Russia-Ukraine crisis will be an 'economic and political quagmire,' Brookings fellow says

Douglas A. Rediker, Brookings Nonresident senior fellow for foreign policy, global economy, and development, joins Yahoo Finance Live to discuss the potential for a protracted conflict between Russia and Ukraine, how effective U.S. sanctions are, and the economic fallout from the crisis.

Video Transcript

- Well amid the ongoing invasion of Russia into Ukraine, let's explore the tools still left to deescalate the conflict and what may lie ahead. For that, I'm joined by Douglas A. Rediker, Brookings nonresident senior fellow in Foreign Policy, Global Economy, and Development. Thank you for joining me.

So now that the invasion is underway despite sanctions from the US and EU, there is pressure for a stronger response. We heard from President Biden earlier today. But that could also potentially include the Export Administration Regulations. Now you've called this a big deal that Putin didn't expect. What makes this so effective, and how might it use this time be different from prior use?

DOUGLAS REDIKER: Well let's pick apart your question. I said, it's a big deal because it's a big deal. I didn't say it was going to be effective. And what I mean by that is the Export Control Act and the Foreign Direct Product Rule, so what President Biden described as limiting the ability for Russian high tech companies and really more broadly to gain access to the technologies underlying the economies of the 21st century, that is going to impact Russia's economy over years and decades. And let's just say we don't think Vladimir Putin is going to be deterred by the potential for his economy to slow in the years and decades to come. So it has a serious impact in terms of what it will do to Russia's economic growth. It doesn't mean it's going to act as a deterrent if that's how we define effective.

And I would say the sanctions never really were a credible deterrent because we saw that they were incrementally imposed. They didn't stop the invasion. I don't think anybody credibly thought that it was going to deter what happened today. I think the idea was to at least make it painful so that Putin thinks twice about what he does in the future. But you know, again, I question whether anything really was going to be effective. We took putting guns in boots and troops off the table, and as soon as we did that if you're going to use your own guns and boots and troops, the other side really isn't going to be able to stop you.

- And when we did see a sense of emboldenment, because I want to get your reaction to part of President Putin's speech justifying his invasion and warning against intervention. He said, "Whoever tries to interfere with us, and even more so to create threats to our country, to our people, should know that Russia's response will be immediate and will lead you to such consequences that you have never experienced in your history."

Now is this a case of watch what he does versus what he says? And what sort of fallout should the US be bracing for?

DOUGLAS REDIKER: Well look, President Biden was asked about that quote. The-- the media and others have inferred from that that he was threatening nuclear war. President Biden didn't bite on that, and I'm not going to either.

I'm not sure I would say exactly what he means by that. I do think, though, implicit in that is the sense that Vladimir Putin is not going to back down. And so for those who are looking at the scenarios of where this goes next and how this ends, I don't think a viable scenario is Putin says, "Oh gee, the Ukrainians were tougher enemy than we thought." Or, "The Americans or the Europeans slapped sanctions on me. So I'm going to create some sort of a paradigm that allows me to say, 'never mind.'"

I think that Putin wants to control Ukraine, full stop. Whether he stops there or not remains to be seen. But I think what Putin's messaging is is pretty unambiguous. He's saying I'm going to do this, and there's nothing you can do to stop me.

Now again, that might be true. We can't stop him. We can make it very, very painful for his achieving whatever goals he thinks he's going to achieve. And I think that's the best we're going to get out of this, at least in the short to medium term.

- So then how does the US then navigate sanctions now, or is that even the best deterrent given what we saw with Crimea, when we don't fully know the extent of President Putin's ambitions?

DOUGLAS REDIKER: Well as I said, I don't think a deterrent is the right way to think about it. I think there's a punitive nature to this. You want the other guy to pay a price for doing something that is outrageous and against international law and norms. But it's not going to deter anything that he's doing. What would deter him might have been if a decade or two ago, the world, not just the US but Europe and the US, had taken different stands on a variety of different issues, but that's not what we're discussing right now.

I think that Vladimir Putin is going to end up controlling Ukraine. I don't think it's going to be easy for him. I don't think Ukraine is going to roll over. I think it's going to be an economic and political quagmire, and I'm not sure he's going to be all that pleased with where this ends up because we don't know what the Zelensky government is going to look like if it becomes a government in exile, or if Zelensky and his people are actually captured, tried, and executed, or if they flee and become a government in exile out of the country. There are a lot of different scenarios.

Putin can try and put a puppet regime in place in Kiev, which is what I expect he will try to do. But managing the country from that puppet regime without the ongoing presence of Russian troops across the country is going to be pretty hard. And if he has to do that that is costly, that is likely to end up in humanitarian costs on both sides, and I'm not sure how politically viable that is. But I think that's what Putin has in mind, and right now I don't see many ways that we're going to end up stopping it.

- Now I want to get your reaction to some sound that we got from President Biden, especially in regards to things like markets and the volatility that we've seen as a result. Take a listen.

PRESIDENT JOE BIDEN: When a major nuclear power attacks and invades another country, that the world is going to respond and markets can respond all over the world. So there's no doubt about that, number one. Number two, the notion that this is going to last for a long time is highly unlikely as long as we continue to stay resolved on imposing the sanctions we're going to impose on Russia.

- So in terms of this perhaps not being a prolonged conflict as people are expecting, do you agree with that?

DOUGLAS REDIKER: I-- look, I respect the President. I think he's wrong on that. I think this is likely to be a prolonged conflict. It might not be a prolonged conflict in the sense that you've got the tanks, and the artillery, and the the level of activity that will be characterized this this first week.

But as I said before, I think that if Putin wants to control the country and the country doesn't want to be controlled, that's a recipe for an ongoing set of conflicts and tensions. Whether that is considered war or just an ongoing resistance I don't know, but I don't think Putin is going to stop at some negotiated settlement for the Donbas. He's made it clear he wants to control the whole country. And the whole country doesn't want to be controlled. So I think this is going to be an ongoing problem.

I think some of the sanctions you saw today are going to have short, medium, and long term impact on Russia and on commerce across borders in Europe and around the world. So I would say I disagree with the President that this isn't going to be a short-- a long thing. I think it is going to play out over an extended period of time.

But I also think the markets are overestimating the fact that, well, the sanctions didn't seem to be as terrible as some people feared, and if this is a short term thing then well we're agnostic against the human rights. We're just in it to make money. So therefore, let's let's go buy the dip.

I think that we're witnessing a seismic change in the global world order. This is no longer going to be the post-world War II world order that we all grew up with. And I think there are going to be real consequences to that. But in the short term the markets may be overestimating how painless that's going to be. I think there's going to be more pain for the markets and longer term unsettling situation in the borders of Ukraine than many seem to be ascribing to right now.

- And I just quickly want to get your take on what we heard from the Belarusian president who says he expects to discuss the possible deployment of Iskander and S-400 air defense systems to Belarus with President Putin. And also we heard the President when asked about China and perhaps China helping-- helping the US with Russia. The President couldn't comment. But what does having another country, having Belarus now, siding with Russia, what does that mean for the US and its allies going forward?

DOUGLAS REDIKER: Well Belarus is no longer an independent country, full stop. Belarus was the staging ground for attacks from the Russian military into Ukraine. Belarus is now going to be armed with what I would assume will be a permanent Russian troop presence.

So there were moments in the past when President Lukashenko tried to play a little bit of a pivot card. I'm not really beholden to Russia and I'm going to try and make some feints to the West. That's over. Lukashenko is now a complete puppet of Putin, and that's just done and dusted.

The big question out there, and it's a really big question, is the one you alluded to regarding China. China has surprised me. I thought that China would recognize that there's going to be a global hostility to what Putin has done, and that by their allying with Russia that that makes China look bad. And China has-- the two biggest markets China has are the EU and the US. So if he wants to really get, he being President Xi, if he wants to get on the wrong side of the US and the EU because he's going to stand by his friend Vladimir Putin in this action, I think that is going to have economic cost to the Chinese. And it would not surprise me if China comes in and plays a little bit more of a nuance card than they have to date.

But I've been surprised. I thought China would already have done that. They have not. And you know that is likely to have more consequences for China than certainly maybe has been baked in to date.

- We'll certainly be keeping an eye on that. A lot of developments, obviously. Thank you so much for your insights, Douglas Rediker, Brookings nonresident senior fellow in foreign policy, global economy, and development. Thank you for your time today.