A Different War, a Different State, and Different Money

There was some predictability to the outbreak of the war in Ukraine, but it still came as a shock

After months of being bombarded by Western media’s warnings about Russia’s getting prepared to invade Ukraine, it would hardly be appropriate to say that the war came as a surprise. But who would have guessed things would turn out the way they did?

The same can also be said of the economic pressure exerted on Russia by the West. It was to be expected that the US and Europe would react harshly, but who could have predicted that they would be willing to put confidence in the international monetary system, their principal asset, at risk and push global supply chains of whole industries to a precipice of collapse?

The parties concerned have spent considerable time and effort preparing for a decisive confrontation. The crisis that had ensued as a result turned out to be exceptionally well executed.

One could see echoes of World War I in the speed of the slide into a disaster and the enthusiasm of the sides of the conflict. It's true that our civilisation has changed and that such massacres are not possible anymore (or are they? ). However, this war will change the world system as we know it most dramatically.

So, what are the first conclusions and predictions that one can make today?

A Subcritical War

It has already become clear that this kind of war hasn't been seen in Europe or anywhere around the world since World War II. It is apparent how deeply NATO is embedded in hostilities on the side of Ukraine and how close NATO has gotten to the line beyond which a direct confrontation between Russia and NATO could become imminent. Both sides have advanced combat planning and control systems that can deploy advanced heavy weapons and have modern communications and intelligence capabilities.

If the use of the term "classic war" is appropriate here, then this is the first classic war we have seen in decades.

How could this happen in Europe?

Despite decades of repeating the mantra that "this" should never happen again in Europe, the war did break out after all, as could be expected. Why was it expected? Because the mantras ended up substituting genuine efforts to create a proper collective security system in the region. It would be naive to predict a different outcome if you routinely ignore the continent’s most substantial military power concerns for decades.

But these are just general considerations. The war that we see unfolding today the way we see it was made possible as Russia had succeeded in addressing the two critical problems of waging a regional war: the risk of the conflict’s turning into a nuclear war and the problem of having to deal with massive civilian casualties.

The moral dilemma of whether or not to use tactical nuclear weapons is no longer something that keeps politicians and military leaders awake at night. The ability to achieve assured destruction of critical components of the enemy's military infrastructure makes one more confident in using conventional weapons. The advent of hypersonic weapons has helped solve the first problem.

Hypersonic weapons have eliminated the need to turn to nuclear deterrence measures on the regional level. That’s the first point.

The second point is that the extensive experience gained by the Russian military during the operation in Syria enabled the armed forces to develop a strategy that helps bring civilian casualties to a minimum. Had it not been for the irrational and inhumane defence tactics of Ukraine’s regular armed forces and its nationalist battalions, Ukraine would have been able to avoid the humanitarian catastrophe that it is now rapidly approaching.

The term "hybrid warfare" has become very current in recent years. What we are witnessing in Ukraine is a sub-critical war. This full-fledged regional war is fought in such a way as to avoid sliding down into a customary bloodbath or seeing it escalate into a nuclear war. The US leadership is aware of this and seems to be doing everything to ensure that the war remains subcritical.

Historical context and consequences for Russia

Russia has extensive experience fighting continental wars, not in fighting "on land", but scale-wise. The current war, especially in light of the economic blockade imposed by the West, is one such war.

- The French invasion of Russia, 1812-1814

- The Crimean War, 1853-1856

- The Great Patriotic War, 1941-1945

Although they may seem to have very little in common, the current war in Ukraine is a direct continuation of these three wars.

The key common factor inherent in these wars is that they reflect the nature of Russia's relations with the global colonial system. The French invasion of Russia and the Great Patriotic War were part of the fight to repartition the global colonial system. The wars in Crimea and Ukraine illustrate the combined pressure of the worldwide colonial (the Crimean War) and neocolonial (the war in Ukraine) systems on Russia.

This leads to two conclusions

Firstly, Russia is better adapted to withstanding the cumulative pressure exerted by the West. This is perhaps since the readiness for action and willingness to make sacrifices of the West is lower than that of its constituent parts that may be highly motivated to fight for their share of the colonial pie.

Regardless of the intensity of its Russophobic rhetoric, the West currently lacks the right actors. They would have the ability to engage in the fight for the redistribution of wealth with a matching level of motivation. Poland, for one, has been seen making such claims, but it can hardly be expected to go beyond fighting for the redistribution of flows of subsidies within the EU or NATO’s budget outlays.

Secondly, each such war profoundly affected Russia's political system. They served to reboot the nation’s political process, ultimately helping create a more consolidated, patriotic, and capable government.

Such a restart would be an extremely positive thing for today’s Russia. The conflict in Ukraine will play an even more significant role in helping Russia detach itself from the West’s system of values and beliefs than NATO’s operation in Yugoslavia did.

NATO’s expansion and the potential for a conflict it has brought have played such a critical role in shaping the modern Russian state that their importance is tough to overestimate. A pivotal moment in all of this was Vladimir Putin's 2007 Munich speech that laid out all of Russia’s concerns and appropriate messages to the nation’s Western partners. Them being ignored led straight to the events of February 24, 2022. The conflict in Ukraine represents a crucial stage in this process.

It could also be assumed that the conflict in Ukraine will be the final point in the history of military confrontations between Russia and the global colonial system. Firstly, neocolonialism as a geoeconomic strategy had run its course long before it could have reached its peak. Still, this time the West will no longer have sufficient resources to finance the next round of its quasi-colonial policies.

Secondly, Europe does not currently have the right actors who would be capable of, similar to its actors of the past, engaging in a direct military confrontation with Russia and is unlikely to see them emerge in the future. According to a relatively widespread view in Russia, what we are seeing happening in Ukraine is a war fought by Russia against Russia. Some see it as a war of a renewed Russia against the Russia of the late 1990s that has run its course. Others view it as a war fought between the country’s core that had not yet wholly rid itself of the social constructs of an agricultural empire and its periphery, a deeply archaic part of this former (and not genuinely former!) agrarian empire.

Incidentally, the reasonably high (by today’s standards) degree of readiness to die and kill on the battlefield demonstrated in this conflict can be explained that post-Soviet countries have never entirely abandoned the social constructs of the agricultural empire. One of Russia’s substantial competitive advantages in the wars it fought in the 19th and 20th centuries was that Russia’s society was less modernised than the European one, with comparable technological and industrial development levels.

This is the card that is being played against Russia now in the conflict in Ukraine. But it has already become apparent that this is not going to work.

To quote Sergey Karaganov, the Honorary Chairman of the Council on Foreign and Defense Policy Praesidium, who said back in 2016 that "Russia will never again fight a war on its soil", is one of the reasons this strategy is not going to work. This is something that anyone who is involved in military planning against our country should keep in mind.

The Future of the Repressive State

States fight wars. This is especially true in the case of a war happening in Ukraine. Countries with armed forces capable of resisting such wars are few and far between. And Ukraine, to whom the US assigned the suicidal role of a battering ram against Russia, isn't one of them. Whether or not a country can engage in this type of warfare will significantly impact the transformation of the state as an institution by the mid-21st century.

It is no secret that neoliberal rhetoric stresses the waning role of the state. Although this rhetoric does not argue against the state, it does say that not everyone can afford it. Not everyone will be allowed to have a state or be able to use its resources and benefit from the opportunities it offers.

While advocating against a strong state, big capital is eager and willing to use the state's opportunities to promote its programme, whether it's the "green transition" or the specifics of implementing an anti-COVID policy. Despite all the talk about the presumed failure of the state, we see that the demand for the state’s repressive capability has been rising at an unprecedented rate in recent decades.

The state remains a highly effective tool to support the accumulation of capital, or whatever is going to replace it in the new digital age.

However, not everyone will be able to afford to have a state. As globalisation, urbanisation, and industrialisation that used to provide a massive surplus of resources come to an end, the question that arises is: how will the state be supported and funded?

While the transition process was still underway, many countries had sufficient capital accumulation, state interventions, and funding for social programs. Help, however, will be in short supply now that globalisation has ended and the expansion of the West’s economic realm got stalled in Ukraine. The number of nations that will be able to afford a powerful state will now decrease significantly.

Granted, a strong state has its inherent weaknesses. Highly hierarchical systems are slow to adapt to change. However, they are quite adept at accumulating resources. In the new "total world" (the Club of Rome, 2018), this function may be more relevant than the so-called promoters believe in meta-verses.

The Future of Money

The Future of Money

It is believed that the war in Ukraine marks the beginning of a post-American world and the end of the dollar-based monetary system. During the first month of the war, several reports and articles on this topic were published by authors whose level of competence and knowledge are beyond reproach. Whereas the remaining question is: what will replace it?

So, this is an economic war waged by indebted countries against the world's largest supplier of resources (energy, metals, fertilisers, food).

To draw one’s conclusion, it will suffice to compare two maps: one showing the countries that imposed sanctions against Russia and the other with the highest per capita debt levels. The two maps will be identical: USA, Canada, Australia, Japan, and Europe.

A transition from fiat money will drive the transformation to resource-backed currencies or alliances where resource suppliers will have agreements with an industrial centre (a case in point is Saudi Arabia’s talks with China about using the yuan as a settlement currency).

And that is not yet all bad news for the countries that issue unsecured reserve currencies and are used to exporting inflation to the periphery. In addition to the resource-backed currencies, cryptocurrencies will further undermine their dominance.

The cryptocurrency market's capitalisation is already estimated to be equal to $20 trillion (or 15% of the global GDP). To this day, this market lacks proper regulation. It remains to be seen to what extent the weakening countries of the West will be able to control it. The less they are capable of handling it, the less power they will be able to wield.

It is possible that the US, given its leadership in the digital realm, will be able to secure its place in the new cryptocurrency world. Still, the future of the other Western countries remains in grave doubt.

In any case, this dual pressure brought to bear on the traditional (fiat) monetary systems will change the global currency map over the next twenty years. And it will indeed affect the political map, too.

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