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How should democracies trade with the enemy?

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Confronting Russia shows the tension between free trade and freedom

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Liberal governments need to find a new path that combines openness and security

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Soaring commodity prices, sweeping financial sanctions and the potential for a ban on energy imports from Russia after it invaded Ukraine are threatening to hobble a global economy still weakened by the Covid-19 pandemic. They are also complicating the task of central banks that had been preparing to phase out easy money.

On both sides of the Atlantic, inflation is at levels that haven't been seen for decades, and still rising. Global stock markets are wilting and the dollar is surging against other currencies as investors rush for the safety of U.S. assets.

Economists are increasingly warning of a possible bout of stagflation, particularly in Europe, a situation of high inflation and low growth that afflicted major economies during the 1970s. Back then, central banks responded to a surge in oil prices with easy-money policies that caused a wage-price spiral. Now, some central banks might give up on their plans to increase interest rates after keeping them down during the pandemic.

"It's going to be increasingly hard to ignore the comparisons to the 1970s as the commodity price action is increasingly resembling this," said Jim Reid, a strategist at Deutsche Bank.

At rate-setting meetings scheduled over the next week, the European Central Bank and U.S. Federal Reserve had been expected, until recently, to move rapidly to phase out easy-money policies. Both are now likely to be cautious, investors said, reflecting the new economic risks.

Fed Chairman Jerome Powell told congressional officials last week that Russia's invasion of Ukraine was likely to push up inflation, and said he would propose a quarter-percentage-point interest-rate increase at next week's meeting, effectively ending speculation over a larger, half-percentage-point increase.

"We need to be alert and nimble as we make decisions in what is quite a difficult environment," Mr. Powell said.

In Frankfurt, ECB officials have signaled they will move cautiously when they gather on Wednesday and Thursday, despite inflation rising to 5.8% in February, almost three times the ECB's 2% target. Investors now expect the ECB to increase its key interest rate by 0.1 percentage point by December, to minus 0.4%, rather than the 0.5 percentage point rate boost expected a month ago, according to financial market prices.

At the heart of the latest bout of uncertainty is Russia, the world's 11th-largest economy and a crucial energy supplier to much of Europe. Western nations have in recent days imposed the most sweeping economic sanctions against a major country in recent decades.

Christopher Smart, former U.S. Treasury/National Security Council special assistant to President Barack Obama, said the uncertainty among global businesses was reminiscent of that which accompanied the collapse of Lehman Brothers in September 2008.

"We've never seen anything this comprehensive, this powerful and this sudden imposed on an economy this size and important to the global economy," said Mr. Smart.

It is similar to the Lehman crisis "in the sense that there's going to be a lot of uncertainty about who has exposure to Russia, the indirect exposure," he said. "I may know that I'm not exposed, but I'm not really sure who among my clients may be exposed, who has investments that they're...going to have to write down."

Europe, with its geographical proximity to the conflict and heavy dependence on Russian energy, is potentially facing its third recession in two years. The U.S. economy is likely to fare better given its role as the world's top oil producer and still-sizable household savings, but even in the U.S., surging inflation is likely to weigh on consumer spending and growth.

The euro has fallen to $1.08, close to its five-year low against the dollar. The MSCI EMU, an index of large and midcap eurozone stocks, has fallen by about 20% since January, compared with a 10% decline for the S&P 500 index. Eurozone bank stocks have been hit particularly hard, even though their direct exposure to Russia is limited in most cases.

Even before the Ukraine conflict, Europe's economic recovery had less momentum than that of the U.S., partly because of lower government spending. Eurozone consumer spending and investment are both well below the path they were on before the pandemic, while the U.S. has returned to that path, according to ECB data.

Large emerging-market economies like Egypt are facing a food-security crisis amid surging prices and crimped supplies of Russian wheat and sunflower oil exports, according to the Middle East Institute, a Washington, D.C., think tank.

In Russia, economists predict an economic contraction of as much as 10%, which the nation hasn't experienced since the messy post-Soviet economic overhauls of the 1990s. The initial shock is likely to be followed by a prolonged period of low growth or stagnation as Russia is pushed into economic isolation, according to Capital Economics.

In China, where leaders are gathering to set out economic priorities for the coming year, growth is slowing and high energy costs are a mounting concern. The country is still implementing a zero-Covid-19 policy, and household consumption has been weak, while policy makers are cracking down on excesses in the housing market. President Xi Jinping said on Sunday that the country must ensure grain security and reliance on the domestic market to maintain production, state broadcaster CCTV reported.

The Ukraine war could reduce eurozone economic growth by as much as 2 percentage points, according to Capital Economics. Western sanctions on Russian businesses, companies voluntarily cutting ties and the deep recession in Russia will severely reduce eurozone exports to Russia.

The conflict is also putting fresh strains on stretched global supply chains and pushing up prices for Europe's export-focused manufacturing companies. Auto companies are throttling production amid a lack of wiring harnesses and other components. The war will also weigh on household spending through higher prices and greater uncertainty.

The fallout from the Ukraine conflict will affect Italy's growth in 2022, Prime Minister Mario Draghi told reporters on Monday. "These events will clearly influence economic growth this year," Mr. Draghi said after a meeting with European Commission President Ursula von der Leyen in Brussels.

While the ECB might decide to delay rate increases until 2023 and extend its bond-buying program, the Fed, the Bank of England and the Bank of Canada are likely to continue lifting rates, albeit at a slower pace than initially priced in before the conflict, said Iain Stealey, a portfolio manager at J.P. Morgan Asset Management in London.

A closely watched index of eurozone investor confidence plunged in March to a 17-month low, on par with the decline seen at the start of the Covid-19 pandemic in March 2020.

"We think higher commodity prices are here to stay and will lead to both higher inflation and lower growth," said Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International in London.

"This means the risk of outright recession in Europe is rising sharply, especially if physical commodity flows from Russia are substantially disrupted in the coming days and weeks."

Write to Tom Fairless at tom.fairless@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Global Economy Braces for Impact of Russia's War on Ukraine

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Soaring commodity prices, sweeping financial sanctions and the potential for a ban on energy imports from Russia after it invaded Ukraine are threatening to hobble a global economy still weakened by the Covid-19 pandemic. They are also complicating the task of central banks that had been preparing to phase out easy money.

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Seun Ayanleke

A global financial pariah’: how could central bank sanctions hobble Russia?
https://www.ft.com/content/1a9e01b1-03b0-428b-84d1-d8b9be334942

US in ‘active discussions’ over Russian oil import ban as Moscow targets Ukraine urban centres
https://www.ft.com/content/5f08826e-55ca-4e5b-a72c-52d034278576

The world this week Politics
Anonymous.The Economist; London Vol. 442, Iss. 9286,  (Mar 5, 2022): 7.
https://www.proquest.com/docview/2635852382/2C8433EEDE414A07PQ/3?accountid=10286

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The US and its western allies unveiled the most punitive penalties to date against Russia, the latest in a barrage of sanctions rolled out in response to the country's full-scale invasion of Ukraine.

The measures announced on Saturday take direct aim at Russia's central bank and seek to hobble the country's connectivity to the global financial system. They are intended to destabilise the Russian economy, building on sanctions imposed in recent days that target oligarchs as well as its banks, high-tech companies and aircraft makers.

"It's becoming increasingly clear that Russia is going the way of Cuba and Iran in terms of the significance of the sanctions being imposed," said Daniel Tannebaum, a former US Treasury sanctions official who is now a partner at Oliver Wyman, a consultancy.

A senior US administration official added that the new measures amount to Russia "getting kicked off the international financial system" and becoming a "global economic and financial pariah".

Here is how the new restrictions may work in practice.

What has been announced?

The US, UK, Canada, France, Germany, Italy and the European Commission on Saturday said they would block Russia's central bank from using its roughly $630bn stockpile of foreign reserves, harming its ability to shore up its economy and shield it from the costs associated with its attacks on Ukraine.

The sanctions were announced alongside plans to eject some Russian lenders from the Swift financial messaging system, which is used to communicate the details of trillions of dollars' worth of daily payments between banks.

Their primary aim is to hamper Russia's ability to circumvent the extensive sanctions that have been imposed on the country.

"It's a direct attempt to strike at Russia's ability to weather out sanctions, because the way they would weather out sanctions is by relying on their reserves," said Daniel Glaser, who served as assistant secretary for terrorist financing and financial crimes at the US Treasury department from 2011-17 and is now at K2 Integrity, a risk advisory firm.

"The less control they have over their reserves or the less they could do with their reserves, the more vulnerable to the second round of pressure they become," he added.

The US and its allies have not yet specified how the new regime against the Russian central bank would work. Glaser said the most "straightforward" US method would be to add it to the Treasury's "specially designated nationals" list - where assets of individuals and companies are blocked and US individuals and commercial banks are prohibited from dealing with them.

How damaging could these restrictions be for Russia?

The country's foreign exchange reserves are a pillar of its economic strength, and the western allies are attempting to undermine its ability to tap the stockpile. While Russia has aggressively pared down its dollar reserves, a notable chunk of its foreign exchange stockpile is held overseas in the US, Germany, France, UK, Austria and Japan.

If Russia were unable to sell large swaths of its foreign assets in exchange for local currency, it would be hamstrung in its ability to defend the rouble. Elina Ribakova, deputy chief economist for the Institute of International Finance, said imposing sanctions on the central bank could eventually lead to bank runs. Russians have already been flocking to banks to withdraw cash amid fears that the country's financial system will seize up.

"I have great confidence the effects of these measures will be felt immediately in Russian financial markets," a senior US official said. "Market participants understand that without Russia having the ability to defend its currency, it will go into freefall."

The country's record-high $19bn current account surplus, amassed on the back of its significant energy exports, will offer some protection. Russia continues to earn large amounts of foreign exchange via oil and gas sales, which should support the economy and help pay for imports. And the Russian central bank said it was propping up domestic lenders by offering them rouble liquidity.

How is Russia's central bank likely to react?

Lacking access to the reserves to guard against the rouble's collapse, the central bank would be left with only two clear options: raising interest rates, and capital controls.

The central bank may seek help from China, where more than 14 per cent of its foreign exchange reserves are held - the biggest single foreign share. It is not clear, however, whether China will want to provide it. While rushing to Russia's aid would undermine US dominance of global finance, Chinese banks could fear secondary sanctions that would cut off access to dollars and euros.

The central bank could also try to sell a chunk of its 2,299 tonnes of gold, the fifth largest stockpile in the world, to friendlier governments. This gold is held in locations in the Russian Federation, according to the central bank.

But Sergei Guriev, an economist at Sciences Po university in Paris, said selling those reserves would also be difficult.

"Whoever says it will be easy to sell gold or yuans must be kidding - Chinese state banks are already blocking financing of Russian oil sales. China is afraid and rightly so of secondary sanctions. This is really a game changer," he said.

How exposed are foreign investors?

The direct exposure of western financial institutions to Russia is modest, partly due to sanctions imposed after its 2014 annexation of Crimea, as well as the rise of more investor-friendly economies in Asia.

Foreign investors held $20bn of Russia's dollar debt and rouble-denominated bonds worth $37bn at the end of 2021, according to data from the Russian central bank.

Russian bonds comprise about 6 per cent of JPMorgan's widely tracked index of emerging market local currency debt, and roughly 3 per cent of the foreign currency version. Russia only accounts for 3.4 per cent of MSCI's widely tracked emerging markets equity index, less than Saudi Arabia or South Africa.

The measures could leave Russian securities listed on overseas markets out in the cold, as banks become reluctant to permit intermediate trading and investors grow wary of adding any exposure.

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The local impact will be severe, according to Peter Williams, an analyst at Evercore ISI. "Russia banks and financial markets will likely face substantial stresses when they open, given the memories of the 1990s," he said.

In terms of banks' exposure to Russia, the Bank for International Settlements estimates that foreign banks' claims on the country's banks stands at only $29.3bn, and overall claims on Russian entities amount to about $89bn, JPMorgan noted.

That said, Europe in particular is heavily exposed to Russia's enormous energy sector. "Russia accounts for well over 10 per cent of global oil and natural gas production and plays a significant role in European natural gas markets," the bank said in a report this weekend.

What about cutting Russian banks from Swift?

The proposal to sever a number of Russian banks from the Swift network aims to ensure those lenders are "disconnected from the international financial system", according to the allies.

This would come on top of existing, more targeted individual sanctions on Russian banks. The move follows pleas from Ukrainian president Volodymyr Zelensky for banks to be cut out of the network, making it more difficult for Russians to make cross-border transactions.

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Again, the details have not been set out, but officials say they do not want to undermine western economies' ability to purchase Russian fossil fuels, meaning there will be significant carve-outs from the Swift ban. One way of achieving this would be to permit energy-focused Russian banks to remain on the network.

Has the US done something like this in the past?

Yes. The US has frozen the central bank assets of hostile regimes including Venezuela, Iran and, more recently, Afghanistan. Iranian banks were also forced off the Swift network by President Donald Trump in 2018.

The Iranian sanctions could provide a blueprint for the Russian central bank ban. The sanctions, imposed by the Trump administration in 2019 after the relaxation of earlier measures imposed by President Barack Obama in 2012, froze central bank assets held in custodial accounts in the US.

In addition, the Iran sanctions stopped financial institutions from engaging in transactions on behalf of, or offering other services to, the central bank.

"I believe we are on a conveyor belt towards Iran-style sanctions, which included this action against their central bank," said Edward Fishman of the Center for a New American Security think-tank, before the latest moves were announced.
Reporting by Colby Smith, Claire Jones, Sam Fleming, Demetri Sevastopulo, Max Seddon, Tommy Stubbington and Robin Wigglesworth

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'A global financial pariah': how could central bank sanctions hobble Russia?

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The US and its western allies unveiled the most punitive penalties to date against Russia, the latest in a barrage of sanctions rolled out in response to the country's full-scale invasion of Ukraine. The measures announced on Saturday take direct aim at Russia's central bank and seek to hobble the country's connectivity to the global financial system.

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Samsung has suspended product shipments to Russia amid its invasion of Ukraine, per reports.

The company said in a statement that it was actively monitoring the situation.

Other tech giants like Apple and Microsoft have also halted sales and services in the country.

Samsung has announced that it is suspending product shipments to Russia, following the country's invasion of Ukraine, Bloomberg reported.

In a statement sent to media outlets, the company says: "We continue to actively monitor this complex situation to determine our next steps," per Reuters.

The South Korean firm joins other major companies such as Apple, Nike, and IKEA stopping sales and services in Russia, Insider reported.

A source told Bloomberg that it will affect all Samsung products, from chips to smartphones and consumer electronics. "Our thoughts are with everyone who has been impacted and our priority is to ensure the safety of all our employees and their families," the statement said.

Samsung did not immediately respond to Insider's request for comment, made outside of normal working hours.

On Friday, Ukraine's vice prime minister Mykhailo Fedorov wrote a letter to Samsung vice chairman Han Jong-hee to urge the company to temporarily stop supplying services and products to Russia.

In the letter, which he posted on his Twitter account, Fedorov said: "We believe that such actions will motivate the youth and active population of Russia to proactively stop the disgraceful military aggression."

He called for support, saying that "modern technology is perhaps the best answer to the tanks, multiple rocket launchers, and missiles targeting residential neighborhoods, kindergartens, and hospitals."

He added: "Stay with Ukraine and save millions of innocent lives!"

Per the report, the tech giant is also donating $6 million, including $1 million in consumer electronics products, to humanitarian efforts in Ukraine.

Non-Russian companies find it challenging to operate in the country due to the sanctions imposed by Western countries, according to Bloomberg. This includes the US banning transactions with the country's central bank.

Insider's Abby Wallace reported on Tuesday that the world's biggest shipping company is also taking a stand against Russia's invasion of Ukraine by suspending business in the region.

Meanwhile, Facebook pulled all ads in Russia and blocked all Russian advertisers globally, while a Moscow court fined Twitter for not taking down posts encouraging protests.

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Samsung stops shipping products to Russia amid its invasion of Ukraine, report says

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Samsung has suspended product shipments to Russia amid its invasion of Ukraine, per reports. The company said in a statement that it was actively monitoring the situation. Other tech giants like Apple and Microsoft have also halted sales and services in the country.

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5 Belgrave Square, a stucco-fronted mansion complete with pillared portico, is one of London's most exclusive addresses, overlooking leafy gardens and nestled between grand embassies and other private residences.

Once home to Sir Henry "Chips" Channon, a US-born Conservative MP whose diaries published during the 1960s were a source of scandal about British high society, in 2003 the Belgravia property, marketed for £25mn, became a symbol of a new era in UK prime real estate ownership.

It was bought for members of the family of Oleg Deripaska, the Russian oligarch, an early sign of a flood of Russian wealth into "Londongrad", as the UK capital soon became labelled.

Another prominent oligarch who invested in London the same year was Roman Abramovich, who bought Chelsea football club. This week, as pressure ratcheted up on Russian tycoons following Vladimir Putin's invasion of Ukraine, Abramovich put Chelsea up for sale.

Over the past two decades, London became one of the preferred investment locations - if not the favoured destination - for Russian oligarchs, as well a key financial centre for Russian companies, all encouraged by British governments of different political stripes.

But critics have dubbed it the "London laundromat": an apparatus that allowed billions of pounds - some of it obtained through illegal or questionable means - to be siphoned out of the Russian economy and into trophy assets in the UK.

Following Putin's full-blown war on Ukraine, Boris Johnson declared he wants to put that process into reverse, and impose punitive sanctions on individuals and companies with links to the Kremlin as well as crack down on money laundering.

But despite the bold rhetoric, it is not clear the Johnson government has either the political will or the tools to completely strip illicit money from the UK financial system.

The first wave of Russians to invest in UK real estate "was new money wanting very substantial properties", according to Andrew Langton, chair of London estate agent Aylesford International. "The properties on the wish list were the biggest and the best," he says.

The lack of UK rules requiring full disclosure of foreign owners of British property was an attraction for the Russian super-rich, who appreciated the privacy.

"There were no questions asked," says Charles McDowell, an estate agent who specialises in buying high-end London properties for clients. "If you came along with a photocopy of your passport, that was enough."

A 2006 judgment in the High Court in London involving Deripaska said he was the beneficial owner of 5 Belgrave Square.

But the title register for the property lists the proprietor as Ravellot Limited, a company registered in the British Virgin Islands. Deripaska's name does not appear on the title, although a spokesperson for him said members of his family own the house. She added Deripaska was not the beneficial owner.

Deripaska, founder of metals and hydropower company EN+, has been under US sanctions since 2018 as a result of his alleged close relationship with the Kremlin.

The spokesperson for Deripaska - who in 2019 described the US sanctions as being based on "filthy lies" - said his assets were acquired "legitimately and lawfully". "Allegations to the contrary are utterly baseless," she added.

Deripaska's spokesperson said prior to stepping down from his management position at EN+, he met many senior officials from the Kremlin and relevant Russian government departments. "He had ordinary links, just as any other industrialist of his scale would have in any country around the world," she added.

Transparency International, the anti-corruption campaign group, has identified £1.5bn worth of UK property - nearly 150 land titles - bought by Russians who have been accused of links to the Kremlin or corruption.

More than £1bn of those assets are held by companies based in tax havens, the majority in UK crown dependencies and overseas territories, which makes ownership difficult to identify.

In the heady days after the end of the cold war, when Moscow was introducing democracy and aggressively privatising much of its economy, London quickly signalled that it was open for Russian business.

A visa policy first introduced under the then Conservative prime minister John Major in 1994 and expanded under Gordon Brown's Labour government effectively sold British residency to overseas millionaires with little in the way of checks over where their money had been made.

"There was a 'blind faith period', where if you rocked up with the money then you pretty much got given a visa," says Tom Keatinge, an expert in finance and security at the Royal United Services Institute, a think-tank.

The City of London was also welcoming Russian companies. Close to 40 Russian companies have floated in London since 2005, according to FactSet. As well as EN+, these include state controlled Gazprom and Rosneft, two of Russia's leading energy companies. Almost 90 equity and debt capital markets deals involving Russian companies, raising $34bn, have been carried out in London since 2010, Dealogic data shows. The Russian government has also used London for sovereign debt issuance.

"The ease with which the Russian government was able to raise funds in London . . . raises serious questions about the government's commitment to combating Russian state aggression," the House of Commons foreign affairs select committee said in a 2018 report.

The committee pointed to the 2017 flotation in London of EN+, then controlled by Deripaska, as an example of the "contradictions inherent in UK government policy toward Russia" given the company's connections to sanctioned entities. It added Deripaska's "proximity to the Kremlin was well known".

Russia's super-rich have tried to cultivate influential friends in the UK. Lord Peter Mandelson, a former senior minister in Tony Blair's government who went on to be European trade commissioner, spent three nights on Deripaska's luxury yacht off Corfu in 2008. He denied doing any favours for the tycoon but critics said his stay highlighted how close some British politicians were to the Russian elite.

A 2020 report by the UK parliament's intelligence and security committee noted that a number of British politicians had business interests linked to Russia, or worked directly for major companies with ties to the Russian state. Former Tory minister Lord Greg Barker, for example, joined EN+ as chair when it floated in London.

The report also highlighted a supporting cast of advisers, including bankers, lawyers and estate agents, who were on hand to provide their services to oligarchs and Russian companies.

It said that Russian money had been put to use in "extending patronage and building influence across a wide sphere of the British establishment - public relations firms, charities, political interests, academia and cultural institutions were all willing beneficiaries of Russian money".

The report found that certain members of the Russian elite who were closely linked to Putin had donated to UK political parties and had "a public profile which positions them to assist Russian influence operations".

Labour estimates that since Johnson became prime minister £1.9mn has been given to the Conservative party, or individual Tory MPs' constituency associations, by donors who have either "made money from Russia or have alleged links to the Putin regime". The opposition party is calling for the money to be returned.

Foreign secretary Liz Truss said last month that all Tory donors had been fully vetted. "I think it's very important we don't conflate people with Russian heritage and Russian backgrounds with people who are close to the Putin regime," she added.

Governments led by former prime ministers David Cameron and Theresa May came under intense pressure to crackdown on Londongrad after Putin annexed Crimea in 2014, and following the poisoning of former Russian double agent Sergei Skripal in Salisbury in 2018, which the UK blamed on the Kremlin.

But successive governments have faced a consistent problem: how to distinguish between the Russians whose money has been made in a legitimate manner, and others.

Some high profile UK attempts to expose ownership of illegal riches have fallen short. In 2018, the May government introduced a measure called unexplained wealth orders which, where certain criteria are met, require the owner of an asset worth more than £50,000 to explain how they could afford it. But, so far, only four orders have been issued by the courts.

The Johnson government is now seeking to remove barriers to the use of these orders through reform contained in a much delayed economic crime bill, which is broadly aimed at bolstering attempts to root out illicit money.

"There is no place for dirty money in the UK . . . those backing Putin have been put on notice: there will be nowhere to hide your ill-gotten gains," said Johnson.

The legislation will establish a register that will require anonymous foreign owners of British property to reveal their identities, although lawyers and campaigners said there appeared to be loopholes.

The government has meanwhile abolished the so-called golden visas awarded to overseas millionaires, but an official review launched in 2018 into how more than 700 Russians obtained these permits has yet to be published.

Critics say the UK sanctions against those deemed to prop up Putin following his invasion of Ukraine are far less comprehensive than those imposed by other western countries.

A senior Russian executive likened the UK sanctions to "Colombia, Mexico, Argentina, and Afghanistan cutting Russia out of the drug trade", saying they were weaker than those unveiled by the US and EU.

Among several prominent oligarchs, the EU this week targeted Mikhail Fridman, co-founder of London-based private equity firm LetterOne. He has rejected as "false" EU claims that he is an "enabler" of Putin's inner circle.

Johnson has announced a 10-point package of measures against oligarchs, Russian banks and other companies, but the UK has not sanctioned Fridman or Deripaska.

Labour has demanded to know why Abramovich has not been sanctioned, after the opposition party said in parliament he is a "person of interest" to the UK government because of links to the Russian state.

City executives are now scrambling to figure out their full exposure to Russia, with key advisory firms starting to cut their links. Certain law firms and other professional services groups ended working for Russian government entities.

The London Stock Exchange has meanwhile suspended trading in 36 companies with close ties to Russia, including EN+ and Gazprom.

But some bankers doubt the UK government will have the stomach to fully exclude Russian businesses from London's capital markets, and question whether British law enforcement agencies will have the financial resources to pursue oligarchs' highly sophisticated ownership structures that often run through offshore companies.

Chris Bryant, a former Labour minister and member of the Commons foreign affairs committee, claims the government's latest moves to crack down on Putin's regime and money laundering in London may be too late to reverse the tide.

"Someone is dragging their heels somewhere and it's hard not to think they are just too close to the Russians," he adds.

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The 'London laundromat': will Britain wean itself off Russian money?

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5 Belgrave Square, a stucco-fronted mansion complete with pillared portico, is one of London's most exclusive addresses, overlooking leafy gardens and nestled between grand embassies and other private residences.

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https://www.businesstoday.in/latest/world/story/russia-ukraine-crisis-heres-how-it-can-impact-geopolitics-and-global-economy-323453-2022-02-22

https://www.epw.in/journal/2014/11/editorials/ukrainian-crisis.html

https://www.e-ir.info/2015/04/09/an-unnecessary-war-the-geopolitical-roots-of-the-ukraine-crisis/

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The butterfly effect. The Russian-Ukraine war has impact on global prices of crude oil, wheat and other commodities. I call this the geopolitical butterfly effect which has impacted the economic state globally.

-Dhara

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News, analysis and comment from the Financial Times, the worldʼs leading global business publication

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Factors contributing to situation in Ukraine 

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Factors contributing to situation in Ukraine 

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1. Ukraine: Conflict at the Crossroads of Europe and Russia
https://www.cfr.org/backgrounder/ukraine-conflict-crossroads-europe-and-russia

2.Geopolitical situation of Ukraine and its importance
Bálint Störk
National University of Public Service, Budapest, Hungary, Faculty of Military Sciences and Officer Training, Military Leadership (BSc), Reconnaissance Specialisation

3. https://www.fpri.org/article/2014/04/geopolitical-implications-of-the-ukraine-crisis/

Factors contributing to the current situation in Ukraine
• Geography( 2nd largest in europe which dominates east european plain)
• The place that connects the west especially eu with russia
• Deep reated traditional and cultural link with russia yet Ukraine's alliances with NATO, western institutions and EU
• Russias quest for power, dominance and control
• After math of cold war and russia and ukrains involvement in soviet union.
• Socio political unrest internally and externally since 2014 Crimea situation
• Internal rivelry bwn catholic(15%) and orthodox christian(70%)
• Ukraine being a key location when it comes to regional stability.
• Russias situation and place when it comes to association with USA and European union which is at a very low point

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https://www.dw.com/en/ukraine-crisis-a-geopolitical-chance-for-the-eu/a-60411886

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You could say that this week has not reflected well on the European Union's political power.

As the Russian troop buildup on the eastern Ukrainian border continues to stoke fears of a Russian invasion, Europe did not even get a spot at the negotiating table.

On Monday, senior diplomats from the United States and Russia met in Geneva for crunch talks, without any EU officials.

When the talks were moved to Brussels on Wednesday, the setting of choice was not the European Council bringing together European heads of state, but rather NATO headquarters.

On Thursday, negotiations are continuing at the permanent council of the Organization for Security and Cooperation in Europe in Vienna.

Russia is accused of having massed 100,000 combat-ready troops at the Ukrainian border; the West is asking these troops to be withdrawn.

Moscow is demanding that NATO pull its forces out of former Soviet countries, end any eastern expansion and rule out Ukraine joining the alliance. The US calls this unrealistic, while underlining that talks should continue.

And all along, it seems the EU is watching from afar.

'Feels like post-World War II'

EU member states' foreign ministers are coming together on Thursday and Friday in the northwestern French city of Brest. A French diplomatic source told journalists ahead of the informal meeting that the EU was "deeply implicated in ongoing discussions on Ukraine."

"We are coordinating closely with the US and being debriefed by them," the source said.

But observers can only marvel at how little of a role the EU seems to be playing.

"This feels like the post-World War II period when the Americans and Russians were deciding on Europe's future - especially as this conflict is taking place right at Europe's doorstep," Jacques Rupnik, head of research at the Paris-based Sciences Po University, told DW.

"The current situation is underlining how complicated it'll be for French President Emmanuel Macron to give Europe ' strategic autonomy' as he declared," he added.

France will be holding its six-month EU presidency until June. Pro-European Macron had said during a press conference in December that he wanted to make "Europe powerful in the world, completely sovereign, free in its choices and the master of its destiny."

The president announced an ambitious agenda, including a reform of the Schengen area with tighter control of Europe's external borders; stronger police cooperation; a new economic deal for the African continent; and a common European defense policy.

Macron has big plans for France's EU presidency, particularly in the field of security

EU unity crucial for 'hard power'

With relation to such ambitions, Rupnik agrees the EU needs to get out of its role of an exclusively economic and commercial "soft power" and also become a geopolitical "hard power."

But for that, consensus is crucial. And divisions amongst European partners start at the most basic points.

"EU countries have diverging threat perceptions - Italy won't mind the security situation in the east as much as Poland, for example," Rupnik explained.

He added that after the tenure of former US President Donald Trump, member states assessed the US position differently. Trump had been the first US president to call the European Union a "foe."

Brendan Simms, Director of the Center for Geopolitics at Cambridge University in the United Kingdom, agrees that unity is the essential ingredient for Europe to become a hard power.

"The EU needs to turn into one state, with one president and one parliament, to become an important geopolitical player," he told DW. "That's how countries like the US, with its 50 member states, managed to bundle their forces."

But he conceded that such complete unity is unlikely to occur. "Alas, that means the EU won't be able to do what it wants, as its power will remain atomized," he said.

Shortcomings as an opportunity

But there might be a silver lining, reckoned Sophie Pornschlegel, a senior policy analyst at the Brussels-based think tank European Policy Center.

"The current situation goes to show that the US doesn't hesitate to bypass Europe - even regarding a conflict happening in one of the EU's neighboring countries."

And that increases the urgency to come up with a common EU stance on defense, she believes.

"Europe now has to acknowledge that the world is dominated by competing powers such as China and the US, and that we have to act if we don't want to be completely overrun by things in the future," Pornschlegel said.

She's hoping the EU will find more common ground in March, when it's set to agree on the so-called strategic compass, a white paper on EU defense policy that Macron is pushing.

The meeting in Brest could partly pave the way for such an agreement.

French researcher Rupnik, meanwhile, predicts the EU's 27 will move closer together - at least when it comes to the matter of immigration.

"There now seems to be a consensus that we Europeans have to take back control over our external borders if the union is to persist - otherwise, nationalism will rise further," he concluded.

"In that sense, the EU could indeed form a more unified block in the future."

What next for migrants stuck in Belarus?

EU seeking repatriations

A spokesperson for the EU's foreign policy chief said the bloc was in contact with the Belarusian Foreign Ministry to clarify how migrants could be repatriated to their countries of origin. In the last two weeks, two groups of Iraqis - some 600 people - already returned to Iraq's northern Kurdish-run region on special flights. Some spoke of abuse suffered at the hands of Belarusian authorities.

Author: Philipp Böll

Edited by: Sonya Diehn

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Ukraine crisis: A geopolitical chance for the EU? | DW | 13.01.2022

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You could say that this week has not reflected well on the European Union's political power. As the Russian troop buildup on the eastern Ukrainian border continues to stoke fears of a Russian invasion, Europe did not even get a spot at the negotiating table.

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Deadly violence engulfed Kyiv's Maidan, or Independence Square, in 2014 after the Ukrainian government, under pressure from Moscow, abandoned an agreement to strengthen ties with the European Union. Russia remains opposed to Ukraine's move toward the West, and appears poised to invade its neighbor.

Photograph by Jeff J. Mitchell, Getty Images

As the threat of a Russian invasion of Ukraine continues to dominate the news, a look back at the long, intertwined history of the contentious neighbours reveals how the stage was set for today's conflict.

The two countries' shared heritage goes back more than a thousand years to a time when Kyiv, now Ukraine's capital, was at the centre of the first Slavic state, Kyivan Rus, the birthplace of both Ukraine and Russia. In A.D. 988 Vladimir I, the pagan prince of Novgorod and grand prince of Kyiv, accepted the Orthodox Christian faith and was baptised in the Crimean city of Chersonesus. From that moment on, Russian leader Vladimir Putin recently declared, "Russians and Ukrainians are one people, a single whole."

A 19th-century painting depicts Vladimir I, ruler of Kyivan Rus-the birthplace of both Ukraine and Russia-choosing Orthodox Christianity as the new state religion in A.D. 988.

Photograph by Artwork courtesy of Museum of the History of Religion via Bridgeman Images

Yet over the past 10 centuries, Ukraine has repeatedly been carved up by competing powers. Mongol warriors from the east conquered Kyivan Rus in the 13th century. In the 16th century Polish and Lithuanian armies invaded from the west. In the 17th century, war between the Polish-Lithuanian Commonwealth and the Tsardom of Russia brought lands to the east of the Dnieper River under Russian imperial control. The east became known as "Left Bank" Ukraine; lands to the west of the Dnieper, or "Right Bank," were ruled by Poland.

More than a century later, in 1793, right bank (western) Ukraine was annexed by the Russian Empire. Over the years that followed, a policy known as Russification banned the use and study of the Ukrainian language, and people were pressured to convert to the Russian Orthodox faith.

Ukraine suffered some of its greatest traumas during the 20th century. After the communist revolution of 1917, Ukraine was one of the many countries to fight a brutal civil war before being fully absorbed into the Soviet Union in 1922. In the early 1930s, to force peasants to join collective farms, Soviet leader Joseph Stalin orchestrated a famine that resulted in the starvation and death of millions of Ukrainians. Afterward, Stalin imported large numbers of Russians and other Soviet citizens-many with no ability to speak Ukrainian and with few ties to the region-to help repopulate the east.

Soviet leader Joseph Stalin's brutal campaign to collectivize agriculture led to widespread famine in the 1930s that killed millions of Ukrainians. In the wake of the famine-which came to be known as the Holodomor, meaning "death by hunger"-settlers from Russia were brought in to repopulate the countryside.

Photograph by Photograph via AP

A speaker addresses a crowd in Chernivtsi, a city in western Ukraine, during "reunification days" in November 1939. Just weeks before, German and Soviet troops had invaded Poland and made western Ukraine-previously under Polish control-part of Soviet Ukraine.

Photograph by Photographed by Anatoliy Garanin, Sputnik/AP

These legacies of history created lasting fault lines. Because eastern Ukraine came under Russian rule much earlier than western Ukraine, people in the east have stronger ties to Russia and have been more likely to support Russian-leaning leaders. Western Ukraine, by contrast, spent centuries under the shifting control of European powers such as Poland and the Austro-Hungarian Empire-one reason Ukrainians in the west have tended to support more Western-leaning politicians. The eastern population tends to be more Russian-speaking and Orthodox, while parts of the west are more Ukrainian-speaking and Catholic.

With the collapse of the Soviet Union in 1991, Ukraine became an independent nation. But uniting the country proved a difficult task. For one, "the sense of Ukrainian nationalism is not as deep in the east as it is in west," says former ambassador to Ukraine Steven Pifer. The transition to democracy and capitalism was painful and chaotic, and many Ukrainians, especially in the east, longed for the relative stability of earlier eras.

Pedestrians in Odessa, a port city on the Black Sea in southern Ukraine, walk past a sign heralding Soviet themes of power and justice in 1991-the year Ukraine became an independent nation and the USSR was dissolved.

Photograph by Bertrand Desprez, Agence VU/Redux

"The biggest divide after all these factors is between those who view the Russian imperial and Soviet rule more sympathetically versus those who see them as a tragedy," says Adrian Karatnycky, a Ukraine expert and former fellow at the Atlantic Council of the United States. These fissures were laid bare during the 2004 Orange Revolution, in which thousands of Ukrainians marched to support greater integration with Europe.

On ecological maps you can even see the divide between the southern and eastern parts of Ukraine-known as the steppes-with their fertile farming soil and the northern and western regions, which are more forested, says Serhii Plokhii, a history professor at Harvard and director of its Ukrainian Research Institute. He says a map depicting the demarcations between the steppe and the forest, a diagonal line between east and west, bears a "striking resemblance" to political maps of Ukrainian presidential elections in 2004 and 2010.

Crimea was occupied and annexed by Russia in 2014, followed shortly after by a separatist uprising in the eastern Ukrainian region of Donbas that resulted in the declaration of the Russian-backed People's Republics of Luhansk and Donetsk. Today, Russian troops are again massed on Ukraine's borders, fault lines that reflect the regions tumultuous history.

Curtains of blue and yellow-the colors of the Ukrainian flag-backdrop a young dancer in Kyiv. Most Ukrainians born after 1991-the "Born Free Generation"-are eager for their nation to escape Russia's shadow and join Europe and the West.

Photograph by Agnieszka Rayss, Redux

Portions of this article were originally published during the 2014 Crimean crisis. It has been updated to reflect current events.

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Russia and Ukraine: the tangled history that connects-and divides-them

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Deadly violence engulfed Kyiv's Maidan, or Independence Square, in 2014 after the Ukrainian government, under pressure from Moscow, abandoned an agreement to strengthen ties with the European Union. Russia remains opposed to Ukraine's move toward the West, and appears poised to invade its neighbor. Photograph by Jeff J.

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What are the factors that are contributing to the current geopolitical crisis in Ukraine? Please feel free to express your views and share the relevant material.

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What are the factors that are contributing to the current geopolitical crisis in Ukraine? Please feel free to express your views and share the relevant material.

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ess than a week into the war, it seems increasingly likely that Vladimir Putin is heading towards a historic defeat. He may win all the battles but still lose the war. Putin's dream of rebuilding the Russian empire has always rested on the lie that Ukraine isn't a real nation, that Ukrainians aren't a real people, and that the inhabitants of Kyiv, Kharkiv and Lviv yearn for Moscow's rule. That's a complete lie - Ukraine is a nation with more than a thousand years of history, and Kyiv was already a major metropolis when Moscow was not even a village. But the Russian despot has told his lie so many times that he apparently believes it himself.

When planning his invasion of Ukraine, Putin could count on many known facts. He knew that militarily Russia dwarfs Ukraine. He knew that Nato would not send troops to help Ukraine. He knew that European dependence on Russian oil and gas would make countries like Germany hesitate about imposing stiff sanctions. Based on these known facts, his plan was to hit Ukraine hard and fast, decapitate its government, establish a puppet regime in Kyiv, and ride out the western sanctions.

But there was one big unknown about this plan. As the Americans learned in Iraq and the Soviets learned in Afghanistan, it is much easier to conquer a country than to hold it. Putin knew he had the power to conquer Ukraine. But would the Ukrainian people just accept Moscow's puppet regime? Putin gambled that they would. After all, as he repeatedly explained to anyone willing to listen, Ukraine isn't a real nation, and the Ukrainians aren't a real people. In 2014, people in Crimea hardly resisted the Russian invaders. Why should 2022 be any different?

With each passing day, it is becoming clearer that Putin's gamble is failing. The Ukrainian people are resisting with all their heart, winning the admiration of the entire world - and winning the war. Many dark days lie ahead. The Russians may still conquer the whole of Ukraine. But to win the war, the Russians would have to hold Ukraine, and they can do that only if the Ukrainian people let them. This seems increasingly unlikely to happen.

Each Russian tank destroyed and each Russian soldier killed increases the Ukrainians' courage to resist. And each Ukrainian killed deepens the Ukrainians' hatred of the invaders. Hatred is the ugliest of emotions. But for oppressed nations, hatred is a hidden treasure. Buried deep in the heart, it can sustain resistance for generations. To reestablish the Russian empire, Putin needs a relatively bloodless victory that will lead to a relatively hateless occupation. By spilling more and more Ukrainian blood, Putin is making sure his dream will never be realised. It won't be Mikhail Gorbachev's name written on the death certificate of the Russian empire: it will be Putin's. Gorbachev left Russians and Ukrainians feeling like siblings; Putin has turned them into enemies, and has ensured that the Ukrainian nation will henceforth define itself in opposition to Russia.

Nations are ultimately built on stories. Each passing day adds more stories that Ukrainians will tell not only in the dark days ahead, but in the decades and generations to come. The president who refused to flee the capital, telling the US that he needs ammunition, not a ride; the soldiers from Snake Island who told a Russian warship to "go fuck yourself"; the civilians who tried to stop Russian tanks by sitting in their path. This is the stuff nations are built from. In the long run, these stories count for more than tanks.

The Russian despot should know this as well as anyone. As a child, he grew up on a diet of stories about German atrocities and Russian bravery in the siege of Leningrad. He is now producing similar stories, but casting himself in the role of Hitler.

The stories of Ukrainian bravery give resolve not only to the Ukrainians, but to the whole world. They give courage to the governments of European nations, to the US administration, and even to the oppressed citizens of Russia. If Ukrainians dare to stop a tank with their bare hands, the German government can dare to supply them with some anti-tank missiles, the US government can dare to cut Russia off Swift, and Russian citizens can dare to demonstrate their opposition to this senseless war.

We can all be inspired to dare to do something, whether it is make a donation, welcome refugees, or help with the struggle online. The war in Ukraine will shape the future of the entire world. If tyranny and aggression are allowed to win, we will all suffer the consequences. There is no point to remain just observers. It's time to stand up and be counted.

Unfortunately, this war is likely to be long-lasting. Taking different forms, it may well continue for years. But the most important issue has already been decided. The last few days have proved to the entire world that Ukraine is a very real nation, that Ukrainians are a very real people, and that they definitely don't want to live under a new Russian empire. The main question left open is how long it will take for this message to penetrate the Kremlin's thick walls.

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Why Vladimir Putin has already lost this war | Yuval Noah Harari

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ess than a week into the war, it seems increasingly likely that Vladimir Putin is heading towards a historic defeat. He may win all the battles but still lose the war. Putin's dream of rebuilding the Russian empire has always rested on the lie that Ukraine isn't a real nation, that Ukrainians aren't a real people, and that the inhabitants of Kyiv, Kharkiv and Lviv yearn for Moscow's rule.

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Public discussion on Ukraine is all about confrontation. But do we know where we are going? In my life, I have seen four wars begun with great enthusiasm and public support, all of which we did not know how to end and from three of which we withdrew unilaterally. The test of policy is how it ends, not how it begins.

Far too often the Ukrainian issue is posed as a showdown: whether Ukraine joins the East or the West. But if Ukraine is to survive and thrive, it must not be either side's outpost against the other - it should function as a bridge between them.

Russia must accept that to try to force Ukraine into a satellite status, and thereby move Russia's borders again, would doom Moscow to repeat its history of self-fulfilling cycles of reciprocal pressures with Europe and the United States.

The West must understand that, to Russia, Ukraine can never be just a foreign country. Russian history began in what was called Kievan-Rus. The Russian religion spread from there. Ukraine has been part of Russia for centuries, and their histories were intertwined before then. Some of the most important battles for Russian freedom, starting with the Battle of Poltava in 1709 , were fought on Ukrainian soil. The Black Sea Fleet - Russia's means of projecting power in the Mediterranean - is based by long-term lease in Sevastopol, in Crimea. Even such famed dissidents as Aleksandr Solzhenitsyn and Joseph Brodsky insisted that Ukraine was an integral part of Russian history and, indeed, of Russia.

The European Union must recognize that its bureaucratic dilatoriness and subordination of the strategic element to domestic politics in negotiating Ukraine's relationship to Europe contributed to turning a negotiation into a crisis. Foreign policy is the art of establishing priorities.

The Ukrainians are the decisive element. They live in a country with a complex history and a polyglot composition. The Western part was incorporated into the Soviet Union in 1939, when Stalin and Hitler divided up the spoils. Crimea, 60 percent of whose population is Russian, became part of Ukraine only in 1954 , when Nikita Khrushchev, a Ukrainian by birth, awarded it as part of the 300th-year celebration of a Russian agreement with the Cossacks. The west is largely Catholic; the east largely Russian Orthodox. The west speaks Ukrainian; the east speaks mostly Russian. Any attempt by one wing of Ukraine to dominate the other - as has been the pattern - would lead eventually to civil war or breakup. To treat Ukraine as part of an East-West confrontation would scuttle for decades any prospect to bring Russia and the West - especially Russia and Europe - into a cooperative international system.

Ukraine has been independent for only 23 years; it had previously been under some kind of foreign rule since the 14th century. Not surprisingly, its leaders have not learned the art of compromise, even less of historical perspective. The politics of post-independence Ukraine clearly demonstrate that the root of the problem lies in efforts by Ukrainian politicians to impose their will on recalcitrant parts of the country, first by one faction, then by the other. That is the essence of the conflict between Viktor Yanukovych and his principal political rival, Yulia Tymoshenko. They represent the two wings of Ukraine and have not been willing to share power. A wise U.S. policy toward Ukraine would seek a way for the two parts of the country to cooperate with each other. We should seek reconciliation, not the domination of a faction.

Russia and the West, and least of all the various factions in Ukraine, have not acted on this principle. Each has made the situation worse. Russia would not be able to impose a military solution without isolating itself at a time when many of its borders are already precarious. For the West, the demonization of Vladimir Putin is not a policy; it is an alibi for the absence of one.

Putin should come to realize that, whatever his grievances, a policy of military impositions would produce another Cold War. For its part, the United States needs to avoid treating Russia as an aberrant to be patiently taught rules of conduct established by Washington. Putin is a serious strategist - on the premises of Russian history. Understanding U.S. values and psychology are not his strong suits. Nor has understanding Russian history and psychology been a strong point of U.S. policymakers.

Leaders of all sides should return to examining outcomes, not compete in posturing. Here is my notion of an outcome compatible with the values and security interests of all sides:

1. Ukraine should have the right to choose freely its economic and political associations, including with Europe.

2. Ukraine should not join NATO, a position I took seven years ago, when it last came up.

3. Ukraine should be free to create any government compatible with the expressed will of its people. Wise Ukrainian leaders would then opt for a policy of reconciliation between the various parts of their country. Internationally, they should pursue a posture comparable to that of Finland. That nation leaves no doubt about its fierce independence and cooperates with the West in most fields but carefully avoids institutional hostility toward Russia.

4. It is incompatible with the rules of the existing world order for Russia to annex Crimea. But it should be possible to put Crimea's relationship to Ukraine on a less fraught basis. To that end, Russia would recognize Ukraine's sovereignty over Crimea. Ukraine should reinforce Crimea's autonomy in elections held in the presence of international observers. The process would include removing any ambiguities about the status of the Black Sea Fleet at Sevastopol.

These are principles, not prescriptions. People familiar with the region will know that not all of them will be palatable to all parties. The test is not absolute satisfaction but balanced dissatisfaction. If some solution based on these or comparable elements is not achieved, the drift toward confrontation will accelerate. The time for that will come soon enough.

Henry A. Kissinger was secretary of state from 1973 to 1977.

© 2014 Tribune Media Services

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How the Ukraine Crisis Ends | Henry A. Kissinger

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Public discussion on Ukraine is all about confrontation. But do we know where we are going? In my life, I have seen four wars begun with great enthusiasm and public support, all of which we did not know how to end and from three of which we withdrew unilaterally.

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This article is part of our Summer reads series. Visit the full collection for book lists, guest essays and more seasonal distractions.

A T THE HEART of the Ukraine crisis lies a fundamental question about the nature of history and the nature of humanity: is change possible? Can humans change the way they behave, or does history repeat itself endlessly, with humans forever condemned to re-enact past tragedies without changing anything except the décor?

One school of thought firmly denies the possibility of change. It argues that the world is a jungle, that the strong prey upon the weak and that the only thing preventing one country from wolfing down another is military force. This is how it always was, and this is how it always will be. Those who don't believe in the law of the jungle are not just deluding themselves, but are putting their very existence at risk. They will not survive long.

Another school of thought argues that the so-called law of the jungle isn't a natural law at all. Humans made it, and humans can change it. Contrary to popular misconceptions, the first clear evidence for organised warfare appears in the archaeological record only 13,000 years ago. Even after that date there have been many periods devoid of archaeological evidence for war. Unlike gravity, war isn't a fundamental force of nature. Its intensity and existence depend on underlying technological, economic and cultural factors. As these factors change, so does war.

Evidence of such change is all around us. Over the past few generations, nuclear weapons have turned war between superpowers into a mad act of collective suicide, forcing the most powerful nations on Earth to find less violent ways to resolve conflict. Whereas great-power wars, such as the second Punic war or the second world war, have been a salient feature for much of history, in the past seven decades there has been no direct war between superpowers.

During the same period, the global economy has been transformed from one based on materials to one based on knowledge. Where once the main sources of wealth were material assets such as gold mines, wheat fields and oil wells, today the main source of wealth is knowledge. And whereas you can seize oil fields by force, you cannot acquire knowledge that way. The profitability of conquest has declined as a result.

Finally, a tectonic shift has taken place in global culture. Many elites in history-Hun chieftains, Viking jarls and Roman patricians, for example-viewed war positively. Rulers from Sargon the Great to Benito Mussolini sought to immortalise themselves by conquest (and artists such as Homer and Shakespeare happily obliged such fancies). Other elites, such as the Christian church, viewed war as evil but inevitable.

In the past few generations, however, for the first time in history the world became dominated by elites who see war as both evil and avoidable. Even the likes of George W. Bush and Donald Trump, not to mention the Merkels and Arderns of the world, are very different types of politicians than Attila the Hun or Alaric the Goth. They usually come to power with dreams of domestic reforms rather than foreign conquests. While in the realm of art and thought, most of the leading lights -from Pablo Picasso to Stanley Kubrick-are better known for depicting the senseless horrors of combat than for glorifying its architects.

As a result of all these changes, most governments stopped seeing wars of aggression as an acceptable tool to advance their interests, and most nations stopped fantasising about conquering and annexing their neighbours. It is simply not true that military force alone prevents Brazil from conquering Uruguay or prevents Spain from invading Morocco.

The parameters of peace

The decline of war is evident in numerous statistics. Since 1945, it has become relatively rare for international borders to be redrawn by foreign invasion, and not a single internationally recognised country has been completely wiped off the map by external conquest. There has been no shortage of other types of conflicts, such as civil wars and insurgencies. But even when taking all types of conflict into account, in the first two decades of the 21st century human violence has killed fewer people than suicide, car accidents or obesity-related diseases. Gunpowder has become less lethal than sugar.

Scholars argue back and forth about the exact statistics, but it is important to look beyond the maths. The decline of war has been a psychological as well as statistical phenomenon. Its most important feature has been a major change in the very meaning of the term "peace". For most of history peace meant only "the temporary absence of war". When people in 1913 said that there was peace between France and Germany, they meant that the French and German armies were not clashing directly, but everybody knew that a war between them might nevertheless erupt at any moment.

In recent decades "peace" has come to mean "the implausibility of war". For many countries, being invaded and conquered by the neighbours has become almost inconceivable. I live in the Middle East, so I know perfectly well that there are exceptions to these trends. But recognising the trends is at least as important as being able to point out the exceptions.

The "new peace" hasn't been a statistical fluke or hippie fantasy. It has been reflected most clearly in coldly-calculated budgets. In recent decades governments around the world have felt safe enough to spend an average of only about 6.5% of their budgets on their armed forces, while spending far more on education, health care and welfare.

We tend to take it for granted, but it is an astonishing novelty in human history. For thousands of years, military expenditure was by far the biggest item on the budget of every prince, khan, sultan and emperor. They hardly spent a penny on education or medical help for the masses.

The decline of war didn't result from a divine miracle or from a change in the laws of nature. It resulted from humans making better choices. It is arguably the greatest political and moral achievement of modern civilisation. Unfortunately, the fact that it stems from human choice also means that it is reversible.

Technology, economics and culture continue to change. The rise of cyber weapons, AI-driven economies and newly militaristic cultures could result in a new era of war, worse than anything we have seen before. To enjoy peace, we need almost everyone to make good choices. By contrast, a poor choice by just one side can lead to war.

This is why the Russian threat to invade Ukraine should concern every person on Earth. If it again becomes normative for powerful countries to wolf down their weaker neighbours, it would affect the way people all over the world feel and behave. The first and most obvious result of a return to the law of the jungle would be a sharp increase in military spending at the expense of everything else. The money that should go to teachers, nurses and social workers would instead go to tanks, missiles and cyber weapons.

A return to the jungle would also undermine global co-operation on problems such as preventing catastrophic climate change or regulating disruptive technologies such as artificial intelligence and genetic engineering. It isn't easy to work alongside countries that are preparing to eliminate you. And as both climate change and an AI arms race accelerate, the threat of armed conflict will only increase further, closing a vicious circle that may well doom our species.

History's direction

If you believe that historic change is impossible, and that humanity never left the jungle and never will, the only choice left is whether to play the part of predator or prey. Given such a choice, most leaders would prefer to go down in history as alpha predators, and add their names to the grim list of conquerors that unfortunate pupils are condemned to memorize for their history exams.

But maybe change is possible? Maybe the law of the jungle is a choice rather than an inevitability? If so, any leader who chooses to conquer a neighbour will get a special place in humanity's memory, far worse than your run-of-the-mill Tamerlane. He will go down in history as the man who ruined our greatest achievement. Just when we thought we were out of the jungle, he pulled us back in.

I don't know what will happen in Ukraine. But as a historian I do believe in the possibility of change. I don't think this is naivety-it's realism. The only constant of human history is change. And that's something that perhaps we can learn from the Ukrainians. For many generations, Ukrainians knew little but tyranny and violence. They endured two centuries of tsarist autocracy (which finally collapsed amidst the cataclysm of the first world war). A brief attempt at independence was quickly crushed by the Red Army that re-established Russian rule. Ukrainians then lived through the terrible man-made famine of the Holodomor, Stalinist terror, Nazi occupation and decades of soul-crushing Communist dictatorship. When the Soviet Union collapsed, history seemed to guarantee that Ukrainians would again go down the path of brutal tyranny - what else did they know?

But they chose differently. Despite history, despite grinding poverty and despite seemingly insurmountable obstacles, Ukrainians established a democracy. In Ukraine, unlike in Russia and Belarus, opposition candidates repeatedly replaced incumbents. When faced with the threat of autocracy in 2004 and 2013, Ukrainians twice rose in revolt to defend their freedom. Their democracy is a new thing. So is the "new peace". Both are fragile, and may not last long. But both are possible, and may strike deep roots. Every old thing was once new. It all comes down to human choices.■

Copyright © Yuval Noah Harari 2022.
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Yuval Noah Harari is a historian, philosopher and author of "Sapiens" (2014), "Homo Deus" (2016) and the series "Sapiens: A Graphic History" (2020-21). He is a lecturer in the Hebrew University of Jerusalem's history department and co-founder of Sapienship, a social-impact company. Our recent coverage of the Ukraine crisis can be found here

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Yuval Noah Harari argues that what's at stake in Ukraine is the direction of human history

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Humanity's greatest political achievement has been the decline of war. That is now in jeopardy | By Invitation