We were fortunate to be joined by Professor David Satter of the Hudson Institution for a 22V client webinar this morning. We have summarized below some of his points which we found helpful in thinking through the war in Ukraine and the world’s reaction to it follow. If you would like to listen to the full discussion, please find the replay HERE.
Professor Satter explained that there is enormous disparity in the distribution of wealth that exists in Russia – about 110 people control 35% of the country’s wealth. Sixty percent of that wealth is stashed in offshore accounts. Though the standard of living in Russia has improved since the transition from socialism to capitalism, it still has not been enough to eliminate poverty. Corruption in Russia remains rampant. Satter reminded us that the current Russia regime regards its own people as the enemy and came to power as an act of terror in 1999, even though not widely acknowledged.
Why Invade Ukraine Now?
President Putin was seeing that the nationalism and heightened mood after Russia’s annexation of Crimea was running out of steam. There was a growing unrest of the Russian population given their current living conditions. Putin feared a potential move of Ukraine towards the EU and peaceful internal demonstrations. he sought a distraction for the Russian people from the example of the Ukrainians and a repeat of the same success he achieved in Crimea. Recent international developments convinced him that he could make a move on Ukraine. Putin was emboldened by the events around the US withdrawal of Afghanistan and American slogans of “no endless wars.” He was convinced that the US would be powerless, and that NATO would be as well to rescue an allied government.
What is going wrong for Russia in the invasion?
Ukraine is too big of a country to easily pacify and would require an estimated 500,000 troops to control it. The worst-case scenario for Russia is that the outcome would look like Chechnya, where Russia troops would be confined to checkpoints and controlling territories. Russia clearly hoped that Russian nationalism would welcome the ability to restore its previous glory with the invasion of Ukraine. Russians have a tradition of underestimating their opponents. Satter noted that Putin thought Russian could subdue Chechnya in two months, but it took 18 months, and ended in Russia defeat.
External off Ramp vs Coup
Satter shared he believes that there needs to be a ban oil and gas exports from Russia but acknowledged that the costs to Western Europe and U.S. would be immense. He suggested that potential coup momentum exists. Russia has sent young boys into Ukraine, including from two call ups in June and December, so they have had minimal training. Soldiers Mothers in Russia was inundated with calls from worried parents, but their phones have since been cut off. According to Satter, even before invasion, top Russian generals in Putin’s inner circle were suggesting success was not imminent. If they made these statements, he believes it represents others at the highest level share this opinion as well.
What to keep an eye on?
Satter suggested that the Russian people may be potential allies against Putin’s “clique” which has no concern for their lives. The more internal backlash the more likely of a potential external off ramp. There are reports that Putin will declare martial law. He described a sense of paranoia that surrounds Putin and those around him. He stated that if they are feeling they are losing, anything is possible. Satter thinks that thermobaric bombs are more likely than nukes.
