How St. Petersburg is mapping the Eurasian Century

June 04, 2021

By Pepe Escobar with permission and first posted at Asia Times

It’s impossible to understand the finer points of what’s happening on the ground in Russia and across Eurasia, business-wise, without following the annual St. Petersburg International Economic Forum (SPIEF).

So let’s cut to the chase, and offer a few choice examples of what is discussed on top panels.

The Russian Far East – Here’s a discussion on the – largely successful – strategies boosting productive investment in industry and infrastructure across the Russian Far East. Manufacturing in Russia grew by 12.2% between 2015 and 2020; in the Far East it was almost double, 23.1%. And from 2018 to 2020, per capita investment in fixed capital was 40% higher than the national average. The next steps center on improving infrastructure; opening global markets to Russian companies; and most of all, finding the necessary funds (China? South Korea?) for advanced tech.

St. Isaac’s cathedral, St. Petersburg

The Shanghai Cooperation Organization (SCO) – As I’ve seen for myself in previous editions of the forum, there’s nothing remotely similar in the West in terms of seriously discussing an organization like the SCO – which has progressively evolved from its initial security focus towards a wide-ranging politico-economic role.

Russia presided the SCO in 2019-2020, when foreign policy got a fresh impetus and the socioeconomic consequences of Covid-19 were seriously addressed. Now the collective emphasis should be on how to turn these member nations – especially the Central Asian “stans” – more attractive for global investors. Panelists include former SCO secretary-general Rashid Alimov, and the current one, Vladimir Norov.

Eurasian partnership – This discussion involves what should be one of the key nodes of the Eurasian Century: the International North-South Transportation Corridor (INSTC). An important historical precedent apply: the 8^th-9^th centuries Volga trade route that connected Western Europe to Persia – and could now be extended, in a variation of the Maritime Silk Road, all the way to ports in India. That raises a number of questions, ranging from the development of trade and technology to the harmonic implementation of digital platforms. Here one finds panelists from Russia, India, Iran, Kazakhstan and Azerbaijan.

The Greater Eurasian partnership – Greater Eurasia is the overarching Russian concept applied to the consolidation of the Eurasian Century. This discussion is largely focused on Big Tech, including full digitalization, automated managing systems and Green growth. The question is how a radical tech transition could work for pan-Eurasia interests.

And that’s where the Russian-led Eurasia Economic Union (EAEU) comes in: how the EAEU’s drive for a Greater Eurasian Partnership should work in practice. Panelists include the chairman of the board of the Eurasian Economic Commission, Mikhail Myasnikovich, and a relic from the Yeltsin past: Anatoliy Chubais, who is now Putin’s special representative for “relations with international organizations to achieve sustainable development goals.”

Gotta ditch all those greenbacks

Arguably the most eye-catching panel on SPIEF was on the post-Covid-19 “new normal” (or abnormal), and how economics will be reshaped. An important sub-section is how Russia can possibly capitalize on it, in terms of productive growth. That was a unique opportunity to see IMF Managing Director Kristalina Georgieva, Russian Central Bank governor Elvira Nabiullina and Russian Minister of Finance Anton Siluanov debating on the same table.

It was Siluanov who in fact commanded all the SPIEF-related headlines when he announced that Russia will totally ditch the US dollar in the structure of the National Wealth Fund (NWF) – the de facto Russian sovereign wealth fund – as well as reduce the share of the British pound. The NWF will have more euros and yuan, more gold, and the yen’s share remains stable.

This ongoing de-dollarization process has been more than predictable. In May, for the first time, less than 50% of Russian exports were denominated in US dollars.

Siluanov explained that the sales of roughly $119 billion in liquid assets will go through the Russian Central Bank, and not through financial markets. In practice, that will be a simple technical transfer of euros to the NWF. The Central Bank after all has been steadily getting rid of the US dollars for years now.

Sooner or later, China will follow. In parallel, some nations across Eurasia, in an extremely discreet manner, are also bypassing what is de facto the currency of a debt-based economy – to the tune of tens of trillions of dollars, as Michael Hudson has been explaining in detail. Not to mention that transacting US dollars exposes whole nations to an extra-territorial, extortionary judicial machine.

On the all-important Chinese-Russian front, permeating all the discussions at SPIEF, is the fact that a pool of Chinese technical knowhow and Russian energy is more than able to solidify a massive pan-Eurasian market capable of dwarfing the West. History tells us that in 1400, India and China were responsible for half of the world’s GDP.

As the West wallows in a self-induced Build Back Better collapse, the Eurasian caravan seems unstoppable. But then, there are those pesky US sanctions.

The Valdai Discussion Club Session dug deeper into the hysteria: sanctions serving a political agenda are threatening vast swathes of the world economic and financial infrastructure. So we’re back once again to the inescapable syndrome of the weaponized US dollar – deployed against India buying Iranian oil and Russian military hardware, or against Chinese tech companies.

Panelists including Russian Deputy Finance Minister Vladimir Kolychev and the UN Special Rapporteur on the “Negative Impact of Unilateral Coercive Measures on the Enjoyment of Human Rights”, Alena Douhan, debated the inevitable new escalation of anti-Russian sanctions.

Another running theme underneath the SPIEF debates is that, whatever happens on the sanctions front, Russia already has an alternative to SWIFT, and so does China. Both systems are compatible with SWIFT in software, so other nations may also be able use it.

No less than 30% of SWIFT’s traffic involves Russia. If that “nuclear “option” would ever come to pass, nations trading with Russia would almost certainly ditch SWIFT. On top of it, Russia, China and Iran – the “threat” trio to the Hegemon – have currency swap agreements, bilaterally and with other nations.

SPIEF this year has taken place only a few days before the G7, NATO and US-EU summits – which will graphically highlight European geopolitical irrelevancy, reduced to the status of a platform for US power projection.

And taking place less than two weeks before the Putin-Biden summit in Geneva, SPIEF most of all performed a public service for those who care to notice, charting some of the most important practical contours of the Eurasian Century.

Prospects Of Turkish-Russian Military Conflict In Syria

South Front

Dear friends, during the past 2 weeks, there were signals of the growing confrontation between Hayat Tahrir al-Sham as well as the intensifying coordination between Turkey and Russia in Greater Idlib.

The region of Greater Idlib remains the main source of tensions in Syria.

The March 5th ceasefire deal reached by Turkish President Recep Tayyip Erdogan and Russian President Vladimir Putin in Moscow allowed an end to be made to the open military confrontation between the Turkish Armed Forces and the Syrian Army. However, as of mid-April, the main provisions of the deal have yet to be implemented. Members of al-Qaeda-linked groups still enjoy freedom of movement across Greater Idlib and keep their positions with weapons and heavy equipment in southern Idlib.

The safe zone along the M4 highway, the creation of which was agreed, has not been created. All Russian-Turkish joint patrols have been conducted in a limited area west of Saraqib and have just been a public move needed to demonstrate that the de-escalation deal is still in force.

Ankara turns a blind eye to regular ceasefire violations and other provocative actions by militant groups and their supporters. Additionally, it has continued its military buildup in Idlib. The number of Turkish troops in the region reportedly reached 7,000, while the number of so-called ‘observation posts’ exceeded 50. Meanwhile, Turkish-affiliated media outlets ramped up a propaganda campaign accusing the Assad government of killing civilians, of ceasefire violations, of using chemical weapons and of discrediting the de-escalation agreement by calling it the surrender of the goals of the so-called Syrian revolution.

On the diplomatic level, neither Turkey nor Russia demonstrate open antagonism, but statements coming from the  top military and political leadership of Turkey regarding the conflict in Syria demonstrate that Ankara is not planning to abandon its expansionist plans or aggressive posture towards the country.

These factors set up a pretext for and increase the chances of a new military escalation in Idlib. However, this time the conflict is likely to lead to at least a limited military confrontation between the Turkish and Russian militaries. Both sides have troops deployed in close proximity to the frontline, including the expected hot point of the future escalation – Saraqib.

Possible phases of escalation are the following:

1. Without the full implementation of the Moscow de-escalation deal and neutralization of radicals, the military situation in southern and eastern Idlib will continue to deteriorate. Militants, inspired by their impunity and the direct protection of the Turkish Army, will increase their attacks on the positions of Syrian forces and their Russian and Iranian allies. These attacks will gradually increase in scale until they provoke a painful military response from the Syrian Armed Forces. Militants, surprised at this blatant ceasefire violation by the bloody Assad regime, will continue their attacks, now justifying them by the right of self-defense. G_4 (A) Turkish diplomats and media outlets will immediately accuse the Assad government of violating the word and spirit of the de-escalation deal and will claim that the “unjustified aggression of the regime”, which is supported by the Russians, led to the killing of dozens of civilians and will film several staged tear-jerkers from Idlib to support this. The so-called ‘international community’ led by the Washington establishment and EU bureaucrats will denounce the aggression of the Assad regime and its backers.
2. In the face of the continued and increased attacks from Idlib armed groups, the Syrian Army will have two options:

• To retreat from their positions and leave the hard-won, liberated areas to the mercy of Turkey and its al-Qaeda-affiliated groups;
• To answer the increased attacks with overwhelming force and put an end to the ceasefire violations by radicals.

It’s likely that the Syrians will choose the second option. The military standoff in Idlib will officially re-enter a hot phase. The previous years of conflict have demonstrated that militants cannot match Syrian troops in open battle. Therefore, if the Turkish leadership wants to hold on to its expansionist plans, it will have no choice but to intervene in the battle to rescue its proteges. Syria and Turkey will once again find themselves in a state of open military confrontation.

1. As in previous escalations, the Turkish military will likely opt to start its military campaign with massive artillery and drone strikes on positions of the Syrian Army along the contact line in southeastern Idlib and western Aleppo. Special attention will be paid to the area of the expected confrontation between Syrian troops and Turkish proxies: the countryside of Saraqib, Maarat al-Numan and Kafr Nabel. Turkish forces will not be able to stop the Syrian Army advance without taking massive fire damage to their infrastructure and to the forces deployed in these areas. Such strikes will also result in  further escalation because they will pose a direct danger to the Russian Military Police in Saraqib and Maarat al-Numan, and to Russian military advisers embedded with the Syrian units, which are deployed in southeastern Idlib.
2. If Turkish strikes target Russian positions and lead to notable losses among Russian personnel, Moscow will be put in a situation where they will be forced to retaliate. Since the start of the military operation in Syria in September 2015, the Russian Armed Forces have concentrated a capable military group in the country protected by short- and long-range air defense systems and reinforced by Bastion-P coastal defense and Iskander-M ballistic missile systems. Additionally, the Russian Black Sea and Caspian Fleets and Russian long-range aviation have repeatedly demonstrated that they are capable of destroying any target on the Syrian battleground and thus also in any nearby areas.

The Russian retaliatory strike will likely target Turkish military columns in close proximity to the frontline as well as Turkish depots, positions of artillery, armoured vehicles, and material and technical support points in Greater Idlib.

If, after the Russian strike, the Turkish leadership does not halt its aggressive actions and its forces continue attacks on Russian and Syrian positions in Syria, the escalation will develop further.

The second wave of Russian retaliatory strikes will target Turkish military infrastructure along the border with Syria. HQs and logistical hubs in the province of Hatay, which were used to command and supply its Operation Spring Shield, will immediately be destroyed. The decision to deliver strikes on other targets along the border will depend on the success of Turkish forces in their expected attempt to attack Russia’s Hmeimim airbase and put it out of service.

Another factor to consider is that should Turkey appear to be too successful in their attack on the Hmeimim airbase, they risk losing their entire Black Sea fleet. While theoretically the Turkish naval forces deployed in the Black Sea are superior to the Russian ones in numbers, the real balance of power there tells a different story. The combined means and facilities of the Russian Black Sea fleet, the Caspian Sea fleet, air forces and coastal defense forces deployed in the region would allow Moscow to overwhelm and sink the entire Turkish Navy. On top of this, Russia, unlike Turkey, is a nuclear power.

Turkey’s NATO allies have already demonstrated that they are not planning to risk their equipment or personnel in order to support Erdogan’s Syrian adventure. Furthermore, a new round of complaints to the UN or demonstrative sanctions will be no help to any destroyed Turkish airbases or to a fleet resting deep underwater.

Ankara will have to find a diplomatic way to de-escalate the confrontation before it gets to this point. The format of this diplomatic solution and the consequences, which Turkey will have to suffer for its military adventure, will depend only on the moment, when the Erdogan government understands that it’s time to stop.