Thoughts on USA’s response to Russian Invasion of Ukraine
The unprovoked attack by Russia on Ukraine is a very sad event. My heart goes out to the brave Ukrainians who are battling tyranny. I also don’t fully understand Russia’s endgame and how this war will end and what a future peace accord looks like. In the meantime, I am hoping for minimal casualties and a quick return to normalcy.
Russia’s initial expectation about the war was based on the recent easy takeover of Afghanistan by the Taliban. That’s why when the Russian troops encountered resistance, they ran out of food and fuel within 2 days. As a comparison, during the March 2003 invasion of Iraq, the USA Coalition took 3 weeks to capture Baghdad. Also the USA coalition had 300,000 troops and Iraq’s population was 25 M. Ukraine’s population is 45 M and Russia has attacked it with only 200,000 troops. Clearly Russia has far fewer troops than what was required and that’s why taking over Ukraine is proving to be a tough assignment. Going by the Iraq metric, I would say unless Russia brings in additional reinforcements, this invasion would continue for a while or may even become a stalemate.
Now the Biden Administration had been warning us about the impending invasion, so the actual Russian invasion was not a surprise to them. When Russia attacked, the Biden Administration quickly rolled out calibrated sanctions. Under the inspirational leadership of President Zelensky, Ukrainians have resisted the invasion and that resistance has garnered popular support in Europe and USA. As the Ukrainian resistance continued and the Russian invasion stalled, Americans have demanded more action from their government. In response, USA and its allies have frozen Russian foreign reserves, banned Russian banks from the Swift network, closed their airspace to Russian planes, expropriated the assets of Russian nationals (Oligarchs) deemed to be close to President Putin, and some have banned Russian energy imports. In just 2–3 weeks of conflict, we have imposed many sanctions that were deemed unimaginable just a month ago. Given that this conflict would drag on for more time, I shudder to think what other measures USA will add without much deliberation. The sole intention seems to be to win the daily Newspaper coverage and that is not how foreign policy should be conducted.
I have put together some additional thoughts about the current state of US foreign policy:
A. I understand that the direct aggression of Russia in Ukraine deserves a strong response. But in general, I have also noticed that within the US foreign policy framework, Morality has overtaken Realpolitik. We have adopted a sneering attitude towards all Dictators and Strongmen. The era of live and let live and respecting each other’s areas of influence is no longer being followed. As a result, the US has some issues or the other with many countries. Just in the oil market, we are not getting along with 4 of the largest oil producers — Venezuela, Iran, Russia, and Saudi Arabia. All these countries have not had good regimes for decades but in the past we tried to work with them — agree where we can and disagree when we need to. In the past decade or so, as social media became more prominent, the influence of morality has gone up. Now that we wish to isolate Russia, we are trying to rehabilitate our relations with Saudi Arabia and Venezuela. At least Venezuela is playing along but Saudi Arabia is not. These are the real limits of running foreign policy based on morality. I hope we have learned our lessons and we will try to have a working relationship with as many countries as possible.
B. The size of our economy and the US Dollar being a reserve currency means foreign governments hold a lot of dollar reserves and these reserves are usually held at the Federal Reserve of New York. Since the assets are within our jurisdiction, we can hurt the foreign powers financially. But we need to understand the limitations of this power and I draw the line at confiscating some other country’s wealth — we recently confiscated Afghanistan’s $10 B reserves and now we have frozen Russia’s $400 B reserves. People have been killed for far less and at some point, these countries will try to hurt us to get their money back, and I fear what they will do. The Iranian Hostage crisis in 1979–80 was a product of a similar mindset. I sincerely hope we adhere to some red lines and not back other countries into a corner causing them to dangerously lash out.
C. USA is abusing its sanction power. When so many countries and entities are sanctioned by us, other countries and companies are finding it difficult to do their normal business. At some point, these countries and companies will just start ignoring our sanctions. That tipping point may soon come and when it comes, USA’s soft power would erode significantly. In order to prevent Russia from circumventing the sanctions by using India and China, we are currently threatening sanctions on them also. The combined economic might of the USA and its Allies like Western Europe, Japan, South Korea and Australia can easily hurt the Russian economy but they surely cannot isolate and launch an economic war against Russia, China, India, and the Middle East combined.
D. The USA and its allies have decided that they are not going to intervene militarily in the Russian invasion of Ukraine. They have instead decided to start an economic war against Russia and cut its connections to the world at large. They are trying to give more direct support to Ukraine and help the refugees. Now in most sectors, Russia is not a major player but it is a major player in the energy market. For instance, the world consumes about 97 million barrels of oil a day and Russia exports about 7 million barrels out of its 11 million barrels of daily production. The world doesn’t have the spare capacity to replace Russian oil and the fear of supply disruption is driving up oil prices. My concern though is that the impact of the higher oil prices is falling disproportionately on almost all emerging countries and the poor everywhere. The higher oil prices are actually benefiting Russia and they can use these higher prices to fund the war and also win support of emerging countries by offering them 5–10% discount on crude oil deliveries. For instance, every day, India imports 5 M barrels of oil. The extra cost to India due to USA’s economic warfare against Russia is $200 M per day. (Oil at $120 instead of $80 across 5 M barrels). Recently, the spot price of natural gas in the UK was 5 pounds per BTU. If that persists, a normal family will pay a monthly heating bill of 1000 pounds. That family has no idea from where they will get the money to pay the heating bill.
The main theme I wish to highlight here is that since the end of the Cold War in 1992, the USA has thought that the world has become unipolar and that this world doesn’t have two superpowers but it has just one hyperpower. We really don’t believe that there are any real limitations to our power and one sad byproduct of that mindset was the ill-fated NATO expansion from 1999 onwards into former Warsaw Pact countries and former constituents of the USSR. I know the USA keeps repeating that every inch of NATO territory will be strenuously defended but since 2004, in their hearts, the Baltic republics (Latvia, Lithuania, and Estonia) have always been scared that when push comes to shove, the USA won’t launch WW3 to protect them. I am basically saying that it will be good for the USA in the long run to recognize that there are limits to their power. Empires that move beyond their defensible borders and stretch themselves too thin can soon go from being a Hyperpower (USA became Hyperpower in 1992) to Superpower (1945) to Great power (1918) to a Regional power (1822).
Coming back to Ukraine, the USA needs to avoid a prolonged stalemate/ conflict in Ukraine with continued loss of life. For that we need to repurpose the current sanctions to avoid collateral damage. We need to focus on only isolating Russia and should try to keep China and India on our side, even after knowing they will be playing nice to both sides. We need to understand that other countries have constraints and we are no longer that powerful that we can give countries an either/ or ultimatum. Already 52 out of the 193 countries chose to be absent, or abstained, or voted against the recent UN resolution condemning Russia. Before imposing more sanctions on Russia, we should give a roadmap to Russia to de-escalate the situation. Hopefully that roadmap will encourage Russia to back down and reintegrate with the world.
