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Rumors abound of a Russian winter offensive. Russian equipment has been seen entering rebel-held Ukraine almost daily. Russian T-72s sit outside Mariupol, the site of one of last summer’s bigger battles. Nobody can be sure that a full-fledged invasion will take place as the snows fall, but all this activity is telling us one thing.

Putin is going to play the hardest ball he can minus going to nuclear war

Putin and the ruling Russian elite have obviously, blatantly concluded the West is out to get them and there’s nothing to be gained by cooperation when it comes to Russia’s near-abroad. This makes a huge amount of sense geopolitically from Moscow’s perspective. The Kremlin still runs the world’s largest country and has the largest frontier on Earth. For centuries, people have been trying to pick bits off when they feel Russia is weak. Within Russia itself, ethnic minorities overrun by once-upon-a-time imperialists seek to run their own affairs, up to and including having their own countries.

So the paranoid streak is warranted. Russia’s elite see NATO’s growth not as a NATO does. NATO thinks its reordering the world into a liberal, peaceful, globalized worldview. Russia sees it as an American-led threat that seeks U.S. domination of the planet and the breaking of its only European rival.

Having lost the Baltic Republics in the early 2000s, Putin and his men now seek to reverse the trend. Russia is strong; to prove it, it must kill people.

Enter the trains and the New Silk Road

To shore up his flank, Putin has been putting a great deal of effort into China. This border is the sixth longest one in the world; Russia has historically disliked having to spend resources defending this remote vastness, but must in order to retain control of Siberia. A friendly China lowers border costs and lets Putin deploy more power towards the West.

Thus the massive China-Russia oil deal. Now the New Silk Road, a rail line that runs from Beijing to Europe, is open for business. This is a prime way for China to avoid America’s shipping rules on the high seas and for the Russians to become a major transit point for world trade. This builds some safety for Russia; the more important Russia is for world trade, the less a rival like the United States can threaten embargoes.

Meanwhile, a flare-up in Ukraine is partially meant to fire up Russians at home and make Putin look all the more manly

Large numbers of Russians are sympathetic to the secessionists in Ukraine and don’t want to see Kiev steamrolling over them. However, Russians are also not willing to lose soldiers to prevent that. Putin has enjoyed a massive popularity boost having bloodlessly annexed Crimea, but the sanctions and counter-sanctions are burning through Russia’s cash reserves (the emergency cash Moscow holds to keep its currency from collapsing). Russia’s central bank has been forced to spend loads of these cash reserves to prevent a full-on currency crisis; up to 20% of these reserves have been spent in the past year along.

Clearly, Putin can burn Ukraine, but its costing him. So far, it’s just money. But worse news has now come.

Damn those Saudis and their oil production

Oil has sunk to $80 a barrel, and nobody expects it to rise any time soon. Saudi Arabia is charging ahead with loads of production; meanwhile, the American oil shale revolution is fully underway. Russia can’t afford to cut production to try to raise prices with all its financial bleeding. It needs up to $117 this year to balance its budget – which just won’t happen.

Speculation for why OPEC isn’t driving the price up varies, but it makes some sense that Saudi Arabia and its Gulf partners are trying to squeeze out the oil shale wildcats in America, who, if they get enough of a permanent market share, could really screw them over. The Gulf states can afford a few years of low prices; they did so well enough in the 1980s. What they can’t afford is to let the oil shale revolution become a permanent state of affairs. That they’re hurting both Russia and Iran – two of America’s prime enemies – is a bonus, as their attempt to retrench their oil monopoly can also be sold as geopolitical usefulness to the Americans.

So if OPEC can at least slow the pace of the oil shale revolution, they’ll consider it a success. But Russia doesn’t have the same kind of treasuries that the Gulf does. With a massive population that expects certain benefits and a huge military that must be paid for, Russia isn’t in the same kind of comfort zone Saudi Arabia is.

And that will, incidentally, most likely make Putin more aggressive

The Russia nation-state would benefit from Putin stepping back from the brink, pulling out of Ukraine, and suing for peace with the West. But here is where geopolitics collides with personal ambition. None of that would benefit Putin, who would look weak, be accused of losing Ukraine, and become vulnerable to his opponents. His entire political personality is based on being tough; should that crack, his visage goes with it.

Putin has exploited several crises masterfully to full advantage. In Iran, he has helped make Russia a key broker for a nuclear deal. In Syria, he saved Assad from air strikes at the last minute. But now he’s bitten off a big chunk and risks choking. If he can escalate the conflict, break the will of Kiev to reimpose its will in eastern Ukraine, and force the Europeans to accept his victory, he may still have time to normalize relations with the West before the next election.

But right now, Kiev will still fight. A week-long blitz won’t do the trick, as it did with Georgia in 2008. The conflict will get bigger and bloodier. Putin must hope Ukraine breaks before he does. His window of opportunity is running out, and the odds are good he’ll favor action to try to save himself.

A full-on winter war perhaps, but without a doubt more fighting to come

Russia may abstain from a full-on conflict, but its proxies may be given license to bleed the Ukrainian military as much as possible along the current front line. That kind of war of attrition would be calculated to force Ukraine to accept the loss of Donbass and prevent Ukraine from joining NATO for the foreseeable future.

Russia is at a crossroads; to embrace the West would probably mean the end of Putin, and would likely carve up Russia as ethnic minorities assert themselves and use the West’s liberal international system to secede. But to confront the West is also a losing strategy; Russia is simply outgunned.

Putin has been labeled a master of geopolitics. He has done well to reverse Russia’s long decline. But the hard wall of what Russia is actually capable of is fast approaching. He may yet find a balance, but the odds are quickly going against him.