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00:00So in terms of economic impact we're starting to see that albeit it seems like the energy side is still being supported quite nicely. But as a deterrent for the war can we say that the sanctions have been pretty ineffectual. Yes sanctions failed as a deterrent. Remember in the run up to this war President Joe Biden repeatedly threatened the toughest sanctions of all time. That didn't deter President Vladimir Putin from invading Ukraine. No sanctions have become a tool or a weapon designed to cripple the Russian war efforts. But that's not happening. And you can see that if you just look at the ruble exchange rate which has been in a round trip relative to the dollar got back last week to close to where it had been on the eve of the war. More importantly what that reflects is the fact that Russia continues to sell oil and gas to Europe and to other parts of the world. And as long as the German government holds out against an oil embargo stopping purchases of oil from Russia Putin's government is earning about a billion dollars a day from its energy sales. And that's why the Russian economy although it's been hit hard is far from crippled. And of course the war goes on. Your theory is that this combination of the war of attrition continuing Ukraine the sanctions and the pressure on Moscow and the White House is hoping to bring about political instability and perhaps potentially even a regime change. How destabilizing is this and how does it really throw open the range of outcomes going forward. Well I think that as far as I can tell there is a conscious strategy in Washington of using the ongoing war which is inflicting heavy casualties on the Russian army and the sanctions to try to undermine the position of President Putin. And in his speech in Warsaw nearly two weeks ago no Joe Biden made it clear that he wanted to see Putin gone. My own sense is that the probability of that happening is pretty low. After all Putin's regime has had a an iron like grip on Russian society for years now. Opposition is constantly crushed by repressive tactics. And the propaganda is actually pretty effective in persuading people right across the Russian Federation that somehow this war is Ukraine's fault or the West's fault. So I think the probability of a regime change in Russia is pretty low. What worries me is that if you if you say as the United States and its allies have said that he's a war criminal and you explicitly call for his removal from power I think that that creates a pretty dangerous situation right now. In the next few weeks there is going to be an attempt by the Russians to win this war at least in the east of Ukraine. They're betting everything on a final offensive designed to encircle Ukrainian forces in the Donbas. If that fails Putin doesn't have many options. As my good friend Graham Allison pointed out the other day you're you're presenting him with a choice between humiliating defeat or the use of weapons of mass destruction. And let's not forget he has the biggest arsenal of nuclear warheads of anyone in the world. That's a very scary proposition. But as you said if economic sanctions are not working you're not very optimistic about regime change then can we at least expect the Ukrainian resistance to push them back. We have seen an adjustment of expectations from Russian generals. Is that even a possibility at this point when as you're saying more dangerous weapons are on the table as well. Well I think we're now onto the Russian plan. C. Plan A was going to be the six day war that led to the fall of key even the toppling of President Zelinsky. Then Plan B was well what about we encircle Kiev besiege it and then launch amphibious landings against Odessa. That too has been pretty much scrapped. And we're now down to Plan C which is encircle Ukrainian forces in the Donbas and then try and declare some kind of victory in the east of the country by let's say May the 9th. But there is some risk that that fails. I mean Russia's taking huge casualties in the six weeks of war. And it's not clear that they really are in a position to launch a successful offensive in the east of Ukraine right now. What worries me is that if it fails the better things go. In other words for Ukraine the higher the risk that the Russians resort to using you know using chemical weapons. Or in a worst case scenario they use a tactical nuclear weapon say in the east in the west of Ukraine to try to send a signal that this is a war they're simply not prepared to lose. And I sense that the Biden administration is not really attaching a high enough probability to that risk. It's not like we're dealing with Saddam. Seen here. Or for that matter Colonel Gadhafi we're dealing with Vladimir Putin and his nuclear arsenal. So Neal how do you stop Vladimir Putin with a few words less severe repercussions that we could see out of this. Well my view is the better strategy would be to try to use the leverage the US has to bring about a ceasefire as soon as possible. The US has leverage over both sides. It imposed the sanctions on Russia and its allies the weapons to Ukraine. And I don't see Anthony Blinken the secretary of state making the kind of efforts that say Henry Kissinger would have made back in 1973 when a somewhat similar situation arose when the Arab states attacked Israel. I think the US has calculated that the longer the war runs the better because it's kind of bleeding Russia dry and increasing the probability of regime change in Moscow. I think that's way too risky a strategy given that Putin has the option to escalate using for example a tactical nuclear weapon against Ukraine. I don't know what the Biden administration would do if that happened. It's not clear at all to me how they would react. And that of course can only embolden Putin to think that he can use weapons of mass destruction to win this war. He's shown himself capable of inflicting atrocities on civilians that we all know. I don't know why he would rule out using a tactical nuclear weapon if it was his only way of avoiding a humiliating military defeat. Now we've already seen inflation and supply side pressures exacerbated by the pandemic and by the war create these political crises whether you talk about Peru or Sri Lanka or Pakistan. How much time is there before these domestic political concerns trumped the support for the Ukrainian cause. You talk about this kind of attention deficit situation. Well this is a problem. The West has we tend to kind of lose interest in any foreign crisis after about four weeks in the United States. It only really took a slap in the face at the Oscars to change the subject in US media coverage. I think if you look at France the number one issue in the French presidential election that's just coming up is not Ukraine. It's inflation. And I think right across the world rising prices which were already a problem before this war are becoming ever more salient as a political issue. And that's why again I think there is a strong argument for trying much harder than we're trying to get a ceasefire. Stop the fighting and try to achieve some kind of peace. However fragile in Ukraine very large numbers of countries rely on Ukraine and Russia for food. They're are great exporters of wheat for fertilizer all over the world. Farmers are noticing that fertilizer is either very expensive or barely available. And so there are going to be ramifications right through the global economy. People have to remember that in the 1970s it wasn't just the price of oil that drove a global inflation surge. Actually the price of food was just as important. And when food prices go up in developing countries as you rightly say there is often political instability. Believe me we've only just seen the beginning of this cascade of trouble watch Africa and particularly watch countries like Egypt.

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Stanford University's Ferguson on Ukraine War

Niall Ferguson, Bloomberg Opinion columnist and senior fellow at Stanford University's Hoover Institution, discusses the latest developments on Russia's invasion of Ukraine. He speaks with Haidi Stroud-Watts and Shery Ahn on "Bloomberg Daybreak: Australia." (Source: Bloomberg)

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