12 Leaders The Economist May 21st 2022
F
or finland and Swedentojoinnatoisa rebuketotheanti
nato arguments of Russia’s president, Vladimir Putin. Two
countries that are proud of their long history of military non
alignment think the risk of antagonising their neighbour to the
east is outweighed by the security they will gain. It is the direct
result of the invasion of Ukraine, which Mr Putin ordered osten
sibly to forestall nato’s expansion.
Finland and Sweden submitted their applications on May
18th. Despite Turkey’s stalling tactics, over Kurdish militants
and possibly American fighter planes, their admission is likely.
They will bring formidable capabilities in Arctic warfare and, in
Finland’s case, the largest artillery force in Europe. Membership
will more than double the length of nato’s border with Russia. It
will also make the Baltic states easier to defend.
Mr Putin’s regime has responded by cutting
electricity supplies to Finland and threatening
“militarytechnical” action, whatever that is
supposed to mean. He is not the first Russian
leader to object to enlargement. In the 1990s Bo
ris Yeltsin complained when members of the
old Warsaw Pact applied to join the alliance. Ov
er the years this hardened into the line of argu
ment cited by Mr Putin as justification for invading Ukraine.
Russia’s president says that enlargement breaks an undertak
ing that James Baker, then America’s secretary of state, gave the
Soviet Union in February 1990. Many Western commentators ar
gued that enlargement was unwise, because Russia would feel
threatened. The West had other ways to enhance security, such
as the Partnership for Peace, which sets out to strengthen rela
tions between the alliance and nonmembers.
These arguments do not stand up. Mr Baker was speaking
about eastern Germany. His words were overtaken by the col
lapse of the Warsaw Pact nearly 18 months later. nato and Russia
signed an agreement in 1997 that did not contain any restriction
on new members, though enlargement had been discussed. TheCzechRepublic,HungaryandPolandjoined almost two years
later. The undertaking that has been violated is Russia’s pledge
to Ukraine not to use economic or military coercion, given in
1994 when it surrendered the nuclear weapons based on its soil.
In fact nato has every right to expand. Under the Helsinki Fi
nal Act of 1975, signed by the Soviet Union, countries are free to
choose their own allies. The Warsaw Pact suffered grievously
under Soviet rule. Why would its exmembers not seek a haven?
For many years Finns and Swedes mostly opposed joining nato.
This shifted after the invasion of Ukraine in February. Indeed,
the right for sovereign countries to determine their own desti
nies is one of the many things currently at stake in Ukraine.
But was nato expansion wise? A spiral of mutual suspicion
between Russia and nato clearly exists, but to
blame nato expansion for triggering it is
scarcely credible. Mr Putin has increasingly
used nationalism and Orthodox religion to
shore up his rule. He needs enemies abroad to
persuade his people that they and their civilisa
tion are under threat. That is why he seized ter
ritory in Georgia in 2008 and in Ukraine in 2014.
Besides, Russia has a long history as an imperial
power. Like most declining empires, it was likely to resist as its
periphery drifted off, regardless of nato expansion.
Finland and Sweden are both longterm members of the Part
nership for Peace. If one of them were attacked, nato would
have no commitment to intervene. Nor would American and
British nuclear weapons cover them. Their choice to join nato
suggests that the partnership was not able to cope with Russian
aggression. Likewise, denying central and eastern Europe mem
bership of nato would have created a security vacuum that Rus
sia may very well have been tempted to fill. Finland and Sweden
are right to have concluded that Mr Putin is dangerous and un
predictable—not because of nato, but in the wayhegoverns
Russia. Their applications should be rapidly approved.nIt shows the flimsiness of Vladimir Putin’s justification for invading UkraineThe meaning of membership
Sweden, Finland and NATOF
inancial aphorismsare trotted out by investors in every fi
nancial cycle. Think of “Buy the rumour, sell the fact”, or
“Markets can stay irrational longer than you can stay solvent”.
These sayings have staying power because they often ring true.
Today, amid a general market rout, cryptocurrency assets are
collapsing in value, and the aphorism of the moment is “When
the tide goes out, you find out who is swimming naked”.
The crypto slump has been brutal. In November the market
value of cryptocurrencies was almost $3trn. That fell to $2trn by
midApril before plunging by another 35% to just $1.3trn now.
Bitcoin has briefly dipped below $29,000, its lowest since late2020. Crypto’s detractors have long argued that it is useless—un
less you are a moneylaunderer or conartist—and predicted its
demise. The crash will convince many that they are right. In fact
the picture is rather different: a sorting process is under way, as
the dodgiest parts of the crypto world are exposed, while other
bits prove more resilient (see Finance & economics section).
The crypto collapse is part of that broader slump. Redhot in
flation is forcing central banks to tighten monetary policy, trig
gering a selloff in riskier or longdated assets. After a heavy sell
off on May 18th, the techheavy nasdaqindex is down by 29%
from its high. The s&p500 index has shed “just” 18%.
As financial markets tumble, we decode the cryptocurrency crashSink or swim
Cryptocurrencies