Viewpoint: Why Western embargo does not scare Russia
Far from stymieing Russia’s growth, the economic restrictions imposed by the Western countries in the past couple of years seem to have weakened the global influence of the United States and its allies, says Girish Linganna
At the 8th Eastern Economic Forum (EEF), being held from September 10-13 at the Far Eastern Federal University (FEFU) in Vladivostok, Russian President Vladimir Putin emphasized the importance of the Russian nation being self-reliant, especially in security and defence.
However, he clarified that self-sufficiency did not equate with isolating the country. Instead, it signified that, in collaboration with its partners and allies, and through integration with most of the world’s population, Russia would enhance and fortify its own nation. Putin highlighted that, despite the pressure of sanctions from the West, Russia’s trade with Asia-Pacific (A-Pac) countries had risen by 13.7% in 2022 and experienced an additional 18.3% growth in the first half of 2023.
Eastern Economic Forum
In 2015, the Eastern Economic Forum (EEF) was founded with the aim of promoting economic growth in Russia’s Far East and strengthening. The country’s partnerships with Asia-Pacific nations. During the past eight years, the forum has evolved into a significant global platform that has fostered connections between Russian and foreign investors and facilitated the discovery of fresh business prospects in the Far East region.
The forum has attracted roughly 7,000 participants from over 50 countries, with the most significant delegations originating from China, Myanmar, India, Mongolia, and Laos.
After Russia initiated a military operation in Ukraine aimed at demilitarization and ‘de-Nazification’, the US and its allies implemented wide-ranging economic sanctions across nearly all sectors of Russia’s economy with the intention of causing significant economic strain.
Additionally, Western nations disconnected Russia from the SWIFT financial transactions system and seized assets belonging to Russia’s Central Bank.
Nonetheless, the limitation on dollar-based payments has prompted numerous countries to transition to using their national currencies for transactions and store their savings outside the US. This shift comes as trust in the Western financial system is eroding, as Putin highlighted at the forum.
Regarding the freezing of Russia’s $300 billion gold reserves, the Russian president commented, “We essentially gained twice as much."
Dmitry Suslov, who works at Russia’s Higher School of Economics, said the economic measures against Russia had not succeeded. He also mentioned that attempts to unite the world against Russia in an anti-Russian coalition had not worked, as most of the world did not join the West in this effort.
He believes that American society is growing tired and frustrated with the ongoing Ukraine conflict, which has not led to victory for the US and Kiev. In this situation, the West has two options: admit their failure, which would be politically damaging; or escalate the situation.
Has the US Used Up All Its Options?
Joe Siracusa, a professor and political scientist from Curtin University in Australia, expressed his admiration for the straightforward message from President Putin. Despite tensions with Washington and the Western countries, Putin is continuing with his plans as usual.
The EEF, created in 2015 to generate interest in business investment, education and cities in the Far East, seems to be progressing smoothly. Siracusa is amazed by how things are operating normally in that region and how President Putin is preparing for its development.
Since the US could not significantly impact Russia’s economy as intended, Siracusa believes they have already used up all their available measures and have no additional options to achieve their objectives.
The US has warned other countries against doing business with Russia. But, according to the Australian professor, this threat will not have much impact. He points out that the US has already put strong sanctions in place -- not only on Russia but also on North Korea.
These sanctions have limitations, and the professor believes they are becoming less effective. He suggests that the sanctions are now starting to hurt American investors, the American people and the United States’ friends and allies around the world, making it harder for them to access such items as food and fuel.
Siracusa also holds the firm opinion that Putin is demonstrating that Russia can continue its economic activities despite the numerous sanctions imposed by Washington. The EEF serves as additional evidence of this resilience.
Effective Asian Collaboration
The key to Russia’s achievement in maintaining and strengthening its partnerships in the A-Pac region lies in Moscow’s balanced and non-political approach, explained a source in Sputnik, a Russian state-owned news agency and radio broadcast service.
Russia’s strategy in Asia significantly contrasts with the US Administration’s ‘Pivot to Asia’, which involves isolating and restraining certain countries, fostering divisions among regional allies and pushing A-Pac nations to choose sides.
According to Siracusa, Putin’s message at the forum was crystal clear: You can engage with Russia without getting caught up in a bigger game of power politics. Back in the Cold War era, everyone had to choose a side, although some, like the Indians, were known for not aligning with either bloc. They still maintain their non-aligned stance. So, the ability to conduct business without entangling others in one’s geopolitical matters is highly significant.
Meanwhile, the Australian professor has highlighted that Russia’s Far East region presents numerous attractive investment prospects. There are abundant mineral resources in the region, ample opportunities for various ventures, excellent prospects for education and more. As the world’s demand for minerals and potentially fossil fuels continues to grow, this part of the world, with its rich underground resources, holds significant promises.
Putin, on his part, has emphasized that Russia’s Far East holds a strategic significance throughout the entire 21st Century. The Russian president noted that the investment trends in the Far East were currently three times more significant than those for Russia, in general.
The Russian president has plans to establish high-speed highways that will traverse Siberia and the Far East, extending all the way to the Pacific Ocean, with the goal of enhancing connectivity in the region. Additionally, the consolidation of the ‘Power of Siberia’ and ‘Sakhalin-Khabarovsk-Vladivostok’ gas pipelines into a single integrated system is expected to revolutionize the energy landscape in the Far East, providing a significant impetus to its ongoing industrial progress.
Asia Strategy vs ‘Pivot to Asia’
At a time when the US is increasing its military presence in the Asia-Indo Pacific region, Moscow is strengthening its connections and influence in the East. This has raised concerns about the potential for a new nuclear arms competition among member-states of the Association of Southeast Asian Nations (ASEAN) and has also led to open challenges to China, Russia and North Korea.
At the same time, as part of an effort to reassure its regional allies, the US states that it does not aim to contain China and presents new logistical and infrastructure proposals. The Biden Administration’s recent initiative, the India-Middle East-Europe Economic Corridor (IMEC), unveiled during the G20 meeting, however, has sparked scepticism among international experts.
According to officials, there is a possibility that this infrastructure project may not materialize, similar to other ambitious initiatives by the G7 that have amounted to mere words without tangible action.
The notion that the United States is attempting to strengthen and deepen its ties with India does not seem to carry much political or military weight, says Siracusa.
"It appears that the US is trying to cultivate an interest in India, but Indians may not reciprocate the same level of interest in the US. While Indians may enjoy the prestige of being invited to the White House and such other gestures, the idea that the US will significantly benefit from India in terms of resources or military cooperation through domestic development efforts might not be realistic,” he added.
What this signals, says Siracusa, is that the Americans might not fully grasp Australia’s position. They may not have a clear understanding of what AUKUS represents and they might underestimate its significance of India. The Quad alliance may not hold much weight for them.
Currently, the AUKUS arrangement appears to have minimal impact, if any. America’s longstanding strong ties in the Far East have traditionally been with South Korea and Japan, dating back to the early days of the Cold War. They have been closely connected for a very long time, believes the Australian professor.
Deep State Influence & US Policy
The US is experiencing a diminishing influence in the Asia Pacific region, while their Ukrainian allies have become stuck in a three-month-long unsuccessful counteroffensive.
A growing number of Americans, particularly within the Republican base, view the United States' Ukraine policy and Russia strategy as deeply flawed.
They argue that it's both a financial drain and a hindrance to Washington’s efforts to strengthen its position in the Asia-Indo-Pacific region. While they may not constitute a majority in the US now this significant segment is on the rise.
With the focus divided between Eastern Europe and Asia, the Biden Administration faces the risk of an electoral setback in the 2024 presidential elections. To compound the situation, it appears that the current US government is struggling to alter its course, Suslov notes.
The Russian professor mentioned that no single US president can independently alter the country’s stance on relations with Russia, as demonstrated by the experience of former president Donald Trump. Trump aimed to improve US-Russian relations, but, in reality, the confrontation between the two countries escalated during his presidency.
The US even intensified its sanctions and containment policies towards Russia. Why did this occur? For the simple reason that, for any significant change in policy to take place, it needs support not just from the president, but also from American elites and the deep state.
The true driving forces behind US foreign policy are the elites and the deep state. Unless there is a transformation within these influential circles, one should not expect a significant shift in US foreign policy towards Russia. The critical question is whether such a profound change and reshuffling of American elites and the deep state can occur due to the general dissatisfaction expressed by American society, both on the Right and the Left.
As of now, it is impossible to provide a definitive answer to this question. Currently, the American deep state seems largely insulated from public demands and the discontent of the American people, concludes Suslov.
The author of this article is a Defence, Aerospace and political analyst based in Bengaluru