The New Iron Curtain

Events in Ukraine has metastasised at such a pace it can almost feel like we’ve experienced a decade’s worth of geopolitics in the space of less than two weeks. As one UK official told me recently; “9/11 was paradigm shift, this is a paradigm breaking”. When an established order suddenly falls – which could be what the Russian operation into Ukraine eventually could be seen to herald – what happens next is of course hugely uncertain, but a new 'Iron Curtain' is apparently coming down across Europe.

The original ‘Iron Curtain’ was the political boundary dividing Europe into two separate areas from the end of World War II in 1945 until the end of the Cold War in 1991. In its most physical manifestation, it took the form of the Berlin Wall and the other fortifications that divided West from East. The end of the Cold War was to some famously the ‘end of history’. Globalisation and the rise of economic interdependence was theoretically to unite all parts of the planet like never before. Whilst North Korea stood in inglorious isolation the majority of social and economic ties between people grew in the period between 1991-2022.

However, thirty-one years since the Cold War the rapid isolation of Russia triggered by their Ukraine adventure means that we could be looking at a new phase of geopolitics defined by separation, tension and of course the backdrop of the threat of conflict between nuclear armed states. This new Iron Curtain will become will be defined by geographic, economic and sociocultural splits that will reverberate the longer the reinforced divide exists. Already we have seen an unprecedented attempt to disconnect much of the world from the Russian economy. Companies have banned their products being sold there, have surrendered their Russian assets and plans for investment. Back in June of 2008 $1 bought 23 roubles, today that same $1 gets you 200 roubles.

Russia's central bank has doubled interest rates, limited foreigners from moving money, and made other moves in response to Western sanctions. Whilst Russia may be sitting on over $600bn in reserves it surely could not have expected the economic counterattack to its actions to be so severe. Selected Russian banks being removed from SWIFT – the world’s main international payments network – which will also hit Russian trade and make it harder for its companies to do business. Russian companies meanwhile have been insulated by a closure of the Russian Stock Exchange to protect it from predicted catastrophic falls.

Russian airlines are facing an almost complete blockade from flying west over Europe after they were barred from the airspace of nearly 30 countries following the invasion of Ukraine. Microsoft announced it will stop selling its products and services in Russia; Cogent Communications, an internet infrastructure firm that carries about 25 percent of global web traffic, has begun cutting ties with Russian clients; and the Kremlin banned Facebook and is throttling traffic to other U.S. social media platforms. In cultural terms Russia’s participation in international sport – from the football World Cup to the Winter Paralympics – has been devastated. Before they received official bans from the respective organisers of these events their would-be opponents had already refused to play them.

Perhaps the most seismic and yet to be unanswered question is whether European nations will be able to find an alternative to their current reliance on Russian gas. Russia is the world’s third largest producer of oil and supplies about 40% of Europe’s gas. European Commission president Ursula von der Leyen has called on member states to diversify its energy supply. Removing themselves for such dependency quick is a huge challenge that could see European states fundamentally review their approach to shale gas, nuclear power and renewables. Without a change of approach Europe’s attempt to economically isolate Russia will be flawed.

One of the hardest aspects of this new Iron Curtain to predict is the geo-security aspects of how the two blocs will be divided. The crux of this uncertainty of course lies in the events yet to happen in Ukraine and what Russia’s vision for the country is if they are to able to shape events to their will. Will never securitized borders divide East from West inside Ukraine or at its borders with Europe is Russia succeeds in occupying the entire country? This will ultimately be the sharpest point of this new geopolitical tectonic plate.