Putin is trying to use the West’s banking problems to his advantage. A financial crisis could affect Western support for Ukraine and shift public attention.
Munich/New York – In the USA, memories of the year 2008 are currently being awakened. In the US, the Silicon Valley Bank and other banks are in crisis. In Europe, too, the financial situation remains tense. The major bank Credit Suisse announced that it would borrow CHF 50 billion from the Swiss National Bank in order to stabilize liquidity. The difficult banking situation in the West comes at exactly the right time for Russian President Vladimir Putin. Because he can skilfully distract from his current problems in the Ukraine war and assume that the West will not be able to finance Ukraine for much longer.
The Credit Suisse banking crisis is playing into Putin’s hands: he wants to show “Western decline”.
“What Putin wants is a narrative of disorder in the US and Europe, whether that disorder is January 6-style protests, political polarization, or economic crisis,” historian Michael Kimmage said Newsweek. “He just wants to show that there is a Western decline and that the West cannot support Ukraine in the long term,” Kimmage said. This does not have to be true, but Putin still wants to tell this story. These kinds of events are definitely useful for the Russian public,” Kimmage said.
For Putin, the financial difficulties also offer the possibility of a distraction. Heavy fighting and casualties are currently taking place in Bakhmut on the Ukrainian and Russian sides. The pictures from Bakhmut show the Russian population the brutality of the Russian war of aggression against Ukraine. “It’s not like Putin is going to get out of this problem with this particular crisis, but attention will be focused elsewhere,” Kimmage explained. It is an event with which Russia has no connection whatsoever.
Possible financial crisis in the West: what will happen to Ukraine?
If there is a financial crisis, it could have an impact on Western support for Ukraine. “The financial turmoil will weaken Europe economically, and that will make it more difficult to sustain the war effort,” said Alessandro Rebucci, professor of international finance and applied macroeconomics at Johns Hopkins University Newsweek. However, Kimmage and Rebucci agree that the motivation to support Ukraine is political and not dependent on economic factors.
Russia would hardly be affected by a possible financial crisis. Even if Credit Suisse collapsed and there was an economic crisis in the EU, it would have “little impact on Russian banks or the Russian financial system,” said Gary Hufbauer, of the Peterson Institute for International Economics. Russia is already “well isolated” due to the sanctions imposed by the West. Even without the financial crisis, the budget report in Moscow reveals Putin’s problems. (vk)
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