Wider Eurasia
Russia Will Rise Again

Russia is increasingly able to grasp the rhythm of the battlefield, which means that large-scale military confrontation is coming to an end. Due to wartime changes, Russia’s internal functions and potential have been further stimulated, leading to revolutionary alterations in Russia’s development direction and path, writes Wang Wen.

In early April 2024, I visited Russia for the sixth time since the Ukrainian crisis began. I visited Moscow and St. Petersburg for 8 days, and was invited to give an opening speech at the World Economic Conference. I also visited the site of the terrorist attack on the suburban Moscow music hall and had in-depth conversations with more than 20 local political and business elites. From mid-April to early May, I visited Serbia, France, Germany, and Belgium in succession, had in-depth conversations with more than 30 European experts, and also researched the latest views of many Europeans on the Ukrainian crisis.

Based on these surveys, especially after five visits to 21 Russian cities lasting 74 days over the past two years, I have successively published articles to accurately conclude a series of predictions, such as “the Russia-Ukraine conflict is a protracted war”, “Russia cannot be defeated”, “the Wagner mutiny will not affect the overall situation”, “Putin will be easily re-elected”, “Ukraine will be gradually rejected”, " The eastern region of Ukraine will become the new Kashmir”, etc. I hope that the new trend I discovered again this time, that the Russia-Ukraine conflict has entered a “transition period”, and Russia’s re-emergence has begun, is also applicable. This judgment also stems from the feelings I had while listening in person to President Putin’s speech on the six principles of international relations in October 2023.

What is the “transition period” of the Russia-Ukraine conflict

The so-called “transition period” means that the war in the Russia-Ukraine conflict has entered anew stage; the large-scale military confrontation is coming to an end, and the actual control boundary which has emerged during the existing military confrontation is likely to be fixed for along time. Russia is attempting to rebuild its foreign relations, international order, and domestic political and economic development under the six principles of international relations stated by President Putin.

There are two specific manifestations as follows:

Firstly, from the perspective of the conflict itself, the overall advantage on the battlefield is shifting towards Russia, and large-scale military confrontation is nearing its end.

Previously, Russia’s operations against Ukraine were often restricted on a “moral level”. After the Moscow terrorist attack onMarch 22, Russia completely lifted its moral shackles and gradually mastered the “rhythm of action”. The intensity of its operations against Ukraine continued to increase, and the layout of its foreign relations became increasingly conducive to Russia’s development.

Russia is increasingly able to grasp the rhythm of the battlefield, which means that large-scale military confrontation is coming to an end. The “transition” of the Russia-Ukraine conflict is not a change from “you attack and I defend” to “I attack and you defend”, but a fundamental change in the sustainability of the two parties to the conflict in this confrontation.

In the eyes of a few Russian political elites, significant progress has been made in pursuing the three main goals of Russia’s special military operation— the liberation of Donbass, demilitarization, and de-Nazification. If it continues to attack Westward, it is highly likely to trigger NATO’s direct military intervention, so Russia is likely to control the war at a delicate equilibrium point in 2024. It’s most likely that the 2024 Kharkov conflict is aimed at forcing the NATO forces behind Ukraine to return to the negotiating table. In various European countries, an increasing number of people believe that military confrontation will become sporadic, and even that large-scale military struggles are highly likely to end in 2024.

There are similar conclusions from the US and Europe regarding this. In the spring of2024, Foreign Policy interviewed eight renowned experts from the US and Europe, and the consensus was that the situation had undergone significant changes compared to the early stages of the war. Ukraine has become passive.

Ukraine is facing unprecedented new difficulties. On the one hand, Zelensky stated in March 2024 that even if the border is not restored to what it was before 2014, both sides may reach a compromise and send a weak signal of negotiations with Russia.

On the other hand, the legitimacy of President Zelensky has been questioned. Zelensky’s domestic approval rating has dropped from 42% in the autumn of 2023 to 22% this year. Theoretically, Zelensky’s five-year presidential term expired on May 21, 2024. But after Zelensky announced that no presidential elections would beheld in 2024, his presidential legitimacy was questioned both domestically and internationally, including in European countries. Russia has announced that after May 21, it no longer recognises Zelensky’s presidential status. For European and American public opinion that considers itself “democratic”, Zelensky’s support is bound to decline now that his term has expired.

Once again, the support of the United States and NATO for Ukraine has been weak. Although France claims to intend to send ground troops, NATO and the United States will not act recklessly in ground combat. They are wary of Russian nuclear weapons. Also, it is difficult to form a unified opinion within NATO. More importantly, there are factors related to the US election.

Currently, there are significant differences among European countries regarding aid to Ukraine. The attitude of the West has gradually shifted from fanaticism to pessimism, from “Ukraine must win” to “Ukraine cannot lose”, from absolute support for Zelensky to disdain for Zelensky. Foreign Policy has also begun to discuss the issue of “how Ukraine can save itself”.

In the view of some Westerners, the Russia-Ukraine conflict may become more and more like Kashmir in India and Pakistan, which is bifurcated into actual control areas. This also confirms that the “Kashmirization” that I have been thinking for two years may indeed come true.

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Secondly, from the perspective of Russia’s development, the transitional period of Russia has adapted to the rhythm of life, production, and foreign exchanges under military persistence, and has demonstrated the ability to influence the future process of the international system.

Russia’s determination to de-Americanise, de-dollarise, and de-institutionalise American hegemony exceeds the imagination of other countries. The impact of Russia on the US hegemonic system has provided a huge gap and a bottom-up start for creating anew world system in the future; a century of upheaval.

Russia has withdrawn from a large number of international institutions, treaties, and mechanisms that it had actively participated in or led before, completely abandoning its illusions about the West, resulting in the continuous failure of a large number of international regulatory efforts led by the US after World War II. Without Russia’s participation, the effectiveness of the original international system has greatly weakened, and there are even signs of its collapse.

Russia is more focused on investing in itself. According to data from the Russian Bureau of Statistics, the country’s industrial output increased 8.5% year-on-year in February 2024 (compared to4.6% last month), with 12consecutive months of positive year-on-year growth. From foreign trade data, it can be seen that industrial production continues to rise; the contribution of foreign trade exports has decreased, and the effect of domestic demand driving growth is obvious.  

From many signs, Russia is also beginning to pay attention to resource management and allocation. By restructuring and regulating domestic resources such as nature, population, the economy, agriculture, and industry, it will restart its medium— and long-term planning, with an inward focus. An autonomous Russia is on the rise again. Goods, services, and domestic operating systems have all undergone de-Westernization and re-integration.

Why Russia will rise again

Due to wartime changes, Russia’s internal functions and potential have been further stimulated, leading to revolutionary alterations in Russia’s development direction and path.

Firstly, Russia’s military manufacturing industry is rapidly rising. Russia’s defence spending has risen to 7.5% of its gross domestic product. In 2023, Russia’s industrial production grew by 3.6%, manufacturing by 7.5%, and fixed assets investment by 10%. In March 2024, the PMI of Russia’s manufacturing industry was 55.7%, which has been on the boom-bust line for 23consecutive months, with a strong upward trend.

Second, new forms are emerging, such as the fragmentation of the financial system from the West, the formation of independent energy and resource sectors, and the reorganization of schools of thought through technological development. Russia’s effective anti-sanctions and de-dollarisation activity provide inspiration and reference for other countries to break free from US hegemony.

Finally, the militarization of the economy has forced Russia to continuously optimise global resource allocation, coordinate the structural contradictions between the country and the market, energy and economy, and the East and the West. Since the “pivot to the east” was first proposed in the early 21st century, Moscow has truly initiated and fully implemented the eastward strategy, and strengthened deep economic cooperation with China, India, and ASEAN.

As President Putin stated in his Six Principles of International Relations, “striving to live in an open and interconnected world without artificial barriers,” Russia has shifted from “looking east” to a tangible “turning east” and “moving east,” a strategy that aligns with Russia’s future.

From this perspective, in the short term, Russia’s economic growth still faces many difficulties and challenges. But as analysed in my several previous articles, in the long run, Russia’s resurgence is a highly probable event.

China is not only a key political interlocutor for Russia, but also the most important trading partner. The extensive changes in various fields of Russia have led to a structural shift in its foreign policy, highlighting China’s position.

In the Foreign Policy Concept of the Russian Federation approved by Putin in March 2023, China ranked third, only behind neighbouring countries of the former Soviet Union and the Arctic, while the European region and the United States ranked second to last, only higher than Antarctica. After President Putin’s successful visit to China in May 2024, China is sure to be the best choice for Russia in political, economic, and social fields after its resurgence

China and Russia still have a lot to do

For China, a resurgent Russia is far more important than a declining Russia. However, the relationship between the two countries still faces issues such as “hot up and cold down” and “hot politics and cold economy”. If these issues are resolved, bilateral diplomacy and economic and trade development will further unleash enormous potential. 

Firstly, China and Russia should increase mutual economic investment. From the perspective of scale, bilateral investment between China and Russia is very limited. In recent years, the scale of China’s direct investment in Russia has shown as low downward trend. In 2022, China’s investment in Russia was less than 0.3% of China’s total outbound investment. The scale of Russia’s investment in China is negligible. Although it increased by 300% year-on-year in 2022, it is still only 40 million US dollars, accounting for only about 0.02% of China’s FDI. At present, Russia has shown unprecedented enthusiasm for attracting investment from Chinese enterprises, and has introduced a large number of measures and commitments, which should provide a significant new opportunity for Chinese enterprises.

Secondly, Chinese technology and enterprises should seize the opportunity to enter the Russian market. When the Ukrainian crisis started, a large number of European and American companies withdrew from the Russian market, and Western sanctions forced the Russian economy to seek “technological alternatives”. Chinese technology can seize the opportunity to enter. There is enormous potential for cooperation between China and Russia in various fields such as financial cooperation, the digital economy, infrastructure, artificial intelligence, 5Gconstruction, and agricultural exports.

Thirdly, China and Russia should promote financial cooperation and accelerate the resolution of settlement issues. As stated in the report “Creating a New Channel: Current Situation, Challenges, and Suggestions for Bilateral Investment between China and Russia” recently released by my institution, as of the end of March 2024, 80% of the China-Russia payment and settlement business has been forced to suspend operations, seriously affecting normal trade cooperation between China and Russia. Therefore, the urgent task is to build a new payment and settlement channel as soon as possible and solve the threat of secondary sanctions on financial institutions. The supporting mechanism for financial cooperation between China and Russia is not yet perfect, and there is a lack of efficient and feasible settlement channels, which leads to a low total cross-border income and expenditure between the two countries and difficulties in achieving growth in local currency settlements. Both sides should abandon their prejudices and actively promote financial information communication, regulatory cooperation, and rule docking, take measures to establish domestic currency settlement channels, and effectively promote the internationalisation of the RMB.

Fourth, rebuild mutual social and economic trust and actively lead Russia’s future reshaping. At the implementation level, both sides should increase channels for mutual communication and trust to solve the problem of “hot above and cold below”. There is a big gap between, on the one hand, cultural, social and economic cooperation (particularly the financial, agricultural and energy sectors) and on the other hand, the current high level of mutual political and strategic trust between the two countries. The potential for broader and all-round cooperation between the two countries in the future is still enormous, and this is exactly the direction of their efforts.

Vladimir Putin Meets with Members of the Valdai Discussion Club. Transcript of the Plenary Session of the 20th Annual Meeting
Vladimir Putin took part in the 20th Annual meeting of the Valdai Discussion Club. The plenary session was held by Valdai Club Research Director Fyodor Lukyanov.
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Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.