Putin 'is losing on the battlefield' amid West's support for Ukraine, expert says

Jacob Funk Kirkegaard, nonresident senior fellow at the Peterson Institute for International Economics, joins Yahoo Finance Live to discuss the Russia-Ukraine war, reports of damage to the Nord Stream pipeline, Russian President Vladimir Putin's posturing, the threat of nuclear war, and sanctions from the West.

Video transcript

- Well, moving to geopolitics now, Vladimir Putin has declared Russia-- declared Russia has four new regions. This after what many labeled a sham referendum in Russian-controlled Ukrainian areas. The regions named are Luhansk, Donetsk, Kherson and Zaporizhzhia. The Biden administration has responded with new sanctions on Moscow.

All of this comes amid speculation over leaks on key pipelines bringing gas from Russia to Europe. Some European leaders suggest the Russian state is behind damage to Nord Stream 1 and 2. Russia's top Intelligence agency says the West was behind it. Joining us now is Jacob Kirkegaard. He's nonresident senior fellow at the Peterson Institute for International Economics.

Jacob, let's start with what we have been seeing play out today with Russian President Vladimir Putin annexing those regions. A lot of this expected. He set it up with that referendum. Quote unquote, we should say. What does this mean for the fighting moving forward? In many ways, it allows Russia to say, look, if Ukraine takes these territories, this is a direct attack on Russian territory.

JACOB FUNK KIRKEGAARD: Yeah, I mean, basically it comes down to it's Vladimir Putin trying to double down on the credibility of his nuclear threat. But I think it's also the first time in certainly modern military history that a country has tried to annex regions of another country while its army is being kicked out of those very regions, which is what is gradually happening in eastern Ukraine. So the question is, does the West believe Putin more now than it did a week ago? Because when he first brought up the nuclear threats once again, what did-- what did we do in the West?

Well, the US government pledged another major weapons deal or supply with Ukraine, doubling the number of HIMARS long-range artillery, rocket launchers. And the EU started talking about an eighth sanctions package. This is not the kind of response that Vladimir Putin would have wanted. And frankly, I don't think this is going to make much difference on the battlefield, because so far, our actions shows that we, quote unquote, in the West do not believe Vladimir Putin's nuclear threats.

- I mean, what do you think is the endgame for Vladimir Putin, then?

JACOB FUNK KIRKEGAARD: Well, I think-- I am convinced that Ukraine will win this war. It's a matter of time. It's a matter of how many people are killed, you know, reclaiming the lost-- the so far lost territories. But no, I think Ukraine will win. And then the big question is, what happens domestically in Russia once such a major military defeat is inflicted upon it, with all the loss of government prestige, military prestige, et cetera? I don't know, but it is without a doubt Vladimir Putin, in my opinion, that's under increasing pressure.

But he only knows one thing. And that's escalation. And he keeps doing it. But the reality is there's just another piece of Ukraine that's about to be encircled, thousands of Russian troops potentially encircled in the Lyman area. So whatever his parties in Moscow are saying about annexation, he still is losing on the battlefield. And that's ultimately what will matter also to him in the long run.

- Even as the fighting continues between Russia and Ukraine, there's certainly a lot of discussion over at the EU about the impending energy crisis, especially with winter approaching. A number of varying approaches on that front. But I wonder, when you look at the unity in the EU on this issue of Russia and Ukraine, to what extent do you think that starts to get much more fragmented the closer we get to the winter months, the deeper we get into winter, when they face so much-- they as in these leaders-- face so much domestic pressure about doing something on these energy prices?

JACOB FUNK KIRKEGAARD: Well, I don't actually think it matters that much for public opinion. There was a new poll out in Germany earlier today that showed that support-- public support for continuing to support Ukraine, despite the rising energy prices and the cost to the economy, was going up. It was about 74%, 75% of German voters say that. And this is true in virtually all EU members, maybe with the exception of Hungary.

What we're seeing is that EU governments are, you know, firing the fiscal cannons at this problem. We've got about 3% of GDP, on average, devoted to mitigating the costs-- the rising cost of energy and cost of living. So, you know, the average European is being, to a very large extent, shielded from this. So from that perspective, again, minus Hungary, which is certainly a special case here, I think EU unity is holding up, and in fact will continue to hold up quite well.

- Finally, you have a strong response coming out of the White House today, the president saying that these actions have no legitimacy, in terms of the annexation of these regions, imposing additional sanctions for some of these shell companies that were established to try to evade the previous sanctions. How effective do you think these sanctions can be when you consider the response that has come from Vladimir Putin so far?

JACOB FUNK KIRKEGAARD: Well, I think the sanctions have actually been very successful. They have very clearly severely inhibited the Russian government's ability to wage war. There's a reason why Russia is now forced to source drones in Iran and potentially, you know, agro-- sorry, artillery shells in North Korea, because nobody else is selling him stuff. He cannot buy what he needs to wage war effectively even from China. So from that perspective, I think the sanctions have been very effective.

They have obviously not caused the immediate collapse of the Russian economy, but I don't think that was ever really credible, to think that they would. But they are, in my opinion, also causing the long-term decline in Russian oil and gas exports. Not immediate, not as fast as we would like, but in the long term. They're also going to undermine Russia's economic ability to wage this war. So overall, I think the sanctions are a success when measured at a realistic scale, or against a realistic metric.

- Jacob Kirkegaard, nonresident senior fellow with the Peterson Institute for International Economics, good to have you on today.