Policy Recommendation: Countering Russian Escalation of the Ukraine War

So far, the Ukraine war has remained a limited war, from the standpoint of the U.S. and NATO as no troops have been committed, and both the Russian army and the fighting have been contained in Ukraine. There are, however, a number of ways that the war could escalate, dragging the United States and NATO into a conflict with Russia. The Center for Strategic Intelligence Studies CSIS) pointed out that the longer a conflict lasts, the less likely it is to remain restricted to the two original combatants. As the Ukraine war rolls into its second year, we already see more countries joining in sanctions and more countries sending weapons, while the weapons sent are becoming more lethal.  

Over 30 countries have supplied weapons to Ukraine, and the Kremlin has warned that nations providing Ukraine more powerful weapons are risking their own destruction. If Vladimir Putin makes good on these threats, he might attack strategic locations in NATO, particularly in Poland, which are facilitating weapons to Ukraine. Or, he may deploy chemical or biological weapons inside of Ukraine, but close enough to the border, to cause casualties in Poland. Furthermore, Putin may decide that Latvia, Lithuania, and Estonia are easy pickings, because of their disadvantageous geographic position, hemmed in by the Russian Federation and Moscow-ally Belarus.

The Kremlin’s doctrine allows the use of low-yield, tactical nuclear warheads. The Basic Principles of the Russian Federation’s State Policy in the Domain of Nuclear Deterrence, signed by President Putin in June of 2020, states “The Russian Federation retains the right to use nuclear weapons in response to the use of nuclear weapons and other types of weapons of mass destruction against it and/or its allies…and also in the case of aggression against the Russian Federation with the use of conventional weapons, when the very existence of the state is put under threat.”

The U.S. has always kept an arsenal of nuclear weapons as a deterrent, while maintaining a policy of “no first use”. The Biden administration, however, has revised this policy, stating that first use would be an option, under the certain circumstances. The Department of Defense 2022 Strategic Review of National Defense Strategy reads, “The United States would only consider the use of nuclear weapons in extreme circumstances to defend the vital interests of the United States or its Allies and partners.”

The question is, at what point would Putin feel threatened enough to either deploy nukes or to attack a NATO ally? Once this happens, the U.S. and NATO would be obligated to engage. A further question is, how could the U.S. and its allies respond to a Russian escalation without causing massive destruction and loss of life in Europe and the U.S.?

Since the end of the Cold War, the mission of the North Atlantic Treaty Organization (NATO) has been to prevent the acquisition of European territory by Russia. Consequently, the Kremlin has always felt threatened by NATO.  Putin has repeatedly stated that he wanted to achieve economic, financial, military, and political independence from a western world order, led by the United States.

While the world is distracted by the war in Ukraine, and concerned about possible Russian expansion into Europe, it is important to remember that, Moscow has long believed that it should have dominion over the Arctic, where Russia already has significant holdings of land, and semi-autonomous republics, as well as significant liquid natural gas (LNG) and mineral interests. It is possible that Moscow could seize on this moment of chaos to expand its control over what would seem to most western observers as an unimportant, sparsely inhabited stretch of frozen land and water. But the mineral and energy riches of the region are exactly the kind of economic lifeline Russia needs in the face of this war. Additionally, Russia borders on the Northern Sea Route (NSR), which could serve as a trading lifeline for Russia, allowing it to bypass western sanctions, connecting the Russian Federation with its financial-baker China. The NSR is also important strategically, because Russian missiles and submarines stationed there would be able to threaten Scandinavia, the United States, and Canada, while restricting freedom of navigation.

If an escalation comes as a result of Putin using nuclear weapons, it is likely that the U.S. will respond in kind. On the other hand, if Putin escalates by expanding the war beyond the borders of Ukraine, attacking Europe, or by gaining control of the Northern Sea Route, the response from the United States should be one which would defeat Russia’s ambitions, without causing an all-out world war or nuclear war. This could be achieved through a comprehensive plan, combining political, economic, financial, and military dimensions.

The political dimension consists of the U.S. utilizing its much larger number of allies to support political, economic, and financial isolation of the Russian Federation. Most of Russia’s allies are small, economically developing nations, with limited military capabilities and very little ability to wage a war beyond their borders. Belarus and Serbia are situated in Europe, and could play a role in a military engagement in that theater. The Central Asian Republics, however, would not be much more than a symbolic token in a European or Arctic war. China would be a wild card, as it is unclear if China would join the fight or not.

The U.S. allies, on the other hand, include the richest and most developed countries in the world. The U.S. would ask these countries to intensify sanctions on Russia. And, since a Russian incursion into Europe would directly threaten Europe and an Arctic expansion by Russia would directly threaten the U.S. Europe, Canada, and Japan, it is likely that the allies would agree. The U.S. and E.U. should also intensify the consequences for countries not abiding by sanctions or not going along with the program agreed upon by the western bloc. The E.U. and other allies could refuse to trade with countries which continue to support Russia. NATO members, such as Turkey should be confronted directly, and told that they have to make a choice between the Russian side or the western side.

In the economic dimension, the current sanctions would be intensified and trade with Russia, which is now restricted, would become 100% banned. The U.S. with the world’s largest GDP would support loans, trade diversion, and provide other incentives to countries willing to support sanctions on Russia. U.S. banks would freeze all Russian assets and U.S. allies would be asked to do the same. Russian entities would also be barred from using U.S. banks. This would include a complete removal of all Russian firms from the SWIFT. Currency exchanges would refuse to exchange rubles and Russian entities would not be allowed to buy or sell products outside of Russia. These prohibitions would extend to all purchases of oil and gas.

Under the current oil price-cap scheme, allied purchasers are permitted to buy Russian oil and gas, below the price cap. In the event of an escalation of the war, all purchases of Russian energy would cease. Allied flag vessels and merchant ships would be ordered not to dock in Russia, and Russian vessels would be barred from docking in allied ports. Additionally, harsh, secondary sanctions would be imposed on those who violate the terms of the restrictions. Currently, India, China, Vietnam, Myanmar, and Turkey are trading heavily with Russia. Under an intensified sanction regimen these countries would be held accountable. Effectively, the intensified sanctions would be designed to cut off all of Russia’s income.

Turkey, as a NATO member, should be told that they are completely banned from trading with the very nation NATO is fighting. Myanmar, supported by China, would probably ignore western pressure. China would most likely defy the west. Vietnam and India would be question marks.

The financial dimension would be similar to the economic, and similar to current sanctions, except that there would be no holes. Russia would be completely banned from SWIFT and from any form of international money transfer or payments systems, such as Paypal. The U.S. would bar Russian entities from purchasing U.S. dollars, by requesting that global foreign exchange markets stop trading in rubles and stop trading with customers in Russia or Russian registered entities. U.S. credit cards, Visa and Master Card, would not only cancel service in Russia, but also cancel service for Russian entities abroad.

The military dimension: the U.S. is ranked first in firepower, while Russia is second. If the U.S. had to fight Russia, however, it would not be the U.S. alone, the war would also include the combined firepower of NATO and possibly, allies, such as Japan, dramatically magnifying the firepower of the U.S. military.  On the other hand, an all-out war could lead to mutual destruction, particularly if Putin resorted to the use of nuclear weapons. Even if nukes were not deployed, a direct conflict with Russia would be very costly.

It must be kept in mind that Russia has always prepared for an invasion from western Europe. Consequently, engaging from the European side would result in the highest number of allied casualties. Instead, the allies should invoke a policy of limited war. Since the end of World War II, the U.S. has repeatedly engaged in limited wars with Russian-backed forces in Asia, Latin America, Africa, and elsewhere without fully committing to a war. This limited war strategy has worked well so far in Ukraine. The United States has been leading the efforts against Russia for a year now and not a single American has been killed. If the war escalates, the military strategy should be one which augments the economic and financial strategy, without causing an outright or full-scale ware.

If strict economic sanctions are put in place, as outlined above, and if secondary sanctions will prevent countries like Turkey, Vietnam, and India, from trading with Russia, then China will remain Russia’s only major source of income. Consequently, a military response could be focused on gas and oil pipelines, as well as ports and railroads, connecting Russia with China. Destruction of Russian infrastructure in the Arctic and in the Russian Far East, as well as military installations and ports, can be carried out, from the Arctic side by the combined naval assets of the Pacific alliances, the Quad and Aukus.

There is always a chance that even the recommendations outlined in this report could cause Putin to deploy nukes, but that possibility exists without this plan. And, Putin is less likely to use nukes against a nuanced strategy of political, economic, financial and limited military engagement than he would in the face of an all-out declaration of war by NATO.

The advantage of this plan is that, fewer western lives would be lost, while Russia’s ability to wage war would be severely curtailed. This would end current aggression, while hopefully preventing future Russian expansion. At the same time, it would send a strong signal that the U.S. and the West will not tolerate such a threat. This would dampen China’s external militarization, limiting their global expansion to economics and trade. Once a solid anti-Russia bloc is in place, the same bloc could be used to address China.

Antonio Graceffo
Antonio Graceffo
Antonio Graceffo, PhD. China-MBA, is a China economic-analyst who has spent over 20 years in Asia, including 7 in China, and 3 in Mongolia, where he teaches economics at the American university. He is a graduate of Shanghai University of Sport and Antai College of Economics & Management, Shanghai Jiao Tong University. Additionally, he conducted three years of post-doctoral studies at School of Economics Shanghai University, focusing on U.S.-China trade, and currently studies national security at the American Military University. He is the author of 5 books about China, including Beyond the Belt and Road: China’s Global Economic Expansion and The Wushu Doctor. His writing has appeared in The South China Morning Post, The Diplomat, Jamestown Foundation China Brief, Lowy Institute China Brief, Penthouse, and others. He is a frequent guest on various TV shows, providing China commentary on NTD network in the United States.