Not Just Another Recession
Why the Global Economy May Never Be the Same
Russian President Vladimir Putin has made a strategic blunder by invading Ukraine. He has misjudged the political tenor of the country, which was not waiting to be liberated by Russian soldiers. He has misjudged the United States, the European Union, and a number of countries—including Australia, Japan, Singapore, and South Korea—all of which were capable of collective action before the war and all of which are now bent on Russia’s defeat in Ukraine. The United States and its allies and partners are imposing harsh costs on Moscow. Every war is a battle for public opinion, and Putin’s war in Ukraine has—in an age of mass-media imagery—associated Russia with an unprovoked attack on a peaceful neighbor, with mass humanitarian suffering, and with manifold war crimes. At every turn, the ensuing outrage will be an obstacle to Russian foreign policy in the future.
No less significant than Putin’s strategic error have been the Russian army’s tactical blunders. Bearing in mind the challenges of assessment in the early stages of a war, one can surely say that Russian planning and logistics were inadequate and that the lack of information given to soldiers and even to officers in the higher echelons was devastating to morale. The war was supposed to end quickly, with a lightning strike that would decapitate the Ukrainian government or cow it into surrender, after which Moscow would impose neutrality on Ukraine or establish a Russian suzerainty over the country. Minimal violence might have equaled minimal sanctions. Had the government fallen quickly, Putin could have claimed that he was right all along: because Ukraine had not been willing or able to defend itself, it was not a real country—just like he had said.
But Putin will be unable to win this war on his preferred terms. Indeed, there are several ways in which he could ultimately lose. He could mire his military in a costly and futile occupation of Ukraine, decimating the morale of Russia’s soldiers, consuming resources, and delivering nothing in return but the hollow ring of Russian greatness and a neighboring country reduced to poverty and chaos. He could create some degree of control over parts of eastern and southern Ukraine and probably Kyiv, while fighting a Ukrainian insurgency operating from the west and engaged in guerrilla warfare across the country—a scenario that would be reminiscent of the partisan warfare that took place in Ukraine during World War II. At the same time, he would preside over the gradual economic degradation of Russia, its growing isolation, and its increasing inability to supply the wealth on which great powers rely. And, most consequentially, Putin could lose the support of the Russian people and elites, on whom he depends to prosecute the war and maintain his hold on power, even though Russia is not a democracy.
Putin seems to be trying to reestablish some form of Russian imperialism. But in taking this extraordinary gamble, he seems to have failed to recall the events that set in motion the end of the Russian empire. The final Russian tsar, Nicholas II, lost a war against Japan in 1905. He later fell victim to the Bolshevik Revolution, losing not just his crown but his life. The lesson: autocratic rulers cannot lose wars and remain autocrats.
Putin is unlikely to lose the war in Ukraine on the battlefield. But he could lose when the fighting mostly ends and the question becomes, What now? The unintended and underestimated consequences of this senseless war will be difficult for Russia to stomach. And the lack of political planning for the day after—comparable to the planning failures of the U.S. invasion of Iraq—will do its part to make this an unwinnable war.
Ukraine will not be able to turn back the Russian military on Ukrainian soil. The Russian military is in another league from that of Ukraine, and Russia is of course a nuclear power, whereas Ukraine is not. So far the Ukrainian military has fought with admirable determination and skill, but the real obstacle to Russian advances has been the nature of the war itself. Through aerial bombardment and missile attacks, Russia could level the cities of Ukraine, thereby achieving dominance over the battle space. It could try a small-scale use of nuclear weapons to the same effect. Should Putin make this decision, there is nothing in the Russian system that could stop him. “They made a desert,” the Roman historian Tacitus wrote of Rome's warfare tactics, attributing the words to the British war leader Calgacus, “and called it peace.” That is an option for Putin in Ukraine.
Even so, he would not be able to simply walk away from the desert. Putin has waged war for the sake of a Russian-controlled buffer zone between himself and the U.S.-led security order in Europe. He would not be able to avoid erecting a political structure to achieve his ends and maintain some degree of order in Ukraine. But the Ukrainian population has already shown that it does not wish to be occupied. It will resist fiercely—through daily acts of resistance and through an insurgency within Ukraine or against an eastern Ukraine puppet regime set up by the Russian army. The analogy of Algeria’s 1954–62 war against France comes to mind. France was the superior military power. Yet the Algerians found ways to grind down the French army and to sap support in Paris for the war.
Occupying Ukraine would be incalculably expensive.
Perhaps Putin can cobble together a puppet government with Kyiv as its capital, a Vichy Ukraine. Perhaps he can muster the support required from the secret police to subdue the population of this Russian colony. Belarus is an example of a country that runs on autocratic rule, police repression, and the backing of the Russian military. It is a possible model for a Russian-ruled eastern Ukraine. In reality, however, it is a model only on paper. A Russified Ukraine might exist as an administrative fantasy in Moscow, and governments are certainly capable of acting on their administrative fantasies. But it could never work in practice, owing to Ukraine’s sheer size and to the country’s recent history.
In his speeches on Ukraine, Putin seems lost in the mid-twentieth century. He is preoccupied by the Germanophile Ukrainian nationalism of the 1940s. Hence his many references to Ukrainian Nazis and his stated goal of “denazifying” Ukraine. Ukraine does have far-right political elements. What Putin fails to see or ignores, however, is the much more popular and much more potent sense of national belonging that has arisen in Ukraine since it claimed independence from the Soviet Union in 1991. Russia’s military response to the 2014 Maidan revolution in Ukraine, which swept away a corrupt pro-Russian government, was an additional spur to this sense of national belonging. Since the Russian invasion began, Ukrainian President Volodymyr Zelensky has been pitch-perfect in his appeals to Ukrainian nationalism. A Russian occupation would expand the Ukrainian polity’s sense of nationhood, partly by creating many martyrs to the cause—as imperial Russia’s occupation of Poland did in the nineteenth century.
To work at all, then, the occupation would have to be a massive political undertaking, playing out over at least half of Ukraine’s territory. It would be incalculably expensive. Perhaps Putin has in mind something like the Warsaw Pact, through which the Soviet Union ruled over many different European nation-states. That, too, was expensive—but not as expensive as controlling a zone of internal rebellion, armed to the teeth by its many foreign partners and on the lookout for any Russian vulnerability. Such an effort would drain Russia’s treasury.
The horror of this war will backfire on Putin.
Meanwhile, the sanctions that the United States and European countries have imposed on Russia will result in a separation of Russia from the global economy. Outside investment will fall away. Capital will be much harder to acquire. Technology transfers will dry up. Markets will close to Russia, possibly including the markets for its gas and oil, the sale of which has been crucial to Putin’s modernization of the Russian economy. Business and entrepreneurial talent will flow out of Russia. The long-term effect of these transitions is predictable. As the historian Paul Kennedy argued in The Rise and Fall of the Great Powers, such countries have a tendency to fight the wrong wars, to undertake financial burdens and thus to deprive themselves of economic growth—the lifeblood of a great power. In the improbable event that Russia could subdue Ukraine, it could also ruin itself in the process.
A key variable in the fallout of this war is the Russian public. Putin’s foreign policy has been popular in the past. In Russia, the annexation of Crimea was very popular. Putin’s general assertiveness does not appeal to all Russians, but it does appeal to many. This may also remain the case in the early months of Putin’s war in Ukraine. Russian casualties will be mourned, and they will also create an incentive, as all wars do, to make the casualties purposeful, to press on with the war and the propaganda. A global attempt to isolate Russia could backfire by walling off the outside world, leaving Russians to base their national identify on grievance and resentment.
More probable, though, is that the horror of this war will backfire on Putin. Russians did not take to the streets to protest the Russian bombings of Aleppo, Syria, in 2016 and the humanitarian catastrophe that Russian forces have abetted in the course of that country’s civil war. But Ukraine holds an entirely different significance for Russians. There are millions of interconnected Russian-Ukrainian families. The two countries share cultural, linguistic, and religious ties. Information about what is happening in Ukraine will pour into Russia through social media and other channels, disproving the propaganda and discrediting the propagandists. This is an ethical dilemma Putin cannot resolve through repression alone. Repression can also backfire in its own right. It often has in Russian history: just ask the Soviets.
The consequences of a Russian loss in Ukraine would present Europe and the United States with fundamental challenges. Assuming Russia will be forced to withdraw one day, rebuilding Ukraine, with the political goal of welcoming it into the EU and NATO, will be a task of Herculean proportions. And the West must not fail Ukraine again. Alternatively, a weak form of Russian control over Ukraine could mean a fractured, destabilized area of continuous fighting with limited or no governance structures just east of NATO’s border. The humanitarian catastrophe would be unlike anything Europe has seen in decades.
No less worrisome is the prospect of a weakened and humiliated Russia, harboring revanchist impulses akin to those that festered in Germany after World War I. If Putin maintains his grip on power, Russia will become a pariah state, a rogue superpower with a chastened conventional military but with its nuclear arsenal intact. The guilt and stain of the Ukraine war will stay with Russian politics for decades; rare is the country that profits from a lost war. The futility of the costs spent on a lost war, the human toll, and the geopolitical decline will define the course of Russia and Russian foreign policy for many years to come, and it will be very difficult to imagine a liberal Russia emerging after the horrors of this war.
Even if Putin loses his grip on Russia, the country is unlikely to emerge as a pro-Western democracy. It could split apart, especially in the North Caucasus. Or it could become a nuclear-armed military dictatorship. Policymakers would not be wrong to hope for a better Russia and for the time when a post-Putin Russia could be genuinely integrated into Europe; they should do what they can to enable this eventuality, even as they resist Putin’s war. They would be foolish, however, not to prepare for darker possibilities.
History has shown that it is immensely difficult to build a stable international order with a revanchist, humiliated power near its center, especially one of the size and weight of Russia. To do so, the West would have to adopt an approach of continuous isolation and containment. Keeping Russia down and the United States in would become the priority for Europe in such a scenario, as Europe will have to bear the main burden of managing an isolated Russia after a lost war in Ukraine; Washington, for its part, would want to finally focus on China. China, in turn, could try to strengthen its influence over a weakened Russia—leading to exactly the kind of bloc-building and Chinese dominance the West wanted to prevent at the beginning of the 2020s.
Nobody inside or outside Russia should want Putin to win his war in Ukraine. It is better that he lose. Yet a Russian defeat would offer little cause for celebration. Were Russia to cease its invasion, the violence already inflicted on Ukraine would be a trauma that will last for generations; and Russia will not cease its invasion any time soon. The United States and Europe should focus on exploiting Putin’s mistakes, not just by shoring up the transatlantic alliance and encouraging Europeans to act on their long-articulated desire for strategic sovereignty but also by impressing on China the twinned lessons of Russia’s failure: challenging international norms, such as the sovereignty of states, comes with real costs, and military adventurism weakens the countries that indulge in it.
If the United States and Europe can one day help restore Ukrainian sovereignty, and if they can simultaneously nudge Russia and China toward a shared understanding of international order, Putin’s greatest blunder will turn into an opportunity for the West. But it will have come at an incredibly high price.