Ukraine Crisis: Putin Should Remember That Biden Is a Cold Warrior

The Russian president is forcing the United States to show tenacity in a crisis, a dynamic closely watched by China as the confrontation may exact a high economic price from Moscow

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Alon Pinkas
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Putin and Biden
Credit: Sputnik/Reuters, Nicholas Kamm/AFP
alon pinkas
Alon Pinkas

Vladimir Putin is upping the ante on Ukraine. He believes he’s exercising what is called “escalation dominance” – the ability to escalate a crisis in all dimensions: keeping your intentions cloaked while controlling the timetable, deployment of forces and intensity.

What Putin may be miscalculating is how the Ukraine crisis may unravel, America’s determination and the possible consequences.

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It’s true that in one crisis, Putin has rekindled an era of superpower conflict, and in this respect he has repositioned himself and Russia in the center of geopolitical attention. Less clear is what Russia gains from this.

Putin, who was spoiled by the easy comfort zone of dealing with an admiring and clueless President Donald Trump, may be forgetting one thing: Joe Biden’s formative years were the Cold War. Trump may have liked Putin, but Biden distrusts Russia profoundly.

He grew up when the United States and Soviet Union were two hostile superpowers with spheres of influence. He matured watching the so-called Pax Americana, the post-World War II liberal order that Washington built, maintained and led, with “containment of Soviet communism” the prime directive.

He came into the Senate in 1973, in the midst of the Cold War, served as a senator for 36 years and witnessed Putin’s nefarious attempts to restore Russia to some form of Soviet glory in Biden’s eight years as vice president. The 46th president is a Cold War-mold statesman; appeasing someone like Putin isn’t something he would entertain.

Assuming confidently that the United States won’t react with force and won’t initiate military action – a Russian invasion of Ukraine, after all, doesn’t directly impact U.S. national security – there are two tiers of U.S. retaliation policy: diplomatic and economic.

A UN showdown with Russia is already derided as an exercise in futility since Russia – and China – both have veto power at the UN Security Council. Still, the United Nations isn’t the arena where the United States expects concrete action; rather, it’s a stage where Washington aims to expose Russia’s isolation, show a united front with Europe and compel the Russians to come up with some mangled, incredulous narrative defending their decision to invade Ukraine.

Vladimir Putin and Joe Biden meeting in Geneva last June.Credit: Patrick Semansky/AP

The Americans will accuse Putin of manufacturing a crisis, constantly escalating the rhetoric while visibly building an invasion force in the Donbas region on the Russian-Ukrainian border. The United States will point to Moscow’s intransigence when Washington initiated diplomatic talks, to provocations in Ukraine, to bogus claims about NATO expansion – all three concealing economic despair and geopolitical recklessness.

Russia will contend – rightly, by the way – that it has been trying in vain for years to persuade the Americans not to deploy intermediate-range missiles near Russia and conduct large-scale war games in Eastern Europe. We agreed, the United States will answer, but then you made it all about NATO expanding into Ukraine, which is a pretext for a planned crisis, not a real argument. Ukraine isn’t joining NATO anytime soon.

SWIFT kick

The second tier of the American response is economic, specifically sanctions against Russia. U.S. sanctions on Russia have been in place since the 2014 invasion of Crimea and include export controls and sanctions due to malicious cyberactivity, human rights violations and election interference. Some of these measures are in the potent “Magnitsky” category: the Sergei Magnitsky Rule of Law Accountability Act of 2012, covering corruption and human rights abuses.

Various sanctions cover individuals, entities, vessels and air transportation, and may include the blocking of assets, limits on access to the U.S. financial system, denial of entry or arrest warrants.

But when considering what may constitute a major U.S. escalation of sanctions on Russia after a major invasion of Ukraine, the term most commonly evoked is SWIFT – the international money-transfer platform. Cutting a country off from this system is commonly referred to as the nuclear option of sanctions.

While there has been no indication that the United States is actively considering severing Russia from SWIFT, it remains a substantial instrument, even if it may be overhyped.

SWIFT is essentially a secure communications platform used by banks, brokerage houses and other financial institutions to send and receive information on money transfers. When you want to send $100 from Chicago to your sister in Tel Aviv or cousin in Rome, you’re using SWIFT via your bank account. SWIFT handles around $5 trillion daily.

Ukrainian soldiers watching a screen as President Volodymyr Zelensky speaks on Armed Forces Day in Kramatorsk, Ukraine, last month.Credit: Andriy Andriyenko/AP

The platform is based in Belgium and owned as a cooperative of member institutions under a 25-member board. It’s overseen by the G-10, the 10 largest central banks, plus the European Central Bank. Notably absent are China, India and Russia.

Because SWIFT is based in Belgium, it’s subject to Belgian and EU laws, so the United States can’t force a decision to cut off a country from it, or financial institutions in that country. But it can most certainly do this through political pressure, as it did with Iran last year.

The question is whether a U.S.-European decision to cut Russia off from SWIFT would be an effective punishment, realizing that as a pre-invasion deterrent it probably wouldn’t work.

There’s no question that disconnection from SWIFT would cause significant disruptions to the (already weak) Russian economy, since Russia is deeply integrated into the system. But Washington and European capitals that rely on Russian energy realize that since Russia’s main exports are oil and natural gas, SWIFT would be circumvented, thus the disconnection would prove less damaging.

Russia observers are quick to point out that since 2014, after the Crimea invasion and in preparation for a possible SWIFT severance, Russia built its own financial information transfer system, SPFS, which has 400 member banks in Russia and former Soviet republics. The system handles 20 percent of all financial communications and data transfers. Also, Russia’s foreign currency and gold reserves are at a high of $620 billion.

Target bank

However impressive that may be to some, it doesn’t change the endemic weakness of the Russian economy, which is exactly what new and harsh sanctions are designed to target. The two most vulnerable entities that Washington will contemplate targeting are VEB, the Russian development bank and payment mechanism for the government, and the Russian Direct Investment Fund, which is part of Russia’s sovereign wealth fund. Direct sanctions on Russian banks and state-owned institutions seem to be Biden’s most effective tool.

The Biden administration will feel confident that the European Union and NATO are reliable partners in standing up to Russian aggression. This could also prove to be the perfect expression of the law of unintended consequences. Putin’s goal ostensibly was to stop NATO’s expansion. He wants to end Ukraine’s pro-Western orbit. His policy objectives were to sow division in NATO, undermine the alliance’s unity, distract the United States and erode its resolve.

A street in Moscow last November. Putin may be producing a national security crisis to deflect from internal strife. Credit: Maxim Shemetov/Reuters

Instead, if this crisis follows the script, NATO may be enlarged with Sweden and Finland joining. And it will be further unified thanks to an ominous threat it thought ended when the Soviet Union disintegrated.

Ukraine will be even more hostile to Russia. Putin is forcing the United States to show tenacity in a crisis, a dynamic closely watched by China as the confrontation exacts a high economic price from Russia.

What’s the point? Where are Putin’s accomplishments? How does Russia benefit from this? Is this a price worth paying for dreams of past Russian grandeur? If NATO’s expansion into Russia’s sphere of influence was the root cause of the crisis, as Russia contends, wouldn’t the outcomes above be the exact opposite of Putin’s hopes?

That is, unless his motives are purely domestic. The fundamentally weak economy, the rampant inefficiencies, the president’s sagging popularity and the pandemic wreaking havoc in Russia all point to a textbook case of producing a national security crisis to deflect from internal strife. If that’s the case, the likelihood of an invasion increases, but equally so it reflects Putin’s weakness, not strength.

That weakness may be exposed by Biden’s response.

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