Last week Putin began his blitzkrieg invasion of Ukraine. His war machine is using rockets and artillery against the much smaller, but more highly motivated, Ukrainian military.
In anticipation of economic sanctions, Putin built a war chest of USD630 Billion. That sounds like a lot of money, but wars have a funny way of outlasting the money available to pay for them. With the ruble no longer accepted anywhere in the west, and with Russia cut off from every advanced funds transfer system, he may not be able to use that money. But even if he could use it, would USD630 Billion be enough to make a difference for Putin?
For some historical context to answer to that question we can turn on the Wayback Machine and revisit an earlier conquest of a hostile little puppy state by a Great Empire with an overwhelming military machine: the Anglo-Boer War of 1899 to 1902 in South Africa.
In 1899, Great Britain was the preeminent economic and military power of the world. London had not yet ceded to New York the title of world financial center. The United States and Germany had been catching up to Great Britain both economically and militarily, and in the latter sphere Kaiser Wilhelm II was determined to challenge England for naval supremacy. But England was still heads above the rest, and when European nations considered important policy choices they gave a great deal of weight to how Whitehall might react to the change.
From a geographical perspective, Russia today sees Ukraine, part of its “near abroad,” as a territory that it must dominate, if not control. In 1899, South Africa held an importance for Great Britain similar to that of today’s Ukraine for Russia. South Africa was key to maintaining a reliable and defensible sea route between England and India. Cape Town was the re-coaling station for steamships on that route. And although by 1899 the Suez Canal had already been open for about thirty years, England could not rely on it: it was owned and operated by France. If, in a conflict, France were adverse to England (which had happened a few times in the past), access to India through the Suez Canal would be lost.
Natural resources ran a close second to global strategy concerns. Within the fifteen years preceding the outbreak of the Anglo-Boer War, gold had been discovered in the Transvaal, and diamonds in Witwatersrand, making South Africa one of the richest spots on the planet. South Africa had become the leading source of gold in the world. The world was on the gold standard then, and because London was the center of world finance, England had a keen interest in the volume of gold in circulation and held in government reserves. Too little gold would unduly constrain commercial and industrial access to capital, while too much would risk metallurgical inflation. Europe had endured that type of inflation back when Spain was its most powerful country. The massive quantities of gold and silver that Spain imported from its possessions in central and south America caused more than a few monetary problems.
Russia now claims that ethnic Russians are being mistreated by Ukraine’s government, which Russia views as illegitimate. By 1899, the Boers had declared the Transvaal and the Orange Free State to be independent republics not subject to rule from London. The many Englishmen extracting wealth from South Africa’s mines in these new Boer republics were second-class citizens, without voting and other civil rights.
Today Russia worries about the consequences of having a successful fledgling democracy like Ukraine on its doorstep because it might give Russian citizens the idea that democracy might be worth a try. Similarly, in 1899 Britain viewed the newly declared Boer republics as an affront to its sovereignty over South Africa, and it worried about the effect such new little breakaway states might have on its subjects in other British colonies around the world. Would they start breaking away too? This was an early domino theory.
Just like Putin’s propaganda about the benevolent nature of rule from Moscow, the British in 1899 thought that British rule was a divine gift to all the empire’s subjects, even if some of those subjects were trying to persuade the Brits to leave by shooting at them.
Russia looks down on the people of Ukraine in the same way that Great Britain looked down at the Boers. Both Russia and England thought they’d have a splendid little war, that it would be over quickly, and that they would easily squelch these little republics.
But every present-day Ukrainian, like every Boer back then, was armed to the teeth and ready to fight. Sure, the Boers were not a regular army with chains of command and discipline in the ranks, etc. But, like Ukrainians today, that strategic weakness becomes a tactical strength when the irregular force is highly motivated and fighting against an outside invader on its home turf. The Boers would attack some organized British column moving through the countryside, and then melt back into the wilderness. The Ukrainians have already ambushed some Russian motor convoys. The Russians will also have to fight Ukrainians in urban environments, which is a nightmare for an attacking force. Think Stalingrad.
So how does all this tie in to Putin’s USD630 Billion war chest?
Well, in October 1899, the government of Prime Minister Robert Cecil, Lord Salisbury, calculated that England’s fine little war against the Boers could be “put through” for 10 million British pounds.
By the time peace was finally negotiated in May 1902, the British government had spent more than 217 million British pounds on its war against the Boers. That was enough to bring down the government of Lord Salisbury, which was replaced by that of Arthur Balfour. To get an idea of how much money that was at the time, it represented 12% of the entire gross national product of the United Kingdom – then the world’s leading economy – for the preceding year.
Were we to apply that same percentage to the 2020 GDP of the United States, today’s leading economy, that would be 12% of USD20.94 Trillion, or about USD2.51 Trillion. That would be not quite twice Russia’s entire GDP of USD1.483 Trillion. So Tsar Vladimir could well find himself a bit short on funds as his Ukraine war drags on, and that’s without any consideration of what happens when no other country in the world accepts your currency.
If Putin had read up on the Anglo-Boer War, there’s no way to know whether he would have changed his mind about invading Ukraine. But at least he would have learned that it was possible, and even likely, that Russia would get Boer-ed.
I take the historic content as factual since I have no background on it. However, it reads as though the motivation to invade Ukraine is about conquering another or staving off a revolution in the home country. While Russia might have grand ideas, this probably has much more to do with money, as it always does. US doesn’t like competition for its captive customer base in the NATO/EU. And, likely, it wants to expand it in Ukraine and the rest. Think of all the debt US banks could be sold to the poor little Ukraine that last time voted against EU membership because economic relationship with Russia was better than the little amount the EU offered up as a compromise, maybe $650m vs $20b impact of joining. The prospect of democracy and greater autonomy is the selling point, but debt servitude on the backs the citizens is the endgame. Beyond Ukraine, couldn’t the rest of the EU be better off with business relationships with Russia?
Not saying Putin and Russia are great, but the US is the kettle in this case. Just my thoughts…
Ukraine has been Putin’s obsession now for almost twenty years. Putin’s stated view is that the greatest calamity of the 20th century was the dissolution of the old Soviet Union — not World War II, not the Holocaust, and not World War I, but the collapse of the Soviet empire. That’s the bedrock for all of Putin’s other policies and actions. He sees himself as a latter day Peter the Great (though Ivan the Terrible might be a better analog). If Ukraine “falls” to the West (Putin’s take on closer connections between Ukraine and the EU), then Russia’s borders will be brought back to where they were in Peter the Great’s time. His installation of Victor Yanukovich as Ukraine’s president was his strategy to prevent that, at least until 2014.
Russia’s oil and gas are its commodities most in demand in the EU, and eventually that trade will resume. But every western company that deals with Russia has to have some discount — or risk premium — that reflects the absence of the rule of law in Russia. If Putin gave the order to seize all the hard assets of western oil cos. in Russia, those firms would be SOL.
I think the big mistake that the US and the EU have made since Putin’s ascension to power is to believe that, well, if we just give him what he asks for — within reason, of course — then he won’t resort to using force. Putin is like Hitler in that respect. If you give him an inch, he’ll go for a foot, and no prior concession counts for anything. The use of force will always be a second, if not a first, option. He understands only the language of force.
The comment by “LT” is so off the wall that I suspect it was written by a Russian propagandist. Besides its illogical argument, the grammar used suggests it was written by someone whose native language is not English.
One tipoff is the phrase, “because economic relationship with Russia…,” which lacks use of the article, “the” following the word, “because.” This is a classic characteristic of most Slavic people speaking English. Being fluent in a Slavic language (second language learned as a child) I am sensitive to this idiosyncrasy.
Interesting, I attributed it to someone writing quickly. A few years ago I posted an entry on Turkey’s Recep Erdogan, and the next day the WordPress site showed that I’d had a reader from Turkey. No name was attached to it, but I suspected it was someone in Erdogan’s version of the East German Stasi combing the web for anything said about their boss. Autocrats’ egos are exquisitely sensitive.
Please excuse the grammar. Paul is indeed correct. Thinking out load on comments must be a bad idea. Apologies, RBorlick.
I only mean to note that it is about money. And, that which seems to turn the world, is much of a reason to provoke Putin. US has reasons to protect its interests. Ukraine has a reason to get the natural resources of the eastern portion of Ukraine which Zelensky has been hostile to. Just don’t think it’s just because Putin wants to return Russia to its legacy. I think Russia knows that is not a reachable goal.