Russia and the West on thin ice as Putin looks to the East

With Russia taking centre stage in the geo-political affairs of Eastern Europe, it comes as no surprise that many people have been wondering what Putin’s ultimate aims are. Or more importantly, where he intends to bring Russia as a nation in relation to the rest of the world ?

puttinWhile Putin’s motivation for the annexation of Ukraine are allegedly based off of a “genuine” desire to protect Russians in the Ukraine as well as their political interests, it is clear that something else is motivating Russia. Perhaps it is looking to carve out its own market like it once had as the USSR as opposed to constantly relying on an American-based system that is predominant throughout most industrialized countries.

There has been a lot of discussion on the shrinking value of Russia’s economy following the annexation of Crimea. However, Russia feels that these sanctions that are being taken against Russia by America and other Western Powers are only targeting Russia in its trade with the West.

Sergei Shatirov, the deputy head of Russia’s Federation Council commented in a press release that the decision by the U.S. to remove Russia from its General System of Preferences, wouldn’t hurt the economy because Russia is not looking to base its primary economic functions on trade and industry with the West.

“We are talking about the benefits for Russian goods on the American market. There will be no shocks for Russia’s economy. We will look for new markets. It’s necessary to adapt, all kind of things can happen,” commented Shatriov to NewsWire this weekend.

Shatirov, however, is not the only high profile man in Russia who is openly down-playing the affect of American sanctions. Mikhail Yemelyanov, First Deputy of the Chairperson of the Russian State Duma Committee on Economic Policy, told the RIA Novosti in an interview, “The decision to deprive us of benefits, preferences is mostly a symbolic measure. The harm that comes from it is that the United States shows it is not planning to decrease the level of confrontation with Russia. Russia needs to be ready for this. This is a political rather than economic signal”.

“The ramifications will be minimal since the volume of the trade with the United States is not large, while the products to which the preferences applied were even smaller in number. So, there will not be any particular harm”.

Not only does Russia seem unscathed by the American led sanctions against Russia, but upon examination, its has becomes fairly evident that these sanctions are not as heavy hitting as one would expect.

The GSP ban on Russia does technically cut them off from 1.5 to 5.8 per cent in tariff reduction with other nations, however Russian exporters can still claim for tariff reduction on upwards of 17.9 per cent.

In addition, Russia’s annexation of Ukraine has done little to halt its relation with the U.S. As of April 2014, the time immediately preceding the annexation of Crimea, only saw $90 million fall in imports, a relatively small fall for a country that was condemned in its political actions by the united States.

While the West continues to try and punish Russia the only way it knows how, perhaps it is time to take a different approach to the problem. While it is never right for a country to do what Russia did to Ukraine, perhaps we should be focusing on what we can do to help the people in Ukraine because Russia is not worrying about its shrinking investment base in the West, or the weak political sanctions that have been levied on it. Russia is not up at night losing sleep about its weakening political position or the fact the G-8 is no longer playing with Russia. Russia is simply rediscovering that trade and investment do not only come from the West and that the East, with an untapped consumer basis five times that of the West, may be a much more tantalizing prize to go after.

Maybe that is the problem with American critiques who say that Russia’s economy will simply fail. While they are correct in saying that American and Western investment is fading from Russia, they are biased in assuming that Russia, and the rest of the peripheral world are totally dependent on America, a country, that in its own right, is entering into the inevitable fate of all empires: decline.

Putin verifies Russia’s interest in internal development…. As well as a closer relationship to the East

In a press release on Oct. 2, Vladimir Putin reassured the Russian people that their economy would not falter.

“We will seek to make sure that Russia economy develops based on open market. This strategic course remains unchanged,” Putin commented while attending the annual “Russia Calling” international investment forum.

“Sanctions give a powerful stimulus to intensify scientific and technological research in all spheres to get rid of dependence on foreign technology.

“To renew the economy, we intend to use our own financial resource and to activate cooperation with investment funds and banks of other countries.

“We will maintain our course toward expanding and diversifying foreign trade. Among our priorities is to deepen business, trade, investment and technology partnership with Latin American countries, Asia-Pacific states and our BRICS partners, including China and India.”

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