Crimea Update 3/13/2014

Crimea Update:

 

Commentary: The protests in Eastern Ukraine (in Donetsk – where I was an election observer in 2004) have resulted in their first death. This lays the groundwork for Putin to potentially enter Eastern Ukraine using the same pretext he used to enter Crimea.

 

The West continues to underestimate Putin and misunderstand his objectives. For example, contrary to the commonly held assumption that Putin’s annexation of Crimea was just because of a new hostile government in Ukraine, some commentators have suggested that Putin had been planning to annex Crimea since the Georgian war in 2008 and the chaos gave him the opportunity. A plausible hypothesis with broad implications if true.

 

Since the West has signaled military options are off the table, I do not believe Putin will respond to soft power threats. In the most mild scenario economists are already projecting that Russia will enter into a recession this year and with more sanctions things may get worse. But this may not affect Putin as much as the West hopes. Putin controls the media in Russia, he will be able to spin the economic downturn in Russia to be the West’s fault. As mentioned in a previous update, his approval rate stands near 80%.

 

Putin will likely only stop if he is hit hard and left reeling – heavy sanctions now, with pressure off if he behaves. If the West does not have a strong response after Sunday’s referendum, expect Putin to move into Eastern Ukraine.

 

Updates:

  • Just for fun here is my scenario analysis for how this plays out:
  • 1) 2% Putin bows to Russian pressure and returns Crimea to Ukraine
  • 2) 38% Deescalation after Crimea votes to join Russia (with potential for Putin to move in over long term)
  • 3) 38% Putin makes annexation moves into Eastern Ukraine Short Term capitalizing on unrest
  • 4) 20% Limited War Scenario – Ukraine or Russia is aggressor – no NATO involvement
  • 5) 2% Large Scale War Scenario – Large Scale NATO involvement

On vacation for the next 10 days – updates will be intermittent. 

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