For Vladimir Putin, Donald Trump is the gift that keeps on giving. Just as Moscow was tiring of the American president’s assurances that he could strong-arm Volodymyr Zelensky into accepting Russia’s terms for peace in Ukraine, the US-Israeli intervention in Iran caused a spike in the oil price. This has given Russia the chance to supply more oil to the global market and boost its flagging budget revenues.
On balance, the war in the Middle East is set to bring significant benefits for Russia, but they will not be enough to bring about Putin’s most urgent desire: the defeat of Ukraine. Of course, the Russian president can bask in the glory of Russia being recognized by the United States as an indispensable energy superpower. He can also relish the spectacle of Washington’s ties with Europe fraying further as the European allies refuse to heed Trump’s call to join the US in sending naval forces to keep the Strait of Hormuz open.
Then there is the added bonus that, facing competition from the US’s Middle Eastern allies, Ukraine will struggle to receive further deliveries of Patriot interceptor missiles. These have been its best defense against Russia’s devastating ballistic missile attacks on its critical infrastructure over the winter. The Kremlin can also see that it will be even harder for Ukraine’s European allies to keep supporting the country economically when they need to shield the vulnerable parts of their own populations from high energy prices.
Ukraine has proved to be a much tougher nut to crack than Putin ever imagined
The benefits of the war in Iran for the Russian economy are also undeniable. Before Trump’s intervention, Russian oil was trading at a substantial discount to global prices because of sanctions. That discount has quickly disappeared, and Russian oil is now being sold at higher prices than Middle Eastern oil. An increase of $10 per barrel in the price of export oil will additionally bring the Russian budget between $1.1 billion and $1.2 billion per month.
This is welcome news for the Kremlin. Falling revenues as a result of lower energy prices and an economic slowdown were becoming an increasing source of concern as the war in Ukraine dragged on and the long-term effects of western sanctions made themselves increasingly felt. Russia’s finance ministry had recently been preparing other government departments for a 10 percent budget cut for what it called euphemistically “non-sensitive” expenditure – in other words, excluding funding for the war in Ukraine and social spending.
Economic ties with China have played a vitally important role in stabilizing the Russian economy and keeping the military industry functioning. Yet China shows no interest in investing in Russia and has not replaced European finance, Russia’s traditional source of investment capital.
The Kremlin does, however, have reason to hope that the specter of prolonged instability in the Persian Gulf might encourage China to return to discussions with Russia on the Power of Siberia 2 pipeline project that have stalled. Exporting another 50 billion cubic meters of natural gas beyond the current annual volume of 38 billion cubic meters would partially compensate Russia’s lost sales to Europe as a result of its full-scale invasion of Ukraine. Last year, only 18 billion cubic meters of Russian gas were delivered to Europe compared to more than 180 billion in 2019.
Despite these noteworthy gains, though, the Kremlin understands that caution is appropriate for several reasons. First, the war in Iran may be over quickly and oil prices may fall. They may not fall to February’s levels, but the budgetary boost to the Kremlin’s coffers might be far more modest than hoped.
Secondly, a long war leading to oil prices over $120 would trigger a global recession and destroy demand, effectively wiping out price gains and reducing Russia’s importance for the US and China. With Trump distracted, there is also less chance that Putin can use him as a lever to persuade Volodymyr Zelensky to sue for peace.
Lastly is the fact that Ukraine continues to demonstrate a remarkable determination to fight. This is despite the terrible destruction inflicted on its energy infrastructure over the winter and the resulting considerable hardship for the population at large.
For well over a year, Putin has been claiming that the Russian army holds the strategic advantage along the entire front in Ukraine and that its advance is unstoppable. This has set expectations of victory that remain far from fulfilled. Despite the greater size of its economy and its population, Russia has so far not been able to bring its superior resources to bear or sap Ukraine’s will to fight.
On the battlefield, the Ukrainians have recently gained an advantage in low-altitude drone operations. They have increased their medium-range drone and missile strikes which are destroying Russian air defenses and preparations for the Russian army’s spring-summer offensive. The Ukrainians believe that disrupting the summer offensive can seriously damage the Russian army’s offensive capabilities and force Putin to stop the fighting.
The Ukrainian strategy is to thwart Moscow’s aggression by making the war futile. Strategists in Kyiv believe that the longer the relative stalemate continues, the more questions will be asked in Russia about the purpose of the war. At one level, the argument is convincing. In March 2022, Russia controlled 27 percent of Ukraine’s territory. Four years later, they hold just 19.4 percent. Last year, Putin’s army took 1.5 percent of Ukrainian territory at a cost of one million casualties. Yet, in Russia’s increasingly repressive environment, there are for now no obvious signs of disagreement with the Kremlin’s line.
Having survived the winter and resisted Trump’s pressure, the Ukrainians have felt more confident than in recent months about their ability to fight Russia to a standstill. The Ukrainian army retook significant amounts of territory in February, more than canceling out Moscow’s territorial gains the same month.
Kyiv knows that the Kremlin fears announcing another partial mobilization because it is the main source of anxiety for Russian society. When last attempted in the fall of 2022, it led to around one million Russians leaving the country, including many of its best and brightest.
Ukraine has proved to be a much tougher nut to crack than Putin ever imagined. True, he is now likely to profit from short-term budget relief and weakened Ukrainian air defenses while Kyiv seeks alternative ways to protect its skies in the absence of munitions diverted to American allies in the Middle East. But this will not be enough to tip the balance and ensure the defeat of Ukraine.
Trump’s misadventure in the Middle East resembles Putin’s in Ukraine. Poor planning and faulty assessments of the opponent invariably lead to disastrous outcomes. In both cases, no deus ex machina beckons.
Comments