Putin waits to play his hand amid Obama’s threats

The West was impotent to prevent Moscow’s annexation of Crimea, which, in its book, is no re-marriage made in heaven. With a military option off the table, its leaders have ganged up to punish Russia diplomatically and economically, though the US and European Union (EU) sanctions lack bite. They target individuals with travel bans and asset freezes as well as the Rossiya Bank whose clients’ MasterCard and Visa transactions have been blocked.

Russian President Vladimir Putin joked that although he did not have an account with that bank he would “certainly open one there on Monday.” Russia’s Deputy Prime Minister, Dmitry Rogozin, tweeted: “I think the decree of the President of the United States was written by some joker . . .” Those comments are a fine display of bravado. In truth, Russia’s stock market and currency are hurting. International ratings agencies, Fitch and Standard and Poor’s, have pronounced a negative outlook for the country’s economy that translates to more expensive borrowing. Obama and his EU counterparts have stopped short of trade sanctions for good reason. Europe is heavily reliant on Russian gas and trade. Should the situation escalate further, Germany’s most prominent trade body has warned that German companies could experience catastrophic losses. There is apprehension within the City of London that is awash with Russian money, too.

When announcing his new measures to isolate Russia, US President Barack Obama admitted that the global economy may be impacted. That snippet has gone virtually unnoticed by the international media that should be screaming it from rooftops. For many countries still suffering lingering effects of the 2008 global downturn, the very thought will be disconcerting. Other than demanding Kiev pay its debts in the tune of $11 billion-plus (more than Dh40.45 billion) the return of a further $3 billion loaned to Ukraine prior to the parliamentary coup, President Putin has held off from imposing tit-for-tat punishments. Is he being conciliatory, hoping that the international noise will die down as it did over Russia’s annexation of South Ossetia and Abkhazia in 2008? Or does he have long-term plans to sting his detractors, plans currently being held close to this chest.

Europe and Ukraine are working on ways to circumvent their dependencies on Russian energy supplies, but finding new sources and laying requisite pipelines could take years. Moscow is in a far stronger position because of a potential buyer salivating on its borders—China. Beijing has stayed on the sidelines of this particular dispute and abstained from voting on the issue in the United Nations Security Council. As Russia’s natural ally, Moscow’s relationship with Beijing can be its biggest trump card. A senior official from Russia’s state-owned oil company, Rosneft, said Moscow will turn eastwards to seek new customers and geopolitical alliances. Putin is scheduled to visit Beijing in May where he hopes to cement a long-negotiated energy deal centred upon 38 billion cubic meters of natural gas being pumped to China annually.

The blogosphere is buzzing with another potential slap in America’s face were Russia to dump the petrodollar and manage to bring China, India and Iran onside. That will spell the demise of the dollar as the world’s reserve currency, triggering the US economy’s collapse. Obama is only too aware of China’s role in thwarting Russia’s ring-fencing. Michelle Obama is in Moscow, along with her teenage daughters, to meet the Chinese President Xi Jinping relative to discuss social and cultural issues! The US president is set to follow. He has extended a planned visit to Europe and Saudi Arabia to whisper in the ears of the Chinese leadership against his rival in Moscow. He will be travelling with a sack of carrots; no doubt, tempting at a time when China’s economy is slowing down, but Beijing will hesitate to throw its UN Security Council sidekick under a bus.

Putin also has eager friends in Latin America, countries that look at Washington with deep suspicion. Russia is increasing military ties in that part of the world and, recently, Russia’s defence minister disclosed plans to set-up military bases in Venezuela, Nicaragua and Cuba. Moscow is further expanding its Middle East influence with warming ties with Egypt that’s signed a lucrative arms deal brokered by Saudi Arabia. Like Egypt, the Kingdom is also seeking to diversify its relationships. The Saudi minister of defence revealed earlier this month that Riyadh sought to transform Saudi-Chinese ties into a strategic partnership. It is likely that the manifestation of such a partnership will draw Russia into its sphere.

If Putin is pushed, he could throw a spanner in the wheels of US-led negotiations with Tehran on its uranium enrichment programme by simply opening up Russia’s border with Iran, permitting anti-Iranian sanctions to be circumvented. He could also task his military to bring a speedy conclusion to Syria’s civil war, leaving Bashar Al Assad at the helm.

Russia may be swallowing the West’s foul-tasting medicine right now, but the US and Europe should not get too complacent. China’s decision on which way to jump will in large part dictate how hard Putin responds and how asymmetrical those responses may be. Moscow does look vulnerable, but do not be surprised if Russia’s wiliest fox succeeds in turning the tables.

Linda S. Heard is a British specialist writer on Middle East affairs. She welcomes feedback and can be contacted by email at heardonthegrapevines@yahoo.co.uk.