The nature of the Russian attack on Ukraine, striking across the country and not just concentrating on the territory claimed by the so-called breakaway republics, shows Vladimir Putin’s confidence that he can weather whatever sanctions the West imposes. This is not an assault designed to sit in any kind of grey area, but an unambiguous invasion — which the West has always made clear would bring forth the maximum set of sanctions.
Putin’s confidence is driven by two things. First, as I say in the magazine this week, Russia has been preparing to face expanded sanctions since the annexation of Crimea in 2014. It has built up foreign currency reserves of $630 billion, an increase of 75 per cent since 2015. It now has the fourth largest currency reserves in the world, despite being only the 11th largest economy. The reserves are akin to a third of the Russian economy — and don’t forget that even today, the West will buy north of $700 million (£520 million) of Russian oil and gas.
In a further attempt to bolster Moscow’s resilience against a western economic squeeze, Putin has kept state spending under control. The economic historian Adam Tooze calculates that Russia only needs oil to sell at $44 (£30) a barrel to balance its budget; Brent crude is currently trading at over $100 (£75) a barrel.
The second source of Putin’s confidence is a conviction that the West is not prepared to take serious — and sustained — economic pain for Ukraine. As Monday’s bizarre televised meeting of the Russian National Security Council showed, this has created a confidence in Putin’s circle that the sanctions will either not be that comprehensive or will not be strictly enforced for that long.
Western leaders need to challenge this by telling their citizens that sanctions will worsen the cost of living crisis; it will raise energy prices and push inflation higher. Until the Russian ruling class hears democratic governments levelling with their electorates on that, they will remain confident that they can handle whatever sanctions the West imposes.
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