March 4, 2022
CrossLead panel discussion, about the ongoing crisis in Ukraine, sponsored by Red Cell Partners. Dave Silverman facilitates a conversation with former vice chairman of the Federal Reserve Board of Governors, Roger Ferguson, and former member of the Central Intelligence Agency, John Sipher.
Crisis in Ukraine: Panel Discussion
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Show Notes

Crisis in Ukraine: Panel Discussion

CrossLead panel discussion, about the ongoing crisis in Ukraine, sponsored by Red Cell PartnersDave Silverman facilitates a conversation with former vice chairman of the Federal Reserve Board of Governors, Roger Ferguson, and former member of the Central Intelligence Agency, John Sipher.


Webinar recording

John Sipher

Roger Ferguson

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For today’s episode, I have the pleasure of hosting a panel discussion on the developing crisis in Ukraine with two exceptional leaders and patriots. Our sponsor for this episode is Red Cell Partners. Red Cell Partners is a design and incubation studio that brings ideas, capital, resources and talent together to build technology led companies that address the nation’s most pressing challenges in finance, health care in the national security space.

My first guest is John Cipher. John is a foreign policy and intelligence expert who previously served 28 years in the Central Intelligence Agencies National Clandestine Service. At the time of his retirement. He was a member of the CIA’s Senior Intelligence Service, the leadership team that guides the CIA’s activities globally. John’s has served in multiple overseas tours as both chief of station and deputy chief of Station across Europe, Asia and several other high threat environments to include Russia.

He’s a regular contributor to various news outlets and publications and very active, active as a social influencer. My second guest is Roger Ferguson. Roger is a former vice chairman of the Board of Governors of the US Fed. Reserve. We served from 1999 to 2006. He represented the Fed on several international policy groups and served on key Federal Reserve committees, including payment systems oversight Reserve Bank Operations and supervision regulation as the only governor in DC on nine 11.

He led the Fed’s initial response to the terrorist attacks, taking actions that kept the U.S. financial system functioning while reassuring the global financial community that the U.S. economy would not be paralyzed. He is a Steven A. Tananbaum Distinguished Fellow for International Economics at the Council on Foreign Relations and the immediate past president and CEO of TIAA, the leading provider of retirement services and the Academic Research Medical and cultural fields, and also a Fortune 100 financial services organization.

He attended Harvard for his undergrad, his law degree, and his Ph.D. in Economics In today’s discussion, we talk about Putin strategies. It relates to Ukraine, the current military, geopolitical and economic situation. How this crisis might evolve and the global implications both economically and politically. And I’d like to start with John, and I hope that you could provide some context on Russia and Ukraine and sort of how we got to where we are now.

Yeah. Well, it’s interesting. Let me start a little bit to talk about Putin and what makes him tick, because, you know, at the end of the day, a week ago, you know, many people would have assumed he wasn’t going to invade Ukraine. And, you know, essentially nobody could answer, was it?

Whether he was or wasn’t, wasn’t going to. And as much intelligence as the U.S. and Western officials have they still didn’t know because it was all in the head of one person. You know, when you’re a dictator and you’ve created a system around yourself where, you know, people have to come to you and you don’t know. You know, I have no idea.

I was on his head. So a little bit about him. And then and I’ll talk a little about what he cares about, where we are now. So, you know, one thing that is most important to me about Leader Putin is he’s a career Chekist, but that means he’s a career intelligence officer. He’s a kid. It was a career KGB officer.

And that term, Chekist, really relates to the original Bolshevik intelligence service called the Cheka. And any Russian intelligence officer calls themselves a proud Chekist because the check out when the Bolsheviks took over in 1918, the first thing that new government did was create an intelligence service to sort of, you know, kill off any potential domestic opponents as well as to keep their enemies at bay.

And they did that right from the beginning, doing a lot of the things that we’ve seen since the 2016 election, for example. They use subversion, deception, they use disinformation assassinations around the world, all these kind of things. And they continue to do that throughout the Cold War. So that’s really important to understand. Vladimir Putin, because he grew up in a, in a system where they were using information warfare, creating false stories and disinformation and killing their opponents from the beginning.

The other thing to understand about him is, you know, he was in the KGB when the Soviet Union fell. You know, and I think it’s probably hard for us here to understand how that must have affected somebody psychologically. They thought they were in the world’s second greatest superpower. Liberator was the greatest superpower. He worked for the KGB, which is a sword and shield of that of the regime.

You know, the most important. Arguably part of the regime in protecting it. And his whole country fell apart. And he tells a story it even in his own biography about what that meant to him. And he talked about when he was a KGB officer in Dresden, in East Germany, when the wall was starting to fall. And there was protesters coming around his consulate where he was working.

You know, he contacted the military attaché in Berlin and said, you know, we need Soviet troops here. And the military attache in Berlin called him back shortly thereafter and said, you know, we’ve been trying to contact Moscow, but Moscow is silent. And Putin talks about this and use it in his own book to suggest that when the country needed to use its monopoly on brutality, when it needed to be tough, it was silent.

And his point is, whenever he would have a chance to change that, when he would ever have a chance to make sure that the regime was powerful and it used its brutality, his strength when it needed to, he would do it His view is, you know, the weaker beaten in the end. The most important thing about any government is to maintain a monopoly of power and a monopoly of brutality.

And so, you know, another thing to understand about him is, you know, we often talk about how does he negotiate? What is he doing? And I think a lot of us are now seeing that he’s gone into the Ukraine. You know, he’s a sort of a serial liar and someone who sort of is always playing others. And so it was Garry Kasparov the famous chess champion that sort of talked about he says, listen, Putin doesn’t play the situation on the chess board.

He plays the opponent. And so he has this sort of gift for sniffing out weakness and trying to then take advantage of that weakness to amplify it or to exploit it. So how do we get here? Like what are the things that he really cares about? So I’ll mention a few that he sort of claims and that led to this crisis.

But then there’s sort of one that it’s really important that when you talk about dictator sort of the first thing to realize is this whole thing is completely manufactured. There was no threat to Russia. NATO was not expanding. There hasn’t been talks for years about including Ukraine. There is no threat from Ukraine to Russia. It’s a much smaller and weaker country.

All of the things that he brought up, you know, that led to this were things that were for like the 1990s. You know, this is stuff that easily could have been discussed, negotiated, dealt with. But it has to do with that sort of mentality of the man. You know, he’s always had this sort of sense of grievance of emotional anger against the West in the United States.

His narrative is that when the powerful Soviet Union fell, it was because the West in the in the United States were trying to destroy Russia. They wanted to humiliate Russia and keep it down. And of course, you know, that’s another manufactured thing. I worked in Moscow in the embassy in the 1990s for the very organization that would try to destroy Russia if that’s what we were doing.

And the United States government was trying everything they do to bring Russia into the family of nations to support them economically, help them. And if there’s an argument to be had from that period of time, perhaps that we didn’t do enough, not that we were trying to destroy Russia or weaken it. And so there’s there’s a couple of things that he said consistently that he wants the death of NATO’s.

He wants NATO’s to go away. He wants he doesn’t want all of these Western security services on his anywhere near his borders. You know, in fact, when he took office, it was the NATO general secretary, I think Rasmussen, who met him and said, you know, Mr. President Putin, my goal is to increase cooperation with Russia. And Putin reportedly responded with the question of his own.

He said, Do you know my mission, Mr. Rasmussen? Is to make sure that your organization no longer exists. And so he’s had that view ever since. He wants the U.S. out of Europe and he wants NATO’s dead. And the other thing he wants is he wants countries on his borders to be weak and vassals of the Kremlin. It’s democratic expansion that threatens him really more than veto expansion.

He doesn’t want success for democratic countries nearby, which can be a sort of a sign to his own people. What’s what’s certain possible. In fact, you know, bear with me for a second on a quote George Kennan said years ago, too long ago, he said, quote, The jealous, the jealous and intolerant eye of the Kremlin can distinguish in the end only vassals and enemies and the neighbors of Russia, if they do not wish to be one, must reconcile themselves to being the other.

So with that said, those are the things he’s claimed sort of led to this problem. But the big one, and then I’ll stop for a while is he’s a dictator. It’s about survival. Dictators, you know, have to worry every day about staying in power, making sure there’s not people out there who maybe want to sort of take power from the north where they want to maintain control.

And so when there’s a country, when you create a country where there’s no means for a peaceful transition of power, everything is about staying alive, staying in total control. And so Putin, in his 20 years of being in power, has witnessed a number of really strongmen fall everywhere, from Egypt to Ukraine to Georgia and around the world. And, you know, he probably has visions of Gadhafi being filmed in a sewer, being sodomized in the lead pipe.

And that is what he is trying to do. It’s all about maintaining power and staying in power. And then as we go on, I don’t want to feel like I’m talking too much here. We can go on about sort of, you know, how we ended up where we are and where and what and what where we might go from here.

Right. John, that was amazing. Given that context and background, can you give the audience here a sense of the current situation, as you understand it, from your vast network of spies and assets that you still probably actively engage with? And, you know, one of the questions just came in is like, what was that? What was the catalyst for Putin’s making the decision to act now?

That’s what’s crazy about this. There really wasn’t a catalyst. You know, he’s created these false narratives that, you know, NATO’s expanding. It’s a threat. And Will NATO’s wasn’t expanding hasn’t expanded since what, 2012 or whatever. And really, like I said, it’s about democratic expansion rather than NATO’s expansion. He worries about a successful and democratic Ukraine on his border that looks like a success to his own people.

So they can say, hey, what why? If Ukraine can be successful in Western and Democratic, why can’t we be. And the answer is Vladimir Putin. And so those are the sort of things that. And so where we are now you know I think you know when you’re a dictator for 20 years it’s sort of like sort of the classic thing.

There’s so much power around you. I think as time goes on, people are afraid to bring you bad news. No one wants to walk up to Vladimir Putin and say, sir, you’re very wrong about this. This is how we should change it. And so I think you know, having been in power for so long and we see it from those pictures where he’s like 50 feet away from his advisers that are at a table that sort of suggests this kind of thing.

I think he’s getting to a point where, you know, he believes his own sort of bull and and thought that he had to do this. You know, he went into, if you remember, in 2014, he went into Crimea and he took the eastern part of Ukraine. I think he believed that, you know, that’s a largely Russian speaking areas.

I think he believed that the Russian speakers there would rise up and be thrilled to be part of Russia and get away from Ukraine. Well, it didn’t work. And so he eventually had to send his soldiers in there to try to like, you know, fight their way in. And that still hasn’t worked. They haven’t even taken over the whole area they tried to do.

And so this is sort of the third step is, you know, they’re going to go in and sort of crush Ukraine. And so I think he expected this one to go quickly. I think he’s seen, you know, Western armies and U.S. Army go in and use sort of pinpoint attacks. And very quickly, we’d be able to sort of the regime would fall.

And then he would come in and put in his own sort of his own, you know, fake regime that would support Russia. And as we’ve seen, it hasn’t really worked out that way. You know, that the communication between their troops, all these kind of things have sort of gone into a mess. And they actually created a different problem for him as the whole world is now paying attention.

The whole world is now you know, a lot of us have been following for Russia forever have been saying, hey, we need to crack down on him. He’s exactly the kind of person if you don’t push back, he’s going to take that as weakness. And continue to move along. And multiple administrations have failed to push back on Putin so that when this crisis arose, we had very little to deter him.

He had gotten his way so many times. We had assumed every time if we gave him an off ramp, he would maybe come around and change and join the family of nations. And it never happened. He hates us. He wants us to go away. He wants to overthrow the rules based order. And so I think we now realize the rest of the world now realizes, you know, he is someone who has to be fought and deterred, is not someone we can negotiate with.

So one quick thing. You know, where are we and where does it go? And so what’s hard here is it really depends on how he responds to what the world is doing to him. You know, everybody everybody from Sweden and Finland and in Switzerland, or even, you know, pushing back Switzerland was was was neutral against the Nazis. But now they’re actually pushing back against Vladimir Putin.

So. So it’s a tough thing for the the world is watching. But his traditional way of doing things, as we saw him in in Syria and in Chechnya and other places, is to essentially destroy everything, to sort of carpet bomb and destroy the entire cities. And so I worry that, you know, if he sort of sees that it’s not going well rather than try to use his, you know, precision weapons, which we’re finding out aren’t so precision, they’re going to go back to the old traditional Russian way of war with massive artillery and bombing and sort of killing and murdering.

And I think we’re already seeing some of that vigorous yet. John, thank you so much, Roger. As one of the preeminent economist it’s really the last several, several decades, certainly. I’d love to get a sense from you on where we are economically. I mean, the one thing that we have noticed is that there’s been a rapid coalition of, I would say, support and focus from the E.U. and from the U.S..

And to John’s point earlier, Switzerland has picked aside for the first time since the Vatican. So they’ve seen this be a sort of unimaginable even a week ago, are now sort of happening. I’d love to get a sense of where you see that current situation and how you see that playing out.

Well, first, thank you. And secondly, to John’s first point, you know, when I was in government, we treated this not I personally, but the government in the US. It created this notion of the G7 G8 inviting Russia and inviting them into the G20. And so, you know, they they were early on in giving this olive branch to come in and be part of the part of the international financial order.

And where are we today where all of that has collapsed? We’re seeing an unprecedented coalition including, as you’ve heard, Sweden, Switzerland, Finland, aligned against one country that is a large country, is that it’s not the largest it’s like the 17th largest economy in the world to be in that sort. So this is not a small country we’re dealing with.

And not only is there total alignment, but we’re using in the financial world a tool that has never been used against a country the size, which is basically precision exclusion of people from swift SWIFT is the international telecommunications system. It brings in 11,000 patients from 200 countries and you cannot possibly move money around the world accurately without using SWIFT.

And so what you saw is when you and the US decided to exclude an unnamed number of patients and now we know it’s just a handful of the ones immediately that led to a run of the banks, quite literally. And in Russia, individuals, you know, grabbing their rubles. We saw the ruble decline quite dramatically and they had to close the stock market and in Moscow on Monday.

And so, you know, this decision to start to exclude Russian banks from the international communications system of SWIFT has had dramatic effects in that country. In terms of undermining the trust and confidence in the banking system. The second thing that was also unprecedented for a country, the size was an effort to make sure they couldn’t use lawsuits, $630 billion in reserves and their central bank, again, unprecedented.

What that actually means is that they’re reserves and so reserve currencies and dollars and and euros and pounds, etc. that may be held in these countries in the West are not usable. So effectively that’s reduced their usable reserves to about, we think, a third a bit more primarily gold and also reserves like they have in the past. So their ability to support their economy, the central bank to support the economy has been dramatically weakened.

And then the final thing and all of these are playing together is obviously various sanctions against individuals and also against trade. Right now, energy is theoretically exported. But we’ve seen a number of Western companies that are critical to moving Russian energy oil around the world have been unwilling to to participate in that supply chain. So even though, you know, Russian oil has not yet been officially moved into the sanction list, effectively, it has because of the lack of payment ability for us to identify and then Western companies not wanting to be involved in transporting Soviet or Russian oil.

So unprecedented coalition of the willing to speak and beyond with Sweden, Switzerland, etc.. Unprecedented use of financial tools against a country that had been and still technically is, you know, in the closet with the G20. An unprecedented impact in a very large economy in terms of having the run on the banks, quite literally, that we’ve seen in driving a currency to being almost worthless.

So we are living in some normal times in the standpoint of the financial architecture of the world.

Now, I’m going to Roger, a follow up question Where do you see this playing out? I mean, we’ve they’ve all these unprecedented actions have now taken place. Let’s assume that this is going to be a protracted fight for Russia and Ukraine. I don’t I don’t see this thing, you know, sort of getting resolved in the next you know, certainly next week or two.

How do you how do you think this plays out in the affects? Do you think that’s going to have on the global economy?

So with three different ways, it’s already starting to play out. One obviously is increasing the price of oil well over, I think $110 today. And, you know, a very, very important impact globally that’s increasing the discussion around some stagflation, the possibility that inflation picks up. And we still have slowing growth. The last time we had an oil shock of this magnitude back in 1973 and 1979, in fact that was one of the causes of the stagflation that we had to deal with.

This time things are slightly different. To be fair. And so we have a different well in the 73 and 79, oil prices first tripled. They stayed at a high plateau and then in 79 they doubled again. So while energy prices, oil prices have clearly gone up, we’re not talking about a doubling or tripling of oil prices right now.

The second thing that’s different from then is the United States has developed its own oil capabilities where energy independence and in fact we are the ability and not as much as we’re going to need, but we have an ability to export our liquefied natural gas, and others are as well to support to support the Europeans that need that as it gets.

Not now, but back in the 18 season, So one thing is risk of stagflation going up. But I think it’s not probable what we saw in 69 and 79. So when the talk is certainly higher and for sure this is doing the second thing which is creating some uncertainty for all the central banks that we’re on a process of normalizing interest rates.

Chairman Powell had this testimony today he opened by talking about uncertainty when he went on to continue the discussion around managing inflation. Probably not as as aggressively as some of his colleagues had been empty, but nevertheless creating some uncertainty there. The answer that he gave looks to me as other markets liked it, because there’s a lot of green now in the major indices here in the U.S. At least that’s the second issue.

You have a central bank to deal with this. And then there’s a third longer term issue, which is excluding using the swift tool, excluding a major country from SWIFT at this stage of the unpredictable spillover effects on how others think about their reserves how they think about linking to the communications system. I don’t know yet how that’s going to play out, but there will certainly be talk about in some capitals, not a major one, but some smaller ones.

You know, how do we think about reserves, how we think about Swift, etc. Those are questions that have really not been on the table since the fall of the Berlin Wall. So some uncertainty, some certainty. And then there’s longer term multiplier effects. Hard to gauge how that how things are up there.

But you’re happy you’re not your old job. Sounds like a lot.

No, just the opposite. It’s great to be in the Fed when these moments are occurring. They’ll handle it well.

Awesome. So I want to I want to talk now about what we think happens next. So maybe starting with you, John, you’re from that from a geopolitical standpoint, where do you how do you see this playing out over the next month or two? And I’m very curious, not just tying that to the relationship with with with with Europe, but also with how it can affect China, because my sense is Russia sort of back to Soviet days as far as isolation and isolationism from from the Western sort of markets and opportunity sets and, you know, their biggest probably partner, you know, what’s available to them, at least today is China will be interested to see how that morphs and changes and evolves over as inevitably Russia’s military efforts sort of pick up momentum and speed.

I’ll start by saying, I think, you know, the administration has done a pretty good job once they sort of started focusing on how to deal with Putin and deal with this crisis. But they came in with a pretty weak hand. The administration first started their policy towards Russia. It was to create a stable and predictable relationship with Russia.

Now, anybody, any Russia followers who have been seeing what Putin’s been doing for the last at least eight to ten years, he’s been at war with us. He’s had a political war. That’s why he’s trying to use disinformation and cyber attacks and all these other kind of things, you know, fomenting violent groups around Europe and all these type of things.

We are never going to have a stable and predictable, predictable relationship with him. He wants to overthrow essentially the rules based order. He wants us out of Europe. He wants U.S. and Europe divided and weak. And so he has tried to build a relationship with China. And just prior to the Olympics, he went out to China and met with Xi.

And they put together you know, it was quite an amazing statement. I listened to former Australian Prime Minister Paul Rudd, who is a China expert and was the ambassador in China, among other things. Talk about it. And he said it was really unique for China. Because it really tie those two countries together more than ever before and suggested that China was much more on the Russian following the Russian thing, saying negative things about NATO’s negative things about the West, which was surprising because they’ve always tried to be careful about, you know, never supporting something that would break across borders and maintain their markets.

And so, you know, what we’ve seen since the invasion happened is, you know, I think China had a real opportunity on the world stage for sort of really the first time to make a foreign policy statement to put themselves out there is, you know, a bigger player. And I think they really fumbled the ball here. You can argue that China is essentially winning the 21st century.

Their growth is incredible. They want and need a stable rules based order because they’re winning their rules based order to becoming rich on that rules based order. Whereas Vladimir Putin is a loser of the 21st century. They are. They’re losing big time. They want to overthrow that rules based order. They want. They want to create problems inside of it.

And so that that relationship doesn’t seem like a natural one to me. And I don’t understand why China would want to tie themselves to a violent and loser kind of guy like Putin with a really tiny economy the size of, you know, Portugal or Italy and you know, who might then invade countries in Europe, which then China is going to have to be stuck, whether they support that or not support that.

And we can see in recent days that China is sort of again fumbling to try to say, well, you know, yes, we said we are with Russia, but we’re not really allies. But we really we don’t want war, but we want to support what we like. So they’re having a tough time dealing with these kind of issues and actually, the China Russia thing, you know, in the long term is not really natural for Russia either.

You know, there’s Russia’s going to become a pariah here. Its economy is going to depend on that. Relationship with Russia and is taking a tough man as Putin is. He’s going to find himself being a little brother to China. And at some point, China is not going to care about the little brother. And, you know, Putin in Beijing is just all he wants, but he’s not.

If that’s the relationship, if he’s reliant on China, he’s really sort of in a weak position even with his own people.

Roger, one of the questions that came in was maybe going a layer deeper on the oil piece for for Russia. You mentioned it is far as effective and isolated, but you know, I think I think the core maybe if you can go a little deeper when the question that come is given that oil prices are at a seven year high and that.

Long or not, VICE has taken that next step. Do you think that’s even an option that that that Europe would consider doing, just given, you know, how much this has escalated in the last the last couple of days?

Well, I think the answer is given the unprecedented nature of what they’ve already done. It wouldn’t surprise me to see the next step, partially for the reasons you pointed out, which is effective Russian oil is basically a commodity that much of the West doesn’t want to touch in terms of moving it around. So already, regardless of what has been officially decided, there is clearly some motion that is making it more and more difficult to get hold of oil.

And think about it. How do you know how much you’re going to pay for it? You know, it’s not all the media. Its banks are excluded from the international payment system. You know, recognize something else that happened. The Germans decided to not certify the Nord Stream two gas pipeline that would have increased the amount of gas coming from Russia into Germany and to Germany to the rest of Europe estimated 50%.

So it’s pretty clear that, you know, energy as a stick is not nearly as potent as it had been before. Now, what is going on? I don’t know exactly what’s going to happen with the appointment. John made this sudden easy. Very interesting.

Alliance. That’s what it is between Russia and China that has very important energy overlays to it. Right There was an agreement, I believe, between Russia and China a few years ago to trade with each other in their currencies and not in the U.S. dollar. And to the point that was made earlier, natural gas and oil would be very, very beneficial to the rapidly growing economy of China.

So I can imagine the Chinese playing a bit of a game in which Russian oil comes out through, you know, perhaps some Chinese companies there are a large number of Chinese oil companies. We don’t really know how much their reserves are. We see them around the world, you know, drilling for oil or price. And so this may end up being a very helpful answer in terms of getting that useful commodity, not having to use any hard currency and avoiding some geopolitical concerns of really some very, very unsavory countries.

So I can imagine that being an outcome. Let me pick up on a point that Germany I’ve observed the same thing, which is, you know, and he’s more aware of these issues than I am. But, you know, the Chinese wanting to play a constructive role, I think they submit around the Ukraine. And he’s also right that the Chinese have benefited greatly from the existing trading system and they want to stay in that system.

So one of the things that might limits them is the fear of secondary sanctions against their company. So it’s a complicated story with China. We’re trying to play a leading role, trying to position themselves as the alternative to the West trying to position themselves even in the payment system world as an alternative to swift. Those things might start to arise.

And this linkage on energy will find some rest more likely coming out of China. But at the end of the day, you know, I really think China is not going to get to the point where an earlier play, you know, overly supportive of Russia for obvious reasons. And therefore, I think even even with oil going up in the price, it’s not going to be sustaining the Russian economy as much as it might imagine.

Yeah, that’s super helpful. I heard a an old colleague of mine back from that from the military days was talking about the calculus that went into Russia making this decision. John. Roger, to invade. And obviously, you know, Putin’s on record as you as you said, one, that he believes that the worst geopolitical failure of the 20 20th century was a collapse of the Soviet Union.

And it’s sort of his stated objective as a sort of reconstitute that and he’s probably looking for the right time to do that if you look at the last five years, you could argue that you know traditional relationships had been sort of deprioritized or hard even frayed potentially under under you know some of the actions that you know, us and other allies have taken.

And so maybe he saw as a moment of weakness. But what I heard, which was interesting, was that sort of the events of Afghanistan specifically that, you know, sort of the botched pull out of Afghanistan at the beginning of this year or so, sorry, saw that the fall of last year sort of set a clear message that says, well, look, you know, this wasn’t really handled well and wanted to it’s sort of a clear sign of like how they sort of think about your allies and partners.

And that was sort of I heard like one of the major final straws I said or I can go in is probably not what these guys are going to do about. In fact, I heard about a meeting that the Russian foreign minister had with senior officials in the U.S. where he stated, hey, we may we may not go into Ukraine, but there’s nothing that America is going to be able to do about it to start the process.

Right. Just so sort of like the flip it sort of arrogance. And then separately, I know there’s a lot of discussion, you know, maybe to Roger’s points that this could also be seen as an opportunity for for China to continue or saber-rattling potentially take the next step in Taiwan, which obviously had significant significant geopolitical implications. And my assumption is, given the swift response economically and how interlinked China is the global economy, that my guess is that’s pretty massive deterrent.

But I’d be clear to see you guys talk about that for a second. Maybe start with you, John.

Yeah, I do think like I said, I think multiple administrations have misplayed Putin. I think he’s essentially been at war with us sort of in their intelligence doctrine, political warfare, information warfare, whatever you want to call it, to try to weaken us from the inside for a minimum of at least ten years since 2008 when he went into Georgia and he stated it, you know, directly at the Munich conference there.

That was his goal. And I think since that time, multiple administrations have tried to deal with him. And every time he’s done something where we really should have and could have pushed back, we didn’t do so because I would think we thought, hey, well, if we accommodate him, if we give him an off ramp, you know, maybe he’ll come around You know, presidents have big egos and they think that, you know, if there’s a problem, they can solve it with their wonderful personalities.

And I think we realize that, you know, so we came into this in a pretty sort of weakened space. And Afghanistan was a huge problem. I mean, we we looked we we didn’t work with our allies. It was, you know, essentially surrendering to the Taliban. It was a complete mess. And it was certainly seen by the Chinese and Russians as weakness.

But a bigger thing, I think, is our own tribal nature, political nature here in the United States. And he’s been trying to foment and exploit that and and use all sorts of disinformation, deception to mess with us inside. But, you know, you look what happened on January six and all these other kind of things, you know, a good portion of the Republican Party is less supportive of Putin and doesn’t care about what he does around the world.

And and Americans are sort of see they we see our political opponents as the enemy. We don’t see Russia anymore as the enemy or foreign people. I think we’ve been so used to essentially years and years of success and peace and economic growth that we sort of forget there’s a price to pay for that, to try to deter people who want to change that rules based order.

And of course, now we’re faced with it. And so even Biden in his speech last night said, you know, we know that we’ve learned a lesson that if you if you don’t push back against dictators, they will continue to create chaos. Well, that’s absolutely true. And we didn’t push back for quite a long time and sort of we ended up sort of stuck here.

And so, yeah, Vladimir Putin, the person with grievances against the West, created sort of a false narrative about, you know, the West being a threat to him and having that nose for weakness, I think put all those things together and perhaps having been a dictator so long of not getting real information any more thought that this he could go in and the West would not be able to push back.

I mean, Europe really has been weak over the last couple of decades. They have not invested in defense. They have been really inward focusing. And so, you know, he didn’t necessarily misread that, but he forgot that the size of our economies and our long history together and the fact that we have allies and they don’t allow us to sort of quickly come around and push back.

And so I think hopefully he’s very surprised about how quickly Europe, the United States and Western leaning countries around the world have come together on this.

Yeah, let me let me jump in and say, from the economic standpoint, there was an economic equivalent of not pushing back, which was when he went into Crimea. There was discussion, rumored talk of using the swift tool, moving some Russian banks out of access to Swift. He explicitly said they would be perceived as an act of war. And we didn’t do it.

There was a moment when I met that they should have, but to John’s point in the finance world, clearly a point of weakness. Similarly, you know, the using the oil and more natural gas to act on the economics, perhaps decoupling Germany, Western Europe from the U.S. around that. And there have been quite a bit of friction around this question of Western Europe becoming more and more linked to Russia in the energy sphere.

So perhaps you read that that’s not the sort of economic story that feeds very much into the John story. Sort of, you know, perhaps Germany won’t stand up. And one of the things that I think is really quite amazing spilling over a little bit into what John talks about. But the focus that the Germans now have on spending much more of their budget on defense from the standpoint of an economic policy, that is a pretty dramatic move to finally get up to two and a half percent of their GDP on defense.

All of that triggered by this. And at that point, you think about finance using economics. Most of the early signals were, you know, maybe Europe is not going to jump behind us around these things that perhaps they’re going to go their own way. So I can imagine. I know nothing about the psychology of what I’ve just heard from John but if he were looking for points of weakness in the Western alliance on this economic topic, there could have been two or three straws in the wind that might have reinforced what he saw around Afghanistan and other things.

So, you know, all of a peace and I think all of us rescued and as well are surprised at the strength of the unified voice in the economic space as well. The geopolitical space on this one it’s not clear, even if it’s one would have predicted that ten days to two weeks ago. The other thing to note economically is no other than energy, Western interaction, financial interaction, business interaction with Russia is relatively limited There are very few banks that have really like turned to Russia.

They’re not normally thought of on this energy as being sort of credit worthy. And so, you know, they’re the collapse of their economy. Other than this question of energy is unlikely to have a negative spillover effect back to US banks, for example, or even most European banks. So. And then we saw today the stock market turned around. So know there are no seem to be no replications in Western economy other than how this oil thing plays out from the the turmoil and chaos that has emerged in Russia because they have over many, many years tried to decouple from the West.

And the result of that is we look like we can penalize them more than they do as us in the world of finance and economics.

Right. Because one quick answer, one and one quick thing is in a sense, when you look at Vladimir Putin, you got to look at someone who is essentially like, you know, a bully or an organized crime boss. And he has that mentality. And so, you know, when you talk about we didn’t push back over all those years, he also has that real skill.

You know, again, he’s a dictator. He doesn’t have any threats internally, have to worry about about intimidating and threatening and pushing back. So every time. You know, we even hinted that we might do these kind of sanctions. When I push back, he sort of went nuclear and pushed back and made it clear he separated us from our allies by everybody saying, hey, it’s not worth going that far because he might do something crazy.

And we’re seeing that now. He’s threatening, you know, nuclear war. And you guys have said mean comments to me. Therefore, I’m putting my nuclear by your nuclear weapons on alert. I mean, it’s the same kind of thing. He’s he uses those threats to scare us and push us back and then have some, you know, allies it’s a hard thing to keep, you know, to throw allies together and things.

Some people are going to be like, oh, my God, let’s back off. We need to offer them, you know, face saving measures. We need to listen to what he wants And so, I mean, he’s very, very good at that game of sort of, you know, a bully tactics of, you know, threatening and making people back off.

Yeah. No, I totally agree. That there’s two question just came out. I want to ask you that when I guess I think they’re related. The first is, is the Russian military performing as poorly as is suggested in the press? If yes, what are the implications longer term? That’s question one. Maybe, John, you could try that. And then my question, too, is acknowledging that Putin is a dictator and that weakness is an existential threat probably to his his is his hold on power.

How does this resolve in a way that allows Putin a way out that doesn’t guarantee his downfall? What does that path look like and in what timeframe specifically is they’re acceptable course of action to Putin that would lead to the end of sanctions? Maybe take that, Roger. Maybe, John, start with the Russian military performance to date, as you said, relative to our assessment of them going into it.

And then and then and then what is a way out of this process? Is there a way to save.

A quick comment on the on the way out? Off-Ramp thing is, you know, there’s a lot of that now now that he’s made these nuclear threats. There’s a lot of that we have to have he has to have a means to save face he has to have an off ramp. He has a way and a way to stay in power here.

And sort of one quick thing is, you know, he manufactured this entire thing, thing out of whole cloth. There was no threat to him. There was no pushing needle. There was nothing here is his grievances and anger are based on things from like you know, the 1990s and such. He may he he made this up and my take is like, listen he if he needs a way off to face save, he can make he can kill a bunch of people and claim victory and back off and he can, he can make up his own face.

Saving things is not on us to have to somehow give him a way out of this. But on the on the military thing, it’s, you know, I’m not a military expert. It’s hard to follow these things. It’s certainly hard to follow them through the media. There’s sort of this world of, you know, military Twitter, people who are finding things in the world of Open-Source Intelligence has gotten so big, you know, the Bellingcat of the world.

I don’t know if you guys follow that group, among others, that have been able to use big data sets to pull together, you know, incredible amount. You know, if there’s a bomb that goes off somewhere now, there’s so much social media and pictures taken around there, they can be sucked in and pulled together and, you know, tic Tacs and everything.

So on one hand is making it hard for Putin because Ukrainians or others are sort of putting pushing out to the world the stuff they’re doing. And so, yes, it looks like they they really screwed this up. I think, again, he’s a dictator. I’m sure they’ve told him that, you know, the military is strong and ready to go.

But at the same time, the people around him, you know, it’s like they’re massive criminals. They’ve been stealing money it all places. So whoever the Shoigu, who’s a minister of defense, has been saying, yes, sir, yes, sir. We got this covered. I’m sure at the same time, you know, he’s got another another crony of Putin who says, well, I want my company to do X, Y and Z.

And even if that company is, that is the worst choice. That’s the way that guys skims money. And so over time, I think they’ve created this Potemkin village where they think their military is more powerful and put together. It is, but it’s often a kludge together by these corrupt cronies who are all making money off of this thing.

And we’re seeing it in action now. So a lot of the things that our professional military says about communication and, you know, and surprise and all these type of things, you know, they’re not showing themselves to be terribly effective. There’s you know, they’re running out of gas. They’re running out of food. You got Russian soldiers turn around and walking home the Ukrainians are using the sort of social media against them.

So it doesn’t mean that Putin can’t now go to the old school thing and just raze whole cities and stuff that certainly possible. But, you know, he does have the whole world watching now. So in terms of real details about how the military is doing, you know, doesn’t look good.

Yet. Doesn’t, Roger, what’s the path out economically? Well.

I think it’s very narrow, frankly, once we’ve gone to the place we’re willing to exclude some of their banks from on the international communication networks. I indicated once we got to the place, unprecedented, where we said to a central bank we’re going to limit your ability to use or you reserve you know, it’s you you know, the only way to come back from that is to say we are going to be good financial citizens.

And, you know, it doesn’t seem like that’s in the Putin playbook. The other thing it’s fascinating is that we all know when you see a run on banks as occurred during the Great Depression, there was a I’m speaking to you from from the U.K. There is a line around a bank here at 28, 2009 governments tend to change, i.e., citizens think that is unacceptable.

When I am not sure that I trust the banks, the government really should be held accountable in some way for that. I don’t see how that works in Russia. You have been said so. I don’t know where a couple of questions came in. Yes, I do think west western banks that have been, you know, putting Russia in more and more off limits are going to continue to do that.

You know, we have in the West all these rules about sort of know your customer and anti-money laundering, etc.. Well, the money in Russia X the you know, that’s the oil and energy is in the hands of these oligarchs. They don’t tend to bank in the West for obvious reasons. So I think what the way out is, you know, Russia becoming more and more isolated, you know, more of a small economy, more limited and their trading partners probably a broader type relationship with China and a few others.

And so I think from the standpoint of economics, this is really backfiring and has pushed to the further away from any ability to actually, you know, drive and claim these kind of great economies. And we didn’t have one before. He has even less of one now. And the working around of is one big resource, which is energy and others I think is is going to continue and we’ll find other ways to get to get along without the raw materials that are, you know, the major exports from Russia.

So we’ll be very, very interesting. And I don’t see around other than, you know, trying to be really good citizens and separating the average Russian from government. And I honestly have no idea how that unfolds in a dictatorship.

So, John, do you think then that literally Putin’s got to do in order to fix this for Russia, the Putin has to basically go away like I mean, like like lose power be overthrown? I mean, that’s that’s sort of the doomsday scenario here because because he holds a nuclear arsenal and it’s a real threat that’s obviously creating a lot of anxiety collectively and yeah. Anyways, let me ask you that.

Well, the problem is he’s created a system. He’s changed the Constitution. He stayed in power. They don’t really have a means of sort of of a changing of power in a nonviolent way. And so we’re sort of stuck. And so I see a few possibilities. You know, the one is sort of this becomes an ongoing sort of quagmire.

There’s a number of these. So, you know, since 2014 they’ve been stuck in in eastern Ukraine and Crimea and in Georgia and in in Moldova of these sort of frozen conflicts that aren’t completely solved. And there’s Russian soldiers in these places and you know essentially what in the quagmire possibility he bombs the hell out of the place you know kills off the leadership there you know tries to put in his own people.

There’s this sort of low level insurgency against him and it sort of goes on forever like it has in eastern Ukraine for the last eight years. There’s the other one is, you know, there’s an old iron curtain comes back down over Europe. You know, the brutality cracks down. He has to crack down really at home because he worries about being overthrown.

And so there’s more people thrown in jail. He types up and civic type tightens up domestically. Europeans and NATO has to rearm and sort of push up. So we have an Iron Curtain. There is a possibility of of sort of a larger war here with NATO. Right. A lot of people talk about the no fly zone. No fly zone means we’re shooting down Russian planes because this is a this is a whole different thing here.

If you’re bringing in more with NATO and with the West, you know, or over time and one of these sort of frozen conflicts, we’re sort of rearming from NATO countries and the Baltic people are sending things across the border. I can imagine problems. You know, wars don’t follow a script. You never know how these things are going to go once they get going.

You know, if you see if you look at the map, there’s a little small part of Russia that’s separated from the rest of Russia. In Kaliningrad, it was old German, Königsberg you know, I can imagine now that he has sort of Belarus and Ukraine, you might want to make a connection to Kaliningrad, the other part of Russia. And that goes through natal countries in the Baltics who he despises and thinks are weak.

Then you’re at war with NATO or they’re there’s some sort of dirty compromise that sort of has this will go away. And then the one you mentioned, it’s the Putin in the gutter scenario that, you know, that the former foreign minister, Andrei Kozyrev, put out a tweet yesterday the Russian foreign minister saying, telling people in the Russian Ministry of Foreign Affairs that they should all quit.

Like this is really something inside a country like Russia. So, you know, when there’s no legal way for this to happen, some sort of civil war, some sort of you know, violent overthrow is certainly a possibility.

And press at times. So we’re getting we’re getting to the top of the hour. We’ve got to cut this off. I’d like to hear any closing comments. Roger that. You might have before before we end the session.

Well, you do it unprecedented a few times. And, you know, that’s the main thing from the standpoint of finance, a country that’s not huge. What has the or not irrelevant is now clearly being made up. Ryan and I suspect from a financial standpoint is going to be a remaking of the international economic order with a rethinking of energy.

And in particular and I don’t know where it’s going to where it’s going about Russia’s certainly is an important source of many commodities that we need in the West. But it’s hard for me to see quite how we pull back from all these sanctions. And so very, very messy opaque future as far as I can see here.

Great. John, in closing comments for you.

Yeah, quick and I apologize. I don’t mean this to be domestic political comment, but there is one way that Putin actually wins this thing. It’s hard to see how this comes out really well for him. But there is one way he truly can win. And in fact, if he affects our domestic politics so much that the Trump is reelected and Putin actually does win.

Right. The United States pulls out of NATO that we sort of weaken our relationship with Western allies. He allows Putin to do what he wants in Eastern Europe. And so you know, there is an effect here that if if, you know, it affects our domestic politics to the point where Donald Trump or a Donald Trump like candidate wins again, that really is sort of a lifeline to Vladimir Putin.

And the other one is to think about it. Right. You know, now, obviously, the Ukrainian people have incredible bravery in there is really something. And besides the Ukrainians who are suffering here, the other people to think about who are really, you know, being thrown under the bus here are the Russian people later are Putin essentially in the great tradition of the Russian czars and the Communist Party bosses, they don’t give a shit about their own people.

And so they’re they they’re making their country an economic pariah. There’s no economic future for people in Russia. They’re going to be beholden to a massive China. They’re sending their men off to war to become back in body bags. This is not a good this is not a good place for Russian citizens to be either. So Russians and Ukrainians, the people are the ones that are really suffering here. And that’s.

Yeah, well said. Thank you both so much for taking time out of your incredibly busy schedules to to talk about this. This is really this critical topic. I can’t thank you enough. And with that we’ll we’ll go ahead and end the session. Thank you, guys.


Thank you.

A pleasure, Roger.

Thank you.

If you want to watch the video recording of this episode, or read the full transcript, you can head over to to create a free account and get access to many other resources. Thanks for tuning in. I hope you enjoy the conversation I’ve have with my friends, John and Roger.

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Crisis in Ukraine

CrossLead panel discussion, about the ongoing crisis in Ukraine, sponsored by Red Cell Partners. Dave Silverman facilitates a conversation with former vice chairman of the Federal Reserve Board of Governors, Roger Ferguson, and former member of the Central Intelligence Agency, John Sipher.

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