TS Lombard with a timely warning.
Since the stakes in the Ukraine war are far too high for the belligerents to cut their losses and negotiate some compromise, fighting will continue until one or the other side collapses. The weekend’s events highlight the collapse potential on the Russian side – even if the prompt end of Yevgeny Prigozhin’s rebellion/putsch attempt shifts that potential to slow-burn. All the commentary now focused on that collapse potential may obscure what we see as a key conclusion for global risk. While collapse will determine the war outcome, global risks stemming from this war will be aggravated rather than alleviated by the process and aftermath of collapse.
Let’s imagine the counter-factual that Putin and Prigozhin had failed to cut a deal last Saturday. The result would have been a bloody civil conflict in which the Wagner mercenaries would have been crushed but, in the process, Putin’s authority not merely weakened as now but terminally undermined. The end of the Putin system would have been all the more rapid if the fight against the Wagner rebels had sufficiently distracted from the Russian war effort to allow the Ukrainian counter-offensive to achieve the kind of decisive breakthroughs that have eluded it for now. Russia would then fall into a power struggle between military and security factions constantly liable to erupt into armed conflict. Putin’s long personal rule has so hollowed out the system that there is no successor capable of smoothly replacing him as the lynchpin and supreme arbiter. Or rather, a smooth succession would require a managed power handover with Putin still strong enough to preserve stability even as he stepped back and oversaw the process of his chosen successor taking up the reins.
