Ukraine – Putin’s Got All He’s Going to Get (Without a War). So We’ll See.

If Putin is rational, he’d played this mess out to the most face-saving “win” he’s going to get.

It “feels” like the point where the whole Ukraine drama comes off the boil (returning to a simmer) or we’re going to have a major land war in Europe.  Not sure how it resolves, but if we are going to have a standstill this is likely when it happens.  Just thinking this through on paper here.

In retrospect, it was obvious Putin would choreograph his point of maximum tension for today.  Why?  Because the Winter Olympics ended yesterday.  Why piss off the Chinese?

At this point, he’s gotten about all he’s going to get short of outright war.

  • Fully occupied and effectively re-absorbed Belarus.
  • Occupying the “breakway” regions of Ukraine.  With useful ambiguity if that includes Ukrainian land (across the current front line) claimed by those regions.
  • Looking tough in front of the Russian people and the world.

Note that the first 2 “wins” aren’t really much of a change from where we were a few months ago.  Although Belorussia’s now-gelded dictator Lukashenko might disagree.  Actual Russian troops on the Polish border is also a little more scary.

Putin has also lost a lot already.  His initial calculus was (probably) Biden is a wimp and Europe is easy to split apart and I can extract concessions from them if I press hard enough.  That has proven wrong.

  • No concessions gained.  If anything, his actions have served to unite them.  Germany putting the Nord Stream 2 gas pipeline on the line was a big loss for Putin.
  • Pushed Ukraine farther away (today’s speech claiming it for Russia will only exacerbate that).
  • Set off a likely for-real effort by German/Europe to diversify away from energy dependence on Russia.
  • Repelled everyone that really doesn’t like the idea of old-school wars of conquest, which is “most people in the world” these days.
  • Given “everyone” a lot of reasons to avoid investing in Russia.

If Putin goes forward with war, he risks losing more and I still can’t see what he gains?  Maybe I’m not seeing some halfway move that gets him more out of Ukraine with the long-term war-of-occupation pain. Otherwise, he stands still here.  The rest of the week is about everyone finding ways to normalize the situation.

In bar fight terms, the bully making all the noise gets to stomp out looking tough, but the other guy doesn’t actually get punched.  And we all sort’ve know the bully was bluffing, but we do him (and the other guy) the favor of not pointing it out.

If he isn’t rational?  Or if there is some benefit I’m not seeing (very likely)?  Or some internal threat pressing him forward?  Then we’re going to war.  But it likely resolves this week.

He can’t keep the troops out in the field forever (ran into a good Twitter thread about how they are getting drunk, cutting down all the trees for firewood, and selling off their rifles in Belarus).  Also the mud makes the whole area impassible as we get into March.

So we’ve hit the likely point of maximum panic and uncertainty.  We have learned that.  We don’t know (yet) how it resolves.

From a market/economy perspective, I’d note that a land war in Ukraine actually doesn’t change much for most things.  OK, energy prices will stay high (but they are already high).  Europe will have a freak-out.  It does increase the (small) risk the Russians blunder into a confrontation with NATO.  But mostly the world will just keep going about its day.  Provided you don’t live in the Ukraine.

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