Trading Realpolitik for a Puppet Show

A week, as the British Prime Minister Harold Wilson is supposed to have said, is a long time in politics. Poor Joe Biden would doubtless agree, assuming that he remembers what a week, what a long time, and what politics are. It was just about a week ago, on March 26, that he said, “As a result of our unprecedented sanctions, the ruble was almost immediately reduced to rubble.” 

I wonder who thought of that play on words? The ruble is rubble. Ha, ha, ha. 

The Russian currency did take a sharp dive. But then, almost immediately, it recovered. Why? There are several explanations. The conventional headscratchers hold that it is largely because the nefarious Vladimir Putin has nefariously blackmailed the weak-willed Germans and others who prefer bucking the sanctions in order to heat their homes. What cowards. 

A better explanation, I think, is that Putin, having played this game before, more or less knew what to expect when he invaded Ukraine. The Western press was full of gloating stories about how Mastercard and Visa stopped handling transactions when Biden announced the sanctions. That’ll show ’em. But those companies had done the same thing back in 2014 when, with Barack Obama at the helm in the United States, Putin gobbled up Crimea. This time, Putin was ready. He had already implemented his own card payment system. Mastercard and Visa piggybacked on it. One irony of the situation, as the web site Daily Reckoning observes, is that “instead of Visa and Mastercard getting the fees, Russia’s central bank collected 8.2 billion rubles in net profit, or about $94 million at current exchange rates. Russia actually profited from Visa and Mastercard sanctions.”

File that under “unintended consequences.” 

The Daily Reckoning columnists believe we’ll be witnessing a lot of unintended consequences in the coming weeks and months. I and many other commentators have already noted that the “Russia sanctions” are likely to hurt the sanctioners at least as much as the sanctioned. Consider this: 

Blocs of nations have long been chasing dollar alternatives. These latest sanctions have merely forced the pace.

The world will no longer consider the dollar a dependable monetary bedrock. If the United States can kick Russia from the international payments system, it can kick other miscreants from the international payments system.

And yes, the world is full of people and states that the U.S. government considers miscreants. Is there world enough and time to sanction them all? Bill Kristol is going to be awfully busy. 

Certain cracks in the façade seem to be appearing. Google, for example, must be worried that the agreed upon narrative about Ukraine—Putin bad, Zelenskyy good—is under stress because it just announced to publishers that it was temporarily “demonetizing” content that said unapproved things about the war in Ukraine. The “pause,” the ad giant explains, “includes, but is not limited to, claims that imply victims are responsible for their own tragedy or similar instances of victim blaming, such as claims that Ukraine is committing genocide or deliberately attacking its own citizens.” That is going to make it tough on those who, for example, were thinking of reporting on the activities of the Azov Battalion, the neo-Nazi anti-Semitic activists who are credibly accused of widespread rape, torture, and murder in and around the Donbass.

I have elsewhere cited the work of the “realist” foreign policy commentator John Mearsheimer. In a lecture from 2015, Mearsheimer explained why he thought that the debacle already evident in Ukraine was primarily the West’s fault. Last month, he sat for a long interview with a writer for The New Yorker in which he expatiated on that contention. Before February 2014, when Putin annexed Crimea, Mearsheimer argues, the United States did not regard Putin as the aggressor in Ukraine. “That,” he says, 

is a story that we invented so that we could blame him. My argument is that the West, especially the United States, is principally responsible for this disaster. But no American policymaker, and hardly anyone in the American foreign-policy establishment, is going to want to acknowledge that line of argument, and they will say that the Russians are responsible.

Mearsheimer’s perspective is obviously sharply at odds with the regime narrative put abroad by our masters in Washington and their megaphones in the press. But his larger point revolves around the question of where America’s real interests lie. “Russia,” he points out, “is not a serious threat to the United States.” Unfortunately, “We do face a serious threat in the international system. We face a peer competitor. And that’s China. Our policy in Eastern Europe is undermining our ability to deal with the most dangerous threat that we face today.”

That hard truth has bubbled to the surface every now and then in recent years. Now it seems to have been shelved in favor of applauding Zelenskyy and eschewing Russian vodka, Russian dancers and conductors, and even Russian literature. 

Meanwhile, Mearsheimer argues, “We should be pivoting out of Europe to deal with China in a laser-like fashion, number one.” There are people in high places that might agree with that. But remember when Donald Trump said it would be a “good thing, not a bad thing,” if America got on well with Russia? That is Mearsheimer’s “number two” point: “we should be working overtime to create friendly relations with the Russians,” he said. 

The Russians are part of our balancing coalition against China. If you live in a world where there are three great powers—China, Russia, and the United States—and one of those great powers, China, is a peer competitor, what you want to do if you’re the United States is have Russia on your side of the ledger. Instead, what we have done with our foolish policies in Eastern Europe is drive the Russians into the arms of the Chinese.

This brings me to some comments by the financial analyst James Rickards about the prevalence of lies in wartime. 

Here’s the first clump of lies and misrepresentations, aka the official narrative: “Russia’s invasion of Ukraine was unprovoked, Putin’s three-day blitzkrieg of Kyiv has failed, Russian forces are bogged down and valiant Ukrainian troops are putting up a powerful defense and regaining lost ground with the help of weapons from NATO.”

Rickards, like Mearsheimer, offers a different interpretation. According to him, the “real story” is that “Russia’s invasion is the end result of 14 years of provocation by the West, including repeated declarations that Ukraine will join NATO and a U.S.-backed coup d’état in 2014 that displaced a pro-Russian president.”

Many news sources will tell you that Russia’s “blitzkrieg” against Kyiv failed. But, as Rickards points out, 

Russia never planned a blitzkrieg on Kyiv. That’s a Western invention intended to make Putin look like a failure. In fact, Russia is slowly and methodically taking territory in the south and east of Ukraine in order to control the seacoasts, eliminate pro-fascist elements in Mariupol and establish pro-Russian autonomous zones in Donbas.

Hmmm. But what about Zelenskyy, the “new Churchill”?  On the plus side, Rickards acknowledges, he has “succeeded in presenting himself as a strong wartime leader, standing up to the big, bad Putin.” He’s telegenic, a fighter, and a PR genius. No wonder the U.S. Congress gave him a standing ovation. But he is also a complicated figure. As Rickards also notes, Zelenskyy is “a corrupt oligarch with millions of dollars hidden offshore. His acting skills have enhanced his propaganda efforts, but it doesn’t take much training to see how phony he is.” Moreover, “innocent civilians, including women and children, are dying under his failed leadership and inability to come to terms with Putin before the invasion began. In a nutshell, Zelenskyy bet on support from Biden and the West and lost.”

Putin’s invasion of Ukraine has been a tragedy for that star-crossed country. But the Western response, although it has afforded many opportunities for virtue signaling, is very likely to make things worse. Sanctions, Rickards points out, will not stop the war. They never do. Ultimately, they will “harm everyday citizens and consumers most.” 

Inflation was baked into the U.S. economy many months ago by Biden’s attack on fossil fuels and his incontinent spending. But it has been put into overdrive by the anti-Russian sanctions. The pain is not, and will not, be confined to Russia. Sure, things will be bad for ordinary Russians. But Rickards is right: “the pain on the American people has only begun. It’s about to get much worse. U.S. consumers and investors will suffer as prices soar, growth lags and stocks collapse.”

That’s not the ending Bill Kristol or Francis Fukuyama forecast. But in this respect, they and their ilk are like Holiday Inn: the best surprise is no surprise.

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