there are going to be different standards to be met, different levels of competition with different kinds of technology. New trade routes.
In this case though, people focus on whether Putin wants to annex or have a frozen conflict in the Donbas. Even if he loses, he wins.
Take what's happened in Lysychansk in the last 48 hours. It's the site of a large oil refinery. There wasn't fighting in the area, yet rebels took it over. Within a couple of hours the vehicles had been impounded--some repainted--and removed from the refinery. Then the fires started. The place is trashed, oil reserves were set on fire (along with oil residues), any gasoline not trucked off also set on fire.
Or the mines that had the electrical transformers blown up. 10, 15, 20 miles from the front lines. The miners refused to fight and found themselves out of a job. But now the mines are often flooded because the pumps were without power. The equipment was stuck in the mines.
Numerous companies were liquidated. Office equipment and records confiscated or just destroyed. Estimates are that the Donbas GDP is already down by 30%, and that's just income.
Repairing the Slov'yansk TES--which was hurt by shelling from government forces when the rebels were near it, and destroyed by rebel forces when the government forces were near it--will take half a billion Hr. The bridges and overpasses being downed, the RR sabotage, will all take hefty funds to fix. The damage to the buildings, likewise. Even reports "from the front lines" to the rebel press say that one of the things that the Ukr forces were doing in Slavyansk was removing mines and bombs. Ukr press says many were rigged to cell phones, to blow up sniper nests or take out buildings after withdrawal. But in the fighting in the hours before the rebels left mobile communications were entirely knocked out and are only now--a couple of weeks later, after a lot of sapper work--coming on line. If that was a plan, then the devastation would have been horrible. (Evidence it was a likely plan? The morning after the withdrawal, while announcing that it was a withdrawal, reports among the rebels was that a lot of buildings were flattened by shelling with massive casualties in ruined buildings and the city mostly levelled. The areas named had the largest concentration of bombs set to go. Strelkov was also quite open that they had left a few surprises behind for the Ukrainian troops that didn't learn the lessons of WWII. They couldn't know that the bombs hadn't gone off and when the video fly-over of the city was freely available on the web the claims just vanished.)
The instability has caused investment to dry up. Leading to reduced future growth.
The expenditure of funds for troops who produce nothing, for new weapons production, for transportation of troops. The replacement costs of the weapons ceased by the rebels and which have been destroyed. The realization now that the Russian border will not just get by with a few dozen border posts with a couple of unarmed guards at them, but will need reinforcing and cost money. The de facto trade war that's taking place now--today milk productions are turned back from Crimea, tomorrow it's potatoes from the Kharkiv border. Belorus has gotten into the act, barring a number of things. Typically they don't announce it ahead of time but wait for the produce to show up as usual, get warehoused at the border for a few days, and then when it's about to spoil say, "Sorry, take it back." There's a trade war.
This isn't an accident. Yesterday Russia announced that vegetable imports from Moldova are banned. The day before Moldova signed the association agreement with the EU.
Reduced production, increased military expenses, trade war, instability leading to less investment. This is quite a dividend for Putin. And it nails the lesson even more than Abkhazia and S. Ossetia did: Submit or your life will be hell.
You may think this is hurting Russia.
It's not, not really. This weakens Ukraine, gets Putin popularity points, and solves a problem--hundreds of men who really want to carry a gun and shoot people have been streaming across the border, recruited from numerous cities in Russia. These are often wannabe soldiers of fortune, in many cases they have criminal pasts. And they're dying in Ukraine. In fact, a number of reports have said that on several occasions Russian border guards open fire on people crossing from Ukraine into Russia through rebel-held checkpoints. They're usually in camo. Russia wants its violent young men to go kill Ukraines, and if they fail to die in the process Russia doesn't want blowback--war-hardened young men sporting weapons returning to Moscow or Voronezh.
The trade war increases prices slightly--that can be blamed on the West--and keeps money in the country. It's a support for local business.
All that materiel isn't expensive for Russia, either. The tanks were decommissioned. Most of the armaments are from the '80s and '90s, and Russia is spending billions to modernize. One DUer said Ukraine was a place for Russia to try out new toys. He was utterly mistaken. It's a place for Russia to send equipment it considers obsolete in exchange for achieving some hefty foreign policy (and domestic policy) goals. Same for the MiGs sent to Iraq--they get money for equipment that would just rust and have to be melted down.The fairly new things, the AKs, are cheap. If somebody like Zhirinovsky or Yanukovich are paying for the stuff sent to Ukraine, so much the better: They buy Russia's trash and call it gold.
In exchange, given all the agitprop in the Donbas, they've set up Ukraine for a political problem for a long time to come. They've taken animosity caused by having most of the Russian-speaking Donbas population essentially living in the Ukraine's Rust Belt and said that it wasn't economic shifts that caused the problem, it was intentional hatred by Jewish, Western, liberal, gay fascists. This, on top of the idea that the Russian USSR was intentionally destroyed by Western powers to take over the world--and specifically to hurt Russians.
The price paid by Russia are sanctions, if the BRICS in being anti-Western don't cover Putin's pale butt. And if the strategic investment fund that's being used to compensate companies hit by sanctions can't handle it (yes, that's a new projects fund, but the only cost to using it is opportunity costs, and few ever count those losses). If Russia loses--and the more the rebels are on the rocks, the more Russia demands a ceasefire, mediation, and the more shelling from the Russian side of the border, the more little green men, and the more materiel pour across the border--it might look really bad if Putin can't find a way of saving face. And, if the number of dead "good" Russians gets out it might be a real problem. Last week there was a burial of 17 Russian special forces in one unit. No word on what caused their "sudden death." Those who read between the lines said, "Cargo 200 from Ukraine." It was a few days after a rather large battle in E. Ukraine. But apart from a brief media article saying how these men gave their lives for their country, nothing.
But for now, even if Russia loses in the Donbas it almost certainly still wins. All the downside for Russia consists of "if" and "might" or is a price that is less than the benefits Russia will certainly reap. There is little upside for Ukraine apart from unity and a near-return to the status quo, and a huge downside that has already occurred and will certainly continue.
To blame the financial mess just on re-orienting from East to West sort of entails believing that this war is a spontaneous outpouring of local concerns.
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