There are days when history accelerates. February 24th, 2022, is one of those days.
If the post-Cold War order had not ended before, Russia’s invasion of Ukraine was certainly the final nail in the coffin for the concept that it is possible to have a peaceful accommodation with Russia that is built on mutual interdependence. If it had not been obvious before, the last days of psychopathic fury, Kremlin madness, and imperial lunacy have shown us the real face of those who run Russia. We are dealing not with thugs but war criminals. There are many of us that have been astounded over the years by the naivety and gross irresponsibility expressed by all those leaders in Europe and the West that have dismissed Russia’s previous invasions as something that did not have to bother us and our policy priorities – it was happening over there. These reactions had a whiff of Munich over them – “quarrels in far away countries, between people of whom we know nothing”, as Chamberlain once put it. That debate should now be over. Russia will not stop until it is stopped. We should count ourselves lucky if our war with Russia stays cold.
The Western response should be swift. However, it is far more important that it is a good response. The framework for our thinking should not be sanctions – a concept based on the notion that economic responses by us could change Russia’s strategy. In the first place, sanctions have a dubious record. When they have had an impact, the effect has come over time. February 24th was a day when history changed course because our framework now needs to take aim of making a clean break with Russia and rapidly shore up our own defenses – militarily as well as economically – while we are providing much stronger support to Ukraine and those countries where Putin will go next.
This is not to suggest that sanctions would not hurt the Russian economy: they will. Trade sanctions will have an impact over time on Russia’s economy – mostly by forcing new resource reallocations in Russian capital and labour markets, and depriving Russia’s economy from gains in technology and trade. While trade sanctions would hurt individual European firms too, the negative impact on the European economy would be limited. Sanctioning oligarchs and a vast number of individuals in Putin’s networks would undermine them and their businesses. Energy sanctions would no doubt be very powerful. The export revenues from exports of gas and oil to Europe and its allies remains a substantial (yet shrinking) part of Russia’s income, and if that income flow seriously reduced, it will hurt both current income, asset values and fiscal stability. Russia’s oil trade is mostly fungible, but the country cannot easily substitute its exports of gas to Europe with exports elsewhere. Financial sanctions could be more powerful still. There is some talk that Russia’s USD 650-plus billion foreign reserves make it immune to financial sanctions. That is simply not correct. It won’t take long for Russia to burn through these reserves if the country is under strong financial sanctions and basically shut out of Western capital markets.
However, few of these measures are likely to come thick and fast. It will take time to build up a sanctions policy that is strong, correctly sequenced and that avoids throwing Europe itself into chaos. While much could be done immediately, the important choice to make now as far as economic measures are concerned is to go for a strong economic and financial break with Russia. More sanctions could come fast: many more Russians can be sanctioned; more Russian banks can be blacklisted; Russian diplomats can be expelled; Russia could be kicked out from various international bodies, like the International Space Station. But it is equally important that Europe sets in motion policies that reduces Europe’s dependence on Russian gas and key minerals, and that European banks exposed to Russia wind their business with Russia. Such efforts – happening in the medium-term rather than short-term – would not just hurt the Russian economy and the Russian state; they would also make us better equipped to defend European interests and liberal values.
Obviously, that choice will have consequences for controversial policies in Europe. Cutting our dependence on Russia will makes us more dependent on others. The version of Europe’s strategic autonomy that has floated around Brussels and other capitals in the past years – that we should reduce our dependence on everyone, and especially the US – simply does not work. A Europe that is closing itself to the rest of the world is going to become less capable of dealing with Russia and the new Cold War: this is a time when we need to strengthen our alliances. The charades about a European taxonomy that cuts out investments to nuclear power must stop. Putting green tariffs on imports of minerals that we now import from Russia, will slow down our ability to stop the imports from Russia. The list could go on.
Choices have consequences. Europe can no longer pretend that choices in trade, energy, climate, technology, and financial policies are neutral as far as our security are concerned. February 24th, 2022, was a day when history changed.