As Mohamed El-Erian, an economist whom I have read extensively in the past, says in his article on Project Syndicate,
"The final group comprises the “wild card” countries, whose size and connectivity have important systemic implications. The most notable example is Russia. Faced with a deepening economic recession, a collapsing currency, capital flight, and shortages caused by contracting imports, President Vladimir Putin will need to decide whether to change his approach to Ukraine, re-engage with the West to allow for the lifting of sanctions, and build a more sustainable, diversified economy.Putin's recent comments blaming the West, and particularly the U.S., for his country's economic malaise, and rightfully so in many respects, indicates that he is not interested in coming to the table and is simply building up the broad political will for a military action. Significant -- and by significant, I mean Western and/or U.S. involvement -- military action would be required to push oil prices higher, which is the only means of respite for his energy-dominated Russian economy.
The alternative would be to attempt to divert popular discontent at home by expanding Russia’s intervention in Ukraine. This approach would most likely result in a new round of sanctions and counter-sanctions, tipping Russia into an even deeper recession – and perhaps even triggering political instability or more foreign-policy risk-taking – while exacerbating Europe’s economic malaise."
I bet Putin is wishing that he did not imprison, and remove from influence, Khodorkovsky, who was actively pushing for a more diversified Russian economy based on technological innovation. It was a geopolitical gamble that Putin took during his ascendency to power. One with huge implications for the Russian people, and one that I am betting that he will lose.
