Stopping Putin means hitting him where it really hurts

Fears of an imminent Russian incursion in Ukraine seem to have intensified in the past week or so. NATO allies have sent ships and fighter j [Bloomberg]( Follow Us [Get the newsletter]( Fears of an imminent Russian incursion in Ukraine seem to have intensified in the past week or so. [NATO allies have sent ships and fighter jets to back up Ukraine](, while the [U.S. has put 8,500 troops on standby]( and ordered families of all American staff at the U.S. Embassy to leave the country. It’s a tense situation. After the 2014 annexation of Crimea, the possibility of an invasion cannot be ruled out. If it does happen, Ukraine will need support from the rest of Europe and NATO. Ukraine has gradually upped its military spending since 2014, putting it almost on a par with Russia’s spending by share of GDP. But Russia maintains one of the largest military forces in the world, and it holds every major advantage. By active personnel, Russia’s army is the fifth-largest in the world. By comparison, Ukraine’s army comes in at 22nd. [Russia’s key demand is a halt to NATO expansion](. Russian President Vladimir Putin has asked for guarantees that Ukraine will never be allowed to join the alliance, and demanded a withdrawal from eastern Europe. That, naturally, is a no-go for the allies. In response, James Stravridis suggests welcoming two other nations into NATO with open arms: [Sweden and Finland](. Late last year, the Russian foreign ministry indicated displeasure with the idea of either joining the alliance. Their membership would make clear to Putin that he does not hold a veto card when it comes to expanding the democratic alliance. The media frenzy makes it seem like an invasion is inevitable. But what about [another scenario in which de-escalation is more likely?]( That’s what Leonid Bershidsky lays out. In short, Putin set a bait trap for Georgia in 2018 to make a devastating first move and — given Ukraine’s rearming of its military — was perhaps rather hoping to spark something similar again. Instead, U.S. President Joe Biden has successfully turned the tables with a big publicity campaign, allowing Western arms supplies to move into Ukraine and landing a blow on Russia’s stocks and currency. With Putin now on the back foot, it’d be advantageous for the Kremlin to wait out the crisis and therefore undermine U.S. credibility. Andreas Kluth poses the theory that perhaps Putin deliberately created a crisis in which everything is possible at once. [In the same way Schrodinger’s cat is both dead and alive](, Putin is in permanent superposition of attacking and not attacking, infiltrating and not infiltrating, and has the world’s attention on him. That can’t last forever, though. Meanwhile, the tensions are making waves elsewhere, too: Europe’s energy crisis. Europe imports approximately 40% of its gas from Russia, and if a war led to the loss of all those supplies, the region would be forced to take Draconian measures. Javier Blas warns that [high gas prices are set to be a new trend, not a one-off.]( If you’re feeling nice and secure in the U.S., consider this: [Russia also has the ability to disrupt global oil markets](, which would directly hit Americans. Meghan O’Sullivan explains that that option may have fewer downsides for Russia, and could be more easily disguised as an explosion on a pipeline or an environmental disaster. So how should the West push back? As Bloomberg’s editorial board writes, [unity is its most potent weapon](. Andreas points out that [Europe doesn’t look that united right now,]( especially with [Germany’s preoccupation with “dialogue.](” In fact, though the government is still dealing with the Partygate scandal, [the U.K. looks like the adult in the room for once,]( after making an unusually clear-eyed diplomatic decision to deliver 2,000 state-of-the-art N-LAW anti-tank weapons to Ukraine, says Martin Ivens. If the West can pull themselves together for long enough to make a coordinated response, the challenge will be to [punish Putin in the language he understands best — through his wallet and those of his friends](. Max Hastings argues that while economic sanctions against Russia as a country are right, they’re not sufficient: “The only meaningful weapon is an assault upon the fortunes and lifestyles of the Kremlin’s gangster clique, held and invested around the world.” It’s hard to put a finger on where Russia’s murky offshore wealth is and who it belongs to, but at this point it’s safe to say there’s a lot of it. [One 2017 study]( suggested that Russia’s offshore wealth accounted for 54.5% of GDP. One way to get to Russia’s wallet would be to cut it off from the Society for Worldwide Interbank Financial Telecommunication, or [Swift](, which is used to transfer money across borders or settle securities trades. The autocracy’s currency and economy [that would seize]( up if it were denied access to Swift. But Timothy O’Brien suggests that [it may not be enough to get to Putin himself](. As suggested by the reporting on the [Pandora]( and [Panama Papers](, Putin stashes his wealth — and his shares in state-owned enterprises — in networks controlled by family members and close advisers. To make Putin feel the same financial pain as his fellow Russians if the country is locked out of Swift, the West would have to identify his networks and freeze accounts located outside of Russia. That’d be tough. But it’d be worth it. More Ukraine-Russia Reading As the EU’s only pre-eminent military power after Brexit, [France has an opportunity]( to play a more productive role, says Lionel Laurent. [Putin is using history as a weapon]( in this campaign. Hal Brands notes that he’s not the only autocrat doing so right now. James Stavridis isn’t scared of Putin’s [“pirate of the Caribbean” ambitions](. More Data From Bloomberg Opinion We’re already fighting [the world’s next global health emergency](, says Therese Raphael. [Unexpected enthusiasm for electric vehicles has lithium in short supply](. Liam Denning assures us that it’s probably not for long. Notes: To contact the author of this newsletter, email Lara Williams at lwilliams218@bloomberg.net. This is the Theme of the Week edition of Bloomberg Opinion Today, a digest of our top commentary published every Sunday. Like Bloomberg Opinion Today? [Subscribe to Bloomberg All Access and get much, much more](. You’ll receive our unmatched global news coverage and two in-depth daily newsletters, The Bloomberg Open and The Bloomberg Close. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. You received this message because you are subscribed to Bloomberg's Bloomberg Opinion Today newsletter. 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