News Journal: Putin is in a hole; will he stop digging?

Back in May, a lot of American pundits and politicians were saying that Vladimir Putin was a masterful foreign policy strategist who had outwitted President Obama. I disagreed. I thought Putin’s incursion into Ukraine was a major miscalculation that would have disastrous consequences for him and for Russia.
It is beginning to look like I was right. Since May, the Ukrainians have rallied, held democratic elections, spurned Russian overtures and strengthened their ties to the European Union. The loss of 298 lives when a Russian missile downed a Malaysian Air plane shocked the world and woke up some of our previously complacent European allies.
When the Ukrainians sent troops into its eastern provinces to engage the Russian-backed separatists and had some success against them, Putin countered by sending even more obvious military help into the country, including regular Russian army troops, artillery, tanks and armored personnel carriers. His denials that he was doing so persuaded no one, especially not the Russian families who were forced to mourn the sons they lost in funerals the government demanded be held in secrecy.
Meanwhile, Putin has managed to do something that looked nearly impossible just a few months ago. He has reinvigorated what had become a moribund NATO alliance. Our European allies, reluctant to spend any money on their own defense when they saw no threats on the horizon, have now recommitted to NATO. Their defense budgets will increase, and they will take part in creating a rapid response force that will probably be based in Poland. Former USSR states such as Estonia that are now part of NATO have received firm assurances of the alliance’s commitment to their defense.
While Putin has reunited the West, his country’s economy has begun to collapse. The Ukraine incursion caused multinational corporations and banks to cancel planned projects and pull major money out of Russia. That was happening even before the sanctions our allies finally agreed to in the last couple of weeks were put into effect.
John McCain’s description of Russia as “a gas station masquerading as a country” isn’t far off the mark. And in an economy based entirely on gas and oil, recent headlines like these add up to a disaster in the making:
• “Energy Companies Rethinking Russia After New Round of Russian Sanctions” (New York Times).
• “Rosneft Chief Appeals to Moscow for $42 Billion Bailout as West’s Sanctions Bite” (The Financial Times of London; Rosneft is the leading Russian oil company).
• “Political Tide Turns Against Putin’s Pet Gas Pipeline” (The Financial Times of London).
Last week, the London Telegraph summed up the present economic situation in Russia this way:
“The Russian ruble has fallen to record lows against the dollar as the US, Europe and Japan prepare to launch a fresh raft of financial sanctions within days unless the Kremlin pulls its troops and heavy armor out of eastern Ukraine.
“The currency has dropped 25 percent over the past 18 months, raising the real cost of servicing almost $610 billion of foreign currency debt owed by Russian banks, companies and state bodies. Fresh capital flight pushed the ruble to 37.46 against the dollar on Tuesday, a level that may soon force the central bank to raise rates, driving the economy deeper into a protracted slump. … Traders warn that a serious liquidity crunch is taking hold in Russian financial markets. …
“ ‘People are very scared,’ said one Moscow banker. ‘There is talk of Iran-style sanctions against Russia and, if we go down that route, we may not have much of a financial sector left.’ ”
I am reminded of the first rule of holes: When you find yourself in one, stop digging. I think Putin knows he has dug a deep hole but doesn’t know how to stop. The Russian media he controls have whipped the Russian people into a patriotic frenzy. They have been bombarded with stories about Ukrainian atrocities. They have been persuaded, incorrectly, that millions of ethnic Russians living in Ukraine want to come back to Mother Russia. How does Putin reverse course now and pull back from Ukraine without suffering grave political consequences?
I don’t know the answer to that, but the alternative for Putin is ultimately suffering even graver political consequences when millions of Russians lose their jobs and see their savings disappear. Unless he stops digging, it might turn out the hole he has dug is his political grave.
Ted Kaufman is a former U.S. senator from Delaware.