Russia's
unemployment rate is at 4.9 percent, its lowest level in two decades and well below the pre-Crimean invasion level of 5.6 percent. Its
gross debt stands at an astonishingly low 13 percent of GDP. While the
inflation rate is up slightly from early 2014, it is also still well within the range since 2011 and remains at post-Cold War historic lows. Impact of sanctions nowhere to be found using these indicators.
Per capita GDP is
expected to rise this year, although at a slower rate than seen
in previous years. One must remember that Russia's growth rate in real per capita GDP has been slowing steadily since 2006/2007, and was only 1.1 percent in 2013. Consequently, if the growth rate slips lower this year, it will be nearly impossible to distinguish any impacts from sanctions out of this pre-existing trend, largely because the sanctions impacts will be negligible.
Some will point to statements made by Russian government officials that their economy is struggling under the sanctions. Did anyone think that storyline is to their advantage? The Russians excel at manipulating the propaganda circuits in the West, through both their allies and the useful idiots in the press -- which are very difficult to distinguish between. If Russia pretends it is wilting under sanctions via some official channels, all the while continuing its advance into eastern Europe, that removes some of the public pressure in the West for NATO to get serious with military action. In short, the tactic gives the eternal illusion that sanctions are working and will eventually achieve the desired reaction of forcing Russia to slow -- and ultimately reverse -- its expansionism. A classic geopolitical version of deceit analogous to rope-a-dope in boxing. And the West's leaders are the dopes.
The West is not the only economic game in town anymore
The current global economic system isn't tilted in the West's favor for sanctions to work. In the mid-1980s, the G7 made up
almost 60 percent of the global economy. It is now down to 37 percent and dropping like a rock. The EU comprises only 18 percent of the world's economy, and this slice of the pie is also getting much smaller very quickly. Emerging market and developing economies, which were 30 percent of the global economy in the 1980s, are now more than half the world's economy and rising fast. Russia has economic options.
The West is not the only economic game in town anymore, nor is it even a desirable one given our anemic rates of growth and massive debt burdens. Russia and China
signed a $400 billion gas deal earlier this year, and just broke ground on what these two nations have called the
world's largest construction project -- Gazprom's Power of Siberia pipeline. This is only the tip of the iceberg. The world is hungry for energy, and Russia has plenty of it to export. That equals hard cash.
Meanwhile,
some NATO allies "have been wary of doing anything that might endanger a 1997 agreement with Moscow under which NATO pledged not to base substantial forces in Eastern Europe on a permanent basis." It would seem that 1997 agreement with Russia was negated the moment Russia violated the 1994
Budapest Memorandum via invading the Crimea. In fact, one could reasonably construe that Russia's invasion of Ukraine, in clear and unequivocal violation of previous agreements it made with the West, has negated any and all other agreements (informal and formal) made between these two adversaries. The gloves can come off now without restrictions. If this bothers Russia, the solution is simple: Russia should remove all forces from Ukraine and return the Crimea to its rightful nation. This is highly unlikely to happen, and so the West should respond accordingly with the position that no valid treaties or other agreements remain as hindrance.
What should Ukraine's response be? The
Kyiv Post is
reporting that Ukraine's Foreign Minister Pavlo Klimkin has confirmed that the nation "has asked the signatory states of the 1994 Budapest Memorandum (the United States, the United Kingdom and Russia) to conduct consultations." Consultations? Over what? How to divide up an already partially conquered formerly sovereign nation? Ukraine's leadership remains weak, and unless the country wants to accept its apparently inevitable fate as either a Russian proxy state or a part of Russia itself, as the Crimea already is, it has only two real options at this point: (1) demand and receive full acceptance into NATO, thereafter calling on Article 5 protection to have NATO forces liberate eastern Ukraine and the Crimea; and/or (2) acquire and continue to develop nuclear weapons as a means of deterring future Russian aggression and as leverage to have Russia return the Crimea and remove all official and unofficial forces from the remainder of Ukraine.
The notion that Ukraine should acquire nuclear weapons arouses Pavlovian hysteria in the West's media now, but looking back two decades reveals some rather prescient viewpoints. Back in the summer of 1993, John Mearsheimer from the University of Chicago published a
piece in
Foreign Affairs entitled "The Case for a Ukrainian Nuclear Deterrent." Mearsheimer's article begins as follows:
"Most Western observers want Ukraine to rid itself of nuclear weapons as quickly as possible. In this view, articulated recently by President Bill Clinton, Europe would be more stable if Russia were to become 'the only nuclear-armed successor state to the Soviet Union.' The United States and its European allies have been pressing Ukraine to transfer all of the nuclear weapons on its territory to the Russians, who naturally think this is an excellent idea.
President Clinton is wrong. The conventional wisdom about Ukraine's nuclear weapons is wrong. In fact, as soon as it declared independence, Ukraine should have been quietly encouraged to fashion its own nuclear deterrent. Even now, pressing Ukraine to become a nonnuclear state is a mistake.
A nuclear Ukraine makes sense for two reasons. First, it is imperative to maintain peace between Russia and Ukraine. That means ensuring that the Russians, who have a history of bad relations with Ukraine, do not move to reconquer it. Ukraine cannot defend itself against a nuclear-armed Russia with conventional weapons, and no state, including the United States, is going to extend it a meaningful security guarantee. Ukrainian nuclear weapons are the only reliable deterrent to Russian aggression. If the U.S. aim is to enhance stability in Europe, the case against a nuclear-armed Ukraine is unpersuasive."
This reads as a near-perfect prediction of the future. The future we are now living in.
Mearsheimer goes on to acknowledge that "nuclear proliferation sometimes promotes peace. Overall, the best formula for maintaining stability in post-Cold War Europe is for all the great powers -- including Germany and Ukraine -- to have secure nuclear deterrents and for all the minor powers to be nonnuclear." Of course, Mearsheimer got some key points wrong, such as the belief that "there is a second reason to favor a Ukrainian nuclear deterrent: it is inevitable. Ukraine is likely to keep its nuclear weapons, regardless of what other states say and do." Sadly, Ukraine did indeed give up its nuclear weapons, to the great detriment of its national security. But Mearsheimer's arguments are more correct than not, and generally refute the hysterical domestic and international concerns about a nuclear Ukraine.
Martin DeWing, a Lieutenant Commander in the US Navy, reached similar conclusions during his 1993 M.A. thesis in National Security Affairs at the Naval Postgraduate School. Namely, that security assurances to Ukraine by the West were undoubtedly of little value, that Russia was likely to become aggressive towards Ukraine in the not-too-distant future, that Ukraine had the capacity to function as a responsible nuclear weapons state -- including the technical sophistication to enable construction, operation, and maintenance of the weapons themselves, and that the nation had a valid interest in retaining these weapons as part of its national defense posture.
The question for today's world is whether Ukraine can afford to reacquire and retain nuclear weapons. They cannot afford not to. Absent immediate full membership in NATO with a retroactive application of Article 5 to include all of Ukraine's territory before the Crimean invasion, security guarantees and other assurances from the West have proven useless to Ukraine. The simple fact is that it was invaded in early 2014 by Russia, and is progressively losing the war. Any international condemnations of a Ukrainian nuclear weapons capability and associated sanctions, diplomatic penalties, and the like are essentially irrelevant when compared to the likely loss of its nationhood. At least one Ukrainian politician, Pavlo Rizanenko of the Udar Party headed by Vitali Klitschko, is
thinking correctly on this front.
This leads us to a cost analysis. What would it cost Ukraine to buy a nuclear weapon and modest delivery vehicle on the international black market? Perhaps somewhere in the range of tens of millions of dollars, if we use more recent
cost estimates from the American weapons program. The trick is finding the supplier and getting the delivery before Russia finds out about the deal and launches a full pre-emptive invasion of the entire country. But with an annual GDP of US$178 billion, a gross debt of only 41 percent of GDP, and military expenditures already above US$5.3 billion per year, Ukraine is in a position to easily finance such a deal -- particularly given the likely cost-benefit analysis of providing a possible temporary deterrent to Moscow.
As to the source, that would be the real challenge. None of the Non-Proliferation Treaty (NPT) states would make such a sale, and the alliances between the non-NPT nuclear weapons states and the NPT members may preclude any non-NPT state sales to Ukraine. Ukraine would need to cultivate an attractive relationship with one of the non-NPT states in order to make any technology sales worth the possible blow back to the seller by one of the NPT members.
If Ukraine wants a longer-term indigenous nuclear weapons program, the investment will be high -- but potentially manageable. The
full-cost annual estimates for the nuclear weapons programs of Israel and Pakistan are about US$2 billion each, with North Korea's expenditures estimated at only US$700 million per year. Some
peg the cost of a domestic nuclear weapons program for Ukraine in the US$50 to $100 billion range just for building the enriched uranium and plutonium facilities, plus all the other weaponization and delivery system costs on top.
These high-end estimates seem far too conservative. A more realistic range may be an order of magnitude lower to get up to the level of producing a few functional devices that could be loaded -- however crudely -- onto a modest delivery vehicle. Remember that the short-term goal for Ukraine is preliminary deterrence, which comes by way of the ability to deliver a low-yield weapon to the vicinity of Moscow -- or at least the threat that such a task is possible. Nothing more, nothing less. To achieve that does not require an advanced NPT state type of program with high-yield warheads, pinpoint accuracy, and rapid launch capacity. On the other hand, it only requires the equivalent of a second-hand mobile Scud missile launcher with a basic kiloton range warhead. Think in terms of billions of dollars for this, not hundred of billions.
Once initial deterrence is attained, Ukraine can think about the longer-term goals. Getting reliable estimates on the true costs for a sustained nuclear weapons program will be exceedingly difficult, owing to the classified nature of the work and the inherent motivations by both government bureaucracies and anti-nuclear activists to artificially inflate costs. But given the protection they provide and the risks to Ukraine's very existence at present, the costs -- whatever they be -- appear to be a bargain.
As a Canadian of Ukrainian descent, I find it informative to watch how the national defense policies of Ukraine and Israel have -- unfortunately -- differed. Each country represents a people who have suffered the horrors of being targets of genocidal regimes during the last century, and both nations continue to be under existential threat up to the present and into the foreseeable future.
Yet Israelis have taken the protection of their nation-state and their people, not only domestically but also abroad, with the utmost seriousness of purpose and resolve. The residents of Ukraine have not. Israel provides a good model for Ukraine: build a strong and independent economy with equally strong political and military alliances; be relentless in protecting and preserving your people and their culture regardless of location; and spend whatever necessary to construct the conventional and nuclear military capability to reach these objectives. The survival of the Ukrainian people hangs in the balance.
