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More than three and a half years into the Russia-Ukraine War, Russia is pummeling Ukrainian cities from the air with ever more force, while retaining an advantage on the battlefield in the east — though it is far from achieving a significant breakthrough. Ukraine has found success striking Russian oil refineries deep in the country and may receive longer-range missiles from the Trump administration, which has been more focused on negotiating peace in Gaza after a summit with Putin in Alaska failed to yield results. Meanwhile, Russian drones and aircrafts have made appearances over multiple NATO countries, putting Europe on edge as the continent contemplates a broader defense strategy to combat its neighbor to the east.
These developments may not seem seismic on their face, but Nigel Gould-Davies thinks they signal a major shift. Gould-Davies, a Senior Fellow for Russia and Eurasia at the International Institute for Strategic Studies who has served as the U.K. ambassador to Belarus, wrote recently that foreign-policy setbacks and economic challenges have put Russia in a bind, which “compels it to accelerate its theory of victory – to grind down Ukraine militarily and outlast the West politically – before the window for winning closes forever.” I spoke with him about why he believes the West has a major advantage against Putin going forward.
You argue that “Time may no longer be on Russia’s side.” You elaborate in your article, but for readers — why do you think that? What is different about this moment than any point since the war began in 2022?
I would look first at the new things that are happening and work backwards to the underlying conditions that are impelling Russia to behave this way. What we observe is this sudden and very striking escalation of drone and even fighter incursions. These things aren’t entirely new — what’s entirely new is the scale of them. The second thing that’s going on is this sudden intensification of drone and missile attacks on major cities and in particular, energy infrastructure. Again, not entirely new, but the scale of it is absolutely unprecedented. So what might be causing this? That’s what led me to think in the round about Russia’s condition. And it’s partly inferential, but partly a matter of looking at some of the hints — actual specific evidence that elites now are more worried and anxious than they’ve been at any time since the war began.
First there are the external conditions that Russia faces as a consequence of policy choices and decisions made by the other major actors beyond its immediate, combatant adversary, which is Ukraine. All of last year, Putin was waiting for Trump to return. Russia was very happy with the November election result, and was looking forward to engaging with Trump, hoping that he would bring about a fundamental shift in American policy, hoping for the far end of expectations — that America might abandon Ukraine, might potentially even abandon Europe, and would ease or lift sanctions against Russia.
Russia worked hard to try to exploit what it saw as the opportunity of the new Trump administration. But what we’ve seen in practice is that as the dust is settling on nine months of turbulent diplomacy, America has ultimately disappointed Putin’s hopes and ambition. And we’ve heard very explicit confirmation of this by Deputy Foreign Minister Rybakov, who said that the spirit of the Alaska Summit has now dissipated.
Although Putin and Trump are still praising each other.
But if one looks at Trump’s deeds rather than his words — there were one or two very difficult specific moments, and we all remember the awful Oval Office meeting with Zelensky on February 20, and the temporary halting of intelligence support to Ukraine. But we’re now in a situation where that relationship with Zelensky appears to have been restored, where the United States is still providing important forms of intelligence help and is still providing weapons, albeit now selling them rather than giving them to Ukraine. And to round out the diplomatic piece, we saw very warm engagement between Trump and European leaders at the Hague NATO Summit in June. And that shifts us off onto the second part of the story, which is Europe stepping up now.
I would say the most important consequence of that NATO summit was the commitment of almost all members — Spain is a partial exception — to spending five percent of GDP on defense by 2035. Since Europe’s GDP is so much greater than Russia’s, the consequences of that are very significant. Roughly speaking, Europe’s collective GDP — I’m including the UK in this, of course — is around 10.6 times greater than Russia’s. That is a margin of superiority in raw economic strength over Russia that is greater than the margin of superiority that the whole of the transatlantic alliance enjoyed over the whole of the Warsaw Pact during the Cold War. If you just look at the raw numbers, Europe’s margin of superiority is over three times what it was during the Cold War. That’s very significant.
Pull the camera back further for a moment. There’s a strong case for saying that the iron law of history regarding major great power conflicts, where vital interests are at stake, is that ultimately wars are won by the richer side. And that makes sense. In a war of fundamental interest, you mobilize everything you have for victory, because the stakes are so high. The more stuff you have, the more weapons of war you can make. The more ploughshares you have, the more swords you can fashion them into. If you had to summarize the great book by Paul Kennedy that charts this, The Rise and Fall of the Great Powers — if you had to summarize that in one sentence, it would be that in major power wars, the richer side wins. If you put the situation we face now in that larger historical and analytical context, the implications are very clear that if Europe continues to see this as a conflict involving its vital interests, something it cannot afford to lose, it has material capacity to outcompete and ultimately outfight Russia. There are various caveats one can make to that, and one of them is the nuclear one, that Europe has no medium or shorter range nuclear weapons, and only a few French and British strategic nuclear weapons, whereas Russia has thousands of non-strategic nuclear weapons.
That does seem important, yes.
There’s also coordination, and making sure that the logistics of national states work properly and so on. You can talk about those things. But if you’re sitting in the Kremlin and looking at the numbers in a clear-eyed way, what you see is this slow tsunami approaching, of massive increases in European defense spending. Again, look at the underlying numbers here. Let’s suppose Europe doesn’t reach that five percent figure. Let’s say it just gets to three percent. Since Europe’s GDP is 10 times greater than Russia’s, it follows from that, arithmetically, that Russia would have to spend 30 percent of its GDP just to keep up. That’s astonishing. It’s vastly more than the around 7.5 percent that it’s spending now, and much more than the Soviet Union was spending during the Cold Wars, which was around 15 to 20 percent of GDP. And that was a hell of a burden. This is a completely different game. And to compound that, look at the woes and difficulties that are increasingly besetting Russia’s economy. As I put it in that piece, it’s like two blades of a pair of scissors cutting into the economy.
And finally, the China bit. On one hand, China is providing very significant forms of economic help. But what Russia really needs now is not just, perhaps not even primarily, the inputs of military, technological stuff that China is selling. It needs the finances to pay for that, and to keep the Russian economy afloat more generally. China is not supplying that. It might eventually, but as things stand now, the next few years, things are all going in the wrong direction as far as Russia is concerned.
Connect that total situation back to what I began with: this series of trends increasingly and quite quickly moving against Russia explains why Russia understands that it’s faced with a closing window of opportunity, and therefore must escalate its attacks and escalate the risks, partly against Ukraine, but particularly against Europe. The balance of resources vastly favors Europe. Russia’s only way of effectively combating that is to try to tilt the balance of resolve in favor of itself by presenting such threats and risks that Europe is divided and deterred from doing what it has embarked on doing.
Putin was bombing Ukraine very intensely even while Trump was much friendlier to him in the early months of this administration. You’re saying that this escalation is happening because Putin feels cornered, but why would he have been so aggressive before, when he presumably didn’t feel so cornered?
I do think that in the last couple of weeks, we’ve seen a step change in the severity, intensity, of those attacks, unmatched up until now. You are right, he’s been bombing Kyiv regularly for a long, long time, and things did begin to become worse back then. It’s very striking that Russia at no point even hinted at a willingness to accommodate or compromise. There was a kind of brazenness, even during negotiations in Istanbul and the Middle East.
And before and after the Alaska summit.
Yeah, that’s right. It’s hard to infer really exactly what was going on in the Kremlin mind. There’s almost a sense Russia is showing that it’s not going to compromise even as it’s seeking concessions from the United States. It’s not the rational thing to do. Obviously, if you are trying to at least posture as a reasonable country pretending to seek peace, and to portray your adversary as, as the one that doesn’t all — all I can say is it feels very Russian, without being rational in a way that we would understand.
Over the last three years, I have heard a few times that the economic picture was darkening in Russia and that sanctions were really starting to bite. I’m sure you could find instances of Russian elites sounding dire during that time. But the economy has defied people’s expectations, given the intensity of the sanctions and everything else. It may not be booming, but it hasn’t collapsed. So why are you confident that this time is different?
Let me step back a moment and look at some of the language that you were sort of drawing upon. You say the economy hasn’t collapsed. That’s absolutely right. But that’s not the kind of test that it’s fair to set for sanctions, or even the combination of sanctions and war. Economies almost never collapse, under any circumstances.
Well, I guess I meant it hasn’t suffered a severe recession. There hasn’t been chaos in the streets.
I appreciate that, but one hears this word used quite a lot — that the economy hasn’t collapsed, and therefore sanctions aren’t working. And it’s a straw man. Smaller economies than Russia’s have been subject to such severe sanctions for longer. They don’t implode. And I think the reason people use this term, in particular in the context of Russia, is we have these memories of 1991, where things really did collapse. But that was a unique historical moment, which was a consequence of circumstances that will never recur, including an economic system that was historically out of time.
But why haven’t we had a severe recession? There’ve been two significant sources of growth since this combination of major war and major sanctions began. The first major source of growth was a huge external surplus. So Russia’s balance of payments shot up. That happened from mid 2022 onwards, and it happened for two reasons. One was that energy prices went up, and the second was that sanctions suppressed imports. Sanctions did genuinely shock the Russian economy before it began to find ways to get around many of the export controls. But there was a period where the combination of more revenues for Russian oil, plus fewer hard currency outflows — because imports fell drastically — created this huge external surplus, and that buoyed the Russian economy. And then imports did gradually rise again, and energy prices began to fall.
The second big source of growth, which arrived in early 2023, was this huge increase in military spending. And for a while that sustained things. It’s worth looking at the experience of other countries. Major wars are typically economic stimulants. The really interesting thing in that comparative perspective is how short-lived the Russia boom has been — not that it happened, but that it is withering away manifestly. It’s not only that the Russian economy is virtually stagnant now, but that if you look within the economy, the non- militarized sector has stopped growing, and there’s a massive, ongoing transfer of resources to military industrial production, and huge payments needed by the Russian state to persuade its citizens to fight.
This is a point of fundamental significance: that Russia is doing everything it possibly can not to compel its citizens to fight. It’s exhorted them to fight, and in particular, it’s paying them to fight. It’s using North Korean soldiers, Cuban soldiers, militaries from other parts of the world. But it is avoiding doing what is always done before, which is drawing upon either a large peasant serf army or a mass Soviet conscription system to fight. And that’s very expensive. Russia has to pay its soldiers as well as pay for materiel production for the war.
I could go on about some of the other distortions and problems that the Russian economy and financial system faces. To return to the core of your question, a series of phenomena now are converging in Russia’s political economy that we absolutely have not seen before: the highest real interest rates in the world; the fact that major non-military enterprises now are starting to shed labor, moving to four day weeks; the fact that in some regions now pensioners, in order to combat inflation, are starting to be given a kind of ration card. They’re avoiding calling it a ration card, but that’s what it is. And so on. There really is a palpable sense that elites are worried again to a degree that we haven’t seen since the beginning of the war, and that there are quite specific, quiet, discussions about escape routes, about the prospect of collapse and so on. The best economic minds in Russia are the most worried about this situation.
To go back a bit: you said the richer side always wins great power conflicts. First of all, is this a great power conflict? It may have more in common with a proxy fight of the Cold War. And the richer side of those conflicts didn’t always win — I’m thinking of U.S. involvement in Vietnam. Sometimes it’s the side that’s more committed, and Russia has shown that it is committed to this fight. Europe may be upping its defense spending by the day, but it’s not so simple as a financial equation.
There are some very significant recent examples of small countries defeating great powers, whether it’s Vietnam, whether it’s the Soviet Union against Afghanistan, the U.S. in Afghanistan. What are all those situations? Those are big powers against small powers, where I think one can say that the balance of resolve more than offset the balance of resources. The North Vietnamese were absolutely committed. They put themselves through extraordinary sacrifices. America ultimately concluded that defending South Vietnam was not a vital interest. It had vast resources, but they were limited, and they were needed for more important things in other parts of the world. So a determined small power can beat an uncommitted large power, if the large power concludes that its vital interests are not at stake, and it couldn’t afford to lose without its security fundamentally being compromised. And I think that was why, in all of these cases, the much larger power ultimately withdrew and was defeated. They didn’t have to win. The costs of continuing the war were greater than the costs of leaving the war.
So is Europe to Ukraine as America was to Vietnam, or as the Soviet Union was to Afghanistan? Absolutely not. They are fundamentally different strategic situations, because everyone understands that this war that Russia is fighting is not only about Ukraine, and that Russia, if it’s victorious in Ukraine, will simply be in a better position to pose a larger and longer term threat to continental security. Russia set out its vision for the architecture of a future European security order in two treaties that were presented in December of 2021. They envisaged a United States essentially withdrawn from Europe, and a NATO rolled back to its 1990 borders. It would’ve been very, very easy at any point for Russia to have said “We have no quarrel with Europe.” You can imagine the sort of language they’d use. It would be dishonest, but they could have used it. “We have special historical interest commitments to Ukraine as a special historical part of the Rus, blah blah blah.” A lot of European audiences would’ve been very happy to believe that. At no point has Russia even hinted at that.
Well, Putin has claimed that he wasn’t going to invade Europe.
I haven’t seen that, or certainly not any version of it, that anyone would take seriously. What are the drones doing? What are the fighters doing if he’s not posing a threat to Europe? What about the sabotage actions? What about the attempted assassination of the CEO of Rheinmetall? It came very close, that plot. There’s all sorts of things everyone can point to. I don’t see any significant constituency of European opinion that thinks that Russia is not a threat. So again, it’s not like Afghanistan, not like Vietnam and so on. What Russia has to do now in this closing window of opportunity is tilt the balance of resolve, and deter and divide and intimidate. So that’s really what Putin is doing. He’s not trying to, as it were, neuter Europe by reassurance. He’s neutering it by threat, by the prospects of escalation and trying to exploit the fear of escalation.
To your other point, about the practical problems Europe faces in turning its much bigger reservoir of economic stuff into deployable force: If you think of it as a reservoir, this big kind of lump of stuff underground — it gets to the surface through a very narrow pipe of finances called the defense budget. The problem there is that almost every European country’s finances are very strained, much more strained than during the Cold War, where we are all spending a significantly higher proportion than we are now of our GDP on defense. Today our societies are aging and ailing, and you have this massively greater sort of welfare spending, massively greater debt to GDP ratios, much less headroom for increasing defense spending.
Here Putin has one advantage. Change the metaphor: The pie that he has of GDP is much smaller, but he can devote a much bigger slice of it to defense, because one of the consistent themes of the whole Putin presidency has been fierce fiscal conservatism. This is a very clear lesson looking both at the collapse of the Soviet Union, but also perhaps even more, the humiliation of the default of 1998. He’s been absolutely determined to put Russian public finances on a sound footing. And that means a much smaller debt-to-GDP ratio and a much lower budget deficit. It also helps to have a repressive political system, not especially responsible to popular demand, so you can impose forced choices on the allocation of resources.
Right, no dealing with pesky elections or protests.
All of that means that yes, they have a smaller pie but that they can devote a much bigger slice to the war. Even that, though, is beginning to become more difficult. Russia cannot borrow abroad now. It needs to spend more. So what are its options? It can borrow more domestically — it’s doing that. And it can raise taxes — it’s doing that as well. It’s also been drawing down the National Welfare fund, which was set up in the 2000s to salt away oil revenues for a rainy day. That’s now been falling very significantly.
If Putin is sending drones into the airspaces of various European countries, what is the best-case scenario for him there? You say he wants to divide Europe, but what would that look like? Would it be scaring European leaders into saying “let’s cut a deal favorable to Putin on his terms to wrap things up in Ukraine?”
It’s a very good question. I think he’s hoping that some of the larger, more Western European states will be intimidated by the prospect of escalation. I don’t see that happening.
It doesn’t seem like a great strategy.
And there’s a sense in which the fact that it’s not great suggests that there’s a degree of desperation to it. I’ll draw another comparison. It’s well known that Russia has been conducting a very active campaign of sabotage across Europe. We cannot be sure that all the incidents that are suspected of being Russia-caused in fact originate from Russia, but an awful lot do. And they have been attributed publicly by multiple security services in many countries. This was something that never happened during the Cold War in Europe. We know that the Soviet Union had extensive plans to carry out sabotage and assassinations on our territories should war break out to disrupt us as part of a full-fledged military campaign. Those preparations had been made, but they weren’t implemented, because war never did break out. The very few cases of assassinations of individuals were almost all of Soviet dissidents and exiles rather than European citizens.
And yet we have a situation now where in this kind of drip, drip, drip way, Russia is carrying out attacks, including on critical infrastructure, on cables, pipelines, train systems, those sorts of things. And it’s very odd if you think about it, because what it does is it highlights the threat that Russia poses and also gives us the opportunity to improve our resilience against future ones because we are sensitized to the risk. It’s not storing all this stuff up to do in the event that a war breaks out. It’s showing us what it can do ahead of time. And I’m not actually not sure that the Kremlin has really thought that through.
So what do you think happens next? To give you an easy one.
Well, now we’re in punditry territory.
Yes, sorry about that,
No, that’s okay — it has to be done. At a minimum, I’ll say quite confidently that Russian probing and testing of our tolerance for its incursions will not just continue, but escalate until such time as we demonstrate, unassailably with deeds, not just words, that we will not tolerate this.
What kind of deeds?
Well, that means stopping things happening.
Risky territory, obviously.
Risky for whom? That’s the question we’re asking. Inevitably people go back to what Turkey did back in 2015. A Russian plane was in Turkish airspace for 17 seconds and boom, it got shot down. Never happened again. Put it this way: if the only way to stop stuff getting into your airspace is to shoot it down, then that’s what you have to do. Otherwise, it becomes a slow, steady invasion of your airspace. What do you do with invasions? You stop them.
This interview has been edited for length and clarity.
