17/01/2022
RP Comment: Deteriorated security situation in Europe and its’ effect on international trade
Background
Late last year, the Russian Federation gathered an army of at least 100,000 troops on the border with Ukraine. At the same time, Russia put forward two proposals for treaties on a new European security order to the USA and Nato. These treaty texts were not open to negotiation, instead their acceptance was as a condition for avoiding war, or as Russia called it, military and military technical solutions.
According to Russia, Nato must end its enlargement, practically return to the borders of 1997, and refrain from deploying military capabilities on the soil of former Soviet republics. In reality, Russia rejected the right of sovereign states to choose their foreign and security policy and demanded a return to the Soviet-era zone of influence. Nato would be left unable to defend its eastern member states.
Russia suggests this order be set out in a bilateral agreement between itself and the US, not among the European states involved. European democracies would be left with no choice but to accept their fate being decided by other, namely Russian, interests.
The rules-based world-order at stake
The USA and Nato rejected Russia’s demands, as did all democratic states in Europe. The demands violated the fundamentals of the European security order, which has provided stability since 1989 but are based on principles dating back to the Helsinki Act of 1975. The USA and Nato stated that they were prepared to continue talks, something that was declined by Russia.
The security situation in Europe is worse today than at least since the Cold War. The threat of large-scale war in Europe is as imminent today as it has been for decades.
Russia seeks to split the USA from Europe and divide Nato members from each other and from Nato’s partner countries. Russia is increasing the leverage of its actions by acting unpredictably. The West is not supposed to know what to expect or how to understand Russia’s behaviour and goals.
Russia considers the USA weak following the hasty exit from Afghanistan and due to the internal political divide. It has noted Donald Trump’s hesitation towards Nato and the mutual security obligations. Russia also knows that the German government is very new, that France is approaching a presidential election, and that the leadership of the United Kingdom is unstable after Brexit and the pandemic. These combined presents an opportunity for Russia to challenge what it perceives as a weak and divided Europe and USA.
Russia also believes that its regional military capability and political resolve is currently stronger than Nato’s. Russia has used the last decade to make very substantial investments in its armed forces, as well as in new military technology.
To date, Russia has been fundamentally wrong regarding both Europe’s will to remain politically united and Nato’s determination for, and commitment to, a collective defence. The USA, EU and Nato have all signalled the introduction of significant economic and political sanctions should Russia invade additional parts of Ukraine. Nato has signalled its unwavering commitment and determination to defending its member states. Russian pressure has served to unite Europe and Nato.
Sweden has adjusted its military readiness and transferred troops and equipment to Gotland, a strategically important island in the Baltic Sea.
No one knows whether the Russian military build-up will result in an all-out invasion of Ukraine, or other military action towards Europe, or if military force will be used for political means. It is not certain that Russia has yet decided on how it will move forward.
It is, however, important to bear in mind that the Russian-backed war in Donbas in eastern Ukraine has already cost 14,000 lives, and that Russia grabbed the Crimea peninsula from Ukraine in 2014.
There will probably be no return to what has been considered normal relations with Russia under President Putin. Putin’s Russia has, with purpose and intent, told Europe and the USA that it has no interest in good relations or in a rules-based security order. Russia has, by its own doing, returned to a world where might is right - threatening neighbour states with military might if they do not act in accordance with Russian interests.
Potential consequences for international trade
Business leaders, governments and economic and political actors will have to consider the consequences and adjust to the threats and risks involved.
Should Russia invade Ukraine, there will be significant and severe political and economic sanctions implemented by the USA and EU. Russian elites and Russian exports would be targeted by sanctions and Russia would, according to western actors, stand to be cut off from Swift, the international payment and financial clearance system.
The security situation in Europe is very unpredictable, unstable, and dangerous. This is because one country wants it to be this way. Should a major war be initiated, it is very hard to predict how it will end. Russia could limit itself to formally annexing the Donbas regions to create a corridor to Crimea or capture the entire Black Sea coastline. It could try to invade the entire Ukraine or stop at the Dnepr. A large-scale conflict would cost thousands of lives and make millions of people flee their homes and seek asylum elsewhere. There would be a considerable risk that a large-scale conflict would be hard to contain. Even the threat of war has fundamental political effects.
A war, irrespective of its scale, would fundamentally change Swedish, European and world politics as well as economic conditions.
