Wednesday, March 12, 2014

Ukraine is a test case for American power
If the Chinese leadership were ever to ‘do a Putin’, how could the US and allies react?
Ingram Pinn illustration©Ingram Pinn
A few weeks ago, even Europeans were paying little attention to events in Ukraine. Now the whole world is watching. This is because the Russian incursion into Ukraine is widely seen as a direct challenge to the US-led world order. If President Vladimir Putin gets away with it then other governments, such as China and Iran, may decide defying America is getting less risky.
Barack Obama’s opponents in Washington argue that the US president blinked over the use of force in Syria and has shown weakness in his dealings with Iran and China. Senator John McCain, Mr Obama’s defeated rival in 2008, claims that the Ukrainian crisis is “the ultimate result of a feckless foreign policy where nobody believes in America’s strength any more”.

But the “weak Obama” story misses the point. This is not the cold war, in which US presidents were called upon to show unshakeable resolve, in a global struggle with an implacable Soviet enemy. Instead, the Ukraine crisis is a vital test of the foreign-policy rules of a new era – the era of globalisation, when the west’s most dangerous rivals are also often its key trading partners.
The one continuity with the cold war is that in Ukraine in 2014, just as in Hungary in 1956, the US knows that it cannot use force. The fact that Mr Obama appears to have ruled out a military response is proof not that he is weak but that he is sane.
However, the defining difference with the crises of the cold war is that nowadays a confrontation with Russia, and potentially one day with China, involves economic relationships that did not exist when the world was divided into rival political and economic blocs. What is not yet clear is whether the west has worked out how to play the economic cards that globalisation has dealt it.

The problem is that, while western powers know they could damage Russia economically, they also know that in harming Russia they would also inflict plenty of collateral damage on their own economies. Are Europeans and Americans prepared to accept that?
Faith in the potential power of economic sanctions has been boosted by the startling damage they have done to Iran, cutting the country off from the global financial and trading system. However, the economic pressure on Iran worked partly because that country had nothing that the west could not find elsewhere: Iranian gas could, ironically enough, be replaced with Russian gas.

Russia is a much tougher challenge. Western policy makers know that it is impossible to inflict real damage without exposing their own vulnerabilities, whether it is German dependence on Russian gas, Britain’s role as a financial centre, or France’s €1.2bn contract to supply ships to the Russian navy. America does less trade with Russia – but also knows that US sanctions would be much less effective without European participation.
The struggle with Russia has global implications because, potentially, it is a test case for an even bigger confrontation that might one day be staged with China. As with Russia, the US finds itself in an increasingly adversarial political and strategic relationship with a country that is also vital to the global economy. If the Chinese leadership were ever to “do a Putin”, and use military force in support of its dispute with Japan over the Diaoyu-Senkaku Islands, how could the US and allies react? Unlike the Ukrainians, the Japanese have the protection of a security treaty with the US. But China, like Russia, might still calculate that America would not really risk going to war with another nuclear power – particularly over some uninhabited rocks on the other side of the globe.
Economic sanctions would then be considered. But the stakes would be even higher than with Russia, because China is now the second-largest economy in the world. In theory, the US could restrict the imports of Chinese goods – or even, in extremis, use the US navy to block China’s energy imports. But, like the Russians, the Chinese would have plenty of economic weapons with which to retaliate, from the disruption of the supply chains of American corporations to a refusal to buy US Treasury bills.

The knowledge that the Chinese – as well as the Iranians, Syrians and others – are watching increases the incentive for America to act over Ukraine. The “weak Obama” narrative, while unfair and oversimplified, has gained a certain currency around the world. If the president is seen to threaten “there will be costs” for Russia’s actions in Ukraine but then not to deliver, he looks foolish. America’s potential rivals might also conclude that global economic interdependence has not strengthened the west politically, but weakened it.
That could be right in the short term: we will see. In the long run, however, globalisation still works in favour of the west, even in political terms. It might have reduced the west’s ability to punish but it has increased its power to attract. Ultimately, the punishment that would most hurt Mr Putin is “losing” Ukraine. But, by occupying Crimea and threatening eastern Ukraine, Russia is likely to alienate the Ukrainian population permanently. At the same time, it is underlining the point that the west is more politically and economically attractive than the Russian alternative. Even if the Ukraine crisis makes the west look temporarily weak, the long-run trends are still much more favourable to the US and the EU than to Russia.

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