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Sergey Aleksashenko is one of Russia’s most brilliant economists. At one time, he was deputy finance minister of the Russian Federation (1993-1995) and also first deputy chairman of the Central Bank of Russia (1995-1998), managing to become one of the heaviest voices in the world of finance in his native country. Aleksashenko, over the years, also became a critic of President Vladimir Putin, severely attacking his economic policies since the middle of his second government (2009, approximately) and his way of exercising power; which he described in his book Putin’s Counterrevolution (2018) as rigid authoritarianism, similar to that of a heavy-handed monarchy.
Regarding Russia’s invasion of Ukraine, ordered by Vladimir Putin almost two weeks ago, El American exclusively interviewed Aleksashenko, who was asked about Putin’s pretensions with the neighboring country, the role played by the West at the beginning of this war; the effectiveness of sanctions to provoke a political implosion in Russia and whether there is a possibility of the conflict having a nuclear escalation.
What is Russia, or Vladimir Putin, strategically intending to do by invading Ukraine?
First, Putin doesn’t want to see Ukraine as a successful country. The country that is able to transform from the corrupted, the poorest country in Europe, unstable, to a prosperous country that is a member of the European civilization. Because Ukraine is based on democratic principles, on free elections on change of powers. And of course, if Ukraine is successful, it will be an indication for the Russian people that there are other ways possible, not only the authoritarian regime as in Russia.
But on the surface, what Putin declares is that he wants Ukraine to be a weak country, a puppet of Russia, part of the sphere of influence and loyal to Russia.
He declares that he fears the NATO approach in Russian borders, but in fact, he declared openly that he wants regime change in Ukraine and he wants to nominate a government that is loyal to Russia.
The next issue in the next level is. Does Russia have any military capabilities to do it?
I’m rather skeptical because Russia as we see tried a Blitzkrieg strategy but it became a “Blitz-fail.” The Russian army was not able to take over Kyiv, the capital of Ukraine within 2-3 days and we have to remember that Kyiv is only 100 miles from the border of Belarus from where the Russian invasion started and at the moment, I do not see the endgame for Putin because Ukraine is ready to fight.
Ukraine is a huge country, it’s the biggest European country in the territory. It’s a country of 40 million. Even if 10 million will emigrate to Europe, that is an awful number. The other will resist, it will be the guerrilla war where Russia has no such a huge occupation army to keep control over Ukraine.
So strategically I do not see how Putin may reach his goals in Ukraine and at the moment, by the time being, we see that Putin definitely doesn’t want any peaceful solution, and he is ready to deploy more and more troops and to promote more tough and bloody military operation.
The West removed several Russian banks from the SWIFT system but does not touch those related to energy and gas. To what extent will this measure affect the Russian economy and trade relations with the world?
I would emphasize the position of the United States when President Biden declared that we are looking for the sanctions that hurt the Russian economy the most but provide as little harm as possible to the US economy to the economy of our allies.
In this respect, I believe I see that if the West will block the import of Russian oil and gas, it will be a significant blow. First, for European countries and in oil, it is Poland and in gas is Germany, Austria and some countries of Central and South-Eastern Europe. And the building of these sanctions will be disproportionate to some countries, while if the West allows Russia to sell oil and gas, and even to receive euros and dollars in the accounts of the banks that are not removed from SWIFT.
But ban any use of many of those dollars, the ban on import of many goods to Russia, and that creates a real hurt on the economy because what’s the value of exporting your oil and gas if you can purchase nothing with the dollars you receive so?
I believe that these current sanctions: blocking financial operations, blocking, import blocking container shipments to Russia is much more efficient than the direct ban on the import of oil and gas.
Is it possible that sanctions against the Russian economy will fuel internal pressure to destabilize the Putin regime?
Unfortunately, I do not believe it’s possible.
We can see what happened in Venezuela where the sanctions were severe and where the economy dropped by more than 50%. Nevertheless, in the chaos of hyperinflation Maduro’s government was able to implement the national distribution of goods, and it was carried out by the army and more than 50% support Maduro’s regime. So in the history of dictatorships, it is very rare case when domestic political pressure when political unrest results from worsening economic conditions,
By the time being, of course, sanctions are in effect for two weeks only. Nevertheless, we do not see a significant antiwar movement, anti-war protests in Russia, maybe because Russian people don’t know what’s going on, because the Russian government has blocked all independent media on independent news flows and is washing brains with its propaganda.
But nevertheless, first Russian people don’t know what’s going on in Ukraine. Second, we can hardly find cases when the economic situation results in the change of the dictatorial regime.
Russia claims that the blame for this invasion lies with the West, in particular NATO, which it describes as a strategic aggressor. What do you think?
This is a narrative that Putin wants to promote and, of course, it’s a fear that sits in Putin’s brain. He personally is scared of the West, He is personally scared of anyone who can remove who can oust him out of power, and he sees NATO as an invader.
Nevertheless, if you look at the Russian history for the last, let’s say 200 years since 1800, Russia invaded other countries I would say maybe a couple of times, while Russia was invaded only by Napoleon in 1812 and by Hitler in 1941. All other wars were initiated by Russia against other countries, so Russia is much more aggressive than its neighbors.
Nevertheless, I believe that the West has some responsibility, not because it created some pressure or was ready to invade Russia in February at the beginning of March. Of course not, there was no evidence that even Ukraine was ready to invade Donbas, because the Ukrainian government is not crazy, and, of course, NATO had no troops for an invasion of Russia in Europe since long ago.
Nevertheless, I believe that the West carries certain responsibility by not negotiating with Russia the strategic issues of European security. Let’s say somewhere around 2010, after Putin’s Munich speech in 2007, it became evident that he is looking for some strategic agreement on the deployment of troops on potential threats, on asymmetry in the situation of Russia and the United States and nobody was ready to talk to him seriously. Everybody in the west, every politician, believed that in the 21st century there is no space, there is no place, there is no reason to have a bloody war.
Nevertheless, Putin was thinking otherwise. I would say the main problem with the West is that it underestimated who Mr. Putin is.
Ukraine’s survival is now at stake, does the Ukrainian government have a way out?
I think that it’s an overestimation that Ukraine’s survival is now at stake. I understand rather well that the Ukrainian army is weaker than the Russian Army. The Russian army has much more sophisticated weapons, much more destructive weapons, and of course, the military victory itself of Russia over the Ukrainian army is possible.
Nevertheless, the readiness to resist, the patriotism, and the inspiration to defend their country. The morale of the Ukrainian army is much higher than the morale of the Russian army.
So I would say that even military defeat of the Ukrainian army, even if Putin’s army occupies the biggest Ukrainian cities, it’s not the end of Ukraine, and it’s not the victory of Putin.
I think that the Ukrainian Government is legitimate, and will be legitimate despite where President Zelensky is located in Kyiv, in Lviv, or even in Warsaw, in the last two weeks he became a strong leader. Maybe the strongest politician in Europe or maybe in the whole world, and nobody disputes his political authority.
The way out for the Ukrainian government is to continue to resist and sooner or later Ukraine will win, because there is no endgame, there is no victory strategy for Putin, he started this war. He thought that Ukraine will capitulate, will be ready to sign any peace agreement with Putin. But nowadays, it’s evident that nobody in Ukraine, there is no politician who is ready to say, OK, I’m ready to be Putin’s puppet. So, the way out for the Ukrainian government is a victory.
Will Russia settle for invading Ukraine or, on the contrary, can it go for other non-NATO countries such as Sweden and Finland?
Oh, it’s a hard question. Two weeks ago, three weeks ago I was saying that I do not believe that Putin will start a war, will invade Ukraine because I haven’t seen and now, I do not see any rational reason to invade Ukraine.
Because if we believe Putin seriously, that he is looking for Russian strategical security, he wants some agreement with NATO about the deployment of troops and so on, so far what he does what he did worsens his situation. Because native NATO is consolidated, Europe has consolidated and became not an economic bloc, but a political and military bloc. NATO troops moved closer to Russian borders, and the strategic security of Russia is definitely much weaker than it was two weeks ago.
Right now, the severe economic, financial sanctions imposed on Russia and the economy are not collapsing, but it’s moving in quantity and the quality backward somewhere to maybe mid-90s or even maybe in some issues into mid-80s.
So, this war, in my mind, against Ukraine was irrational for pushing for Russia. Nevertheless, Putin’s decision makes me conclude that he is irrational. In this situation, hit some admin policy. We cannot predict his behavior and I would not nullify chances that he will invade, not Sweden and Finland, but let’s say Baltic countries. Why not?
Finally, do you see Putin using the nuclear arsenal in an eventual escalation of the conflict?
Yes, definitely he does, and there was his statement a week ago when he said that he ordered to put Russian nuclear arsenal on alert and that despite there was no significant military move that could cause this reaction, at least NATO did not, and the United States did not use their nuclear arsenals.
I’m afraid that at a certain point, Putin might use tactical nukes just to demonstrate his readiness to go with this war as far as possible and to destroy anyone who will resist just. I am not a military expert, but from what I am reading I may conclude that the first wave of the invasion may lose its momentum, may lose, it will need resupply, and [Putin] will need to rethink of strategy because it is evident that the current offensive operation is evaporating any moment in this invasion is evaporating.
So, for Putin, using tactical nukes may be the symbol of more cruel war, because today we see the let’s say Grozny and Aleppo, style of war when he destroys big cities, giants by bombshell and by her missile strikes.
So, at a certain point in time, it could be nukes as well.