U.S. Plays Russian Roulette
James Rickards

Since the start of the war in Ukraine, I’ve been warning about the dangers of escalation between the U.S. and Russia. We may be about to take a serious step up the escalation ladder.

On Sunday, Ukraine launched an attack on Crimea with U.S.-supplied Army Tactical Missile System (ATACMS) missiles. The target was likely a military installation, quite possibly a Russian airbase.

It appears that five ATACMS were used in the attack. Four appear to have been shot down by the Russians. The evidence indicates a fifth missile was damaged and knocked off course.

It had a clustering warhead, which releases multiple bomblets upon its target. It’s specifically designed to take out personnel as opposed to hard targets.

Well, this missile detonated over a crowded public beach in Sevastopol, the home of Russia’s Black Sea Fleet. Four people were killed and at least 150 were wounded.

“Retaliatory Measures Will Certainly Follow”

This incident has sparked outrage in Russia, and the Russian government has condemned it in no uncertain terms. The Russian defense ministry issued the following statement:

The responsibility for a deliberate missile strike on peaceful residents of Sevastopol is primarily carried by Washington, which supplied this weaponry to Ukraine.

Meanwhile, the Russian foreign ministry has warned that this attack “would not go unpunished,” and that “retaliatory measures will certainly follow.”

When Russia accuses the U.S. of being directly responsible for the attack, they have a valid point. The U.S. doesn’t just hand Ukraine ATACMS missiles to use as they wish and wipe its hands clean of it.

The targeting data for these missiles is supplied by U.S. reconnaissance assets, and that information is programmed into the missiles by U.S. personnel. Ukraine doesn’t have access to that data, only U.S. military personnel do.

It’s like the U.S. loads and points the gun that Ukraine’s going to fire at Russia. Ukraine pulls the trigger, yes, but the U.S. gives them the loaded gun and tells them where to point it. Russia knows that, which explains their angry response.

Come on, It Was Just an Accident

Some might say that no one deliberately targeted a crowded public beach in Crimea, that Russia’s own air defenses diverted the missile from its intended target, which unfortunately detonated over the beach. Russia can’t therefore claim the U.S. bears any real responsibility for the incident.

But this was a daytime attack and the missile was programmed to follow a flight path that would take it near this crowded beach. That greatly increased the odds that an incident like this would take place. Maybe that route was selected because Russian air defenses were lighter in that area, I don’t know.

But the argument the U.S. doesn’t shoulder significant responsibility for this incident doesn’t hold much water with the Russians.

The U.S. ambassador to Russia was summoned to the foreign ministry in the wake of the attack. I don’t know what exactly was said, but let’s just say it probably wasn’t a cordial meeting.

The question now is what form of retaliation does Russia take?

Will Russia Declare No-Fly Zone Over Black Sea?

There’s increasing pressure on Putin to declare the airspace above the Black Sea a no-fly zone (targeting data for missile attacks on Crimea are often supplied by drones and manned aircraft over the Black Sea).

That would be a major escalation. The U.S. and its NATO allies wouldn’t accept a Russian no-fly zone over the Black Sea. They would almost certainly challenge it.

But in order to maintain its credibility, Russia would have to shoot down any drone flying over the Black Sea. The question then becomes would they shoot down manned reconnaissance planes?

Shooting down a drone is one thing. Shooting down a reconnaissance plane is another. These planes are crewed by at least 15 personnel, sometimes over 30, depending on the mission. Unlike fighter jets, there are no ejection seats on these planes.

They might have a bailout chute in the back of the plane, but if the plane were hit by a missile, the entire crew would likely die. You can just imagine the cries for retaliation if such an incident occurred.

Will Putin bow to increasing domestic pressure to declare a no-fly zone over the Black Sea? I don’t think so.

Russia Will Retaliate in Its Own Way

Despite everything you hear in the media, Putin is a very cautious, measured leader. He understands the serious risks that a no-fly zone would invite. He knows that the U.S. would challenge it and that he’d have to shoot down U.S. drones and aircraft to maintain his credibility.

The last thing you want to do is issue an empty threat. It must be backed by action or else it’s meaningless. Putin doesn’t issue empty threats.

But just because Russia won’t likely impose a no-fly zone over the Back Sea or take any direct action against the U.S. doesn’t mean it won’t retaliate. It will. It’ll just be an indirect form of retaliation.

As I’ve explained recently, just like the U.S. is using Ukraine as a proxy to attack Russia, Russia could use its own proxies to attack U.S. interests around the world:

• Russia could arm proxies in Syria with advanced drones to attack U.S. forces based in Syria
  
  
• Supplying Iran with advanced missile technology would threaten Israel, a key U.S. ally, and would perfectly fit that proxy approach
  
  
• Russia could also give the Houthi rebels in Yemen more advanced anti-ship missiles to target shipping in the Red Sea, potentially including U.S. warships.

The Houthis have been using drones and antiquated missiles based on technology from the 1960s. U.S. warships have been able to intercept most of them (at great expense, I might add).

But if Russia supplies them with advanced anti-ship missiles, that would change. These missiles would represent a legitimate threat to the U.S. Navy.

Playing With Fire

Would any of these measures be an escalation? Yes. But they wouldn’t be direct attacks on U.S. forces or interests. They would be indirect attacks through proxy, just like the U.S. is waging an indirect proxy war against Russia.

That’s why I think Putin will choose that type of indirect retaliation. He doesn’t want to risk a direct war with the U.S., even though he faces domestic pressure to impose a no-fly zone over the Black Sea.

But if another incident like this arises, Putin may feel he has to take more decisive action. That’s a significant danger because war is unpredictable, and the longer this war drags on, the more likely it is that another similar incident will occur.

We’re playing with fire. Let’s just hope we all don’t get burned.

 

James G. Rickards is the editor of Strategic Intelligence, Project Prophesy, Crash Speculator, and Gold Speculator. He is an American lawyer, economist, and investment banker with 40 years of experience working in capital markets on Wall Street. He was the principal negotiator of the rescue of Long-Term Capital Management L.P. (LTCM) by the U.S Federal Reserve in 1998. His clients include institutional investors and government directorates.

His work is regularly featured in the Financial Times, Evening Standard, New York Times, The Telegraph, and Washington Post, and he is frequently a guest on BBC, RTE Irish National Radio, CNN, NPR, CSPAN, CNBC, Bloomberg, Fox, and The Wall Street Journal. He has contributed as an advisor on capital markets to the U.S. intelligence community, and at the Office of the Secretary of Defense in the Pentagon. He has also testified before the U.S. House of Representatives about the 2008 financial crisis. 

Rickards is the author of The New Case for Gold (April 2016), and four New York Times best sellers, Currency Wars (2011), The Death of Money (2014), The Road to Ruin(2016), and Aftermath (2019) from Penguin Random House. And his latest book, The New Great Depression was published in January 2021.

 

 

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