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Post-Western economic world as the ironic result of Western sanctions against Russia

March 31, 2014   ·   0 Comments

 

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The West has resorted to the tried-and-failed tactic of sanctions in order to protest Russia’s reunification with Crimea. Historically, sanctions have never achieved their desired political effect, and on the contrary, average citizens in the targeted state are usually inconvenienced or outright harmed. In the case of Western sanctions against Russia, they largely amount to nothing more than bluster and heavy-handed political rhetoric. Suspending Russia from the G8 will only serve to strengthen BRICS and the G20, and ironically enough, will set the stage for non-Western organizations to surpass their elite Western predecessors. In this sense, the Western response to the Ukrainian Crisis will be seen as a watershed event in the global economy, and will contribute to the eventual post-Western economic world.

Sanctions? What Sanctions? 

In a knee-jerk reaction, the West reacted to Russia’s reunification with Crimea in the same fashion that it does to many other political events it detests through the implementation of sanctions. To an economy as big as Russia’s, such paltry punitive measures as travel bans, asset freezes, and selected bank isolation can do little to make a dent in the world’s eighth-largest economy. On a micro level, the sanctioning of Rossiya Bank and SMP Bank affects nearly half a million regular Russians who have their accounts there. Instead of achieving some grand political aim of “punishing” Russia’s political leadership, it has resulted in inconveniences for the average citizen, as sanctions are always wont to do. 

The Demented “Logic” of Sanctions 

The West seems to be under the false assumption that Russia is some type of oligarchic dictatorship run by a small cabal of closely-connected individuals, all of whom supposedly keep their money in the the West. This cannot be further from the truth, but basing one’s policies around such dementia brings about demented depictions of reality. Take for instance Newsweek magazine, which argues that although appearing weak on the surface, the sanctions will effectively split Russia’s oligarchic and political elite. This is thought to turn them against Putin (who is inaccurately seen as running the country single-handedly), allowing them to “have a strong financial motive to look beyond Putin and envision a Russia without him.” 

The Flaw of “Regime Change by Sanctions” 

This is a strategy ripped from the Iranian template, where Washington has traditionally pursued the use of sanctions in hand with regime change. However, Daniel Drezner, professor of international politics and contributor to Foreign Policy Magazine, stoutly argues against this strategy, believing that it is counterproductive towards affecting any pro-Western change. The myth of “regime change by sanctions” has its roots firmly in ideology, believing that assertive non-Western states are dictatorships enforcing their will on the people, and that the proper economic “nudge” against the citizens or the elite will be enough to topple the rotten structure. Although Russia and Iran have many cultural differences, both countries are democracies in their own civilizational (non-Western) understanding of such, and thus, sanctions will never have any effect in breeding anti-government revolutionaries. 

The G8 Distraction 

The West then thought it necessary to thump its chest and suspend Russian participation in the G8 forum. Such a move was likely intended to be a parochial scolding to a Russia that is still seen as condescendingly inferior, as if the 1990s had never ended. Such a ‘punishment’ is unnecessary, as Russia has long outgrown the need for the G8 through its cooperation with BRICS and the G20. As Sergei Lavrov wisely noted, Russia does not need the informal forum of G8. In fact, given the changes in the global economy since its inception, especially after the 2008 financial crisis, it may have even outlived its usefulness by now, becoming nothing more than an elite Western club and a relic of the last century. Thus, Russia’s suspension is nothing more than Western Exceptionalist rhetoric to distract from the fact that America and Europe are in economic decline vis-à-vis Asian ascendency. 

The German Conundrum 

Germany has found itself in a tight squeeze when it comes to the topic of Russian sanctions. Thousands of German businesses, hundreds of thousands of German jobs, and billions in trade and investment are connected with Russia, and an escalation in sanctions could endanger them. Nonetheless, by cancelling a military deal with Russia, Germany is indicating that it is either still under the thumb of Washington or that ideology trumps economics. In the latter, this is referring to the liberal-democratic model that the EU has feverishly been expanding eastwards since 1991, with its most recent nominal conquest being the Association Agreement with the Ukraine that was signed by junta leader Yatseniuk last week. 

The German government is now in conflict with the interests of its business community and the citizens that are dependent on it. If Germany decides to continue along the path with sanctions, this would be out of lofty political ambitions conducted at the expense of its people. In this case, it would become absolutely clear that Germany, and the EU by extension, are motivated by political/ideological reasons in their Crimean quarrel with Russian, and not by any “humanitarian”, “democratic”, or “international legal” reasons. 

A Lesson and a Blessing 

The West’s reactionary measures against Russia are both a lesson and a blessing. Moscow has learned the lesson that the West is not to be politically trusted, no matter the high level of complex economic interdependency with EU-leader Germany. The EU seems to be on an ideological crusade at the expense of its values rhetoric (anti-democratic coups and fascist parliamentarians are not exactly compatible with official 21st -century EU ideals) and economic interests. Russia now recognizes this threat and can take appropriate defensive countermeasures. Therefore, it is also a blessing in a disguise. 

Russia’s BRICS counterparts have come out in strong support of their fellow member, condemning the “hostile language” and unilateralism directed against Moscow. This has led to speculations that Russia will enact a long-term strategy of permanently altering its economic partners, integrating more closely with BRICS and the G20 instead of the EU. Such an event would have global implications and could liberate Russia from the whims of its unstable and ideologically driven EU ‘partner’, which more and more is proving itself to be erratic, unreliable, and inconsistent. BRICS, on the other hand, do not display such fickle characteristics, nor do they have a track record of playing such political games with one another. 

The Long-Term Global Impact 

The West has unwittingly brought about a watershed event for the global economy. Their reaction to the Ukrainian Crisis has served as the “straw that broke the camel’s back” and motivated Russia’s decision makers to accelerate the country’s economic diversification. The long-term implications can be bundled into three overall general trends. 

Firstly, the EU will move to diversify its energy supplies away from Russia, possibly eventually substituting them with imports of liquefied natural gas from the US or a pipeline from Nigeria. The future of South Stream is now uncertain, so there is no telling what direction that project can take. Russia in turn will likely reach a landmark energy deal with China, albeit below the price of gas sold to Europe, and perhaps with other East Asian clients as well. The combined effect would be the divergence of the complex economic (energy) interdependence that stabilized EU-Russian ties in the past, the removal of which could potentially unleash the EU to take even more radical steps in its march to the east. 

Secondly, BRICS and the non-G7 members of the G-20 may approach the cusp of finally toppling the Western-led economic order. With Russia more firmly embedded in these organizations, they can increase their likelihood of pooling their resources and presenting a (semi-unified, semi-organized) non-Western economic front against the G-7’s economic dictates. This would bring about a fundamental transformation of the global economic system, and perhaps even more striking, it would increase the potential of establishing an alternative reserve currency besides the dollar. This would close the page on the Euro-Atlantic economic hegemony of the past two centuries. 

Finally and more concretely, Russia’s economic pivot to BRICS and the G-20 would indicate that its leadership believes that economic dealings have become unnecessarily politicized by the West. The threat and partial application of economics as a political weapon against a major global economy will demonstrate to other states the risk of heightened Western cooperation. Of course, out of necessity there will have to be some type of economic relationship with the gigantic Western market and its ocean of investment, but it is evident from the Russian case study that this comes with large risks. Countries not as strong as Russia may succumb to the economic blackmail and find their sovereign rights infringed upon and controlled by their Euro-Atlantic economic ‘partners’. They may even find themselves the victims of regime change. Contrasting this with the economic and political freedom of BRICS and G-20 cooperation, they will become even more compelled to diversify their relations and move towards a post-Western economic world.
VOR

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