As Ukraine descends into civil war, the West is reduced to the role of spectator. It is begging President Vladimir Putin not to start a full-scale invasion of his neighbour, but it knows that if he does — or if he leaves it to the Russian-backed mobs causing mayhem from Donetsk to Slavyansk to the historic port of Odessa — any “punishment” will be brief and laughably weak. The sanctions imposed so far are as hypocritical as they are ineffective.
Britain is the epicentre of the global business of laundering Russians’ reputations. The Russian oligarchs to whom caps are doffed are living a double life in London: they own large chunks of the capital city of a country with whom their president has entered into a proxy war. For all the harrumphing in Whitehall about the Germans’ obeisant dependency on Russian gas, or the characteristically ponderous approach of US President Barack Obama, it is Britain’s business model that makes a laughing stock of claims to be making Putin’s pips squeak. The Russian leader knows that western nations are not serious and that is why his assault on Ukraine is but the start of his mission to reinvent a Soviet Union in all but name. Western policymakers have long been in denial. One needed only to read his own pronouncements to understand Putin’s intentions.
A decade ago he spoke of the collapse of the USSR as “the biggest geopolitical catastrophe” of the 20th century. Stalin is rehabilitated in schools. Dissidents are punished. Journalists go missing. TV stations, newspapers and the internet regurgitate Kremlin propaganda. Putin has played a double game with the West, with considerable success. He encouraged oligarchs to buy up blue-chip investments abroad and as many properties as they wanted. He promised to leave them alone to make and spend their billions, as long as they handed him and his coterie large stakes and did not challenge him politically. Those who played by his rules have enjoyed a life of unsurpassed luxury. They have created lucrative micro-industries for Britain in real estate, jewellery, designer fashion, super yachts and private jets. They have employed armies of public relations experts and voracious lawyers. At the heart of the collusion and backslapping are deals in the energy sector and the banks.
Western Europe’s economies are locked into Russia’s. BP and other oil companies are inextricably linked to Russian firms that were formed out of the robber capitalism of the early 1990s. To punish them would be to punish ourselves. That is why western leaders have been so cautious. When they insisted they were taking a pragmatic, incremental approach to give Putin some wiggle room, they are being disingenuous. The main reason was their desperation to find a way to avoid confronting those to whom they are beholden.
Politically unchallenged
As Obama talked tough, with German Chancellor Angela Merkel standing uncomfortably at his side on Friday, it was clear that the West’s response had only emboldened the Russians. Several rounds of sanctions have seen a gradual increase of pressure. The latest has seen seven senior officials and 17 firms added to a black list of visa bans and asset freezes. The rouble and the Russian stock market have fallen, but have not crashed and are just as likely to rally in time. Most problematic has been the downgrading of Russia’s credit status by Standard & Poor’s to one level above junk status. But there is nothing unique in that. Greece and Spain have trodden a similar path, and are gradually coming out of the mire. Russia’s growth rate has, in any case, been low for some time. But much of its economic power is not marooned at home.
A quick glance at the FTSE 100 shows the extent of Russian power. An economic downturn is an annoyance to Putin, but little more. Politically he goes unchallenged: his opinion poll ratings riding high on a wave of quintessential Russian jingoism and self-pity. Economically, he and his mates have most of their money elsewhere. A few famous names around the president have been inconvenienced. But they didn’t get where they are today by being transparent in their financial dealings. They will have sewn intricate webs of offshore shell companies (several, one assumes, in UK dependencies) that will have allowed them to transfer assets with consummate ease. They may struggle to use their villas in the Cote d’Azur, but there are their marbled palaces in newly reacquired Crimea. They will blame their plight on the perfidious West. Ultimately, the West will only be able to assert itself against Russian expansionism by extricating itself economically, particularly in terms of oil and gas supplies. That would take years, even if the political will existed — which in most of Europe it doesn’t.
Putin is in for the long haul. In his 14 years at the helm, he has never been more confident than he is now. He is spoiling for a fight that would give meaning to a presidency he assumes will run for a long time more. He could use the latest bloodshed in Odessa to send in the “official” troops, or he could hold back, allowing Ukraine to disintegrate. Putin’s immediate task is to render that country ungovernable so that elections on May 25 will not be able to be held or will be considered illegitimate. The dismembering of Ukraine will lead to more demonstrations of Kremlin-orchestrated “people power” by Russian minorities in Moldova, Georgia, Armenia and then even into the Baltic states that fall under the Nato mutual defence shield. That will be the gravest danger of all. Mr Putin has got away it with it so far. He is beginning to sense that nobody has got what it takes to stop him.
— The Telegraph Group Limited, London 2014
John Kampfner was The Daily Telegraph’s Moscow correspondent from 1991-94.
