Putin's weak spot?

Peace negotiations and the Russian economy

Following a call this week between Presidents Trump and Putin negotiations on ending the Russo-Ukraine war are set to begin. Trump’s olive branch to Putin has been greeted with dismay by Ukraine’s supporters. Russia is no longer being treated as a pariah but as a potential partner for peace despite having engaged in cruel aggression. Ukraine’s future is being treated as matter for Moscow and Washington, and it has already been told that it cannot expect to regain all lost territory, and that the US does not expect to be part of any eventual security guarantees to deter Russia returning for more.

I have argued in a piece for the Financial Times that concern about these developments does not mean that Putin will get a deal that allows him to achieve, through negotiations, what he has yet to achieve through military action. His basic problem is that he is being offered what is for him a draw though he still wants and needs a victory. As I outlined in an earlier post there remains a significant divergence between the American approach and Russian aspirations.

A serious, conspicuous, negotiating process, as opposed to back door discussions through intermediaries, has its first impact in adding urgency. Military efforts are likely to be stepped up to improve bargaining positions. As the negotiating window might not stay open for ever a realistic assessment is needed about not only what might be achieved in talks but also what happens if the talks fail. In this case that means assessing how Trump may respond to the side he blames for thwarting his peace-making aspirations.

The Russians must judge how likely it is that they can achieve a true military breakthrough and not just more slivers of battered land. They must also consider the state of the Russian economy and how well it can cope with a continuing war. In this post I want to consider how much economic considerations are likely to influence Putin’s approach to negotiations.

Senior figures in the Trump administration continue to suggest that the Russian economy is in a poor state and that this offers leverage over Putin. Is this really the case, and is it sufficient to force Putin to give up on his aggression? In the expert community one can find a range of opinions – from the view that a financial crisis is imminent, to one that acknowledges a gathering crisis but suggests that it is manageable for now, to claims that there is no real crisis at all. My argument is that the crisis is real enough, and that the economy that has been distorted out of shape by the demands of the war. In the context of peace talks this may not force Putin’s hand but does argue for him to get the best deal he can now while he has a relatively sympathetic American administration.