Published with permission from ISTORIYA Ltd.These days I’m often being asked whether economic sanctions imposed by the West will have any major follow-up from the Russian side, to which I normally respond with a smirk and my usual ‘don’t you realise that we’re heading for the new Cold War?’ and proceed to observe the look of horror on the face of whoever was asking the question.
Oh well, I guess I’ll once again have to explain why your beloved tour agency/hotel chain/marketing agency or even fast-food chain won’t suddenly go bankrupt and how you don’t need to bargain it away and leave for Rio this evening. You see, there is no doubt that the situation on the Russian market will change — you don’t need to use the services of an internationally-renowned global intelligence agency to realise that. However, I can assure you that it will stay within well-defined limits and if you take de minima precautions to optimise some of your business processes (my friends at ISTORIYA will tell you a lot more about this as it’s one of their specialties) you will be fine.
As it’s obviously not Putin who controls the major part of country’s wealth, in order to understand why the Russian market will stay within well-defined limits we need to look at those who do — namely, the present-day Russian elites. Since president Yeltzin’s times what I’m going to call for the purposes of simplicity ‘the Kremlin’ (although elitist circles go way beyond any political structure) has been primarily divided between two distinct factions: the so-called ‘liberals’ and the ‘national patriots’, and while the former is more or less uniform, the latter consists of a diverse number of sub-factions — usually called ‘the national socialists’, ‘the fundamentalists’, and ‘the national democrats’ (think Rogozin). In essence, each one in itself is a broad collection of various forces, elitist groups and circles. When Putin was brought power, he also brought in a rather small group of so-called ‘centrists’ along and put a bit of pressure on the mentioned ‘liberals’, so that they would give up some of their economic share of the country’s wealth. Although accurate information of this kind is usually reserved for commercial geopolitical analysis, we can almost definitely say that the present-day ‘Kremlin’ is approximately 20% ‘liberal’, 10% ‘centrist’ and 70% ‘national-patriotic’.
Now, how does any of this relate to the topic of economic stability? There’s just one more thing that I need to mention: all of the factions mentioned above exist within the borders of a fundamental ideological concept that underpins all of their decision-making processes — what we call ‘the anti-Soviet consensus’.
There’s just one more thing that I need to mention: all of the factions mentioned above exist within the borders of a fundamental ideological concept that underpins all of their decision-making processes — what we call ‘the anti-Soviet consensus’.
‘East or West, Brioni is best’… or Burberry. It doesn’t matter. Whether different parts of the Russian elites call themselves ‘liberal’ or ‘national-patriotic’, de facto their main difference is whether they prefer to get luxury suits from a London-based tailor or from a local Moscow-based one. It’s still luxury suits, though. Hence, any predictions of the socio-economic situation in Russia should be based on the fact that 90% (as we established earlier) of the people in charge of the country’s wealth wouldn’t want to see much less of Bentleys and Ferraris in their parking lots. If anything, they’d want to see more, and they’ll do anything within their power so that this ‘unpleasant misunderstanding’, as they tend to call the West-imposed economic sanctions, remains just that. When one of the government ministers holds a conference meeting as early as possible in the morning, so he can get on his private jet and be on the way to London to see his family the very same afternoon, there shouldn’t be any question on how far the Russian response to the sanctions will go and how much the international market situation will change.
The new Cold War is not going to be a stand-off between the mighty Soviet Union and, as the Soviet propaganda used to call it, ‘the decaying West’ – once the sanctions worsen, the Russian elites will sluggishly hand back the leash and say something along the lines of ‘well, at least we tried, now what do we need to do to get our castles in France back?’
This is where the limits are, and this is where they will remain.
So, just as I said, make sure you review your company’s operations so that there are no unpleasant surprises, and get ready to enjoy the economic opportunities this new Cold War is about to bring.