Letter From the Editors
The special operation began in February, abruptly cutting off diplomatic efforts. The smaller country’s government was weak and unpopular after cracking down on the opposition. Yet the public rallied against what it saw as a treacherous invasion by a bullying power. Despite early claims the war would end in days, it held off the offensive with decentralized defense forces and cheap drones. By late March, global media questioned the “great power” president’s grip on reality, as his administration appeared to shift its war aims daily while insisting everything was on track.
“It’s no coincidence that parallels have been drawn,” Vladimir Putin told the Russian Union of Industrialists and Entrepreneurs, “with the recent pandemic.” Some effects of Iran closing the Strait of Hormuz do resemble COVID-19 disruptions, but the military parallels are more immediate.
Putin’s framing was striking given how he introduced Iran: “We all know very well the events of 2014, when we were compelled . . . to take all the necessary measures to protect our people in the Crimea and, later, in southeastern Ukraine in general. But then came illegal sanctions! I want to stress that they were illegal because they were never approved by UN resolutions. And now, on top of this, the armed conflict in the Middle East is making an even more noticeable contribution to the situation today.”
Conspicuously compressed in that narrative (between 2014 and the present) is the 2022 SMO, so fateful to the entrepreneurs in the audience. Andrei Kolesnikov remarked, “It’s surprising that Vladimir Putin still believes it is necessary to explain why the special operation in Ukraine began in 2014. He clearly believes that there is something he hasn’t fully explained; something about this story is still bothering him. He wants to be canonically correct and continues to reinforce this version in people’s minds.”
If Putin is refining a fixed narrative, Donald Trump appears to be flying by the seat of his pants. Writing for Republic, Yevgeny Feldman tracked the president’s shifting statements from March 11 to March 16, framing both Iran and Ukraine as “escalation traps.” Feldman’s logic: “You dominate! You have more missiles, more soldiers and more advanced technology. Obviously, you need to escalate the fighting, and then everything will be fine. What’s more, backing down is a sign of weakness.”
That logic clashes with the need to limit losses, producing volatile policy swings. Trump has moved between calling for allied naval support in the Strait of Hormuz and suggesting negotiations are under way. These shifts also carry economic consequences. Ekspert notes that Trump’s remarks about “very good and productive conversations regarding a complete and final resolution of our hostilities in the Middle East” in a March 23 social media post “triggered a collapse of the oil market,” benefiting stock indices. Feldman notes: “The problem with oil prices is so serious that the US has acknowledged that it is allowing Iranian tankers to pass through the Strait to prevent further price increases and is lifting sanctions from Russian oil that is currently aboard tankers.”
With “illegal sanctions” effectively gone and oil prices back to pre-2014 levels, this might seem like a boon to Russia. But the outlook is more complicated. The influx of revenue is entering an economy already under strain. As NG reports, “Every business climate indicator in Russia dropped sharply.” Meanwhile, government overspending and severe shortages of labor and demand are putting the Central Bank in a bind. “The ruble may get much weaker by [April’s governors’ meeting] if the Finance Ministry, instead of selling foreign currency, starts buying it up. This will further heighten inflationary expectations,” NG concludes. Russia suffering stagflation in wartime? We might have to look further back to find a parallel for that.