A Report Card on Vladimir Putin’s War

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Ukraine vs. Russia: Trapped in an Unfinished Epic

The Iliad begins in medias res — that is, in the middle of things, with the protagonists engaged in bitter feuds amid the fog of the Trojan War that is still a long way off from that wooden horse that ended it all.

That’s sort of where we are 18-months into Vladimir Putin’s invasion of Ukraine: in the middle and muddle of things. On Wednesday, many speculated that he appeared to have dispatched his ally-turned-rival Yevgeny Prigozhin by way of a plane crash. Is that enough to re-establish Putin as the one true power in the Kremlin, quiet his critics and stabilize a home front that’s been turbulent since Prigozhin’s revolt in June?

“Everything from the style of the crash to its timing now resonates with the Putin regime’s macabre sort of rhyme and meter,” Andreas Kluth says. It is a “signal to all of his potential adversaries that insubordination means punishment up to and including death. This doesn’t mean he’ll no longer have enemies; only that the bar is now higher ... for them to plot their next steps.” The fate of Prigozhin’s Wagner Group is now nebulous as Putin sweeps aside the mercenary-in-chief’s sympathizers, including General Sergey Surovikin, after whom Russia’s defense “dragon’s teeth” line is nicknamed. He’d vanished from view in the wake of the June mutiny; this week, he lost his official post as commander of Russia’s aerospace forces.

In the meantime, Ukraine’s counter-offensive has become a slog — nowhere close to the dramatic breakthroughs of last year. Max Hastings urges both realism and persistence. To an extent, Max says, Kyiv can count on some successes: “Ukraine’s summer offensive has inflicted substantial damage and losses upon Russian forces, especially by harrowing their rear areas, reserves and logistics hubs with long-range weapons.” However, he says, the lack of progress will depress public morale, which is critical for President Volodymyr Zelensky as the months turn into years. The commemoration of Ukraine’s independence on Aug. 24 was a somber affair.

Readers of the Iliad had a sense of where that epic was headed. By the time Homer set it to verse, the Greeks knew they had triumphed and that Troy had suffered tragically. We, on the other hand, are trapped in medias res in Ukraine, with no one yet knowing how it will end. If this were a report card, the grade would be an “I” for incomplete.

Another Symptom of the China Syndrome

It wasn’t a great summit for President Xi Jinping of China. As he headed for an appearance at the BRICs convention in Johannesburg, his bodyguard got waylaid by South African security. He was also overshadowed by fellow BRICSter Prime Minister Narendra Modi of rival India, which received global accolades for being the first country to land a spacecraft on the moon’s south pole.

Meanwhile, the drip, drip, drip of bad economic news from home continued. This week, the cause of anxiety was the $9 trillion of debt by so-called local government financing vehicles (LGFV), incurred indirectly by provinces and cities amid the infrastructure boom. As Shuli Ren notes, China and its banks have too many sleight-of-hand habits to reclassify non-performing loans (she points out that US banks have their own flaws, too). Still, the LGFV statistic is quite alarming, as you can see from this chart:

Washington may take some comfort in knowing that China’s once unstoppable momentum has, well, stopped. But President Joe Biden has been emulating Beijing-style industrial policy. Allison Schrager warns of a “foundational flaw” of such attempts to revive manufacturing and the semiconductor industry: “Governments are not good at consistently picking winners — and are very bad at quickly cutting losses when they pick a loser.”

Large-scale industrial policy can work, she notes. But the conditions aren’t exactly democratic or salubrious. Says Allison: “Usually it involves a poor country with lots of cheap labor and a dictator with near perfect foresight and few political constraints. Even then, it can only get you so far. Industrial policy ran out of steam in other East Asian economies such as Japan and South Korea, and its limits are now becoming clear in China too.”

Telltale Charts

“When in doubt, flock to the buck ... Never mind that for years, it has been fashionable to assert that the US is in long-term decline at the hands of China, a view that has come in for some refreshing scrutiny. Could there be deeper forces at work? A paper from the New York Fed in December attributed much of the dollar’s primacy to a so-called “Imperial Circle.” The basic idea is that the dollar is not just integral to world commerce, but is increasingly important.” — Daniel Moss in “ The Dollar Is the Fortress China Struggles to Breach.”

“The printed circuit board assembly, the camera module, the touch-screen display and the glass cover. Together, they account for three-fourths of the bill-of-materials cost of a smartphone. Vietnam, the world’s second-biggest exporter of handsets after China, sources these and most other components at zero tariffs from free-trade partners. But India, which has few such accords of its own but is still keen to emulate the manufacturing powerhouse in its neighborhood, has customs duties as high as 22%. The result? Making mobile phones in the world’s most-populous nation now comes embedded with a cost disadvantage of 4%.” — Andy Mukherjee in “India’s Trade Policy Is Working Great — for Vietnam.”