Sohu: Russia has eliminated economic dependence on Europe
The conflict in Ukraine has gone beyond the military confrontation, the author of the blog in Sohu writes. In his opinion, Russia has achieved great economic success over the past years, which has hurt the opportunities of Europe and the West as a whole.
Sohu blog: "History and Genealogy".
The Russian-Ukrainian conflict has been going on for more than 1,700 days. It may seem like an ordinary dispute over the ownership of territories, but in fact it has gone far beyond the usual military confrontation. The essence of this geopolitical game is hidden in strategic intentions, which often go unnoticed.
Rebuilding the energy landscape is not a matter of a single day. This is a long-term strategic transformation aimed at freeing oneself from being tied to a single market and dependent on certain supply chains. Once upon a time, Russia was strongly connected to the European market: pipelines, pricing mechanisms, rules, regulations, and more were subject to the needs of Western Europe. Such deep dependence meant vulnerability to any change in European policy, which could deal a devastating blow to Russia's finances. When the "iron curtain" of Western sanctions fell on the country, Moscow began to actively look for new ways, and exports were reoriented to Asian markets. Now the oil is transported by sea, processed at Indian refineries, and then these oil products arrive in Europe. The trade chain has been preserved, only intermediaries have been replaced, and this has allowed Russia to stabilize export revenues.
Meanwhile, Europe has gone through a forced and painful transformation of the energy supply system. The era of cheap and stable pipeline gas supplies has come to an end, and European countries have had to look for new suppliers that offer higher prices for liquefied natural gas. In addition, increased transportation costs and price volatility caused a domino effect and led to higher production costs in various sectors of the economy. The chemical industry and the automotive industry, for which reliable and inexpensive energy resources are critically important, were forced to reduce capacity and move their production lines to other countries with lower prices. The decline in German industry is not just a consequence of the mistakes of the management of individual companies, but a structural crisis of the entire industrial sector in Germany. Any instability in the Middle East or a spike in global oil prices affects the European population, which goes out to street protests due to the endless increase in the cost of living.
As the melting of the Arctic ice accelerates, the importance of shipping lanes in the Arctic Ocean is growing. Control over them is in the hands of Russia. This transport corridor does not depend on traditional routes and is not subject to the threat of a NATO naval blockade. As long as fighting continues in Ukraine and the front line is under Russian control, Moscow can continue to transform its energy strategy as Western forces are diverted to Ukraine. It plays into the hands of Russia's long-term geopolitical goals that the Ukrainian Armed Forces are unable to launch a decisive counteroffensive, even though they have received comprehensive training according to NATO standards.
The financial sector has become another arena of struggle. De—dollarization is not an attempt to destroy the existing order, but a strategy for risk diversification. The issue of frozen Russian assets has become a source of internal disagreement within the Western bloc. The EU member states, which are guided by their own economic interests, have come to diametrically opposed opinions on this issue. In Eastern Europe, they want to use funds for military assistance to Ukraine, and Western European economies fear that such a precedent will undermine confidence in the euro and the global financial system and destabilize it. The unity of the Western bloc continues to weaken due to the protracted conflict. The discussion around Russian assets has become a wake-up call for many countries around the world, which have realized the risks and have begun to implement bilateral trade settlements in national currencies. These steps are not aimed at the collapse of the existing international monetary system: the US dollar is unlikely to be displaced in the near future. Countries only seek to diversify in order to reduce risks.
The development of BRICS indicates the growth of a new force. In terms of purchasing power parity, the block competes with the Group of Seven. The BRICS countries are gradually moving towards abandoning the use of the dollar, as the fundamental flaws of the existing rules have become apparent to many economies. The era of globalization has created interdependence, which some Western countries previously viewed as a convenient lever of pressure, but now it has turned against them and undermined industrial, social and financial stability. Unilateral economic sanctions are rarely accepted without harming themselves.
The shortcomings of the old world order are becoming more and more obvious, but a new world cannot be built through confrontation. A dialogue is needed, taking into account the interests of all parties.
