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Russia Continues its March Forward

Russia Continues its March Forward

Russia has demonstrated its self-reliance in all aspects to itself and the world, according to the Russian president Vladimir Putin. He made this remark at a meeting with local residents in Anadyr, the easternmost town of Russia. He said that this was the most significant achievement of the past year. 

He added that Russia was confident about its future and continued to advance. A closer look at Russia’s economic and military performance in the last year reveals that it has overcome some challenges and made steady progress towards its goals in Ukraine, while maintaining its economic independence.

Russian GDP Gains Steady

The state statistics service Rosstat confirmed on Wednesday that Russia’s economy grew by 5.5% in the third quarter, compared to a 3.5% contraction in the same period last year. This is a sign of recovery from the 2.1% decline in GDP in 2022, when Russia faced severe sanctions from the West for invading Ukraine. However, the economic performance in the first nine months of this year was uneven. Rosstat reported that GDP grew by 3% in January-September, but this was mainly driven by the second quarter, when it expanded by 4.9%.

The first quarter saw a 1.8% decrease in GDP, reflecting the impact of the pandemic and the geopolitical tensions. One of the factors that boosted Russia’s growth in the third quarter was its ability to avoid a Western oil price cap, which was proposed as a measure to pressure Moscow to withdraw from Ukraine. Russia, as one of the world’s largest oil producers, benefited from the surge in global oil prices, which reached $80 per barrel in October. This gave President Vladimir Putin a political advantage as he prepares to run for a fifth term in 2024, despite the challenges posed by labour shortages, inflation and high interest rates.

Russia Has succeeded in finding alternative markets

Russia’s relations with India and China date back to the Soviet era, Russia has always enjoyed a close partnership with India, while maintaining strategic ties with China(except for the brief Sino-Soviet split). The three countries have maintained strong ties in the defense sector, with Russia supplying most of India’s weapons and also selling arms to China. In recent years, as the west imposed sanctions on Russia over its annexation of Crimea and involvement in Syria, India and China have increased their economic cooperation with Moscow. Energy trade, in particular, has grown rapidly, as both Asian giants seek to diversify their sources of oil and gas.

As the G7 imposed a price cap on oil in late 2022, India and China have been increasing their imports of Russian oil at a lower cost. The data shows a dramatic shift in India’s oil sources: in January 2022, India imported only 1,7 million barrels of Russian oil, accounting for 0,2% of its total oil imports. By April 2023, after Russia’s invasion of Ukraine, India’s imports of Russian oil surged to 63,3 million barrels, making up 36,4% of its total oil imports. Russia has successfully diversified its energy markets amid the geopolitical tensions.

With a booming wheat industry, Russia dominates the global market as the top exporter of the cereal crop. Despite the challenges posed by the pandemic and climate change, Russian grain exports have shown no signs of slowing down. According to Reuters, which quoted the Russian news agency Interfax, the country is expected to ship more than 65 million tonnes of grain to its foreign partners in the 2023-24 marketing season. This would be a new record, surpassing the previous year’s impressive figure of 60 million tonnes. The 2023 harvest, projected to be the second largest in Russia’s history, would enable this remarkable feat.

Russia’s success in the grain sector is not limited to wheat. Over the last ten years, the country has also increased its production of other grains and oilseeds, such as sunflower seed and rapeseed. This is the result of a combination of factors, including the expansion of cultivated area and the improvement of crop yields. In the 2022/23 season, Russia achieved record levels of production for all these crops, demonstrating its potential to become a major player in the global food system.

Successful Bypass of Sanctions

As Western sanctions continue to hamper its economy, Russia is relying on its trusted ally- Iran, to learn how to dodge them and keep trading with the world. Iran has been a valuable partner for Russia, providing it with the essential skills, contacts and strategies to overcome the barriers imposed by the West. The Kremlin sees Iran as an example of how to resist sanctions, which have targeted Iran’s nuclear and missile ambitions and its alleged support for terrorism since 1979. Iran denies these accusations.

To evade the sanctions, Russia has adopted various tactics that Iran has used or suggested. These include transferring the ownership of assets to relatives or associates, using intermediaries to access foreign currency and avoid the Central Bank of Russia’s restrictions, and replacing imported goods with domestic ones. In addition, Russia is seeking closer ties with other countries that have faced similar sanctions or that help bypass them, in order to exchange experiences, obtain services and expand trade opportunities.

Slow but Steady Gains in Ukraine

Meanwhile, on the military front, Russian gains in Ukraine have been slow and mixed. While it suffered from a series of humiliating retreats initially and its early tactic of Guderian inspired “blitzkrieg” failed due to logistical and coordination failure. It has since made slow and steady gains using its superior air power, artillery and manpower reserves. While the battles have been bloody and costly for both sides, in a long war of attrition, Russia is likely to win as it has the manpower, infrastructure and determination to push through. Ukraine meanwhile, will rely ion the willpower and consistency of western powers to for military and monetary support.

Overall, President Vladimir Putin has reasons to be confident in his claims. Russia is somewhat hamstrung due to the various restrictions put on it. However, it is far from crumbling and instead, is flourishing and adapting both economically and militarily. If one reads history, it becomes clear that those who underestimated Russia have paid their price in blood. One only needs to look at Napoleon Bonaparte and Adolf Hitler to realize that.

Tvista Desk

Tvista Desk

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