The west’s hybrid war on Russia

For all Russia’s efforts to develop an unconventional approach to conflict in the 21st century, its offensive against Ukraine has been carried out along brutal and decidedly old-fashioned lines: air strikes, heavy artillery and armoured vehicles attempting to pound its neighbour into submission.

Instead it is the west that is introducing a new and non-traditional means of fighting back, having been outsmarted for much of the past decade by Russia’s expansion of the battlefield to incorporate cyber attacks, misinformation and “little green men” – masked troops with no insignia.

Over the past week, western nations have introduced unprecedented financial sanctions on Russia, including on the country’s central bank, which have the potential to decimate its economy. Experts say they amount to full-scale financial warfare of an unheard-of nature and scope.

At the same time, it has orchestrated a cultural and sporting boycott, imposing a broad-based sense of isolation on Russian society. Weary of its own endless wars, the west is pioneering a new kind of “hybrid” war — a combination of economic and soft power intended to punish Russia and pressure a change of course.

“It’s warfare without the traditional war,” observes Robert Koenigsberger, the chief investment officer of hedge fund Gramercy. “Maybe we don’t have to send in the marines any more.”

Since the end of the cold war, a web of deep links has grown up between Russia and its former enemies in the west, not just in business and finance, but also in culture, sport and travel. Western governments are now trying to turn that interconnectedness against Putin, making use of their control over the international financial system and the ability of their societies to create powerful narratives that are spread on social media.

“Russia has been incredibly effective at manipulating the ties that bind it to other countries, especially its neighbours — whether it be with cyber, disinformation, energy supplies or trade disputes,” says Mark Leonard, director of the European Council on Foreign Relations. “There is an endless list of things that connect countries but which can also be used to exert political pressure.”

Leonard, author of The Age of Unpeace, says that the western efforts to fight a very different kind of war started with the intelligence briefings about Russian plans in the run-up to the invasion, which have made it harder for Putin to explain and justify the attack.

He adds: “We are now trying to at the very least match Russia and use the same techniques against them.” 

While few western officials expect the measures to have an immediate impact on the course of the war, there has been surprise at how quickly and decisively governments were able to put together the package of financial sanctions. The western response is being closely watched by other potential adversaries, including China.

“I don’t think I’ve ever seen such a potent, unified, co-operative, and rapid action,” says Mark Sobel, US chair of the think-tank OMFIF and a four-decade senior US Treasury official. “What they did was just absolutely unprecedented in terms of the forcefulness.”

Swift and severe

The impact of the financial sanctions has been swift and severe. Over the weekend, Russians started queueing outside banks to withdraw their money and the rouble went into freefall, forcing the Russian central bank to more than double interest rates to 20 per cent to buttress the local banking industry.

Over the past week, the Russian currency has lost over 30 per cent of its value, falling to near record lows against the US dollar. JPMorgan is forecasting that Russian gross domestic product will collapse by 35 per cent in the second quarter of this year. The sanctions are so draconian that they could even push Russia into its first government debt default since the country’s ruinous 1998 crisis — largely due to the west in practice “weaponising” its dominance over the world’s financial architecture.

“We will provoke the collapse of the Russian economy,” French finance minister Bruno Le Maire told a local radio station this week. “We are waging total economic and financial war against Russia, Putin, and his government, and let’s be clear, the Russian people will also pay the consequences.”

There are multiple prongs in the joint US-European financial assault. At first they mainly involved placing sanctions on important individual Russians and Russian companies, prohibiting any western financial institutions from interacting with them in any way. But over the course of a weekend, the west unveiled its weapons of mass financial destruction.

The two main tools were blocking swaths of Russia’s access to the Swift messaging system that underpins much of the global payments ecosystem — exempting only energy payments to keep oil and gas flowing — and freezing the Russian central bank’s overseas assets to hamstring its ability to support its financial system with roughly $600bn of accumulated reserves.

Add in a flurry of exits by western companies such as BP, store closures such as Ikea, and divestments by investors such as Norway’s sovereign wealth fund, and Russia faces the equivalent of a near-total international financial blockade of its economy.

“What they’re trying to do now is to align financial tools and the weaponisation of finance to fit into the military prerogative of raising the costs and pulling the bottom out of the Russian economy before they destroy Ukraine,” says Julia Friedlander, who previously worked at the US Treasury’s Office of Terrorism and Financial Intelligence and is now director of the Economic Statecraft Initiative at the Atlantic Council.

‘Which values do you support?’

While governments have carefully orchestrated swingeing financial sanctions, western societies have also imposed, seemingly organically, a sporting and cultural boycott of Russia of a breadth not seen since apartheid-era restrictions on South Africa.

Perhaps the most dramatic snub has come from the world’s most popular sport. Russia was the host of the previous football World Cup, in 2018, a propaganda triumph for Putin who the following year bestowed the Russian Order of Friendship on Gianni Infantino, president of Fifa, the sport’s governing body.

But on Monday, Fifa banned Russia from all international football competitions. The Russian men’s team had been due to play a qualifying match for this year’s World Cup later in March, but it will now almost certainly not be present at the finals in Qatar in November.

Jonas Baer-Hoffmann, secretary-general of players representative body Fifpro, says it is impossible for football to remain neutral in face of the Russian invasion. “The idea that we can make something apolitical is a myth,” he says. “If Putin decides football is political, it is political. The question is not can you remain apolitical. The question is which values do you support as a sector? Which side do you come down on?” Football, he says, should come down on the side of peace, equality, human rights, and national self-determination.

Russia has suffered the same fate in ice hockey, one of its most popular sports. As well as condemning the invasion, the International Ice Hockey Federation suspended all teams from Russia and Belarus from participating in its competitions “until further notice”.

Alex Ovechkin, the ice hockey player who is one of the most famous athletes in the country and who in 2017 helped set up a PutinTeam on social media to back the president, told a press conference this week: “Please, no more war.”

Russian athletes were also banned from the Winter Paralympics in Beijing, and Formula One cancelled the Russian Grand Prix. Russia will not be allowed to compete in this year’s Eurovision Song Contest. Even the International Cat Federation has banned Russian cats from international competitions. Fédération Internationale Féline said on Wednesday that “it cannot just witness these atrocities and do nothing”.

Many of Russia’s best-known artists have also found themselves caught in the push to isolate the country and in some cases have been turned into almost cultural pariahs.

Valery Gergiev, one of the most celebrated figures in the classical music world, was sacked this week from his position as chief conductor of the Munich Philharmonic. The 68-year-old maestro, a vocal supporter of Putin, had refused a request from the city’s mayor to distance himself from the invasion of Ukraine. In New York, the internationally recognised opera singer Anna Netrebko was forced to cancel her future dates at the Metropolitan Opera after refusing to repudiate Putin’s actions.

“All these moves make clear to Russian public opinion that the country is isolated in the world and disapproved of,” says Leonard.

A political strategy?

With Russian troops encircling Kyiv and other cities under aerial bombardment, there is little sign that any of these measures have had an immediate impact on the war. Putin claimed again on Thursday that Russia was rooting out “neo-Nazis” and insisted he “will never give up on [his] conviction that Russians and Ukrainians are one people”.

But over time, the overarching objective is to put more and more pressure on Putin. The rationale is that if Russians see that the economy is in chaos, while their national football team and cultural icons are shunned by the rest of the world, they will turn their anger on the president.

Yet even experts who believe western nations are right to mobilise all the available tools worry about some of the implications. The first issue is the indiscriminate nature of many of the measures, which are not just targeted at the government or senior officials but all Russians.

Ingrid Wuerth, a law professor at Vanderbilt, says the financial sanctions can be legally defended and are appropriate given the scale of Russia’s own transgressions. Yet she frets about the precedent of targeting a major country’s foreign reserves and the long-term negative impact it could have.

“If central bank assets become a more routine target for meeting foreign policy objectives then I think that is bad for the global financial system, and bad for international relations,” she says. “We can do great financial damage to Russia, but the question is whether we can achieve our aims . . . If the Russian economy collapses, how much is that going to help Ukraine, and how much is it just going to hurt the Russian people?”

The US authorities have built up a wide-ranging capacity to gather intelligence on overseas financial transactions, which has allowed it to become extremely effective at tracking — and then fining — banks that are evading sanctions.

The result is that even when US sanctions are supposed to be targeted, they can have powerful spillover effects because financial firms around the world are so afraid of being placed on an American blacklist.

The sanctions package announced over last weekend was designed to avoid oil and gas payments to Russia. However, with traders now afraid of the risks associated with dealing with any Russian counterparties, many have chosen not to purchase Russian oil this week, leading to a new rise in oil prices.

“This is pretty hard to insulate yourself from unless you’re prepared to be North Korea,” says Richard Nephew, a sanctions expert at Columbia University who formerly worked at the US state department.

Some observers worry that imposing punitive measures on all Russians, whatever their views, could provoke resentment against western nations and fuel nationalism.

When the Russian pianist Daniil Trifonov gave a recital at Carnegie Hall in New York on Thursday, the venue’s director, Sir Clive Gillinson, went on stage beforehand to make the distinction between those Russian artists who are publicly critical of Putin and those who remain silent or support the war.

“America, and most of the world’s response to the invasion has clearly been an indictment of Vladimir Putin, and not of Russians in general,” he told the audience. “It is very important to note that a great many Russians in Russia, despite the threat to themselves, their families, and their loved ones, are demonstrating against this invasion, which in their circumstances is an incredibly brave thing to do.” 

Aleksander Ceferin, president of Uefa which runs football in Europe, agrees with the decision to ban Russian teams. But he worries about the impact of organisations such as Uefa making decisions about which athletes are permitted to play. “Are people allowed [to go to] live sporting events or do we first check how the political situation is and don’t go to other countries?” he asked at an FT conference.

The other important question is how and when these measures might be reversed. As sanctions experts point out, they are easy to impose, but much harder to lift. To be an effective form of pressure, sanctions need to be integrated into a broader political and diplomatic strategy for ending the war.

Western governments have yet to articulate a pathway for what Russia would need to do for sanctions to be lifted. The statement that the US, EU, Canada and UK governments released last weekend said only that they would “continue imposing costs” on Russia to isolate it from the international financial system.

Leonard points out that even the sanctions regimes that are considered a success — such as on apartheid South Africa and Iran — took years to have an impact.

If Russia were to declare an end the war having taken control of a large chunk of Ukraine, western governments would face difficult decisions about which sanctions to maintain and for how long — which could damage the unity seen over the past week. The cultural and sporting worlds would take their cues from the signals sent by governments.

Robert Blackwill, a former US deputy national security adviser, says that western nations are trying to use economic and other instruments to achieve geopolitical objectives. “We don’t yet know whether this will be effective,” he says. “Will it change behaviour, or just punish behaviour?”

Additional reporting by Ian Johnston