Ukraine Update: 20 January, 2022 (Late Morning)

Joe Biden’s press conference yesterday afternoon at the White House has left many of America’s European allies shaking their heads. Biden predicted that Putin will move forces into Ukraine and if that happens, the United States will hold him accountable. Next, he attached a caveat of sorts when he said the response will depend on what action Russian chooses to take. “It’s one thing if it’s a minor incursion and we end up having to fight about what to do and not to do,” he said, openly admitting that America’s European allies are far from united on how to best handle Russia and Ukraine. Biden’s comments were not clear, and the White House tried to walk them back later in the day as it became apparent his press conference was something short of a success. One area where Biden has been devilishly successful is in affirming that Vladimir Putin’s strategy of using this crisis to drive a wedge into NATO has been quite successful so fa


The barrage of threats from the US and Europe warning of severe economic sanctions being placed on Russia in the event of military action do not appear to be worrying the Russian government. Moscow’s lack of concern has been a disappointment to the West, which has placed considerable faith in the ability of sanctions to deter Russia. What the US and its allies do not seem to have taken into account is that Russia has been preparing for a long time to face a situation like this. Since 2014 or so, Russia has steadily been reducing its reliance on the global financial system, increasing its currency reserves and undertaking a number of other initiatives aimed at minimizing the effects of significant sanctions. Sanction-proofing its economy has come at a cost in economic growth, though. The Russian economy has grown at an average of 0.8 percent annually since 2013. This is far below the 3% annual growth that the global economy. However, in the event massive economic sanctions do hit, Moscow is confident the Russian economy is stable enough to weather the storm.

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