As Sunday’s referendum, in which the people of Crimea will decide whether to join Russia, approaches, the images on Russian television are astonishing. They are more propagandistic and venomous than anything I can remember even from Soviet times. Breathless presenters whip up hysteria with bloodcurdling stories of atrocities being committed by the “neo-Nazi junta” now governing Ukraine. Overheated “victims” beg Putin to help, kindly Russians offer to give refuge to the terrified people fleeing Ukraine, and menacing music accompanies montages of swastikas, fascist thugs armed with clubs, and black-and-white images of Hitler’s troops and burning villages.

It is all apparently aimed at preparing the public to accept that there may be war, and that Russia will be fighting in a just cause. Yet I have a horrible feeling that President Putin believes all this stuff. He receives his information mainly from his trusted secret services – men like himself, schooled in the dark arts of KGB disinformation. I worked as a media consultant to the Kremlin from 2006 to 2009, close enough to gain a sense of Putin’s growing paranoia.

I believe this has three causes, the most important of which, perhaps, is his own terror of being dislodged by popular revolution. Putin believes the Ukrainian uprising was fomented entirely by the West. He puts two and two together and gets five. He saw Senator John McCain saluting the Maidan crowds, and heard Victoria Nuland, the US Assistant Secretary of State, discussing on the phone which opposition leaders she would like to see in the new government (and he made sure his spies made the tape of the conversation public). Putin has been convinced ever since the Orange Revolution in 2004, followed by the Moscow protests of late 2011, that there is, in one of his advisers’ words, a “Destroy Russia” project. And he is next on the list.

David Fuller's view

Gorbachev eventually became a friend of the West partly because he knew how his father and millions of other Russians had suffered under Stalin’s rule.  Putin is no Gorbachev and we should judge him by his words and actions.  Nine years ago Putin said: “The break-up of the Soviet Union was the greatest geopolitical tragedy of the 20^th century.”  He was equally candid in saying a few years later: “There is no such thing as ex-KGB.”

Putin does regard Western powers as friends.  However, he has many western interests, not least with Germany.  Fair enough and the same could be said for Western countries’ views of Russia.  However, Western countries would like to see a more democratic Russia.  It does not have that under Putin’s rule, although it does have business links and many cultural interests with Russia.

Putin’s moves in Crimea and along Ukraine’s eastern border have reawakened uncomfortable Cold War memories.  Putin and Russia clearly have historic connections with Crimea in addition to contemporary security interests.  However, by annexing Crimea because, he could do so without being militarily opposed by the West, he risks leaving himself more politically vulnerable within Russia. 

This vulnerability is not yet shown in Russian public opinion polls but the country is haemorrhaging money through its stock market (weekly & daily).  More seriously, Russian companies have $653bn of foreign dollar debt, according to this informative article: Russia counts as West tightens sanctions noose, by Ambrose Evans-Pritchard. Here is a brief section:

This article above goes on to list all the non-military steps that the West can take in its efforts to curb Putin’s aggression.  He could respond by cutting off gas and oil supplies to Europe, but that would be a Pyrrhic victory reducing a significant portion of Russia’s revenue.

In conclusion, the Russia/Crimea/Ukraine situation has become a potentially important geopolitical risk which markets have begun to reflect.  Sanctions promised by the USA, Germany and the UK would have economic consequences for both sides.  Putin started this and he can also end the tensions.  Either way, his career as Russia’s strong man is probably on the line as well.   

This article by Mark Hulbert is only partly related but may also be of interest: In-the-know insiders are dumping stocks.