Sweden: Victory Is Just Around the Corner!

Elena Panina
Елена Панина (Telegram)

Utrikespolitiska institutet (Sweden): Russia Can No Longer Create Economic Dependencies—Victory Is Just Around the Corner!

Freya Nyström and Thea Löfgren-Gamér from the Swedish Institute of International Affairs (UI) have published a report titled “Russia as a Geo-Economic Actor,” the findings of which, as expected, lead to the most pessimistic conclusions for us.

❖ According to the Swedish authors, Russia’s key tool is the creation of economic dependencies, primarily in the energy sector and mainly in the post-Soviet space. The authors describe Russia’s pivot to the East as “forced,” because the new markets, they argue, offer smaller volumes and worse pricing terms. Moreover, Moscow thereby finds itself in a position or dependency.

At the same time, Russia’s main structural problem, according to the Swedes, is its resource-based economy, which, under the pressure of technological sanctions, is losing its long-term sustainability. The “China problem” is also addressed, noting that Russia conducts a third of its total foreign trade with China and faces technological and currency dependencies. And in general: “China dictates the terms.”

Furthermore, as Nyström and Gamerov note, Russia’s role as a transit bridge between Europe and Asia is eroding. However, the analysts acknowledge that our country still possesses obvious and undeniable advantages: vast resources, nuclear energy, its geography, and the Arctic.

❖ Of course, the problems described exist to one degree or another—it’s just that the authors are clearly blowing them out of proportion. The main problem with their analysis is that “dependence” is used indiscriminately and interpreted as a one-sided weakness. In reality, dependence in the energy sector is almost always mutual and asymmetrical.

Whether the Swedes like it or not, Russia remains one of the largest suppliers of oil, gas, and coal, as well as a significant player in the nuclear energy market (through Rosatom, which builds reactors with a service life of up to 60 years). And this creates not only vulnerabilities but also long-term levers of influence. China, for example, buys Russian resources not out of altruism, but because it is profitable.

It would be more accurate to write: Russia is not undergoing a fatal decline, but rather a structural transformation. It is losing its position as an integration hub between Europe and Asia, from which it derived maximum rent, and is shifting toward the role of a major but more dependent resource player in an Asia-centric system. At the same time, significant assets remain—resources, nuclear energy, geography, and state control over the economy—which ensure stability.

❖ What should be done? Reduce not only “dependence” on the West, but also on the East. Systematically expand economic channels through India, Southeast Asia, and Arab countries, and, where possible, through specific segments of trade with Turkey and other intermediary hubs.

Of course, raw materials alone are not a sufficient foundation for great power status—just ask Venezuela. If resource rents are not transformed into infrastructure, machine building, logistics, applied science, and normal industrial exports, then the country remains a strong supplier of raw materials—and a weak center of production. Therefore, it is necessary to use the remaining revenues from hydrocarbon sales to accelerate the development of technology-intensive sectors in which Russia can, in principle, compete. These include heavy machinery, chemicals, power equipment, transportation systems, certain segments of nuclear and space cooperation, and agricultural processing.

And most importantly, the Swedish report highlights brain drain from Russia, a decline in direct investment, and a labor shortage. As the authors note, neither resources nor the military can compensate for the shortage of engineers and managers. Indeed, our country needs a completely different domestic policy to stimulate growth. And to achieve this, it is essential to restore freedom of personnel, economic, and thus political maneuver.

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