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In less than six months, the Russo-Ukrainian War has degenerated into one of the most devastating conflicts in modern history – the UN Human Rights Commissioner conservatively estimates more than 11,000 civilians have been killed or injured (“Ukraine: Civilian Casualty Update”) and more than 5.8 million refugees have fled the country (“Operational Data Portal”), while the UN Department of Operational Support estimates that, by mid-March, Ukraine had already sustained more than $100B in infrastructure damage, with numerous cities reduced to rubble (“Ukraine War: $100 Billion in Infrastructure Damage”). Battlefield losses range from 200 to 1,000 Ukrainian soldiers killed per day (Lawler; Shinkman).
Outside the theater of battle, economic output for Europe and Central Asia may contract by 4.1% in 2022 (“Europe and Central Asia Economic Update”), especially for European countries dependent on Russian oil and natural gas, and food shortages are forecasted for the Middle East, African and other countries dependent on Russian and Ukrainian grain exports that have been disrupted (“FAO and WFP Warn of Looming Widespread Food Crisis”; Harter).
Finally, the unanticipated impact of sanctions on Russia has exacerbated global inflation, which is approaching double digits in some EU countries (Caldara). These are the tangible and actualized ramifications of the war. But the more apocalyptic concerns are the possibilities that either the conflict will spiral out of control into a regional nuclear war (Nichols), or that one of Ukraine’s four nuclear power plants will sustain collateral damage from an errant artillery shell or missile. Until very recently, this latter risk was purely hypothetical. However, on August 5, 2022, the Zaporizhzhia nuclear power plant (NPP) facilities were hit by artillery fire( Zinets and Hunder).
By any measure, this is a truly horrific situation, and the question that must be asked is – how is it possible that this debacle was allowed to happen? Without an understanding of the conflict’s true cause, it will be difficult, if not impossible, to negotiate a settlement that is acceptable not only to Russia and Ukraine, but also to the many secondary parties that are using them as proxies, including the US, the North Atlantic Treaty Organization (NATO), and to a lesser degree, China (Brands).
While each of the stakeholders above has their own interpretation anchored in their respective agendas, this war didn’t just happen – it was entirely avoidable and is the direct consequence of US foreign policy that provoked Russia to respond to an existential threat to its sovereign integrity.
For the most part, western governments and their media counterparts insist that a military confrontation with Russia, especially with Vladimir Putin at its helm, was inevitable. The central theme proffered by the US government and its NATO allies is that Russia’s invasion of Ukraine was neither provoked nor justified, but rather, that Putin was seeking to restore the glory of the former Soviet Union, or at least to re-incorporate Ukraine back into the Russian Federation (Seddiq). They offer as evidence Russia’s participation in the 1990-92 Transnistria War in Moldova, its invasion of South Ossetia in 2008, its annexation of Crimea in 2014, and of course, a whole host of transgressions in its previous incarnation as the Soviet Union (“Russian Aggression in Eastern Europe”).
Taken out of context, each of these incidents was, in fact, a Russian military incursion into neutral countries, and one might reasonably conclude that, collectively or individually, they constitute a pattern of aggression that is a broader threat to Europe.
The West’s explanation for Russia’s initial invasion in February 2022 is a form of reverse causation that ignores a succession of provocative US and NATO policies dating back to 1990, which cumulatively threatened the physical security of the fledgling Russian republic, as well as ethnic Russians scattered throughout the region.
However, there was no single provocation, no single red line that was crossed. Rather, Russia’s decision to use military force was entwined in a complex web of events that included the collapse of the Soviet Union in 1991, the reunification of the former East and West German states, the eastward expansion of NATO into the former Warsaw Pact in the 1990s and early 2000s, the so-called 2014 Euromaidan Revolution in Ukraine and its aftermath, and finally, NATO’s decision in 2021 to accept Ukraine’s application for membership (in NATO). Any assessment of Putin’s actions must consider these events in the aggregate, and their relation one to the other.
The North Atlantic Treaty Organization (NATO) is a military alliance consisting of 30 nations, most of them European, founded in 1949 to deter Soviet expansionism, prevent the re-emergence of extremist regimes in post-WWII Europe, and more generally, halt the spread of communism (“A Short History of NATO”). With more than 3.5 million personnel, it is the world’s largest military organization and has operated in every corner of the world.
Relevant aspects of its structure and operating model include:
Notwithstanding the historical events that have exacerbated tensions between NATO and Russia, the very existence of NATO long after the demise of the Soviet Union poses a clear threat to Russia’s security:
The story of the Russo-Ukrainian War began with the collapse of the Soviet Union, a process that lasted from 1989 to 1992. It was an extremely delicate transition, as it involved one of the world’s two nuclear superpowers, which had large numbers of troops and weapons deployed throughout Eastern European countries, including the German Democratic Republic (GDR) and Ukraine. President H.W. Bush’s primary goal was to balance the competing tasks of promoting a transition to democracy for each new country while maintaining stability in the region (“Collapse of the Soviet Union”).
In February 1990, US and Soviet Union representatives met to discuss the sensitive issues of East and West Germany’s reunification and the future of NATO. The Soviet Union’s blessing in these matters was critical, as it maintained a large contingent of troops, as well as an arsenal of conventional and nuclear weapons within the GDR. As part of the negotiation, then-Secretary of State James Baker and Soviet Union President Mikhail Gorbachev verbally agreed to a quid pro quo arrangement whereby:
This quid pro quo agreement is the cornerstone for the argument that Russian leaders had, and still have, a legitimate basis to demand a buffer between Russia and NATO. Regardless of whether it was verbal or written, Gorbachev held up his end of the agreement by supporting German reunification and withdrawing Soviet forces from the former GDR.
It is important to understand the context of the Baker-Gorbachev meeting – like President Bush, Gorbachev and his colleagues were under intense pressure to secure any agreement that would ensure stability and security for the countries that emerged from the ashes of the Soviet Union. The quid pro quo agreement was hasty, informal, and imperfect, but it represented the best deal Gorbachev could achieve under the circumstances – he was dismantling the largest country in the world and was not entirely in control of that process.
Although not formally incorporated into the 1990 Treaty on the Final Settlement with Respect to Germany, also known as the Two Plus Four Agreement in reference to the six signatories (East and West Germany, plus the UK, US, Russia, and France), the Baker-Gorbachev meeting was fully documented by the Gorbachev Foundation. According to his notes: “Baker again assures Gorbachev that ‘neither the President nor I intend to extract any unilateral advantages from the processes taking place,’ and that the Americans understand the importance for the USSR and Europe of guarantees that ‘not an inch of NATO’s present military jurisdiction will spread in an eastern direction.’ Gorbachev responds by quoting Polish President (and former dictator) Jaruzelski: ‘that the presence of American and Soviet troops in Europe is an element of stability.’” (Gorbachev; “NATO Expansion: What Gorbachev Heard”).
Notwithstanding the quid pro quo agreement between Baker and Gorbachev, between 1999 and 2020, 14 additional countries, most of them from the former Eastern Bloc, joined NATO (see table 1). Notably, Ukraine was approved in 2021, and recently, Finland and Sweden have been approved for membership as well.
In 1993, Russian President Boris Yeltsin formally complained to President Clinton that the US and NATO had violated the spirit of the 1990 Two Plus Four Treaty (Wintour). And in a now-famous speech on February 10, 2007, President Putin likewise accused the West of reneging on its assurances not to expand NATO. In the so-called Munich Speech, Putin warned against further NATO expansion and the threat it posed to Russia (Putin). Contrary to the narrative maintained by the US, NATO, and most western media, this is not a contrived excuse Putin has concocted to justify Russia’s invasion of Ukraine. Both President Putin and Foreign Minister Sergey Lavrov have repeatedly warned that Ukraine’s membership in NATO would be a final red line that, when crossed by the West, would prompt Putin to abandon diplomatic options in favor of military ones (Isachenkov).
Ukraine had expressed interest in joining NATO as early as 1992. Despite Russia’s repeated warnings against this prospect, Ukraine formally submitted its application in 2008, which was tentatively approved by NATO at the 2008 Bucharest Summit, subject to Ukraine’s successful completion of NATO’s Membership Application Plan.
However, in 2010, Viktor Yanukovych, who was pro-Russian, was elected President of Ukraine and the NATO application was temporarily suspended. While this represented a victory for Russia, it was a blow to the West’s goal of splitting Ukraine away from Russian influence vis-à-vis NATO membership (Pifer).
With the removal of Yanukovych, Ukraine was once again in a position to complete the MAP for admission to NATO. In February 2019, the government amended the Constitution to comply with NATO requirements, and at the June 2021 Brussels Summit, NATO confirmed that Ukraine would be admitted as a member (“Brussels Summit Communiqué”).
Eight months later, Russia invaded Eastern Ukraine.
In 2013, President Yanukovych sparked both domestic and international outrage when he abandoned a free-trade agreement that had been offered by the EU and signed a competing agreement with Russia and the Eurasian Economic Union. This action led to protests in Kyiv, Ukraine’s capital, in November 2013, and subsequently to a revolution in February 2014 that resulted in Yanukovych fleeing the country. The 2014 “Euromaidan” revolution resulted in a Western-friendly regime replacing the Russian-friendly Yanukovych government (Kurkov). Not only did Russia lose political influence in Ukraine, but ethnic Russians, who make up 16% of the total Ukrainian population, became a disenfranchised minority.
In the aftermath of the revolution, more than 9,000 people were killed in what was a low-grade war in Southern and Eastern Ukraine, where 70% of ethnic Russians live (“Russians in Ukraine”). In Southern Ukraine, Russia took advantage of a unique set of circumstances (i.e., predominantly ethnic Russian population, proximity of its Black Sea fleet, and confined geography) to establish military control of the entire Crimean Peninsula (Kofman, et al.). In the eastern Donbas region, separatists declared independence from Kyiv. This region experienced the bulk of post-Maidan revolution conflict (Fischer, 8-13), and is likewise the nexus of the current Russo-Ukrainian War.
Russia likely believed the US had actively supported an illegal coup to replace Yanukovych with a western-friendly alternative, Petro Poroshenko. Such an assumption would not be unfounded – a team of US legislators visited Kyiv in the runup to the 2014 revolution to reiterate US opposition to the Yanukovych regime (McCann), and a leaked recording of a conversation between Assistant Secretary of State Victoria Nuland and another diplomat clearly revealed that the US was actively involved in the revolution (“Ukraine Crisis: Transcript of Leaked Nuland-Pyatt Call”).
The Russo-Ukrainian War is a devasting conflict that could have easily been avoided by simply acknowledging Russia’s legitimate right to territorial security. The US has had numerous opportunities in the past 30 years to reassure Russia, in both word and action, that the US and its allies would honor the quid pro quo agreement between Secretary of State Baker and President Gorbachev – or simply honor common sense when dealing with an adversary who controls more nuclear weapons and has more advanced delivery systems than the US (“Status of World Nuclear Forces”). But each time, the US has opted for a course of action that blatantly challenged Russian sovereignty. NATO’s admission of 14 additional countries into the alliance has been a constant reminder to Russia that its interests are neither represented nor respected by the US and the EU. Putin has declared on multiple occasions that Ukrainian admission to NATO would be a transgression unacceptable to Russia, but the West has underestimated his resolve.
As it turned out, Putin was not bluffing and now Ukrainians are paying for the US’ hubris.
This epilogue addresses recent events that dictate a very different interpretation of the war’s risks and possible consequences.
Media and government analysis of the Russo-Ukrainian War initially treated it as a conventional conflict, albeit one with horrific human and economic suffering. Most reporting has been based on the assumption that it will drag on as a long-term war of attrition. However, any assessment of the war must now address the August 5, 2022 artillery attack on the Zaporizhzhia nuclear power plant (NPP) in Southern Ukraine, the largest nuclear facility in Europe (Guenot). While the shelling did not score a direct hit on a nuclear reactor, support systems were reported to have been damaged (Update 88 – IAEA Direct General Statement).
Until the Russo-Ukrainian War, there has never been a conflict where NPPs have been intentionally incorporated into the theater of battle. However, in early March, Russian forces captured the Zaporizhzhia NPP and have occupied it ever since. The Ukrainian government has accused Russia of launching artillery strikes from within the facility’s perimeter (Yee). Until last week, a counter-attack on the nuclear facility has been considered unthinkable (for all the obvious reasons).
Neither the International Atomic Energy Agency (IAEA) nor any other third party has been able to conclusively determine who was responsible for the August 5 assault, as neither Russia nor Ukraine have agreed to let the IAEA perform an onsite inspection. Further complicating the matter, both Russia and Ukraine have accused each other of being the source of the shelling (Wright). Regardless of who is to blame, the key issue is that a nuclear facility was fired on with weapons that could have triggered a catastrophic event.
Since an attack against an NPP in an active war zone has become a realized risk, the world must consider the consequences if another attack damages or destroys the core reactors at Zaporizhzhia, or any other Ukrainian facility. And in fact, another attack occurred on August 6. Although built to stricter standards than the Chornobyl NPP, Zaporizhzhia was “not [built] to specifically withstand the impact of artillery weapons” (Guenot). The uncontrolled release of radiation from such an attack would have unpredictable consequences ( Thompson and Lyman). In the Chornobyl incident, the Soviets were able to limit collateral damage by encasing the damaged reactors in a concrete sarcophagus. However, one can assume such a complex operation may not be possible in an active war zone.
On August 6, Rafael Grossi, the IAEA Director General, issued the following statement expressing his concern over the situation at Zaporizhzhia: “any military action jeopardizing the safety of the ZNPP – Europe’s largest such plant – [is] completely unacceptable and must be avoided” (“Update 88 – IAEA Director General Statement”). He further noted that “[any] military activity – such as shelling – within, or in the vicinity of, a nuclear facility has the potential to cause an Unacceptable Radiological Consequence” (ibid). The human suffering and economic and infrastructure losses incurred to date in this conflict pale in comparison to an uncontrolled nuclear accident in Eastern Europe. The Russo-Ukrainian War is spiraling out of control in ways that have never been seen in modern warfare. The US, NATO, Russia, and Ukraine must act responsibly and bring the conflict to a swift end.
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As has happened so often with ill-advised US foreign policy in the recent past, the law of unintended consequences has prevailed in the Russo-Ukrainian War – not only have the sanctions failed spectacularly but the inability of the US to orchestrate a cohesive effort to force Putin’s hand in Ukraine suggests that the global balance of power is shifting.
Data Source – World Bank
Data Source – World Bank
Data Source – World Bank
Western media is starting to pay attention to China’s efforts to influence members of the so-called Global South, or more specifically the BRICS+ and Shanghai Cooperation Organization (with substantially overlapping membership), to denominate international trade in the Chinese Renminbi (RMB), aks the Chinese Yuan (CNY) and/or other local currencies. For very different reasons, Russia has promoted the idea of an entirely new currency for trade settlement. This is an accelerating trend among countries that have formed close economic and political relationships with China.
Coincident with the pivot to the RMB for trade settlement is a growing sentiment among the BRICS+ and SCO members that holding USD as their primary reserve currency poses a risk in the event the US declares sanctions and/or freezes a country’s assets, as happened with Russia and Belarus in 2022.
The combined effect of these two trends should be observable in a country’s US Treasuries holdings, and that’s exactly what we’re seeing in the chart above – China’s USD and Treasuries holdings peaked at $1.277 trillion in 2013 and declined by more than 32% in 2022.
Things change “slowly at first, then all at once”...
The so-called “de-dollarization” phenomenon is really a reflection of China’s ascendancy to superpower status – there can be no question it is the main driver behind the emergence of increasingly powerful inter-regional economic organizations, innovative trade agreements that circumvent the USD’s role as the world’s primary currency for trade settlement, and conceivably, the demise of the USD as the world’s de facto reserve currency. In this Part 1, we summarize the key factors that might trigger a future change in currency usage by China and its trading partners.
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As the multi-polar Global South movement accelerates, there is now a consensus that the time is right for strategic alternatives – banks, financial messaging systems, and possibly even a new currency. In this Part 03, we examine recent changes to the financial infrastructure proliferating amongst BRICS+ and SCO+ members.
While China is a driving force in the Global South’s pivot away from the USD, the rapid expansion of inter-regional economic organizations made up of Asian, Central Asian, Middle East, African and Latin American countries has accelerated the shift in political and economic power that threatens to upend more than 70 years of US dominance on the world stage.
The so-called “de-dollarization” phenomenon is really a reflection of China’s ascendancy to superpower status – there can be no question it is the main driver behind the emergence of increasingly powerful inter-regional economic organizations, innovative trade agreements that circumvent the USD’s role as the world’s primary currency for trade settlement, and conceivably, the demise of the USD as the world’s de facto reserve currency. In this Part 1, we summarize the key factors that might trigger a future change in currency usage by China and its trading partners.
Recent news coverage in western media suggests that US sanctions against China’s semiconductor sector have caught the CCP and mainland industry leaders off guard. In this Part 2 of our two-part series on China’s semiconductor market, we do a deep(er) dive on the mainland Chinese chip sector, examine the Chinese government’s strategic plan to decouple China’s reliance on western technology suppliers, and evaluate the outcomes of that strategy.
A recap of mainland China, APAC, and international news items – this week, we look at the markets’ initial reactions to US sanctions on the transfer of advanced semiconductor technology to China.
Recent news coverage in western media suggests that US sanctions against China’s semiconductor sector have caught the CCP and mainland industry leaders off guard. In this research article, we examine this issue in the context of the global supply chain to analyze the short-term and long-term impact of US sanctions and the implications for both China and key industry players.
As the multi-polar Global South movement accelerates, there is now a consensus that the time is right for strategic alternatives – banks, financial messaging systems, and possibly even a new currency. In this Part 03, we examine recent changes to the financial infrastructure proliferating amongst BRICS+ and SCO+ members.
There’s been a flurry of articles since chatGPT was first released that try to make sense of the burgeoning problem of plagiarism at colleges (and even high schools). But this is entirely the wrong issue…
While China is a driving force in the Global South’s pivot away from the USD, the rapid expansion of inter-regional economic organizations made up of Asian, Central Asian, Middle East, African and Latin American countries has accelerated the shift in political and economic power that threatens to upend more than 70 years of US dominance on the world stage.
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