war of economic attrition
The war between Russia and NATO countries with a Ukrainian front has turned into a war of attrition, as the Secretary-General of the Alliance, Jens Stoltenberg, said earlier this month in Washington: “Western countries should prepare for a long-term war of attrition” in Ukraine.
But the war of attrition that Jens touched on is completely different from the war of attrition that we will discuss in this article. The Secretary-General of NATO is talking about a military war of attrition, which is perhaps unlikely due to the mass destruction of the Ukrainian military structure, as what we mean here is The emergence of a war of economic attrition in which the balance of power varies, as each side has strengths and weaknesses that will determine the winner at the end of this war.
We will try here, as much as this space allows, to clarify the strengths and weaknesses of both sides, which will allow us to draw conclusions about who will raise the flag at the finish line. NATO countries and the countries allied with it focus their strengths in their financial dominance on the SWIFT system of financial payment, their possession of advanced modern technologies, and the control of their cross-border companies over many important sectors. As for its weaknesses, it lies in its heavy dependence on imported energy sources, a dependence that cannot be eliminated for many years to come, and with it a similar dependence on importing minerals, in addition to the financial and economic crises that afflicted their economies in the past two decades, which had repercussions that affected its position within the economic balances. Its economies retreated from the first advanced centers to be replaced by the economies of emerging countries, such as China, India, Brazil and Indonesia.
As for Russia and the countries sympathetic to it, which are large and economically important countries, their most important strengths lie in their possession of enormous energy resources; This allowed it to have almost complete control over its energy supply, which also applies to food and mineral supplies. Its markets have also turned into large consumer markets on which many major Western companies have criticized their governments for the strict sanctions against Moscow, such as the warning of the Pacific Investment Management Company (Pimco) to the US Treasury of the repercussions of these sanctions, which inflicted Western losses amounting to 400 billion dollars.
While its most important weakness lies in its dependence on the American financial payment system, as well as its dependence on importing Western technologies and many consumer goods. Victory in the process of economic attrition will depend on the ability of each party to adapt by either dispensing with what it imports from its rival or finding alternatives to it, as we will discuss that briefly as well.
For NATO countries, dispensing with Russian energy resources is not only difficult, but also destructive for Western economies, as evidenced by the high inflation wave in the West, which ranges between 8 and 10 percent, just for a partial boycott of a small percentage of Russian oil away from the gas that is still flowing in abundance to breathe life in European economies, as well as the sharp rise in prices, which sparked waves of discontent and popular discontent in the United States and the European Union. As for the supply of food commodities and minerals, their impact is less severe. For example, the US nuclear industries can find an alternative to their imports of Russian minerals.
With regard to Russia’s ability to withstand the repercussions of the ongoing economic war of attrition, it has greatly reduced its dependence on the “SWIFT” system by signing trade and financial agreements with its main partners, such as India and China, by adopting their national currencies in the exchange, and it is now using an alternative Chinese system for financial payments. This threatens the SWIFT system in the future, given that it has adopted the ruble as an alternative to the dollar and the euro in its gas sales to Europe.
As for Western technologies and long-term consumer goods, China is more than ready to provide Russia with all its needs. We hope that this summary will allow the possibility of drawing conclusions about the conduct and results of the economic war of attrition that is going on with force and violence, and which will continue for many months after which the world will be other than the world we know now.
*Expert and economic advisor
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