Valdai Club

On Thursday, June 16, a Valdai Club session, titled “Self-sufficiency and Cooperation: Features of Modern Political Economy”, was held as part of the business programme of the St. Petersburg International Economic Forum 2022.

The participants in the session, moderated by Fyodor Lukyanov, Research Director of the Valdai Club, discussed the restructuring of the global economic system, which has demonstrated the need for self-sufficiency and the inevitability of cooperation. Interdependence has now become a weapon, Lukyanov noted. Previously it served as a guarantee against reckless political moves and upheavals, but current developments show that this is not the case. Does this mean the end of globalisation as we know it, and what will replace it? The participants of the session tried to answer these questions.

Rasigan Maharajh, Director of the Institute for Economic Research on Innovation at the Tshwane University of Technology (South Africa), raised the topic of global inequality, which was recently highlighted by the coronavirus pandemic. He compared unequal access to vaccines to apartheid, pointing out that the price of a vaccine dose in Africa, the poorest continent, is the highest in the world. He quoted UN Secretary General António Guterres who had said in his 2020 Nelson Mandela Lecture that that the global economic system fails to ensure prosperity and achieve sustainable development goals.

According to Jacques Sapir, director of research at the Paris School of Social Sciences (EHESS), the pandemic has put the final nail in the coffin of globalisation. The very idea of free trade has been called into question. Already today we see that the notion of global trade is actually crumbling under the sanctions. Therefore, self-sufficiency will become a priority for an increasing number of states.

The subject of curtailing globalisation was also touched upon by Vladimir Chizhov, Ambassador Extraordinary and Plenipotentiary, Permanent Representative of the Russian Federation to the European Union. According to him, the world has recently faced a number of global challenges: “one may call it a ‘perfect storm’, while another uses other epithets, but this is definitely not the ‘end of history’.” Chizhov said that these challenges include the vaccine race that unfolded during the pandemic; the persistent drive of the European Union to abandon the system of long-term contracts for the supply of energy, which resulted in a price hike; food security; as well as the problem of IT giants, which neither the US nor the EU can cope with. The West’s response to this set of problems has been a search for a culprit, which Russia was declared to be, but this does not help solve the problems.

Meanwhile, the EU itself has changed significantly in recent years. The European Union, which emerged as a mechanism to prevent a new war in Europe, is undergoing an essential restructuring. Within the EU, national identities are being eroded and the influence of European structures consisting of unelected officials is growing. Against this background, Washington’s influence on Brussels is growing, and EU plans for gaining strategic autonomy are becoming less and less relevant.

Russia-EU relations are at their lowest point ever, Chizhov stated, but neither side is slamming the door as they remain important trade and economic partners. However, in the future, the EU will either have to reconsider its position towards Russia and begin to formulate a new basis for relations, or become the backyard of world development, he stressed.

If we are talking about globalisation according to Western rules, then it is really winding down, said Wang Wen, Executive Dean of the Chongyang Institute for Financial Studies (RDCY), Deputy Dean of the Silk Road School, Renmin University of China. The way the US influences global trends winds up pushing non-Western countries towards self-sufficiency. However, while striving for less dependence on the US, they must simultaneously think about cooperation and the advantages of the global market. Future globalisation will be more balanced and inclusive, Wang Wen said. In the context of the formation of a new world order, efforts must be made to avoid a new war and US hegemony.

According to Stanislav Georgievsky, Vice President of the Russian Export Center, the creation of a second and third security loop will be one of the motives for making decisions on trade blocs and joint investments in the face of a possible disconnection of non-Western countries from systems such as SWIFT. To ensure self-sufficiency, non-Western countries should work together to create new institutions and economic principles, exploring concepts such as ESG (environmental, social, and corporate governance).

Sanctions are harmful, but inefficient, said Bijan Khajehpour, managing partner of Eurasian Nexus Partners (EUNEPA), an Iranian consulting company. They are inefficient in the sense that they affect society and the economy and cause real damage, but do not achieve their goals. Iran is a vivid example of the fact that it is impossible to change a country with sanctions: when old ties are cut, new ones are sought out. Sanctions are an economic war that replaces real military action, and diplomacy is an alternative to wars and sanctions, he concluded.