Heading towards World War III?

Just before the G7 leaders met at Elmau Castle in Bavaria last week, their counterparts from the five BRICS countries held an online summit under the Chinese presidency. Russia had been discussed as a threat at the G7 gathering but was a key participant in the latter.

Long gone are the days when Moscow could straddle the divide between the West and the non-West. Following the 2014 Ukraine crisis, the G8 reverted to its previous G7 format; in the wake of the Russian military action in Ukraine last February, Russian-Western confrontation degenerated into a full-blown “hybrid war,” complete with an actual confrontation – if so far a proxy one.

Having tried, after the end of the Cold War, to become part of the new West, and having failed at that endeavor, Russia is now focusing on developing its ties with Asia, the Middle East, Africa, and Latin America.

This is both a difficult and a necessary task, for a number of reasons. First, there is a powerful inertia from the past. At least since the days of Peter the Great, Russian elites have looked westward, adopting Western ways of appearance and behavior (while remaining distinctly Russian beneath the garb and manners); adapting Western institutions (even if often only superficially); borrowing Western patterns of thinking (while creatively developing them, as with Marxism); seeking to become a great European power; then, in Soviet days, a global superpower; and, more recently, a key component of a greater Europe from Lisbon to Vladivostok.

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Russia appears to be on track for a much shallower recession than was initially expected this year, Bloomberg reported on Wednesday, citing experts. Surging oil shipments have blunted the impact of US and EU sanctions, they say.

According to the publication, economists from JPMorgan Chase, Citigroup, and other big banks are slashing their outlooks for the drop in output this year to as little as 3.5%. Russian officials, some of whom foresaw a contraction of as much as 12%, are now preparing to update their forecasts to less than half of that.

“The boxer is now moving again after being knocked down,” chief economist at Moscow-based credit assessor Expert RA Anton Tabakh told the outlet. “There was a knockdown, but it’s been offset substantially by comfortable export prices, even with the discounts, and the budget’s capacity to pour money on the problem.”

The economy is still “facing the sharpest contraction since at least 2009,” Bloomberg claimed, adding that the government’s “quick moves to stabilize the currency in the first weeks after the war prevented a financial crisis and a flood of export earnings followed.”

Seasonally adjusted data from the Development Center at Moscow’s Higher School of Economics showed industrial production in Russia was up 1.7% in May from the previous month. “The break in the contraction in May could be a sign that producers have initially adapted to the shock of anti-Russian sanctions,” the center said.

Economists pointed out that a rebound in oil production as a result of growing domestic demand and a shift to export buyers in Asia has been a big driver for the Russian economy. Gas output was another key economic engine, fueling revenue gains on spiking prices.

“We are not at the level of stress that we had assumed for 2022,” Rosbank economist Evgeny Koshelev told Bloomberg. “We should expect better trends because both budget and monetary policies are overall stimulative.”

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Russia is ready to engage in peace negotiations with Ukraine, President Vladimir Putin said on Thursday, warning that those who reject such prospects should realize that prolonging the ongoing conflict would only make such talks more difficult.

“We do not refuse to negotiate peace, but those who refuse should know that the longer they do, the more difficult it will be to negotiate,” Putin said, issuing a warning to those who might think Russia has already exhausted its capabilities amid the conflict.

Putin also said that the West appears to actually be willing to “fight until the last Ukrainian,” which he said is a “tragedy” for the Ukrainian people.

The president blamed the ongoing conflict on the US-led NATO, stressing that Russia’s consistent efforts to create a fair international security system have been jeopardized.

“The initiatives to work together on missile defense have been rejected, warnings about the unacceptability of NATO expansion, especially at the expense of the former Soviet republics, have been ignored,” Putin said.

If the West’s goal was to provoke a conflict between Russia and Ukraine, it has evidently succeeded in that, Putin admitted. On the strategic level, however, the West already lost when Moscow launched its military operation in Ukraine, Putin stated.

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Ukrainian President Volodymyr Zelensky offered a warm farewell to Boris Johnson as the British PM tendered his resignation as Tory leader on Thursday. Johnson’s departure has “saddened” all Ukrainians, Zelensky claimed, as he expressed hope that Kiev and London would remain “friends and strong allies” after his departure.

“Friend Boris Johnson, all Ukrainians were saddened by the news of the resignation of the leader of the Conservative Party. We are sincerely grateful for the decisive and uncompromising help from the first days of the war. Special thanks for your leadership in defending the interests of Ukraine in the international arena,” Zelensky said in a social media post, sharing a photo with Johnson taken during the latter’s recent visit to Kiev.

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The Biden administration is aiming to protract the armed conflict in Ukraine for as long as possible, and it is for this purpose that Washington is providing Kiev with four more HIMARS units, the Russian embassy in the US claimed on Friday. The statement came in response to an announcement made by the Pentagon, in which it revealed that High Mobility Artillery Rocket Systems were part of a new military aid package.

The Russian embassy’s statement went on to suggest that the planned delivery of additional multiple launch systems is intended to make up for growing casualties among Ukrainian forces.

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Germany just posted its first monthly trade deficit in three decades, and the head of the German Federation of Trade Unions has warned that key industries in the country may collapse permanently as a result of high energy prices and shortages. The golden era of the European Union’s economic locomotive has already come to an end.

For three decades, the competitiveness of German industries was enhanced by the import of cheap Russian energy, while Europe’s largest country also became a key export market for German technologies and manufactured goods. Over the previous centuries, a key theme of European politics was that the productive power of Germany and the immense resources of Russia could create the main pillar of power on the European continent.

The relationship between Germany and Russia has subsequently always presented a dilemma: A partnership between the two giants would create a challenge to rival powers such as Britain and the US, while German-Russian conflicts have previously turned Central and Eastern Europe into what the British geographer James Fairgrieve referred to as the “crush zone.”

The current NATO-Russia proxy war in Ukraine demonstrates that this dilemma from the 19th and 20th centuries remains relevant. Although the 21st century presents a key difference in that the world is no longer Europe-centric.

The West has paralyzed the G20 by pursuing confrontation with Russia and China, but the organization remains indispensable
Read more The West has paralyzed the G20 by pursuing confrontation with Russia and China, but the organization remains indispensable
Moscow’s objective for a Russian-German partnership was to construct an inclusive Greater Europe, although this initiative has now been replaced with a Russian-Chinese partnership to construct a Greater Eurasia. The export of Russian energy and other natural resources is being redirected to the East, while Russia increasingly imports vital technologies and industrial products from that source as well.

A case study of self-harm
The economic crisis in Germany is a fascinating case study of self-harm. After Moscow supported German reunification in the early 1990s, there was a lack of reciprocation as Bonn, then Berlin, abandoned the agreements with Moscow for a pan-European security architecture based on “sovereign equality” and “indivisible security.” Instead, Germany supported NATO expansionism to create a pan-European system, without the continent’s largest state.

As a result, the centuries-long historical rivalry for influence in Central and Eastern Europe was revived between Germany/NATO and Russia over where the new European dividing lines would be drawn. After Berlin supported the Orange Revolution in 2004 and the Kiev Maidan in 2014 to install pro-West/anti-Russian governments, Ukraine became a less reliable transit corridor for Russian energy. Yet, Germany undermined its own energy security by opposing several Russian initiatives to diversify transit routes. Berlin repeatedly threatened to cut reliance on Russian energy and thus incentivised Russia to search for export markets in the East.

The Minsk-2 agreement in February 2015 represented a compromise to resolve the conflict that followed the Western-backed coup in Ukraine the year before. Berlin negotiated the peace agreement, although it then played along with American efforts to sabotage or “renegotiate” the agreement for the next seven years. As NATO Secretary-General Jens Stoltenberg publicly admitted recently, the military bloc was using this time to prepare for conflict with Russia.

When Moscow responded by recognising the independence of Donbass and attacking Ukraine in February 2022, Germany cancelled the Nord Stream 2 pipeline, seized control of Gazprom’s subsidiaries on its territory, and announced sanctions on Russian energy. For years, there has been speculation that Russia would use the feared “energy weapon” by cutting energy supplies to Germany, although in the end there was no need to do so as Germany inflicted this economic pain on itself.

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