WHO PAYS FOR THE DAMAGES: Putin’s War on the Ukraine?

It’s not too early to think about the end game in Putin’s murderous war on the Ukraine.  There are, of course, two possibilities:

Russian Success and a continuing Russian war of aggression

Suppose the Ukraine falls and a Putin supported Government is installed.  Possibly, common sense will occur in the Kremlin and at least some of the physical damage is repaired so that a functioning Ukraine can emerge from the damages inflicted. Undoubtedly it will minimal.   It is highly likely that Putin will limit his expense in cleaning up the mess his attack has caused.  Clearly, there will be no Russian compensation offered to the human casualties.  The Ukraine will become a totalitarian state “loyal” to Russian aims.  It will be hostile to the West and a threat to NATO members.  It will entail a permanent state of cold war with Russian military assets being deployed both to suppress the Ukraine’s population while posing as a tangible threat to other ex-Soviet states that border either Russia proper or occupied areas also conquered by Putin’s prior attacks. We should expect it will be Cold War II, extended in any case and hopefully not leading to a hot version

Russian failure but withdrawal

Suppose the Russians recognize they have failed and withdraw their army and the Ukraine retains its present government?  There will remain mammoth damages to be repaired to the physical structures and perhaps some State compensation for the tragic deaths of innocent Ukrainians who lost their lives as a result of the Russian aggression.   Who will pay for the this?  Which State pays?

It is impossible to believe that Putin’s Russia will foot the bill, no matter what the West together with the Ukraine will claim.  Yet, the West is not without resources for extracting financial resources from Putin Russia and his Co-Thug’s using the resources he and they control.  Russian commodities will try to regain lost export markets or enlarge the markets to which they can still export.  To the extent that these products enter the commerce of the West, they should be taxed!   Unfortunately, the incidence of such taxes falls on both the suppliers (Russian resource owners) and the users who continue to buy these resources.  The key to making Russia and Russian Thugs pay is the design of the West’s tax system.

Unfortunately, until former Russian users of gas and oil, wheat, metals, etc., switch their source of supply away from Russian-origin goods, any taxes levied will raise their cost of acquiring such resources.  To the extent that these goods are controlled by the Oligarch’s that support Putin, they will in turn realize less from their sales in the West—and perhaps that is a fitting and just allocation.    These Oligarch’s are the minions of Putin.  Previously, they gained lavish rewards, and many continue to support Putin.   The damages to their ostensible income from exporting these resources—in whichever form they are now exported—should become a perpetual drain to such Oligarch’s.  Maybe, they will realize that by supporting the Chief Thug, they will continue to pay a price and look for another political answer?   In the meantime, the West can collect revenues largely paid by the suppliers and contribute those tax revenues to the rebuilding of the Ukraine.

Reparations déjà vu

This becomes is a modern version of reparations.  The trick is to make the tax “bearable,” but distinctly painful to resource owners in Russia, as a continuing reminder that doing business with a Thug who has an Army to use on the innocents, has a distinct cost to the operators of such enterprises.

Wood the West resort to this tactic?  Surely, free-trade advocates will raise objections that will be that combining conditions of Trade and International Politics is a bad mixture, and that what is really needed is a reformation of property rights in Russia.  As far as it goes, the argument is correct.   Some will say that to offer tacit forgiveness by not restricting Russian trade opportunities as punishment for the heinous damages that the Thugs have essentially financed, is equivalent to allowing Putin and his supportive Oligarchs to escape from their adventure far too lightly.

That has to change and at least the Co-Thugs will now have an incentive to drop their support of Putin. The trick will be to construct import restrictions through licensing in some form for all products from Russia, however they are described in bills of lading or certificates of origin and to tax them heavily wherever they arrive.  It will take international cooperation from the West to construct such a regime.  Sadly, we will create another bureaucracy to levy, collect and disburse the proceeds.  And, at the end of the day, who knows where this kind of punishment will lead?

Perhaps it will lead to much less international trade, which is an affliction to traditional importers in the West?  Yet, it will force down the prices received by Russia and its collection of war-supporting exporters.  It will make for some suffering of those in Russia who are engaged in the chain of production and export.  They too have a stake in throwing Putin out as a leader of Russia.  Whatever revenues are collected should be donated to relief from the destruction Russia has caused.  It is not much given the scope of the Russian inflicted damages to property and people, but it is a step the West needs to take.

In the last few days, we have seen films of Hitler-type rallies organized by Putin in which he raises the absurd claims of de-nazifying the Ukraine.   He does so by the same techniques utilized by Hitler in the 1930’s as he motivated the hate and anger of Germans in support of his ultimate war aims.   No doubt, in this digital age, some of that nonsense will be recorded and filtered into the digital world of Russia, however internet communication is restricted by Putin.  Will it arouse the mass of Russians to revolt?

We don’t know; nor can anyone be relied upon to predict how the Russian Masses will behave.  Will they support Putin’s failed logic, or begin to develop sufficient resources to force Putin to retreat or resign?   200,000 cheering partisans gives the impression that his war on Ukraine has broad support.  We doubt that, but have no counter evidence.

We also doubt that a revolt in Russia is possible in the near future—and we must always remember that a revolt against a failed government requires a mobilized elite to organize the discontent.  We don’t know if such an elite will or can arise in Russia policed as it is by state and military police.

Thus, it is in the now-organized West, that a response is needed.   The West must stiffen its spine and penalize Russia for its behavior; for the deaths it has caused and the emigration that it has inspired.  The West must raise cash for a fund that can be used by the Ukraine when it has finally defeated this orgy of destruction led by Putin’s malevolence and Hitlerite ravings.