Putin Forces Political Risk onto European Treasury Agenda

“The last thing I want to do is to cry wolf or be unnecessarily alarmist,” notes Sir Richard Shirreff on the second day of the Association of Corporate Treasurers’ (ACT) annual conference in Manchester, UK. Sir Richard, who served for many years as NATO’s deputy supreme allied commander, is now an independent consultant and is alarmed by events on Europe’s periphery – from the threat to the Ukraine to the trafficking of immigrants to Europe, which has seen many drown in the Mediterranean.

Unfortunately “peace is not the default setting in international situations – it’s fragile and has to be worked at and paid for”, says Sir Richard. At the moment, five major themes are evident regarding the threat to European security and stability.

  1. Both NATO and the global security environment are in fluid transition and still adjusting form the challenges of the Cold War to those of the 21st century.
  2. The cost of security is steadily increasing, while the tools for stability are regarded as increasingly ineffective – creating a credibility gap.
  3. Despite the outlay of resources by governments and organisation, security lapses are growing in both number and complexity.
  4. The complexity is matched by problems in adjusting to today’s problems, such as the increase in illegal immigration resulting from political instability.
  5. The solutions can, in themselves, create new problems. One example is the situation in Libya, where the overthrow of a dictator has been followed by chaos and instability.

Putin’s Ambitions

To the East, Russia’s annexation of the Crimea in February 2014 has created a new paradigm, Sir Richard warns. Russian president Vladimir Putin spoke of the ‘threat’ that the West posed to Russia and how the collapse of the Soviet Union 25 years ago was a wrong that had to be corrected. He set out his ambition of uniting all Russian-speaking people under one nation once more – a unity that was essential even if opposed by other states.

This policy, if pursued, could put Russia on a collision course with the West – particularly if Putin’s ambitions extend to annexing the Baltic states of Lithuania, Estonia and Latvia. “Weak-willed Western democracies are facing an autocrat who is more than ready to extend Russia’s borders by force,” warns Sir Richard.

The response of NATO and the Western powers has to be a warning to Putin of “thus far and no further” he adds. To do so requires the following strategy:

  • The West has to win the strategic narrative and tell a better story than the one being pumped out by the Russian propaganda machine.
  • Sanctions are the West’s most effective weapon at present – they are already hitting the Russian economy hard and should be intensified.
  • Diplomacy must be maintained to ensure there is unity of purpose. The West “should be putting an armlock on Russia” until it extracts a pledge that sovereign rights will be respected.
  • Strong conventional deterrents must also include the nuclear threat. “Russia only respects strength, so the bar has to be set high” says Sir Richard.  This also means European Union (EU) member states pledging to commit 2% of gross domestic product (GDP) to defence and not expecting this US to foot the bill.

The threat from Russia is accompanied by the “Pandora’s box” that has been opened in Syria, where the forces unleashed are too entrenched to be removed simply by air strikes.  A further deployment of troops may be unavoidable. “The emphasis should be on supporting the weak government in the region opposing Islamist forces,” suggests Sir Richard. “It demands a totally integrated approach and removing the soil in which terrorism flourishes.”


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