Think Tank
Russia Without Globalisation?

Even if globalisation is waning, and even if the old world order has been irrevocably scrapped, few large non-Western countries are prepared to sever ties with the West for the sake of Russia regardless of their own revisionist ambitions, writes Valdai Club Programe Director Oleg Barabanov.

Among other themes, the recently held St Petersburg International Economic Forum focused on discontinuing globalisation in its original form. In his remarks at the plenary session, President of Kazakhstan Kassym-Jomart Tokayev noted that “The era of regionalisation with all its advantages and inherent shortcomings has come to replace globalisation. The process of reformatting traditional economic models and trade routes is accelerating. Importantly, the countries of our region should go beyond finding the right responses to these challenges and try to benefit from them as much as they can. Therefore, we will need to consistently work to unlock the potential of cooperation within the EAEU.”

The same issues were touched upon a little earlier at the first Russian-Pakistani conference sponsord by the Valdai Discussion Club. In their remarks, the participants of our conference underscored the fact that sustainable development of the Eurasian macro-regions is impossible without inclusive growth of all countries in that region. It’s extremely important that the countries of the region can move forward effectively only as a team relying on international and regional cooperation.

In a situation where regionalisation may replace globalisation as the key driver of global socioeconomic development, this commonality of interests and, as our Chinese colleagues like to say, common destiny, are becoming a key prerequisite for success and sustainable efficiency.

Prospects for Cooperation Between Russia and Pakistan
Oleg Barabanov
On June 6, 2022, Moscow will host the first Russian-Pakistani expert dialogue between the Valdai Discussion Club and the analytical centre Pakistan House – International Think Tank. Previously, the Valdai Club has repeatedly participated in expert events in Pakistan, and experts from various Pakistani analytical centres  have taken part in Valdai Club events, such as the Club's Annual Meeting, and the Middle East and Central Asian Conferences.

Understandably, Russia’s position in this new situation is particularly illustrative. On the one hand, having crossed the line separating “ordinary” revisionism from direct military-political challenge to Western countries, Russia has consciously taken itself outside the Western-centric globalisation framework. On the other hand, Russia’s partners from the non-Western world were also confronted with a choice. Only one country — the Republic of Belarus — fully took Russia’s side and followed it “to the barricades,” thus faithfully fulfilling its duty as an ally. All other countries showed some degree of restraint, which is quite understandable and relatable if we step back from Russia-centricity and look at the situation from the point of view of each of these countries’ own national interests.

Even if globalisation is waning, and even if the old world order has been irrevocably scrapped and, as they are often saying now, life will never be the same, objectively speaking, few large non-Western countries are prepared to sever ties with the West for the sake of Russia regardless of their own revisionist ambitions. On the other hand, almost all major non-Western (in the mental sense, not geographic) countries resisted the pressure exerted by the United States and the EU and chose not to openly join the onslaught of sanctions on our country. I believe this is a genuine success for Russia in the current circumstances and the result of its efforts to construct a global non-Western identity in previous years.

Some of Russia’s non-Western partners were expected to adopt this position, others were less expected to take Russia’s side, and still other countries’ level of independence from the West came as a pleasant surprise for Russia. First of all, these are Saudi Arabia, the United Arab Emirates and other Gulf states. Frankly, we might have had concerns that some other countries would not support Russia as much as they did in reality. In my subjective opinion, that was India. On the contrary, our expectations were higher with regard to other countries, but the reality turned out to be more modest. This is life. Based on the previous context, the restraint shown by some of Russia’s military-political opponents of the recent past was absolutely unexpected, for example Georgia, which, I believe, failed to obtain the status of a candidate for EU membership not in the least for this exact reason. This despite the fact that, objectively, Georgia is doing much better in terms of fighting corruption, transparency of institutions and the rule of law than Ukraine or Moldova.

What we got in the end is a situation where Russia is definitely not a part of Western-centric globalisation, whereas other non-Western states are still part of it, but have not severed ties with Russia. At least, we can safely assume that we are not a notorious rogue nation, which is something to celebrate given the circumstances.

What are our other possibilities? The fact that Russia will now carry out many of its foreign economic transactions not directly, but through other non-Western countries is a quite realistic mid-term scenario. In his remarks in St Petersburg, the President of Kazakhstan made a direct and bold statement in this regard: “Kazakhstan could be instrumental in its role as a buffer market.” It’s a bold statement, because no one has canceled secondary sanctions. No doubt, all Russia’s non-Western partners will be mindful of that risk. And the new Russian word “overcompliance” where the fear of falling under secondary sanctions will keep our partners from engaging even in transactions permitted by the sanctions, will certainly have a role to play.

But at the same time, let’s face it, buffer markets for a country under sanctions are a tangible additional opportunity for its partner countries to derive windfall profits. It would be a waste not to take advantage of this opportunity. Everyone in the mental non-West understands this.

By the way, the participants of the above Russian-Pakistani Valdai Club conference analysed how these buffer markets developed and functioned in the countries of the region with regard to Iran. Years of sanctions have provided Iran with considerable expertise in financial, managerial, institutional, logistical and other areas which can be used to create new buffers, this time for Russia. Of course, you can always say that this is not the way to go, that it is at least unethical and is undermining ESG standards. But the reality of a world divided by sanctions is that buffer economies have always been and will always be there. There will always be companies in it which are not likely to be guided by Western-centric ESG standards.

There is one more aspect to buffer economies which was also discussed by the participants of the Valdai Russian-Pakistani conference which boils down to the fact that we are already observing competition between potential buffer markets for Russia.

On the one hand, the influence of existing geopolitical faultiness within the non-West between Pakistan and India, India and China, the Gulf countries and Turkey, Turkey and Armenia, Kazakhstan and Uzbekistan, to name few, can already be felt. No doubt, Russia and Russian companies will need to redouble the delicate nature of their approaches to maintain constructive relations with partners competing with each other (this factor existed before, but it may well grow stronger now), while also taking account of new sanctions and buffer realities. However, it may be that the buffer market for Russia will be big enough for everyone. Russia is a big country after all.

So, Russia’s mid-term future is all about buffer regionalisation. Clearly, this does not sound very appealing, but that’s how things are. Is there a maximum programme in this situation? It may well become available if the first greenshoots of trends towards de-dollarisation and actual regionalisation of the global economy, and a transition from the dominant financial and service sectors to new industrialisation, will grow stronger and become an increasingly large-scale reality. If this happens, we will be able to say that Russia’s example or experiment of consciously exiting Western-centric globalisation was not a terrible mistake, but a harbinger of a new world of truly Promethean proportions. We shall see.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.