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41. How Will China Respond to the Russia-Ukraine Crisis?

Author:
Chris Miller
Publication Date:
01-2022
Content Type:
Special Report
Institution:
Foreign Policy Research Institute (FPRI)
Abstract:
How will China respond to a potential Russian military escalation against Ukraine? Relations between Russia and China have intensified in recent years, with Vladimir Putin and Xi Jinping holding regular summits and the two countries’ militaries participating in joint exercises and cooperating in some defense industrial efforts. Ties between Moscow and Beijing are now closer than any time since the days of Stalin and Mao, driven by a shared perception that the United States is each country’s primary foreign policy challenge. One top Russian official told media in December 2021 that the relationship now “exceeds an alliance.”[1] Chinese state media, meanwhile, have vocally backed Russia in arguing that the current crisis stems from the US “using NATO as a tool to cannibalize and squeeze Russia’s strategic space.”[2] The 2014 war in Ukraine and annexation of Crimea was an important factor driving Russia and China closer to each other, as Russia sought to reduce post-Crimea international isolation and as Beijing realized it could drive a hard bargain in its bilateral relationship with Russia on issues like energy. China’s response to the 2014 war, however, was generally to avoid taking sides. China accepted a narrative that placed blame on the West for causing the crisis, with top diplomats citing Western “foreign interference for causing the crisis,” but didn’t approve of Russia’s seizure of Crimea or its military actions in the Donbas.[3] China abstained from voting on the key United Nations resolutions regarding Crimea, for example, and it still declines to recognize Crimea as Russian territory. Similarly, it verbally rejected US and European sanctions on Russia though it let Chinese firms, including the country’s big state-owned banks, abide by these sanctions to avoid being cut off from US financial markets and the international banking system. Compared to 2014, however, China may find it more difficult to avoid involvement in an escalating crisis. Leaders in Beijing and around the world will see the US response to any military escalation against Ukraine as sending signals about whether the US could effectively respond to future crises in the Taiwan Strait or East or South China Seas. The success or failure of US efforts to impose meaningful costs on Russia if it escalates will be seen as a test of whether the US could do something similar in Asia. Moreover, after repeated summits between Chinese President Xi Jinping and Russian President Vladimir Putin, including Xi’s description of Putin as his “best friend,” China’s approach to Russia amid a crisis will also be interpreted as sending signals about China’s own capabilities and influence. Because of this, China will not see a new phase of war between Russia and Ukraine as a peripheral issue in its foreign policy, even though China has no core issues at stake in Ukraine itself. China is most likely to be implicated in the crisis by potential Western sanctions on Russia, which in contrast to 2014 will impose substantially more pressure on Beijing to take sides. China’s decision either to adhere to new Western sanctions or to help Russia avoid them will shape escalation pathways and determine the magnitude of economic and political isolation that sanctions impose.
Topic:
Foreign Policy, Politics, Sanctions, Military Affairs, Economy, Crisis Management, and Escalation
Political Geography:
Russia, China, Europe, Eurasia, Ukraine, and Asia

42. Hypotheses on the Implications of the Ukraine-Russia War

Author:
Barry R. Posen
Publication Date:
06-2022
Content Type:
Commentary and Analysis
Institution:
Defense Priorities
Abstract:
Structural realism is a useful tool to examine the implications of the war in Ukraine for global politics. Because structural realism emphasizes the anarchic nature of international relations, it suggests the war is unsurprising, a reminder that states still compete for security, sometimes violently, and the prudent will prepare for it with tools for self-preservation. The realist lens also sees lessons for nuclear deterrence: The prospect of mutual nuclear destruction constrains great power war and has limited U.S. and NATO support for Ukraine. Other states may take note and seek their own nuclear deterrents. The war demonstrates some limits of economic interdependence, which not only failed to pacify Russia, but also left Russia exposed to economic coercion, in a way both it and China may look to avoid in the future. Other important lessons for states from a realist perspective include the importance of military power—large, capable armies and the enduring advantages of defensive warfare, especially when infused with nationalism. The war leaves the “liberal international order,” a byproduct of the eroding post-Cold War U.S. power position, looking threadbare, but it is thus far reviving the U.S. Cold War coalition—a less liberal grouping—which could prove useful in dealing with China.
Topic:
International Relations, Security, NATO, Sanctions, and Russia-Ukraine War
Political Geography:
Russia, Europe, Eurasia, and Ukraine

43. Lessons for Taiwan from Ukraine

Author:
Sascha Glaeser
Publication Date:
10-2022
Content Type:
Commentary and Analysis
Institution:
Defense Priorities
Abstract:
The Russo-Ukraine war is analogous in several ways to a hypothetical war between China and Taiwan. Like Ukraine, Taiwan is a relatively weak state, threatened by a neighboring great power with a sizable nuclear arsenal who makes historical claims to its territory, and has some backing from the United States. Ukraine’s experience provides several lessons for Taiwan. War remains an instrument of statecraft that great powers use in pursuit of their perceived national interests; smaller, weaker states should plan accordingly. In Taiwan’s case, that means continuation of the status quo which has helped provide peace for decades. Taiwan should assume the United States will not engage in direct conflict with China on its behalf. This assumption should encourage Taiwan to focus its military strategy on securing an advantage by acquiring more anti-access, area-denial capability and reforming its reserve force to help it deter or resist an invasion. While Ukraine shows Taiwan could expect an outpouring of global humanitarian and military aid if attacked, its island geography and the likely course of the war means it might not manage to receive or access those supplies, and should therefore maintain strategic stockpiles of weapons, ammunition, food, fuel, and other supplies. The United States and others will likely impose economic sanctions on China. However, sanctions are unlikely to alter China’s behavior in any meaningful way if it has already committed to war.
Topic:
Foreign Policy, Sanctions, Conflict, Military Aid, and Russia-Ukraine War
Political Geography:
Russia, Ukraine, Eastern Europe, Taiwan, and Asia

44. Western financial warfare and Russia’s de-dollarization strategy: How sanctions on Russia might reshape the global financial system

Author:
Maria Shagina
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
Since 2014, Russia’s de-dollarization plan has been guided by security and geopolitical considerations. By dumping the US dollar from its foreign currency reserves, Russia diverted from the traditional approach where liquidity and the credibility of the issuer determine the choice of currency. In 2022, Russia has doubled down on its efforts to de-dollarize the economy. What started as de-dollarization in 2014, transformed into full-blown rouble-ization in 2022. Following the dynamic of an emerging multipolar world order, the global financial system is also gravitating towards fragmentation and currency multipolarity. The overuse of sanctions could strengthen revisionist countries’ desire to increasingly conduct their trade in non-dollar currencies in an attempt to avoid US oversight. If current trends continue, the de-dollarization effort could gain ground and undermine the primacy of the US dollar.
Topic:
Monetary Policy, Sanctions, Finance, and Conflict
Political Geography:
Russia, Europe, and Global Focus

45. Strengthening the impact of EU sanctions against Russian aggression in Ukraine

Author:
Svitlana Taran
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
European Policy Centre (EPC)
Abstract:
As Russia’s largest trade and economic partner, the European Union (EU) has significant leverage to expand the current sanctions regime. Yet, EU countries continue to rely heavily on Russia for their energy, raw materials, and agricultural fertilisers. This dependency reduces the EU’s economic resilience and exposes it to supply chain disruptions. Much more should be done to turn the tide on this dependency. The EU has so far adopted eight sanction packages against Russia, which already impacted the country’s economy. However, these restrictions will have an even greater impact when all sanctions are in full effect, and Western supply chains reduce their reliance on Russian products. This Discussion Paper identifies five measures the EU can take to increase the impact of sanctions against Russia and end the war as soon as possible. Extending the scope of sanctions on Russian export revenues: A large part of Russian trade flow remains unsanctioned. Russia is receiving record revenues from energy exports due to rising prices. Even though Russia’s exports are likely to drop significantly after the implementation of the EU oil embargo, the impact of sanctions can be further increased. By expanding their scope to other sectors, such as the diamond industry, and placing embargoes on all iron and steel supplies, the EU can significantly impact Russia’s economy. Expanding and aligning export restrictions among the coalition countries: Many exports from the EU to Russia are not restricted. Sanctions should first target products that Moscow would find difficult to replace. EU and coalition partners (such as G7 members and other allies) should align their sanctions regimes to make it harder for Russia to redirect its trade to other markets and substitute its critical imports. Encouraging more company-level self-sanctions: Voluntary restrictions by companies can have a greater impact on Russian trade and investment flows than compulsory country-level sanctions. Self-sanctions by international companies should be encouraged in sectors unaffected by country-level sanctions, with public pressure serving as an effective catalyst for their trade and investment withdrawal from Russia. Preventing sanctions circumvention: Loopholes in the current sanction regime should be addressed. Sanctioning countries should take stronger enforcement actions, among others, against countries and foreign companies that facilitate sanctions evasion. The EU must work more closely with its allies to monitor and enforce the imposed sanctions. Prolonging renewal periods for economic sanctions: The current six-month period for renewing sanctions against Russia could lead to calls for lifting them, threatening EU unity. To avoid this and increase the sanctions’ impact, the EU should consider prolonging their renewal period until Russian troops leave the Ukrainian territory. Russia’s war of aggression has caused disastrous economic effects and devastating infrastructure damage to Ukraine. EU and Western sanctions against Russia should reflect the extent and consequences of these actions. Closing loopholes and widening the scope of sanctions must be a priority for the EU and its allies to strengthen their impact and curtail Russia’s capacity to continue its war. At the same time, existing possibilities for replacing Russian products with Ukrainian ones should be exploited. While maintaining EU unity over sanctions is a challenge, staying united will be crucial for sustaining the credibility of EU policies, accelerating the end of the war, and securing long-term peace in Europe.
Topic:
Sanctions, European Union, Economy, Exports, and Russia-Ukraine War
Political Geography:
Russia and Europe

46. Assessing Russian State Capacity to Develop and Deploy Advanced Military Technology

Author:
Samuel Bendett, Richard Connolly, Jeffrey Edmonds, Andrea Kendall-Taylor, and Michael Kofman
Publication Date:
10-2022
Content Type:
Special Report
Institution:
Center for a New American Security (CNAS)
Abstract:
Even before Russia’s invasion of Ukraine in February 2022, many analysts and policymakers viewed Russia as a declining power. This mindset, formed by the sharp juxtaposition between the seeming strength of the Soviet Union and the chaos and weakness of Russia in the 1990s, has been an enduring heuristic for how Russia today is understood. The country’s stagnant and resource-dependent economy, declining population, and substantial brain drain have fed a sense that Russia’s days as a global power are numbered. The war in Ukraine has only accelerated some of these trends, further reinforcing such views. The Russian military’s poor performance, the degradation of its forces, and the imposition of sanctions and export controls that will restrict Russia’s ability to regenerate its forces have already led some to dismiss the country as a Potemkin power and pronounce the end of its great power status.1 Russia undoubtedly will emerge from its war on Ukraine as a weaker power. But even during the post-Soviet period of sustained economic stagnation, brain drain, and demographic decline, the Russian state developed a new generation of hypersonic missiles, air and missile defenses, and nuclear weapons with novel means of propulsion. Russia has demonstrated that it is able not only to bring to fruition late-Soviet designs, but also to develop a follow-on generation of capabilities. Likewise, the Kremlin has continued to modernize and expand its nuclear capabilities. Despite economic constraints, the Kremlin prioritized the development of its strategic nuclear forces by investing significant resources into developing and deploying new nuclear warheads and launchers, upgrading all legs of the nuclear triad, completing work on a hypersonic glide vehicle, and building a new intercontinental, nuclear-armed, nuclear-powered undersea autonomous torpedo. Of course, Russia’s past performance was under a different set of conditions. Moving forward, as a result of its invasion of Ukraine, Russia will face new and more significant constraints on its ability to modernize its military. But it is too soon to count Russia out. Policymakers need a more nuanced assessment of the nature of the future Russian threat. This report provides such an assessment, focusing on Russia’s ability to develop and deploy its nuclear capabilities through 2030. To that end, this report first identifies Russia’s own stated goals and objectives for the development of its nuclear forces looking out to 2030. Because Russia’s invasion of Ukraine and the resulting military degradation and economic sanctions and export controls introduce critical uncertainties about the Kremlin’s ability to execute these objectives, this report adopts a scenarios approach to forecasting Russia’s future nuclear capabilities. The report identifies two drivers that the authors view as most critical in shaping Russia’s ability to fulfill its stated objectives: the impact of Western sanctions on Russia’s government revenue and ability to access critical technology, and the extent of the degradation of the Russian military in Ukraine, which will force choices on the Kremlin about how to prioritize military expenditures. This report uses these two drivers to describe two scenarios that define the upper and lower boundaries of expectations for Russia’s nuclear capabilities, along with the implications of each of these scenarios for the United States and its allies. The scenarios, in other words, describe both a worst- and best-case state of affairs for Russia, and thus they help frame the problem for U.S. policymakers and planners. The report concludes with an assessment of key findings that emerge from the analysis and associated recommendations for the United States and Europe.
Topic:
Nuclear Weapons, Science and Technology, Sanctions, Military, Russia-Ukraine War, and Policymaking
Political Geography:
Russia and Europe

47. Toward a New Transatlantic Approach to Russia Sanctions

Author:
Edward Fishman, Andrea Kendall-Taylor, and Angela Stent
Publication Date:
02-2022
Content Type:
Special Report
Institution:
Center for a New American Security (CNAS)
Abstract:
This policy brief is a product of the Center for a New American Security Transatlantic Forum on Russia, an initiative designed to spur coordination between the United States and Europe on Russia-related policy across multiple issue areas. The policy briefs are informed by a series of dialogues with leading experts from both sides of the Atlantic. The analysis and recommendations in the memo reflect areas of agreement between U.S. and European experts. Where there are notable differences in perspective, we highlight those to better enable policymakers to navigate fissures that can hinder coordination. We thank all the experts who contributed to such fruitful dialogue, especially Nigel Gould-Davies, Brian O’Toole, and Maria Shagina. Introduction As Russia continues to build its forces on Ukraine’s border, the United States and its allies have laid out the economic costs that Russian President Vladimir Putin would face for any further aggression against Ukraine. The Biden administration has stated it is willing to pursue “economic measures that we've refrained from using in the past.”1 In addition, the United States has indicated it is prepared to use export controls on U.S.-origin technologies that are key to Russia’s industrial sectors and potentially enact a Russia-focused Foreign Direct Product Rule—a tool that, to date, has only been used against Huawei. It is unclear if such a package is enough to deter Putin, especially if he is intent on pursuing his maximalist objectives—autonomy for parts of eastern Ukraine that would give Russia a veto over Ukrainian foreign policy and closing NATO’s door to Ukraine. Nonetheless, implementing such sanctions if Putin further escalates in Ukraine is critical for raising the costs to Putin and for restricting Russia’s ability to sustain its aggressive foreign policy over the long term. Regardless of what happens in Ukraine, however, U.S.-Russia relations are on a new course. The era of working toward a stable and predictable relationship with Russia is over for now. The United States will need a new, more proactive approach—one in which sanctions will be a tool (among many) that Washington should use to deter future Russian attacks on liberal democracies and disrupt Russia’s destabilizing actions, especially the corrupt networks that Moscow uses to spread its influence and sustain its hold on power. This policy brief outlines the current state of play of U.S. and European sanctions policies on Russia and how the United States and Europe can update its sanctions approach in this new era of relations with Russia.
Topic:
Foreign Policy, Sanctions, Crisis Management, Deterrence, and Transatlantic Relations
Political Geography:
Russia, Europe, and United States of America

48. What Putin’s War in Ukraine Means for the Future of China-Russia Relations

Author:
Björn Alexander Düben
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
Björn Alexander Düben analyses China’s reaction to, and motivation in implicitly supporting, Russia’s invasion of Ukraine, even as Putin’s strategic blunder becomes increasingly difficult to deal with. The author finds that, as long as Putin remains in power, long-term alignment since 2014 and a shared authoritarian world-view will cement closer ties between the PRC and Russian Federation; this at the cost of the latter devolving to a client-state dependent on China to keep its economy afloat, whilst the PRC’s cautious state banks further diminish Russian hopes of financial cooperation in order to avoid secondary sanctions from the West.
Topic:
Bilateral Relations, Sanctions, Authoritarianism, Economy, Vladimir Putin, and Russia-Ukraine War
Political Geography:
Russia, China, Ukraine, and Asia

49. The impact of the Ukraine crisis on international trade

Author:
Zsolt Darvas and Catarina Martins
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
We study the economic implications of Russia’s invasion of Ukraine, by scrutinising global trade volumes and commodity prices, trade balances and bilateral trade flows between major economic powers and Russia. We find that energy prices increased more in 2021 than in 2022, suggesting that the war and the sanctions were not the most important drivers. Nevertheless, International Monetary Fund forecast revisions from October 2021 to October 2022 suggest that the volume of global trade in goods and services declined by 3.4 percent, energy prices increased by about 100 percent, and the prices of non-energy commodities by 8 percent. The war could be an important driver of these forecast revisions, though other factors were also at play. While forecasts for important industrial production input costs were not revised, soaring energy prices deteriorated the trade balance of countries importing energy. Only half of the increase in Russia’s trade surplus was related to soaring energy prices. The other half resulted from the collapse of Russian imports, which will likely undermine the Russian economy’s productive capacity over time. Falling Russian exports of goods other than mineral fuels suggest Russia’s productive capacity has already weakened. Russia’s trade has been reoriented from advanced economies to China, India and Turkey, but this has only partially compensated for the decline in trade with advanced countries. We find that sanctions had an impact on trade. There is no evidence of European and US companies circumventing sanctions by re-routing sanctioned goods to Russia via China and Turkey. The UK and the US have already stopped importing fossil fuels from Russia, and such imports by the EU have declined. With the EU’s Russian seaborne crude petroleum import ban taking effect in December 2022 and the refined petroleum ban coming to effect in February 2023, Russia’s revenues from fossil fuel exports to the EU are set to shrink significantly, with limited options for redirecting exports to other countries. The three main policy-relevant implications from our research are: The war and the sanctions are not the most important drivers of energy price; The direct aim of sanctions seems to have been achieved; The capacity of the Russian state to finance the war from fossil fuel revenues is bound to shrink. The dataset used for most charts of this working paper is regularly updated and is available in the Russian foreign trade tracker
Topic:
International Trade and Finance, Sanctions, Fossil Fuels, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Ukraine

50. How have sanctions impacted Russia?

Author:
Maria Demertzis, Benjamin Hilgenstock, Ben McWilliams, Elina Ribakova, and Simone Tagliapietra
Publication Date:
10-2022
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Russia’s invasion of Ukraine has triggered a series of sanctions imposed by the European Union, the United States and others. Sanctions included restrictions on Russia’s financial industry, its central bank and its coal and oil exporters, in addition to general export controls. Meanwhile, foreign companies have withdrawn voluntarily from the Russian market as a result of a ‘self-sanctioning’ trend. We assess the impact these sanctions have had on Russia’s economy in the immediate aftermath of the invasion and more structurally. Russian fiscal revenues have not suffered from sanctions sufficiently to reduce the length of this war. Effective management by the Bank of Russia has prevented financial instability and has therefore also protected the real economy. However, this picture of economic containment is coming to an end. Russia’s fiscal revenues are now beginning to take a hit; given the breadth of sanctions, the economy will suffer in the medium to long term. The voluntary departure of a large number of western firms, eventual energy decoupling by the EU and Russia’s inability to find equal alternatives will damage the Russian economy severely. As the Russian economy closes in on itself, it will become harder to find reliable data to evaluate the extent of the hit. Still greater sanctions coordination across the globe is needed to isolate the Russian economy, limit the flow of income into Russian coffers and therefore help stop the war.
Topic:
Governance, Sanctions, Economy, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Ukraine