The Russia sanctions are also a great opportunity for Russia

Despite the enormous significance of events on the fronts in Ukraine and in relations between Russia and the collective West, the most important changes of the last twelve months have taken place and are taking place in Russia itself. These changes are enormous: they herald a new form – a new mode of society – of the Russian Federation.

Tens of thousands of Western sanctions have dealt an immeasurable blow to Russia’s former model as a “gas station country”, to quote the late US Senator McCain’s famous contemptuous definition. However, the Russian economy is not only resilient, it will become even more resilient. Moreover, the sanctions have set the economy on a path that was previously hindered by the persistent interests of Russian elites with their Western-oriented thinking. The forced termination of the offshore policy through the seizure of Russian private property in the West has destroyed the remnants of the oligarchy – now also in an economic sense. The freezing of the Russian Central Bank’s foreign exchange reserves and their threatened confiscation have enormously promoted de-dollarisation. The need to replace the failed imports from the West has stimulated industrial production in the country. Plans have already been drawn up for a revival of civil aircraft manufacturing and a significant increase in the size of the satellite constellation, and the ambitious task of restoring the country’s technological sovereignty has been added to the list of duties.
  On the political level, the elite has withdrawn. A small part of it has decided to emigrate to the West, where it is closer to its previously transferred wealth. Those who remain, whether sincere or not, are crowding around the incumbent authorities. Many are waiting and hoping (in vain from our point of view) that the authorities will be forced to make peace with the West and that everything will go back to the way it was before (which will not be the case). At the same time, the patriotic wing within the elite, whose interests are firmly linked to Russia, has become stronger and more active.
  For some this is a call of one’s soul, for others a cold calculation, but that is not so important: the conditions of political life in Russia have changed decisively, and the orientation towards the interior of Russia is now clearly stronger than the previous orientation towards totally different goals. The political parties are still searching for their place in the system, but they are already working on a cross-party patriotic level, still hampered by ideological quarrels and the political ambitions of their leaders, but the state is putting the emphasis on social policy.

It was not the sanctions,
but the partial mobilisation
that shook up the population

Russian society has suffered the same shock as the economy, but less from the sanctions than from the mobilisation that the previous three generations did not know. Society has suffered an unexpected and severe blow, but has not collapsed. Yes, hundreds of thousands of people, mainly from the liberal part of society, went abroad – at least for the duration of the war. Those who stayed were rather shaken up by the war. The special mission of professional military personnel was over and the state needed a nationwide effort for victory. 300,000 fighters were called up, and not all of them will return home. Alongside these military combatants, however, a group of citizens is also emerging – patriots of action, not protest. These include various forms of volunteering, activists raising funds for soldiers and their families, war correspondents on the battlefield and musicians on the front lines. People in war situations not only demand professionalism and a sense of responsibility from their authorities, they also try to improve the situation with their own means.

Cultural life is also affected

The Russian cultural milieu has suffered its own losses. A number of stars of different celebrities have left the country. The selection of films and other mass cultural products from the USA has shrunk as a result of the boycott of Russia by Western distributors.
  Some US social media websites have been banned in Russia because they allow violent propaganda against Russians. Against this background, a change has taken place in our country, which develops from a culture of entertainment and pleasure to a culture of values and service. Meanwhile Western culture in Russia – both historical-classical and contemporary – is not persecuted, unlike Russian culture that is being repressed in the West and threatened with a total ban for the first time in history. This situation not only causes outrage in Russian society. In this society the “Russian spirit”, which had long been out of fashion is being reawakened and strengthened.

A renewed Russian identity is being reconsidered

The final break between official Russia and modern Western liberalism has raised the question among authorities and the elites of the necessity of a Russian social ideal.
  The pragmatism the country’s governing and ruling class had followed for a long time proved to be flawed. Patriotism, which had long been offered as a substitute for ideology, proved to be insufficient. The conservatism promoted in recent times only emphasizes protection against change and offers no vision for the future. There is still no adequate answer to this problem, but serious efforts to reassess the national history without exclusions and distortions, to work out a series of essential values without falling into archaicism, and to reconnect teaching and education with each other again, point to a movement that has not been seen in this field for a long time.

The war has improved many things, not least in the military sphere

 The war has brought the country’s armed forces, the entire national security system and the military-industrial complex to a particularly hard and brutal test. As is usual in this field, the conditions in wartime differ significantly from those in peacetime. The distance between parades and the reports on them, to reports on real military actions and the real behaviour of the geo-political opponent is always considerable. However, there is nothing more valuable than real military experience. The price for this experience is always very high, but the result of the enormous effort is an army, a secret service and a military-industrial complex of much higher quality than before the war. The Russian army of today is not yet the Red Army in the final phase of the Great Patriotic War, but it is not any more the same as it was a few years ago.

For Russia the outcome of the war is existential

The changes in Russian foreign policy can be compared to an earthquake. Relations with the West have changed from a state of political discussions to a state of active military confrontation. For the first time in history Russia finds itself – so far indirectly – at war with a coalition that includes all the Western countries without exception. For the USA and Europe, the confrontation with Russia is of fundamental importance, but for Russia it is literally existential. Not only Russia’s fate, its borders and its position in the world will be decided now, but also the question of its continued existence. At the same time, the war, which is the greatest threat to our country, has opened up new possibilities for it.
  The long-declared, but due to the centuries of Western centrism, not adequately implemented turning to the East receives a new, strong impulse. It is not only possible, but also indispensable, to turn the tide now. While Russia’s army is turned towards the West, business and diplomacy are increasingly focused on Asia, the Middle East, Africa and Latin America – the so-called “Global Majority”, which will be the most important foreign-policy and foreign-economic of Russian policy for the foreseeable future.

From problem to opportunity

The break with the West and the direct confrontation with it have not only created a number of serious problems, but have also opened up many unique opportunities for us. The only thing to do is to seize them by formulating realistic goals and developing a strategy to achieve them.
  Russia’s economic system has become enormously stress-resistant over the last three decades. The national economy is very resilient, flexible and resourceful. It is able to survive in almost any environment, but it is also very capable of development. The country is ready for rapid economic growth, provided that monetary policy is correct. Russia has enormous resources, but we need to move from trading these resources to processing them domestically and exporting finished products. While we are expanding production, we should at the same time strengthen domestic demand for domestic products. And this requires a change in the established logistics chains. Replacing some foreign suppliers with suppliers from others, even from friendly countries, does not contribute to development.
  The state should move to an industrial policy and work with the companies instead of trying to create a state plan. We need to give industry cheap, long-term money – say at 3 % for 15 years – for development through project financing, without burdening the core business, without mortgages, etc., with the only collateral being the shares of the project company. This will not lead to additional inflation: The money will be given to industry for specific long-term projects, not for cheap consumer credit that has become so inflated that it has become a social problem. The state has already made infrastructure development a priority, but the mechanism of public-private partnerships and concessions can play an important role in speeding up the process.

Science and technology also need to be promoted

The state also has a key role to play in the development of applied science and technology. This development should be supported through cooperation with friendly countries such as India and a number of other non-Western countries. At the same time, there is a need to actively engage in technical education and train highly qualified personnel for Russian industry in order to address the acute shortage of personnel.
  In foreign economic relations, the loss of stagnant markets in Europe is not critical if new growth markets are developed and new logistics are created. Existing transport corridors to China are being expanded, but the most important priority now is the development of the north-south transport corridor across the Caspian Sea to Iran and on to the Indian Ocean region. India, one of the world’s leading economies, and the regions of the Middle East, East Africa and Southeast Asia – one and a half billion people! – are a huge field of activity for Russian companies.

The money must be invested more domestically

In the political sphere, the reorientation of the elites towards more in-country objectives has long been a stated goal. This goal has never been achieved. The war in Ukraine forced the elites to make a choice: with Russia or with their capital exported abroad. However, foreign property and assets are already threatened with confiscation, and foreign citizenships acquired in the past are revoked. Those elites who remain in Russia will be forced to invest in their own country and build their estates at home instead of buying mansions and castles in unfriendly countries. Some of this will probably continue to flow to the Arab Emirates, but the scale of this outflow will not be comparable to the outflow of funds to the West in the past.

The reorientation to the domestic market is overdue

Today, after the externally enforced reorientation of the elites towards national goals, the next step must be taken: the voluntary formation of a willingly national-oriented elite. Many elites previously active in the mediation business, emerging during the period of opening up to the West and therefore closely linked to the West, are beginning to rise above those elites that grew up before the confrontation with the West and remained there. These groups will not only keep their money in Russia and invest it there, but also educate their children in their own country and prepare their future here. This group of the Russian national bourgeoisie will be highly state-oriented, i.e., it will assume its responsibilities and duties towards the country. This may lead to the country’s leading and ruling elite becoming citizens once again – some (the expiring version) involuntarily, others (the new version) out of conviction.

Power and society will move closer together again

Even more important for strengthening the state will be the formation of a new group of citizens in Russia. The war and especially mobilisation have destroyed the old unwritten social contract of mutual non-interference of the upper and lower classes in each other’s affairs. Power and society have now come closer together and their further cooperation will depend on how open and accountable the authorities become and how active and constructive the dynamics of society will be. If this process develops positively, a new political system could eventually emerge in the country, based not on the constant struggle of competing ideologies or overambitious politicians, but on the balancing of different interests and the cooperation of free individuals for the well-being of society and the state.

The social development will be more Russian again

The first form of post-Soviet Russia proved to be very un-Russian from a historical perspective: the personal clearly dominated the common. As a result, many were without support, a significant proportion were able to take advantage of various freedoms to meet their own needs, but a few even managed to become very wealthy and virtually (practically) free of obligations to the country. By the early 2020s, however, the potential of this «first model» of the Russian Federation was practically exhausted. It was hard to imagine what could have led Russia out of this impasse. The war, originally intended as a special operation, now provided the answer. The answer to the question of what the new, second model of the Russian Federation will be, the outcome of this war will show.  •

First published and translated from the Russian on Globalbridge.ch: 
https://globalbridge.ch/die-russland-sanktionen-sind-fuer-russland-auch-eine-grosse-chance/ of 12 February 2023

(Translation from the German Current Concerns)

* Dmitry Trenin is a research professor at the “Higher School of Economics” in Moscow and a senior research fellow at the Institute of World Economics and International Relations. He is also a member of the Russian Council for International Affairs. He wrote this article for the Russian news agency regnum.ru.