Victory or global chaos.. How does Russia plan to confront the West in the battle for food and oil?

Cannons are resounding relentlessly, and their echoes are rising in the far east of Europe for more than a hundred days, and weapons are flowing from all parts of the western camp in support of Ukraine, but everyone is still looking forward to “Kyiv” alone, without other Ukrainian cities falling in the south and east, because its fate Alone may paint a new political reality in Europe.

As for Russia, which decided to take risks from the first moment in order to redraw the map, it was motivated by convictions that did not accept questioning, including that the crisis was imposed on it when Washington and NATO crossed all the “red lines” and included Eastern European countries in the Western alliance after the end of the Cold War.

Today, Russia is trying by force to regain what it lost for more than two decades, and to prove its historical weight and weight in European policy-making, and therefore it is determined to extract victory at all costs, and avoid the specter of a military defeat that could set Russian policy back decades.

However, the costs of the desired Russian victory, which began with Western sanctions and required Russia to use all its economic cards, quickly resonated in the entire world, a world that now realizes that the confrontation between Moscow and Kiev is not just a geopolitical conflict in the east of the European continent, but rather a conflict between two opponents. Together, they acquire a third of the world's basket of wheat and 80% of vegetable oils, in addition to the weight that Russia represents in global energy balances.

It is the second largest gas producer, the third largest oil producer, and one of the largest exporters of minerals.

Therefore, it does not seem that Western sanctions, as large as they are, are able to easily subjugate Russia without seriously harming the global economy, which will affect the oil, grain, stock and bond markets, which doubles the burden on the major Western countries entrusted with managing the global economic scene.

But despite the Russian army's stumble in several stations in the current war, and its retreat from the goal of overthrowing "Kyiv" and changing the regime there, the rapid subjugation of the Russians in return, as desired by Western countries, has become unattainable in turn, which puts pressure on Western capitals now confused between Stopping the war and reaching a settlement in which Ukraine cedes the Russian-speaking states in the east and south, and between continuing the economic pressure for a longer period, with which Russia’s economic burdens will increase, but with it, the tangible economic crisis is exacerbated today in the countries of the whole world due to the repercussions of the continuation of the war.

The oil embargo... the war's confused accounts

The Russians are seeking to limit Kyiv to the role they have always depicted for it by remaining a back garden for Moscow, or at least becoming a neutral space between them and Western countries, without being integrated into the structure of the Western alliance politically or militarily.

While the Russian military buildup set out towards achieving its goals at the end of last winter, the European political arenas swept quickly to prevent the implementation of the Russian plan, and with the Western powers’ reluctance to respond directly, including the flight ban, and contention with supporting the Ukrainian regime with most of the weapons it wanted, the capitals of Europe decided in parallel Impose a complete embargo on Russian oil.

Europe announced various packages of sanctions in an attempt to dry up Russia’s main artery that funds the war, by depriving it of $800 million per day in oil and gas sales. of gas and 30% of oil flows to Europe.

Dissenting voices came from countries smaller and closer geographically to Russia, terrified of the impact of the war on their own economic growth.

The problem became more complicated after it seemed that the Europeans played all their economic cards at once and rearranged their oil and gas market with American support, as it was decided to ban 70% of Russian oil imports last May, and about 90% by the end of the year, provided that the alternative is British oil and Norwegian North Sea crude and US exports, in addition to attracting more barrels of crude from West Africa.

However, what happened is that the prices of new customers’ oil rose to record levels after the increase in demand for it, and despite the agreement of the oil-producing countries in the “OPEC Plus” alliance to increase production by 648,000 barrels per day, prices rose and then gave the Kremlin some financial gains despite the damages of the sanctions .

The Western perception of the success of the sanctions was based on several factors, including the decline in China's demand for oil in light of the increase in its infections with the Corona virus, and the increase in production from "OPEC Plus", as well as the withdrawal of the United States from one million barrels of oil per day from the American reserve.

However, Russia’s adventure, on the other hand, was based on factors that Moscow saw as beneficial to it. Since 2021, oil and gas prices have been escalating, and Russia has not found any difficulty in finding alternative markets, especially after it offered its oil at discounts of $30 a barrel, which Pushing China to double its imports of Russian oil despite its current lack of need, as well as pushing many developing countries to buy cheap oil in quantities that quickly overturned the price market.

As a result, the Western camp is still bewildered by the crisis, and it does not seem that it is able to take a radical decision with regard to completely banning imports of Russian gas, because the consequences of the decision will be devastating on the economies of Europe, some of which have entered a recession, especially smaller countries with more fragile economies.

At the same time, there is no alternative in sight for Russian gas, because other major exporting countries, such as the United States, Australia and Qatar, cannot immediately increase their exports in large quantities, which means that the homes of the continent will remain threatened next winter if Europe decides to boycott, and this is a bet. The prolongation of the war and the weakening of the boycott's resolve, which Russia bets on when the war exceeds its ninth month.

The weaponization of "food"... the crisis of the effective surplus

A few days after the entry of the Russian army into the heart of Ukraine, its equipment appeared in the form of smashed remnants left in the open or piled up as spoils, which tempted the armies on the other side that there was no need to negotiate now as long as the enemy fronts were bleeding.

However, the Russians, who initially moved on several fronts according to a relatively old military strategy, quickly rearranged their cards and priorities, which are now focused on full control of eastern and southern Ukraine, including the separatist Donbass region and its annexation to Russian sovereignty, in order to establish A land bridge to Crimea, which Moscow acquired in 2014, would then achieve the required land corridor between the island and the rest of Russia, with a longer coastline on the Black Sea.

Despite the declared goals that seemed to be geopolitical in the first place and would extend only geographically to eastern Europe, the fires of battle reached other targets after Russia surrounded ports and targeted fields and prevented the export of grain shipments outside Ukraine.

Therefore, of course, the economies of countries that are thousands of miles away from the war zones were affected, so wheat prices in European markets jumped by 20%, and after a hundred days of the war the rise reached 60%, affected by other surprises, which is the ban on the export of wheat by India, the second largest exporter of wheat in the world, after a drought hit its agricultural crops.

India's decision gave a free card to the Russians, whose leaders in the West began to call their leaders to solve the Ukrainian grain export crisis.

In the midst of the crisis, Moscow received accusations that it deliberately seized millions of tons of grain and prevented its export, and that it was arming food as part of its war.

The WTO estimates that there are about 25 million tons of Ukrainian grain in storage, and that the same number could be harvested next season.

In order for India to return to its old position, Russia, which imposed a stifling blockade on the Ukrainian ports, is setting conditions for the release of grain shipments (which is a third of the world's wheat supply) according to a negotiating rule based on "lifting sanctions in exchange for food", but Washington refused to yield to the bargains.

Within the tug of war between international powers, 23 countries have placed restrictions on food exports, most of which are countries from Africa and the Middle East that depend for their wheat imports on the crops of Russia and Ukraine.

How did the ruble rebound under the fire?

Simultaneously, while the Russian army wreaked havoc on the streets of Ukraine, the West used its influence in the global economy, and began to strike strikes that succeeded in creating a state of confusion within the Russian economy.

Europe initially froze the assets of the Russian Central Bank, limiting its ability to access $630 billion, representing 60% of its international reserves, with the separation of Russian banks from the international financial system, among other measures aimed at isolating Russia economically.

The European plan aimed to undermine the Russian economy, and the strategy went according to what was planned after the ruble lost a third of its value against the dollar, and the collapse of the share prices of many Russian companies.

However, contrary to what was expected and planned, after the passage of time, the performance of the Russian ruble improved relatively. After its value fell to 150 rubles against the dollar following the shock of the first sanctions, it then recorded its highest value in five years, 59 rubles against the dollar, at the time of writing the report.

The ruble's rebound came due to tough decisions made by Elvira Nabiullina, head of the Russian Central Bank and Putin's closest economic adviser since taking office in 2013, who is credited with the economy's resilience in the face of sanctions over the past years.

After the West's freezing of central bank reserves, "Nabiullina" began to jump directly to the strategy of controlling capital flows outside the country, and imposed restrictions on the movement of funds that could be transferred to unfriendly countries, including preventing the sale of financial assets owned by foreigners inside Russia.

During the Ukraine war, "Napolilina" imposed on Russian energy-exporting companies to transfer 80% of the value of their sales to the Russian ruble, in an effort to obtain from them their hard currency in exchange for the same value in rubles, as part of a plan aimed at raising the demand for the Russian currency. Using Russia's resources.

Therefore, the "Napolilina" succeeded in maintaining the value of the ruble from falling against the dollar, and the currency quickly regained its balance after its rapid decline at the beginning of the war.

Russia went even further when Putin announced that he would force “unfriendly” countries importing Russian gas to pay Moscow in rubles instead of dollars, betting, of course, that everyone would demand rubles to keep the energy flowing.

The bets of strength versus the bets of fragility

Well, despite all that, the Western camp is still betting that Russia's economic victories will not last long in light of the fragility of its economy against the major industrial economies, and that storms will strike Moscow again for many reasons, including that the rise of the ruble is linked to Russia's foreign revenues, and that its economy will inevitably enter The stagnation phase if the ban on importing the necessary materials from the West is prolonged, and the stability of the internal situation that prompted the Russians to pump their money again after withdrawing it will be linked in one way or another to the course of the war.

With the sanctions policy continuing, the United States is betting that Russia's lean years will come to an end, and that Moscow will start defaulting on its foreign debt for the first time in nearly a century if the war drags on.

On the other hand, Moscow says that it is not Tehran in the end, regardless of the sanctions imposed on it, and that it has sufficient resources to maneuver in the current global economy, or at least to ensure that sanctions against it lead to high prices for its opponents that force them to negotiate in the end.

Russia, then, is not betting on its military and economic power, which has been waning since the fall of the Soviet Union. Rather, it is betting that its large size and influence in the global economy can create global chaos that Western capitals will not be able to stand idly by.

Therefore, the battle of sanctions may end with Russian gains in the end, not because of the strength of the Russians but because of their ability to export fragility to all corners of the global economy, which has become, paradoxically, a partner of Russia in its fragility.

Only the coming days will reveal the biggest loser from the prolongation of the war, and whether it is the limited economy of Russia, which is roughly equivalent to that of Italy, or will the entire global economy continue to suffer under the weight of the bombing.