Ukraine War Winner #1: USA
In analyzing the impact of the Russia-Ukraine conflict, one has to evaluate the gains and losses of all key players in different areas. While one could state categorically that the war subjects all countries to inflationary pressure, human migration crisis, food and energy security concerns, the degree of impact and pain each one of these has on each country is different.
For example, certain European Union countries cared more about the inflationary pressure due to increased gas and commodity prices. Certain countries are more concerned about the influx of millions of Ukrainians, who blend in well with their domestic population and would be difficult to repatriate after the conflict ends. Yet other European countries may simply have no choice in deciding whether or not to sanction Russia because one hundred percent of their oil and gas come from Russia. Countries such as Egypt, Israel and Turkey are also concerned about food supply this year and next as Ukraine is likely to miss the coming planting season.
Shamefully, but perhaps rightfully in realpolitik, not a single one of these governments above placed Ukrainian civilian lives above their own national or even personal interest. The Ukrainians are therefore the biggest losers in this war. Fallen prey to their own leader who failed to assess the geopolitical landscape before the war, fell under the sirens of empty promises offered by western leaders, and even in war is still more interested in seeking the limelight than resolving the crisis expediently. Fallen prey to an aggressive neighbor who does not value civilian lives above its own perceived insecurity from Western threat. Fallen prey to foreign powers which do not have the political will and moral courage to support Ukrainian civilians beyond words in the conflict. This is a cruel indictment of the brand of international politics we engage in: that of upholding one’s self interest.
While the Ukrainian people are the biggest losers in this tragedy, the single biggest winner is USA. They are not actively admitting displaced Ukrainians from the war. They do not have a single man and equipment aiding Ukrainian despite promises and insinuations throughout the years. Even 80% of their promised $1.5Billion aid goes back to US arms manufacturers and USA military based in Germany.
USA has no intention of bringing NATO military might to Ukraine’s aid. This widely reported continuous trickle of squad level weapons would only serve to prolong the war without offering realistic hope of repelling the Russians. Therefore, the expected end game by all parties today (actually since the first week of the conflict) is Ukraine partition and future neutrality. If so, then the way forward is speedy negotiation of a peace treaty to minimize civilian lives loss and maximize Ukrainian dignity, guaranteed and managed by the biggest player: USA.
However, USA is precisely the one major player who has not actively pursued or expressed intent of participating in a negotiated settlement. They held on to the demand of an unconditional withdrawal, or perhaps surrender, of Russian troops, plus the return of Crimea. As this is a position that does not represent the state of the conflict, and hence not acceptable to Russia, it is a clear indication of USA’s desire to let the war drag on at the expense of Ukrainian civilian lives.
One may ask why would the world’s biggest champion, on paper and in words at least, of human rights and democracy want the conflict to continue? That’s because a sustained conflict benefits USA on multiple fronts. It is like killing eight unhappy birds with one stone:
Boosting capital flight from Euro-zone countries to USA. During times of uncertainty and war, investors leave and stay away from markets near to the event epicenter. Other than gold, investors also prefer USA based investments. This reflexive actions provided a much needed boost in terms of strengthening US dollars vis-à-vis the other currencies and alleviating slightly the inflationary pressure in USA. More importantly, it put a brake in Euro’s growing share as the world’s trading and reserve currency.
Holding NATO together. In 2021, after the USA-Afghanistan withdrawal fiasco, and the subsequent AUKUS submarine deal which saw France losing a multibillion dollar contract and a few thousand French jobs, led to the desire within Germany and France to form a European Defense Force. This is a natural progression of NATO because European countries’ perceived security risk has changed and seen more significant divergence from that of USA. The Ukrainian war nipped this in the bud. European countries are now increasing their defence budget and buying yet more arms from USA.
Ensnaring Russia in a war of attrition. One more Russian killed, one more Russian plane destroyed, one more Russian missile fired all weigh heavily on the Russian economy as the cost of replenishment is high. Irrespective of the level of support the general Russian public has for the war, every additional day without resolution would lose Putin another sliver of Russian population’s collective goodwill.
Demonizing USA’s top geopolitical opponents. USA is a country in need of an enemy or two to unite the fragmenting factions within and China has been designated imaginary enemy number one until Russia came along and invaded Ukraine providing a more expedient target. The war is a golden opportunity of painting Russia as a demon. To maximize the return from this crisis, USA is also labeling China as a co-conspirator at every turn. This is cognitive warfare at its best, once the people make up their mind, they are conducive to future manipulation. Unfortunately for the USA, it is not getting the desired results outside of its core allies of UK and Australia.
Selling more armaments. The USA military-industrial complex is a hungry beast that must be fed. This war, together with the residual (and historical) fear of Russia over the next five to ten years will lead to increased defense appetite for military hardware in Europe. As the top four arms maker in the world are all American, and USA is a NATO ally, a huge portion of this spending will be captured by America.
Selling more natural gas. Russia has the largest market share on natural gas in continental Europe. A few countries rely on Russian almost exclusively on gas import. With the structural change in power generation due to environmental concerns, European countries do not have many alternatives other than sourcing natural gas from other suppliers should Russia sanctions continue. USA becomes the savior, after orchestrating the sanctions that hurt Europe.
Selling more farm produce in the future. Both Ukraine and Russia are major grain producers and exporters. They account for one third of the world’s wheat and barley export. Countries such as Egypt and Israel import up to eighty percent of their wheat from Russia and Ukraine. With Ukraine likely to miss this spring sowing season and Russia being sanctioned, a large part of that shortfall next season could only be met by increased US grain production.
Creating a distraction from domestic policy failures. This conflict provided Biden with cover, no matter how tenuous, on inflation as Biden blames Putin for inflation woes at home. In general, the President has benefited from a break from his domestic headaches as media attention has largely been siphoned away from high inflation, pandemic, President’s plunging approval and Hunter Biden laptop scandal. While this may not be as effective in rescuing his presidency as the White House desired, it has at least attracted eyeballs away from home.
Le Voilà the eight unhappy birds killed with one stone, and not a single US soldier is officially involved in the entire conflict. It is not even a text-book case proxy war because Ukraine, the US proxy, is fighting the war against the principal, Russia.
Unfortunately, despite all the gains listed above, USA has overplayed its hands and is left with quite a few serious threats on the horizon. These threats are either natural byproducts of the gains above, such as the negative reciprocal effect of sanctions, or a result of poor execution in diplomacy, such as the unnecessary pressure piled on India, an ally. Therefore, it is not what they do against Russia, but rather what they are doing, or not doing, to their partners that would lead to a lasting schism between USA and its partners.
Destroying a value system championed by the West, and accepted by most countries since 1950s. Demonizing normal Russians, and punishing the oligarchs and seizing Russian assets globally may have given a lot in the West a righteous feeling and an instant drug induced high. However this has gone against all the free market ideals cherished and championed by the West. If Western governments can go about seizing private properties without due process, it is no better than any other authoritarian states that nationalize corporate and personal assets as they see fit without due process.
Losing the heart of its core EU and NATO allies. In urging Ukraine to prolong this fight, USA has demonstrated a singular commitment to the preservation of its own self-interest. The concerns of the European counterparts in the area of human migration, energy security, and inflation were largely brushed aside. One need to look no further than Germany, France, Poland’s effort both before and after the invasion to find peace and compare that with USA’s consistent uncompromising position. This is attributable more to its core divergence from other European nations than strategic posturing adopted to establish a stronger coordinated negotiating position for the West.
Losing credibility amongst its closest allies. The seizing of Russian state, corporate and private citizen’s assets in the West, together with the earlier appropriation of Afghanistan’s foreign reserves have touched a nerve of many countries, especially the middle eastern oil producing nations. These countries are concerned that USA could do the same to them in the future. Thus to protect themselves and to send a message, they elected to not join in facilitating the sanctions (Saudi Arabia refused to increase oil production, and India continue its gas purchase from Russia) and take active measures to diversify from US asset (Saudi Arabia is planning to use China RMB on oil sale to China).
Exacerbating the inflation problem at home. That annualized inflation rate hit a forty year high of 7.9% needs no more explanation. The common people staring at the prices at the pump and supermarket are probably feeling surreal right this moment. The impact of any of those unhappy birds in the bag are far removed from their daily life and this explains largely Biden’s unmoving approval ratings. Yet the USA is bent on further sanctions, even threatening secondary sanctions against China and India, acting as if USA is isolated safe haven.
The die is cast. How would all the gain in dollars and cents balance out the loss of the perception of impartiality and moderation?
Let us travel back in time to see an example of the demise of an overreaching bully. Around the year 450 BCE, a struggle for power and influence took place within the vassal state of Jin in China. Though on the decline due to a weak central government and king, the Jin nation remained one of the five largest nations in mainland China toward the tail end of the Spring-Autumn period (770 BCE to 403BCE). Its domestic political scene was controlled and dictated by 4 clans. The most powerful of the four was the Zhi clan, which received regular tributes and concessions from the other three in exchange for its patronage.
During one squabble that ended in war, the Zhao clan refused to concede and subsequently came under siege from the Zhi army. The head of the Zhi family diverted water from a river and inundated the Zhao family lands and castle, announcing ex tempore to the muted horror of the other two Family leaders watching that he would unleash the same destruction on them should they oppose him in the future.
Recognizing the potential danger to them in the future, the two families on the sideline accepted a proposal from the Zhao family still under siege and formed a military alliance. Soon after, the three clans ambushed and slaughtered the Zhi forces and the entire Zhi clan. They followed up, some forty years later, by carving Jin nation into three parts and kick-started the Warring States period.
When the dominant superpower is weakened, or simply perceived to have declined in influence, all those who have previously submitted themselves either unwillingly or out of convenience would disobey, dither, or rebel. USA is entering such an era.