Putin's adventurism in Ukraine will end in disaster for Russia

Amid the growing clamour in Washington that the Obama administration project strength in the Ukraine crisis, several key points are being obscured.

First, the option of America acting like a cold-war great power is over. The global context of the 21st century is fundamentally different from that era. If the events of September 11 or the US invasion of Iraq in 2003 demonstrated anything, it is that extraordinary national power alone does not guarantee security or diplomatic influence in the world.

Today, challenges in the security, economic or environmental spheres cannot be resolved unilaterally by any sovereign state.

Second, Russian President Vladimir Putin's adventurism in Ukraine is likely to end in strategic disaster for Russia. On the surface, Putin's swift annexation of Crimea and growing involvement in eastern Ukraine has been a rousing national success.

Many Russians are applauding him as a hero who stands up to the West and is prepared to use military force to assert Russian interests and rights in "near abroad" countries like Ukraine.

But Putin has behaved as if he is leading the old Soviet Union rather than a post-communist Russia, which has a big stake in an interconnected global economic order. In particular, he has overlooked the economic, political and diplomatic costs of his actions in Ukraine.

Even before the intervention, the Russian economy was struggling; economic growth was a modest 1.3 per cent last year. Now, as a result of intensifying US and EU sanctions, Moscow faces the prospect of negative growth this year and a looming economic crisis.

Russia's former finance minister, Alexei Kudrin, said sanctions could cost up to US$160 billion in capital flight alone. On Friday, Standard & Poor's credit agency cut Russia's credit rating, citing a capital outflow of US$51 billion in the first three months of the year and a risk to investment.

Beijing is not going to jeopardise its export markets to please the Kremlin

Putin and Prime Minister Dmitry Medvedev seem to believe Russia can protect itself against Western sanctions by strengthening economic ties with China. But Beijing is not going to jeopardise its two biggest export markets - the US and EU - to please the Kremlin. Besides, China knows that technology and business are too globally intertwined to divide the world into blocs.

At the same time, Putin's intervention in Ukraine is a geopolitical disaster, creating the very situation that the Kremlin most feared. US and EU support for the interim government in Ukraine has massively expanded in the face of the Russian threat.

Meanwhile, Nato is actively strengthening its presence in the region. It is ironic, given Putin's strong opposition to the alliance, that his heavy-handed approach has now raised the real possibility that politicians in Kiev could pursue Nato membership in the future.

Furthermore, Putin's stance has left Russia diplomatically exposed and virtually isolated. If it continues to deepen its military involvement in eastern Ukraine, Moscow's global reputation will decline further.

Putin's regime has shrugged this off by saying many countries do not understand the Russian position while others, such as the US and the European Union, simply want to keep Russia weak.

Moscow insists it has other diplomatic options, including a closer relationship with China, but Beijing has made it clear that it opposes any threat to the territorial integrity and independence of Ukraine.

Make no mistake: the economic, geopolitical and diplomatic costs of Putin's muscular policy in Ukraine will bite within months and Russia is now on the threshold of its biggest strategic blunder of the post-cold-war era.