Why We Can Play the Long Game on Russia

And how we can do it.

With the benefit of hindsight, the Russian annexation of Crimea shouldn’t have been a great surprise: it has been obvious to those who chose to look that for most of the last twenty years, that Russian president Vladimir Putin never fully accepted the USSR’s demise. Now, as the West agonizes over another possible irredentist feint—possibly in Ukraine proper or in Transnistria—the United States and its allies need to take a deep breath and consider the long game.

By the end of March, some accouterments of post-Soviet sovereignty had changed. The peninsula in dispute switched flags and currencies. But despite epochal foreboding, few lives had been lost; with Russian pride assuaged, the remainder of Ukraine was lurching into the European Union’s embrace—barring a Putin effort to destabilize it. The issue kicking off the crisis in the first place—Ukraine’s edging towards the EU—had now given Eurasia another tilt towards Mother Europe.

Is it possible that over the long run, much of this might come out better than feared? Putin’s Ukraine gambit may yet prove a tactical success, but a strategic failure. Even there, if Putin seeks to dismantle Ukraine, he may yet face a Ukrainian military response. The shock annexation of Crimea, itself a product of a 1954 intra-Soviet land transfer, has had another salutary effect—jolting us into reluctant awareness of the downside cost of our intrusions into the Russian periphery over two decades.

If we can accept that we too often behaved as if Russia didn’t matter, we stand a better chance of preserving Eurasian stability in the post-Crimean era.

The answer lies in playing a long game, with our secret weapon being a nuclear deal and gradual rapprochement with Iran. With this in our pocket, we could eliminate much of the risk premium—$15-$20 a barrel—in current oil prices. As electric cars become common and global oil demand peaks, the likely per-barrel price lies in the $70-$95 range—very bad news for Putin, whose domestic budget rests on oil set at around $110. Consider the many unintended consequences of Putin’s folly:

● Crimean pensions and budget subsidies totaling between $30-40 billion annually are now Russia’s responsibility. As rah-rah nationalism fades, reality will sink in.

● The days of Soviet economic autarchy are long gone. Before the Ukraine affair, the Russian economy was projected to grow nearly two percent in 2014. Now, targeted sanctions, a weak ruble and declining domestic and foreign investment all add up to weaker growth and the danger of recession. Capital flight has accelerated, with an estimated $70 billion in the first quarter of 2014, by comparison to net outflows of $63 billion during all of 2013. Foreign investment funds are offloading Russian assets. And if you were an oligarch, why would you keep your money in rubles?

● Russia’s Crimea gambit is uniting most of the remaining Ukraine against him. A serious US/EU/IMF financial package (with effective conditionality to force reforms) of some $30 billion over a multi-year period could dislodge Ukrainian corruption and bring it on track to EU associate status.

● Putin has put European security back on the table and breathed new life into a more Eurocentric, post-Afghanistan NATO. After Crimea, its members want a tighter security embrace; on both sides of the pond, many now expect an uptick in ‘old style’ defense spending—e.g., tanks, theater-delivery systems, etc. Sweden, now a key NATO “partner,” and Finland are mulling full membership. Deploying NATO assets in the Baltics and Poland may also be in the cards.

● Putin’s Crimea action has led Ms. Merkel and the rest of Germany to rethink tolerance of, and reliance on, Russia. German firms have been a major source of investment capital for Russia, but are now repatriating profits.

● Putin has sparked new determination within the EU to reduce dependence on Russian gas. The Europeans are rapidly rethinking homegrown opposition to developing their own shale resources. Putin’s action is also boosting support and sense of urgency for US natural-gas exports;

● By landing a body blow to the post–Cold War order that Russia had signed up to Putin has reduced his country’s freedom of maneuver.

The downside of Putin’s Crimea gambit—economic, diplomatic, commercial—therefore make a long, countervailing list of damaging consequence, a dubious “victory” even now. But consider some other uncomfortable truths, also thrown into sharp relief by Ukraine and other trouble spots in recent months:

Spheres of Influence—for Us but Not for Them. Just look at the reportage: With us, it’s the ‘International Community’ but for the Russians it’s just a ‘naked power grab’ or, at best, ‘irredentism’. But isn’t there a disconnect here? Why is maintaining a sphere of influence acceptable for us, but repellent if sought by Russia (or China)? Not to minimize Russian bloody-mindedness, but try imagining a world in which we had lost the Cold War, and then found the Russians in a military alliance with Mexico and Canada. How would that go down?