Editor’s note: This article by FPRI researcher Mitchell Orenstein is the outcome of a workshop on “The Global Order After Russia’s Invasion of Ukraine” hosted by the University of Pennsylvania’s Perry World House on April 14, 2022.
Moscow grossly underestimated the economic cost of starting its war in Ukraine. Lulled by the limited sanctions that welcomed his 2014 invasions of Crimea and Donbass and a false sense of security conveyed by his hundreds of billions of dollars in reserves, President Vladimir Putin seems to have believed he could do it all Surviving sanctions that would bring about a split West was able to muster. He doesn’t seem to have understood the shockwave that a full-scale invasion of a European state would cause in the West, and the massive unity of the European Union’s economic response. He did not count on Germany’s about-face in its relations with Russia, nor on the sudden attractiveness of NATO membership for Finland and Sweden. Russia’s invasion of Ukraine appears to be a catastrophic mistake by Putin, one that puts Russia and her regime in grave jeopardy.
On April 6, 2022, the White House said: “Experts predict Russia’s GDP will contract by up to 15 percent this year, erasing the economic gains of the past fifteen years. Inflation is already rising to over 15 percent and is expected to accelerate further… Supply chains in Russia have been severely disrupted. Russia is very likely to lose its status as a major economy and continue a long descent into economic, financial and technological isolation.” This seems a reasonable projection. However, a number of uncertainties remain, such as whether Russia will be forced to pay its debt; whether its foreign trade, particularly in oil and gas, will be banned; whether it can continue to count on India and other developing countries for economic support and the lifting of sanctions; and how large Russia’s currency reserves actually are and whether they are oligarch assets or other hidden treasures of Russia’s mafia-like state networks.
Moreover, following the exposure of war crimes in Bucha, Western leaders have reiterated their determination to punish Russia, primarily through harmful economic sanctions. But Europe has so far held back with the ultimate sanction: the ban on gas imports from Russia. Fifty percent of Russia’s export earnings come from oil and gas, and its main customers are in Europe. Every day, with every atrocity, Europe moves closer to the decision to cut off Russia’s energy supply, a decision that would have long-term strategic implications and hurt Russia’s economy, at least until it could attract new customers and transit routes. Once the European Union made that decision, it’s hard to imagine why it would go back. As recently re-elected Hungarian strongman Viktor Orbán says he will veto an energy boycott, a consensus is forming in Europe for the one measure that more than any other would undermine Putin’s ability to fund this war in the medium term. Some countries, including Germany, have already banned Russian oil and are also striving for independence from Russian gas. Russia recently stopped gas supplies to Poland and Bulgaria.
The logic behind the sanctions is that the worse Russia’s economic situation deteriorates, the greater the likelihood of an internal political response that would challenge Putin’s delusional leadership. The first month of the war was one of extreme confusion, both in politics and on the battlefield. Russian military and government leaders seemed disoriented. Defense Minister Sergei Shoigu disappeared from the scene for a few weeks. Putin sacked the heads of the Federal Security Service’s foreign intelligence agency as several generals died on the battlefield and Ukrainian peasants were towing away inoperable Russian tanks. Some reports suggest that the Russian leadership fled to a deep nuclear bunker under the Ural Mountains while Ukrainian President Volodymyr Zelenskyy continued to rule Kyiv. Some Russian oligarchs have expressed dismay at the invasion and its results, believing that in a single act Putin threw away 20 years of Russian prosperity. While a palace coup or popular uprising is unlikely, but neither impossible, Russia’s politics will remain volatile as living standards collapse, despite a crackdown on dissent and free speech.
Putin realigned the army to concentrate forces in eastern Ukraine and prepared a new offensive there. In a way, this is already a defeat, as military objectives have been rapidly scaled back, from a complete takeover of the country to an attempt to expand Russia’s occupation of eastern Ukraine. But as security analyst Sergei Karaganov notes, Russia must win this war, however defined, and adopting a narrower definition might work. Much depends on what is happening on the ground. If Putin manages to hold the expanded territory in eastern Ukraine and claim victory, that’s one thing, but if the Ukrainian army manages to push back Russia, Putin will be deprived of the opportunity to declare victory and he will become political more vulnerable. Expect Putin to drag out the conflict for as long as possible.
This war was already a huge political success for Ukraine, although extremely costly in terms of lost lives, damaged property and destroyed cities. In it, Ukraine won recognition as a state on the international stage. Most nations are forged in war, and Ukraine has turned this terrible onslaught to its long-term advantage by presenting itself to the world as a powerful state. It has emerged as a democracy, a European nation possessing powerful bourgeois nationalism that transcends the Ukrainian-Russian language barrier and embraces a wide variety of ethnic identities: Polish, Jewish, Armenian and Greek. With its popular and telegenic President, Ukraine left an indelible mark on the world stage. Above all, after decades of skepticism from the core EU states, Ukraine has shown itself to be part of Europe, of European values, and thus a potential future member of the bloc. This will change Ukrainian politics forever.
In the future, Ukraine will become a more self-confident country, embedded more deeply in Europe. It will direct its government to the project of Western integration, apply for EU membership and take all possible steps to achieve it. Zelenskyi has given a crucial direction to Ukrainian politics as an attempt to integrate as closely as possible with the West in order to gain security and economic progress.
A critical part of this will be recovery efforts. Ukrainians are already pouring back into Kyiv, trying to rebuild their economy and their city, which has suffered significant damage, though nowhere near the extent of bombed cities like Mariupol. Western and other funds are needed to rebuild cities, bridges and other infrastructure.
Expect much of the initiative to rebuild Ukraine to come not only from the government, but also from civil society organizations that have played a massive role in refugee relief and national defense and may also play a pivotal role in the reconstruction. Ukraine’s liberal and nationalist civil society has been building for decades. The Euromaidan movement of 2013/14, like the Orange Revolution before it, was a civil society movement organized by individuals and groups outside the state. While civil society flexed its muscles in 2006 and 2014, it was not able to fully control events afterwards, but its strength and importance have increased during the war. Citizen Volunteers have solved many of the problems of the current war and organized aid for the affected cities. They also formed the backbone of his Territorial Defense Forces and Volunteer Battalions. It is hard to imagine that civil society will allow itself to be sidelined by Ukrainian governance and reconstruction in the future. Civil society has the power and legitimacy to play a bigger role now.
At the same time, Ukraine’s empowered civil society will face competition within Ukraine’s peculiar domestic politics. For decades, oligarchs have dominated various cities across the country, subsisting on the state or state-provided rents. Oligarchs tend to strengthen their position in the absence of state leadership, and the destruction of such a large part of Ukraine could offer them opportunities to rise again and consolidate power as the government will be unable to perform Herculean tasks such as to manage the reconstruction of entire cities without partners and financing.
Vladimir Putin has called Ukraine “anti-Russia”, and to a certain extent that is true. Ukraine has shown the world what can happen when Eastern Slavs embrace typically Western values such as nationalism, democracy and civic identity. It can defeat Russian armies made up of brainwashed, drunk and corrupt conscripts. A new Ukraine is demonstrating for all to see that Russia has taken a wrong turn in submitting to a modern-day Ivan the Terrible. A different kind of Western liberal identity is also possible in the heart of what was once Kievan Rus’. Even after the ravages of neoliberal shock therapy that cost Ukraine so much. Despite economic collapse and corruption, Ukraine has developed a powerful civil society to seize the unique opportunity to maintain national independence after 1991. Now Ukraine has lessons from the democratic transition to teach the rest of the world, most notably Russia and Belarus.
The views expressed in this article are solely those of the author and do not necessarily reflect the position of the Foreign Policy Research Institute, a nonpartisan organization that strives to publish well-argued, policy-oriented articles about American foreign policy and national security priorities.
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