Picture of a hand painted in Ukranian flag colours holding a miniature Ukraine

The world on fire: Everyone loses when conflict becomes open

leadership risk strategy Mar 07, 2022

A lesson from the past

When the last rites of the Great War were administered at the Treaty of Versailles in 1921, it was clear that despite the war ending in an armistice, Britain had achieved a stunning victory. It had achieved its core objectives of defending Belgian neutrality, maintaining the balance of power in Europe, and defending the international order that enabled trade to flow freely to and beyond the borders of Empire. Moreover, they acquired the spoils of war. One million square miles of territory were added to the British Empire. The Royal Navy received 176 U-Boats. The German army was broken and fleet scuttled at Scapa Flow. The German, Austria-Hungarian and Ottoman Empires were dissolved. Alsace Lorraine was recovered for France. International law upheld. Germany agreed to pay crippling reparations. The German drive for world power, which threatened Britain’s status quo as the preeminent global player, was checked. British security, finance, trade, and Imperial security were guaranteed for a generation. The British population was justly proud that the ‘war to end all wars’ had ended in victory, ushering in a new era of peace and prosperity in a land ‘fit for heroes’.  

The war had been costly. 900k British and Dominion soldiers died, and there were a further 2m casualties. Horrific as these losses were (36% of mobilised forces), they were far lower numerically and proportionately than other combatants: Germany (56%), France (78%), Russia (59%), and Austria Hungary (77%). The war had cost Britain £3.2bn (£160bn+ in today’s money), which had liquidated much of the Government’s wealth. Still, this could be off-set economically by the revival of manufacturing industries and the creation of several new ones spawned in the white heat of war (chemicals, optical glass, aircraft, engines). There was little doubt in 1921 that the war had been worth it.

Fast forward 15 years and the view was very different. The Imperial edifice, its foundations fatally weakened, was overextended and crumbling. The social and economic promise of victory had failed to materialise, in part thanks to the financial turmoil in Germany and the Wall St crash. Fascism was rampant in Europe and Japan. The League of Nations had failed. International rivalry and the spectre of war returned, with imperial aggression across the globe. The public openly questioned whether the sacrifices of the Great War had been worth it. Fast forward another 25 years to the 1960s, the bloodletting of the Second World War had convinced nearly everyone that the Great War had been a disaster. A futile conflict which resulted in a lost generation, lions led to their deaths by donkeys.    

We looked but did not see

As the conflict in Ukraine escalates, most observers are in shock. How could such a thing happen? Just because we didn’t expect it, it can’t be called a complete surprise: the signs were there. We just didn’t pay any heed to them. Russia is an Imperial power. It always has been. It also has a different model of empire, based on adjacent client states providing a strategic buffer zone, rather than the global network favoured by Western powers. Russia has been anti-Western for over a hundred years, since 1917. That’s because the West was anti-Bolshevik (British, American and European troops intervened in the Russian civil war of 1919-20); anti-communist before the Second World War; and anti-the USSR for over 40 years of Cold War. In truth, Russian leaders haven’t been fans since then either. Much has been made of NATO’s expansion into eastern Europe. Be honest, did you know how far they extended? Or care? This is clearly a provocation to a proud nation that still mourns the death of 27m killed after they were invaded by a Western power in 1941.

Moreover, Russia is now relatively weak. It has not been a winner in the post-Cold war era of liberal democracy. The Russian economy is the same size as that of Texas. It has been totally eclipsed by both America and China, which has found a way of competing and winning on the international stage while maintaining its communist ideology. For a proud nation like Russia, this is galling. It makes sense for Putin to play by different rules when he loses by following them. Russia can potentially gain from a period of instability, especially one that places the West at such a disadvantage, worried about its security rather than its wealth. 

Putin is not a freak mutation. He is a Cold War warrior, intent on refighting the battles of the past. His arms are not freshly forged. His aggression, willingness to subvert international law, and hostility towards Ukraine were all made abundantly clear in the annexation of the Crimea in 2014 (fulfilling another long standing Russian imperial ambition of controlling the Black Sea). 

No, this conflict isn’t a surprise. We looked but did not see the danger or understand its import. 

What is Putin trying to achieve?

No one knows exactly what success looks like in Putin’s warped worldview, but there are at least four likely goals:

  1. Improve his personal standing and power within Russia
  2. Stop NATO expansion
  3. Enhance Russia’s influence in world affairs, especially the European security order
  4. ‘De-Nazify Ukraine’, which ridiculous claim roughly translates as change the Government to one that is either pro-Russian, less Western, or both

Recent revelations about the extent to which the war was premeditated, only delayed at the request of the Chinese until the Beijing Winter Olympics were over, shows that there is probably a fifth, unspoken objective: create a new buffer by annexing territory or even partitioning Ukraine east of the Dnieper River.  

The unanswerable question

We are glued to our screens watching the horror of combat unfold: the destruction of historic cities, the bravery of Ukrainian civilians and defenders, and the gradual dismemberment of a country two thirds as populous as Britain. It’s the human stories that stand out most, like the Ukrainian grandads who berate Russian troops at checkpoints or offer to tow their broken vehicles back to Russia. And the Ukrainian grannies who show kindness to the enemy by calling the mothers of captives to let them know they are safe. The people of Ukraine have arguably had an even more tragic recent history than Russia, but they have learnt from and responded to it better. 

We want to know what is happening hour by hour. But the big question is what happens next? It is unanswerable. As Thomas Friedman wrote in the New York Times, ‘We have never been here before’. This is 20th century power politics played out in the 21st century globalised world, where companies and consumers have more power than most Governments.  

It seems a fair bet to say that Russia will win the conflict militarily, simply because having gambled all, Putin cannot afford to lose. A man willing to not just fire high explosive shells at a nuclear reactor, but then shell the teams trying to put out the fire, has enough ruthlessness and commitment to push on to victory. He has overwhelming superiority in manpower and equipment despite the western commitments to supply Ukraine. 

An unpalatable truth

Right now a Putin victory is the last thing the world wants to see. But paradoxically, a Russian defeat would be even more destabilising: if Putin ended the ‘specialised military operations’ and retreated back to Russia, he would only lick his wounds and regroup for an opportunity to strike again and achieve his objectives elsewhere.  This would threaten global security like never before.

A military victory for Russia would, initially, accomplish his objectives. He would be a hero in Russia for defeating the West and bringing Ukraine back into the Russian fold. He would have stopped NATO expansion not just in Ukraine, but elsewhere, because it would be far too provocative to contemplate inviting anyone new. Putin would claim that Russia was a global player again. And he would be free to install a puppet Government in Kiev and annexe whatever territory he wanted. There would be at least 10 years of international instability for him to exploit. Ongoing economic sanctions would cause harm, but they would also harm Western nations as well, by driving up the cost of living. Damage could be off-set by potential gains in the sale of precious energy resources and new deals with China. Mission accomplished. 

A Pyrrhic victory 

But as our learning from the Great War showed, even victorious wars rarely end positively, or seem worth the effort in hindsight. Ukrainians may lose their democratic freedom, but they will never accept a puppet government installed by Russia. It could only be maintained by an ongoing army of occupation. This, together with sustained sanctions, is likely to prove deleterious to Russian economic and military power. Putin may be loved by older citizens who accept state propaganda. He may also not care about the suffering of Russian soldiers or Ukrainian citizens. But even he must be worried that a ‘forever war’ with an endless stream of casualties will damage civilian morale in Russia. Especially amongst the young and middle classes, who don’t share the same generational love of sacrifice for Mother Russia. How long can they live without their iphones and Western technology? How long can the 116 oligarchs live without their lucre and luxury super yachts? How long before other deeply conservative patriots in the Kremlin realise that Russia’s influence has been weakened, and their status as a pariah state is dishonourable? 

Putin will become ever more authoritarian to maintain his grip on power, but even in Russia with its tumultuous history of programs and political persecution, periods of terror are only ever temporary. There is every chance that a Russian victory will be pyrrhic: more costly to Russia and Putin personally than a defeat. The effort of digesting their prey could cause dyspepsia strong enough to weaken Putin’s hold on power.  

The omens are good. Kind of.

Putin has made at least two massive miscalculations. Firstly, he did not expect the Ukrainians to resist. They continue to bravely stall the Russian steamroller. The world is full of admiration for their struggle and will continue to wave the blue and yellow flag so the idea and promise of a free Ukraine lives on.

Secondly, Putin expected the West to fold. Instead, they have trumped, finding a unity and strength of resolution that has surprised everyone. Germany, Russia’s closest European partner, has sent the clearest signal, sanctioning the Nord Stream 2 which formed the basis of their energy strategy and up-weighting defence expenditure by 100 billion euros. NATO is likely to face further provocation. It is not inconceivable that Putin tries to escalate the conflict in an attempt to force the West to drop sanctions. Hopefully they can maintain the resolve and develop the graduated responses necessary to counter any such action.

Internationally, Russia faces exile. Even spineless international organisations like the IOC and FIFA have found the courage to punish. Who saw that coming? North Korea seems happy enough to be in the wilderness for the last 65 years, but Russia is different. It wants and needs to be part of the international system, extending its sphere of influence. 

Much though, depends on the behaviour of China, which controls the backdoor to Russia. It is within China’s power to mitigate or amplify the effects of Putin’s maladroit bellicosity. Putin may offer cheap Ukrainian grain, but this is unlikely to off-set the damaging economic effects of ongoing instability. China doesn’t want to see an emboldened and remilitarised West. It wants us buying more of their cheap electronics, not Exocets.

Open conflict makes everyone a loser.

Today neither we nor Putin knows what will unfold. But what is clear is that now conflict is open, everyone is a loser. Russia is suffering and stuck in a bind whether it wins or retreats. Having gone for hard power they have lost all soft power. Ukraine is devastated and mourning its lost children. It will take a generation for it to rebuild and recover, assuming it is given the chance. The West is galvanised but poorer and scared. China’s carefully laid plans for manipulating the international system have been upset. International organisations and communities have been immersed in the destructive politics and sanctions they were created to avoid.

There may be a few exceptions: soldiers who win medals, generals who win acclaim, or arms manufacturers who secure fat contracts. But they are insignificant in the wider scheme. Open conflict is undermining the harmony, well-being, and livelihood of everyone. In so doing it is eroding the foundations of global prosperity and peace.

Which brings us to the main point of this article. Was this all really necessary? Could Putin have achieved his objectives another way? Let’s remind ourselves of them:

  1. Improve his personal standing and power within Russia: this could have been achieved by securing concessions from Ukraine without invasion.
  2. Stop NATO expansion: : this could have been achieved by securing concessions from Ukraine without invasion.
  3. Enhance Russia’s influence in world affairs, especially the European security order: this could have been achieved by securing concessions from Ukraine without invasion.
  4. ‘De-Nazify Ukraine’ which roughly translates as change the Government to one that is either pro-Russian, less Western, or both: this couldn't have been achieved fully without invasion, but concessions could have been agreed. That is why diplomacy exists. 
  5. Partition Ukraine: this would require invasion, but as noted above, it’s probably not worthwhile.

Looking back, the moment when Putin was most likely to achieve his objectives was on the eve of invasion. When his sabre rattling had the Ukraine scrambling to mobilise and the West uncertain how to respond. He could have pocketed his gains and achieved victory without bloodshed. Now he is trapped in a desperate situation of his own making, trying to find some way of masking his failure by exiting with a tangible victory. 

This is a blog for founders. If there is a business lesson, it is this: don’t let competition get so intense that you end up immolating yourself. Your job is to create value, not destroy it. And destruction becomes inevitable when acts of hostility go too far. If you don’t like the temple, build a better one. Don’t pull it down on your own head. What seems like a good idea for a targeted strike can very quickly become a mistake. And even the most glittering, stunning victory soon loses its lustre and can come to be seen as a historic mistake.

Let us hope that our leaders can find a way to de-escalate the crisis. The final words belong to a Russian leader, Nikita Khrushchev, who managed to do this. He wrote the following to JFK at the height of the Cuban missile crisis in 1962:

‘We must not succumb to intoxication and petty passions, regardless of whether elections are impending in this or that country, or not impending. These are all transient things, but if indeed war should break out, then it would not be in our power to stop it, for such is the logic of war. I have participated in two wars and know that war ends when it has rolled through cities and villages, everywhere sowing death and destruction…

If, however, you have not lost your self-control and sensibly conceive what this might lead to, then, Mr. President, we and you ought not now to pull on the ends of the rope in which you have tied the knot of war, because the more the two of us pull, the tighter that knot will be tied. And a moment may come when that knot will be tied so tight that even he who tied it will not have the strength to untie it, and then it will be necessary to cut that knot, and what that would mean is not for me to explain to you, because you yourself understand perfectly of what terrible forces our countries dispose.

Consequently, if there is no intention to tighten that knot and thereby to doom the world to the catastrophe of thermonuclear war, then let us not only relax the forces pulling on the ends of the rope, let us take measures to untie that knot. We are ready for this.’


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