Perils of Empire: five ways Putin hurt Russia by grabbing Crimea

Russia shouldn’t be picking a fight with anybody. Its economy is less than a tenth the size of the combined U.S. and European Union totals. Its population is smaller than Nigeria’s or Bangladesh’s. It has one of the lowest birth-rates and highest death-rates in the world (Russian men on average live only 64 years). Its political system, like its military, is riddled with corruption.

And yet pick a fight it did, annexing the Ukrainian province of Crimea in what amounts to the first forcible change of European borders in two generations. So now the Russian people will have to pay the price for Vladimir Putin’s dreams of regional hegemony. Although Putin’s land-grab in Crimea is winning rave notices at home, evidence of damage to Russia’s global standing will become increasingly hard to ignore. Here are five ways in which the Crimean adventure is hurting Russia.

1. A weak economy grows weaker. The International Monetary Fund this month lowered its projection of Russian economic growth in the year ahead from 2% to 1.3%, saying “the fallout from emerging market financial turbulence and geopolitical tensions relating to Ukraine are headwinds on the back of already weak activity.” The IMF warns that a cycle of sanctions and counter-sanctions arising out of the Crimea crisis could spread economic “contagion” in Russia and other parts of the former Soviet Union. Tim Fernholz points out at the Quartz web-site that Russia’s stock-market is way down, the ruble is steadily depreciating against the dollar, and capital is flowing out of the country at an accelerated pace.

2. Europe seeks alternatives to Russian gas. Since the manufacturing and service sectors of the Russian economy are not competitive by global standards, Moscow is heavily dependent on the export of commodities, especially gas and oil, to generate hard currency. Europe gets 30% of its natural gas from Russia, but after seeing Putin use the threat of supply cutoffs for political leverage in the past, Europeans now fear they will be vulnerable unless they find other sources of energy. With vast untapped gas reserves of their own, countries like Britain and Germany are taking a renewed interest in fracking. Meanwhile, U.S. companies are moving to export more of America’s gas to Europe. Eventually, Russia will either lose market share or have to cut prices.

3. U.S. military planners rediscover Europe. When the Obama Administration unveiled a new defense strategy in January of 2012 stating that America’s military posture in Europe must “evolve,” it didn’t take a code-breaker to figure out what that meant. U.S. forces on the continent, already reduced by three-quarters since the Cold War ended, would be shrinking further as Washington’s security focus shifted to East Asia. Putin’s Crimea incursion has forced a re-think of the assumptions underpinning that plan, and now the likelihood is that the U.S. military presence in Europe will increase — especially in the countries and bodies of water immediately adjacent to Russia, where Washington thinks deterrence needs to be strengthened.

4. Modernization of U.S. nuclear forces becomes more likely. President Obama is a long-time proponent of nuclear disarmament. His presidency has not seen a single new nuclear warhead built, and funding for defense against nuclear attack has been minimal — less than 5% of the Pentagon budget. But White House hopes that nuclear arsenals could be pared to barely a thousand warheads on each side were dashed by annexation of Crimea, because now policymakers have to worry about Moscow’s intentions and how nuclear weapons might be used to blackmail the West. The threat of escalating regional tensions also has bolstered the case for theater and strategic missile defenses. Moscow now faces the prospect of a revitalized U.S. nuclear force far more capable than its own.

5. NATO experiences a renewed sense of solidarity. My Lexington Institute colleague Dan Goure wrote a clever essay this week about how “Dr.” Putin has accomplished the medical miracle of breathing new life into a moribund North Atlantic Treaty Organization. As Dan put it, “Vladimir Putin appears to have done more for alliance solidarity than two decades of harangues by U.S. officials.” He’s right. The main glue holding the Atlantic Alliance together since its formation in 1949 was always the threat of Russian aggression, so when that danger receded so did the sense of shared purpose among member states. The Crimea crisis has sparked a renewed round of commitments to collective security, with the prospect of troops being deployed to newer member-states right on Russia’s borders.

Chances are Putin didn’t think most of this through before kicking off his campaign in Crimea. When you’re surrounded by sycophants and don’t use the Internet, it’s easy to misjudge situations involving other countries. Putin probably thought Crimea was so small, and so close to home, that the Western response would be relatively mild. Instead, he has spawned a sea change in the perceptions of Western nations that will harm Russia’s economy, security and global influence for many years to come. Some observers may think that the Western response to date actually has been mild, but there is more to come and Russians are beginning to grasp just how vulnerable they are to the displeasure of other nations.