On episode 9 of the show Ritter is joined by Vladislav Shurygin, an author, military expert and war correspondent. Member of the Russian Writers Union and a permanent member of the Izborsky Club.
Link here.
By STEPHEN BRYEN AND SHOSHANA BRYEN, Asia Times, 10/15/22
It is increasingly clear that the destruction of part of the Kerch-Crimea bridge and the destruction of three strands of the Nord Stream 1 and 2 pipelines required highly sophisticated technology and the skill of secret operators.
According to Russia’s Federal Security Service (FSB) investigation, the truck bomb that destroyed part of the Kerch Strait Crimea bridge “was concealed in 22 pallets of plastic film rolls weighing a total of 22,770 kilos.”
The Russians blame the Secret Service of Ukraine (SSU), but Kiev would have needed considerable professional help to design such a huge weapon. The biggest bunker buster in the US inventory, for example, is the GBU-57 A/B at 14,000 kilograms. Experts would have known that to knock out the bridge they needed something even more powerful.
The investigative journalism site Greyzone said on October 10 that the British Secret Service (MI-6) drew up a plan last April to blow up the Kerch Bridge and shared the plan with Ukraine.
As Greyzone reported, the British plan was to bring in explosives by sea, perhaps using underwater vehicles or divers, and blow away the main bridge supports. An alternative, the British allegedly recommended, was to use cruise missiles – but doing so would remove any possibility of plausible deniability.
The Russians may have known about the plan. Interestingly, they positioned a special force to guard against an underwater attack and moved an S-300 air defense system from Syria to Crimea to deal with a possible cruise missile strike.
Assuming Greyzone is accurate, the Russian countermeasures forced an alternative plan. Perhaps, though with no evidence yet to support the thesis, UK or US experts were commissioned to determine the scale of the explosion needed to blow the bridge from the roadway.
For the record, Ukrainian cruise missiles lack both the accuracy and destructive power needed for such an attack. HIMARS, which has been supplied to Ukraine, might be capable of damaging the bridge (but not destroying it) and is accurate.
But its 90-kilogram warhead is too small to demolish a structure as large as the Kerch Bridge. Any sensible Russian should have spotted the cruise missile part of the British proposal as a possible fake if Moscow managed to get its hands on the report.
Little is known about how the massive amount of explosives was assembled, exactly where, and how it was done in secret – other than the FSB statement that the shipment originated in the nearby Ukrainian city of Odesa.
While the Russians appear to have been reading Ukraine’s mail, they entirely missed the possibility of a truck bomb. Is it possible that the Greyzone-reported British-devised plan was, in its entirety, a ruse intended to mislead the Russians?
A deception operation like this has its roots in the famous World War II British Operation Mincemeat, in which incorrect information was strategically placed on the body of a fake UK officer for the Germans to find. If so, the ruse worked again, and brilliantly.
The organizers of the bridge bombing put together a concealed but highly sophisticated operation.
Working backward, it looks like this: There were two trucks. The first went from Ukraine across Turkey, through Armenia and Georgia, and to the border of Russia. The explosives were inside, wrapped to hide from Russia’s X-ray inspection system on the border.
At the Russian border, trailers must have been attached to different, Russian trucks. If the explosives were in the first truck and the trailer was detached and hitched to the second but not again X-rayed – although Russian sources say it was later searched by security guards when coming onto the bridge – then the Russian inspection at the bridge’s approach appears to have been poorly handled and perfunctory.
There is a general belief that the trucker who picked up the load had no idea he was hauling explosives, meaning that the bomb in the truck was detonated by radio from a remote location. The truck driver was killed in the blast.
The Ukrainians put out a story that the blast came from the sea and not from the bridge span. There is no hard evidence to support the theory.
Nord Stream operation
The attack on the Nord Stream pipelines also suggests a sophisticated operation but one that could have gone partly wrong. The raw facts: The first explosion, near the Danish island of Bornholm, happened at approximately 2:03 am local time on September 26.
Gazprom, the Russian pipeline operator, reported the possibility of a leak when pipeline pressure dropped at 8:30 am. It was not until approximately 1:00 pm that the Danish air force sent F-16s to investigate. Those jets spotted the gas leak on the sea’s surface.
The first explosion was relatively small and picked up seismically, as was the sound of escaping methane gas.
At 7:04 pm a much larger explosion occurred along the pipeline route in the Swedish Air Defense Identification Zone (ADIZ). According to seismic experts, this blast was greater than 100 kilograms and less than 200 kilograms, equivalent to a 2.3 magnitude earthquake.
There is a possibly related story. In November 2015, Gazprom discovered a device adjacent to Bornholm sitting up against one of the two Nord Stream 1 pipes.
The device, it turned out, was a SeaFox mine-disposal unmanned underwater vehicle manufactured by the German company Atlas Elektronik’s division located in Maine. It was controlled by a fiber optic cable, part of which was discovered connected to it.
The battery-powered SeaFox carries a 1.4-kilogram-shaped charge to blow up mines and has a limited endurance of about 100 minutes. The drone was recovered and disarmed by Danish authorities. The US Navy admitted it had been lost, but never explained why it was found parked next to the pipeline.
Fast forward to the present, SeaFox has a small explosive charge that is more than adequate to punch a hole in a pipeline or blow up a sea mine. Its blast would have been more than adequate to create the first hole in the Nord Stream 1 pipeline.
But why was the second explosion, hours later, so large when a smaller explosion clearly had already compromised the pipeline?
Possibly, the results of the Bornholm explosion were not enough to satisfy the perpetrators and they tried again, this time in the Swedish ADIZ. The second mission could conceivably have consisted of a larger bomb – or could have created what was, in fact, a third explosion by hitting an old sea mine lingering on the seabed near the pipeline.
The Baltic Sea is a disaster area when it comes to unexploded mines and munitions, including chemical weapons, left there after World War I and II. Approximately 80,000 German and Russian-moored sea mines, most in unknown locations, litter the sea bottom.
This created serious concerns when the first Nord Stream pipeline was under development. While care was taken to try to avoid them, many are buried under sand and still others have broken free from their moorings and moved far from where they were originally sited.
Northern Europeans have spent a great deal of effort trying to remove ordnance from the Baltic Sea, but what they recover is a tiny fraction of what remains. Denmark is now complaining that its effort to investigate the first underwater explosion off Bornholm is being hindered by old unexploded mines and ordnance.
Like the operation carried out against the Kerch Bridge, the sabotage attacks of the Nord Stream 1 and 2 pipelines were a sophisticated operation that almost certainly involved underwater devices or professional divers.
SeaFox, for example, can be launched from a surface vessel including the rapidly inflated boats (RIB) often used by US Navy SEALS. The British, Germans, Swedes, Danes, Poles and others have similar systems; even the Ukrainians have frogmen.
Since it is unlikely any saboteur stayed around to witness the explosions, the devices used for both attacks had to have been planted earlier, equipped either with timing devices or capable of receiving remote signals. That suggests significant planning and advanced technological capabilities executed by experienced operators.
A US Navy P-8 antisubmarine aircraft flew from Naval Air Station Keflavik over the blast area at 3:00 am local time on the day of the blast. The plane proceeded to Poland where it was air-refueled by a C-130. It returned to Bornholm at 4:44 am.
According to tracking data, it made a number of loops around the area and then headed toward the Russian enclave of Kaliningrad. There is no flight data available between 5:39 am and 8:20 am local time, probably because the P-8’s transponder was turned off.
The US Navy acknowledged the first overflight of Bornholm and said it was a normal mission and had nothing to do with the pipelines. But whoever carried out the attacks, which is still unclear, launched their assaults with the utmost secrecy.
Russian President Vladimir Putin claims it was an operation by the “Anglo-Saxons” (meaning the US and UK). The Russians are complaining that they have been deliberately excluded from the Swedish-run investigation, although the Swedes invited the US to participate. Sweden has also cut off the Germans and Danes from a planned joint investigation, citing “secrecy.”
As the Kerch Bridge and Nord Stream blasts indicate, war by other means involving highly secret operations with significant organizational and technological skill is now underway. And there are few nations that have the experience, resources and capability, including the organizational skills, to manage and successfully launch such attacks.
By Ivan Safranchuk, Russia in Global Affairs, September/October 2022
Safranchuk is a Candidate of Political Sciences, Director and Leading Researcher at the Center for Eurasian Studies of MGIMO University, Ministry of Foreign Affairs of Russia, Associate Professor of the Department of International Relations of the National Research University Higher School of Economics.
The Cuban Missile Crisis holds a special place in the history of the Cold War. Then the USSR and the USA in practice found the limits of their direct confrontation. Of course, there were practitioners on both sides who were ready for more decisive action, but at the level of political leadership, the understanding prevailed that the superpowers had come to the brink. Then there is a nuclear war with unacceptable consequences for anyone.
This general awareness helped to move towards the conceptualization of mutual nuclear deterrence, on the basis of which the process of nuclear arms control was launched. The task of the latter was to carry out this very deterrence more rationally and safely.
From the point of view of the realistic school of the theory of international relations, the Cuban Missile Crisis can be understood as the establishment of a balance of power. Further, it was strengthened (although attempts were made to win back unilateral advantages), the rivalry proceeded within its framework. The liberal-idealist school interprets the Cuban Missile Crisis as such a convincing demonstration of the danger of confrontation in the nuclear age that opponents had to go beyond actions based on selfish interests and turn to the idea of the common good – the prevention of nuclear catastrophe .
On the one hand, the Cuban Missile Crisis remained in the history of the Cold War as a dangerous culmination of a confrontation that must not be repeated. On the other hand, as great-Power rivalry has grown in the twenty-first century, there has been a sentiment that a new crisis that will have the same functional consequences as the Caribbean is inevitable, if not necessary.
“Red Lines”
In practice, Russia and the United States have already stooped to the lower level of relations. But even the Ukrainian crisis did not become “Caribbean”. One can, of course, expect that the “real Caribbean” is yet to come. On another line of rivalry, the Sino-American one, there is a rapid aggravation, but even there there are no signs of a “Cuban Missile Crisis”. Therefore, it is appropriate to hypothesize that technically the “new Cuban Missile Crisis” happened, but never became the “real Caribbean”, that is, it went according to a different scenario and did not lead to the structural consequences that the original provoked at one time.
In October 1962, the United States essentially marked its “red line”, the crossing of which could lead to a direct military clash – it was implied that escalation to the nuclear level was almost inevitable. The USSR did not cross this “line”, although it put forward symmetrical conditions regarding American nuclear missiles in Europe.
In early 2022, Russia, in turn, also drew a “red line” – the non-admission of Ukraine to NATO. However, the US refused to promise that it would not cross it.
Instead, Washington has begun to challenge the legitimacy of Russia’s red line.
It should be noted that the question of the legality of the designation of the “red line” is irrelevant. In 1962, the United States had no formal right to restrict military-technical cooperation between the USSR and Cuba, and Moscow accused the American leadership of piracy. But these rhetorical exercises and appeals to the legitimacy of actions served only as an external entourage. The United States firmly declared its understanding of national interests and readiness to protect them by any means. The Soviet Union denied the legitimacy of the demands, but recognized the “red line” drawn, understanding the decisiveness of the opponent’s mood. The United States did not recognize the Russian “red line – 2022”.Functionally, this is the main thing, and all the talk about the illegality of the designation of red lines is generally meaningless.
The same practice of denying “red lines” is being adopted by the United States in the Taiwan Strait. For China, the “red line” is the inevitability of reunification (while the PRC showed great flexibility regarding its timing and forms). However, the Americans’ emphasis on the topic of inviolability of the “status quo” with the still remaining formal recognition of the “one-China” principle means that Washington will oppose the PRC in implementing the unification course.
The refusal of the United States to recognize Russian or Chinese “red lines” can easily be explained by the emotional and psychological background that was cultivated after the Cold War. Much has been said in recent decades about American leadership and superiority. Rhetorically placing themselves on the pedestal of the world hierarchy, Americans cannot make concessions to those who challenge them and set conditions for them. There are also arguments about how much the world has changed, about new problems, about the inadmissibility of returning to the past. And within the framework of such a narrative, the “red lines”, again, cannot be perceived as anything other than a historical relic.Therefore, it is natural for the United States to dismiss the restrictive conditions set by someone else.
Balance by someone else’s hands
But that doesn’t seem to be the only point. In practical policy, the United States has moved to actions close to what American professor John Mearsheimer called “offshore balancing.” This refers to indirect (by proxy) regional balancing/containment, that is, the creation of a balance in important parts of the world based on the relations of regional players. Never mind that none of the significant figures in the foreign policy establishment has openly accepted such a concept.
The British approach has long assumed that there should be no dominant force on the continent capable of challenging a global maritime power. For these purposes, London implemented a strategy of direct balancing, which can already be called classical. Not being able to defeat everyone alone, Britain could provide its fleet (the strongest in the world) to one of the coalitions of warring powers, thereby making a decisive contribution to its victory and becoming entitled to a significant part of the dividends. Such a strategy was successful, but did not solve the problem of the costs of participation in a major war. As a result of the two world wars, Britain, although it was on the side of the victors, lost its position in world affairs.The task of the United States is not to repeat this experience. Therefore, instead of the British direct (with their own hands) global balancing, the Americans are engaged in indirect (by proxy hands) regional balancing / deterrence.
During the Ukrainian crisis of 2022, the United States also used a “homemade billet” – it imposed unprecedented economic sanctions on Russia. And despite the fact that they stopped hiding this “blank” since the end of last year, its practical implementation still seemed incredible to many. Now the prevailing opinion in the West is that a geo-economic siege will ensure the achievement of geopolitical goals, that is, deprive Russia of resources for the continuation of the geopolitical conflict. However, we can assume the opposite: in fact, the geopolitical dimension of the Ukrainian crisis was only a pretext to launch a geo-economic blitzkrieg, to justify it. That is, the geo-economic dimension is the main one, and the geopolitical dimension is the official one, not vice versa.
The aggravation of the crisis around Taiwan, despite the different entourage, is following a trajectory similar to the Ukrainian one. The United States does not recognize the Chinese “red lines”, leads the PRC to the need for aggravation, which, on the one hand, justifies the political and military-technical pumping of Chinese opponents, and on the other hand, can legitimize unprecedented measures of pressure – the opening of a geo-economic front.
Theoretically, the scheme for Washington is a win-win. Their regional vassal, who bears the brunt of the burden of deterring the United States’ global rivals, will either prove to be a geopolitical hero and survive, with broad American support, in a battle with a stronger adversary, and then offshore balancing will work . Or he will become a geopolitical suicide bomber, whose suffering can be maximally propagated and justified by measures of geo-economic coercion that are unthinkable in a normal situation.
In any case, the goal of the United States is not to negotiate with rivals on the basis of the balance of power, but to show them their place in the global system and force them to stay in this place.
Therefore, the recognition of the “red lines” of Russia or China, their independently formulated ambitions for the United States is unacceptable.
A Settlement Without America
Russia and China hoped to create conditions for deals with Washington that would correspond to the ideas of Moscow and Beijing about their worthy place in history and modernity. By and large, both countries were sympathetic to the reluctance of the United States to part with its dominant position, but considered it a temporary phenomenon, a coincidence of circumstances after the Cold War and believed that it was simply unreasonable to claim its long-term consolidation. Therefore, the task was to bring the United States to the agreements, if necessary, to force them by creating counter threats and demonstrating its own economic and geopolitical significance.
For a long time, it may seem that a sufficient level of pressure has not yet been created for Washington to agree to equal agreements with Russia or China. And in light of this, a tipping point of escalation that would be the “moment of truth,” the “new Cuban Missile Crisis,” was considered necessary. However, the way the United States behaves in the Ukrainian and Taiwan crises gives reason to believe that they are fighting not for the conditions and parameters of compromises with Russia or China, but for the fact that there were no agreements and could not be.
Russia and, apparently, China also face the question of basic goal-setting. Should attempts to force the United States to accept itself as equal partners and push them towards mutually acceptable settlements of controversial and conflictual issues, or to seek to resolve critical security and economic issues without American participation?
It is clear that in the acute phase of the crisis, the United States imposes its participation. By acting directly, although formally indirectly (“by proxy”), the United States deprives Russia (potentially in the Taiwan crisis – and China) of the opportunity to respond directly and adequately, but at the same time gives grounds to block the participation of the United States outside the acute phase of the crisis.
Taking America out of the game can be a goal for Russia, the main international outcome of the Ukrainian crisis, and in the event of a further aggravation of the Taiwan crisis, for China.
The active involvement of the United States in regional situations does not allow a transition to a non-military settlement, and it would be acceptable to the main regional players, although painful for some of them. So far, the only realistic option is a decisive military victory over the American vassal, which deprives both the defeated and his patron of the right to vote on the subject of the conflict over the exhaustion of the subject as such. This scenario can be considered a minimum program. And the maximum goal for both Russia and China is to acquire the ability to politically resolve complex situations (preferably at the pre-war stage, but at least at the post-war stage) without American participation, and not at the expense of agreements with them.
Taking the United States out of the game may seem unattainable and, therefore, a false basis for practical goal-setting. But what are the alternatives? Either Washington’s no more likely coercion to equal agreements, or implicit agreement to compromise with retreat beyond its own “red lines”, or a fixation on military means.
This paper uses the results of the project “Contemporary Great Power Rivalry: Theoretical and Practical Aspects”, carried out within the framework of the research program of the Faculty of World Economy and International Politics of the National Research University Higher School of Economics in 2022.
By Gilbert Doctorow, Blog, 10/15/22
Some readers have commented in direct emails to me that they have taken comfort from my writings insofar as I have been a moderate voice, avoiding alarmism over the often troublesome daily news in and around the Russian war with Ukraine, or more properly speaking today, Russia’s proxy war with NATO in and about Ukraine.
For this very reason, I hesitated whether to share with readers the deep pessimism that overcame me a couple of days ago over our chances of avoiding nuclear Armageddon. This followed my watching the latest Solovyov political talk show on Russian state television. I have used this show regularly as a litmus test of the mood of Russian social and political elites: that mood has turned black.
Whereas in the past, going back six months or more, I had reported on the open contempt which leading and highly responsible Russian academics from university circles and think tanks were showing for the American political leadership in their statements on the political talk shows, this contempt has moved into an actionable phase, by which I mean that serious, God-fearing Russians are so furious with the rubbish propaganda coming out of Washington, repeated with bullhorns in Europe that if given the chance they would personally “press the button” and unleash nuclear attacks on the United States and Britain, in that order notwithstanding the possibility, even probability of a return strike, which, however enfeebled, would be devastating to their own country. That is to say, deterrence as a policy is fast losing its psychological impact on the Russian side of the argument.
Whatever the words of the Biden Administration about nuclear war being ‘off the table,’ America’s aggressive and threatening behavior, including the ongoing ‘training in nuclear weapons’ currently going on in Europe under U.S. direction, has made rational and very serious Russians ready to give it a try.
One of the most sober-minded international affairs experts to appear on the Solovyov show, Yevgeny Satanovsky, president of the Institute of the Near East think tank, contained his rage with some difficulty, saying only that while he had once held some sympathy for the United States, he would see its utter destruction now with little regret; he left no mention where his feet are pointed when he added that he could say no more on air for fear that he will be censored and his words removed from the video.
For these reasons, I have given to this essay addressed to the Collective West, and in particular to the fomenters of world disorder in Washington and London, a title that fits the current situation.
*****
As we have seen from even before the launch of the ‘special military operation,’ Russian talk programs identify by name individuals in the Biden team whose outstanding stupidity, obtuseness and rank ignorance they find unbearable, with the likes of Antony Blinken, Jake Sullivan and Lloyd Austin among those coming in for special mention. We are left with the impression that when Biden calls in his advisers to the Oval Office, he, senile dimwit that he is, is the bright light in the room. The Russians conclude from this that they have no one to negotiate with.
Now the naming of idiots in high places carries over to all discussion of European Union and British leaders. The denunciation of incompetence, rank stupidity and, yes, neo-colonialist or fascist mindsets among European leaders was well reflected in the latest Solovyov show. The most discussed whipping boy was the EU’s commissioner on external action, Josep Borrell, who seems to be speaking to the world daily and acknowledges no limits on what he may proclaim, as if it were official EU policy in defense as well as diplomacy.
The Solovyov show put up on screen a brief video recording of Borrell expounding smugly on Europe’s privileged position as ‘a garden of liberal democracy, good economic prospects and social solidarity’ which is surrounded by ‘the jungle.’ That jungle reference fits in well, Solovyov remarked, with the colonialist mindset of Rudyard Kipling and is deeply offensive to the Rest of the World, of which Russia is a part. More to the point, Borrell was also notorious in Russia this past week for his statement that any use by Russia of nuclear weapons in Ukraine would be met by a massive non-nuclear attack from Europe which would ‘annihilate’ the Russian army. However, Borrell was not alone in the stocks: other European leaders who were decried for their stupid policies this past week included German Chancellor Olaf Scholz and French President Emanuel Macron.
So you have no bomb shelter? Then, as the Russians said decades ago, it is high time to throw a bed sheet over your shoulders and slowly walk to the nearest cemetery.
*****
One of the two latest fake news stories being disseminated simultaneously and ubiquitously in Western major media this past week is that Russia is considering using against Ukraine ‘tactical nuclear weapons,’ meaning warheads with a destructive force equivalent to the Hiroshima-Nagasaki bombs mounted on cruise or medium range ballistic missiles. Our print and electronic media speculate on the numbers of warheads Russia currently possesses (2,000 or more), as if that would make any difference in an assault on Ukraine.
Rubbish say the Russians on Solovyov’s show: we have no need of nuclear arms to finish off the Ukrainians. The only nuclear forces we would deploy in the current situation are strategic arms, and they are directed against….Washington with the help of the Sarmat and Poseidon delivery systems.
The other major fake news disseminated massively by Western media in recent days was the allegation that the Russians are seeking to freeze the Ukrainians to death by their strikes against power generation infrastructure. Images of Stalingrad were evoked by our broadcasters. A similar freeze is said to be inflicted on Western Europe by the cut-off of Russian energy supplies to the EU.
More rubbish say the panelists on the Solovyov program. The attack on the electricity grid in Ukraine is not directed against civilians per se; it is intended to halt rail deliveries of advanced weapons systems and munitions coming into Ukraine at the Polish border and being moved by train to the fronts in the east and south of the country. Without these inputs, the Ukrainian army will be kaput and the war can come to an early conclusion with the capitulation of Kiev. As regards the EU, whatever chill out may be coming this winter is due solely to the unprofessional and ignorant decisions of the Commission on imports of Russian hydrocarbons that have been blindly followed by the Member States without due consideration of consequences for their own populations.
Continue reading here.
By Sina Azodi and Arman Mahmoudian, Responsible Statecraft, 10/12/22
Sina Azodi is a Non-Resident Fellow at the Atlantic Council, and a PhD candidate in International Affairs at University of South Florida. Arman Mahmoudian is a lecturer of Russian and Middle Eastern Studies and a Ph.D. Candidate in Politics and International affairs at the University of South Florida (USF).
The West’s response to Russia’s invasion of Ukraine in February 2022 was swift and decisive.
Shortly after the Russian invasion, the United States barred Russia from making debt payments using foreign currency held in U.S. banks, increasing the risk for Russia to default on its debts. In addition, seven Russian banks have been excluded from the SWIFT international messaging system, which facilitates financial transactions and payments.
These sanctions were the “largest sanctions package in [the] Union’s history,” according to Ursula Gertrud von der Leyen, the president of the European Commission.
To remedy the impact of sanctions on its economy, Russia has expedited cooperation with its partners, including China, India, and the Islamic Republic of Iran, to create a parallel financial system to the Western-dominated institutions. In doing so, Russia is pursuing two main objectives. In the short term, Moscow’s goal is to replace Western markets by expanding its petroleum exports to India and China, which are seemingly more reliable trade partners. The ultimate objective, however, is to create a system in which Russia and its partners can circumvent Western economic dominance.
The practicality and effectiveness of such a system remains to be seen.
The creation of a new financial system has been on Russia’s agenda for years. In fact, from the early days of the post-Soviet Union, Moscow has been trying to establish a common market with the USSR’s former republics. In this vein, the 1991 “Commonwealth of the Independent States,” an intergovernmental organization between eastern European and Central Asian nations, was created to encourage financial cooperation and mutual trade. This resulted in the establishment of the Eurasian Economic Union, or EEU, in 2014, a supranational institution that integrated the market of five countries – Russia, Belarus, Armenia, Kazakhstan, and Kyrgyzstan – into a single market.
Nevertheless, during this period, Russia remained more interested in creating a “financial hub” of its own rather than creating a “financial zone” parallel to the Western system. However, the U.S.-backed sanctions on Russia that followed the annexation of Crimea in 2014 demonstrated Moscow’s vulnerabilities. It is noteworthy that as a result of sanctions, the Russian currency, the rouble, depreciated by 100 percent.
This helps explain why, shortly after the annexation of Crimea, Russia began adopting its “Fortress Russia” strategy designed to detach its economy from the Western-dominated financial system and diversify its economy. Two important measures bear noting here. The System for Transfer of Financial Messages (Sisteme Peredachi Finansovykh Soobshchenii) was devised in 2014 as a Russian equivalent of the SWIFT system and was designed to reduce the risk of sanctions imposed on Russian businesses and banks.
Despite Russian declarations on the effectiveness of this system, however, SPFS has suffered from a number of shortcomings, including high transaction costs, system availability, and security requirements, which have undermined its reliability and usefulness.
Meanwhile, the MIR payment system initiated by the Russian Central Bank in 2017 is meant to serve as an alternative to the U.S.-based Visa and MasterCard. MIR has already been accepted in 11 other countries. In addition, Russia has accelerated its efforts to de-dollarize bilateral trade with friendly countries such as China, Iran and India, and has been actively redirecting its petrol exports from West to East to turn Asia into the “default market” for Russian oil.
A number of regional powers have also sought to detach their economies from the Western financial system. Since 2014, Russia and China have been strengthening their partnership. To shield their financial cooperation from potential U.S. sanctions, both nations have sought to eliminate the U.S. dollar from their trade with considerable success. It is noteworthy that in 2020, only 41.5 percent of bilateral trade has been settled in Dollars, while in 2015, 91 percent of bilateral exchanges were settled in U.S. currency.
Meanwhile, Sino-Russian cooperation entered a new stage in December 2021 when Russian President Vladimir Putin and China’s Xi Jinping held a video conference and jointly pledged to escalate bilateral efforts to set up an independent trade network to reduce their reliance on the U.S.-led international financial system. The Putin-Xi commitment was followed by the Bank of China’s decision to join the Russian SPFS in 2022. However, the Bank of China is the only non-Russian member of the SPFS, and China has not encouraged other banks to join it.
India is another potential candidate for the Russian initiative. In fact, since 2019, New Delhi has been expressing its interest in joining the SPFS and replacing the dollar with rupee-rubles transactions. The evidence suggests that both nations have made significant progress in achieving this goal, given that the use of rupee-rubles in bilateral transactions has quintupled.
The other prospective candidate for the Russia-proposed financial system is Iran, whose economy has been subject to suffocating sanctions for a decade. Iranian banks were cut off from the SWIFT system in 2012 as a result of U.S. sanctions. While Iranian banks briefly rejoined the system in the aftermath of the 2015 signing of the JCPOA (the Iran nuclear deal), they were disconnected again as a result of President Donald Trump’s withdrawal from the agreement two years later.
It is therefore no surprise that Tehran would also be interested in joining the Russian-led initiative. In this context, Mehdi Safari, Deputy Foreign Minister for Economic Diplomacy, told Sputnik in July 2022 that the two countries should de-dollarize their trade and build a similar system to SWIFT.
Notwithstanding the efforts to circumvent Western financial institutions, the Russian system has yet to prove effective, due to a number of factors. The number of countries willing to join or cooperate with the Russian led financial system is limited. It is noteworthy that while Turkish banks had previously adopted the MIR, they have since dropped it under pressure from the U.S. and European authorities. The Egyptians, just a few days ago, did too.
Additionally, some of the prospects for increased Russian cooperation on the financial side have more trade with the U.S. than Russia. It bears noting that China is a top trade partner for the U.S. with $521 billion worth of exports headed to the U.S. market in 2021. Meanwhile, the Chinese exports to Russia stood at $59 billion. Similarly, India’s top trade partner is the United States, and about 18.1 percent of India’s exports in 2021, worth $71 billion, were purchased by Americans, while Russia is not even among India’s top 25 trade partners.
Therefore, it would neither be practical nor feasible for India or China to trade with Russia, at the cost of antagonizing the U.S. In the Iranian case, notwithstanding the growing political and military ties between the two countries, Iran and Russia not only don’t have a compatible economy, but they are natural competitors. Both nations are oil exporting countries, seeking to grow their markets. In fact, Russia is already competing with Iran over the Chinese and Indian markets by offering oil at a discounted price.
Given the challenges discussed, and ongoing uncertainties over the readiness of other major powers to implement the Russian system, the future and effectiveness of the “fortress Russia” strategy remains unclear.
For the moment, the weaponization of sanctions as a tool of punishment has indeed created incentives for some nations to cooperate with the West. But while American dominance over the financial markets have stymied the Kremlin’s efforts to establish a parallel system, evidence suggests that dynamics are shifting as more countries are conscious of their vulnerabilities.
As the world moves toward a multipolar reality, there may be a time when alternatives are much more preferable to the U.S. dominated system. Indeed, the West should be concerned about China’s future actions, as Beijing is expanding its gigantic industrial and commercial capabilities at home and abroad. If it chooses to move closer to Russia in its quest to forge a new path, the U.S. may soon feel its own vulnerabilities in this realm.