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  • Billy Hayes

Tensions in Ukraine – A Game Theory Perspective

Updated: Aug 30, 2022

Tensions between Russia and the West over Ukraine are at the epicentre of global politics. Many have been left speculating whether there is a serious risk that hostility will escalate into war. Game theory provides insight into the potential outcomes and solutions to the current crisis.

Since 2014, Ukraine has been caught in a violent conflict between pro-Russian forces and the Ukrainian government, killing more than 13,000 people and displacing 1.5 million more.

The recent mobilisation of 100,000 Russian troops along the Ukrainian border has prompted widespread distress amongst the international community, with many now fearing that Russia is preparing for a full-scale invasion of the Donetsk and Luhansk regions of eastern Ukraine.

Today’s crisis in Ukraine can be traced back to the 2014 Russian invasion of Crimea. Although widely considered illegitimate, Crimea’s annexation sparked rampant pro-Russian separatist movements in the Donetsk and Luhansk regions of eastern Ukraine, areas characterised by a Russian ethnic majority.

There are real concerns that Russia is planning an invasion of Ukraine. Following the annexation of Crimea, Putin’s poll ratings improved to nearly 80%. Currently faced with a stagnating economy and the lowest approval ratings since 2012, invading Ukraine is a sure way for Putin to regain the trust of Russians and revitalise domestic support for his premiership.

Western powers have been quick to disregard the argument that Putin is acting purely to protect the interests of the ethnically Russian majority in eastern Ukraine, and instead, perceive the intensification of Russian involvement in the region as a return to an aggressive foreign policy that aims to reunify all of southern Ukraine with Russia. Crucially for Russia, Donetsk, the region at the heart of current tensions, accounts for 20% of Ukraine’s total Gross Domestic Product (GDP) and possesses significant coal, steel and energy capacity.

We can model current tensions as a game between Russia and the West. Russia can either maintain its current relations with Ukraine and the West, or it can pursue a more aggressive foreign policy. Maintenance of the status quo would result in no change in utility (benefit) for either party. Meanwhile, Russia can expect an improvement in utility from increased aggression. Faced with Russian aggression, the West can either appease Russia or respond with their own aggression in the form of tough economic sanctions and military aid to Ukraine.

If the West appeases, Russia will experience an increase in utility at the expense of the West. Alternatively, if the West chooses to take the path of aggression, there will either be a return to the status quo if this course of action is successful in coercing Russia to back out of Ukraine, or it will invoke a full-scale war and there will be a major fall in utility for both Russia and the West, an outcome both parties will want to avoid. Consequently, if the West perceives that the risk of conflict is high, game theory suggests that the West should appease Russian aggression.

Arguably, this is reflective of the political reality and provides a useful framework for understanding the available avenues for resolving the current crisis. Up until now, the West has largely chosen to appease Russia. However, appeasement, as a viable response, assumes that the Ukraine crisis is a one-off game.

Western political incentive structures are largely focused on the short-term, thus disincentivising leaders to devise foreign policy which addresses long-term geopolitical trends. For example, since the Russian annexation of Crimea in 2014, both the UK and the US have experienced two changes in political leader. In reality, tensions in Ukraine more closely resemble the characteristics of a repeated game. Putin has maintained a firm grip on politics in Russia since 1999 and is likely to remain president until at least 2036. Up until now, Western appeasement has signaled to Putin that aggression has minimal consequences and only increases the probability of Russian aggression in the future.

However, since December 2021, the rhetoric of the West has shifted. Leaders such as French President Emmanuel Macron and newly elected German Chancellor Olaf Scholz, who were initially reluctant to intervene and favoured appeasement have now recognised the need for tougher economic sanctions and more military aid in order to deter a Russian invasion of Ukraine.

The UK and the US have announced their intentions to impose strict sanctions on Russian financial institutions and Putin’s inner circle, with foreign secretary Liz Truss commenting that “there will be nowhere to hide for Putin’s oligarchs, for Russian companies involved in propping up the Russian state”.

Economic sanctions would be unworkable for Putin. Russia’s oligarchs, whom Putin relies on, are particularly vulnerable due to their deep financial ties to the West. In addition, economic sanctions would cripple an economy in which GDP per capita has already fallen by 35% since 2013.

However, game theory presents another solution to the current crisis. In recent years, Russia’s influence in eastern Europe has declined. Ukraine has strengthened its ties with the West and has communicated its desire to join NATO. Furthermore, increased tensions with Turkey have placed crucial Black Sea trade routes at risk. Arguably, Putin does not see a return to the status quo as a positive outcome for Russia and views it necessary to climb the mountain of conflict as a means to reassert its influence in the region. If the West wants to avoid conflict, leaders must do more to make outcomes in Ukraine and eastern Europe more palatable for all parties involved and improve the appeal of the status quo.

The conflict in Ukraine risks further deterioration of Russia’s relations with the US and Europe. If Russia is set on expanding its presence in Ukraine, it seems certain that the West will hit hard, retaliating with tough economic sanctions and military action. The US has already announced it is readying a force of 8,500 for deployment in eastern Europe, with many NATO countries likely to follow.



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