First Economic World War With EU & The West Launched


Russia has been preparing to confront the West since at least the early 2000s. And now, the world is witnessing its first economic world war of the modern era as sanctions pile on Russia in response to its attack on Ukraine, reports MarketWatch.

Russia’s strategic interests in Ukraine are well-known

The geography and history of Russia compel its leaders to create and preserve a buffer between Moscow and the major powers in Western Europe, and to ensure access to the Black Sea. Ukraine is crucial to both goals. But beyond Ukraine, the Kremlin perceives the eastward expansion of Western influence, including into Russia, to be a modern invasion by stealth that threatens the Russian regime.

It is not Western organizations such as NATO and the European Union that challenge the Kremlin, but the socio-economic model that enabled the West to win the Cold War and that enticed Eastern Europeans to want to join the West. When he became president of Russia in 2000, in the wake of the Soviet Union’s collapse and the economic crisis of the 1990s, Vladimir Putin inherited a broken country. Many Russians contemplated joining the European Union, hoping that alignment with the West would bring a better life.

The priority for the Russian establishment was to stabilize and rebuild the country. Putin just wanted to survive politically. Following the example of past successful Russian leaders, he centralized power. Knowing he needed stability and growth to slow the rate of emigration and address Russia’s poor demographics, Putin sought to make Europe economically dependent on Moscow. Looking back at history and the current power balance, he identified Germany as the lynchpin of his strategy of dependence.

Russian ties to Germany were key to establishing ties to the European Union

Russian ties to Germany were key to establishing ties to the European Union more broadly, but this was only the beginning of Russia’s strategy in Europe. Russia opened up its economy to Western investment, established links throughout the Continent and tried to understand the inner workings of EU bureaucracy.

It established close business ties with Italy, France and later Hungary, and built a political network that would help expand its influence in Europe. For Moscow, learning about European vulnerabilities was just as important as building up its economy and growing Russia into a stable economic power.

The Kremlin also campaigned to join the World Trade Organization to establish deeper relationships with the world’s biggest economic players. In the process, it benefited from foreign investments in Russia and learned how the global economy works, building partnerships with not just Western economies but also other economic powers.

The only problem was that China, its major ally against the West, was not seeing the accelerated growth it hoped for and was still very much dependent on the U.S. market, giving Beijing limited ability to counter U.S. interests in the world and forcing Russia to keep its focus on Europe.

The West offered an attractive model to rival Russia

Average Russians saw improvements in their standard of living under Putin. In major Russian cities, life was similar to that in the West. However, when it became a major player in the energy market, Russia also increased its exposure to global economic cycles. The European economic crisis of the 2010s sent shivers through Moscow. Russia’s economy remained fragile overall, and the gap between urban and rural areas remained dangerously high, potentially threatening Putin’s control.

At the same time, the West offered an attractive model to rival Russia’s. It wasn’t so much the growing Western influence in Russia’s buffer zone that bothered the Kremlin, but the fact that ordinary Russians might look at Eastern Europe and see a better model for political organization and economic growth.

Then the pandemic hit. The Russian president apparently feared that the economic insecurity wrought by COVID-19 could threaten his country’s economic security and stability. As the worst socio-economic effects of the pandemic faded, action against the West became urgent. From the Kremlin’s point of view, this was a unique moment.

The U.S. has been trying to reduce its presence in Europe and instead focus on the Indo-Pacific and domestic problems. In other words, from the Kremlin’s point of view, the trans-Atlantic alliance and the European Union appear weak. Most important, Russia’s leaders believe they have gained sufficient knowledge of the way the West works and can fight it effectively.

Read more here.

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Source: MarketWatch


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