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Putin’s invasion was the product of miscalculation. But his calculations were driven by realpolitik.

The verdict is in: Russia invaded Ukraine for two reasons. One is Moscow’s obsessive pursuit of nationalist and imperial ambitions—unifying the two countries and eliminating a separate Ukrainian identity. The other is Vladimir Putin’s misperception—he is an insulated, overconfident autocrat who misplayed his hand.

These theories are surely true, but years of working in and writing about wars have taught me there’s usually more to the story. Whether it’s a world war, a U.S. invasion or a West African rebellion, observers are quick to focus on passions and mistakes and to demonize leaders who launch a conflict. Yet most wars have strategic roots as well, ones that work in concert with passions and mistakes. Ignoring this makes finding a path to peace difficult.

For all its pluckiness, Ukraine was weak, a small country with no allies. Its economy had stagnated for decades. Russia had grown economically and militarily while Mr. Putin consolidated control. The countries of Western Europe gave up nuclear power and found themselves at a huge strategic disadvantage versus their energy supplier, Russia. All this gave Mr. Putin immense leverage over Ukraine and Western Europe.

Despite Ukraine’s weakness, recent trends alarmed Mr. Putin and his inner circle. The Ukrainian people had twice tossed out Russia-leaning leaders in revolutions in the past 20 years. Ukraine was a society with which many Russian citizens identified and a powerful example for an uprising against Mr. Putin’s regime.

Mr. Putin could wield his leverage to extinguish the threat, but war would be expensive and risky, so he first tried other means. He spent years influencing Ukrainian politics with money, propaganda, assassinations and support for separatists. These risky investments didn’t pay off—and might have pushed Ukrainians closer to the West and democratic government.

This was a worrisome trend for Mr. Putin. As Ukraine entrenched its freedoms, regime change there became more difficult. As Kyiv obtained more missiles and drones, the costs of invasion grew. Mr. Putin’s leverage over Ukraine was reaching its peak. Russia had one last tool, invasion, and a closing window to use it.

However reprehensible, this was realpolitik. Mr. Putin was telling Ukraine: It’s time to acknowledge Russia’s strength. Give something up. Adopt neutrality. Refuse new weapons. Renounce your ambition to join the North Atlantic Treaty Organization. Grant separatist-controlled regions autonomy. Allow me to meddle in your politics. Most of Russia’s neighbors had been compelled to make similar sacrifices.

There are three interlocked strategic logics at work in this interpretation of events. The first stems from the lack of domestic checks on Mr. Putin’s power. As a personalized ruler, he’s insulated from the costs borne by average Russians—such as the privations of living under punishing sanctions, or sons dying in battle. Since he could ignore these horrors, he was too quick to use violence. This also gave him an incentive to invade. Ukrainian democracy presented a threat not because it would cause harm to ordinary Russians. Rather, it presented a powerful and (to Mr. Putin’s mind) dangerous example for Russians dissatisfied with authoritarian rule. An unchecked Mr. Putin was also free to pursue any emotional attachments to an expansion of Russian power and identity.

The second logic is known as a commitment problem. It’s a classic strategic dilemma that starts with a closing window of opportunity. After every other measure had failed, Mr. Putin could halt Ukraine’s democratic and Western shift only by threatening to attack. Ukraine could avoid the dilemma only by accepting Russia’s political interference. These unjust sacrifices happen all the time, but the popular mood in Ukraine wouldn’t tolerate a politician who made such concessions. Kyiv couldn’t give in to Moscow’s demand that it give up on democracy—a commitment problem.

The final strategic logic arises from uncertainty. Many people, including most military analysts, were surprised by how things turned out. Russian forces proved less competent than expected. Ukraine’s resolve to fight exceeded expectations, as did Western unity on sanctions. We shouldn’t forget how hard all these things were to predict. As every poker player can tell you, when the truth is uncertain and your opponent has an incentive to bluff, the best strategy often is to call—make the other players show their hands. Then you’ll have the truth of the matter. In this fog, Mr. Putin gambled and lost.

Historians and political scientists usually need both psychological and strategic forces to explain wars. Take World War I. Popular accounts stress that naive and nationalistic leaders sleepwalked into war. But there were strategic forces too—Russia’s imminent rise, the Allies’ uncertain resolve, and Europe’s unchecked leadership. These helped propel flawed European leaders into war and explain why they fought for years.

Likewise, in 2003, an unchecked Saddam Hussein had incentives to restart his nuclear research program—a commitment problem exacerbated by uncertainty. Yes, there were ideological incentives, intelligence failures and gross misperceptions on the American side too. Yet popular psychology provides only partial explanations.

In 2022 Mr. Putin was insulated, overconfident and blindly nationalist. But every politician’s aspirations exceed his capabilities. The interplay of Mr. Putin’s domestic freedom to act, multiple uncertainties, and Ukraine’s hard-to-reverse democratic drift narrowed the range of possible bargains to the point that the Russian president’s misperceptions and ideology pointed to war.

Getting this diagnosis right matters, because adversaries use different carrots and sticks with a calculating, unchecked leader than they do with a delusional ideologue. No one should want to risk misjudging Vladimir Putin the same way he misjudged Ukraine.

Investment giant’s move could send cryptocurrency investing further into mainstream if employers decide to offer option

Fidelity Investments plans to allow investors to put a bitcoin account in their 401(k)s, the first major retirement-plan provider to do so.

Employees won’t be able to start adding cryptocurrencies to their nest eggs right away, but later this year, the 23,000 companies that use Fidelity to administer their retirement plans will have the option to put bitcoin on the menu. The endorsement of the nation’s largest retirement-plan provider suggests crypto investing is moving further into the mainstream, but it remains to be seen whether employers will embrace it for their workers.

Fidelity’s move comes a month after the Labor Department expressed concerns about including cryptocurrencies in retirement plans. It is also an uneasy time for the stock market, with the S&P 500 down almost 10% this year in part due to rising interest rates. Bitcoin is notoriously volatile and has lost more than 40% of its value since its November high.

“There is a need for a diverse set of products and investment solutions for our investors,” said Dave Gray, head of workplace retirement offerings and platforms at the Boston-based company. “We fully expect that cryptocurrency is going to shape the way future generations think about investing for the near term and long term.”

Under the plan, Fidelity would let savers allocate as much as 20% of their nest eggs to bitcoin, though that threshold could be lowered by plan sponsors. Mr. Gray said it would be limited to bitcoin initially, but he expects other digital assets to be made available in the future.

Crypto investing has been virtually nonexistent in 401(k) plans to date. One small company that caters to smaller 401(k) plans is allowing workers in some of the plans it administers to invest up to 5% of their 401(k) contributions in bitcoin and some other cryptocurrencies.

Fidelity’s embrace of bitcoin could prompt wider acceptance among employers.

“We have seen growing and organic interest from clients,” especially those with younger employees, Mr. Gray said, adding that “a number are in the evaluation process” from a wide spectrum of industries.

The company administers plans with more than 20 million participants and $2.7 trillion in assets-under-administration. Fidelity also has a growing presence in the cryptocurrency business, including a trading and custody platform it launched in 2018 that caters to hedge funds and other sophisticated investors.

Fidelity’s move comes at a time of heightened interest in digital currencies. Fidelity estimates that about 80 million U.S. individual investors own or have invested in digital currencies. Some institutional investors, including some U.S. university endowments, have reportedly invested in cryptocurrencies or funds that buy them, or took stakes in companies in the fast-growing industry.

Yet significant obstacles could block bitcoin’s wide adoption on 401(k) menus. The U.S. Labor Department, which regulates company-sponsored retirement plans, published guidance on March 10 cautioning employers to “exercise extreme care before they consider adding a cryptocurrency option to a 401(k) plan’s investment menu,” a department news release says.

Employers offering cryptocurrencies should expect regulators’ questions “about how they can square their actions with their duties of prudence and loyalty” under U.S. pension law, the department said.

Ali Khawar, acting assistant secretary of the Labor Department’s Employee Benefits Security Administration, wrote that “at this early stage in the history of cryptocurrencies,” the department “has serious concerns about plans’ decisions to expose participants to direct investments in cryptocurrencies or related products, such as NFTs, coins, and crypto assets.”

Fidelity, along with various trade groups that represent the financial-services industry, wrote letters calling on the Labor Department to withdraw the guidance, according to Mr. Gray and industry lawyers.

Some predict employers will steer clear of cryptocurrency in 401(k) plans.

Michael Kreps, a principal at Groom Law Group, who specializes in pension law, said the Labor Department’s guidance has likely had a chilling effect on “any conversations that were happening” with employers regarding adding cryptocurrency investments to 401(k) menus. A continuing trend of 401(k) fee litigation also creates “a huge incentive for employers not to take risks with the 401(k),” he said.

Lew Minsky, president of the Defined Contribution Institutional Investment Association, a research and advocacy organization for investment managers, consultants and others in the 401(k) industry, said he isn’t aware of any plans by his organization’s members to make cryptocurrency available. “There is too much volatility,” he said.

Companies have shown little interest in letting their employees rely on cryptocurrency for their retirement security. About 2% of the 63 employers in a recent Plan Sponsor Council of America poll said they would consider adding cryptocurrency to their 401(k) menu.

Proponents of adding a small dose of cryptocurrency to a portfolio say that it can raise expected returns without increasing overall risk. Some believe crypto can serve as a hedge against inflation.

Mr. Gray said workers at companies that sign up for the new offering can elect to transfer up to 20% of their account balances into a digital assets account that holds bitcoin and uses Fidelity’s institutional trading and custody platform. Employees can also invest up to 20% of each payroll contribution in bitcoin, though employers can impose lower caps.

Participants who invest in bitcoin will encounter pop-up boxes with educational information on crypto when they log into their online accounts. When the balance in bitcoin holdings exceeds 20% of a portfolio’s value, the employee wouldn’t be able to transfer additional sums to the account from other investments in the 401(k) plan; the employee can continue to make payroll contributions. About 5% or less of the bitcoin account will be held in a short-term money-market fund to provide liquidity to facilitate daily transactions. Mr. Gray said the fees on the account will be between 0.75% and 0.9%, depending on the client, not counting trading costs.

Fidelity declined to say whether it has plans to incorporate digital assets into its target-date funds. Those funds serve as default investments for employees who are automatically enrolled in 401(k) plans and attract the lion’s share of new contributions.

ForUsAll Inc., a 401(k) provider, announced last year a deal with the institutional arm of Coinbase Global Inc., a leading cryptocurrency exchange, that will allow workers in plans it administers to invest up to 5% of their 401(k) contributions in bitcoin, ether, litecoin and others via a self-directed digital asset window. Founded in 2012, ForUsAll provides automated 401(k) administration, menus of low-cost mutual funds and access to human advisers.

Fidelity’s interest in cryptocurrencies began nearly a decade ago, when Abigail Johnson, now chairman and chief executive, began to hold weekly internal meetings to discuss digital assets and blockchain technology. The firm started mining bitcoin in 2015. Later, it added a link on retail customers’ accounts to Coinbase, the crypto exchange, to track their holdings. In 2020, it opened its own crypto fund for wealthy customers.

Dictator’s weapons programme has grown beyond the ‘purely defensive’

North Korean dictator Kim Jong Un may harbour ambitions to use his nuclear weapons programme to assert control over the entire Korean peninsula, experts have warned.

Andrei Lankov, one of the world’s pre-eminent scholars on North Korea, said the Kim regime’s nuclear arsenal, which is growing in scale and sophistication despite strict international sanctions, had superseded its defensive needs.

“The North Korean nuclear programme was initially purely defensive. They were afraid, correctly, that without nuclear weapons they would be invaded,” said Lankov, who is a professor of history at Kookmin University in Seoul.

“But now it is clearly overkill from a defensive point of view. They don’t really need intercontinental ballistic missiles and they don’t really need a thermonuclear device. This leads me strongly to suspect that their ultimate dream is to assert their control over South Korea.”

Kim Jong Un has long sought to associate himself in the minds of North Koreans with his grandfather, Kim Il Sung, who died in 1994 just as the country he had ruled with an iron fist descended into a brutal famine that killed millions.

A former guerrilla fighter described by one contemporary as resembling “a fat delivery boy from a neighbourhood Chinese food stall”, Kim Il Sung was installed as North Korea’s ruler by the Soviets in 1948 and in 1950 launched a disastrous invasion against the South.

The conflict ended in stalemate three years later, after US-led UN forces and Mao Zedong’s China intervened in support of the South and North, respectively.

With his nuclear weapons programme developing apace, some North Korea watchers worry that the younger Kim hopes to succeed where the “Father Generalissimo” failed: to wrest control of the entire Korean peninsula.

At a military parade in Pyongyang on Monday, Kim Jong Un said that North Korea’s nuclear weapons had a “secondary mission” beyond the “primary mission” of preventing war.

According to North Korean state news agency KCNA, Kim said that “our nuclear [programme] cannot be tied to this one mission of war prevention”. If North Korea’s “fundamental interests” were infringed, he added, “our nuclear forces cannot but go ahead with their secondary mission”.

Lankov said that rather than seeking to invade or occupy South Korea, a more realistic scenario would be the dictator using nuclear blackmail to deter US intervention while coercing South Korean leaders.

“When the situation is favourable, for example when the US is completely distracted by some crisis, or the tenant of the White House is weak or eccentric or Donald Trump the Second, the North Koreans would provoke a crisis, deploy their ICBMs, and keep the Americans out by forcing them to choose between sacrificing San Francisco or Seoul,” said Lankov.

“They could then use their tactical weapons to obliterate the significant conventional superiority of the South Korean forces, and install an ambassador in Seoul with veto power over any South Korean policy they do not like,” he added, likening Kim’s ambitions to Vladimir Putin’s “demilitarisation and denazification” strategy in Ukraine.

“Will it happen? Probably not. Is it their dream? Yes, I think it is.”

Go Myong-hyun, a senior fellow at the Asan Institute for Policy Studies think-tank in Seoul, said that the regime had probably noted western reluctance to confront Russia militarily over its invasion of Ukraine.

“Many people assume that North Korea is looking at the war from the perspective of Ukraine, as a country that could be invaded if it does not have nuclear weapons,” said Go.

“But Pyongyang sees things from the perspective of Russia, which is showing how the mere threat of nuclear use can grant the attacker a strategic advantage.”

Go added: “Its nuclear weapons programme cannot be solely defensive when it has hundreds of nuclear warheads and is continuously looking to diversify its means of delivery.”

North Korea has flaunted an array of increasingly sophisticated weapons in recent months, including a manoeuvrable “hypersonic glide vehicle” and a “monster” ICBM potentially capable of striking the US mainland.

This month, it tested a new type of short-range missile that state media said was the first to boast a tactical nuclear weapons delivery role.

Kim Yo Jong, Kim Jong Un’s sister and a high-ranking regime official, recently spelt out a scenario in which North Korea inflicted “extermination” on South Korean forces poised to launch a pre-emptive strike.

“I do think there is a possibility that Kim Jong Un could still pursue the unification of the two Koreas,” said Jeon Kyung-joo, a researcher at South Korea’s state-funded Korea Institute for Defence Analyses.

“He is young enough to have long-term goals, and North Korea’s weapons development is more than sufficient for regime survival.”

Analysts stressed that the most likely path to war on the peninsula remained brinkmanship and miscommunication, rather than an attempt by Kim to succeed where his grandfather failed.

Ankit Panda, a nuclear weapons expert at the Carnegie Endowment for International Peace, said that North Korea’s nuclear programme “has actually enhanced its confidence in its ability to coexist alongside South Korea”.

He warned that Pyongyang’s progress in developing tactical nuclear weapons “would lower the already low threshold for nuclear use on the peninsula, and make future bouts of brinkmanship with the US and South Korea all the more dangerous”.

Soo Kim, a former CIA analyst now at the Rand Corporation think-tank, said: “North Korea will of course keep the US in mind as it continues to make advancements in its nuclear and missile capabilities.

“But, more than anything, the regime’s development of tactical nuclear weapons bears the potential to threaten South Korea.”

While accepting that the likelihood of a North Korean move to assert control over the peninsula remained remote, Lankov warned policymakers not to exclude it.

“The scenario I have outlined has moved in recent years from the realm of the impossible to the realm of the very unlikely,” said Lankov. “That is a big difference.”

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Owners seek to avoid ‘tearing apart’ grounded planes to verify with authorities they are safe to fly

Aircraft leasing companies have launched a multinational effort to persuade safety authorities to allow grounded planes that were returned from Russia without full maintenance records back into commercial service.

Declan Kelly, chair of Aircraft Leasing Ireland, said the trade body had begun an “asset preservation study” with regulators in Europe, the US and Bermuda to “come up with a mechanism of how to repatriate those aircraft into our global system”.

Sanctions imposed on Russia following its invasion of Ukraine triggered a global rush among overseas leasing groups to recover more than 500 aircraft worth an estimated $10bn that were stuck in the country. Irish aircraft leasing groups are among the worst affected, with planes worth more than $4bn leased to Russian airlines.

Lessors have been able to recover 41 planes with an estimated market value of $770mn since the start of the conflict, according to estimates by aviation consultancy Cirium.

However, Kelly said “many of the aircraft do not have a full suite of maintenance records”. Such records, usually handed back at the end of each lease, are crucial both for validating aircraft value and for obtaining insurance.

The Kremlin passed a law last month allowing foreign aircraft leased by its airlines to be added to the country’s domestic register, in effect allowing them to keep flying domestically.

Lessors now face the prospect of putting each aircraft through lengthy and expensive maintenance and safety checks to reconstruct its records.

“We want to get the aviation authorities to accept that on the 27th of February, all those aircraft were operating safely under the Russian system,” Kelly told the Financial Times. “While some maintenance is to be done and there will be additional costs, you don’t want to tear the aircraft apart. Our whole point is: you cannot just ringfence these into aircraft that can never operate again.”

Industry executives contacted by the FT privately welcomed the initiative but cautioned that lessors faced an uphill battle in persuading authorities such as the EU Aviation Safety Agency and the US Federal Aviation Administration to allow the planes back into service without full records. “It is a safety issue. No compromises,” said one executive.

Rob Morris, head of consultancy at Ascend by Cirium, did not rule out a return to service for the planes, noting that lessors were likely to have at least some of the records replicated in their own management systems.

“In time I do suspect that we will see the majority of these 40 aircraft back in service and indeed several of them are likely to do so as freighter aircraft, following passenger to freighter conversions,” he said.

For the industry, the bigger issue lies with the 435 aircraft that remain in Russia.

Most of the lessors affected by the conflict have already lodged insurance claims. AerCap, the world’s biggest aircraft leasing company, said last month it had lodged an insurance claim of $3.5bn to cover the potential loss of its planes and engines that remain stuck in Russia.

“Our members have paid for and held robust insurance policies for decades,” Kelly said. “And, to the extent that they do not recover their aircraft in a satisfactory condition — or at all — we expect that they will make claims on their policies. We would fully expect that these claims will be paid out.”

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