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Hot Center to a Cold Storm

If you can think of two things no one would like to do in Russia at the end of January, standing around in a line and fighting a war come to mind pretty easily. But that’s exactly what seems to be in the cards for far too many Russians as the Ukraine and economic crises continue howling like a bitter wind that never ceases.

The acceleration of both appears to be assured right now, especially if the West continues to link aggression in Ukraine with more economic sanctions – which at this point will have to be severe to be considered “new”. The new Cold War is definitely on, but there are no assurances that it will continue to be cold much after the freeze of midwinter.

Standing in line at a Russian bank.  There are rumors this is happening a lot, but no solid media reports.

Standing in line at a Russian bank. There are rumors this is happening a lot, but no solid media reports.

The economic crisis in Russia has far more to do with internal structural problems (ie, corruption) and the low price of oil than the sanctions imposed by the West. The banking system has always been a cozy agreement between oligarchs as much as a legitimate front to the Mafia run kleptocracy that is the central government. It was papered over with plenty of Euros flowing in as long as the oil flowed outward at a decent price.

The Russian Central Bank was able to stabilize the Ruble briefly at 54 to the US Dollar with a dramatic rise in interest rates between banks last December. It stands now at 17.6%, with small business and consumer credit available to only a chosen few at over 30%. The Ruble has since crashed back to 68 to the US Dollar as a plan to print 1.6 trillion Rubles (currently: $23B) in order to recapitalize the banks and avoid a general panic. So far there are only a few reports of lines forming at banks, but the tightly controlled media hasn’t aired anything about a general panic.

A year ago, there were only 34 Rubles to the US Dollar.

Even Gorby is blaming this on the West, something we should take notice of.

Even Gorby is blaming this on the West, something we should take notice of.

The worst of this comes as Russia has dramatically stepped up the fighting in Eastern Ukraine – and been matched by the Ukrainian forces equally eager to ignore the cease-fire agreement technically in place. The fighting has intensified greatly in the last few weeks, accompanied by a Russian war of words blaming the whole crisis on the West. Even Mikhail Gorbachev, an internationalist and no friend of Putin, is blaming the US and Europe for accelerating the conflict and threatening to turn it into a hot war between Russia and the West. That could a sign that patience is thin and patriotism is thickening.

Enter into this a call to cut Russia off from the international banking system, known as SWIFT. Such a move has only been done once before, to Iran, and the net effect was to pull Iran back to the negotiating table amid a general depression. Iran was less connected to the West before that was done to them, so the effect on Russia will be devastating. It is the economic equivalent of a nuclear option, and Russia is responding with their own “mutually assured destruction” threats of cutting off oil and gas to Europe if that happens.

Such a threat sounds much worse in January, so time for cooler heads is the most likely result – especially from the bureaucratic minded EU.

Russian rebels in Eastern Ukraine, fighting through the Winter.

Russian rebels in Eastern Ukraine, fighting through the Winter.

No matter what, life for ordinary Russians has become harder than a typical midwinter, and there is little promise of a decent Spring, either. How much this will test their legendary fatalism and reserve remains to be seen, but for now we can see where Putin wants to take this – deeper into Ukraine. The challenge to the West is obvious, but the appropriate response is not. Poland wants more sanctions to save their brothers in Ukraine, and is ready to send more arms in. The rest of Europe is rightfully scared of a hot war, a potential World War III.

Looking at trends to predict the future gives us no reason for hope. Deeper economic troubles so far have been met only with greater and more open aggression in Ukraine. Additional sanctions are likely to continue that trend as Putin continues to back himself deeper into a tight corner. But the West feels a need to respond and not capitulate Ukraine to Russia.

We will likely know before Spring where this is going, but probably not well before. The financial crisis has to play out a bit more and the reserve of the tough people of Russia has to be tested before there is any internal pressure on Putin to give on Ukraine.

Until then, the steppes of eastern Ukraine remain the frozen center of a hot war that still swirls cold around them through Europe. How long this will remain the isolated center of a storm that could engulf the world is anyone’s guess. All that we know today is that the temperature is the only thing reliably cold in this part of the world today.

20 thoughts on “Hot Center to a Cold Storm

  1. World War II was about the fate of Eastern Europe. In Eastern Europe history was something imposed on them from the west or east. So we see it again.

    Historian Anne Applebaum wrote a book called Iron Curtain: The Crushing of Eastern Europe, 1944-1956

    From the introduction:

    One regime in particular understood the methods and techniques of totalitarian control so
    well that it successfully exported them: following the end of the Second World War and the
    Red Army’s march to Berlin, the leadership of the Soviet Union did try very hard to impose a
    totalitarian system of government on the very different European countries it then occupied,
    just as they had already tried to impose a totalitarian system on the many different regions of
    the USSR itself. Their efforts were in lethal earnest. Stalin, his military offi cers and his secret
    policemen – known from 1934 to 1946 as the People’s Commissariat for Internal Affairs
    (Narodnyi Komisssariat Vnutrenikh Del or NKVD ) and only later as the KGB – and his local
    allies were not trying to make a point about Ayn Rand or progressive liberals when they
    created the totalitarian states of Eastern Europe. To paraphrase Mussolini, they wanted very
    much to create societies where everything was within the state, nothing was outside the
    state and nothing was against the state – and they wanted to do it quickly.



    There were 5 Ukranian soldiers who died in the last 24 hours.

    I mourn their deaths because when you are young you dream of having a future.

    • Ukraine has never really been released from that prison. Even if they are, so much of their history is not “institutionalized” by it. I only hope for the best for everyone. I know that the mafia state of Russia is not an example of Best.

  2. Nothing good can possibly come of this. We should stay far away from it and let Europe handle it. I’d hate to reward Putin for what he is doing but we can’t be the world’s police forever.

    • Nothing good can come of this, no. I think there is a role for us, but I haven’t seen it defined yet. I agree that the EU has to take the lead, but when they need us to step up I say we should have their back.

  3. I don’t want another war but Putin has to be stopped. If he gets away with this what will stop him in the future? This is exactly how WWII started with appeasement. He already took Crimea, how much more will he take?

    • He has done this before – In Chechnya. No one stopped him. We have to stop him eventually, yes, but I don’t think this can continue forever given how weak their economy is.

  4. Russia will burn out soon enough. The troops in Ukraine will walk home when they aren’t being fed or paid.

  5. A lot of Democrats have a view of US foreign policy that says the US is imperialist. We try force our democracy and capitalism and lack of concern for social justice on other nations. We kill people to export our way of life. School for the Americas. CIA Kissinger.

    The new left saw the Vietnam War as evil. They saw the U.S. intervening in a civil war that we should have left alone. They say that corporate interests run U.S. foreign policy. They see corporate power and the lack of tackling the income inequality problem in the US as the main reason to hate the United States.

    But how come they have nothing bad to say about the foreign policies of Russia, Iran, Syria.
    Don’t those countries do immoral things. They say lets compromise with our enemies. That way we can focus our ire on Republicans who are the embodiment of evil. They seem to forget that we get Republican majorities in Congress once in while as a result of our legal, consittutional system. John Boehner is an incompetent fool. It is bad to invite Bibi to speak. Bibi is an asshole. Isn’t Putin fucked up? Instead the Republicans are carrying out a war on women. They talked about rape. Instead they focus on Citizens United. Instead they focus on Jews and Israel. They say Israel is expansionist and Israel is aggressive. The United States in expansionist and aggressive.

    They say let Europe take care of it.

    • Don’t get me started! This frustrates me no end.
      A big problem in the Ukraine / Russia situation is that the only English language news we get from the region comes from Russia. So we have a huge problem with Russian propaganda filling the minds of people who are prone to this philosophy in the first place. I don’t blame them for being skeptical of the lame US media and their line, but if they weren’t lazy and/or ignorant they’d at least try a bit harder – maybe learn a little French or German, or seek out KyivPost.com
      But they don’t. It’s sad.
      The hard left is increasingly isolationist, and I’m sort of OK with that. But I’m far more internationalist by nature, which is to say get us out of the front of every problem and give us a strong supporting role. And I do with that people who have problems with the US are at least capable of understanding there is real evil out there that we do have to resist. We have to have a strong moral center to our policy, not an icy cynicism.
      Yes, the Republicans back their own bad people. But Democrats more and more just whine about stuff and look for proof of their elaborate conspiracy theories in hindsight. Not for me.

  6. Very good.

    That is an outrage against humanity that a Japanese journalist had his head cut off.

    I stand up and protest.


    Congrats to the peshmerga for ousting ISIL from Kobani

  7. First off, thanks very much for the follow! I enjoy your articles very much.

    When I first read of the Russian troops seizing the Ukraine my first thought was of Russia’s take over of Chechnya in 1999. The reports I was seeing however didn’t compare this new violence to the old, and I couldn’t understand why. Most US citizens don’t realize who their representative is in the senate, let alone that Russia is infected by Putin and men just a corrupt as him. Without this knowledge how can the public possibly decide where they stand on the matter, for those who even give the conflict a second thought. I suppose I am just disappointed with the coverage of this event.

    I understand that viewers only care about the most interesting and relevant information, but when an almost identical conflict took place little over a decade ago that needs to be mentioned.

    • I agree. I have talked about this before, along with the whole sad history between Russia and Ukraine. It isn’t discussed enough to give Americans any real context to this conflict.

  8. Pingback: Putin, Khameni, Netanyahu – and March | Barataria - The work of Erik Hare

  9. Pingback: America Under Attack | Barataria - The work of Erik Hare

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