SharpEdge

Time.

Time.

Time.

Time.

As per my previous forecast, I’m dropping my estimate considerably.

• The clock is ticking. The base rate that at least one test occurs in the remaining forecast period is very low.
  
• The conditions of my initial forecast still hold, but with a couple caveats.
  
• According to satellite imagery in late January, there were no signs of an imminent test at Punggye-ri.
  
• Historically, poor economic conditions are a mark against an impending nuclear test. At the moment, conditions might be deteriorating into something like the Arduous March of the 1990s. I’m now weighting this factor a little more heavily into my estimate.
  
  

Russia has been under some form of not only continuous but escalating sanctions since 2014. The base rate that sanctions get revoked or expire in the window between now and January 31, 2023 for any reason is very low—barely 2%, depending on the method of calculation. However, there are a few factors that could move this probability up or down.

The first factor to consider is whether or not the EU is planning for more sanctions. They are, and they appear to be resolute in what has already been a long term commitment.

"We are working hard to hit Russia where it hurts to blunt even further its capacity to wage war on Ukraine and I can announce today that we are working full speed on a ninth sanctions package," von der Leyen told a news conference. "And I'm confident that we will very soon approve a global price cap on Russian oil with the G7 and other major partners. We will not rest until Ukraine has prevailed over Putin and his unlawful and barbaric war," she said.

Piling onto the scales is Putin himself, who seems equally committed to waging a war that has no end in sight.

"As for the duration of the special military operation, well, of course, this can be a long process," Putin said, using his preferred term for Russia's invasion, begun in February.

But what if the Russian war effort suddenly collapsed, and a deal for a ceasefire was struck tomorrow?  Even then, according to the experts, sanctions would be extremely unlikely to disappear. The reasons are not simply bureaucratic. An end to the war would not fundamentally change international politics overnight. Sanctions are a powerful piece for the West on the global chess board. Over the years, Russia has learned to play around that piece rather than giving up its own pieces to capture it. If the players remain mostly the same, and the incentives remain mostly the same, then the game will most likely remain the same.

Speaking of games, Victor Orban of Hungary has his own to play. The EU requires unanimous consent for its sanctions on Russia, and Orban is aiming to hold out. It wouldn't be the first time he made this play.

This time around, the price of Orban's vote is apparently full, unchecked autonomy over what he calls his "illiberal democracy" in Hungary.  Orban has failed to implement solid rule-of-law reforms required by the EU. Now the EU is threatening to punish Hungary by withholding billions of euros. Orban, a public Putin sympathizer, seems to think he can hold his vote hostage until he gets what he wants. He also hoped the new government in Italy would help him out, even though he acknowledged the prospect of averting sanctions were slim.

At the moment, Italy does not appear to be on board with Orban, although there might be signs that Italy's support for Ukraine is wavering.

In conclusion, given the current conditions, I think the chances of the EU's sanctions on Russia changing in any meaningful sense drop from barely 1 in 50 to something a good bit less than that—basically, for purposes of this forecast, a round down to zero event. The x-factor here is Orban, but at the moment, the probability that he almost single-handedly undermines the EU's sanctions remains remote.