After the Crimea, where next?

Putin has driven not so much a horse-and-cart as a T34 tank through the established world order that tries to ensure that disputes between nations are resolved by diplomacy, negotiation and international law, but there will be no dramatic response by the EU or the US. Instead there will be very limited visa bans on the kleptocracy close to Putin, and the main thrust will be to attack Russia’s ambitions to be increasingly influential and respected in the world by freezing it out of bodies such as the G8, and projecting it as a gangster state. Russia longs for respectability and to become a super-power once more, but the Crimean adventure has scuppered that.

 

America maybe more enthusiastic about economic sanctions than Europe because it has not much to lose. By contrast the City is the largest international financial centre in the world, and Russian business is massive. Action against it would be very damaging to the British economy, and could see an outflow of money to competing centres such as Hong Kong, Singapore, and Dubai. European trade with Russia is ten times America’s.

 

Using the economy as a political weapon is very dangerous strategy. World economies are intertwined and mutually-dependent. Using its energy resources as retaliation for Western measures will cause long-term damage to Russia as foreign customers seek alternative supplies. Stand by for a rapid rise in American gas exports.

 

One great benefit arising from the crisis is likely to be an added stimulus for fracking, as the west attempts to reduce reliance on Russian energy.

 

Where next? The Sunday Times is speculating Latvia.

 

Not a chance. Entering a NATO country really would mean a shooting war. Putin will concentrate on his ambition to create a Eurasian Trade Zone, mirroring the ECM. He will look east to the various ‘stans’ of Central Asia plus Azerbaijan. So the focus will be Kazakhstan, Turkmenistan, Uzbekistan, Tajikistan and Kyrgyzstan, a pretty doleful bunch.

 

Kazakhstan is the best of the lot. It is a major oil producer, the world’s largest source of uranium, and generally has a sound economy. It also has corrupt elections, which would suit Putin very well. About 25% of the people are Russian-speakers.

 

Turkmenistan is the 4^th largest producer of natural gas and has 700 million tons of oil reserves. It is also a major exporter of electricity. It is to all intents and purposes a one-party dictatorship, ranks only after North Korea for suppression of press freedom, and is thoroughly corrupt. Again, this ticks all Putin’s boxes.

 

Uzbekistan is a Soviet-style authoritarian state. It has gold, oil and uranium. Its human rights record is abysmal. It is a Third-World country, with a GDPppp of a mere $3800. 

 

Tajikistan? Not much to offer there; the poorest of the Central Asian republics with a large drugs production and not much else. It has a GDPppp of only $2500. It is heavily dependent on foreign remittances from migrant workers in Russia, so it will do whatever Putin says.

 

He may soon gobble up Moldova, Europe’s poorest country.

 

So that moth-eaten collection would be the new Russian empire.

 

And now that Putin has asserted his ‘right’ to seize the Crimea because the majority population is Russian, will the same principle apply to Chechnya where only 2% of the population is Russian? I thought not! But he might have opened the door to potential trouble between India and Pakistan, India and China, China and  Japan, China and South Korea, all of which have simmering boundary disputes.

 

The back-story is that Putin is in deep trouble at home. The economy is lop-sided and will be badly affected if oil falls below $80 pb. The rule of law is non-existent. There are frequent human rights abuses and corrupt elections. The demographics are awful; the fertility rate is below replacement rate; male life expectancy is 64 years largely caused by too much vodka. Russians are not happy. So he is falling back on the old diversionary tactic of causing trouble abroad.

 

Putin’s legacy may well be the unleashing of the Russian Spring that will sweep him away, together with his coterie of crooks.