Ukraine crisis not start of new Cold War

The world is witnessing the most important geopolitical events since the Sept 11 attacks in the United States in 2001. This can be seen in Russia's annexation of Crimea, the imposition of American and European sanctions, and the potential for more escalation in Ukraine.

Developments in Ukraine mark a tipping point. Relations between Washington and Moscow were already strained. But with Russia now suspended from the Group of Eight leading industrialised countries, and more sanctions likely, relations are now fully broken.

Various forms of East-West conflict are inevitable, with implications for Europe's security, Russia's stability, the future of the European Union and Nato, and global energy markets.

But though tensions are here to stay and will probably get worse, this is not a new Cold War. Nor will it become one. There are several reasons for this.

First, Russia has neither powerful friends nor the power to win new ones. When the United Nations General Assembly voted on the legitimacy of Russia's annexation of Crimea, just 10 countries sided with Russia. Support came from neighbours that Russia can coerce (Armenia and Belarus) and rogue states without international influence (Cuba, North Korea, Sudan, Syria and Zimbabwe).

Throw in traditionally sympathetic Latin Americans (Venezuela, Bolivia and Nicaragua) and it's clear that Russia lacks the Soviet Union's ideological appeal. Russia's allies are more aligned in their distaste for the established global order than in any alternative organising principle that Moscow can offer.

In addition, Russia's gross domestic product grew by just 1.3 per cent last year. And the Russian economy's increasing dependence on exported natural resources ensures that growth won't improve without an unlikely spike in global energy prices.

In 2007, Russia needed a Brent oil price of US$34 per barrel to balance its federal budget. Five years later, that figure stood at US$117. Last year, oil and gas comprised about half of Russia's government revenue.

Making matters worse, Russia's economy is controlled by a small elite that depends on President Vladimir Putin's favour. More than one-third of Russia's total household wealth is in the hands of the country's richest 110 people.

Despite its nuclear weapons, which are subject to the same rules of mutually assured destruction that bound US and Soviet weapons, Russia also lacks the Soviet Union's military capability. Today, the US spends about eight times the amount Russia can provide for its military. Russia has the muscle to make mischief for its neighbours, but it cannot project power on a Cold War scale.

Russia's greatest limitation, however, is China's unwillingness to become a reliable anti-Western ally. Beijing has little to gain from choosing sides in this conflict. Though it certainly hopes to buy more Russian energy exports, China has no incentive to antagonise its largest trade partners (the EU and the US) in order to favour Moscow.

China is the biggest (and perhaps the only) winner from the ongoing Ukraine crisis. As Europe spends money to relieve its dependence on Russian energy, the Chinese know they can then drive a harder bargain on price, while maintaining pragmatic relations with all sides. China also benefits from intensified US focus on Eastern Europe rather than East Asia.

China will tread carefully when it comes to Russia's bid to provoke secession crises inside Ukraine, since it opposes any precedent that might provoke similar demands for autonomy in restive Chinese provinces such as Tibet and Xinjiang.

Short of Cold War, Russia can try to scuttle Western foreign policy plans. Russia can encourage President Bashar al-Assad's government in Syria to ignore Western demands to destroy or hand over its chemical weapons. It can provide Mr Assad with more financial and military support. Yet, Mr Assad has already gained enough ground to survive Syria's civil war, and there is little Russia can do to put that broken country back together again.

Russia can try to play a spoiler role in negotiations over the fate of Iran's nuclear programme.

But it won't be easy for Moscow to persuade Teheran to back away from a deal that Iran wants as a means of rebuilding its domestic economy. Moreover, Moscow doesn't want a Middle East nuclear arms race that takes place much closer to Russia than to the US.

In short, Russia remains a regional power, though US President Barack Obama doesn't help matters by publicly pointing that out.

But while this is not a new Cold War, it is not all good news either.

The Western-Soviet conflict imposed an international order that made global politics relatively predictable. In the past six years, however, the world has suffered the worst US financial meltdown in 70 years, an existential crisis in the euro zone, turmoil across North Africa and the Middle East, a rising tide of public unrest in emerging market countries, and now a dangerous East-West stand-off over Ukraine.

Given all that, a bit of predictability might be welcome.

The writer is the president of Eurasia Group and a global research professor at New York University.

This article was published on April 12 in The Straits Times.

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