My Fast-Tracked Degree in Virology
Let me start by taking a victory lap: In my very first post on Substack, I predicted that the end of COVID was imminent:
That was an out-of-consensus view back then, with the Omicron hysteria running high and a number of countries revisiting lockdowns… Meanwhile, most countries look at COVID as a nightmare we’ve woken up from. The malady is endemic, we’re all going to get it repeatedly, and that’s just fine because our immune systems have been alerted either by vaccination or by natural exposure, so that COVID doesn’t pose a life-threatening risk for most people.
Importantly, COVID is over because the press has found another topic de jour as dangerous as COVID to keep us all in awe and fear, glued to the news feeds they sell: the Ukraine invasion, Vladimir Putin and THE red button.
So now that I’ve proven myself an expert in virology, it’s time to try my luck in geopolitics :)
The World According to Vlad
I’ve read and heard many opinions asserting that Mr Putin has gone mad to invade Ukraine. I think those views are fundamentally wrong.
Mr Putin has been in power for 20 years or so, during which Russia came out of the post-soviet collapse much stronger. GDP per capita grew meaningfully and the quality of life of many Russians increased significantly. Yes, the commodity supercycle that started about two decades ago, of which Russia (the R in BRIC) was a great beneficiary, certainly helped. And yes, arguably that one-in-a-lifetime opportunity to bootstrap non-commodity sectors of the economy was wasted. And yes, since the end of the commodity supercycle and the geopolitical events of the last decade GDP per capita has been stagnant. Yet, Mr Putin seems to have enjoyed a degree of popularity that many western politicians would die for.
Mr Putin’s popularity was certainly boosted by his risky, yet successful invasion of Crimea, where he came, he saw and he conquered in a flash. The west reacted with sanctions equivalent to a mild slap on his wrist and the world soon forgot about Crimea. I’m not taking sides on this story - I’m just a neutral observer.
So your name is Vlad the Great, you’ve got your people behind you (not least because of the total control you exert over the press), you’re used to taking over territories here and there and getting away with it, and now you feel threatened by a neighbor that is flirting with your arch-enemy (NATO). So you do what Vlad does: you invade.
WTF?
That was everybody’s reaction when we woke up on 24 February 2022 to find out that Russian troops have invaded Ukraine. The consensus until the night before (and yes, also my view), was that all these troop movements along the border were Mr Putin’s negotiation tactic: “guys, you either give me what I want, OR…” And what he wanted was quite clear: guarantees that Ukraine will not join NATO, plus some kind of agreement on Crimea and Donbas. When you look at the world form Mr Putin’s perspective, these are wholly reasonable requests. I personally disagree with that, but my opinion is entirely irrelevant to these reflections…
The events that unfolded brought us two big surprises:
The reaction of the west: started as a big embarrassment with a first round of sanctions equivalent to a mosquito biting Mr Putin while he’s riding that horse topless…
The pinnacle of the embarrassment was the exception given to Italian luxury goods to keep selling into Russia…
Why did you do that, cheeky little Vlad, you ain’t getting your McDonald's happy meal today, but here is your Gucci suit…
After that first embarrassment, though, western governments did step up and imposed sanctions which overnight turned Russia into a pariah state along other renegades such as North Korea, Iran or Cuba. These sanctions will be very very painful for the Russian people (the other victims of this conflict nobody’s talking about).The reaction of the Ukrainian leaders and people: it’s been quite stunning to see the multiple acts of heroism of normal Ukrainians like you and me, best symbolized by Mr Zelensky’s alleged response to western advise to leave the country: “I need ammunition not a ride!” This is widely known, and as Charlie Munger would say: I have nothing to add.
Vlad’s WTF Moment
In hindsight, it seems that Mr Putin’s decision to invade Ukraine was a stupid decision. Now, Mr Putin might be many things, but he’s no stupid. So why did he invade? Clearly he didn’t count on the strong response of the west, and the west is partially responsible for that. He might just have developed a Pavlovian expectation to get away with murder given the outcome of his prior excursions into foreign lands.
The fact that he didn’t factor in the Ukrainian reaction, though, might be the ultimate example of people of power believing their own bullshit. It is well known that the Russian press has been spreading the message that Ukraine has been taken over by Nazis and Mother Russia is coming to the rescue. So here’s what happens, according to the Nazi #2 himself:
Add to that the fact that Mr Putin has surrounded himself by people that fear him (just watch the videos of him reprimanding his misters or some oligarchs in public). Hence, it’s likely that nobody dared telling him that invading Ukraine was a stupid idea.
So what now?
Scenarios
It’s rather impossible to predict how events will unfolds.
This is particularly the case in a war situation, in which there’s no way to know the truth from the outside. I assume that pretty much everything we read is tainted by propaganda, and that’s as true from the Russians as it is from the Ukrainians. Clearly Ukraine is winning the propaganda war, but let’s not kid ourselves into believing what they say out of sympathy. Remember the heroes that told “Russian warship, go fuck yourself!” and then heroically died? Well, they turned up alive and were freed by the Russians in a prisoner swap…
One can, however, critically scrutinize publicly available information, go through scenarios, speculate about their likelihood of occurring as well as (most importantly) inflect the potential consequences of each scenario. Let’s do that going through the two potential main scenarios: Resolution or No Resolution…
Scenario 1: Resolution
A resolution can have different expressions (all resolutions scenarios I estimate have a ~40% probability of happening):
Russia wins outright and Ukraine surrenders: Given the rather pity performance of Russian military so far, plus the formidable fight the Ukrainians are putting up, this seems like a very low-probability scenario (call it an arbitrary 5%). It would certainly require that Mr Zelensky is dead (see below).
Russia declares victory and retrieves: Given the fierce control that Mr Putin has on the Russian press, he could concoct a story and preach it down to the people, along the lines of:
Our glorious Russian army has followed the requests of our Ukrainian brothers and sisters, and freed them up from the cruel oppression of Nazi dictators. We have taken over the Donbas all the way to Mariupol and have secured the access to Russia’s historic territory in the Crimean peninsula. Having achieved all our targets, it’s time for our heroes to return home.
If the military blunder continues the way it’s been going in the first month of kinetic conflict, this might as well be a way out. Let’s call it a 10% probability.
A peace agreement is reached: To reach an agreement both sides need a compromise that makes them look like the winner (for their constituencies).
For Mr Putin a win would at least include the what he wanted pre-invasion (as mentioned above: guarantees that Ukraine will not join NATO, and some kind of agreement on Crimea and Donbas), plus some goodie that helps him justify the cost of the war. The former could be in the shape of a constitutional amendment in Ukraine analog to Moldova’s, whereby NATO membership is banned. The latter could be an international recognition of self-determination in Crimea and Donbas. International recognition of a Russian annexation of these territories is Mr Putin’s wet dream, but seems very unlikely.
For Mr Zelensky a win could come in form of a fast-track to EU membership for (what’s left of) Ukraine. This should be acceptable for Russia, in fact the main hurdle in the past has been the EU itself. Europeans would never have accepted Ukrainian membership before the war (cuz too expensive), but they just might now.
The fact that Ukrainian citizens can get to the border of the EU (Poland, Slovakia, Hungary or Romania), show their passports and immediately get a stamp that grants them a residency and notably a work permit (anathema for the EU in the past), is a remarkable twist of fortune. For what it’s worth, as a EU citizen, I am very proud of this.
I wish this resolution was more likely, to put an end to this horrible human catastrophe, but at the moment I think it’s only a 20% scenario. Paradoxically, Mr Zelensky becoming a world hero has made this scenario less likely. It would require him to show a huge amount of humility and pragmatism to take a compromise acceptable to Mr Putin… Mr Zelensky has surpassed everybody’s expectations so far but this would be the ultimate test.
A palace coup:
We could wake up one morning to find out that Mr Putin is dead, and a transition government has taken over power led by Prime Minister Dmitry Medvedev, Central Bank Governor Elvira Nabiullina, Herman Gref (CEO of Sberbank), Alexei Miller (CEO of Gazprom), and other powerful industrialists. The transition government announces that it is ready to negotiate an orderly return of the troops back to Russia and is calling for new elections. Likelihood of this happening? Very low given the firm grip that Mr Putin seems to have in power plus his so far sustained popularity… Let’s give it a 5%.
However unlikely, this could be a tipping point for Russia. The west would seize the opportunity to gain Russia back to civilization, lift sanctions and throw all its support to making the transition a success.
Somebody internationally respected like chess grandmaster Garry Kasparov could win the elections and Russia could get the next Marshall Plan.
Ultimately, Russia could join the EU: it has everything that the EU needs (notably plenty of energy and food) and it constitutes the only natural direction of expansion of the EU (and empires want to expand). EU membership would bring the Russian people (that have suffered for so long) a multitude of benefits. This thesis is elaborated in the wonderful book Clash of Empires by GaveKal.
All this will certainly not happen tomorrow, but it could happen in my lifetime.
Scenario 2: No Resolution
A month after the invasion this seems to be evolving into a war of attrition (a prolonged period of conflict during which each side seeks to gradually wear down the other by a series of small-scale actions). Given the escalation on both sides of the conflict, the number of human losses, the high stakes for Ukrainians and for Mr Putin, as well as the entrenched military situation, lack of resolution looks like the path of least resistance. I give it a 60% likelihood over the next couple of months, unfortunately.
A temporary cease fire without preconditions or upfront concessions is possible along the way. That would give both sides time to regroup and the negotiations a (however small) chance to succeed. It’s also possible, though, that a short cease fire leads to collapse in negotiations and resumption of the battle.
Consequences
I’m running out of time this weekend, and this piece is getting too long, so I will send it out now and complete my follow-up on consequences as soon as I have some time.
En cuanto a tu análisis de "Sin solución" cabe la posibilidad de que termine cómo Chipre, con una intervención de la ONU y un eterno status cuo con una zona de amortiguación y por supuesto con un gran negocio para alguien.
Whatever the outcome, I pray this will not be a long drawn out war where both peoples of Ukraine and Russia suffer