Sorry if you don’t watch Game of Thrones on Sunday nights, you might not get the title reference. Suffice it to say, without giving a spoiler alert, that there’s vengeance and there’s payback.
Vengeance is when someone who has harmed you gets his or her comeuppance, and while you get to sit back and enjoy the schadenfreude, you really don’t get to revel in it. Payback is when you get to plot and plan the comeuppance, and you can fully indulge your enjoyment. The Purple Wedding was a case of vengeance, in which most of the audience (both in the TeeVeeland and at the wedding of King Joffrey) were simultaneously horrified and gratified by the events.
Likewise, the Purple Wedding of Geopolitics is unwinding in front of our eyes. It explains precisely why President Obama doesn’t have to lift a finger (and why every President after Kennedy could have truly ignored the Soviet threat).
Russia is at increasing risk of a full-blown financial crisis as the West tightens sanctions and Russian meddling in Ukraine pushes the region towards conflagration.
The country’s private companies have been shut out of global capital markets almost entirely since the crisis erupted, causing a serious credit crunch and raising concerns that firms may not be able to refinace debt without Russian state support.
“No Eurobonds have been rolled over for six weeks. This cannot continue for long and is becoming a massive issue,” said an official from a major Russian bank. “Companies have to roll over $10bn a month and nothing is moving. The markets have been remarkably relaxed about this, given how dangerous it is. Russia’s greatest vulnerability is the bond market,” he said.
The Russian economy is, for all intents and purposes, a one-trick pony: oil and gas control economic growth. When prices are high, Russia is powerful. When prices drop, Russia is hobbled.
This is partly why President Obama has been carefully dancing around the Keystone XL pipeline. An increased flow of US and Canadian oil would defang Putin long-term. (For the record, I oppose XL, always will, because I think a short-term justification like this is not worth the price)
The Ukraine crisis is also tied into the Russian economy – as all aggression is – since Ukraine has ports.
This is also why President Obama put in place sanctions that the EU has little choice but to emulate. Among those sanctions was a cut-off of the assets of Bank Rossiya, which is deeply involved in the Russian oil industry.
In effect, Obama has choked off Russia’s economy just as it needs a long draught from her chalice.