Is Russia’s Economic Pain Forcing Putin to Step Back on Ukraine?

Russian President’s Softened Rhetoric and Talks with Ukraine Suggest a Change

Are Western economic sanctions and falling oil prices starting to deter President Vladimir Putin from his larger ambitions in the Ukraine crisis? While Putin has vowed that Russia will overcome its economic isolation, ordinary Russians are feeling increased pain from an economy sliding into recession and a ruble that has lost 38 percent of its value this year.

Two clues have emerged in recent days to suggest that the Russian president may be dialing down his belligerence and might back away from the more far-reaching goals that analysts say the Kremlin is hoping to reach. One clue is a shift in the political arguments and codewords Putin used in his Dec. 4 state-of-the-nation speech. The other is a set of negotiations between Russia and Ukraine over arrangements for a more durable ceasefire than the ineffective one declared September 5.

Putin’s goals in Ukraine—and the other Soviet states that Moscow ruled until 1991—have not changed. He still aims to restore Russian dominance and counter the growth eastward of a Euro-Atlantic community that he describes as a threat. And while repeatedly has signaled his strategic aims, he remains tactically unpredictable, not least because of his career as a KGB officer taught him to be exactly that.

Still, the West should take note of the signs that Russia’s economic stall may be slowing Putin’s aggression:

Putin’s changed rhetoric. Analysts including Dmitri Trenin, head of the Carnegie Moscow Center, read Putin’s “Urbi et Orbi” speech December 4 as a very new downgrading of Moscow’s claims to be the rightful guardian of the wider “Russian world”—and a shift to a very new focus on Russia’s desperately needed economic development.

Trenin flags the conspicuous omission of familiar codewords in Putin’s address. These include the phrase “Russian world” (which Putin uses to justify Moscow’s right to “protect” Russians and Russian-speaking populations wherever they may be). Putin also dropped his frequent reference to “Novorossiya” (a label used to justify Moscow’s “recovery” of the eastern half of Ukraine because Catherine the Great once conquered this turf and gave it this name in the 18th century), and even to “Donbas.” This was a sign that he “doesn’t want to take full responsibility of the future of the so-called people’s republics in Donetsk and Luhansk,” according to Russian political analyst Stanislav Belkovsky.

With an emotional focus instead on the Russian-ness of Crimea (including its ancient site of Khersones, “a Temple Mount-like sacred place for Russians”), Putin’s speech justified what he already holds instead of what Russian or Russian proxy forces might yet try to seize. Ukrainian military analysts say those forces have been strengthened this fall in a way to permit an escalation and a widening of the war. But Trenin sees in Putin’s speech a subtle softening from his boast in August that Russian troops could take over Kyiv in two weeks if they wished.

Rather than Novorossiya, Putin stressed the need to rescue the Russian economy–a priority that, Trenin noted, the president has in the past year subordinated to ultranationalism, strength of political will, and the undoubted capacity of Russians for suffering.

The West’s sanctions and the drop this year by more than a third in oil prices has exposed “the Potemkin village” of Russian economic success under Putin, according to Standard Bank economist Timothy Ash. The ruble has crashed, the country is struggling to find any capital for investment, the economy is slumping into recession and inflation is likely to reach double digits, Ash wrote in an e-mailed analysis. “Russians are set to feel a lot poorer, with per capita GDP set to fall from over $14,000 last year to around $10,000” this year. This hurts Putin because middle class Russians “have got used to buying their flash cars [and] high-end apartments, and enjoying their holidays at swanky international resorts.” Not only do their rubles buy much less, but well-off Russians are wondering “how much longer their international credit cards will continue to work.”

Talks on the ceasefire: In high-level talks, Moscow and Kyiv are struggling to reach an effective ceasefire in Donbas. Trenin says this “ongoing private dialogue … indicate[s] that Russia is seeking to stabilize its ‘Ukrainian front'” instead of expanding its military control in eastern Ukraine. He describes Russia’s formula for this as “Crimea is ours; Eastern Ukraine is Ukrainian (on certain conditions).”

The talks are likely to continue later this week, according to Russian officials cited by state news media. And ground for conciliation was improved today when was improved today when Russia resumed supplying natural gas to Ukraine after a payment dispute in which Moscow cut off the supply in June. Ukrainian and Russian-backed forces declared a “”day of silence” for their weapons today and officials say they continue to work on implementing a demilitarized zone along the front lines between their forces. The failure to clear the buffer zone of artillery and other heavy weapons and the refusal by rebels to let unarmed observers from the Organization for Security and Cooperation in Europe monitor the ongoing flow of heavy weapons and military personnel over the Russia-controlled border into Ukraine have been conspicuous violations of the September 5 pact.

Is Putin Counting the Cost?

For months, Putin in public has mainly ignored the freezing of Western investment and other economic costs incurred by Moscow’s violation of international and treaty law in annexing Crimea and taking over parts of eastern Ukraine. He has failed to see the counterproductive impact of his aggression in its uniting of Ukrainians, including eastern Ukrainians, against Russian encroachment—and in rallying NATO to defend its members against daily Russian incursions of sovereign seas and airspace in the Baltics and elsewhere. He has dismissed the turmoil his actions have triggered in Chechnya and the unease in Kazakhstan and in Belarus. He has ignored the intangible social costs of driving many of the brightest young Russians abroad to pursue their careers and make their unique contributions to freer societies. Most poignantly, he has repressed the Committees of Soldiers’ Mothers for painstakingly identifying dead Russian soldiers from his undeclared war on Ukraine whom his army has buried secretly.

How significant are the hints that Vladimir Putin may at last be seeing the costs he has previously denied, and starting to cut his losses? Ash underscores Putin’s tactical skill at obfuscation, saying “one can never really know if he is actually planning to step back from the brink.”

Trenin is less pessimistic than a month ago, when he expected the “US-Russian crisis” to “become a permanent state.” While he still expects the conflict to continue for years, he now writes more hopefully that “even a partial accommodation in, with and over Ukraine would push back the danger of an all-out hot war in Europe’s east.”

Elizabeth Pond is a Berlin-based journalist and the author of books on Russia and Europe. A version of this essay also is posted at IP-Journal, the website of the German Council on Foreign Relations.

Image: Russian President Vladimir Putin gives his annual state of the nation speech to the Federal Assembly in the Kremlin’s St. George’s Hall. (Russian Presidential Press Office)