Russian President Vladimir Putin has annexed Crimea, stirred up revolt in eastern Ukraine, and kept the fires of revolt burning bright - all while signing two mega-deals with China on gas supplies and pipelines. The global attention he has drawn has no contemporary parallel, and it's clear enough that U.S. president Barack Obama and his Chinese counterpart Xi Jinping are no match on the power politics stage for their colleague from Russia. Forbes named Putin the world's most powerful man this year for good reason: Indeed it is not too much to say that Vladimir Putin has put power politics back onto the European map.
Boxing Versus Trading
Europe cannot afford to remain passive. It has played a weak hand badly so far, and the problem is that Europe is no longer set up to play power games. Europeans are unsure how to handle a man who has donned boxing gloves and has no qualms about using hard power to expand his country's sphere of influence.
In Europe, geopolitics has fallen out of favor in recent decades. Normative policy expansion and trade interests have been given such primacy, in fact, that member states seem unable to understand why any country would opt for confrontation, rather than just carry on doing business together. Europe holds an implicit belief that the whole world will shift toward a capitalist, democratic system in which it would be unthinkable to take up weapons against trade partners - or anyone who might become a trade partner.
Is Europe Naive?
Global developments have clearly shown the error of this approach. Armies may no longer feature in relationships among European countries, but Europe was naive to think that the same would apply outside the union's borders: Europe's demilitarization did not set an example for the rest of the world.
Typical of the gulf between Europe and large parts of the wider world is the approach to commodities. Until recently, Europe viewed resources almost exclusively as a trade issue. This basically implies that after some negotiation, a price is set, and everyone is happy. By contrast, elsewhere in the world - including in the United States - commodities are seen in the context of power politics, and supplies are considered essential to national security. European politicians are becoming aware of this discrepancy, but it will be some time before a changed mindset translates into policy.
The Power Triad
Now that Putin has put power politics back on the European map, it makes sense to analyse what constitutes power in international relations. Roughly speaking, power has three aspects: military, political, and economic. Europe has focused too much on the latter while paying scant attention to the first component. European leaders declared from the start of the Ukraine crisis that military action was out of the question. This was unwise. Meanwhile, Putin deployed a hybrid strategy of military smoke screens, commandos, propaganda, economic pressure, energy policy and diplomacy.
The stress tests Europe carries out on its banks provide an apt metaphor to illustrate why Europe will probably waver again. John Gapper wrote: "The authorities can run all kinds of stress tests on ... banks, trying to predict how well they would bear losses in a future crisis. The stress test they really need to run is on themselves - whether they will stick to their promise to work nicely with each other or will revert to self-interest." So far, Europe has been unable to take measures decisive enough to counter Russia - and more cracks will likely appear in the ‘united' European front as the stress increases.
Undoubtedly, Putin will do his best to increase that pressure and to maintain a degree of control over Ukraine. The pro-European results of the Ukraine elections will have displeased him, and Putin will try to destroy any semblance of unity in Kiev. The rebels lack firm footing in eastern Ukraine, so they continue to rely on Russia. Putin seems to feel that Moscow should have more control - by continuing to send troops and materiel, he can secure the rebels' loyalty. Crimea is a worry for Putin because it is virtually isolated and cannot easily be supplied. Ideally, Putin would like to dominate a continuous area from eastern Ukraine to Crimea via his proxies.
Who will blink first?
Increasingly, power politics and economic policy overlap. Agreements such as the Transatlantic Trade and Investment Partnership and the Trans-Pacific Partnership are not just tools to generate growth - they are geopolitical instruments. Such developments can undermine consumer and producer confidence.
Russia is hampered by its aggressive foreign policy. Russian growth will slow further. Russian companies struggle to attain financing, and reserves that were supposed to be allocated to infrastructure are now used to purchase corporate bonds as a way to provide businesses with cash. One implication is that the (already poor) Russian infrastructure is thrown back even further.
But if Putin doesn't back down, Europe's unity will continue to be tested, and the result could well be disappointing. Politicians may be tempted to look inward rather than outward as they attempt to deal with what could turn out to be the biggest threat to the Eurozone and the European Union: disgruntled voters whose fears for their financial futures will be exacerbated by geopolitical instability. A dissatisfied electorate that is suspicious of the powers that be is one reason economic growth in Europe is bound to continue to be sluggish for a prolonged period. This in turn will undermine Europe's soft and hard power capacities even further.
