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From Subic Bay To Sevastopol

After speaking with Russian President Vladimir Putin on Sunday, German Chancellor Angela Merkel reportedly told President Obama that Putin - whose troops had just finished efficiently and bloodlessly seizing Crimea - is apparently out of touch with reality.

This seems to be a case of psychological projection, the phenomenon described by Freud in which we see in others the characteristics that we ourselves exhibit. Of all the leaders involved in the Ukraine crisis, only Putin has shown that he knows what he wants, understands what he needs to do to get it, and has considered exactly what, if anything, might get in his way.

The West says it wants a free Ukraine, one whose territorial integrity is respected. One in which Russian troops stay within their leased Crimean bases, and whose boundaries are jointly secured by Russia, the United States and Britain, as promised in a 1994 treaty in which Kiev surrendered its remnant Soviet nuclear arsenal.

What the West actually wants, though only Putin will say it, is a Ukraine that is integrated into the European Union; aligned with, if not a member of, NATO; and in a position financially, as well as geographically, to choke off a major portion of Russian gas exports. To American ears, this doesn’t sound altogether bad, but to a Russian - most Russians, not just Putin - it undoubtedly sounds both dangerous and hypocritical.

Those Russian-speaking soldiers who coyly declined to identify themselves as they took control of Crimea may get their paychecks in rubles, but their pay is really based on euros. Russian gas exports, which are so vital to Putin’s Kremlin, make up nearly a quarter of the gas consumed in continental Europe and 40 percent of the gas consumed in Ukraine. Ukraine is hardly a good customer, unable to pay for its gas on anything more than steeply discounted terms; Merkel’s Germany, though, is entitled to a platinum card when it shops at OAO Gazprom, Russia’s gas export monopoly.

So the West, as usual when challenged by Putin, has offered a response that is both feeble and uncoordinated. While some Americans have called for Russia’s expulsion from the G-8 group of advanced economies, in which it never truly belonged anyway, Germany is resisting what it sees as a drastic step.

The United Kingdom and the United States were willing to promise Ukraine whatever it wanted in 1994 in order to get rid of dangerous nuclear weapons. Now put to the test, leaders in both countries have fallen all over themselves to make clear they have no intention of putting their own troops anywhere they might encounter Putin’s incognito special forces. Both countries sent their foreign ministers to Kiev to offer moral support. Secretary of State John Kerry arrives there, mostly empty-handed, today.

Putin understands that, as a practical matter, Ukrainian sovereignty over Crimea has been a matter of Russian paternalistic sufferance ever since Nikita Khrushchev placed Crimea under Ukrainian jurisdiction in the 1950s.

To put it another way, maybe Putin’s predecessor, Boris Yeltsin, considered in 1994 that someday his country’s forces would leave Sevastopol, the headquarters of the Russian Black Sea fleet, the way our own Navy departed Subic Bay in the early 1990s. Whatever Yeltsin might have thought, however, Putin has no intention of ever permitting this to happen.

For decades, Subic Bay in the Philippines was America’s largest foreign naval base. It was the major staging ground for the Vietnam War and provided a secure platform for U.S. patrols ranging from the South China Sea to the Indian Ocean.

But the 1991 eruption of Mt. Pinatubo buried the base in about a foot of volcanic ash (and destroyed nearby Clark Air Base, our only foreign base larger than Subic Bay at the time). A year later, Philippine lawmakers - unhappy at our longtime cozy relationship with deposed strongman Ferdinand Marcos and at the fact that we do not disclose which of our ships are armed with nuclear weapons - demanded that the American forces leave. It was their country, so we turned over the keys and left.

Though we made new arrangements elsewhere in the Pacific, the loss of Subic is still a strategic hindrance to us - and to the Philippines. Now embroiled in territorial disputes with China and eager for U.S. support, in 2012 the Manila government invited the U.S. Navy to use Subic, although only with specific permission. The absence of long-term basing rights limits the investment we can make there, even amid Obama’s so-called strategic pivot toward Asia (which, at the moment of Ukraine’s crisis, sounds like either a joke or a surrender).

Crimea is militarily indefensible from Kiev, and in any event, no Western power is going to fight Russia over territory where it already holds rights to maintain a military presence. That’s reality. The only constraint, therefore, on Russian behavior in Crimea or elsewhere in Ukraine is the consequences it can expect to suffer as a result. Putin knows there will be consequences, but he has clearly decided that when the benefits of aggression outweigh the costs, he is best served by forging ahead.

Western policy - notably, but not only, Obama’s - has fostered this aggression. By occupying sovereign territory, first in Georgia and now in Ukraine, Putin has effectively vetoed their accession to NATO, because NATO doctrine considers an attack on one member as an attack on all. By attacking these countries before they even join, Putin disqualifies them for NATO membership because their accession would practically guarantee a military conflict. So they don’t get admitted, and Putin gets what he wants.

For three decades, Soviet and Russian leaders have loathed all U.S. missile defense efforts. By caving to Russian demands early in his presidency and canceling planned deployments in Poland and the Czech Republic (though those deployments were aimed at Iran, not at Russia), Obama likewise gave Russia what it wanted in return for, as it turns out, exactly nothing.

Meanwhile, European reluctance to limit energy trade with Russia gives Putin the cash flow to finance his military adventures. This is something that Ronald Reagan, who was as much a realist as Putin, foresaw. His administration did everything in its power in the early 1980s to prevent European dependence on Soviet gas. We even allowed the Russians to steal software that had been deliberately sabotaged, which resulted in a spectacular explosion observed by spy satellites in 1982.

Merkel and Obama might feel better calling Putin crazy, but they are the ones who only seem to see what they want to see. When they get back in touch with reality, they will realize that the only way to deal with Putin is to act as he does: recognize that you have to be willing to bear some costs to get what is most important to you.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s most recent book, The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book, Looking Ahead: Life, Family, Wealth and Business After 55.

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