In Geopolitical economy, Geopolitical Economy Research Group [GERG], Multipolarity, New world order, Russia
Sergey Glazyev Russian politician and economist.

Sergey Glazyev Russian politician and economist. Photo credit:  A. Savin (Wikimedia Commons).

A New Cold War exclusive,  St. Petersburg, 1 April, 2023

We met Sergey Glazyev at the St Petersburg Economic Forum where, having long been a lone voice demanding a turn away from neoliberalism and toward the path to planning, industrial policy, redistribution and integration with the economies of Asia, he was now among the majority of plenary speakers who agreed with him. The war has turned Russia on its axis.

Glazyev agreed to meet us one afternoon soon after and we started off by asking him what he thought of President Putin’s conduct of the economy. Glazyev replied by saying, simply, that Putin appeared to have no strategy. The conversation then turned to sanctions on Europe and we discussed Angela Merkel’s statement, widely reported as saying that the Europeans had never engaged in the Minsk II peace process in good faith, only to buy Ukraine time to arm itself, though an actual reading of the interview might suggest she was much more ambiguous.

But hadn’t Hollande said something similar, interjected Glazyev. Indeed, he had, though that posture revealed Europeans acting against their own interests. Glazyev agreed, ‘Why are they so stupid?’ he asked, wondering whether this meant that ‘European business is not so influential, they couldn’t influence political decisions’. There is a crisis of political leadership, we suggested.

Glazyev then turned the conversation to the UK. ‘Why the UK is so aggressive? All the prime ministers which we had over the last two years, they have related to Russia very aggressively’, he said. ‘In fact, they are even more aggressive than the Americans. What is the reason?’ We recalled that ‘no European leader has ever broken with America except Hitler’, making Glazyev laugh. The fact was that the US had practically built postwar Europe, imposing the dollar, destroying Britain, taking a big hand in the reconstruction of Germany and tolerating fascism for its own reasons. So, Europe had long been a US asset.

Glazyev returned to the question of the UK. ‘I mean the American strategy is quite clear; they want to destroy Russia because they want to keep hegemony and isolate China, they say this openly. Why is England so involved in this conflict? In fact, they train Ukrainian soldiers, they are involved very deeply even in the front. And they push Zelensky all the time…’

This was, we felt, part of a longer history going back to Britain’s historic decision in favour of the liberal US against the productively focussed regionalism of Germany, a choice for which the US punished it after the Second World War, playing a major role in the diminution of British power. Since then, the British elite has been ruled by the silly notion that they have a ‘special relationship’ with the US and Britain has played the role of a junior, and ideologically more zealous, partner of the US in its quest for world domination.

‘So, they do not have their own strategy? Glazyev asked. No, they don’t. The subordination of Britain had required an early capitulation by the Labour Party left, which opposed nuclear weapons for half a decade after 1945 until its revered leader, Nye Bevan, reversed his opposition in 1951. The US interest in the UK also focusses on the string of naval bases it has, particularly in the Southern hemisphere, which was why the Falklands were so important.

Now Glazyev got to the nub of his concern with the UK’s belligerence:

I’m asking, because it was not clear after the decision, you know, the International Criminal Court, decided to arrest our President. I analyzed the members of this [court], who are they, who made the decision? Their prosecutor, is English, and his brother is sitting in jail, the brother of the prosecutor. Because he was homosexual and because of violence of some kids, or something like that. So, he was not only homosexual he was paedophile. And just before the prosecutor of this International Criminal Court sent the order, his brother, the time that he was sitting in the jail was reduced, three times. So, it was quite clear that this International Court is manipulated by English. Not by Americans, I think. But this decision was very important, it has symbolic character, because I think till this decision, there was some understanding between our elite and Americans that somehow we should stop the war. But after the decision was made, no negotiations.’

This, of course, was consonant with how Boris Johnson’s visit to Kiev called off promising peace negotiations in March 2022. At the same time, we reminded him that the US did not always speak with one voice. There were factions in favour of the war and others against. The UK seemed to be allied with those factions who want to pull in the direction of war. And then, there is the matter of the crisis of political leadership in Europe and the West more generally that gets the likes of Trump, Johnson and even Truss, taking leading positions. Moreover, the US in particular is fighting to hold on to what remains of its declining world position. It has never been able to come to terms with the development, however modest, of the rest of the world and certainly not with their assertion.

Another reason for the war mania in the West was, of course, the business opportunities it offered. ‘Opportunity in the production of weapons?’, Glazyev asked. Well, that, and also the interest of capital in the West in buying up Ukrainian productive facilities, land, etc, particularly in a context where Zelensky has banned the opposition, he’s ramming through legislation that is even more economically liberal, anti-labour, and so on. So, if there is anything like Ukraine left after the war, it will be a paradise for these sorts of people, we suggested. ‘So, they want to go to Ukraine to make business, to do business?’ Glazyev queried. Yes, we thought.

And there was the question of Russia, which the West has always wanted to break up.
Glazyev knew this well: ‘ One thing to understand about American strategy, do they follow Mackinder’s theory?’ This was the early twentieth century theory that the power that controlled the ‘heartland’ of Eurasia, precisely the territory that is Russia today, controls the world. We discussed how this was a far-from-antiquated theory and takes modern form, for instance, in Zbigniew Brzezinski’s work. Anglo-American hostility towards Russia was not just that it was communist: it was not just about ideology. It was also about the fact that the entire communist world, and all the parts of the third world that were supported by the communist world, were trying to run their economies in ways that did not subordinate themselves adequately to Western interests. Communism is only the sharpest edge of the resistance to imperialism.

Now Glazyev took the conversation in an interesting direction:

Now I ask you this question: if the American elite, business elite, especially, wants to control the Russian market, the Russian economy, they don’t have any motivation to do what they do now in Russia. Because in fact, old style Russian business is in their control, Western participation is very high. Aluminum industry, even the oil industry, they all had a lot of Western directors. In fact, the trade of oil was controlled mainly not by Russian managers, but almost all oil companies had either Americans or European managers who held top positions. If you look at monetary policy, it is totally in line with IMF recommendations. Russia is the largest national donor of the Anglo-American financial system. They didn’t have any reason to fear and to fight with Putin, because our economic policy was exactly the policy which was good for the West.

A most interesting set of points, we thought and wondered if what the West really feared was the potential that a strong government of an intact Russia, the government of a very large country, could at some point assert itself in ways that were not amenable to the West, and, in any case, they found even the minimum of assertion of Russia’s interests under Putin, after the abject submission of Yeltsin, threatening.

That, Glazyev said, was the reason for his interest in the Mackinder theory:

because I think if they’re following Mackinder ideas it is quite understandable. But if you want to control the Russian economy, it is a crazy policy, because now [after the commencement of hostilities last year] they don’t control anything.
However, even now, Russian aluminium is controlled by the American treasury. Rusal was under sanctions, and they got a deal. They got a deal, according to which the American Treasury, not business partners, but the Treasury, got the right to control the director of Rusal. So, all the direct managers of Rusal, they are members of the directorate, appointed, or agreed by the American Treasury.

Was this still the case? ‘‘Even now. I think it is formally, though it does not work in reality. But I just give this example to understand that Americans could do everything in Russia, what they want, they want this company, that company, European companies controlled all the automobile manufacturing industry.’

After some discussion of the US election, the conversation turned to the world situation and its potentials. For Glazyev, the situation was

quite clear. That China and India will lead the world economically, over the next, years to the end of the century. And if you look at the 5-year plans of China, they can fulfill their 5-year plans. And now, in the present 5-year plan, their main goal is technological sovereignty. And if you look at Research and Development expenditures in China, the number of scientists is larger now than the United States. And they continue to finance Research and Development; they’re leading in 5G, and I’m sure they will take technological leadership in the next ten years. They will then produce and export more high-tech goods than the United States. This is in this part of the world. I have been in Indonesia in January. Jakarta is developing fantastically. So, all this region is growing up.

And for this part of the world, it is quite clear that according to Arrighi’s forecast, the world is moving to the Asia cycle for capital accumulation. And in all those countries you have socialist ideology. In China that is quite clear, but in India I guess, the Indian constitution is rather socialist.

We discussed the difficulty of understanding the Indian position, given the government’s divisive politics, its disastrous economic performance deliberately hidden by very problematic statistical measures and the potential of pro-Western forces still gaining the upper hand. Nevertheless,

India is of course, very important. Because if India keeps a neutral position, the world will be stable. If the Americans and the English interfere into Indian politics, they will try to organize war between India and China, which would be a nightmare. But for them it would be the good chance to win. So too much depends on India, because I was sure that, in fact, I don’t know in detail, but I’m looking only for official statistics, that India had a number one growth rate, number one population, huge opportunities, to go up. The connection with Russia and our region, is also developing very fast. Trade with India increased three times last year. And India can produce everything, which can help in Europe. So, it will take maybe one or two years that trade with India will increase maybe five times. You see, in the Soviet period, trade was ten times more than now, because almost all our resources were going to the West. So, if India could be quiet, and remain stable, I think the Western countries have no chance. Because in Europe, you have catastrophe. In the United States, you say that chaos is going up.

With the 2024 US elections already getting into gear, things could heat up quite problematically, we thought and Glazyev agreed: there could be ‘civil war’, he offered. Even so, he felt that despite the political mayhem in the US,

the Americans [had won] the first phase of this war, and all the goals that in this first stage they had in mind, they achieved. They control Europe, this was the goal for the first stage of the war. Europe is structurally under their control. This was the first stage. The second stage was to destroy Russia. And here I think they will not succeed. So, in spite of all problems, I’m sure that this war, in fact, will be economically harmful to Russia. But the political situation if we do not finish this war, Putin’s position becomes strong. Maybe one or two million people left Russia.. The problem is that this is mainly young people, highly educated. And of course, this is a huge damage for our economy. But nevertheless, I’m sure that we survive and America will not achieve the goals of the second stage. We need only one year, because according to our forecasts, which we made about 15 years ago, the next year will be the crucial. You know long waves?

The long waves, the Arrighi cycles, every 100 years,. We will have a turning point around the year 2024. And we are coming to this turning point. And this turning point, it’s happening with the presidential elections. When we made this forecast 15 years ago, we didn’t think about the elections; now it becomes clear how it could happen. A turning point in the major cycles… the world order which started to change after the collapse of the Soviet Union is now coming to the transition period, its coming to them with the collapse of Pax America.

So, Pax America is collapsing, because in spite of the fact that they control Europe now, they lost their monopoly to print world money. Just yesterday we had information that even France has decided to trade with China in yuan.

Brazil has started to trade in national currencies. The Indian government declared that it will take rupees for their exports. So, the dollar lost its position. And this was very stupid for them, to arrest Russian reserves. And of course, according to their short term thinking they should be in a very good position. They control Europe, they don’t spend their money for the war; of all the credits which they give to Ukraine 80% is spent in procurement of American weapons. And they are guaranteed by the Russian reserves. So, they haven’t spent any dollars on this war. And achieved all the goals. But in long term, they lost the monopoly for the world currency. And together with the banking crisis, their financial position becomes worse and worse. And as far as they do not have a well-run economy, …you see the production chains are destroyed, so they rely only on printing money, and it is finished.

The tendency of the US financial system to create asset bubbles that then inevitably burst, we suggested, is finally testing the limits of the world’s tolerance; Glazyev agreed: ‘yes, and now nobody buys American Treasuries.’

Finally, we turned to Eurasian integration, which the war had decidedly accelerated.
‘We had agreements with India, Iran, and Russia, from the year 2000, about the North-South transportation corridors’, Glazyev recalled:

for twenty years, we did nothing. Nothing was done at all. Now, after these Western sanctions, President Putin made the decision and government now is investing a lot of money in this corridor. And I am sure, maybe in two years, it will help make a good transportation route from Russia to India through Iran; trade will go up, and cooperation will go up. So Russian resources will be there allocated to India, and this very good for Russia because we need to compete with China. Because the Chinese are very tough negotiators: they want to control the price. And maybe it will help India to develop.

And it would certainly create the right incentives for Indian governments to abandon their pro-Western inclinations, we thought. Glazyev then turned to Brazil:

Another interesting and uncertain point is Brazil. I don’t know whether now the Americans control Brazilian government or not, at least they control the central bank, until now, I’m sure. Because the Brazilian central bank is doing awful policy, like the Russian. Totally IMF recommendations.

Restrictive monetary policy had quite serious repercussions, Glazyev felt: ‘No credits, no capital controls. And for this reason, I think that Madame Dilma Rousseff lost power, because of the Brazilian central bank policy’:

To finalize the world affairs, this discussion, I think about the future. I think too much depends on India, and on Brazil. Because, the United States situation is quite clear: their only chance to maintain at least part of their leadership and hegemony in the world is to organize more and more wars, war between India and China, But, I think they will not succeed. Because the Indians and the Chinese are not so stupid as to start the war between themselves. Of course, they can maybe organize some kind of Muslim revolution in India, but I think this will not succeed…

So, I think American Pax Americana is collapsing. The dollar system is collapsing. What we are thinking now …It is very funny. I told, when I was the minister for foreign trade in Russia, it was the year 1993, and I told President Yeltsin that we have to export oil and gas for rubles, not for dollars. And for all these thirty years, I advocated that we have to trade in rubles because of the huge capital flight. It’s going on, very simply, because of huge corruption. We will supply oil and gas to Europe in one price, and the retail price is five times higher. The difference is about two, three times. And all this money is going to the pockets of corrupted managers, of oil and gas companies, and going into offshores. If you trade with rubles, this couldn’t happen. They told me all this time, it is impossible, we couldn’t move to rubles, because we have agreements we need a lot of time to change, we shall lose money. But when the war started, we immediately, in one week we switched to the rubles.

However, pressures to revert to neoliberalism were not entirely absent:

You see, when the central bank was isolated from the currency market because it lost all the currency reserves, the ruble was going up. It happened because of the huge surplus in trade. Now, after the shock, Putin made a decision for 80% obligatory surrender of export revenues. So, 80% of export revenues should be sold on the Moscow Exchange. And for this reason the ruble was going up, not because of some policy of the central bank. So the central bank was isolated, and rubles appreciated. Then after the first shock, Nabiullina, three months after, started to liberalize export regulation again. And now they totally reject this obligatory sale of export revenues.

So, they liberalized the regulation again and told the exporters that they could keep export revenues abroad. To my mind it was an awful decision because first of all, you’re not going to guarantee the security of this money.
Second, if they keep money in rupees, in renminbi, or other currencies there is still an exchange rate risk. Nevertheless, last year, we had capital flight of $240 billion. It is much more than any year, we had capital flight above $100 billion every year, but now it is $240 billion. This money didn’t come back because of the central bank policy. You see, the problem is, there have been no decisions about the mobilization of industry, only about the mobilization of people. But as for industry, economic policy, no such thing. The production facilities have only about 60% of [capacity utilization], In some industries like machine tools for instance, only 25% capacity is being used. So, economic policy is still pro liberal.

[Putin] thinks that Europe is collapsing, and that they will not be able to continue this war, and he’s waiting for the presidential election in the United States. And at the same time, internally, he thinks that everything is good, you know, because a year ago it was forecast from the IMF and the World Bank that the Russian economy will go down 12%. Our central bank immediately re-translated to him that we are in a very bad situation, we are struggling with the whole West, this was your decision, we have to pay, the economy will go down about 10%. It was forecast by the central bank. I insisted in my papers that we can go up 10% because we have a huge market now which is free from European products. About 25% of consumption was European imports. So, we can increase production [to meet this demand]. We can produce at least half of the things we imported from Europe by ourselves. So, from the demand side, we have 25% opportunity for growth. As for the supply side, we have 60% of capacity, so we can increase production 40%. Why not to have 10% growth? And Putin said we have to accelerate import substitution. He said this, but the central bank increased interest rates. And there are no credits, so now there is huge capital flight, and the investments are not growing.

We discussed why Putin does not change the central bank governor. Was it to please the oligarchs? Glazyev thought not: ‘you see the oligarchs now are not so influential because they are very angry at the situation because they lost a lot of money.’ And their houses and yachts! So, what was the reason Putin didn’t put somebody else in charge of the central bank?

you see the main problem is that of course there is a strong government that is now more or less efficient. So, they organized the total monitoring of all government expenditures, they introduce digital technologies in monitoring of what government is doing, they pursue clearly the goals which they declared, national projects, and so forth, but they couldn’t do it without credit. And last year, the government was very good because with the high prices of oil and export of raw materials, you have a huge surplus in trade. And so also, in spite of the fact that volume of trade decreased, the money increased. Because of prices. And they got a lot of money for the budget. Now, the situation becomes much worse. Prices are going down…

Will they keep going down? we asked.

Well we don’t control this. The import now cost more expensive, and is going up, so the trade surplus is not too high, not as high as the previous year, so the conditions, the external conditions for Russia’s economy becomes worse. At the same time, we hit about -minus 2% last year, of GDP. And he [Putin] thinks that it was success, because it was not -minus 12%. And so it could be much worse. So, we survived. This is the major goal for the last year – just to survive. And now they have forecast that perhaps now we shall have growth 2%.

We ended wondering how long the war would last: Glazyev felt that ‘If it continues into next year, I think the social opinion will be very negative. Because in fact, everybody thinks we could do this in one week.’


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