Daniel Gross points out that Putin’s Ukraine adventure could end up being very costly for Russia:
In 2013, Russia’s economy grew at a meager 1.3 percent rate, down sharply from 3.4 percent in 2012. This year is likely to be no better. In its world Outlook issued [last] week, the International Monetary Fund downgraded its projection for Russian economic growth in 2014, blaming “the lack of more comprehensive structural reforms [that] has led to the erosion in businesses’ and consumers’ confidence.”
But the Crimea situation is making matters much worse.
The World Bank now projects that given a “limited and short-lived impact of the Crimea crisis,” growth could fall to 1.1 percent in 2014. Should things get messier, however, the World Bank warns that Russia’s economy could shrink by 1.8 percent in 2014. Russian officials, the designated cheerleaders for Putin, are even more pessimistic. According to Reuters, Andrei Klepach, the deputy economy minister, now says Russia’s economy could grow at a rate as low as .5 percent in 2014—perilously close to flatlining. “The sheer market uncertainty has brought down Russian expected growth this year from 2.5 percent to .5 percent,” said Anders Aslund, senior fellow at the Peterson Institute for International Economics in Washington, D.C. “That is, the Putin aggression against Crimea and Ukraine cost two percent of Gross Domestic Product. (And with a GDP of about $2 trillion, that two percent adds up to $40 billion.)
I wish I could feel confident that the obvious economic disadvantages of re-starting the Russian empire would outweigh the psychic and political boon the new chauvinism must be for Putin. Maybe it will. But what’s motivating the Russian government right now is obviously not a cold-blooded assessment of national economic interests. And there is nothing ever cold-blooded about Russian nationalism.