Money Talks - and Putin Can Afford to Compromise

Cynthia V. Hooper is an Associate Professor of Soviet and Post-Soviet History at College of the Holy Cross and an affiliate at Harvard University's Davis Center for Russian and Eurasian Studies. She is currently completing a book entitled Terror From Within: Policing the Soviet Powerful, Under Stalin and Beyond.  This article was published in The Moscow Times on Tuesday, August 5, 2014.

          When Russian President Vladimir Putin did not come out within 48 hours after the downing of Malaysia Airlines Flight MH17 to disassociate himself from the rebels fighting in eastern Ukraine, the world found itself facing yet another crisis. Just a week earlier, the Kremlin appeared to be riding high: Russia was diligently engaged in repairing relations with Europe, and North American talk-show hosts, if they mentioned Ukraine at all, did so only in order to disparagingly compare, once again, Putin’s purported strength to U.S. President Barack Obama’s gently-washed “mom jeans.” Putin even cheered with German Chancellor Angela Merkel at the World Cup final game in Brazil, when a young substitute midfielder scored the winning goal in extra time.

Today, in contrast, a growing number of prominent voices are calling for Russia to be barred from hosting the world’s most popular sports event in 2018.  Above all, E.U. and U.S. leaders have agreed to level wide-ranging sanctions against Russia’s financial, energy, and defense sectors, in hopes of persuading the Kremlin to end its covert intervention in what the International Red Cross has classified as a civil war in Ukraine. These sanctions could go further – natural gas sales are still off the table, and France will be allowed to deliver a 1.1 billion Euro Mistral warship that Moscow has already paid for. But they are serious enough that both Russian and European economies are sure to take a hit.  Now the question is – what follows?

  Western analysts have, in recent days, wobbled between portrayals of Putin as all-powerful and surprisingly weak. On the one hand, he is cast as a tsar-like figure so fearsome that Russian billionaires would prefer to lose every penny in foreign assets than speak up in the face of sanctions. On the other hand, he has suddenly become a man imprisoned in a cage of his own design, trapped by the virulent anti-Ukraine, anti-U.S. rhetoric he initially encouraged. Having turned Russian television into a tool of demagogic power and used it to fuel hatred, rumor and fear, Putin has found himself a victim of the very processes he once set in motion. At least so the argument goes.

            Certainly he met the crisis with a lack of creative leadership and a seeming determination to follow Soviet-era rules of so-called “positive” censorship. First among them – never admit to anything in public that might make the state or its ruling cadre look flawed. Thus Putin, initially, stuck to a tried-and-true script, one very similar to that put out by Communist officials following the 1983 crash of Korean Air Lines 007, shot down as it strayed over Soviet air space en route from New York City to Seoul. Soviet leader Yuri Andropov first disavowed responsibility for the attack, only to later term it “a sophisticated provocation masterminded by U.S. special services with the use of a South Korean plane.”  And although the U.S. denounced the killing of 269 people as a “crime against humanity,” global outrage over Soviet actions quickly died down, amid sad recognition that the loss of an airliner was not worth nuclear war. (As The Christian Science Monitor reported at the time, U.S. President Ronald Reagan’s “restrained reaction” to the tragedy “angered some of his most fervent conservative supporters” but relieved those who had been inclined to see him as a hot-headed risk-taker “all too willing to seek confrontation with the Soviets.”) 

Putin seems to have gambled that U.S. and E.U. hands today would be similarly tied. He was banking (quite literally) on the fact that no one wants to embark on a military conflict with Russia, or to alienate a major power whose president could, if he decided to go completely rogue, scuttle international efforts to fight terrorism or block the development of nuclear weapons in countries like Iran. Above all, he doubted that Europe would risk losing one-third of its gas supplies and more than 400 billion dollars in bilateral trade, as well as a huge annual influx of investment capital some term “corrupt financial flows,” others simply “ill-gotten gains.” 

Ukrainian leaders feared likewise. For months they have condemned Europe for a caution they cast as “appeasement” and “betrayal.” Like their Russian counterparts, they, too, are engaging in an information war, and the downing of MH17 prompted a calculated media campaign to further fuel disgust and rage. Broadcasting pictures of dead children and proclaiming “Russia did this,” Ukrainian television outlets have clamored for global action. “The world must choose sides” announced Ukrainian President Petro Poroshenko, comparing the (likely) rebel attack to that which took down New York City’s Twin Towers and echoing the same language of good-vs.-evil articulated by U.S. President George W. Bush in his call for a “war against terror” after 9/11. Rejecting calls for a ceasefire, the Ukrainian Army has gone on the offensive, at a moment when the disorganization of government troops and the extent of the civilian casualties they are inflicting will be less noticed by a world press preoccupied by the plane tragedy and its international ramifications. 

It turns out that those who doubted Europe’s willingness to take a stand – Putin possibly among them – were wrong. And while sanctions are historically ineffective in bringing about the changes desired by those who impose them, it does seem that these particular measures might prompt the Kremlin to make a few, however grudging, concessions. Certainly Putin will never come right out and admit to, at the very least, criminal error on the part of a handful of pro-rebel subordinates. But, then again, neither did Reagan acknowledge fault in 1988, when a U.S. Navy captain accidentally shot down an Iranian Airbus, killing 290 people. In fact, then Vice President George H.W. Bush dismissed those who questioned the Pentagon’s doctored version of events with scorn, declaring, “I will never apologize for the United States—I don’t care what the facts are.”

But Putin could publicly accept a unified Ukraine and call for the separatists to disarm. He could even do so as a Machiavellian figure only pretending to respect democracy, all the while understanding that the E.U. would then be saddled with propping up a divided country in economic ruin.

Many western analysts argue that Putin can’t afford to back down. They mention all manner of statistics that make Russia sound like a nation of trigger-happy loons:  Gallup puts Putin’s support at 83% and the independent Russian Levada Centre found 64% of Russians blame the West for the Ukrainian conflict, 63% think Russian media coverage of the crisis is objective, and back in June, 40% supported an all-out war. But there’s a multivalence and softness to these statistics that outsiders frequently fail to understand. Such results are gleaned from respondents who are cynical about how power works, who see Putin as the best among a bad, not to mention scrawny, set of options, and who dismiss their own ability to effect political change. Ultimately, they do not think their desires much matter – and, in the end, neither does the Kremlin. 

Any pressure Putin has to fear will come from the top. And in recent months, he has, indeed, replaced so-called “reformers” among his inner circle with “hard-liners” who will not be happy, should he extend an olive branch to “enemies” overseas. But money also talks in post-Soviet Russia, arguably even more than do a few “stand up to the West” patriotic ideals. Back in 2007, former chess champion and oppositionist Garry Kasparov explained that Putin could not afford to alienate Europe by simply choosing to defy his country’s constitution and remain in power at the end of two presidential terms. He cannot come to be seen as a dictator-pariah, Kasparov said, because “the entire fortunes of Russia are tied to the free world.” Elites need the “reliable protective legal environment of the West” to secure “all the money, the financial benefits that they gained after eight years of looting Russia.” Seven years later, and Kasparov’s observations still hold true. Oligarchs are not the only ones with houses in London and children at Harvard – and anyone in Russia now with economic ties to that outside world must be worried. Sanctions, together with capital flight, a falling stock market, rising interest rates, and a ruling by the international arbitration court in The Hague that Moscow must pay out $50 billion to shareholders of an oil company judges found had been unjustly seized could, in sum, push even the biggest beneficiaries of the Putin regime to turn against their chief patron. Or at least nudge him towards compromise.