The International Monetary Fund (IMF) expects Russia’s economy to grow by 2.6% in 2024, more than double what it forecast in October last year. This occurs when Russia has received more than 500 trade sanctions from the United States and the European Union (EU) since 2014, when it annexed the Crimean peninsula; and it is especially notable that this comes after the invasion of Ukraine on February 24, 2022.
It is worth mentioning that the United States seized more than $300 billion in reserves from the Central Bank of Moscow, in what constituted the largest and most effective cyber attack in contemporary history. The underlying fact of this situation is that Vladimir Putin succeeded in transforming Russia into a next-generation “war economy”; and achieved it by building a “Military-Industrial Complex” with 21st century technology.
The historical significance of the Vladimir Putin phenomenon is as follows: the collapse of the Soviet Union in 1991 not only devastated the communist regime founded by Lenin 74 years earlier, but also brought down the Russian state created by the Romanovs in 1604; and this double implosion has produced an immense geopolitical vacuum in the heart of the Eurasian mass.
Putin took power in 1999 and within 20 years they managed to rebuild the Russian state and put an end to a situation of anarchy and complete disintegration. In this way he managed to reverse the immense power vacuum that produced the double implosion of 1991.
The economic structure that emerged was composed of approximately 25,000 large conglomerates without investments, with low productivity and very low wages, whose ownership corresponded to the “oligarchs”, i.e. the former Soviet bureaucrats who took over state companies in a gigantic historical plunder called “ privatizations”.
The news now is that Putin has done it deploy a highly dynamic capitalist system in the “military-industrial complex” equipped with 21st century technology. Putin’s government pays the “Military-Industrial Complex” up to 80% of its production contracts in advance, subject to conditions of efficiency and precision typical of an advanced army; and this with about half of these large conglomerates.
That is why what characterizes it is a remarkable and accumulated growth in productivity, which the Soviet regime never achieved and which, on the contrary, was a systematic destroyer of value due to its lack of innovation capacity.
Ronald Reagan himself (1980/1988) managed to destroy the Soviet system by doubling the American military budget year after year; and above all by deploying its “Space Defense Initiative” (or “Star Wars”), which was the final – and lethal – instrument that led to the Soviet implosion of 1989/1991.
Russia’s defense spending has increased by 4 points of GDP in the last 3 years; and the surprising thing is that this did not produce an extraordinary overheating of the economy, with the consequent inflationary explosion; and this happened because the increase in productivity achieved by the “Military-Industrial Complex” more than compensated for it.
None of this would have been possible with the economic structure that existed in Russia in the period before Putin came to power in 1999/2000. Putin’s certainty that this was the path was fully confirmed when He warned that Ukraine is fundamentally confronting the United States and NATO – that is, the most advanced capitalism of the 21st century -, and only secondarily to Ukraine.
Putin’s second strategic move consisted in turning to Asia, and primarily to China and India, the 2nd and 3rd largest economies in the world. This is demonstrated by the fact that he has increasingly started using the Chinese currency – yuan or renminbi – in his international transactions; and the result was that in 2019 he used the yuan for only 3% of his international trade, while now it reaches almost 50% of the total, with a clearly upward trend.
That is why in the last two years Russia’s international trade with China has doubled and that of India has tripled; and in these 2 cases, most are processed in the currency of the People’s Republic, yuan or renminbi.
The trade sanctions imposed by the United States and the European Union on Russia aimed to isolate it from the world economy, and thus intended to slow its momentum in the Ukrainian war, eventually forcing it to lose its status as a major military power. . Events have shown that a country of 17.5 million km2 – the largest on the planet – cannot be isolated, and the idea that it could be surrounded and expelled from the world economy is a non-concept.
The underlying reason is that starting from 2008/2009 – the international financial crisis – the technological revolution has produced the complete integration of the capitalist system; and this is an irreversible process and the sign of the times.
The United States, the country of technology and innovation, has attempted an endless feat; and that, against the language of technology which is that of instantaneity and digitalisation, its military superiority and the unrestricted hegemony of the dollar as a global currency can do nothing.
Source: Clarin
