Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Category: Russia and Eastern Europe Page 7 of 17

The Bottom Line On Ukraine As An Example Of Decision Analysis

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On April 26, 2022

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I could write a lot of words on this, but let’s keep it simple.

First: Russia keeps taking land.

Second: Putin has far more reserves he can commit than Ukraine does.

Third: this means that the decision about whether to win or lose is Putin’s.

Which do you think he’ll choose.

Oh, there’s considerations around acceptable costs and a possible guerilla war later, but this it the essence of the invasion.

This is a fairly basic but important style of analysis. Ask yourself:

1) Who makes the decision?

2) Do they have sufficient resources and power to enforce their decision?

3) What do they think the right thing to do is? (This isn’t always about self interest, though it often is.)

4) What decision are they likely to make?

You can add bits to this, like “does anyone have a veto?” but this is the essence of it.

This is why I have said for years that nothing would be done about climate change till too late, because the people who have the power to make the decision don’t think it affects them, and do think that the status quo is good for them, so they aren’t going to do anything.

Most reasonably reliable analysis comes down to simple heuristics like this one. Complicated heuristics for social decision making rarely work.

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Is Putin Conducting a “Stalinist” Purge of Russia’s Intelligence Service?

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On April 12, 2022

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I find this story says more about the West than it does about Russia:

A “Stalinist” mass purge of Russian secret intelligence is under way after more than 100 agents were removed from their jobs and the head of the department responsible for Ukraine was sent to prison.

In a sign of President Putin’s fury over the failures of the invasion, about 150 Federal Security Bureau (FSB) officers have been dismissed, including some who have been arrested.

All of those ousted were employees of the Fifth Service. This a division was created in 1998, when Putin was director of the FSB. It’s purpose was to carry out operations in former Soviet Union countries with the single aim of keeping them within Russia’s orbit.

Now, when Stalin purged the secret police, the party, or military, he purged based on perceived loyalty — as well as to get rid of people who were too popular or powerful, and whom he thus regarded as a threat. It’s generally conceded that Stalin’s military leadership purges were part of why the Red Army was, at first, defeated badly by the Wehrmacht.

Does this describe what Putin is doing?

It’s possible, of course, that these officers tried to tell Putin the truth about Ukrainian ability to resist, and Putin wouldn’t listen. But isn’t it also reasonable to think that, if Russia had expected significantly less resistance from Ukraine’s military than what they actually encountered, it is because that’s what the intelligence service told Putin and the military command? So couldn’t this be Putin getting rid of those secret agents who screwed up, and is, therefore, appropriate? And given that thousands of Russian soldiers have died, in large part due to faulty intelligence, and Russia’s position in the world has been damaged, is it not appropriate for the head of the responsible division to go to prison? (Though, he’s been officially accused of corruption, not incompetence.)

Who was fired because of incompetence in Iraq or Afghanistan? What intelligence agents or generals were let go because they made predictions which did not come true? Would the US be better off if those who kept saying that victory in Afghanistan was just around the corner had been fired or even court-martialed?

The West has such a culture of impunity for elite incompetence that elites think that whenever elites are fired or punished for anything it’s “Stalinist.”

Likewise, during the war, we’ve had reports of a number of Russian general dying in combat. Western commenters were aghast, but shouldn’t generals be close enough to the front lines to be in some danger? Isn’t that, actually, good leadership practice?

Russia has serious problems with how it is run; if Russia doesn’t fix its corruption and demographic issues, I think it will fall out of the “Great Power” category in time. But I also posit that Putin holding important people to account for their failures is a positive sign, not a negative one.

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Putin’s Goals, A Map, For Discussion

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On March 30, 2022

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I didn’t make this map and it isn’t based on what I think. I put it up because reader GrimJim sent it to me and I think it’s well done and a good place to start a conversation.

Putin's Goals by GrimJim

Reorienting About How Well Russia Is Doing In Ukraine

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On March 28, 2022

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It’s consensus in the West now that Russia’s military sucks.

Does it?

As Scott Ritter pointed out and as I find it shocking that almost no one else pointed out, Russia invaded with a lot less men than Ukraine has. Regular forces, plus reserves, plus border guards, plus miscellaneous other groups, Ukraine had about 600K. With allies from the Republics, Russia had about 190K.

Russia has air superiority, but not air supremacy over Ukraine, but the bottom line is that they invaded with about a 1/3 ground force disadvantage.

When you look at it that way, the narrative that NATO trained troops are so much better than Russian ones starts looking questionable. Say what you will about the Russians, they have pushed the Ukrainians back and I very much doubt the Western casualty figures are accurate. Perhaps Russian troops are actually superior to NATO ones. It’s certainly at least as viable as a narrative.

There are two important things to note here:

First, the number of troops supports the Russia claim that they never have intended to conquer and occupy the entire country, because even if they thought Ukrainian morale was weak, in no way is a 1/3 outnumbered ground force sufficient to do so.

Second, Ukrainian forces in the east are not getting significant resupply. All roads aren’t held by the Russians, but because of Russian air superiority they are closed to significant supply convoys. As I understand it, Ukrainian forces in the East are down to about 9 days of supply.

If Russia keeps them out of resupply, and keeps them unable to move (fleeing down those roads means Russia’s air force gets a turkey-shoot) then when they run out of supply, they’ll collapse and be captured or killed en-masse.

I don’t know if this the correct picture of the war, I’m not a military analyst and it’s not an area of significant interest to me.

But let’s say this assessment is correct. The entire narrative we’ve been fed about the war will turn out to be false, and will be proven false in a way which cannot be denied.

We’ll know soon enough. It’s hard to be sure. Ukraine is effectively refusing to negotiate, so they think they still stand a chance and they may know something we don’t.

I’ll place one market in the ground, though: if a claim is made that Russia used chemical weapons I will not believe it without incontrovertible evidence. They have no reason to do so. If they want to increase their military force, they can do so easily enough with conventional weapons. Despite rhetoric they haven’t been using strategies like level bombing; they’ve only used a few of their most dangerous missiles and so on. They can ramp up force with causing the sort of backlash chemical weapons will cause. So if there’s a claim, I will suspect it is false flag.

Cui Bono

Finally, as I have stated many times before, the analysis has nothing to do with any preferences of mine about who should win. I want the war over and civilians safe, and I was a critic of Putin back when liberals thought he was their man in Moscow.

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March of De-Dollarization: Russia Selling In Rubles

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On March 24, 2022

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So, as many readers will have heard, Russia has said it will only accept rubles in exchange for its exports to “hostile nations” — which is to say, those nations who have sanctioned it over Ukraine.

The main thing to understand is that the West froze hundreds of billions of dollars of Russian reserves on account in the West. They sold us stuff for Euros and dollars and we will now not let them use those dollars or Euros. Sanctions mean that even the dollars and euros they have cannot buy many, perhaps most things, in most Western countries and Japan.

So selling us anything in dollars and euros doesn’t make much sense: they can’t use them without exchanging them for other currencies, and our sanctions make that difficult, since they’re closed out from our banking system.

Thus, rubles. An additional advantage of this is that it increases the value of the ruble, which had collapsed under sanctions.

In order to buy Russian oil and gas, Europeans will have to get rubles. Russians are unlikely to want a lot of euros or dollars because they’re almost impossible to spend, so Europe will probably have to buy Yuan and Rupees, then trade those currencies for Rubles. Paying with gold isn’t really practical, because it would have to be physically shipped to Russia or on account with a country they trust (China, India, a few others). Obviously gold in Western banks is not safe.

Russia’s main exports are oil, gas, wheat and minerals. There are usually other sources, but without Russia there aren’t enough to satisfy world demand. Sanctions on Russia, because they are such a big wheat exporter, may wind up killing a few million people in the global South, more than will be killed in the war.

From the point of view of the West, this is a continuation of de-dollarization. If Saudi Arabia also sells oil to China in Yuan, it will be a big deal. Prices are still set in dollars, but I expect that may end fairly soon.

Payment systems are being set up, and the world will split into two different trade areas. China wants another five to ten years before the big (inevitable) split with the West, they may or may not get it, but if they have any sense they won’t allow Russia to be choked out. They certainly aren’t going to cooperate with US sanctions, and that means they need to cleanly separate their financial system from ours, so that funds can’t be seized in transit, executives can’t be locked up and so on.

The Russians didn’t expect this, they were taken by surprise. Probably because, in fact, it’s a weapon that can only be used against a country like Russia (as opposed to Venezuela or Iran or Afghanistan), once. No one outside the West can now trust the West’s system, and everyone with sense will want their reserves kept elsewhere.

This is mostly a good thing, the West has terribly abused its currency primary to hurt other nations, even before the abuse of sanctions which largely accelerated under Clinton. Control of dollars was part of the arsenal used to keep the South poor and the US in control. China was able to get around this because of American greed and stupidity, and now that it has, it has a veto. Since Russia being taken out will lead it to be surrounded by enemies, it is going to use that veto. Again, Russia cannot be choked out by financial and economic sanctions if China does not permit.

I have been writing about this for almost 20 years now, it was clear it would happen eventually but exactly when and how were unclear. For a few years I’ve been saying we were moving to a Cold War world, and we are.

The difference is that unlike in 1950 or 2000, the West is not clearly stronger than the coalition against it. The USSR was always weaker economically, and though for much of the 50s and 60s they had higher growth (something forgotten today), in retrospect and for some of the smarter people at the time, the outcome was never in doubt, it just needed to be managed so it didn’t turn into World War 3.

This time the outcome is in doubt, and I think the smart money would bet slightly against the West, maybe 3/2. The wild card is climate change, which will hit China very hard, but could also do great damage to Europe and America.

Putin was foolish to get into this situation, reserves should have been withdrawn, but this is a smart move. It’s also going to hurt Europe a lot and damage German industry, whose costs will skyrocket (I have little sympathy, given that Germany has used the Euro to basically de-industrialize most of the rest of the EU.)

The post-American hegemony world isn’t quite here, but it’s being born. Welcome to the Age of War and Revolution and the Twilight of the Neoliberalism.

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Clarity on Putin’s Aims

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On March 23, 2022

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This video which I first saw at Naked Capitalism, is the best explainer of what Putin is probably trying to do, why and whether he’s achieving his goals.

I don’t endorse all of it, but it’s worth watching.

The first 10 minutes alone, if you aren’t inclined to more.

Russian Debt Default + Consequences, Simply Explained

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On March 16, 2022

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I don’t want to spend a lot of time on this, but the fundamentals are worth a quick review.

Russia had hundreds of billions of dollars on reserve at central banks. We have frozen them so they can’t spend them, and we’ve also forbidden banks, in general, to do almost any business with them in dollars.

So they have the money to avoid default, but are not allowed to use it to pay their debts.

This is like if you personally had an account at the bank for $10 million and they said, “We’ve frozen it so you can’t spend it, and we won’t accept money from anywhere else, but we still expect you to pay your mortgage.”

It’s obviously unfair, and everyone outside of the West knows it, as many countries have invaded other countries and none of them were hit this way. This punishment is so harsh because Russia is outside the club and didn’t have the nod or a similar punishment would have been doled out over Iraq, Libya, and Yemen, among many others.

It has made other countries scared for their money. Even countries that have license, like Saudi Arabia — who is currently bombing the hell out of Yemen with a sanction in sight.

Saudi Arabia is considering accepting the Yuan for oil payments.

Of course, the US is pushing back hard — that oil is priced in dollars, and it’s one of the main reasons the dollar is the global reserve currency.

But while the Sauds are in good for now, who is to say they always will be? What if one day the US decides to sanction them? Perhaps they see it as in their interest to diversify their reserves. Perhaps they also see Beijing as FAR less likely to sanction them? If they do, I agree. Just don’t piss China off about Taiwan, and the odds of China ever freezing your Yuan reserves or sanctioning you is essentially zero, not least because in order to grab reserve status from the US, they need to be more trustworthy.

I don’t know if the Sauds will do this yet; the pressure the US must be bringing is immense. But I do believe that when we look back on these massive sanctions, we will see that forcing Russia into default was the end of the dollar’s hegemony. This weapon has been used before, but only on marginal states. To do it to a Great Power is quite different.

The US can’t be trusted with your money. Before, people was perceived the US was the safest place.

For most countries, the dollar hegemony has been terrible; they sold American stuff and got numbers on a computer in return. (China on the other hand, played the game smart. They got the US industrial base in return and, even if the US freezes every dollar they have, they’ll still be ahead.)

Most countries will be better off in a de-dollarized world. But the US won’t, and if Europe stays a US satrapy (which most indications suggest it will) then it will be bad for them. Ironically, back in the early- to mid-2000s, the Europeans had the opportunity to make the Euro an independent reserve currency, but, as usual for Europe in the age of American dominance, they lacked the guts.

None of this will happen immediately. But I believe we’re either at, or within, a year of when we will be able to look back and see this as the tipping point.

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What Is Our Plan C if Sanctions and the Guerilla Trap Don’t Take Out Russia?

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On March 11, 2022

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First: To my knowledge, sanctions have never lead to regime change. They didn’t in Iran, Iraq, Venezuela, Libya, or anywhere else — not even North Korea and Cuba, which are still under some seriously savage sanctions.

Second: The targeted country’s leadership can still have pretty much whatever they want, it’s the population which suffers.

Third: While, in most ways, Russia is weaker than the USSR, it has a food surplus, while the Soviets always struggled. You can’t starve them out. It also has a fairly decent medical industry and access to Chinese and Indian medicines. Also, if sanctions continue, they will break our IP.

Fourth: The USSR didn’t have the largest industrial nation in the world as its ally (that would be China, not the US).

Fifth: China and Russia are synergistic. What China needs (food (desperately), oil, and minerals), Russia has. What Russia needs (consumer goods, medium to high-ish tech), China has. Plus, for China, having Russia as an ally mitigates the whole “US Navy cutting off supplies at the Straits of Hormuz” situation that every Chinese leader since Deng has stayed up nights worrying about.

Sixth: The logical response for Russia and China is to link their payments systems and to create an alternate monetary system. Because the West has repeatedly stolen billions of dollars from countries foolish enough to keep them on reserve in the West and then get on the West’s bad side, a lot of nations will move over to that system. Honestly, I’d trust China more than I would trust US not to steal my reserves, at this point.

Nobody seems to be thinking this forward. If sanctions don’t take out Russia and force it to collapse and/or have a government we like, what are we going to do next?

And as sanctions have never taken out a government, what’s our plan? Right now, it seems like the only alternative is to have a long guerilla war in Ukraine and bleed Russia dry. This strategy might work, though the human cost will be monstrous. (But then, why would the West care? We’re fighting to the last Ukrainian, after all.)

But if sanctions don’t work, and the guerilla trap doesn’t, what’s our Plan C? It’s particularly important because these sanctions are going to do a lot of damage to ourselves including, very likely, destroying the IP system that makes our rich so rich. (I, personally, look forward to Russia, and later China, breaking our IP system, but I don’t imagine high tech firms and/or Disney are as thrilled.)

Again, what’s our Plan C?

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