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Five Questions about Russia and Ukraine

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The eyes of the world have been fixed on Ukraine, as Russia amasses troops on Ukraine’s northern border and threatens an invasion, and the US and other Western nations debate the extent of their responses to Russia’s aggressive posture. We asked SIS professor Dylan Craig, an expert on proxy wars, a few questions about factors that Russia and Ukraine may both be considering.

What are the costs to Russia, both economically and politically, to engage in an invasion of Ukraine?
Ostensibly, the costs for actual invasion are very high. But this isn't Kuwait City in 1990—Vladimir Putin is not Saddam Hussein, and whatever Russia does in Ukraine, it will almost certainly tiptoe up to the line of invasion but be very careful not to cross it. This moves us from considering the costs of invasion to the costs of imposing forcible regime change, the costs of supporting violent separatist movements, the costs of sending in unwanted peacekeeping forces—and in that sense, Russia stands to lose relatively little, because no other country, least of all the US, wants those actions to be the kinds of things that come with a substantial penalty for states that engage in them. Politically, no one is learning anything about Russia that they didn't know already; economically, punitive sanctions and the costs of deployment will hurt Russia, but not in any way that it can't absorb.
How does the “sphere of influence” that Putin desires compare and contrast with the Iron Curtain of the Cold War?
I can't speak to Putin's personal motivations, but his rhetoric certainly has suggested, at times, that he envisages a fully global sphere of influence for Russia moving forward. That isn't any different from what every powerful state wants, though, so let's instead think about what he might want specifically within this "Iron Curtain 2.0." The old Iron Curtain was a policy of cutting states off from global commerce and transfers in ways that not only made them dependent on the USSR for trade and infrastructure but also allowed the USSR to portray its geopolitical actions as those of a like-minded bloc rather than a single realpolitik-driven entity—a "coalition of the willing" forty years ahead of its time, if you will. It seems reasonable that the same set of goals apply here. It's less a home invasion than a hostage situation, in that sense; Iron Curtain 2.0 doesn't put up barbed wire and border guards, but it gets the same job done. 
As the world contemplates whether Russia will invade Ukraine, how have the advantages once enjoyed by powerful nation states in the twentieth century and for centuries before that changed?
The biggest loss, I'd say, is the loss of the state monopoly on coercion as a tool of foreign policy. In the heyday of the state, gunboats and tanks used to be the only way of keeping one's allies in line, but big states had plenty of those. Nowadays, it's downgraded credit ratings or sponsored terrorism or travel bans or the redirection of refugee flows that truly loom as plausible threats to states great and small, and while there are still ways to use one's gunboats and tanks to inflict these things on one's rivals, one no longer needs to beat one's rivals in the field in order to do so. This is, I believe, Russia's main innovation in terms of how it's used its military since the Chechen war; not symmetrically, but asymmetrically, in ways that use economic and human rights shockwaves to damage the enemy rather than kinetic force per se. 
Who pays the costs of sanctions in Russia, and who within Russia might actually benefit from sanctions?
Sanctions and asset freezes badly weaken a variety of sectors in Russia, but the real question is where and how those costs can be defrayed, and how much of those weaknesses would have been inflicted anyway even without sanctions. In terms of defraying, for example, the military sector has enjoyed a lot of wealth and infrastructural repair in the fallout from the conflict in Ukraine; so also have Russian wealth-transfer and remittance industries, which now have substantial captive clients among Georgians, Romanians, and Ukrainians abroad who want to send money back to places like South Ossetia, Transnistria, and Abkhazia and have had to switch to Russian providers to do so. In terms of what would have been lost anyway, our research team has seen some interesting links between Russian aggression and economic downturns; this may be a case of "take the sanctions now, or lose all that wealth to a recession later, what's the difference?"
I think the key here is to remember that there's no single tub of money with a country's name on it into which all the costs or benefits of international relations pour. Sectors win and sectors lose, and the less economically and politically integrated a society is—the less that my wealth is your wealth and vice versa, and the less that my votes constrain your behavior—the more power that small sectors and influence groups get to provoke actions that are bad overall but good for some. I think that's gaudily on display in contemporary Russia, but they have plenty of peers who are just as bad or getting there. 
From the Ukrainian side: What is the economic damage to Ukraine now, and how would that increase in the event of a Russian invasion? How do they weigh the risks and benefits of appeasement or resistance? How does the impact of a climate of fear within the country brought on by this threat factor into Ukraine’s decisions?
There are the losses in revenue from currently contested areas, of course, and the expenditure of personnel and materiel, but what's getting less emphasis is the effects of living under the shadow of incipient conflict. Insurers, shippers, retailers: these are all folks whose operations become more expensive when war is looming somewhere in the world, and those markups are going to flow down the chain to Ukrainians even if not a single Russian boot crosses the border. In that sense, and given that it costs Russia far less to threaten Ukraine than Ukraine loses by being threatened, I think we should really be asking ourselves how to economically reinforce the targets of Russian coercion and compellence. Sending crates full of anti-tank missiles to the Ukrainian military is all very well, but Russian victory in Ukraine will be measured just as well by the items that disappear from a Ukrainian shopper's food basket as by square kilometers of territory conquered.