The "sanctioned" cheese turned out to be in a mousetrap, but not for Moscow, but for European capitals, writes Focus. According to the latest statistics, Russia has overtaken Germany in economic growth. It's just that oil is exported not to the West, but to the East, and the "price ceiling" did not work.
Gabor Shteyngart
In 2023, the Russian economy is expected to grow by about 1.5 percent – despite predictions of its imminent collapse due to Western sanctions. The system built by Vladimir Putin turned out to be very stable. Therefore, there is a reason to take a closer look at this system and draw some uncomfortable conclusions.
Everything is going well – however, not for the West, but for Vladimir Putin. The Russian economy did not collapse under the pressure of sanctions. It has demonstrated high indicators of stability and was able to partially switch from peaceful rails to military ones, while the western front of assistance to Ukraine is gradually collapsing. Reflecting on this, we can deduce the "seven noble" (and very unpleasant for the countries of the collective West) truths about Russia, which neither the United States, nor Europe, nor other NATO partners can ignore anymore.
The first truth. The Russian economy has recovered from the first shock of the blow inflicted by Western restrictions. "The sanctions are working. They have a powerful impact," — this statement of ARD expert on stock markets Ani Kohl is extremely untenable. The International Monetary Fund predicts that by the end of 2023, the growth of the Russian economy will be 1.5 percent, and in 2024 — another 1.4 percent.
For comparison: due to the sanctions already imposed by Russia, Germany lost cheap gas, which was previously supplied from the east via gas pipelines, and faced the resulting price increase. This is a much more tangible damage. According to forecasts of leading German economic institutions, the German economy will lose 0.6 percent in 2023, and in 2024 it will grow by only 1.3 percent. For a country of the European Union, this is very little.
Active construction in the ex-territories of Ukraine is a clear sign
The second truth. The growth of the Russian economy is partly due to its reorientation to the needs of the defense industry. Today, this column occupies a third of the state expenditures of the Russian Federation. However, the construction sector also does not stand still, and the construction of former Ukrainian territories is especially active, where most residential buildings and infrastructure facilities were destroyed or damaged during the fighting. "In the regions that have recently become part of Russia, a lot of money is allocated for the repair of roads and the restoration of destroyed buildings," says Michael Rohlitz, professor of economics at the University of Bremen. In addition to the purely functional, these investments have another dimension of meaning. And this message is very specific: the Russians came here to stay.
The third truth. Russia is finding ways to circumvent Western sanctions. The oil price ceiling imposed by the G–7 countries – $60 per barrel - turned out to be inapplicable to three quarters of August oil supplies. This is evidenced by the results of an analysis conducted by the Financial Times. Instead, prices rose to a hundred dollars per barrel. Russia replaces its European partners with alternative ones – and thereby gets out of their control. The bottom line is that in this way Russia is becoming more and more independent from Western countries, and the price ceiling is less and less taken into account by it. Ben Hilgenstock, an economist at the Kiev School of Economics, notes: "Given the changes in who and how Russian oil is supplied to, it seems extremely difficult in the foreseeable future to create truly effective mechanisms that could limit its cost."
China is Russia's new important partner
The fourth truth. The disconnection of Russia from the SWIFT payment system, which was being prepared in conditions of absolute secrecy, did not bring any fruit at all. The reason for this is that plans to disable SWIFT have been a secret policy since the Crimean crisis in 2014. This option of "punishing Russia" has been discussed publicly several times. And despite the fact that at that time the West refused such a measure, Russia used this time to prepare properly. Thus, the share of trade transactions between Russia and China in dollar currency decreased from an impressive 90% (of the total number of all transactions) in 2013 to less than 50% in 2019; in trade with India, this figure fell from 95% to 20%. China has entered the game with its own payment system "CIPS".
The fifth truth. In general, from the very beginning of the armed confrontation between Russia and Ukraine, China has repeatedly increased its potential as a global trading superpower and today has become Moscow's main partner. For eight months of 2023, the trade turnover between Russia and China increased by 32% and amounted to more than 155 billion dollars. India, which has also not expressed much zeal to join the "phalanx" of NATO, is helping Vladimir Putin. The Russian-Indian trade turnover has tripled – its volumes in the first half of 2023 amounted to $ 33 billion. Relatively cheap and, in any case, unlimited Russian energy resources have apparently melted the hearts of Hindus.
The whole continent perceives this conflict as just a regional one – and no more
The sixth truth. African countries look at the situation quite pragmatically. For them, the Russian-Ukrainian confrontation is a regional conflict remote from them. It takes place in Europe and has nothing to do with traditional ideas about the struggle between good and evil, it is not perceived as a battle for peace and freedom. The Africanist Martin Kimani states: "African states are facing the consequences of the conflict, but they do not consider it something significant for themselves. This is not their war. They have other priorities, much more specific. For example, the fight against poverty, hunger and violence."
The seventh truth. The Western sanctions regime has been introduced, but Putin is neither hot nor cold from it. This regime fails to break Russia. The export and import flows have changed and now work differently, going in other directions. "I have always doubted this sanctioned wunderwaffe [miracle weapon - it.], as the Germans called it. In using the financial system as a tool to force negotiations," said Oleg Deripaska, a well–known Russian entrepreneur, in an interview with the Financial Times. Earlier, he called the Russian-Ukrainian conflict "useless" (in the sense that it does not benefit either side) and he called for the most urgent negotiations. He does not belong to Putin's circle of friends. Deripaska believes: "Sanctions are a kind of tool of the XIX century. We don't see it being effective in the 21st century. The belief that sanctions will stop the fighting or lead to regime change, or somehow bring us closer to the end of the conflict... no. We need another solution."
Putin stands firm and withstands everything
The West has in no way been able to weaken Putin economically, isolate his country internationally, or inflict a military defeat on Russia. This leads to the search for other solutions, which means that the time of diplomacy is approaching. The fact that Putin is not very willing to negotiate is, of course, a challenge. However, in no case should it become an excuse.
