The risks of the emergence of alternative international economic structures and the impossibility of “cancelling” the Russian presence in the European economy indicate the possibility of a partial lifting of Western sanctions. This applies to the spheres of energy and food exchange, broken production chains, purchases of Russian goods and natural resources that they absolutely need, writes Valdai Club Programme Director Andrey Sushentsov.
Among policy analysts in the West, the unprecedented economic pressure on Russia is being presented as an irreversible and successful process. However, in the United States they realise that their stakes in this game are comparable to those of Russia, and maybe even higher.
After all, the fate of the dollar as the world’s key reserve currency is now at stake — the underlying logic of the global economy has been called into question. Within its framework, the key producers of resources and goods, Russia and China, exchanged their physical goods for beautiful green banknotes, stacked them in Western banks, clearly not thinking that they would be frozen. Now for many countries that are striving for foreign policy independence, the question will arise: where exactly and in what form may the profits and surpluses of their resources be stored? Does it now make sense to do this in the form of US government bonds, kept in Western banks? Or is it more reasonable to exchange them for resources that can be disposed of by sovereign entities at will, regardless of who thinks what about their foreign policy?
Now this has become a nodal stress for the world economic system. By initiating the freezing of Russian gold and foreign exchange reserves, the Americans set off a chain reaction of doubt about the true “globality” of the world economy, and about the security of countries’ financial assets in foreign markets.
It is in the interests of the West to maintain, at least in part, the global nature of financial markets. To do this, it is necessary to make not only Russia and China, but also other countries that are holders of the debt of Western countries, be interested in storing it abroad. America does not allow Russia’s frozen funds to be used to pay coupons on foreign debt. But the unfreezing of these funds in the future cannot be ruled out. However, such a move may be accompanied by a large number of conditions on both sides. For example, as they are now approaching the revival of the Iranian nuclear deal, the Americans and the British are beginning to offer very favourable terms to Tehran. Thus, the Iranians have been able to negotiate for compensation from the British for tanks they failed to supply in the 1970s.
There are also ideas among American analysts that the US should not create a hopeless situation for Russia, when it will have no alternative but to focus exclusively on China. We have to admit that such voices are still in the minority: the American elite advocate the economic strangulation of Russia, especially amid the current acute phase of the crisis. Indeed, the illusory notion dominates in the West today that a wave of sanctions restrictions will cause a shock reaction in Russian society and undermine the support of the authorities.
However, in the long term, the goal of breaking Russo-Chinese economic ties, and thereby undermining the stability of the global economic order, will become more important for the US authorities. For these purposes, the lifting of part of the sanctions against Russia is inevitable. There are clear examples of this kind of activity: the United States is trying to revive relations with Venezuela and Iran in order to reduce the severity of the energy crisis in world markets.
Obviously, the global economy will not be the same: as a result of the crisis, new global economic structures will inevitably emerge. They will not be so interdependent, but they will nevertheless allow for an optimal economic exchange from the point of view of the balance of interests of the parties. The scenario of a total economic blockade of Russia is very dubious.
The scenario of Europe’s refusal of Russian energy resources should also be considered unlikely. There is no such amount of excess gas in the world, and it is impossible to quickly increase its production from other sources because the demand for gas in the world is increasing. Western consumption is not growing at the rate it is growing in India, China and Africa. The NATO countries can experiment with alternative suppliers, but the cost of gas will be at least twice what it is now. In three years, it will be difficult to explain to the German voter why he is forced to pay twice as much for gas, given that the Ukrainian crisis, by then, will have been three years in the past.
So far, our colleagues in the West have only proved their high willingness to theatrically sacrifice what can be conceded for a short time. It’s like putting some country’s flag on your profile picture on social networks for a week or two. Life suggests that a certain form of mutually acceptable economic exchange in the energy sector will resume between us, first of all, to relieve stressful pressure on the European electorate.
The risks of the emergence of alternative international economic structures and the impossibility of “cancelling” the Russian presence in the European economy indicate the possibility of a partial lifting of Western sanctions. This applies to the spheres of energy and food exchange, broken production chains, purchases of Russian goods and natural resources that they absolutely need. In the future, transport links, including aviation, will be also normalised. This is economically feasible for all European countries, including Russia, and will serve as the starting point for a new “cold” peace on the European continent.