COMMENT: Russia is actively preparing for war

By bne IntelliNews September 30, 2014

Ben Aris in Moscow -


Russia is actively preparing for a war that nobody wants and that will probably never happen. But its increasingly obvious commitment to real preparations for a potential military conflict with the West have been convincing enough to create trump cards in the diplomatic and sanctions war that has been raging for much of this year. On the eve of the Minsk summit that brought the shaky ceasefire to Eastern Ukraine, the US seemed to cave in.

What was sabre-rattling has become overtly aggressive military actions that are seriously destabilising the whole of the European continent and freaking Nato out. Russian fighter planes have made almost as many incursions this year into the airspace of the Baltic states, all Nato members, than they have in all of the last decade taken together. Russia has carried out the largest surprise military excises it is allowed to, without giving forewarning to Nato under the terms of its treaties with its old nemesis. And Russia has also started military exercises that include moving nuclear missiles about for the first time in two decades. 

Nato of course finds all this peripatetic armour extremely unsettling, but it is part of a larger aggressive policy Russia has adopted.  

"Putin's Russia today is ready and willing to go to war. Europe and the West are not ready and not willing to go to war. There is no leadership in Europe or in the world able to stop Putin," Lithuanian President Dalia Grybauskaite, who lives on what could be the next front in Russian aggression, told the Washington Post in an interview on September 24. 

Not just Central European politicians but also military analysts are asking: will there be war? And increasingly the answer is not clearcut. "The slow, ongoing militarisation of the Russian state - not only in a purely military sense, but also economically - socially and politically, which has been observed at least since 2007 - raises questions about its long-term consequences," writes Polish military analyst Andrzej Wilk of the Centre for Eastern Studies (OSW).

Despite the economic slowdown, Russian military spending will surge to 4.0% of GDP in 2015 – twice the level that Nato members are obliged to spend –  according to the recently announced three-year budget. This compares with 3.5% of GDP in 2014, which was already a rise of more than 10% in real terms to around $84bn from a year earlier, according to Wilk. 

Along with the rise in spending is a rise in nationalist rhetoric and propaganda, according to which Russia must fight against the aggression of the West. "The spiral of militarisation which has been set in motion in Russia over recent years has already reached a critical 'point of no return': the ruling team in Moscow has become largely a hostage to its own policies." Wilk warns. "The consequence of the current activities may actually be that Moscow starts a full-blown regular war."

Long time coming

While the press is now full of reports of Russian military manoeuvres, the Kremlin has actually been ratcheting up its military preparedness for more two years already. As bne reported in its cover story "Cold War II" in March 2013, Russia had already started rattling its sabre to display its increasing unhappiness with Western policies, such as the proposed missile shield initiative in Poland. 

"And with Russia now ratcheting up spending on re-equipping its military to the tune of hundreds of billions of dollars, plus the noticeably chillier tone in the security rhetoric in the last months, it could well be that historians will one day point to the current period as the start of Cold War II – though the proxy wars that characterised the first one are not much in evidence yet," bne wrote at the time. 

And that has even changed. Russia at least has overtly put its military proxies into first the Crimea and then Eastern Ukraine. And the West baulked at responding in kind. 

While waiting for the first Russian uninvited humanitarian aid convoy to arrive at the Ukrainian border, on August 14 the Daily Telegraph and The Guardian correspondents witnessed some 20 Russian APCs blatantly crossing into Ukraine. That was a tense weekend as observers waited with baited breath to see what the West's response would be. The convoy was widely condemned as a Trojan horse, suspected of carrying arms into Ukraine, but most of the trucks were half empty and some completely empty. 

In retrospect it seems more likely they were simply a Kremlin probe to test the West's resolve. When there was no reaction from the West, Russian President Vladimir Putin assumed he had carte blanche to do as he pleased in eastern Ukraine. Notably in the days that followed, the White House failed to take any definite action other than issue a statement of condemnation. "And where in all this is America?" asked Tim Ash of Standard Bank in a note to clients at the time. 

From that point on, the Kremlin's pretence that it was not sending in regular troops to bolster the pro-Russian rebels in the east faded away in all but name. In the runup to the crucial Minsk Summit on September 5 to call an end to hostilities, eastern Ukraine was swimming in "vacationing" Russian regulars and the Ukrainian army's big push to retake the Donbass region had failed, leaving Ukrainian President Petro Poroshenko with a poor hand at the Belarusian negotiating table.

Call my bluff

Putin is playing a risky game, but has successfully called the US' bluff. The military exercises are getting more frequent and larger. There was another one last week, the snap Vostok-2014 exercises, a huge operation in Russia's Far East to test the mettle of Russian forces in the face of an attack over its eastern borders. 

"Even against the background of the systematic increase in the number and scale of the Russian army’s exercises, which have been effectively conducted almost without a break since February 2013, this project has been distinguished by its long duration and the size of the forces and resources involved, which allow them to be classified along with the largest Soviet army exercises," the OSW's Wilk noted. 

Military exercises are only one aspect of the preparations. Putin banned the import of agricultural goods from the EU on August 6, which was widely seen as a tit-for-tat economic response to sanctions imposed on Russia. Except the move also has the side effect of forcing Russia to become food-independent in a potential military stand-off. "A letter just went out to all Russia's farms and agricultural producers asking them how much food they have and how much they could supply at what cost in the event that Russia's borders were closed," says one agricultural fund manager who did not want to be named. 

The food ban comes on top of a raft of initiatives that could be put in place should Russia go to war with the West: the government floated a road map of what to do should Russia be cut off from the internet at the end of September; it is introducing its own national payment system to end its dependence on the US credit card majors VISA and MasterCard; it is planning to build a messaging system to replace SWIFT after the UK suggested cutting Russia off; the Kremlin is busy replacing European food supplies with those of its BRICS allies, amongst other things; and the Kremlin has launched a general strategy of import substitution that is supposed to be ready within the next three years for all the key economic inputs. 

"Most technologies have their analogues and in the frameworks of the import substitution programme, Russian companies are able in the next three to four years to meet the challenge we are facing," said Deputy Minister of Energy Kirill Molodtsov on September 23. 

Given that no one actually believes there will be a war between the West and Russia – a war Russia would clearly lose – all these measures are as much a message as pragmatic preparations: Putin is signalling that he will not back down over Ukraine and is willing to go all the way, confident that the US and Europe will not. 

Europe breaks with Washington

The US had put Germany's Angela Merkel under pressure to tow a hard-line against Russia ahead of her summit with US President Barack Obama in August. Merkel was not given much choice, but she said explicitly that if she were forced to make a choice between protecting German economic interests in Russia and supporting her allies, she would choose the latter. 

Merkel was forced to make that choice at her meeting with Obama on May 2. Standing next to the US president, Merkel acknowledged that “further sanctions will be unavoidable” if Ukraine is unable to hold the May 25 presidential election, adding that this is “something we do not want”. But, she continued, “we are firmly resolved to go down that road."

However, as the body count mounted in the key eastern Ukrainian cities of Donetsk and Lugansk, while the European economic recovery began to splutter, she made an about-face on the eve of the Minsk summit that brought a ceasefire to eastern Ukraine in September.

Merkel flew to Kyiv to meet Ukrainian President Petro Poroshenko the weekend before the talks in Minsk and clearly pressured him to strike a deal. Merkel said on August 25 that Ukrainian “decentralisation”, a deal on gas prices, and Ukraine’s “trade relations” with Russia are elements that could bring about an accord, but deliberately played down expectations. 

The Minsk meeting was key. At this point Merkel and the rest of Europe decided to cut their losses and go for a negotiated peace with Putin, conceding to many of the demands the Kremlin had been making: some sort of autonomy to the eastern regions, three-way talks on Ukraine's gas deliveries from Russia, and a 15-month suspension to many of the terms in the trade deals that Ukraine had just ratified with the EU.

For its part, Washington was almost entirely silent in the days between Merkel's visit to Kyiv and the Minsk summit. A colleague in the White House press corps went into a press conference during this period and was told explicitly by the White House press handlers: "No questions on Ukraine. Today is all about ISIS. If you ask Ukraine question you will be excluded from the White House press list."

With the situation in the Middle East and Iraq spinning out of control, the White House decided it had bigger fish to fry. About to re-launch a full-scale military operation in Iraq, the last thing the White House wanted to do was get embroiled in what clearly would be a protracted military campaign in Europe, and so the US has cut its losses. "There was a sudden bout of realism in Washington where they realised the situation was coming dangerously close to a military conflict with Russia and they backed down," says Tony Brenton, a former British Ambassador to Russia. 

This was nowhere clearer than following Poroshenko's historic speech to Congress on September 18, when he made an impassioned appeal and called explicitly for "lethal and non-lethal weapons" from the US. “One cannot win the war with blankets,” he said. “Even more, we cannot keep the peace with a blanket,” he told Congress to resounding applause. 

Obama offered a $53m package – a rounding error in the US national accounts – of which only $7m was military aid, and a loan guarantee (not even a cash loan) of $1bn. Poroshenko left Washington with more blankets and little else. The US has decisively turned its back on Kyiv and left it to fend for itself. At most the US will impose more sanctions on Russia, which will inflict economic pain, but have been widely derided by observers as being totally ineffective when it comes to forcing the Kremlin to change its policy direction. 

Poroshenko has been left in a weak negotiating position, as he has been forced to concede that "the conflict in eastern Ukraine cannot be solved militarily," as he told Ukrainian media on September 21. 

Cost of victory

Nato is clearly a lot more powerful than the atrophied Russian military and would eventually win any war. But the issue is not the victory but the cost of such a conflict – Russia has a long history of cataclysmic military sacrifice like no other nation in the world. 

And while Russia's military is weak, it is still no pushover. Rearmament has been going on for several years. Russia has been testing its new Topol M and Bulava ICBMs and introduced new classes of military frigates. Last week the Kremlin announced that the Russian Black Sea port of Novorossiysk is to house submarines carrying cruise missiles with a range of more than 1,500km. 

“With Crimea’s return to Russia the relevance of this base has not diminished at all, because Nato ships are permanently present in the Black Sea, so there are plans for creating a naval base in the Black Sea area,” Black Sea Fleet commander Aleksandr Vitko told the president, newswires reported. "In Novorossiysk the secrecy of a submarine leaving port on a mission is far easier to maintain than in Sevastopol," he added, alluding to Russia's Crimean naval base. 

Perhaps more worrying is that Russia is now also actively upgrading its strategic nuclear force. "Russia will renew its strategic nuclear forces (SNF) not by 70% as expected now but by 100%," Russian Deputy Prime Minister Dmitry Rogozin told Rossiya-24 television on September 22. " Rogozin went on to say that in 2015 the army and the navy should switch to "cutting edge" weaponry by 30%, and in 2020 by 70%. At the same time, Russia needs a compact army, which, if necessary, can be relocated to "any threatening war theatre.”

The West has not been totally inactive, it is just their commitment to follow through that is in question. The US said on September 23 that plans to sell 40 air-launched AGM 158-missiles to Poland strengthens its defence amid the ongoing Ukraine crisis. The joint air-to-surface missiles can carry 1,000-pound warheads and have a far longer maximum range than the ones Poland currently is equipped with. 

Likewise the Poles have formed a rapid reaction force together with the Lithuanians and Georgians designed to counter Russian aggression. And Poland decided to accelerate the process of upgrading its missile defence system in March as the situation in Ukraine deteriorated.

For all its grandstanding, Washington has no intention of going all the way. The Washington Post reported that "administration officials say Mr Obama holds back weapons for Ukraine because of his oft-stated belief that there is ‘no military solution’ to the conflict with Russia and because he wishes to avoid an escalation.”

The thing with threats is they are useless unless you are prepared to carry them out. Putin has made it clear that he is willing to follow through on his threats out, while Obama has made it clear he is not.  

Related Articles

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

EU, US partly suspend Belarus sanctions for four months

bne IntelliNews - The Council of the European Union (EU) has suspended for four months the asset ... more

bne:Chart - CEE/CIS countries perform particularly well in World Bank's "Doing Business 2016" survey

Henry Kirby in London - Central and Eastern Europe and the Commonwealth of Independent States’ (CEE/CIS) countries performed particularly well in the World ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.