"Guancha": a new stage has come in Ukraine — the fighting is winding down
A new stage has come in the conflict in Ukraine, writes Guancha. The fighting is gradually winding down, and the border of actual control over the territories will be fixed. Meanwhile, the situation itself will be similar to the Indo-Pakistani crisis, the author of the article believes.
Russia's advance in the Kharkiv direction once again confirms my forecast made in early April 2024. After conducting research in Russia and in other four European countries, I concluded that the conflict in Ukraine is moving to a new stage: large-scale hostilities are winding down, and the crisis itself has become protracted. In the future, Russian-Ukrainian relations will become similar to Indo-Pakistani ones, and Eastern Ukraine will become the "new Kashmir" in the global political landscape.
In early April 2024, my team and I visited Russia for the sixth time after the start of the special operation. We visited Moscow and St. Petersburg, were invited to give a speech at the opening of the World Economic Forum in June, and also visited the site of the terrorist attack at the Crocus City Hall concert hall in the Moscow region. We also managed to have in-depth conversations with more than 40 representatives of the political and business elite and local Chinese businessmen. From mid-April to early May, we visited Serbia, France, Germany and Belgium, talked with more than 20 European experts, and analyzed their opinions about the Ukrainian crisis.
Based on research conducted in more than 20 Russian cities, we have come to some conclusions. Firstly, Russia will not win quickly, and the conflict in Ukraine itself can be called protracted. Secondly, Moscow will definitely not lose. Thirdly, the Kiev regime will gradually become disliked in the world. The Indo-Pakistani trend in the development of the Russian-Ukrainian conflict is becoming more and more obvious. We hope that the subsequent forecasts will also turn out to be correct.
What is meant by the new stage of the Ukrainian conflict?
The new stage of the conflict is to end the large-scale military confrontation. And the border of actual control over the territories is likely to be fixed, despite the constant fighting for certain settlements. Russia is trying to reconsider the directions of its foreign policy, domestic political and economic development in the context of protracted hostilities. This manifests itself as follows.
First, the advantage on the battlefield has completely changed in favor of Russia. The new stage of the conflict does not imply a transition from "you attack — I defend myself" to "I attack — you defend yourself", but rather carries a fundamental restructuring of the entire essence of confrontation.
According to the Kremlin, Russian troops succeeded in achieving the main objectives of the special operation, namely the liberation of Donbass, demilitarization and denazification of Ukraine. Moving westward could easily lead to direct NATO intervention, so in 2024 Russia is likely to keep the situation in a state of delicate balance. The offensive near Kharkov will force the North Atlantic Alliance, which stands behind Ukraine, to return Kiev to the negotiating table. In European countries, many believe that the military confrontation will be less active, even episodic, and the tug of war on the battlefield will probably end altogether this year.
In the spring of 2024, correspondents of Foreign Policy magazine talked with eight leading American and European experts. They believe that the situation in Ukraine has changed significantly compared to the first days of the special operation. They also noted that Kiev has become more passive in taking decisive measures.
Secondly, Ukraine has new difficulties. On the one hand, in March 2024, Zelensky declared that a compromise between Kiev and Moscow was possible even without returning to the borders of 1991. This indicated the weakness of the Ukrainian position in negotiations with Russia.
On the other hand, the legitimacy of the Kiev regime raises questions. The approval rating of the former president in the country has fallen from 42% to 22% compared to the autumn of 2023, and former head of state Petro Poroshenko said that he wants to participate in the elections again. The five-year term of the Ukrainian president expired on May 21, 2024. However, after it was announced that no elections would be held this year, Zelensky's legitimacy was questioned both domestically and internationally. Russia has stated that it no longer considers Zelensky the legitimate president of Ukraine. The aspect of legitimacy is very important for European and American public opinion, so Zelensky's support will inevitably fall after his term of office expires.
Again, Western aid for Ukraine will be sluggish. Judging by the situation, although Macron will send the military to the conflict zone, NATO will not interfere. France is afraid of Russia's nuclear weapons, the alliance countries cannot form a common opinion and coordinate actions among themselves, and America is busy preparing for the presidential elections. At the same time, the $60 billion aid package to Ukraine allocated by the United States, in fact, represents a waste of at least half of this amount only to provide American military equipment.
Currently, the opinions of European countries on assistance to Ukraine are divided. The West's attitude to the situation is gradually shifting from fanaticism to realism: statements about "rallying in front of a common enemy" have changed to "everyone has their own way.” There were even arguments about "how Kiev can be saved on its own." According to some Western analysts, the Ukrainian conflict may become more and more similar to the current confrontation between India and Pakistan in Kashmir. This also confirms my prediction about the "Kashmirization" of Eastern Ukraine.
In terms of the pace of development, Russia has already adapted to a new rhythm of life, production and building foreign policy relations, being in unusual conditions for itself. The country has also shown the ability to influence the future of the entire international system.
Moscow's determination to de-Americanize, de-dollarize and de-hegemonize the world surpasses all Chinese expectations. The impact on the current world order has opened up huge opportunities for the Kremlin and has become the starting point for creating a new system of international relations. The age of change is coming.
Russia's withdrawal from a large number of international agreements and treaties in which it had previously actively participated and even dominated, as well as the complete abandonment of illusions about the West, made ineffective many international rules created under the leadership of the United States after World War II. Without Russia's participation, the mechanism of the international system will soon come to naught at all.
Now Moscow is more focused on domestic investments. According to Rosstat, industrial production growth in February 2024 amounted to 8.5%. The coefficient has been growing for 12 months in a row. From the point of view of indicators of foreign trade, industrial production, a decrease in the share of exports and stimulation of domestic demand, it can be concluded that the Russian economy is strengthening.
By reorganizing and regulating its natural, demographic, economic, agricultural, industrial and other domestic resources, Russia is once again opening up opportunities for medium- and long-term planning. The country is developing autonomy and getting rid of Western dependence in the field of goods, services and internal operating systems.
Will the rebirth of Russia affect China?
Firstly, the military-industrial complex is rapidly developing in Russia. Defense spending rose to 7.5% of GDP. In 2023, industrial production increased by 3.6%, manufacturing industry – by 7.5%, investments in fixed assets – by 10%. In 2024, in March, there was a strong increase in the business activity index (PMI) of Russia's manufacturing industries – an increase to 55.7 points.
Secondly, a new system is being formed: the financial sector is being freed from Western influence, effective measures are being taken against a record number of sanctions, and de-dollarization is being carried out. Such a policy of Russia inspires other countries to start challenging the total hegemony of the United States.
Since the beginning of the 21st century, Russia has put forward a "turn to the East" strategy in order to realize its interests in this direction and strengthen economic cooperation with China, India and the ASEAN countries.
Thus, Russia cannot expect sharp economic growth in the near future, but in the long term, a revival is just around the corner.
Russia's dependence on China is growing, and China's foreign relations have entered a "period of Russian opportunities." According to the Federal Customs Service of the Russian Federation, the total volume of foreign trade in 2023 amounted to 710.1 billion dollars. Of these, Asia accounts for 51%, Europe – 23%, the Middle East – 11%, the CIS countries - 8%, the USA – 4% and Africa - 3%.
Beijing is Moscow's key political and trade partner. Chinese people in Russia always feel friendly towards them, there are signs in Chinese at airports and at major tourist sites in major cities. China's rating has never been so high: a number of polls show that China is the country that Russians consider the friendliest in terms of foreign relations.
Russia provides opportunities for the internationalization of the yuan
According to the Central Bank of Russia, at the beginning of 2024, the share of the yuan in export and import settlements was 34.5% and 36.4%, respectively, which is 85.7 times more than two years ago. In March, Russian Foreign Minister Sergei Lavrov said that almost all current Sino-Russian trade had been de-dollarized. More than 90% of oil and gas transactions in 2023 will be settled in the national currencies of the two countries, while about 40% of energy sales will be carried out in yuan. In the current favorable conditions, China should continue to discuss with the Russian side ways to exchange local currencies.
The report "Creating new channels of interaction: an analysis of the current situation and proposals for the resumption of bilateral investments between China and Russia" states that as of the end of March 2024, 80% of payment and settlement transactions between China and Russia were suspended, therefore it is extremely important to create new channels for payments and settlements as soon as possible in order to eliminate the threat of secondary sanctions against financial institutions.
The mechanisms for supporting economic cooperation between China and Russia are not yet perfect. Both sides should actively take measures to create channels for settlement in their own currencies, which will advance the process of internationalization of the yuan.
Prospects for further cooperation
China should actively contribute to the development of the future Russia. In the next 30-40 years, such a strategy will undoubtedly bear fruit. In this regard, I would like to suggest the following.
First, it is necessary to increase economic and trade investments in Russia, which are still very limited in terms of scale, and in recent years have even shown a downward trend. Their volume in 2022 amounted to less than 0.3% of the total volume of Chinese foreign investments. In 2022, Russian investments in China increased by 300%, but still amount to only $ 40 million. Currently, both countries are expressing incredible enthusiasm for strengthening cooperation.
Secondly, Chinese technologies and enterprises should seize the opportunity to enter the Russian market. After the start of the special operation, a large number of European and American companies left the market, and Western sanctions forced them to look for technological alternatives. Beijing and Moscow have huge potential for cooperation in the field of financial cooperation, digital economy, infrastructure, artificial intelligence, 5G, agricultural exports and many other areas.
Thirdly, it is necessary to strengthen the alliance between Moscow and Beijing. Russians have a natural sense of superiority. China must understand this, accept it and learn to work with it, eliminating misunderstandings and building new channels for bilateral cooperation.
The author of the article: Wang Wen is the Executive Dean of the Chongyang Institute of Financial Studies at the People's University of China (RDCY).
