Santa Klaus on the North Pole? No is 'Putin'

                                                                       

In this photo taken on Wednesday, July 22, 2015, a portrait of Russian President Vladimir Putin, made by Ukrainian artist Dasha Marchenko out of cartridge cases, is seen in the artist's studio in Kiev, Ukraine.

Russia’s claim last week, using an extremely creative interpretation of international law, to exclusive economic rights to nearly half a million square miles of the Arctic Sea was certainly a head-scratcher. Sure, the territory is valuable due to its untapped reserves of fossil fuels and for the shipping lanes that will open as Arctic ice melts. But the claim is likely to ultimately be rejected by the United Nations.

Still, sparking a manufactured international crisis over the Arctic, one that pits Russia against the United States and Canada, might be just what the doctor ordered. Why? Because Vladimir Putin needs to make a new action movie to distract his people. The Kremlin leader is boxed in on so many fronts right now that he badly needs to change the subject.

  

For starters, Putin has no good options in eastern Ukraine. The old fantasies about seizing so-called Novorossiya, the strip of land from Kharkiv to Odessa, and establishing a land bridge to Crimea are dead. And the more modest goal of expanding the territory Russia and its proxies currently hold, perhaps with a push to Mariupol, is probably out of the question too. Either campaign would be costly in terms of blood and treasure, certainly spark a fresh round of sanctions, and involve occupying hostile territory. The uptick in fighting in the region this week reeks more of desperation than of a serious move to acquire more territory.

Russia could, of course, just annex the territories controlled by Moscow’s proxies; or it could freeze the conflict and establish a Russian protectorate there. But in this case, Moscow would be shouldered with the burden of financing an economically unproductive enclave whose infrastructure has been destroyed. And it would have to do so while Russia’s economy is sinking into an ever deeper recession. Moreover, Russia would lose any leverage over the remainder of Ukraine, which would quickly move toward the West. Sanctions would be continued, and possibly escalated.

The Kremlin’s preferred option, given these limitations is to force the territories back into Ukraine on Moscow’s terms—with broad autonomy and the ability to veto decisions by the Ukrainian government in Kiev. But Ukraine and the West appear unwilling to let this happen. Putin has boxed himself into a corner in Ukraine, and it is difficult to see how he is going to get out of the quagmire he has created.

It’s also difficult to imagine how Putin is going to extract himself from the quagmire he has created at home. The Kremlin leader is caught in a trap of his own making, between economic and political imperatives.

With the economy sinking deeper into recession, inflation spiking, oil prices dipping below $50 a barrel, and the ruble approaching the lows it reached earlier in the year, Putin badly needs sanctions eased to give the economy breathing space. But for that to happen, he would need to climb down in Ukraine—a move that would undermine the whole rationale for his rule and infuriate the nationalist supporters who make up his base.

“Putin’s return to the presidential seat heralded a rather sudden pivot towards a deep-seated domestic nationalism,” Moscow-based journalist Anna Arutunyan wrote recently. “Yet nationalism as a state policy and identity, initially implemented to shore up Kremlin power, now has the Kremlin itself trapped and threatened by forces that it initially nurtured, but can no longer fully control.”

A recent report in Novaya Gazeta, for example, claimed that the war in eastern Ukraine risks “metastasizing” as volunteer fighters return to Russia with large quantities of heavy weapons.

The essence of Putin’s energy woes are structural, not cyclical. In 2008, Gazprom had a market value of $360 billion; today it is worth just $55 billion.

During his first two terms in the Kremlin, Putin’s team—and most notably his chief political operator, Vladislav Surkov—very skillfully co-opted and manipulated both liberal and nationalist groups. That strategy caught up with Putin in 2011-12, when liberal disappointment resulted in the largest anti-Kremlin street protests Russia had seen since the breakup of the Soviet Union—leaving him no place else to turn but toward the nationalists.

“Given the higher prevalence of nationalist views—especially among members of the security services—a sense of betrayal could have much bigger consequences for the Kremlin than simply mass protests,” Arutunyan wrote.

And on top of it all, Putin has an energy problem. It’s not just that oil prices are low and will remain so for sometime, although that certainly is a problem. The real essence of Putin’s energy woes are structural, not cyclical. The global energy game is changing—and it is not changing in Moscow’s favor.

Shale, liquefied natural gas (LNG), and renewables—three areas where Russia is extremely weak—are ascendant and are dramatically altering the market. The potential for ending sanctions on Iran puts a powerful new player and competitor —the world’s third-largest natural-gas producer—in the game. And the Ukraine conflict and Moscow’s aggressive posture toward the West have led Europe—Russia’s most important market—to change its energy policies and seek alternative suppliers. Moreover, rather than looking the other way as the Russian state-owned energy company Gazprom repeatedly flouted the European Union's antitrust laws, Brussels is now cracking down. If one looks at Gazprom as a barometer of Russia’s fortunes, one statistic says it all: In 2008, the company had a market value of $360 billion; today it is worth just $55 billion.

According to Pew, only three countries in the world have a net positive opinion of Russia: China, Vietnam, and Ghana.

Energy has always been Putin’s trump card. He has been able to use it to bully former neighbors into submission and bribe and blackmail the Europeans. Now it’s a trump card he is losing fast.

But at least Putin is still winning the battle for hearts and minds, right? For more than a year, we’ve been hearing about how Russia’s slick propaganda machine is crushing the West in the information war.

Moscow has no doubt been very effective in mounting guerrilla-marketing campaigns aimed at sowing doubt and confusion in the West. And Russian officials have been skillful in manipulating and surreptitiously influencing media narratives on issues like the war in Ukraine and the downing of flight MH17.

But guess what? After spending nearly half a billion dollars to get its message out to the world, after unleashing armies of trolls to disrupt Western news sites, after launching the most widespread disinformation campaign since the end of the Cold War, after all this, Russia’s global image is in the toilet.

According to the Pew Research Center’s new report, only three countries in the world have a net positive opinion of Russia: China, Vietnam, and Ghana. Worldwide, a median of just 30 percent of respondents viewed Russia favorably. Writing in Bloomberg View, political commentator Leonid Bershidsky quipped that “the money might be spent just as wisely buying more $600,000 watches for Putin’s press secretary, Dmitry Peskov.”

And the numbers are dismal across the board. In Europe, just 26 percent view Russia favorably; in the Middle East, only 25 percent do. In Latin America, it’s only 29 percent. In the regions most favorably inclined toward Russia—Asia and Africa—it’s just 37 percent. And if Russia’s global image is bad, Putin’s is dismal. Worldwide, just 24 percent trust him. In Europe, just 15 percent do.

To be sure, Russia’s propaganda machine is working wonders at home, where Putin’s popularity is stratospheric despite a flailing economy. But one has to wonder how much longer that can last.

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This post appears courtesy of Radio Free Europe/Radio Liberty