearing green combat uniforms stripped of their insignia, took control of Crimea in a stealth operation. This attack was swiftly followed by covert operations to stir up civil disorder in Ukraine’s eastern and southern regions close to the Russian border. Russia succeeded in fomenting revolt in the Donbas region and sparking an armed conflict that resulted in 14,000 deaths over the next eight years. All these regions have been targeted for assault and conquest since February 2022. Similarly, in Belarus, Putin took advantage of internal crises and large-scale protests in 2020 and 2021 to constrain its leader’s room for maneuver. Belarus, which has a so-called union arrangement with Russia, was then used as the staging ground for the “special military operation” against Ukraine.
The Russian president has made it clear that his country is a revisionist power. In a March 2014 speech marking Crimea’s annexation, Putin put the West on notice that Russia was on the offensive in staking out its regional claims. To make this task easier, Putin later took steps that he believed would sanction-proof the Russian economy by reducing its exposure to the United States and Europe, including pushing for the domestic production of critical goods. He stepped up repression, conducting targeted assassinations and imprisoning opponents. He carried out disinformation operations and engaged in efforts to bribe and blackmail politicians abroad. Putin has constantly adapted his tactics to mitigate Western responses—to the point that on the eve of his invasion, as Russian troops massed on Ukraine’s borders, he bragged to some European interlocutors that he had “bought the West.” There was nothing, he thought, that the United States or Europe could do to constrain him.
So far, the West’s reaction to the invasion has generally been united and robust. Russia’s aggressive attack on Ukraine was a wake-up call for the United States and its allies. But the West must understand that it is dealing with a leader who is trying to change the historical narrative of the last hundred years—not just of the period since the end of the Cold War. Vladimir Putin wants to make Ukraine, Europe, and indeed the whole world conform to his own version of history. Understanding his objectives is central to crafting the right response.
In Vladimir Putin’s mind, history matters—that is, history as he sees it. Putin’s conception of the past may be very different from what is generally accepted, but his narratives are a potent political weapon, and they underpin his legitimacy. Well before the full invasion of Ukraine on February 24, 2022, Putin had been making intellectual forays into obscure periods of the past and manipulating key events to set up the domestic and international justification for his war. In 2010, at the annual meeting of the Kremlin-sponsored Valdai International Discussion Club, Putin’s press spokesman told the audience that the Russian president reads books on Russian history “all the time.” He makes frequent pronouncements about Russian history, including about his own place in it. Putin has put Kyiv at the center of his drive to “correct” what he says is a historical injustice: the separation of Ukraine from Russia during the 1922 formation of the Soviet Union.
The president’s obsession with Russia’s imperial past runs deep. In his Kremlin chambers, Putin has strategically placed statues of the Russian monarchs Peter the Great and Catherine the Great, who conquered what are today Ukrainian territories in wars with the Swedish and Ottoman empires. He has also usurped Ukraine’s history and appropriated some of its most prominent figures. In November 2016, for example, right outside the Kremlin gates, Putin erected a statue of Vladimir the Great, the tenth-century grand prince of the principality of Kyiv. In Putin’s version of history, Grand Prince Vladimir converted to Christianity on behalf of all of ancient Rus in 988, making him the holy saint of Orthodox Christianity and a Russian, not a Ukrainian, Figure. The conversion means that there is no Ukrainian nation separate from Russia. The grand prince belongs to Moscow, not to Kyiv.
Since the war, Putin has doubled down on his historical arguments. He deputized his former culture minister and close Kremlin aide, Vladimir Medinsky, to lead the Russian delegation in early talks with Ukraine. According to a well-informed Russian academic, Medinsky was one of the ghostwriters of a series of essays by Putin on Ukraine and its supposed fusion with Russia. As quickly became clear, Medinsky’s brief was to press Russia’s historical claims to Ukraine and defend Putin’s distorted narratives, not just to negotiate a diplomatic solution.
Putin’s assertions, of course, are historical miasmas, infused with a brew of temporal and factual contradictions. They ignore, for example, the fact that in 988, the idea of a united Russian state and empire was centuries off in the future. Indeed, the first reference to Moscow as a place of any importance was not recorded until 1147.
On the eve of the invasion, Putin gave a speech accusing Bolshevik leader Vladimir Lenin of destroying the Russian empire by launching a revolution during World War I and then “separating, severing what is historically Russian land.” As Putin put it, “Bolshevik, Communist Russia” created “a country that had never existed before”—Ukraine—by wedging Russian territories such as the Donbas region, a center of heavy industry, into a new Ukrainian socialist republic. In fact, Lenin and the Bolsheviks essentially recreated the Russian empire and just called it something else. They established separate Soviet Socialist Republics for Ukraine and other regions to contrast themselves with the imperial tsars, who reigned over a united, Russified state and oppressed ethnic minorities. But for Putin, the Bolsheviks’ decision was illegitimate, robbing Russia of its patrimony and stirring “zealous nationalists” in Ukraine, who then developed dangerous ideas of independence. Putin claims he is reversing these century-old “strategic mistakes.”
Narratives about NATO have also played a special role in Putin’s version of history. Putin argues that NATO is a tool of U.S. imperialism and a means for the United States to continue its supposed Cold War occupation and domination of Europe. He claims that NATO compelled eastern European member countries to join the organization and accuses it of unilaterally expanding into Russia’s sphere of influence. In reality, those countries, still fearful after decades of Soviet domination, clamored to become members.
But according to Putin, these purported actions by the United States and NATO have forced Russia to defend itself against military encroachment; Moscow had “no other choice,” he claims, but to invade Ukraine to forestall it from joining NATO, even though the organization was not going to admit the country. On July 7, 2022, Putin told Russian parliamentary leaders that the war in Ukraine was unleashed by “the collective West,” which was trying to contain Russia and “impose its new world order on the rest of the world.”
The more that Russia tries to erase the Ukrainian national identity, the stronger it becomes.
But Putin also plays up Russia’s imperial role. At a June 9, 2022, Moscow conference, Putin told young Russian entrepreneurs that Ukraine is a “colony,” not a sovereign country. He likened himself to Peter the Great, who waged “the Great Northern War” for 21 years against Sweden—“returning and reinforcing” control over land that was part of Russia. This explanation also echoes what Putin told U.S. President George Bush at the April 2008 NATO summit in Bucharest: “Ukraine is not a real country.”
The United States was, of course, once a colony of Great Britain. So were Australia, Canada, India, Ireland, and numerous other states that have been independent and sovereign for decades. That does not make them British or give the United Kingdom a contemporary claim to exert control over their destinies, even though many of these countries have English as their first or second language. Yet Putin insists that Ukraine’s Russian speakers are all Moscow’s subjects and that, globally, all Russian speakers are part of the “Russian world,” with special ties to the motherland.
In Ukraine, however, his push has backfired. Since February 24, 2022, Putin’s insistence that Ukrainians who speak Russian are Russians has, on the contrary, helped to forge a new national identity in Ukraine centered on the Ukrainian language. The more that Putin tries to erase the Ukrainian national identity with bombs and artillery shells, the stronger it becomes.
Ukraine and Ukrainians have a complicated history. Empires have come and gone, and borders have changed for centuries, so the people living on modern Ukrainian territory have fluid, compound identities. But Ukraine has been an independent state since 1991, and Putin is genuinely aggrieved that Ukrainians insist on their own statehood and civic identity.
Take Putin’s frequent references to World War II. Since 2011, Putin has enshrined the “Great Fatherland War” as the seminal event for modern Russia. He has strictly enforced official narratives about the conflict. He has also portrayed his current operation as its successor; in Putin’s telling, the invasion of Ukraine is designed to liberate the country from Nazis. But for Putin, Ukrainians are Nazis not because they follow the precepts of Adolf Hitler or espouse national socialism. They are Nazis because they are “zealous nationalists”—akin to the controversial World War II–era Ukrainian partisan Stepan Bandera, who fought with the Germans against Soviet forces. They are Nazis because they refuse to admit they are Russians.
Putin’s conjuring of Ukrainian Nazis has gained more traction domestically than anywhere else. Yet internationally, Putin’s assertions about NATO and proxy wars with the United States and the collective West have won a variety of adherents, from prominent academics to Pope Francis, who said in June 2022 that the Ukraine war was “perhaps somehow provoked.” Western politicians and analysts continue to debate whether NATO is at fault for the war. These arguments persist even though Putin’s 2014 annexation of Crimea came in response to Ukraine’s efforts to associate with the European Union, not with NATO. And the debate has gone on, even though when Finland and Sweden applied to join the alliance in June 2022, despite months of threats from Russia, Putin told reporters that Kremlin officials “don’t have problems with Sweden and Finland like we do with Ukraine.” Putin’s problem, then, was not NATO in particular. It was that Ukraine wanted to associate with any entity or country other than Russia. Whether Ukraine wanted to join the European Union or NATO or have bilateral relations with the United States—any of these efforts would have been an affront to Russia’s history and dignity.
To Putin, Ukrainians are Nazis because they refuse to admit they are Russians.
But Putin knows it will be difficult to negotiate a settlement in Ukraine based on his version of history and to reconcile fundamentally different stories of the past. Most modern European states emerged from the ruins of empires and the disintegration of larger multiethnic states. The war in Ukraine could lead to more Russian interference to stoke simmering conflicts in weak states such as Bosnia-Herzegovina and other Balkan countries, where history and territorial claims are also disputed.
Yet no matter the potential cost, Putin wants his past to prevail in Europe’s political present. And to make sure that happens, the Russian military is in the field, in full force, fighting the regular Ukrainian army. Unlike the situation in Donbas from 2014 to 2022, when Russia falsely denied that it was involved, this war is a direct conflict between the two states. As Putin also told his Russian parliamentarians on July 7, he is determined to fight to the end. “Largely speaking, we haven’t even yet started anything in earnest,” he said, even though he purportedly sees Ukrainians as “brothers.”
Putin abhors that the United States and European countries are supporting Ukraine militarily. In response, he has launched an economic and information war against the West, clearly signaling that this is not only a military conflict and a battle over who gets to “own history.” Russia has weaponized energy, grain, and other commodities. It has spread disinformation, including by accusing Ukraine of committing the very atrocities that Russia has carried out on the battlefield and by blaming Western sanctions for exacerbating famines in Africa when it is Russia that has blocked Ukrainian grain shipments to the continent from the Black Sea. And in many parts of the world, Russia is winning the information war. So far, the West has not been able to be completely effective in the informational space.
Nevertheless, Western support for Ukraine has been significant. This support has two major elements: weapons and sanctions, including the High Mobility Artillery Rocket Systems (HIMARS) from the United States, which have significantly increased Ukraine’s ability to strike back at Russian targets. Other NATO members have also supplied weapons and humanitarian assistance. But Ukraine’s constant need to replenish its arms has already begun to deplete the arsenals of donating countries.
Western energy, financial, and export control sanctions have been extensive, and they are affecting the Russian economy. But sanctions cannot alter Putin’s view of history or his determination to subjugate Ukraine, so they have not changed his calculus or his war aims. Indeed, close observers say that Putin has rarely consulted his economic advisers during this war, apart from Elvira Nabiullina, the head of the central bank, who has astutely managed the value of the ruble. This is a stark break from the past, when Putin has always appeared extremely interested in the Russian economy and eager to discuss statistics and growth rates in great detail. Any concerns about the long-term economic impact of the war have receded from his view.
And to date, Russia’s economy has weathered the sanctions, although growth rates are forecast to plunge this year. The real pinch from Western export controls will be felt in 2023, when Russia will lack the semiconductors and spare parts for its manufacturing sector, and its industrial plants will be forced to close. The country’s oil industry will especially struggle as it loses out on technology and software from the international oil industry.
Europe and the United States have imposed wide-ranging energy sanctions on Russia, with the European Union committed to phasing out oil imports from Russia by the end of 2022. But limiting gas imports is much more challenging, as a number of countries, including Germany, have few alternatives to replace Russian gas in the short term, and Putin has weaponized energy by severely reducing gas supplies to Europe. For 50 years, the Soviet Union and Russia cast themselves as reliable suppliers of natural gas to Western Europe in a relationship of mutual dependence: Europe needed gas, and Moscow needed gas revenues. But that calculation is gone. Putin believes that Russia can forgo these revenues because countries still buying Russian oil and gas are paying higher prices for it—higher prices that he helped provoke by cutting back on Russia’s exports to Europe. And even if Russia does eventually lose energy revenues, Putin appears willing to pay that price. What he ultimately cares about is undermining European support for Ukraine.
Russia’s economic and energy warfare extends to the weaponization of nuclear power. Russia took over the Chernobyl plant in Ukraine at the beginning of the war, after recklessly sending Russian soldiers into the highly radioactive “red zone” and forcing the Ukrainian staff at the plant to work under dangerous conditions. Then, it abandoned the plant after having exposed the soldiers to toxic radiation. Russia subsequently shelled and took over Ukraine’s Zaporizhzhya nuclear power plant, Europe’s largest, and turned it into a military base. By attacking the power plant and transforming it into a military garrison, Russia has created a safety crisis for the thousands of workers there. Putin’s broad-based campaign does not stop at nuclear energy.
Putin’s goal is not negotiation but Ukrainian capitulation.
Russia has also weaponized food supplies, blockading Ukraine and preventing it from exporting its abundant grain and fertilizer stocks. In July 2022, Turkey and the United Nations brokered an agreement to allow Ukraine and Russia to export grain and fertilizer, but the implementation of this deal faced multiple obstacles, given the war raging in the Black Sea area. Indeed, immediately after the official signing of the agreement, Russia shelled some of the infrastructure at Ukraine’s critical Odessa port.
Putin has fallen back on another historic Russian military tactic—bogging down opposing forces and waiting for winter. Much as his predecessors arranged for Napoleon’s armies to be trapped in the snows near Moscow and for Nazi soldiers to freeze to death outside Stalingrad, Putin plans to have French and German citizens shivering in their homes. In his speech at the June 2022 St. Petersburg International Economic Forum, Putin predicted that, as Europeans face a cold winter and suffer the economic consequences of the sanctions their governments have imposed on Russia and on Russian gas exports, populist parties will rise, and new elites will come to power. The June 2022 parliamentary elections in France, when Marine Le Pen’s extreme-right party increased its seats elevenfold—largely because of voters’ unhappiness with their economic situation—reinforced Putin’s convictions. The collapse of Italian Prime Minister Mario Draghi’s government in July 2022 and the possible return of a populist, pro-Russian prime minister in the fall were also considered results of popular economic discontent. The Kremlin aims to fracture Western unity against Russia under the pressure of energy shortages, high prices, and economic hardship.
In the meantime, Putin is confident that he can prevail. On the surface, popular support for the war inside Russia seems reasonably robust. Polling by the independent Levada Center shows that Putin’s approval rating went up after the invasion began. Nonetheless, there is good reason for skepticism about the depth of active support for him. Hundreds of thousands of people who oppose the war have left the country. Many of them, in doing so, have explicitly said that they want to be part of Russia’s future but not Vladimir Putin’s version of the past. Russians who have stayed and publicly criticized the war have been harassed or imprisoned. Others are indifferent, or they passively support the war. Indeed, life for most people in Moscow and other big Russian cities goes on as normal. So far, the conscripts who have been sent to fight and die are not the children of Russia’s elites or urban middle class. They are from poor, rural areas, and many of them are not ethnically Russian. Rumors after five months of combat that the Moscow-linked Wagner mercenary group was recruiting prisoners to fight suggested that Russia faced an acute manpower shortage. But the troops are urged on by propaganda that dehumanizes the Ukrainians and makes the fighting seem more palatable.
Despite calls by some for a negotiated settlement that would involve Ukrainian territorial concessions, Putin seems uninterested in a compromise that would leave Ukraine as a sovereign, independent state—whatever its borders. According to multiple former senior U.S. officials we spoke with, in April 2022, Russian and Ukrainian negotiators appeared to have tentatively agreed on the outlines of a negotiated interim settlement: Russia would withdraw to its position on February 23, when it controlled part of the Donbas region and all of Crimea, and in exchange, Ukraine would promise not to seek NATO membership and instead receive security guarantees from a number of countries. But as Russian Foreign Minister Sergey Lavrov stated in a July interview with his country’s state media, this compromise is no longer an option. Even giving Russia all of the Donbas is not enough. “Now the geography is different,” Lavrov asserted, in describing Russia’s short-term military aims. “It’s also Kherson and the Zaporizhzhya regions and a number of other territories.” The goal is not negotiation, but Ukrainian capitulation.
At any point, negotiations with Russia—if not handled carefully and with continued strong Western support for Ukraine’s defense and security—would merely facilitate an operational pause for Moscow. After a time, Russia would continue to try to undermine the Ukrainian government. Moscow would likely first attempt to take Odessa and other Black Sea ports with the goal of leaving Ukraine an economically inviable, landlocked country. If he succeeds in that, Putin would launch a renewed assault on Kyiv as well, with the aim of unseating the present government and installing a pro-Moscow puppet government. Putin’s war in Ukraine, then, will likely grind on for a long time. The main challenge for the West will be maintaining resolve and unity, as well as expanding international support for Ukraine and preventing sanctions evasion.
This will not be easy. The longer the war lasts, the greater the impact domestic politics will have on its course. Russia, Ukraine, and the United States will all have presidential elections in 2024. Russia’s and Ukraine’s are usually slated for March. Russia’s outcome is foreordained: either Putin will return to power, or he will be followed by a successor, likely from the security services, who supports the war and is hostile to the West. Zelensky remains popular in Ukraine as a wartime president, but he will be less likely to win an election if he makes territorial concessions. And if Donald Trump or a Republican with views like his becomes president of the United States in 2025, U.S. support for Ukraine will erode.
Domestic politics will also play a role outside these three countries—and, in fact, outside the West altogether. The United States and its allies may want to isolate Russia, but a large number of states in the global South, led by China, regard the Russia-Ukraine war as a localized European conflict that does not affect them. China has even backed Russia rhetorically, refused to impose sanctions, and supported it in the United Nations. (One should not underestimate the durability and significance of Russia’s alignment with China.) Indian Foreign Minister Subrahmanyam Jaishankar summarized the attitude of many developing states when he said that Russia is a “very important partner in a number of areas.” For much of the global South, concerns focus on fuel, food, fertilizer, and also arms. These countries are apparently not concerned that Russia has violated the UN Charter and international law by unleashing an unprovoked attack on a neighbor’s territory.
There’s a reason these states have not joined the United States and Europe in isolating Moscow. Since 2014, Putin has assiduously courted “the rest”—the developing world—even as Russia’s ties with the West have frayed. In 2015, for example, Russia sent its military to the Middle East to support Syrian President Bashar al-Assad in his country’s civil war. Since then, Russia has cultivated ties with leaders on all sides of that region’s disputes, becoming one of the only major powers able to talk to all parties. Russia has strong ties with Iran, but also with Iran’s enemies: particularly Egypt, Israel, Saudi Arabia, and other Gulf states. In Africa, Russian paramilitary groups provide support to a number of leaders. And in Latin America, Russian influence has increased as more left-wing governments have come to power. There and elsewhere, Russia is still seen as a champion of the oppressed against the stereotype of U.S. imperialism. Many people in the global South view Russia as the heir to the Soviet Union, which supported their post-colonial national liberation movements, not a modern variant of imperial Russia.
Not only does much of the world refuse to criticize or sanction Russia; major countries simply do not accept the West’s view of what caused the war or just how grave the conflict is. They instead criticize the United States and argue that what Russia is doing in Ukraine is no different from what the United States did in Iraq or Vietnam. They, like Moscow, justify Russia’s invasion as a response to the threat from NATO. This is thanks in part to the Kremlin’s propaganda, which has amplified Putin’s narratives about NATO and proxy wars and the nefarious actions of the West.
International institutions have not been much more helpful than developing countries. The United Nations and the Organization for Security and Cooperation in Europe proved incapable of preventing or stopping this war. They seem increasingly the victims of Putin’s distorted view of the past as well as poorly structured to meet the challenges of the present.
Putin’s manipulations of history suggest that his claims go beyond Ukraine, into Europe and Eurasia. The Baltic states might be on his colonial agenda, as well as Poland, part of which was ruled by Russia from 1772 to 1918. Much of present-day Moldova was part of the Russian empire, and Russian officials have suggested that this state could be next in their sights. Finland was also part of the Russian empire between 1809 and 1918. Putin may not be able to conquer these countries, but his extravagant remarks about taking back Russia’s colonies are designed to intimidate his neighbors and throw them off balance. In Putin’s ideal world, he will gain leverage and control over their politics by threatening them until they let Russia dictate their foreign and domestic policies.
In Putin’s vision, the global South would, at a minimum, remain neutral in Russia’s standoff with the West. Developing nations would actively support Moscow. With the BRICS organization—Brazil, Russia, India, China, and South Africa—set to expand to include Argentina, Iran, and possibly Egypt, Saudi Arabia, and Turkey, Russia may acquire even more partners, ones that together represent a significant percentage of global GDP and a large percentage of the world’s population. Russia would then emerge as a leader of the developing world, as was the Soviet Union during the Cold War.
All this underlines why it is imperative that the West (Australia, Canada, Japan, New Zealand, Singapore, South Korea, the United States, and Europe) redouble its efforts to remain united in supporting Ukraine and countering Russia. In the near term, that means working together to push back against Russian disinformation about the war and false historical narratives, as well as the Kremlin’s other efforts to intimidate Europe—including through deliberate nuclear saber-rattling and energy cutoffs. In the medium to long term, the United States, its allies, and its partners should discuss how to restructure the international and European security architecture to prevent Russia from attacking other neighbors that it deems within its sphere. But for now, NATO is the only institution that can guarantee Europe’s security. Indeed, Finland’s and Sweden’s decision to join was in part motivated by that realization.
As he looks toward a quarter century in power, Putin seeks to build his version of a Russian empire. He is “gathering in the lands” as did his personal icons—the great Russian tsars—and overturning the legacy of Lenin, the Bolsheviks, and the post–Cold War settlement. In this way, Putin wants Russia to be the one exception to the inexorable rise and fall of imperial states. In the twentieth century, Austria-Hungary and the Ottoman Empire collapsed after World War I. Britain and France reluctantly gave up their empires after World War II. But Putin is insistent on bringing tsarist Russia back. Regardless of whether he prevails in Ukraine, Putin’s mission is already having a clear and ironic impact, both on Europe and on Russia’s 22 years of economic advancement. In reasserting Russia’s imperial position by seeking to reconquer Ukraine, Putin is reversing one of the greatest achievements of his professed greatest hero. During his reign, Peter the Great opened a window to the West by traveling to Europe, inviting Europeans to come to Russia and help develop its economy, and adopting and adapting European artisans’ skills. Vladimir Putin’s invasions and territorial expansions have slammed that window shut. They have sent Europeans and their companies back home and pushed a generation of talented Russians fleeing into exile. Peter took Russia into the future. Putin is pushing it back to the past.