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Early this week, Vladimir Putin ordered Russian troops into eastern Ukraine. The deployment orders came after Russia’s president recognized two breakaway Ukrainian regions as independent on Monday.

It’s hard to know exactly what Putin is planning for the long-term. This could be a step in the direction of a full-scale invasion of Ukraine. Or, it could be a hard-hitting bluff.

While no one other than Vladimir Putin knows for sure what happens next (and maybe he doesn’t even know, uncertainty has been part of the game for Russia for a long time), President Joe Biden is convinced that Putin intends to invade. Despite Biden’s obvious concern that a decision has been made in Moscow, the U.S. president did leave the door cracked for a diplomatic resolution.

Following Putin’s recognition of the breakaway regions, Biden was swift to announce a prohibition on economic activity between U.S. individuals and these rebel-held areas. The White House said this prohibition would be in addition to separate economic sanctions the U.S. and its allies are preparing in the event of a full-scale invasion by Russia.

So far, though, an economic conflict is all this remains for the United States and most of its NATO allies. While American military equipment is currently pouring into Ukraine, including $200 million worth of “lethal aid” approved by Biden late last year, the United States has not committed any troops to the conflict.

Russia has itself already fired shots in the economic part of the conflict. A series of cyberattacks struck Ukrainian banks in recent weeks, and economic activity in Ukraine has cratered under the looming shadow of a Russian invasion.

More broadly, world markets have been extremely trepidatious in light of the potential for more widespread conflict. Oil is up to a seven-year high. U.S. stocks, meanwhile, have fallen and continue to fall as more news leaks out of Ukraine.

Uncertainty is bad for business, and Russia’s role as one of the world’s biggest energy producers is fanning the flames of economic fallout in the west. Multiple nations that depend heavily on Russia for energy resources back Ukraine and the United States. It’s difficult to imagine Russia continuing to robustly supply a nation with energy if it’s being harshly economically sanctioned in return, to say nothing of the massive energy resources which must be diverted to military forces in order to carry on a war.

Additionally, the economic sanctions being contemplated against Russia could cut off the world’s largest country from international financial markets. You don’t just cordon off one-eighth of the non-ocean part of the world and expect marketplace dynamics to simply go on as usual.

Obviously, in the grand scheme of things it is not an existential crisis if some stock prices get pummeled and we lose a big foreign export market. The Ukrainian people could lose their homes, their country, and even their lives. The sacrifices they are making and the bravery they are showing in the face of the Russian threat isn’t even in the same ballpark as the comparatively light impacts the conflict is having thus far in the U.S.

Still, Putin seeks to weaken America, and even if his saber-rattling at the Ukrainian border turns out to be a feint, he will have achieved some measure of his goals. Chaos, disruption, and uncertainty in the west are an end in and of themselves for Putin’s Russia.

We have already felt the notable economic effects of the mere threat of a Russian-Ukrainian war. For our sake, and for the sake of the people of Ukraine, I hope we don’t have to find out how much worse things can get if the conflict escalates. 

Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.

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