Russia spreads the view that the country does not need trade with the West, because it can export its goods to the rest of the world and import everything it needs from there. In fact, however, a world split into two trading blocs would make everyone poorer.
“The Global South no longer wants to be lectured,” Russian Foreign Minister Sergei Lavrov told the BBC with satisfaction as the G20 summit approved a final communique that condemned the use of force to win territory but did not name Russia.
Russia’s propaganda arsenal includes the claim that Russia has many allies in the world and that the Russians no longer need the West. In particular, this propaganda attack emphasizes the economic aspects. Why is it necessary to do business with the West, which is losing its importance and does not share Russia’s values, when you can sell your goods to the rest of the world, with whom there are no such problems? This is how the message of the Russian authorities can be summed up, and as always, there is a bit of truth in it, along with everything else.
It cannot be denied – Russia really has supporters among third-world countries. The current lines of power became clearly visible in the United Nations, whose members, to the surprise of many people in the West, did not come out unanimously in support of Ukraine.
Since the start of the war, about 40 countries, home to almost half of the world’s population, have either abstained or voted against the United Nations votes condemning Russia’s aggression. 58 countries did not participate in the vote on whether to expel Russia from the UN Human Rights Council. Some of the countries that voted against Russia have also not rushed to join the sanctions. According to the Economist Intelligence Unit, two-thirds of the world’s population lives in countries that are officially neutral or supportive of Russia.
On the other hand, the story is also related to a wider narrative about the rise of developing countries. The role of the West in the world has indeed declined in recent decades. The share of the economies of China and India, as well as other developing countries, in the world’s gross domestic product (GDP) is increasing, while that of the West is decreasing.
The economies of the US, EU, Australia, Japan, Canada and the UK accounted for about 56 percent of the world’s gross domestic product (GDP) last year. In 2000, this share reached more than three quarters. The majority of this change is due to the rise of China – the country’s share of world GDP increased from 3.6 percent at the turn of the millennium to close to 18 percent last year.
also from a technological point of view, Western countries are no longer the only ones with the know-how to make top-class products. Thus, despite the chip blockade imposed by the US on China, Huawei was able to launch a mobile phone capable of competing with the iPhone.
On the one hand, this narrative claims that the affairs of the world no longer depend on the will of the West to the degree that we are used to. Other countries, so far considered less important, have their own views, which they want to express more and more and for which they are more and more able to stand up.
If in Western countries the war in Ukraine is seen through the prism of the Second World War and Putin is compared to Hitler, then in the third world the first thing that comes to mind is the Cold War, where the Soviet Union was often an ally against the colonial powers – or in the case of South Africa in the fight against the apartheid regime. In these countries, there is often a dilemma, whether to be on the side of an old ally or to stand among democratic countries.
In the third world, many people are also irritated by the Western public’s attention to the war in Ukraine, while the conflicts outside Europe go largely unnoticed, as well as the support for Ukrainian refugees, when refugees from other parts of the world are treated differently.
People in developing countries remember the pretexts of the Western countries for invading Iraq or Libya, which they did not take seriously, and find that the accusations against Russia are no longer to be believed. Often their question is not whether Russia is right or not, but rather a grudge against the West.
On the one hand, this message is intended for internal use. The disappearance of Western goods from store shelves probably does not arouse much joy in many Russians. Propaganda that Russia can do without the West helps to rally its ranks and create a patriotic mood in the people: there are many countries in the world that actually want our goods.
On the other hand, it is aimed at the leaders and residents of Western countries in order to convince them of the use of sanctions against Russia. The debate about the usefulness or otherwise of sanctions is an ongoing one in the press and in think tanks.
Thirdly, it targets the leaders and ordinary citizens of developing countries in order to keep them on its side.
The domestic goal is to convince the people of Russia to see their country as big and powerful, with many allies and no longer in need of Western favours. In terms of foreign policy, the aim is to try to convince the people of the West, that the sanctions imposed against Russia are an unnecessary expense that does not really affect the country economically.
In addition to this, the goal is probably also the development of economic relations. One of the most important alliances is probably Russia’s membership in BRICS, a kind of leadership group of developing countries, whose members currently include Brazil, China, India and South Africa. It is a force to be reckoned with – these countries are home to approximately 40 percent of the world’s population and their economy accounts for more than a quarter of global GDP. Of course, China contributes the majority of this – the other four countries contribute eight percent.
Starting at the turn of the year, the group will expand by six countries, and the United Arab Emirates, Argentina, Egypt, Ethiopia, Iran and Saudi Arabia will also become members. From here, it’s great to make headlines that the group will more than double, as the British paper The Guardian did. However, if you look not at the number of countries, but at the economic weight, then the BRICS with these six countries adds barely three percent of the world’s GDP. Of course, it is also true that three important members of the OPEC group of oil-exporting countries will join the bloc.
President Putin has also come up with an idea that a separate trade bloc could be formed based on BRICS.
Paradoxically, the economic ties of the developing world with Russia are tightened by the country’s limited price for oil, thanks to which poorer countries can buy Russian oil and oil products cheaper than the world market price and thus keep their inflation in check.
After the outbreak of a full-scale war in Ukraine and sanctions against Russia, the country’s trade with several countries that have maintained a neutral line with Russia has grown exponentially. At the same time, it is by no means an unshakable front.
If we take the two largest countries of the same BRICS, China and India, they have also come to military clashes several times since the Second World War. Even now, their relationship is not cordial, to say the least.
Rudra Chaudhuri, director of Carnegie India, stated that India’s refusal to condemn Russia is based purely on national interests and primarily on the fact that the country’s military is heavily dependent on Russian armaments. Of course, India needs weapons mainly against neighbouring China, seeing the latter as a strategic threat in its region. Russia primarily relies on China’s support, and the calculation where “the friend of my enemy is my friend” probably does not seem to be the most stable basis for a long-term friendship from India’s point of view.
At the same time, Russia seems to be having serious difficulties in the production of weapons to wage a war in Ukraine and is forced to look for munitions wherever possible – even from North Korea. Not exactly the most reliable long-term arms supplier – and the Indian leadership probably sees that very well.
While the most acute situation in the current composition of BRICS is between the two largest countries, China and India, the expansion of the grouping will only make it more difficult to reach any kind of consensus. How exactly should Saudi Arabia and the United Arab Emirates, on the one hand, who both aspire to a leadership role among Sunni Islamic countries, and Iran, who leads the Shia Muslim world and is the biggest regional rival of the two aforementioned, come to an agreement in the long term?
Karmo Tüür has pointed out that basically the current BRICS is roughly divided into two, on one side there are countries that think primarily about growing their economy, and on the other side China and Russia, who also have their own geopolitical ambitions. The main unifying factor between the two sides seems to be anti-Western fervour. With the addition of new members comes new tensions, but the group has no real common goal.
If we seriously consider the possibility of poorer countries forming a trade bloc among themselves, either on the basis of BRICS or on some other basis, the question remains of what they could sell to each other. LHV Bank economic analyst Heido Vitsur has pointed out that China is one of the few countries that has been able to catch up with the West in terms of wealth in the long term. For almost everyone else, the West has increasingly gone away. The countries’ economies are growing, and their share in the world economy is growing, but the population is also growing faster than in the West, and although the people there are getting wealthier, they still remain relatively poorer compared to the West.
If we limit ourselves to the export of raw materials, as Russia is mainly doing so far, then operating within such a trade bloc would be completely conceivable. However, if the country wants to start exporting finer goods and services, which could lay a firmer foundation for national wealth, then the inhabitants of the countries of the developing world fall further and further behind those of the rich West and cannot compete in terms of purchasing power. Therefore, in the long term, a country striving for higher economic development has no choice but to look to the West.
All the more so because it seems more and more doubtful whether China, which has shown one of the fastest economic growth among developing countries, will be able to continue at the same pace in the future, the country’s economy has been in tatters for several years. Parallels are often drawn in the case of China with Japan, whose rapidly developing economy after the Second World War slowed down sharply as the population aged, which was first signalled by the real estate crisis of the early 1990s and has remained stagnant ever since.
An additional aspect here is that if developing countries really start favouring mutual trade at the expense of global foreign trade, it would have a bad effect on their own economy. At the meeting of world central bankers in Jackson Hole on the last weekend of August, the Director General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, warned that the division of the world into two trading blocs would mean that global GDP would be about five percent lower than it could be in the long run. However, some developing countries would lose more than a tenth of their GDP.
In its blog, the International Monetary Fund (IMF) also presented calculations of already existing trade restrictions. Since 2019, the number of trade restrictions in force in the world has almost tripled, and last year there were almost 3,000 of them. This is expected to make goods and services more expensive. In addition, the fragmentation of the world market is also caused by the technological separation of countries from each other, failures in capital flows and migration restrictions. According to the IMF, the long-term impact of all of them reaches seven percent of the world’s GDP, which is as much as the economies of Germany and France combined.
So the Global South may not like the lectures, but it needs to do business with the West to get richer. There are really no other options for countries that think primarily about their own economic development – like the majority of BRICS members. Allied ties with Russia, however, work directly against this.
The images used are screenshots from the referenced pages. The infographic was created by Propastop’s editors.