- By Phil LevyPhil Levy is Senior Fellow on the Global Economy for the Chicago Council on Global Affairs and teaches at Northwestern's Kellogg School of Management.
Just over a month ago, I suggested that the question for Russia was not whether the West was capable of inflicting pain through economic penalties, but whether it would actually do so. The trick for Russian President Vladimir Putin throughout has been to achieve his goals in Ukraine without acting so blatantly as to trigger a strong, concerted response. One implication is that Russian failure would come with a bang, but Russian success would be accompanied by the susurration of news stories slipping from the front pages back into the deep recesses of esoteric world news.
If Putin were to play his cards right, he would want the following:
1. Keep Crimea.
2. Assert control over Eastern Ukraine.
3. Let the West claim victory and turn its attention elsewhere.
4. Undo the short-term economic damage to Russia.
So how has he done?
1. Russia still has Crimea.
2. In Eastern Ukraine, some Russian troops have backed away from the border, but Reuters describes rebel success in driving Ukrainians away from border posts and allowing in arms and war materials.
"Outgunned and outnumbered, (border guards) have fled one post after another in the week since the rebels took the border guards’ headquarters in Luhansk, the region’s main city … Witnesses have reported seeing Russian Kamaz military transport vehicles break through frontier posts into Ukraine."
3. At West Point last month, President Obama proclaimed, "Our ability to shape world opinion helped isolate Russia right away. Because of American leadership, the world immediately condemned Russian actions; Europe and the G7 joined us to impose sanctions … this mobilization of world opinion and international institutions served as a counterweight to Russian propaganda and Russian troops on the border and armed militias in ski masks."
4. On the economic front, Russia signed its gas deal with China, effectively undermining any plans for Russian isolation. Western oil companies are expanding operations in Russia. The Russian ruble has rebounded to levels it last saw in late January. The Financial Times reports this week that Russia’s "benchmark stock gauge continued a rally that has sent it back to pre-crisis levels" and the yield on Russian sovereign debt fell to a year low.
That Financial Times story? It was buried on page 20.