Here's looking at EU

Why geo-economics trumps geo-politics in the Russia-Ukraine crisis

As events are beginning to make clear, there is an inconvenient truth to the present crisis involving: despite all the rhetoric about NATO, Moscow’s beef is fundamentally with the European Union.

Samuel Ramani @SamRamani2

BREAKING: Russia says security talks will fail if EU gives collective response to proposals

This truth upsets Washington's sense of its own geopolitical primacy, and Brussels' sense of its own geopolitical non-zero-sum-ness. It also complicates the "just stop expanding NATO" line, because stopping NATO won't make the problem go away.

It's worth remembering that Russia's 2014 invasion of Ukraine was sparked *by a trade treaty*, not by a near- or even mid-term threat of NATO expansion. And no, the EU is not a back door to NATO. If anything, the NATO is a back door to the EU, which is much, much harder to join.

Moscow's problem with the EU is geo-economic, which should not be read as being somehow less salient than geo-politics. Put briefly, the continued expansion of the European geo-economic project poses a threat to the current Kremlin's political survival. For what it’s worth — which may not be much — I’ve been making this argument for years. See here, in 2017, for example, or here in 2016.

The expansion of EU influence puts insurmountable pressure on the Russian political economy to move from a rent-based, patronal model of wealth creation and power relations, to a system of institutionalized competition. Having satellite states that are governed in the same patronalist mode as Russia gives Moscow geo-economic breathing space, adding years or decades to the system's viability. Losing those satellites removes those years and decades.

That's why Moscow needs an effective veto not over Kyiv's defense policy, but over its ability to integrate with the EU, to reform its institutions, and to reorient its markets — a veto that the Donbas war makes possible.

That's also why NATO is a red herring. Yes, a Ukraine that is in NATO — or greatly supported by NATO — can resist or even reverse the pressure exerted via the Donbas. But keeping Ukraine out of NATO won't be enough for Moscow, if Kyiv keeps pursuing ties with the EU. And it's why the 'Finlandization' idea is so pernicious: it means allowing Moscow to dictate not only Ukraine's security relationships, but its economic relationships, too. (Remember that Finland and Austria didn't join the EU until 1995. Their forced neutrality make earlier accession impossible.)

And no, geo-economic 'Finlandization' isn't an option. It is impossible — as a matter of economic governance, and as a matter of customs law — to integrate simultaneously with the EU and the EEU. One way or another, Ukraine will be forced to choose a primary trading bloc.

Now, I'm not here to say that Moscow is out to destroy the EU. It isn't, and Moscow profits — to a degree — from having the EU as a trading partner. But only to a degree. Even within its current borders, the EU puts immense pressure on Russia to do things like adapt the natural gas sector — the country's biggest source of rents — to fit the Third Energy Package.

Moscow's worst nightmare isn't hypersonic missiles in Ukraine: it's the EU Carbon Border Adjustment Mechanism. Now imagine that mechanism — and others like it — extended to Ukraine, and maybe you begin to get my point.

In other words, while NATO is easy to set up rhetorically as a threat to Russian security — a threat that Moscow knows is highly unlikely ever to materialize — it is the EU that poses the clearest and most present danger to the Kremlin's ability to maintain power.