What role is China playing? China could stop the war in a day. All China has to do is to offer Chinese soldiers as a buffer between Ukraine and Russia the same way that US soldiers separate North and South Korea. The fact that China hasn't made such an offer is telling of where China's real interest lies: in a prolonged war with no winners. First, i'll paraphrase what i wrote last year in Putin's invasions: China is benefiting geopolitically because, whatever the conclusion of this invasion, Russia will be poorer and weaker; Russia was already losing influence in Central Asia to China, and everywhere else in Asia, and this war will only accelerate the trend; China is benefiting economically from the crisis because now Russia has to sell its natural resources to China at a discounted price, and this could be the future of Russia; de facto, this war is creating an opportunity for China to couple its manufacturing economy with the vast natural resources of Siberia. Secondly, China makes money out of this war: Russia is selling China natural resources at a discounted price, and China is the main supplier to Europe of technology for renewable energy, so when Europe switched from Russian gas to renewables, China benefited. The war has been a boon to China's economy. It's even more than money itself: it's about expanding the market for China's technology, and imposing China's technological standards outside of China. Thirdly, China cannot allow Putin to fall. If Putin falls and is replaced by a pro-Western leader, the EU and NATO could suddenly reach the border with China. So far China is the winner of this war, but if it ends badly for Putin there's the risk that Russia becomes another "Western" country, and China would be completely surrounded by Western alliances: the Asian "tigers" (Japan, South Korea, Taiwan, Philippines) to the east, the "Quadrilateral Strategic Dialogue" (Japan, Australia, India) to the south, and AUKUS (Britain, Australia), all them piloted by the USA. The world sees Russia as its own power, but China sees Russia as a buffer between itself and the West. Viewed from another planet, Russia is not a superpower but simply a buffer between two rising superpowers: China and the European Union. The EU has been expanding dramatically in just 30 years. While this is considered not an imperial expansion, de facto it is: the EU is an empire that went from consisting of only six countries to being an empire of 447 million people (even after the defection of Britain) and ready to absorb Ukraine and Georgia. The EU is the only empire that has doubled its size in the last 50 years or so. China has not expanded, the USA has not expanded, the Russian empire has shrunk. Europe is the only empire that has expanded rapidly. Putin doesn't want to see a democratic and prosperous Ukraine on its border. Well, China doesn't want to see a democratic and prosperous Russia on its border. China sees a Russia hostile to the West as an asset, and a new regime in Moscow with pro-Western leanings would be a strategic blow to China. China borders many countries but none of them is democratic, except for the short border with India which is high on the Himalayas with virtually no interaction between the two sides. China is separated by the sea from the democracies of East Asia and by a giant land of dictatorships from the democracies of the European continent and by the Pacific Ocean from the democracies of the American continent. If Putin falls, the risk for China is colossal. For these reasons, China's motivation to end the war in Ukraine is scant. There used to be a "great game" between Britain and Russia to exert influence in Central Asia at the time when Britain ruled over India and when Russia was ruled by the czars. That "game" was won by the Soviet Union, which inglobated all of Central Asia except for East Turkestan (which was taken by Imperial China and is now China's Xinjiang province) and Tibet (which was taken by Mao's China in the 1950s). The war in Ukraine could be the prelude to a new "great game" between powers, but this time the "game" would be over control of Russia, the vast expanse between the West and China. Russia may becomes not a power trying to conquer another state but the battlefield in the new "great game" between the West and China. What if Russia broke up? Here is another way to look at it. Russia is buying weapons from Iran and North Korea... the president of Russia begs the president of China for help... Can you imagine the Soviet Union doing this? Stalin begging Mao? Or even the czars doing this? Nikolai II begging Guangxu? This is a very low point in Russian history. The Soviet Union was an industrial powerhouse: it was destroyed by Putin's policies, not by evil NATO. Putin has created the conditions for Russia to become a very minor nation, in fact a colony of someone else: either China or the West. Even before the invasion of Ukraine, Putin's Russia was simply a warehouse of natural resources and, unfortunately, a warehouse of nuclear weapons. Everything else more worthless, and is even less worthless after the invasion. In a not so distant future, China and Europe will compete over control of Russia's vast territory east of the Urals. In the next few decades, Russia may have a simple choice: become a colony of China or become a colony of Europe, depending on what happens after Putin. I'm afraid that Russia will never recover from this. I really feel sorry for Russia, which to me is still the country of some of my favorite writers, intellectuals and composers. Putin will be remembered by future Russians as the greatest geopolitical catastrophe of the 21st century. If Russia becomes a colony of China, then China will do to Russia precisely what Russia feared from NATO: China will make sure that Russia disintegrates so that China can more easily control and perhaps absorb Siberia. And that would also a big loss for Europe: instead of Russia becoming more integrated into Europe, and making Europe stronger (culturally and economically), we'll have Russia becoming less and less European. The Russian dilemma: go west or east? There is an interesting dilemma for Russia: become democratic and an ally of the West, or become a colony of China. The West will never make peace with Putin's Russia or with a similar authoritarian Russian leader. Therefore Putin's Russia has no choice but becoming a colony of China. Either it becomes democratic and a Western ally (i.e. Putin is replaced by a pro-Western leader), or it becomes China's colony. This dilemma would have materialized sooner or later, and the invasion of Ukraine simply made it happen sooner. This dilemma is the result of the exponential growth of China and of the resilience of Western civilization. Russia cannot compete with either, and Putin made Russia even weaker, both culturally and economically, even faster. What is Post-Soviet Russia? One fundamental problem of today's Russia is that it never acquired a post-Soviet identity. Russia right now is simply a nation with a strange autocratic and oligarchic regime that exports its natural resources in return for cash, and then invests the cash into wars. The Soviet Union had an identity (like it or not). Czarist Russia had an identity (like it or not). Post-Soviet Russia is still in search of an identity. That's probably a reason why Putin rules: there's no Russian who has an inspiring view of Russia's future. Putin has a vision, but his vision is to return to the past, to the medieval Christian order of the "Third Rome", which is more nostalgic than nationalistic. (See Putin's Radicalization and the Russian Jihad). The China problem in Europe. European countries have not antagonized China over the Taiwan issue the way the USA has, which is easy to explain: Taiwan is more strategic than Ukraine to the USA and much closer geographically to the USA, while the European countries care a lot more for Ukraine than for distant Taiwan. In theory, European countries should see China in a more favorable way than the USA does, and viceversa China should view Europe more favorably than it views the USA. However, the double whammy of the covid panemic and of China's support for Russia's invasion of Ukraine has convinced Europe to limit its dependence on China. Russia and China are now lumped together not only by the USA but also by most of Europe. In March 2023, the president of the European Commission, Ursula Von der Leyen, gave an important speech in Brussels: she called for a coherent security and economic policy toward China, and warned that the China's goal was to make “China less dependent on the world and the world more dependent on China.” Batteries are made of lithium, and she reminded her fellow Europeans that "we rely on one single supplier – China – for 97% of our lithium". It is probably worrying to the Chinese leadership that views of China in the European Union have changed so much since 2019 and now they almost coincide with the views in Washington. Until 2021, China's ascent in Europe seemed unstoppable: China was already the biggest exporters to the EU and in 2021 it overtook the USA as the EU's largest trade partner in terms of goods. Then came Putin's invasion of Ukraine, and the backlash against Russia. As China sided with Russia (or at least didn't forcefully criticize Russia), the backlash is slowly but steadily spreading to China. China is no longer afraid of US sanctions (it learned to cope with them) but it has to be of possible European sanctions. China may have refrained from sending weapons to Russia not because of the USA but because of Europe. After all, the USA sends weapons to Taiwan, so why shouldn't China send weapons to Russia? The reason is that China would suddenly start a proxy war with Europe (not just with the USA). Sanctions are working, and they are not. Both theories about the sanctions are right: the West is right to claim that the sanctions are working, and the Russians are right to claim that they are not working. The sanctions are working because they are inflicting long-term damage to Russia. The sanctions are not working because in the short term Russians (especially the rich ones) have found ways to work around them. A handful of countries have filled the gap, increasing imports from and/or exports to Russia; notably China, India and Turkey (a NATO member!). In 2021 the Institute of International Finance forecast that the Russian economy would shrink by 15% in 2022. It shrank by 3%. At the same time, Putin predicted that sanctions would hurt the West more than Russia, and that turned out to be false too: the European Union posted GDP growth of 3.5%, even outpacing the USA (2.1%) and China (3% if you believe official data, but probably even less). Inflation skyrocketed in the months after the invasion, but it is down to 7% in the EU and down to 5% in the USA (ironically, it is still out of control in Hungary, the one European country that is closer to Putin than to Ukraine). Russia has benefited from a black market that is much bigger and much better at self-organizing than the West perceived: natural resources exported by Russia have found countless alternative routes to reach customers all over the world, and key imports like US-made chips have found alternative routes to reach Russia from countries that obtain them legally from the USA. Saudi Arabia even acted to boost the price of oil, thereby increasing Russia's oil revenues, and India did not hesitate to become a major trading partner of Russia. Hopefully, the West and Ukraine will remember these two "traitors". Add Israel, which has done absolutely nothing to help Ukraine (despite the fact that Zelensky is a Jew) and refrained from enforcing strict economic sanctions on Russia. But the sanctions are causing structural damage. That's why Evan Gershkovich was arrested after the Wall Street Journal published his article on Russia's declining economy. Besides the direct impact on the Russian economy, the sanctions are also one of the reasons that convinced so many Russians to leave Russia. We don't know the exact numbers, but, since the invasion of Ukraine, about 155,000 Russians have received temporary residence permits in Europe and CentralAsia. Russia's Alfa Bank estimates that 1.5% of Russia's entire workforce left the country. Most of these emigrants are not poor paesants but educated and skilled professionals. This is another long-term structural change: Russian society is poorer, not richer, because of this "brain drain". Finally, the sanctions are taking a toll on Putin personally. His charisma is probably reaching an all-time low within Russia's ruling class, state-owned managers and assorted tycoons: they do know the long-term damage caused by the sanctions. The problem with sanctions is a different one, and may be appreciated only in the long term: the European sanctions will make Russia even more dependent on Chinese technology and everyday goods than it already is. A new pipeline ("Power of Siberia 2") will connect gas fields in Western Siberia (the Yamal Peninsula) to the Chinese market, and China is now able to demand that Russia will accept the Chinese currency for payment. In general, as China becomes Russia’s main trading partner for both exports and imports, more of this activity will be conducted in the Chinese currency (called yuan or renmimbi). The Chinese currency will become the de facto reserve currency for Russia. The Western sanctions are helping the renminbi to become the default regional currency of northern Eurasia. NATO is a clear winner. If China is the winner in terms of economic and political gains, NATO is the winner in military terms. First of all, its border with Russia has expanded dramatically with the integration of Finland (before the war, the USA could only dream of it) and that border will de facto further expand, as Ukraine will become a NATO proxy of one kind or another. Secondly, NATO weapons have proven to be much more effective than the entire Russian arsenal. This war in Ukraine has exposed the fragility of the Russian military and the excellence of the NATO military. In the hands of people who actually want to fight (the Ukrainians, not the Afghans), NATO weapons are technological marvels. And let's keep in mind that NATO has NOT given Ukraine its best fighter jets, helicopters, submarines, tanks, and so on. The USA is learning a lot about the future of warfare. Modern wars are fought "in the cloud" as much as on the battlefield. The USA is the one providing Ukraine with all the intelligence needed to fight the Russian troops. Computer-guided artillery and missiles are de facto controlled from US bases by US personnel: the USA is not the one that pulls the trigger, but it is the one that aims the gun correctly. So de facto Biden has pulled out of Afghanistan but has been pulled into Ukraine. One war that involved US soldiers has been replaced by a war that involves US computers. Germany. The most significant aspect of NATO's reaction is that Germany has chosen to go along. In 2003 Gerhard Schroeder did not follow George W Bush in Iraq and in 2011 Angela Merkel did not follow Barack Obama in Libya. In both cases the Germans were right to worry about both the justification and the outcome: both wars left behind a more unstable nation, and basically handed Iraq to Iran and Libya to warlords partly controlled by Russia and other Arab countries. This time Germany decided to go along, although the goal of NATO's intervention is at best ambiguous: does NATO really want Russia to withdraw from all of Ukraine, including Crimea? Are we really sure that the people of Crimea want to return to Ukraine? Do the Russian speaking Ukrainians want to be ruled by Kiev or Moscow? Nobody ever asked them in fair elections. Zelensky did well in the Russian-speaking regions of the country but their choice was between Zelensky and another Ukrainian politician, not between Zelensky and Putin. Eastern Europe is no longer just a footnore. Europe's determination to confront Russia is really the determination of Poland, Czechia and the Baltic states. The states that were occupied by the Soviet Union after World War II (with the exception of Hungary) are now the ones that really want Russia to lose in Ukraine, and not only to keep Russia far from their borders. They have real fear that Russia will not stop in Ukraine. The Russian Empire has no natural borders and its mission has always been to expand. This marks an important shift of political center of mass in Europe. What history teaches about Kiev. Putin has written lengthy and delirious essays on the history of Russia but he should read more carefully the history books: a thousand years ago it wasn't Russia that civilized Kiev, but Kiev that civilized Russia. Moscow was founded in 1147 by Kiev's grand prince Yuri Dolgoruki. It is Kiev that invaded Russia, not the other way around. Putin should be careful that history does not repeat itself, and Kiev invades Russia, reaches Moscow and overthrows him. Why can Russia bomb Ukraine but Ukraine cannot bomb Russia? The USA has repeatedly warned Ukraine not to attack Russian territory, but that is a bit strange. Imagine if France were invaded by Libya and the USA told France "do not bomb Libya". Who is the winner inside Russia?. We cannot rely on domestic polls but we can guess that so far the Russian public cannot be too proud of how the war is going, especially those who support it. So far the only politician who seems to have gained popularity within Russia (the only "winner) is Yevgeny Prigozhin, the founder and leader of the Wagner Group, which has become a national patriotic institution within Russia. We are not creating a winner within Russia who could be a desirable successor to Putin. Putin is known to be paranoid about NATO, but maybe Putin should be more wary of Yevgeny Prigozhin than of NATO. I doubt that NATO wants Putin to be eliminated, but Prigozhin might have ambitions and now has the military capability to stage a coup. Good luck, Putin. At the same time, the rise of the Wagner Group is reminiscent of what happened in the last years of the Roman Empire, when the Roman army was depending on mercenaries, many of whom weren't even ethnically Roman. The result was total collapse. One person who has benefited internationally from the decline of Putin's charisma is his prime minister, Mikhail Mishustin. Xi met with him in Moscow and Mishustin was invited to China. This is the man who actually runs Russia, and doesn't come with Putin's ideological, messianic, fanatical baggage. The West is not creating an alternative to Putin, but maybe China is. The one and only loser. So far Putin is the loser. He clearly miscalculated on just about everything: the West's determination, Ukraine's ability to defend itself, the will of the Ukrainian people, the support from China, the ability of his own military. Putin's goals (as he himself explained them at the beginning): Unite Ukraine (the cradle of Russian civilization) with his Russia (i.e. annex all of Ukraine) De-nazification of Ukraine (which really meant "regime change") De-militarization of Ukraine Stop NATO's eastward expansion Reverse the westernization of Ukraine In 2023 the situation is: Russia has occupied only a tiny slice of Ukraine, not much bigger than what it occupied before the war Zelensky is still the president of Ukraine Ukraine is more militarized than it has ever been in its history NATO is expanding to Sweden and Finland Ukraine is likely to join the European Union as soon as physically possible, and any peace agreement with Russia is likely to include NATO's protection of Ukraine. Negotiating?. Needless to say, history warns against negotiating with the aggressor. At one point the USA had more than 900 nuclear weapons in South Korea. In 1992 a treaty was signed with North Korea to denuclearize the Korean peninsula. More negotiations followed. The result is that 30 years later the USA has withdrawn all of its nuclear weapons while North Korea has made dozens of them... It's hard to believe that Putin would negotiate anything in good faith. The worst outcome of this war would be one that lays the foundations for another war, possibly a more destructive war. Putin got Abkhazia and South Ossetia out of his invasion of Georgia in 2008 and he got Crimea out of his invasion of Ukraine in 2014. If he gets the Donbass out of this new invasion of Ukraine, i don't see what will deter him from another invasion. In a sense, the West has actually been too nice to Putin. Russia recognized the independence of various separatist republics in Georgia, Ukraine and Moldova, but the West didn't recognize Chechnya's independence. Chechnya was forced to remain in the Russian federation after two bloody wars that killed up to 100,000 civilians. The West has never disputed the legitimacy of Kaliningrad (that Russia stole from Germany) and of Karelia (that Russia stole from Sweden and Finland), The fact that the West has accepted of all this has probably emboldened Putin. I personally think that Ukraine would do better without the Donbass and Crimea, that its "westernization" would accelerate without those Russophile regions, but does anybody seriously believe that, if Ukraine demilitarizes and does not join NATO and surrenders those Russophile regions, Putin will never hurt Ukraine again? I haven't heard any proposal that would guarantee a lasting peace (not just a temporary peace). Why haven't Chechnya and Syria revolted? Putin’s invasion has echoes of the tactics that Putin employed in two previous conflicts: Chechnya and Syria. In both cases Russia employed bombing and artillery to annihilate the resistance. In both cases Russian soldiers tortured and killed civilians who collaborated with the freedom fighters. One would expect that Chechens and Syrias take the first chance to rise up and take revenge on the Russians. That has not happened at all. Not a single Chechen and not a single Syrian has taken advantage of the war in Ukraine to start a new revolt against Russia. How Putin Could Win the War: Putin's Fifth Column in the USA. Putin has strong allies in the USA: Donald Trump, who has always served as Putin's Trojan horses in the US government, several Republican politicians of his "little Mussolini" faction, and several right-wing TV hosts (Tucker Carlson is the most famous). A prolonged conflict in Ukraine would further incite political and popular dissent in the USA. Nothing could help Putin more than a US pullout, and Putin has probably be counting on it from the beginning. Putin probably didn't expect the USA to be so determined to stand by Ukraine, and he may still be proven right if the "fifth column" prevails (on air or at the elections). Nuclear Proliferation is Inevitable. As i have written in Putin's invasions, in the long term one of the dreadful consequences of this war will be not on Ukraine or Russia or NATO but on the non-nuclear countries of the world: yet again, a nuclear power has invaded a country that gave up weapons of mass destruction. Ukraine gave up its nuclear weapons in 1994 in return for Russia to recognize and respect its borders. After just two decades, Russia took advantage and invaded Ukraine. Obviously, things would be very different if Ukraine had kept its nuclear weapons. Countries without nuclear weapons have a strong motivation to build them: it's the only deterrence that works. If you don't have nuclear weapons, you are a "sitting duck" for your nuclear neighbor, or at least a pawn in the geopolitical struggle of nuclear powers. If you have nuclear weapons, you are treated with respect (see how Trump treated the dictator of North Korea). Nuclear proliferation is inevitable. Any country that doesn't go nuclear is either delusional or suicidal. P.S. Economic notes: The cost of debt servicing is a short-term problem. Russia’s current account surplus has declined in the first seven months of 2023 to 25 billion dollars, down from 165 billion in the first seven months of 2022 (an 85% decline). The debt that Russia has to pay in the next 12 months is over 100 billion dollars, and because of the EU sanctions of June 2022 there is no possibility of refinancing. Putin has issued a presidential decree lifted all state guarantees for the private debt of both Russian corporations and Russian banks. Russia has also engineered a bailout of the Russian economy and this should lead to an inflation explosion at some point. These bailouts which are massive kept the economy going and they kept GDP going up. Western sanctions expelled Russia from the international payment system. Russia’s response has been to trade in bilateral currencies so their oil and gas trade with China and India is in remimbis and rupees. Russia can use the remimbis to buy Chinese goods but it’s hard to see what Russia can buy in rupees from India. So Russia’s current account surplus is not all in dollars: 38 billion dollars worth of rupees are sitting in Indian banks (and cannot be used to servicing the debt). Russia is basically selling oil for free to India. The sovereign fund in Russia is not what the Saudis or Norway call a “sovereign fund”: half of Russia’s sovereign fund is what Russia owns itself. Russia will need loans from China or the Emirates or in less than two years it will be technically bankrupt. Russia’s GDP keeps growing but the GDP calculated during the war is a different indicator than the GDP during peacetime. During wartime a defense-driven industry produces tanks and ammunitions, goods that survive a few days in the battlefield, so basically that GDP is just destruction of value although it adds up to GDP. But if one picks out how much households spent on consumer goods, this number is much more catastrophic than the GDP number. However, the contraction of GDP was certainly slower than most Westerners predicted. Firstly, geology is on Russia’s side (Russia is a net major net exporter of energy and of grain so whatever sanctions one imposes on Russia one cannot starve and darken Russia). Secondly, the West’s sanctions coincided with global recovery after the covid pandemic (oil prices there were 20 dollars per barrel in April 2020 and before the invasion they had already climbed to 80 dollars per barrel, and reached the peak of $100 in June 2022). Thirdly, globalization helped Russian traders evade most of the sanctions by repurchasing Western-banned items from third parties. Fourthly, oil sanctions on the European side were introduced effectively only in December 2022 and so Russia. Russia is has received a lot of dollars but it cannot spend them on imports because of Western sanctions and the exodus of Western corporations. This initially even helped the ruble appreciate but in the long run the effect will be the opposite. The scheme of capped and discounted Russian oil is a huge boon to the Indian economy because India’s refineries because India simply resells discounted Russian oil to Europe. The effect of the price cap on Russian oil is to take money from Russia and give it to poor countries. Russia’s discounted oil has a side-effect internally: their companies pay lower taxes, which means that Russia has already lost about 50 billion dollars worth of taxes. A long-term effect that is hard to quantify is the hemorrhaging of human capital and labor shortages. Human capital loss is the most serious challenge to the long-term trajectory of Russia’s economy. The sanctions are one of the reasons why Russian army has not won the war and the financial constraints are slowly strangling even its internal economy. More on Russia | More on Ukraine

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